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Electric Worlds / Mondes électriques

Creations, Circulations, Tensions, Transitions (19th–21st C.)

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Edited By Alain Beltran, Léonard Laborie, Pierre Lanthier and Stéphanie Le Gallic

What interpretation(s) do today’s historians make of electrification? Electrification is a process which began almost a hundred and fifty years ago but which more than one billion men and women still do not have access to. This book displays the social diversity of the electric worlds and of the approaches to their history. It updates the historical knowledge and shows the renewal of the historiography in both its themes and its approaches. Four questions about the passage to the electrical age are raised: which innovations or combination of innovations made this passage a reality? According to which networks and appropriation? Evolving thanks to which tensions and alliances? And resulting in which transition and accumulation?

Quel(s) regard(s) les historiens d’aujourd’hui portent-ils sur l’électrification, processus engagé il y a près de cent cinquante ans mais auquel plus d’un milliard d’hommes et de femmes restent encore étrangers ? Le présent volume rend compte de la diversité des mondes sociaux électriques et des manières d’enquêter sur leur histoire. Il actualise les connaissances et témoigne du renouvellement de l’historiographie, dans ses objets et ses approches. Quatre points d’interrogation sur le basculement des sociétés dans l’âge électrique jalonnent le volume : moyennant quelles créations ou combinaisons créatrices ? En vertu de quelles circulations et appropriations ? Selon quelles tensions et alliances ? Et produisant quelles transitions et accumulations ?

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“Spain – Eximbank’s Billion Dollar Client”. The Role of the US Financing the Spanish Nuclear Program

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Spain – Eximbank’s Billion Dollar Client

The Role of the US Financing the Spanish Nuclear Program

Mª del Mar RUBIO-VARAS* and Joseba DE LA TORRE

Abstract

In 1972, Henry Kearns, President and Chairman, Export-Import Bank of the United States (Eximbank) visited the Official Chamber of Commerce and Industry in Madrid. The title of his speech “Spain – Eximbank’s Billion Dollar Client” gave notice of the important role that the public American bank had for financing the Spanish purchases of capital equipment: aircrafts, steel mills, satellite grown stations, power plants, etc. The heavy concentration on new power facilities at the time made Spain the fastest growing nuclear power developer in Europe, and the largest nuclear power buyer from the US with Eximbank’s support head-to-head with Japan. No other nation approached these two in that respect.

Understanding the role of the US in financing the Spanish nuclear program is crucial given that between 1955 and 1965 the US monopolised the world market of nuclear reactors and still by 1974 the US share remained at 60 per cent. By its part Spain placed the vast majority its nuclear orders with the US. All Spanish nuclear orders from the US came with an Eximbank’s financial package offering below market interest rates and additional guaranties to obtain further funding from private financial institutions.

Investigating archival materials from the Eximbank and the National Archives and Record Administration of the United States (NARA), we explore the financial facilities the US provided to the Spanish nuclear program, the size of the authorised credits and its evolution over time. Beyond the economic and ← 245 | 246 → historical implications of such research, the paper helps to understand how one of the poorest countries of the Western World by the 1950s managed to become an early adopter and champion importer of commercial nuclear power materials less than two decades. In doing so, it also became apparent that the role of the US in pumping public money for exporting nuclear facilities to the world explain a great deal of the US share in the global nuclear market before the 1980s.

Keywords: nuclear, electricity, Spain, export subsidies

*

Introduction

In 1972, Henry Kearns, President and Chairman, Export-Import Bank of the United States (Eximbank) visited the Official Chamber of Commerce and Industry in Madrid.1 The title of his speech “Spain – Eximbank’s Billion Dollar Client” gave notice of the important role that the public American bank had for financing the Spanish purchases of capital equipment: aircrafts, steel mills, satellite grown stations, power plants, etc. The heavy concentration on new power facilities at the time made Spain the fastest growing nuclear power developer in Europe, and the largest nuclear power buyer from the US with Eximbank’s support head-to-head with Japan. No other nation approached these two in that respect.

The literature on the Spanish nuclear program can be divided between the contemporary works published as the program developed and the historiographical revisions of the nuclear program. The former closely follows the nuclear debates that lingered in the Western world as atomic energy evolved.2 Technology historians pioneer the latter with contributions about technology transfer, the institutional scientific setting and the introduction of atomic technology in different sectors (e.g. Medicine, agriculture, industry).3 The first approaches to the Spanish ← 246 | 247 → nuclear program with an economic focus, however, emerged in historical accounts of the Spanish electricity sector and of specific nuclear plants.4 Yet the economic history of the Spanish nuclear program is just emerging in the historiography and many issues remain unknown.5 Understanding the role of the US in financing the Spanish nuclear program is crucial given Spain placed the vast majority its nuclear orders with the US. All Spanish nuclear orders from the US came with an Eximbank’s financial package offering below market interest rates and additional guaranties to obtain further funding from private financial institutions. That was the major role of the Eximbank: financing the export of US manufactures and ← 247 | 248 → services which private lenders were reluctant to adopt due to either their size, risk or long maturity.6 While the literature on the Eximbank stretches over its long and controversial history, no study focuses on the effects that its financial facilities had on the beneficiary countries.

