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China to Supply Two Nuclear Reactors to Pakistan: How will China Convince the NSG?

Dr. Ch. Viyyanna Sastry was Research Fellow at the Institute for Defence Studies and Analyses, New Delhi
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  • May 07, 2010

    Since the visit of Pakistani President Asif Ali Zardari to China in October 2008 during which several Memoranda of Understanding (MoU) were signed, reports of the Chinese intent to supply two more Pressurised Water Reactors have been appearing in the media. The reactors are likely to come up at the Chashma site, where a Chinese built reactor has already been functioning since 2000 while a second rector is being constructed and is likely to start operation next year. The issue of civil nuclear cooperation appeared prominently earlier during the visit of the Chinese President Hu Jintao to Pakistan in 2006 as well. However, it is not clear how China intends to proceed with the deal given that since 2004 it is a party to the 46-member Nuclear Suppliers Group (NSG) whose modified guidelines of 1992 stipulate that nuclear transfers to States that do not have IAEA full-scope safeguards agreement in place are prohibited.

    The Pakistani media, quoting diplomatic sources, reported last month that the Federal Cabinet, in its meeting on March 24, ratified an inter-governmental framework agreement under which China would provide 82 percent of the total $ 1.91 billion finance to Pakistan for the two reactors in the form of a soft loan for a period of 20 years with eight years as grace period. It has now come to light that Pakistan and China signed the loan contract on February 12, 2010 to this effect. Raising the issue in his policy brief, Mark Hibbs, a well-known nuclear analyst with the Nucleonics Week and Nuclear Fuel who is currently with then Carnegie Endowment for International Peace, claimed[f]Mark Hibbs, "Pakistan Deal Signals China’s Growing Nuclear Assertiveness," Nuclear Energy Brief, April 27, 2010. that China has finally decided to go ahead with the construction of two nuclear reactors in Pakistan. According to him, Chinese officials defend the reactor sale to Pakistan in consideration of political developments in South Asia, including the entry-into-force of the Indo-US nuclear civil cooperation agreement and NSG waiver for India.

    There is, however, no Chinese official announcement on the nuclear reactor supply to Pakistan. The China National Nuclear Corporation (CNNC), which was involved in the construction of the two previous nuclear reactors at Chashma, had reportedly claimed in its website a month ago that it had reached the agreement with the aim of developing an overseas nuclear power electricity market. There were earlier reports that the Shanghai Nuclear Engineering Research & Development Institute (SNERDI) had claimed that it completed the design work for the two nuclear reactors.

    Technically, irrespective of what the reports claim, the first step for China to formalise the deal is to inform the NSG member countries of its plans to export two reactors to Pakistan or it may seek relaxation for the future supply of reactors. According to Hibbs, China had explained to the NSG in 2004 that a longstanding framework agreement with Pakistan committed China to provide the second reactor, Chashma-2 and more research reactors as well as the supply of all fuel in perpetuity for these units. This would rule out China supplying additional power reactors (Chashma-3 &-4) under the so-called ‘grandfather clause’.

    If the Chinese cooperation on C-3 &-4 has to go ahead, the NSG would need to consider the Chinese request. The US nod would be crucial for this to happen. Though the NSG countries may have their perspective on the issue, it is for sure that they would be looking at the US for guidance. It is believed that the NSG countries, as on date, are not willing to consider any further relaxations, especially for Pakistan, whose proliferation concerns and the AQ Khan legacy are fresh in their memory. The US too has reiterated on several occasions that it was not going to consider a civil nuclear deal with Pakistan, let alone an NSG waiver. Pakistan, on its part, has been pressing the US, including during the recent strategic dialogue between the two countries, to consider its candidature for such co-operation. As on date, it is believed that China has not yet formally approached the NSG members.

    The NSG as a multilateral export control regime operates by consensus and decisions are not legally binding on members. If there was no consensus on any issue, there could be an internal discussion on modifying their export regulations. It is certain that the NSG countries do not have a legal framework through which they could halt China from going ahead with the supply.

    Pakistan has long been demanding from the US a deal similar to the Indo-US nuclear agreement. Simultaneously, Pakistan had turned to China in anticipation of an analogous deal. Though China voiced its opposition to the Indo-US nuclear agreement as discriminatory and supported the Pakistani viewpoint on a criteria-based approach for NSG waiver to non-NPT States, China finally allowed the deal to pass through. But, there were no indications on how China wished to proceed with its civil nuclear cooperation with Pakistan. Now, it appears that China has decided to let the world know about its intentions. The Chinese motive appears to be indicative of three things: i) showcasing its capability as a nuclear energy supplier country; ii) the importance it attaches to Pakistan, and iii) its selective compliance with international regimes.

    Assuming that the NSG might not reach a consensus on the Chinese appeal, which in all probability is more likely to happen, it would be interesting to see the next moves of China. As a responsible party to the regime since 2004, would China abide by NSG regulations or go ahead with its plans? If China disregards NSG, how will its members react and what could be the possible consequences?

    The next issue would be to see how the US would react if China were to go ahead with the supply. The US and any other NSG member might issue a non-paper to China stating that the NSG guidelines do not permit such an export. Besides, the US has an enormous responsibility to see that the credibility of the NSG regime would not be at stake.

    Five years back, Pakistan had put in an ambitious plan of establishing 8800 MWe nuclear energy by the year 2030. With no indigenous capability as on date to build and operate nuclear power reactors, Pakistan is dependent on external assistance besides nuclear fuel for their entire life time of operation. Pakistan might be hoping that since China allowed the India-specific exemption at the NSG in 2008, the US would reciprocate if China moves the NSG on the issue of Pakistan.

    In any case, a lot depends on the US. It is known that the US is looking for Chinese support for fresh UN sanctions on Iran and also to influence Pakistan’s stand towards the negotiations at the UN Conference on Disarmament on the Fissile Materials Cut-Off Treaty. The Obama Administration has given priority to non-proliferation and strengthening the NPT. The US simultaneously needs Pakistan in its global fight on terrorism.

    Despite the temptation to react to the situation, there is not much that India can do at this stage except to remonstrate with the US. The issue, in all possibility, is likely to witness a strong debate in the coming weeks.