It’s late Saturday afternoon here in Ipanema, 28 degrees C and fair, and my options are to go back to the beach or blog this. So if I get a little speculative as the paragraphs wear on, just chalk it up to compensating for the opportunity cost of being in Rio de Janeiro in late summer, and having to forego the pleasure of far niente for the task of blogging on the subject of powerful P-5 countries finessing their compliance with multilateral nuclear trade controls.
The point of departure is this item by Bill Gertz which appeared on Friday.
My initial reaction to it in print was exactly the same as my reaction to it on the phone a week ago when I heard about it in the same breath as developments at this month’s meeting of the NSG’s Consultative Group in Vienna–I wasn’t certain that there was anything new here.
After all, back in early 2010 CNNC’s most important engineering subsidiary had announced here in fine print that it was going ahead with more power reactor sales to Pakistan and, specifically, for its Chashma site. These would become Chashma-3 and -4 projects a year later. A few countries, including the U.S., during NSG discussions in both 2010 and 2011 queried China about these exports. During the 2010 meetings China had little to say except to urge NSG PGs not to worry because all its trade conformed to NSG guidelines. Into 2011 China let on that it would, as many suspected, argue that these projects were grandfathered by a previous agreement with Pakistan.
While in Pakistan in 2011, I learned that construction work on C-3 and C-4 had in fact started, with the preparation of the foundations underway. No one in Pakistan said anything to me about planned construction of a fifth reactor at Chashma however they did report that Pakistan dearly wanted China to keep building still more reactors in Pakistan.
Beginning 18 months before Gertz wrote last week that he obtained from the State Department news that China and Pakistan had made a new reactor deal, Pakistan media were already engaged in wishful thinking about Pakistan importing what China had unwrapped in 2011 as a new 1,000 PWR design based on exclusively Chinese IPR. The IPR issue provoked me to do some thinking the last couple of days about what might be behind this apparently new transaction, assuming that Gertz’ information is correct.
Has China made a contractual commitment to build Chashma-5? If China were to go through with this transaction, the plant would be the fifth unit China builds at Chashma, and the third after China joined the NSG in 2004 on the basis of information China provided NSG PGs that the existing coopertion agreement between China and Pakistan did not expressly commit China to supply more reactors to Pakistan after C-1/2.
Note that this 1000-MW reactor would be built at a site that has two reactors already set up, as well as C-3/4 under construction, plus lot of other nuclear infrastructure. Images published in 2010 led to speculation that new construction activity at Chashma pointed to erection of new administrative buildings as well as a possible plutonium separation plant.
The point is that this site is hardly a pre-2007 Al-Kibar–there’s lots of new aerial images turning up all the time. So, why, pray tell, would China go to the bother of trying to keep an agreement top secret, as Gertz says, to dig more gaping holes in the ground for a 1,000-MW nuclear power plant?
Maybe the deal with Pakistan isn’t final, in which case discretion merely implies that there is more for the two sides to negotiate (and so there really isn’t anything new here). If there is an MOU or something more, China might want it kept secret for a limited period of time if it considered Chashma-5 as a bargaining chip it could use to obtain certain important benefits.
Since the NSG back in 2010 was confronted by the uncomfortable possibility that China would dish the group about further exports to Pakistan–just two years after Beijing relented to the exception to NSG guidelines proposed by the U.S. for India –some people have considered that a possible way out for the NSG and China would be for both to come to an understanding that China would terminate its nuclear power plant commerce in Pakistan with the completion of C-3/4.
That would permit the NSG to bless the exports of C-3/4 and then in effect close the book and prevent what, if left unresolved, would be seen (especially by NPT parties during the 2015 Revcon) as a challenge to the NSG’s credibility.
Now, China might put Chashma-5 on the table, in effect telling the NSG, “Okay, if the PGs want to get Pakistan and China to fix this nuclear trade regime thing, we could constructively participate in that effort on the basis that we build the 1,000-MW reactor in Pakistan.”
What would China get in return for a deal? Maybe two things:
- a wink and a nod from the U.S. concerning the issue of China’s nuclear trade regime compliance, at a time when the U.S. and China are about to renegotiate a bilateral nuclear cooperation agreement to replace a pact which expires in 2015–and which will be reviewed by the U.S. Congress before it can enter into force.
- support from foreign governments for a deal between Chinese industry and foreign companies, chiefly in France and the U.S., concerning IPR for the 1,000-MW PWR which China has claimed is exclusively Chinese.