In this paper we make use of archival materials from the Eximbank and the National Archives and Record Administration of the United States (NARA), in order to explore the financial facilities the US provided to the Spanish nuclear program, the size of the authorised credits and their evolution over time. The paper opens with the description of the global nuclear market from 1959 to 1980. The choice of dates relates to the changing role of the principal financial source for nuclear exports from the US: the Eximbank. The year 1959 signals the start of the nuclear sales supported by Eximbank financial assistance. By its part in 1980 the US Congress delayed the provision of a budget for the Eximbank for that fiscal year. Although Eximbank total credit authorizations for all sectors were at their peak in 1981, the Reagan Administration made clear that authorizations would be reduced and limited from there onwards.7 For nuclear direct loans and guarantees, it implied its progressive disappearance from Eximbank lending programs. Between 1955 and 1965 the US monopolised the world market of nuclear reactors and still by 1974 their share remained at 60%.8 Adding those manufactured under General Electric [GE] and Westinghouse [WH] licences, the US share in reactors completed and under construction in the world amounted to 84% at the time.9 The US also monopolized the supply of uranium enrichment services for ‘free-world’ (i.e. non-communist) reactors.10 The second section focuses on the role of the Eximbank as chief financial instrument supporting US nuclear exports to the world. From these two sections Spain emerges as an early ← 248 | 249 → adopter and champion importer of commercial nuclear infrastructure. In fact, Spain became the largest client of the world nuclear leader. The third section of the paper enters into the Spanish nuclear program and the financial linkages with the US. In Spain, nuclear development outpaced economic growth.11 Both internal and external forces contributed to it. Internally, the dictatorship combined with a strong lobbying electricity sector – that influenced without opposition the decisions made by officials in the government and regulatory agencies.12 On the foreign front, the US nuclear industry, with Congress support, and Eximbank funding made the difference. This paper concentrates on these external forces, and in particular on the role of the Eximbank. The final section recapitulates the findings and the questions that remain open for further research.

The global market for nuclear reactors 1950s-1980s

Nuclear power plants rank among the largest export transactions in world commerce.13 Yet the global sales of nuclear reactors constitute a tight market. Just about one hundred reactors were sold internationally between 1955 and 1980 (excluding sales by the Soviet Union), the rest were built domestically. By the early 1950s it was clear that nuclear science could not remain an American monopoly and that its spread was inevitable. By taking an active role in assisting foreign nuclear programs, the US influenced the nuclear policies of other nations, shared their technological developments, obtained guarantees on safeguarding nuclear materials and hastened the adoption of broader disarmament measures.14 The light-water reactor, fuelled by low-enriched uranium and cooled and moderated by ordinary water, was the US alternative to the more expensive gas-cooled reactors built by the Europeans in the 1950s.15 Two US manufacturers, WH and GE became major developers of light-water reactors, specializing in pressurized and boiling-water reactors, respectively. By the early 1960s, demonstration power reactors were in operation in all leading industrial countries, and expectations were high. In December 1963, the idea of “turnkey” plants was introduced in the US, with a bid for the construction of a plant at Oyster Creek, New Jersey.16 The main advantage is that turnkey plants were offered ← 249 | 250 → at a guaranteed fixed price, set in advance, that was clearly competitive with coal and oil fired alternatives. The turnkey plants successfully attracted utilities to nuclear power and gained their manufacturers a strong domestic foundation from which they then expanded internationally. In fact, before turnkey projects came about, international nuclear sales only came drop by drop. Up to 1964 the US received 7 international orders for nuclear reactors, the UK sold two (to Japan and Italy)17 and the USSR one to East Germany (see Table 1).18

Table 1. Global Nuclear Export Orders (No. of reactors) 1955-1980

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Notes: (*) Global and World totals refer to ‘free-world’ excluding USSR sales, which can not be disagregatted for all the periods.

Sources: Free world data from “Nuclear Power Plants – Export Orders Since 1974.” Box H 116, Folder 524. Ex-Im Bank Archives, College Park, Maryland, US; USSR export data from Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 8-9. ← 250 | 251 →

The first US turnkey project export of a nuclear reactor to be eventually plugged to the network took place in 1964. It was a 153 MW reactor bought by a Spanish utility for José Cabrera nuclear power plant (later known as ‘Zorita’).19 It was a game changer. WH and GE sold 17 reactors in the second half of the 1960s alone, while other countries sold 14, including the 8 that were sold by the Soviet Union. Before the oil crisis hit, the US companies captured most of the international sales of nuclear reactors to the so-called ‘free world’, but US share declined dramatically from 1974 to 1980 as other Western manufacturers came into play (particularly Kraftwerk Union, Framatome and AECL). Also the virtual US monopoly on enrichment services ended abruptly in 1974 with the Soviet Union decision to sell enriched uranium.20 By 1975, the curve of orders had already passed its peak. Furthermore over two-thirds of all nuclear plants ordered after January 1970 were eventually cancelled.21 On the other side of the iron curtain, the Soviet Union received export orders for 28 reactors over the 1970s, most of the orders were from East European countries, but customers included Finland, Cuba and Libya.22

Which countries were placing nuclear reactors orders with the US and the rest of the ‘free world’ suppliers? Table 2 provides the answer. Two countries stand out as major clients for power reactors sold internationally from 1955 to 1980: Spain with 19 reactors and Japan with 15 reactors. Both were early adopters too. After them, South Korea ordered in the same period 9 reactors, while Switzerland ordered 8 reactors. These four countries concentrated over half of the international sales of the free world. Spain alone 20% of them. ← 251 | 252 →

Table 2. Global* import orders of nuclear reactors (by No. of reactors and importing country)

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Notes: (*) Global totals refer to ‘free-world’ excluding USSR sales, which can not be disagregatted by importing country.

