By Doug Saunders,
Globe and Mail,
4 February 2010

Chernobyl: Leaking radiation and sucking up Canadian money

Thirteen years after Canada and other nations pledged $768-million to render the destroyed nuclear reactor safe, the cost has ballooned to $2-billion and the job still isn`t done

Kiev - Almost a quarter-century after its explosion killed hundreds and shocked the world, the Chernobyl nuclear reactor still sits crumbling amid an uninhabitable wasteland in northern Ukraine, still emits surprising amounts of radiation, and still absorbs vast amounts of money.

Much of that money, at least $71-million of it, has come from Canadian taxpayers, intended to pay for a project launched in 1997 under a pledge from leaders of the G-7 countries to enclose the reactor in a permanent, sealed sarcophagus.

It was meant to be finished in eight years and cost $768-million (U.S.), a symbol of a resurgent Ukraine returning to democratic government and an open economy, putting the 1986 disaster permanently in the past.

But in a story of tragic disappointment that exemplifies the web of corruption and distrust that so often ensnares relations between Ukraine and the West, 13 years later the cost of the project has ballooned to almost $2-billion and construction has not even begun.

Canadian officials describe it as a "money sink" that has fallen prey to the worst aspects of Ukraine`s failed development, a physical manifestation of the once-wealthy country`s political decay.

Later this year, after the G-8 conference in Huntsville, Ont., the Canadian government will be asked to make another pledge, likely in the tens of millions of dollars, in an effort to raise another $200-million to $300-million to get the job done by the end of 2012, before the reactor decays further and poses an even graver danger. While the reactor`s original sarcophagus, built in a hurry after the disaster, was recently reinforced, it is a flimsy structure that could collapse, sending a radioactive dust cloud into the atmosphere. Portions of the reactor core are still exposed to open air and rainwater.

On Sunday, five years after the Orange Revolution raised hopes of a more democratic and economically prosperous Ukraine, Ukrainians will go to the polls in the final round of a presidential election that has already eliminated incumbent President Viktor Yushchenko, blamed by the West for many of the problems surrounding the Chernobyl containment project. But for the bankers and Canadian government officials who have been working for a decade and a half to protect the world from the radioactive ruins of Chernobyl, there is a fear that the New Safe Confinement project, as it is known, will again spin out of control.

"In order to avoid any funds being lost to corruption, we had to take great care, and sometimes it meant that there were periods of years where none of the Ukrainians were doing anything," said Vince Novak, head of nuclear safety for the European Bank for Reconstruction and Development. The EBRD, a development-finance body that aids post-communist economies, was appointed by the G-8 to manage the Chernobyl project.

Most of the delays and cost increases are tied directly to the political turmoil that has embroiled Ukraine since the 2004 Orange Revolution. Mr. Yushchenko, the reformist President in whom the West had placed its hopes, proved to be a terrible manager of both the project and his cabinet, and corruption and cronyism flourished under his watch. At least one minister who headed the project was notorious for corruption and links to organized crime, and others allowed such practices to flourish.

It did not help that Yulia Tymoshenko, his first prime minister, was purged by Mr. Yushchenko after a few months, creating factional splits that hobbled the project. She is now running for president against Viktor Yanukovich, a pro-Russian candidate who, like her, has his own business interests.

At least a dozen cabinet ministers have controlled the project since it began, in some cases seizing it from their counterparts after only weeks, EBRD officials said.

"We`ve seen constant changes of personnel on the Ukrainian side happening very, very, very often," said Balthasar Lindauer, deputy director of the EBRD`s nuclear safety program. "As soon as we finish explaining the project to one minister and staff, there would be a power struggle and it would be taken over by another minister, and all the institutional memory would be lost and we`d have to start again."

In one case, the officials spent several days in Kiev explaining the project to a new minister and winning assurances from Mr. Yushchenko that the contracting would begin, the staff would remain in place and there would be stability. Just as they got off the plane after flying to Spain for another project, they were informed that the President had given it to another minister.

Many of the ministers seemed utterly disinterested in actually enclosing the reactor, officials said. Chernobyl became a source of largesse. Today, a decade after it was shut down completely, the reactor still has more than 3,000 employees on its full-time payroll - a classic example of the communist-style employment system that still plagues Ukraine. Many Ukrainian officials seemed determined to use the containment project to boost these employment levels.

On several occasions, officials loyal to either Mr. Yushchenko or to Ms. Tymoshenko have attempted to bypass the competitive bidding process and give key contracts to organizations close to their friends or the government.

The EBRD maintained control of the funds and the bidding process, and refused to allow such deals. But policing such disputes took years, and sometimes resulted in damaged relationships.

When a contract for the main construction project was awarded to a French company in 2007, there were concerns that the tendering process had been corrupt, so the EBRD ordered a lengthy audit.

The audit last year showed that the contract was reliable. But work has still not begun.

The EBRD is currently in the midst of a new cost estimate to determine how much more money it will need from the G-8 countries, and its officials say they are determined to use a hoped-for period of stability after Sunday`s election to secure enough money to get the project done by the end of 2012.

"They will need at least a couple hundred million euros more," said a Canadian official involved in the project. "And we will probably be contributing a significant amount because this is a priority for us."