December 15, 2010 / 7:49 AM / in 7 years

ANALYSIS-China pursues Pakistan nuclear deal; dilemma in West

SINGAPORE, Dec 15 (Reuters) - China is moving ahead with a deal to export nuclear reactors to Pakistan despite grave misgivings in the West, in a sign it too can shape the rules of global nuclear trade after the United States forced a waiver for India.

By winking at India’s nuclear weapons programme and opening up exports of nuclear fuel and material to the rising Asian power, the United States had created an opening for China and Pakistan to pursue similar cooperation, despite the risk of proliferation, analysts said.

Under the 2008 deal, the United States lifted a 35-year embargo on nuclear trade with India and then leaned on the 46-member Nuclear Suppliers Group (NSG,) that lays the rules for peaceful use of nuclear exports, to grant an exemption so that a $150 billion market opened up.

China too is hoping to help meet the energy needs of its ally Pakistan which was denied a similar deal by the United States on the grounds that it had to improve its nuclear proliferation record first.

This week, as Chinese Premier Wen Jiabao travels to India first and then Pakistan, where he is expected to affirm strategic ties, the race to expand nuclear energy programmes in South Asia has added another layer of instability in a troubled region.

While the collaboration is meant to boost nuclear energy as a viable alternative to fossil fuel for the growing economies of India and Pakistan, analysts say the deals indirectly help both nations’ weapons programmes by freeing up domestic reserves of uranium which are not under international inspections.

“The Chinese are proceeding with the export of the reactors, but they want to be prudent about it. They might want to look for some kind of support for it,” said Mark Hibbs, an expert on South Asian nuclear issues at the Carnegie Endowment for International Peace.

China plans to build two new reactors at Pakistan’s Chashma complex in addition to the one already operating there and another nearing completion.

China says it is supplying the reactors to Pakistan under a 2003 bilateral agreement that it signed a year before it joined the NSG, and that its cooperation with Pakistan is purely for peaceful purposes.

“China and Pakistan will further develop their nuclear energy cooperation, and this is restricted to the civilian nuclear sphere, and conforms to the international duties assumed by both countries,” Liang Wentao, a deputy director general at the Ministry of Commerce, told reporters ahead of Wen’s trip.

“It is entirely for peaceful purposes, and comes under the safeguards and oversight of the International Atomic Energy Agency.”

NO CONSENSUS

China has not formally approached the NSG to grant Pakistan a waiver in the same way the United States, helped by Britain, France and Russia, sought one for India, and it may well argue that it doesn’t need to win NSG clearance since the additional nuclear reactors were “grandfathered” before it became a member.

But Hibbs said the United States and some other members have indicated that while China informed the NSG about its nuclear collaboration with Pakistan at the time of joining the cartel, including that it was building two reactors, it did not mention plans to build reactors 3 and 4.

At the last NSG meeting in New Zealand this year, Ireland raised the issue of new Chinese reactors for Pakistan, but China declined to comment. The next meeting is in June, but it is unclear what stand the group will take. “There is as yet no consensus in the NSG how to deal with this,” said Hibbs.

The group could either accept China’s assertion that the reactors were part of an ongoing project before it joined the group, or it could formally protest the sale of the additional reactors as a violation of its guidelines, or simply ignore it.

Some members are even hoping that the problem may go away for some time, following Pakistan’s calamitous floods on the Indus river this year which might compel it to delay expansion of the Chashma complex, and instead use funds for other purposes including rebuilding infrastructure.

The bottom line is that both China and Pakistan see an opening for greater nuclear collaboration after the India-US deal pushed by the Bush administration that many saw as turning the rules of nuclear non-proliferation upside down.

“The exemption for India is clearly driving Pakistan’s demand for equal treatment, but two wrongs don’t make a right,” said Daryl Kimball, executive director at Washington-based Arms Control Association.

He said the India-US accord was deeply flawed but at least it was brought before the NSG and approval taken from the group. “The Chinese sale of additional nuclear reactors to Pakistan is being pursued in a less direct manner.”

Kimball also questioned whether the small-sized nuclear reactors were the best way to tackle Pakistan’s peak energy shortfall of 4,500 MW which the government says has become a security risk because of the unrest it foments.

“It will be a number of years before these new Chinese-built reactors come on line and they will make a relatively small difference in addressing Pakistan’s energy needs. There are other non-nuclear options that could be pursued more quickly and cheaply.”

In the meantime, the worry was that both India, and to even a greater extent Pakistan, would step up production of fissile material purposes for weapons purposes, he said. (Editing by Robert Birsel; sanjeev.miglani@reuters.com; + 65 6870 3815)

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