Sources: Free world data from “Nuclear Power Plants – Export Orders Since 1974.” Box H 116, Folder 524. Ex-Im Bank Archives, College Park, Maryland, US.

The inner working of the Spanish market for nuclear reactors was well known to the US stakeholders.23 Spanish electrical utilities, privately owned and organised as lobby, managed to manoeuvre within the ← 252 | 253 → dictatorship in order to play a dominant role in the ordering of nuclear power plants.24 Utilities conducted the bidding process and selected the specific reactor supplier and engineering firms. New nuclear plants had to obtain a site authorization from the government before any actual contract could be signed. In many cases, bid negotiations were well advanced before such authorization was granted. Most of the reactors of the third generation, with contracts granted during the mid-1970s, did so before having government pre-authorization. At the end, some of the projects never obtained preliminary authorization, being postponed indefinitely By the late 1970s, the over commitment of Spain to nuclear power began to emerge in the middle of the turmoil of the political transition to democracy and the rampant economic crisis triggered by the oil crisis. Soon after it proved simply impossible to bring to conclusion all nuclear power plants that had been authorized.25

The success of the US nuclear industry in the world market, as its quasi-monopoly of the Spanish market, had one more propelling source besides the US technological edge in plant design and the offering turnkey projects. The financial support of the US to nuclear exports was also crucial. In fact, by the mid 1970s, financing by the supplier’s government became more important to customers than the overall cost evaluation of the project.26 The last row in Table 1 shows the increasing importance of the Eximbank in US nuclear exports: by the late 1970s all but one (sold to Switzerland) US reactor exports came with an Eximbank financial package. For the whole period the Eximbank financed more than half of the free world sales of nuclear reactors. In the case of Spain, all the successful bids from US manufacturers included financial support from the Eximbank. Next, we enter into the issue of financing nuclear power plants and the role played by the Eximbank for the US exports of nuclear technology.

Financing nuclear power plants in early days of the industry

It was “simply impossible during the, 1960s and 1970s, for utilities in countries such as South Korea, the Philippines, Spain, and Yugoslavia to rise, in the private market, the $500 million or more required for a ← 253 | 254 → single nuclear plant”.27 With only a few exceptions, national export financing institutions of the principal supplier nations undertook external financing of nuclear power projects.28 In the US, the Eximbank played this role. Established by President Franklin D. Roosevelt in 1934, throughout its history to the present, Eximbank provides official credit assistance to US exporters in order to improve their ability to compete in international markets. Such assistance contested those offered by other government sponsored export financing institutions.29 Eximbank accepts the responsibility in situations where there is an unwillingness or inability of private institutions to assume the political and/or commercial risks of large and long-term credits. Such situation applies to exports from sectors that are not perfectly competitive – notably aircraft, conventional and nuclear power plants, telecommunications equipment, and construction and mining machinery.30 Eximbank facilitates exports by providing a subsidy to foreign purchasers of US goods and services. The subsidy element derives from the fact that foreign borrowers receive credit terms that are more favourable than would be otherwise available (or even feasible) in private capital markets.31

According to Eximbank’s documentation, it offered a standard financing package. With slight modifications over the years, the Eximabank provided a direct loan to cover 45% of US content of the project, guarantees for an additional 30% – so private banks would join in –, and a 10% cash down payment.32 Interest rates offered by the Eximbank ranged from 6% in the late 1960s to 8.75% a decade later.33 This ← 254 | 255 → ‘blending’ of an Eximbank direct credit with privately supplied funds, at the commercial rate of interest, moderated considerably the effective rate of interest that the customer must pay for the total financing of the transaction. Further more, Eximbank was prepared to finance through its direct lending the later maturities of the total credit. This allowed the private lenders to obtain repayment of their loans in a shorter period of time, reducing further the effective rate of interest to the borrower.34 While the average payment period for an Eximbank loan was 8 to 10 years, for nuclear loans the usual repayment period was 18 to 20 years.35

By principle, the financing of local costs (i.e. costs directly generated in the importing country) was excluded from Eximbank packages. The only assistance Eximbank provided in financing costs in the host country incident to the completion of a nuclear power project took the form of guarantees of loans made by non-US financial institutions to cover those cost.36

Figure 1 shows the total value of US nuclear exports together with direct loans and guarantees by the Eximbank financing those exports from 1959 to 1982. The data shows the slow beginning of nuclear exports and its outburst in the early 1970s. It also shows that the first power plants obtained almost total financial support from the Eximbank. In a way, the cycles of the Eximbank credits also reflects the cycles of the US economy, which entered recession in 1969-1970. Faced with unemployment, inflation and gold reserves at record low, on the evening of 15 August 1971 President Nixon announced to the world the end of the convertibility of the dollar into gold. The dollar devaluations of the Nixon’s Administration made the prices of US goods and services competitive in world markets for the first time in a decade.37 Fostering US exports became a major mantra of the Nixon’s Presidency as in 1971 for the first time in decades imports exceeded exports. In this vein, the Eximbank nuclear power support policy was reinforced under President Nixon presidency to assist in the sale of US made nuclear power production facilities. The program included assurance of the continued availability of financing for fuel charges, of key importance in maintaining the competitive advantage of American exporters. The oil crisis of 1973-1974 cut the expansionist cycle of nuclear exports, but also implied an opportunity to foster them ← 255 | 256 → in 1975-1976. By the end of the decade, three categories of exports – jet aircrafts, nuclear plants and fuel, mining and refining equipment – comprised over two thirds (69.1 per cent) of Eximbank’s total exposure.38

Figure 1

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Sources and notes: elaborated from 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, College Park, Maryland, US. The US export value was below the financial support provided in 1979 due to financial guarantees exclusively for local cost for a South Korean power plant.