The U.S. connection appears straightforward but the IPR issue would be a stretch for the NSG. I understand that Sino-Pak nuclear commerce is politically and strategically driven. But to some in senior management at CNNC and its tributaries, the global export market for CNNC’s 1,000-MW nuclear power plant has got to be a lot more important than the uncertain and unprofitable sale of one unit to Pakistan. In 2011, official people in Pakistan told me that when Beijing and Islamabad struck a deal for Chashma-3/4, Pakistan had to settle on the 300-MW PWR which had been chosen for C-1/2. For C-3/4, Pakistan wanted a two-loop, 650-MW version of that reactor but was told by Beijing that China could not export it because that model contains some non-Chinese IPR. Likewise, Pakistan officials said that the IPR for China’s three-loop 1,000-MW PWR was not entirely indiginous, preventing its export to Pakistan.
Since at least late 2011, China officially asserts that all the IPR for the 1,000-MW PWR is Chinese, permitting China to export this design without approval from the French, U.S., and other foreign vendor firms (in particular Areva predecessor Framatome, EDF, and Westinghouse) which since the 1980s have cooperated with Chinese industry and design institutes to create more modern PWR technology than that represented by Qinshan-1 in China.
But maybe IPR issues don’t figure for China on Chashma-5, and instead China is just, well, counting on the argument that might-makes-right. If China can graze at will in the vineyards of St-Estephe and Pauillac, and is about to gobble up Gevrey-Chambertin and Meurseult next, surely it can force its IPR claims onto Areva–so the argument goes in Paris.
But not so fast. So far, reports in Chinese media asserting that all IPR for the 1,000-MW design is Chinese have not been contested in public by China’s foreign industry counterparts and their governments. That doesn’t have to mean that they concede that point. “Do you want to know if we share the Chinese view that all that IPR is theirs?” one Western diplomat in Beijing asked me about 6 months ago. I told him that in fact I did want to know the answer to that question. “Then wait until you see how we react if and when China signs a contract” to sell the reactor to a foreign client.
On the IPR question: The Framatome 944 MW units the CPR was derived from started operation in Daya Bay in 1993. There is not going to be any patent infringement stemming from that design at this point.
Excellent comment. However, I have some questions.
1. If a contract for a Chashma-5 has indeed been signed – how easy would it be easy for China scrap it? The Pakistanis would not take lightly to such a Chinese insult. Given the strong bonds between China and Pakistan, would China want to risk such an insult?
2. On the “nod from the US” – would it really be necessary for China to sacrifice a possible Chashma-5? Is it really conceivable that the US and China would not renew the nuclear cooperation agreement? After all, the US Congress blocking such a deal would do major harm to bilateral relations as well as to the interests of the US nuclear industry.
3. On the IPR issue – does the nuclear industry in the US and particularly in France care that much about a Chashma-5? Would skipping this make them any more likely to compromise on IPR? After all, the former is a nonproliferation issue, the latter a commercial issue. Moreover, while the US clearly wants to avoid further nuclear trade between China and Pakistan to avoid damage to the nonproliferation regime, I would suspect that France cares less.
Bobby,
1.) I think the answer to that question depends in part on what kind of understanding China has with Pakistan about this transaction. If it is a firm commercial contract, that is one thing. If it is a MOU, that is something else.
2.) China wouldn’t necessarily have to sacrifice its fifth reactor. To the contrary. The more PGs in the NSG want to fix this, the more China may feel that it has leverage to include that fifth reactor in any arrangement it is involved in with the NSG. I agree with Dan Horner on the U.S. Congress angle (see my remarks to Dan on this)
3.) Agreed that China and the others especially P-5 conveniently bifurcate between “proliferation/security” issues with Pakistan and “commercial” issues. But if Areva, Westinghouse, Japanese, Germans, others have legitimate IPR issues concerning the 1,000-MW reactor, can they afford to see China set a precedent by exporting it to Pakistan with impunity? If this ever went to the WTO, how would it react someday in the future if China could argue that the foreigners decided it wasn’t worth pursuing over a sale to Pakistan?
Chashma-5 seems to be a red herring; looking at site prep works I’d say a KANUPP-2 is more likely, sooner. Any of you wonks taken a look at that?
Tariq:
The Gertz piece claims the fifth reactor would be at Chashma. That said, this WNA survey
http://www.world-nuclear.org/info/Country-Profiles/Countries-O-S/Pakistan/#.UU9FRBxg-Fk
says that as of 2007 there is one 1,000-MW planned for Chashma and two units for Kanupp site. In 2006 I was told by senior Pakistan government people that PAEC has purchased land at Kanupp site to eventually host a 1,000-MW PWR from China but that it was premature to build it at that site because China was not yet prepared to export it.
