My firm has been observing with great interest the divergent paths in nuclear policy being taken right now by two major sovereign nations, France under Nicolas Sarkozy and Germany led by Angela Merkel.
These neighboring countries share little more than a common border. They are embarking upon two polar-opposite philosophies regarding nuclear development.
Sarkozy understands fully the concept that a modern industrial nation must utilize safe and economical nuclear power to satisfy its energy needs. The French have been doing this for years. They are rapidly becoming the energy wholesaler for the world, certainly for Germany.
On the other hand, Merkel concerned that she might lose the upcoming election, has buckled to the demands of an environmental, political party that has run amok. Politicizing the needs for national survival to satisfy a section of the electorate represents the road to chaos.
The French have a saying, “The more things change, the more they stay the same.” There are always two sides to the coin. The U.S. Civil War between the Union and the Confederacy is a prime example of differing philosophical approaches. We can draw the same analogies between Napoleon and Wellington at Waterloo or even if we go back to Sparta and Athens.
Recently, Sarkozy has clearly been determined to enlarge the French development of nuclear power. Berlin is scrapping the very same policy that the French are betting on.
Thus Germany, which heretofore had elected to march down the same nuclear road as France, is choosing to become a client nation. That is perfectly alright with Sarkozy. Paris knows something that Berlin has chosen to ignore in its quest for votes.
As an example of the inconsistent and indeed irrational Merkel policy, Germany’s nuclear exit actually hurts Merkel’s green-energy aspirations. Examine Merkel’s tangled policies. Last year she extended the lifespan of nuclear reactors to 2030. No sooner did she do that, then the result of some elections caused her to mothball Germany’s nuclear plants.
Merkel has already said that her policy reversal means that Germany will have to build more coal power plants at exorbitant costs. This will cause rising air pollution and damaging carbon emissions. Currently Merkel is petitioning Russian President Medvedev for additional natural gas. Recently Merkel was also caught selling tanks to Saudi Arabia in exchange for oil. This is the very environmental and geopolitical consequences that the “Greens” have wanted to avoid.
For Germany to get to its declared 2020 emission reduction targets, it has already scheduled a 10% decrease in national electricity consumption. This abandonment of a safe and sane nuclear policy means that they will have to build new housing that requires less heating and the additional expenses of doubling alternative energies coming from such areas as wind and solar.
Current headlines announce that 15 of 31 eurozone banks are in serious danger of collapsing. Unfortunately Germany is involved in financing these troubled entities. The question arises, how could Germany embark on additional financial ventures, involving billions of dollars, at a time when massive populations are taking to the streets of Athens and elsewhere? How is Germany, which is rapidly becoming a client state to France and Russia, expected to bail out the euro?
Meanwhile, Sarkozy has installed new management in Areva policy, as Paris takes the lead.
No other sector has been so brutalized by the media as the uranium miners (URA). On a daily basis stories have been slanted to construct a doomsday scenario, despite which uranium remains a viable, safe and economical presence on the world scene.
Merkel's camp are in the minority. Notice July of 2010 marked the bottom in the fortunes of many uranium stocks such as Denison (DNN), Uranerz (URZ), and Cameco (CCJ). Could July of 2011 be similar?
In October of 2010, I alerted readers to a breakout in this sector. Now the uranium miners appear to have solidified their base over the past four months since Fukushima, despite ferocious media attacks. Investors looking to make new purchases should monitor potential upside breakouts from outlined consolidation pattern. Notice that even in a panic-driven equity market, many uranium stocks' 2011 lows have remained inviolable. Stay tuned for developing news on nuclear.
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