However, from the mid 1970s, and even more after Three Mile Island incident in 1979, critics of nuclear power questioned the environmental, developmental and diplomatic consequences of Eximbank’s assistance to exporters of nuclear power plants. Investigations were launched within the bank but also in other governmental agencies, the Senate and the Congress.39 Nuclear loans by the Eximbank became more exceptional until their total obliteration by 1985.40 We can only adventure some of ← 256 | 257 → the reasons behind such a decision. On the one hand, it was the political change in the US government with its opposition to subsidies in general. On the other hand, the loss of markets by US manufacturers added to the realisation that the US share on nuclear foreign projects has progressively lost weight. Some countries started to erect their own nuclear power plants, while some of the most significant importers in this market had pushed hard for increasing local participation in nuclear projects.41 The direct implication for US policy was that overtime fewer US companies benefited from building nuclear plants abroad. By the early 1980s, a policy that was supposed to benefit large parts of the US manufacturing sector – subsidising exports –, was perceived as benefiting just two large multinationals such as GE and WH.

Returning to the rest of the world, who were the major beneficiaries of US financial support for nuclear power purchases? Table 3 provides the answer. In terms of number of power plants exported the major beneficiaries were Spain with 15 reactors financed by the Eximbank, followed by Japan with 11 nuclear plants exported and financed from the US. In terms of total nuclear purchases value, measured in current US dollars, however, South Korea took the lead over Spain as the largest buyer of US reactors but only bought 6 plants. The different timing explains the differences between the ranks by number of plants and the rank by total value exported. Both Spanish and Japanese purchases took place earlier than the South Korean contracts, the former at lower current value. South Korean purchases had to deal with the high inflation of the late 1970s. A similar thing happened with Taiwan, which with 6 plants bought ranks third by total value of nuclear purchases. ← 257 | 258 →

Table 3. Export-Import Bank of the United States, Authorization for Nuclear Power Plants and Training Center Summary by Country (sorted by number of plants) from Inception thru March 31, 1983 ($ Thousands)

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← 258 | 259 →

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Sources and notes: Elaborated from data in Export-Import Bank of the United States, Authorizations for Nuclear Power Plants, and Training Center from Inception thru March 31, 1983, Exhibit A [1959-1983], Box H128, Folder 705. Ex-Im Bank Archives, College Park, Maryland, US. Other countries include only European nations. ← 259 | 260 →

If we turn to analyse the actual support provided by the Eximbank shown in Table 3, the picture changes somehow but not greatly. In current dollars, South Korea was the country with the largest financial support to buy nuclear reactors from the US, including very large financial guarantees for covering local costs in excess of US export value by 1979 (see Figure 1 above) for the one and only time in history. Spain ranks second, followed by the Philippines (for just 1 nuclear power plant!), Taiwan and Japan. These five countries received almost 85% of the financial support granted by the Eximbank to the purchases of nuclear technology if we take into account direct loans plus financial guarantees to finance nuclear reactors for power plants, fuel and training centres.

From the preceding sections, Spain emerges as an early adopter and champion importer of commercial nuclear infrastructure. In fact, Spain became the largest client of the world’s largest provider of nuclear technology. The last section of the paper depicts the Spanish nuclear program and its financial linkages with the US.

Spain’s nuclear project under the EXIM auspices

The Eximbank’s relationship with Spain began in 1934, the first year of the bank’s operation.42 During the following five years, loans of about $14 million were authorized to finance the purchase by Spain of US agricultural products. There would be no more Eximbank credits to Spain until 1950, when the Franco Dictatorship began its slow reinsertion back into the international economy with the back up of the US diplomacy, endorsed by the Pacts of Madrid in 1953.43 This modest beginning progressed to major proportions during the 1970s when Spain became the single largest nuclear power buyer from the US with Eximbank’s support.

Altogether from 1934 through January 1970, Eximbank authorized more than $700 million in direct loans to Spain. Of this total, about 42% ($295 million) was for electric power installations, 26% ($181 million) for Spain’s steel industry, and 19% ($131 million) related to jet transport aircraft. Two years later, by March 31 of 1972, the total amount had more than doubled to $1,644 million authorized to provide credits to Spain. This was as much support as the Bank had authorized for either Canada or ← 260 | 261 → Mexico, the US next-door neighbours and natural trading partners.44 But the largest loans were still ahead: between 1972 and 1980 the Eximbank authorized over $1,456 million direct loans to Spanish companies, almost matching the full amount lent in the previous 38 years of relationship. Behind the sums lent by the US public Bank to the Spanish economy lay the Spanish nuclear program. In fact, 900 millions of direct credits authorized from 1972 to 1981 were nuclear related.45