Both Chashma site and Kanupp site are of course well-known and subject to constant open-source satellite reconnaisance.
Your point is well-taken. Location needs confirmation. I’ve tweeted your suggestion markhibbs@CEIP maybe we can ferret this out soon.
NSG is a cartel and not a binding treaty for its 44 members so NSG in essence cannot prevent a legitimate nuclear trade between a non npt state Pakistan and a npt state China. Since all Pakistan nuclear power related activities are under IAEA safeguards so there is little to worry on “proliferation dangers”.
Second,while npt nuclear states such as France, Russia, UK , South Korea, Japan continue to trade in multi billion dollar Indian market, a non npt state, so US and these powers have little or no moral and political clout to suggest Pakistan and China Otherwise on nuclear trade.
Majid,
Sorry, but China in 2004 joined the NSG as a PG committed to adhere to its guidelines.
If The Nation got it right in September 2012, then with the background of chronic power shortages in megacity Karachi, the first 1,000-MW PWR from China would be built as Kanupp-2:
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/editorials/11-Sep-2012/karachi-nuclear-plant
Very interesting post, Mark.
A question for you: Does your third paragraph imply that this issue wasn’t discussed during the Consultative Group meeting?
And a response to Bobby’s second point: As you suggest, it seems unlikely that Congress would vote down the agreement. But it seems quite plausible that Congress would add conditions, as it did when it reviewed the current agreement in 1985.
Dan,
Does my third paragraph imply that this was not discussed at the CG? Negative.
To the question of Congress and the 123 agreement with U.S. that China and the U.S. have yet to negotiate: Regardless of the uncertain status of certain in-the-pipeline commercial ventures between U.S. vendors and Chinese partners, China will want a new agreement with the U.S. without any doubt, and it clearly does not want a new agreement with additional strings attached by U.S. lawmakers in a number of areas having to do with bilateral verification, export controls, and security.
Thanks, Mark and Dan. Good point about Congress attaching strings.
On another point – how could China and Pakistan cooperate with PGs on fixing the regime? Fairly big question, but what could a possible deal look like?
Pakistan and China signed a long-term civil nuclear cooperation agreement on Sept 15, 1986 in Beijing which is known to be for an initial period of 30 years and extendable unless any one party decides otherwise.
This agreement was signed by Pakistani Foreign Minister Yaqub Khan and his Chinese counterpart in the presence of the Chinese Prime Minister Zhao Zhiyang and the Chairman of PAEC, Munir A Khan who in 1986 was also the Chairman of the IAEA’s BoG.
The 1986 agreement was signed long-before China became part of the NSG (2004) and signed the NPT and all individual power reactor contract agreements at the Chashma Nuclear Power Complex are therefore grandfathered by the 1986 civil nuclear deal.
While India, a non-NPT state is entitled to waivers, concessions and exceptions, one additional power reactor seems to have caused so much anguish which speaks of discrimination and selectivity in pursuing non-proliferation objectives.
The nonproliferation regime appears to be strengthened and acceptable to all in the shape of the Indo-US nuclear deal, but Pakistan’s nuclear power program (all under IAEA safeguards) has become an eye sore for some.
Perhaps if Pakistan had the money to buy several western power reactors, commercial interests would have triumphed over any non-proliferation objectives that there may have been (which are irrelevant with a nuclear energy program in Pakistan which is already under the IAEA safeguards).
Mansoor,
Thanks for recording here the detail on the 1986 Sino-Pakistan nuclear cooperation agreement. Very good reference.
I note your following remark:
“All individual power reactor contract agreements at the Chashma Nuclear Power Complex are therefore grandfathered by the 1986 civil nuclear deal.”
This is precisely the point about which there is no clarity.
I believe that NSG PGs would like from China some documentation about that Sino-Pak bilateral agreement which would show that in fact the export of additional power reactors from China to Pakistan beyond Chashma-1/2 was committed to or even foreseen in the 1986 agreement.
As I told Gertz prior to the publication of his article, my informal understanding is that as of a year ago (the last NSG Plenary meeting) China had not provided any such documentation or reference.
I think it would be fair to conclude that if China were to provide this, the U.S. and other PGs concerned about this matter would be satisfied.
More fallout from the US-India civil nuclear deal.
MK
Michael,
We have seen apologists try very hard to argue the case that these Sino-Pak nuclear trade events since 2008 have nothing to do with the U.S.-India deal.
But the record on this is in my view pretty clear and to the contrary.