Table 4 details the Spanish nuclear project and its links to the Eximbank financial facilities (only reflects the first loan to each plant but not subsequent ones). We differentiate between the loans directly approved by the Exim (direct loans) and the amounts guaranteed by the Exim but lent by third parties (guarantees). The last column reflects the expected dates of operation versus the historical reality, including the cancelled projects. Between October 1971 and August 1976, the Spanish government pre-authorized 18 nuclear projects, while it had pre-authorized only 4 in the previous decade. Spain became then the fastest growing nuclear power developer in Europe and the largest nuclear power buyer from the US with Eximbank’s support head-to-head with Japan (see Tables 2 and 3 above). Of the 22 nuclear reactors pre-authorised by the Spanish government through its history, 17 reactors were awarded to US manufacturers (12 WH, 5 GE, only 15 formalised contracts for Eximbank support), 3 with Germany (KWU-Kraftwerk Union, a Siemens/AEG joint effort), and one with France (Electricité de France). Only 10 of those reactors achieved connection to the grid: 8 by US companies (6 WH, 2 GE), and one by each French and German manufacturers.46 Except for Vandellós 1, which was entirely financed by the French, all bids for nuclear reactors came with an offer of Eximbank financial support. That includes the three reactors eventually adjudicated to German manufacturers, of which only one was built. US authorities attributed the loss of the two reactors of Trillo and the one of Regodola to German manufacturers to the superior financing terms offered by the West Germans, which the US Eximbank was unable to match.47 ← 261 | 262 →

Table 4. Spanish nuclear program by plant, size, supplier, costs and initial financial support by Eximbank Current Million US $

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← 262 | 263 →

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← 263 | 264 →

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Sources and notes: elaborated from data in J.C. Cruse, Memoramdum Spanish Nuclear program Box H 116, Folder 524. Ex-Im Bank Archives, and Authorizations for Nuclear Power Plants and Training Center from Inception thru March 31, 1983, 6-8. [1959-1983]. Box H128, Folder 705. Ex-Im Bank Archives. Years of actual operation from Romero De Pablos, and Sánchez Ron Energía nuclear en España. Vandellós 1 economic data from Sánchez Sánchez “La centrale nucléaire hispano-française de Vandellos”. The offer for Trillo 1 from the Eximbank NARA Document Number: 1975STATE166552. Excludes secondary application for funding, fuel funds and training centre funds. (*) S.Mª de Garoña may be operational again in 2016. (M) Plants affected by the nuclear moratorium of 1984, which never went operational. ← 264 | 265 →

The Spanish nuclear surge correlated with important external shocks. The suspension of the convertibility of the dollar in August 1971 (which made US imports cheaper for Spain up to 1975), followed in October 1973 by an astronomical increase in oil prices. The third external driving force behind the boom (and the least mentioned in the literature) was the marketing offensive, driven by the Nixon administration, to sell reactors and nuclear technology.48 In March 1974, the US Embassy in Madrid in a telegram to the US Secretary of State suggested the following:

[…] areas for US exports or good prospects for increased US exports as a result of higher petroleum and raw material prices and supply shortages:

1. Technical assistance and equipment sales for Spain’s expanding nuclear energy and thermal energy industry. Re[lative to] nuclear production of electricity, percentage share of total Spanish electrical production estimated to rise from about 1.5 per cent in 1970 to some 45 per cent by 1985. While Westinghouse and General Electric as well as US design firms, e.g. Bechtel, foster Wheeler, have played major role in Spanish nuclear energy program, US industry must continue to be energetic in meeting other competition sources in order [to] exploit increasingly attractive possibilities.49

The US viewed the oil crisis as an opportunity for expanding nuclear power in the world. So did many governments, at least in the immediate aftermath of the first oil crisis. The problem was how to finance such expansion. In April 1975, Henry Kissinger, US Secretary of State sent a telegram to the US Embassy in Madrid stating that:

1. […] Eximbank anticipates that applications for 5 additional Spanish nuclear power plants will be submitted this year. Each plant costs approximately $500 million to construct and the construction period is five to six years. 60 to 70 per cent of the cost will be local and will require peseta financing.

2. Eximbank needs to determine the capacity of the Spanish capital markets, debt and equity to fund the peseta portion of these proposed nuclear per plant projects from 1975 through 1982. Embassy is requested to furnish Eximbank capital market projections to support its evaluations. One useful benchmark would be the actual capital raised in Spain from 1970 through 1974 by private and public borrowers and by equity issuers and comparing these amounts to the debt and equity raised by the electric utility industry during this five year period’.50

The worries expressed by Kissinger about the capacity of the Spanish capital market to finance its share in the nuclear program make evident the ultimate dependence of Spanish nuclear imports from the US financial ← 265 | 266 → assistance both directly through Eximbank loans, and indirectly by guaranteeing private loans for the nuclear projects. For every dollar lent by the Eximbank, there was a dollar lent by a private institution. Indirect collaboration of Eximbank with private banks was formalized with the birth of PEFCO (Private Funding Corporation) in 1970.51 PEFCO’s stockholders initially represented a consortium of fifty-five commercial banks, seven industrial exporting corporations and an investment banking enterprise. They assembled private capital to finance US exports of capital goods. The Eximbank had a substantial role in PEFCO’s business decisions. In the case of Spain. PEFCO contributed to finance the nuclear projects of Ascó 1, Valdecaballeros 2, and Vandellós 2 with some $96 million.52 Major US banks also participated on the nuclear loans to Spain such as the Chase Manhattan Bank and the Manufacturers Hanover Trust Company of New York. But as plants became more expensive over time and a larger share of the projects became local costs, the role of the Spanish financial system also increased the original concern of Mr. Kissinger in his cable of 1975.

The dully response by the US Embassy in Madrid, provided the data requested but noted that:

[…] very large portion of funds comes from cajas de ahorro (savings banks) and that government closely controls destination of these funds. For example, over 74 per cent of fixed income borrowing by private non-financial institutions in 1973 was supplied by cajas which must put 40 per cent of their loans into public borrowing or into other obligations determined by the government. As a Ministry of Finances official noted, there is practically no real bond market as such since most issues are simply sold to cajas. The government consequently, should be in position to assure that local funds will be available from cajas for nuclear projects.53

This expected role of the cajas remains an open research issue. What is clear that the major Spanish private industrial banks (Banco Urquijo, Banco de Bilbao, Banca March, Banco Español de Crédito, Banco de Vizcaya, etc.) played a major role as intermediaries with the US financial ← 266 | 267 → institutions and also as channelers of domestic funds to the Spanish nuclear project.54

From 1975 the dollar rally will mean that loans which first payments to early 1980, more than doubled their cost in pesetas. The credits hat had been obtained over the previous decade suddenly become so expensive to in pesetas that the electrical companies could not bear to repay them.55 There was no chance of getting more subsidies from the US (given the change in policy about the Eximbank support for nuclear after Reagan’s election) and the chances of refinancing in other currencies also were complicated in the early 1980s. The stage was served to a financial crisis that we suspect contributed substantially to the problems that the Spanish electricity and financial sectors faced in the fledgling democracy. Probably, there lies, more than anywhere else, the seed of the nuclear moratorium that paralyzed the Spanish nuclear program in 1983, reducing it to just 10 operational reactors.

Some conclusions and research agenda

We have explored the financial facilities the US provided to its exports of nuclear technology from 1959 to 1980. Pumping public money for exporting nuclear facilities to the world explain a great deal of the US share in the global nuclear market before the 1980s. A question that remains open is to what extent downfall of US public money for nuclear exports from the mid 1980s, which precede Chernobyl’s incident, contributed to the standstill of the industry world wide as much as the incident itself.

The Eximbank played a crucial role financing the Spanish nuclear program. The financial facilities provided by the US helps to understand how Spain, one of the poorest countries of the Western World by the 1950s, managed to become an early adopter and champion importer of commercial nuclear power materials in less than two decades. In fact, Spain became the largest client of the larges nuclear manufacturer in the world by, at the same time, becoming the largest nuclear borrower of the Eximbank.

This paper opens more questions than it answers. A grand open question is whether the US facilities led to nuclear overinvestment in Spain, but also elsewhere in the developing world. Many other questions remain ← 267 | 268 → to be explored in the Spanish history of nuclear power: the exaggerate role played by Westinghouse over General Electric (unmatched in the world market or the US market); the story and accounts of the many cancelled projects besides those affected by the moratorium; the local private finance support remains almost entirely uncovered, both the role of the cajas and that of the industrial banks. The relative cost per MW as the nuclear program unfolded, as much as the waning share of the US in the total costs of the Spanish nuclear project shall be also investigated. A plentiful research agenda lies ahead of us.


* We would like to thank the research assistantship of Luis Álvarez, Álvaro Arana Beatriz Argüelles Lebrón and Guillermo Uriz Uharte, and the extensive collaboration of the FOIA Public Liaison Export-Import Bank of the United States, Dawn Kral, and the archivist Dara Baker in finding and retrieving documents for this research. Financial support from the Bank of Spain (grant agreement 30/6/2012) and the Spanish Ministry of Economics and Competitiveness (project ref.: HAR2014-53825-R) is dully acknowledged. We would also like to thanks the participants in Mondes électriques/Electric Worlds conference held in Paris in December 2014. All remaining errors are solely ours.

1 Press Release, May 29, 1972, Bound Press Releases, July 2, 1971-June 30, 1972, J6i, 2277, Ex-Im Bank Archives, College Park, Maryland, US.

2 For instance Juan Múñoz and Ángel Serrano, “La configuración del sector eléctrico y el negocio de la construcción de centrales nucleares,” Cuadernos de Ruedo Ibérico, (1979), 63-6.

3 On the history of the Spanish nuclear program see Rafael Caro (ed.), Historia nuclear española (Madrid: Sociedad Nuclear Española, 1995); On the study of technology transfer see Albert Presas i Puig, “On a speech by Jose Maria Albareda given before Germany’s academic authorities: a historical note,” Arbor-Ciencia Pensamiento y Cultura, 160/631-32 (1998): 343-357; Albert Presas i Puig, “The correspondence between Jose María Otero Navascues and Karl Wirtz: An episode in the international relations of the Junta de Energía Nuclear,” Arbor-Ciencia Pensamiento y Cultura, 167/659-60 (2000): 527-601; Albert Presas i Puig, “Science on the periphery. The Spanish reception of nuclear energy: An attempt at modernity?,” Minerva 43/2 (2005): 197-218. On the institutional scientific research and development network see Ana Romero de Pablos, and José Manuel Sánchez Ron, Energía nuclear en España. De la JEN al CIEMAT. CIEMAT (Madrid: Ediciones Doce Calles, 2001); Ana Romero de Pablos, “The early days of nuclear energy research in Spain: José María Otero Navascues’s foreign trip (1949),” Arbor-ciencia Pensamiento y Cultura 167/659-60 (2000): 509-525; Javier Ordóñez and José Manuel Sánchez Ron, “Nuclear energy in Spain. From Hiroshima to the sixties,” in National Military Establishment and the advancement of science and technology, ed. Paul Forman and José Manuel Sánchez Ron (Dordrecth: Kluwer Academic Publisher, 1996), 185-213; José Manuel Sánchez Ron, “International relations in Spanish physics from 1900 to the Cold War”, Historical Studies in the Physical and Biological Sciences 33/9 (2002): 3-31. For nuclear applications in medicine see Manuel Castell Fàbrega, Historia de la medicina nuclear en España (Bellaterra: Universitat Autonoma de Barcelona, 1992); Alfredo Menéndez Navarro, “Atoms for Peace… and for Medicine: popularization of the medical applications of nuclear energy in Spain,” Revista Española de Medicina Nuclear 26/6 (2007): 385-399; Mª Jesús. Santesmases, “Peace propaganda and biomedical experimentation: Influential uses of radioisotopes in endocrinology and molecular genetics in Spain (1947-1971),” Journal of the History of Biology 39/4 (2006): 765-794. For industry applications see Francesc X. Barca Salom, “La politica nuclear espanyola: el cas del reactor nuclear Argos,” Quaderns d’Historia de l’Enginyeria IV (2000): 12-44; Francesc X. Barca Salom, “Nuclear power for Catalonia: The role of the Official Chamber of Industry of Barcelona, 1953-1962,” Minerva 43/2 (2005): 163-181; Francesc X. Barca Salom, “Dreams and needs: The applications of isotopes to industry in Spain in the 1960s,” Dynamis 29 (2009): 307-336; Francesc X. Barca Salom, “Secrecy or Discretion: Transfer of Nuclear Technology to Spain in Franco Period,” History of Technology 30 (2010): 179-198.