For example: Why in December 2006 was China during an official state visit not prepared to honor Musharraf’s request for a commitment to build more reactors at Chashma? The answer to me from one very senior Pakistani official involved in that state visit in real time then was that “China’s leaders have explained to us that they are waiting for the U.S. Congress to approve the text of the [U.S.-India 123] and then for the NSG to approve the exception for India.”
George Perkovich has put China’s logic in succinct terms on a number of occasions on stage: The U.S.,Russia, and France got what they wanted for India, and now we’re going to return the favor for Pakistan.
China’s response – “cooperation between China and Pakistan does not violate relevant norms of the NSG”
http://www.thehindu.com/news/international/world/nuke-ties-with-pak-does-not-violate-nsg-norms-says-china/article4547108.ece
@Mark:
You state that “China in 2004 joined the NSG as a PG committed to adhere to its guidelines”, yet those same guidelines that ‘China and the rest of the NSG are committed to adhere to’ clearly specify the following:
====
(a) In the context of this policy, suppliers should not authorize the transfer of enrichment and reprocessing facilities, and equipment and technology therefore if the recipient does not meet, at least, all of the following criteria:
(i) Is a Party to the Treaty on the Non-Proliferation of Nuclear Weapons and is in full compliance with its obligations under the Treaty;
=====
How exactly can any nation that is part of the NSG and engaging in nuclear trade with India claim to be ‘adhering to the guidelines of the NSG as required when they joined the NSG’?
Mark:
My colleagues in Pakistan would strongly contest this statement, but I think one can reasonably conclude that Pakistan has been a beneficiary of the US-India deal. No, it hasn’t gotten recognition as a responsible state with advanced nuclear capabilities, nor has it gotten membership into the NSG. But it has gotten two additional power plants (and maybe three) at a very steep discount.
And the NSG has become less consensual, and the NPT has become weaker as a result.
All very predictable.
MK
Krepon:
I for one would agree with you that Pakistan did in fact want to see the NSG exemption for India go through because it would give Pakistan leverage, in the long term, to argue for a similar exemption for herself, and, in the short-medium term, leverage her relationship with China to obtain more NPP’s.
Here is an excerpt of Zardari’s comments from 2010 for example:
“Pakistan President Asif Ali Zardari has said that his country had not opposed the India-US civil nuclear deal, so he expects the same from others. “We complement the close ties between India and USA. When India was going with civil nuclear deal with USA we did not oppose it, so we did not mind that our friends have influence on other friends and we expect the same from others,” The News quoted Zardari, as saying.”
Read more at: http://news.oneindia.in/2010/07/12/pakdid-not-oppose-india-us-civil-nuclear-deal-sayszardari.html
good post
Thanks, as usual, Mark.
Folks should remember that approval of the US-China agreement was only agreed by a positive vote from Congress based on a Presidential certification that China was basically in compliance with n-p commitments it had previously made. This was Steve Solarz’s idea, which I helped him write, because Sy Hersh’s important article on Chinese design assistance to Pakistan appeared while the Chinese 123 agreement was under consideration on the Hill. This has not been the case for Congressional approval of nuclear agreements in any other case. I expect the precedent will be pursued in interesting ways when the time arrives.
That being said, there are two important changes in the situation. First and most obviously, the Pakistan is now a nuclear weapons state, though of course not legally under the NPT. Second, I wonder when Westinghouse IPR expires? As I recall, 17 years is the term. This became an issue when we were trying to figure out how to help GE avoid liabilities in India because of Tarapur and the subsequent NNPA requirements that prohibited trade, even if it could be argued (as I did, quixotically) that spare parts to keep Tarapur safe would not contribute to proliferation and warranted a 109 waiver.
So does the new Chashma represent a proliferation danger? No. Can anybody else sell to Pakistan? I don’t think so. Nor do I think the green-eyeshades guys anywhere else in the world would support such a deal. Will China try to grandfather this deal? Sure, and they have the only banks on the planet, however unstable, that are willing to take the deal. So the Chinese can grandfather any commercial deal they want under NSG guidelines, and the legacy of the India deal is that you can cooperate with the hermetically-sealed peaceful part of the program, even in Pakistan.
Last question to answer: is this some sort of payback for the inconsistent manner in which nuclear trade has been “governed” by the multifarious folks who claim to have a say-so? Yep.
Sorry, one last question: Does anybody want to do nuclear business with Pakistan but the Chinese, or can they? For all their caterwauling and intense lobbying over the Japan and China and EURATOM agreements, to my knowledge the U.S. nuclear industry has not lost a single deal because of n-p commitments. But the question becomes interesting when you start to think about what the Koreans and Chinese (and Taiwanese) might be planning to export.