4 Josean Garrués, “Las estrategias productivas, financieras e institucionales de Iberduero,” in Un siglo de luz. Historia empresarial de Iberdrola, ed. Gonzalo Anes and Antonio Gómez Mendoza (Madrid: Iberdrola-Ediciones El Viso, 2006), 497-575; Esther Sánchez Sánchez, “La centrale nucléaire hispano-française de Vandellos: logiques économiques, technologiques et politiques d’une décision,” Bulletin d’histoire de l’électricité 36 (2000): 5-30; Esther Sánchez Sánchez, Rumbo al Sur. Francia y la España del desarrollo, 1958-1969 (Madrid: CSIC, 2006); Esther Sánchez Sánchez, “The French Armament Firms and the Spanish Market, 1948-1975,” Business History, 52/3 (2010): 435-452.

5 M. del Mar Rubio-Varas, “Nuclear Energy in Spain. A research agenda for economic historians,” in A Comparative Study of European Nuclear Energy Programs, ed. Albert Presas, Max Planck Institute for the History of Science, 419 (Berlin: Max-Planck-Institut Wissenschaftsgeschichte, 2011), 71-94; Joseba De la Torre and M. del Mar Rubio-Varas, “Nuclear power for a dictatorship: State and business involvement in the Spanish atomic program 1950-85,” Journal of Contemporary History 51.2 (2016): 385-441.

6 Robert S. Rendell, “Exports financing and the role of the export-import bank of the United States,” Journal of International Law and Economics 11 (1976-1977): 91-146; David P. Baron, The Export-Import Bank. An Economic Analysis (New York: Academic Press, 1983); William H. Becker and William M. McClenahan, JR., The Market, the State and the Export-Import Bank of the United States, 1934-2000 (Cambridge: Cambridge University Press, 2003).

7 Baron, The Export-Import Bank, 242.

8 Export-Import Bank of the United States, Annual Report for the Fiscal Year 1975 (1976), 9.

9 Irwin Bupp and Jean Claude Derian, “The Nuclear Power Industry” in Commission on the Organization of the Government for the Conduct of Foreign Policy (“Murphy Commission”) Vol. 1 Washington DC Government Printing Office (Washington DC, 1975), 88.

10 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy: impact on exports and nuclear industry can not be determined’. ID-80-42. (US Government Printing Office, Washington DC, 1980), 8 (Parenthesis added to the original quote).

11 Joseba De la Torre, J. y M. del Mar Rubio-Varas, “El Estado y el desarrollo de la energía nuclear en España, c. 1950-1985,” DT AEHE, 1403 (2014): 5.

12 De la Torre and Rubio-Varas, “Nuclear Power for a Dictatorship”.

13 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 38.

14 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 4.

15 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 8-9.

16 International Atomic Energy Agency, “50 years of Nuclear Energy”, Last modified September 24, 2004, Available at: https://www.iaea.org/About/Policy/GC/GC48/Documents/gc48inf-4_ftn3.pdf [date of access: 16 November 2015].

17 Mauro Elli, Atomi per l’Italia. La vicenda politica, industriale e tecnologica della centrale nucleare di Latina 1956-1972 (Milano: Unicopli, 2011); Mauro Elli, “British First Nuclear Export: ENI’s Atomic Power Station at Latina and Anglo-Italian Nuclear Cooperation,” Annales historiques de l’électricité 9 (2011): 27-42.

18 The US sales went to Belgium, Italy, Japan, West Germany, India, France and Spain. The latter was the first turnkey project exported ever connected to the grid. See table 2 below.

19 Joseba De la Torre and M. del Mar Rubio-Varas, “Learning by Doing: The First Spanish Nuclear Plant” (Paper presented at the XVII World Economic History Congress, Kyoto, Japan, August 3-7, 2015).

20 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, US Nuclear non-proliferation policy’, 10.

21 Steve Cohn, Too Cheap to Meter: An Economic and Philosophical Analysis of the Nuclear Dream (Albany, NY: State University of New York Press, 1997), 127.

22 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 10.

23 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 44-5.

24 Private utilities won the challenge to build nuclear plants to the Government in the early 1960s. See chapter 5 in Joseba De la Torre and M. del Mar Rubio-Varas, La financiación exterior del desarrollo industrial español a través del IEME, 1950-1982, Estudios de Historia Económica 69 (Madrid: Banco de España, 2015)

25 See De la Torre and Rubio-Varas, “Nuclear Power for a Dictatorship” for a summary of the events leading to the nuclear moratorium declared in 1984.

26 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 10.

27 Speech Outline for Rees Nuclear Testimony [may be Congressman Thomas R. Rees, California but this needs to be confirmed by additional research.] 2 (1982). Ex-Im Bank Archives Box H128, Folder 705, College Park, Maryland, US.

28 Eximbank Programs in Support of Nuclear Power Projects (Washington, DC, 1970), 3. Box J11, Folder 2347. Ex-Im Bank Archives, College Park, Maryland, US.

29 Eximbank, Press Release, February 17, 1970, Bound Press Releases, January 6, 1970-June 30, 1970, J6g, 2275, Ex-Im Bank Archives, College Park, Maryland, US.

30 Non perfectly competitive sectors refers to those in which market competition is restricted either because there are very few suppliers (oligopoly) – in the extreme with only one supplier it becomes a monopoly – or because there are very few buyers (monopsony).

31 George Holliday, Eximbank’s Involvement in Nuclear Exports (Congressional Research Service, GPO: Washington DC, March 2, 1981) 4. Box L1, Folder 277. Ex-Im Bank Archives, College Park, Maryland, US. See also, Robin Seiler, Budgeting for Eximbank: a case study of credit reform, United States, Congressional Budget Office (Washington DC, 1990), 8.

32 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 46.

33 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, College Park, Maryland, US.

34 Eximbank Programs in Support of Nuclear Power Projects, (Washington, DC, 1970), 6-7. Box J11, Folder 2347. Ex-Im Bank Archives, College Park, Maryland, US.

35 Holliday, Eximbank’s Involvement in Nuclear Exports, 20.

36 The guarantees for local costs were limited to 15 per cent of the US cost. Eximbank Programs in Support of Nuclear Power Projects (Washington, DC, 1970), 4. Box J11, Folder 2347. Ex-Im Bank Archives, College Park, Maryland, US.

37 Press Release, May 29, 1972, Bound Press Releases, July 2, 1971-June 30, 1972, 5 J6i, 2277, Ex-Im Bank Archives. College Park, Maryland, US.

38 Holliday, Eximbank’s Involvement in Nuclear Exports, 3.

39 Holliday, Eximbank’s Involvement in Nuclear Exports. In 1975 the role of Eximbank was already under scrutiny see Laffer, Arthur B., “Testimony of the Export-Import Bank, prepared for the Subcommittee on International Security and Scientific Affairs on Nuclear Proliferation of the Committee on International Relations, October 28, 1975,” Box G26, Folder 991. Ex-Im Bank Archives.

40 Becker and McClenahan, The Market, the State and the Export-Import Bank, Appendix B. No nuclear credit was authorized in 1986 and a tiny credit of $8,900 was authorized in 1987. None thereafter.

41 Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 34.

42 The loan was a relatively small one of $670,000 for tobacco. Remarks of Henry Kearns, President and Chairman, Export-Import bank of the United States, before the Spain-US Chamber of Commerce, New York City. Press Release, February 17, 1970, Bound Press Releases, January 6, 1970-June 30, 1970, J6g, 2275, Ex-Im Bank Archives, College Park, Maryland, US.

43 De la Torre and Rubio-Varas, La financiación exterior del desarrollo industrial español a través del IEME, section 4.2.

44 Press Release, May 29, 1972, Bound Press Releases, July 2, 1971-June 30, 1972, J6i, 2277, Ex-Im Bank Archives, College Park, Maryland, US.

45 De la Torre and Rubio-Varas, La financiación exterior del desarrollo industrial español a través del IEME, Cuadro 4.4.

46 Rubio, “Nuclear Energy in Spain. A research agenda for economic historians”, table 1, 71-94.

47 The KWU offer contained a financing proposal covering (1) a loan of 90% of the German content at fixed interest rate of 9%, (2) a loan of 10% of the German value to be applied to Spanish goods and services, and (3) the capitalization of interest during construction. In contrast, the Eximbank offered the standard financing package described in the previous section. See Comptroller General’s Report to the Congress, US Nuclear non-proliferation policy’, 46, but also NARA Document Numbers: 1975STATE166552; MADRID 06260 091426Z; Paragraph 5 in STATE 212498, which reflect the exchange of telegrams between the US State Department and the US Embassy in Madrid about the Trillo issue.

48 De la Torre and Rubio-Varas, “Nuclear Power for a Dictatorship.”

49 NARA Document Number: 1974MADRID01553.

50 NARA Document Number: 1975STATE074005.

51 PEFCO’s description comes from Becker and McClenahan, The Market, the State and the Export-Import Bank, 149.

52 Authorizations for Nuclear Power Plants and Training Center from Inception thru March 31, 1983, 6-8. [1959-1983]. Box H128, Folder 705. Ex-Im Bank Archives, College Park, Maryland, US.

53 Telegram Canonical ID: 1975MADRID02787_b available through http://www.wikileaks.org/plusd/cables/1975MADRID02787_b.html but not at NARA. [date of access 20 November 2014]

54 De la Torre and Rubio-Varas, La financiación exterior del desarrollo industrial español a través del IEME, chapter 4.

55 Manuel Espitia, “Resultados económicos y financieros del sector eléctrico, 1962-1983”, Economía Industrial 243 (1985): 91-109. The financial problem was clearly identified by the government and recognized by the electrical industry. Diario de Sesiones del Congreso de los Diputados, II Legislatura, No. 178, 5461 y 5480.