My speculation is that Westinghouse’s proprietary claims on old PWR technology have expired, and that the India-US agreement has done what we expected, namely to make NSG tenets pretty wobbly.
Arch,
To your penultimate point: Don’t bet the ranch that anyone else is going to export to Pakistan for as long as they are not in the regime. Beyond that there is simply the breathtaking political and financial risk associated with any commercially-founded nuclear power plant project in Pakistan. It’s inconceivable right now that outside a Chinese SOE which is acting on behalf of Beijing’s foreign policy imperatives, any other vendor would go there. The piece I did with Toby Dalton and George Perkovich (cited below in response to Jens) elaborates why not.
Pakistan is going to run out of money to buy a power plant, build a pipeline from Iran, or for any other project in three to six months, without another bailout.
MK
PS – The US has TMI, and no new reactors built in over three decades. Japan has Fukushima. I don’t believe we are as competitive in the parlous international nuclear market as we think we are, or might be.
Very good post,
I have just one question regarding a possible impact on Pakistan’s position on the (future) FMCT. Pakistan’s ambassador to the CD, Zamir Akram, said yes to the question “…if Pakistan had an NSG waiver like India, Pakistan would be willing to enter negotiations on an FMCT?”. (Arms Control Today, December 2011).
An NSG waiver like India seems to be a very very distant option. Is there an option that the construction of additional reactors could change Islamabad’s position at the Conference on Disarmament (even if those constructions are not permitted by the NSG)?
Jens,
A good place to start might be here where three of us at Carnegie–I, Toby Dalton, and George Perkovich–suggested over a year ago that Pakistan could affiliate itself with the NSG on the basis of specific criteria that would be tailored to Pakistan and address Pakistan’s deficiencies along a number of fronts including terrorism, export controls, Indo-Pak security relations, multilateral nonproliferation engagement.
And, yes, the FMCT negotiations are part of that picture.
http://carnegieendowment.org/2011/06/22/criteria-based-approach-to-nuclear-cooperation-with-pakistan/dt
With Khushab-IV nearing completion and the Chashma reprocessing plant commissioned, Pakistan is highly unlikely to enter into any arrangement that stops fissile material [plutonium] production and separation for the foreseeable future.
This seems to be all the more palpable given the addition of battlefield nuclear weapons and building of a triad with increasing reliance on LACM and SLCM and other short to medium-range systems, thus making operational military considerations and technological maturation the main drivers of the country’s current position at the CD.
More from Gertz yesterday on this: He says China wanted the Pakistan nuclear deal kept secret so as not to disrupt People’s Congress convening this month. Hard to believe that’s the reason. With everything else on its plate including dealing with a brand new Chinese leadership I somehow can’t believe they would care much about this wrinkle. (What would be the concern? a pro-India faction in the People’s Congress? A group of nonproliferation advocates in the People’s Congress who will leak news of the deal to the Xinhua New China News Agency? 🙂
http://bit.ly/106KuAR
FYI, the IAEA Board of Governors approved the Safeguards Agreement for Chashma Units 3 and 4 on 8 March 2011. It was signed on 15 April 2011 in Vienna, Austria. Pursuant to Section 30 of the Agreement, the Agreement entered into force on 15 April 2011, upon signature by the representatives of Pakistan and the Agency.
http://www.iaea.org/Publications/Documents/Infcircs/2011/infcirc816.pdf
The Safeguards Agreement for Unit 2 was approved by the Board of Governors on 23 November 2006. It was signed in Vienna on 22 February 2007. Pursuant to Section 30 of the Agreement, the Agreement entered into force on 22 February 2007, upon signature by the Director General of the Agency and by the authorised representative of Pakistan.
http://www.iaea.org/Publications/Documents/Infcircs/2007/infcirc705.pdf
For Unit 1 see:
http://www.iaea.org/Publications/Documents/Infcircs/Others/infcirc418.pdf
Tariq,
China in 2011 also informed the NSG’s PGs it had sent a letter to the IAEA serving notice that it intended to supply Pakistan another nuclear power plant for electricity generation under Pakistan’s Infcirc/66 arrangement.
This disclosure by China served as confirmation to members of the NSG, following questions raised by the group in 2010, that China would in fact export Chashma-3/4 to Pakistan.
I am given to understand that, so far, there is no Chinese formal notification to the IAEA that there will be a fifth reactor supplied to Pakistan, as discussed above as Chashma-5 or Karachi-2, under Pakistan’s Infcirc/66 safeguards arrangements with the agency.