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The China-Pakistan Nuclear Deal: A Realpolitique Fait Accompli

Sharad Joshi

Fellow, Monterey Institute of International Studies

Chinese Premier Wen Jiabao meets with Pakistani Prime Minister Yousuf Raza Gilani in May 2011 Chinese Premier Wen Jiabao meets with Pakistani Prime Minister Yousuf Raza Gilani in May 2011
Source: Government of China

Introduction [1]

Following years of periodic rumors, in September 2010 China announced its intention to sell two additional plutonium-producing heavy water reactors to Pakistan. [2] For several years, Pakistan’s nuclear program has been a source of concern for the international community, due to the country’s past involvement in illicit proliferation and the persistent terrorist violence and instability plaguing Pakistan. The recent nuclear deal with China adds another complicating factor into analyses of the state of Islamabad’s nuclear program. It seems clear that China’s motivations in undertaking the deal relate less to the likely impact on Islamabad’s nuclear program, and more to Beijing’s regional balance of power and strategic stability priorities.

At present, Pakistan has between 90 and 100 nuclear weapons, and is steadily expanding its nuclear weapons program through newer installations at facilities such as the Khushab complex. The Khushab complex contains a 40 to 50 MW heavy water plutonium production reactor, as well as two other heavy water reactors under construction. [3] The construction of these reactors and the expansion of reprocessing facilities suggest that Islamabad is focusing on refining its nuclear weapons arsenal. [4] Pakistan is also expanding its delivery systems through regular tests of its nuclear-capable ballistic missiles, including with the introduction of a new, short-range missile in 2011 called Nasr. Islamabad also regularly tests its nuclear-capable cruise missiles, and especially the Babur.   

The 2010 Agreement

China has a long history of providing nuclear and missile-related assistance to Pakistan, including weapons-grade uranium and warhead designs, with the majority of its assistance occurring in the 1980s and 1990s. [5] Analysts generally interpret Beijing’s motivation for assisting Pakistan as being rooted in its objective of containing India’s regional power aspirations. [6]

The two reactors under the latest agreement will be based at the Chashma nuclear complex in Punjab province, where China is already constructing two other reactors from an earlier bilateral deal. According to Pakistani officials, Beijing is offering extremely generous financial conditions, without which the deal would have been a non-starter for Islamabad. [7] The first reactor at the Chashma complex, a 325MW plant called Chashma-I, is based on a 1991 agreement between China and Pakistan. [8] According to a Chinese foreign ministry spokesperson, the latest expansion project at Chashma is part of a 2003 agreement between Islamabad and Beijing. [9]

However, when China joined the Nuclear Suppliers Group (NSG) in 2004 it informed NSG member states that apart from Chashma 1 and 2 it would not supply any further reactors to Pakistan. Beijing also listed the items it was committed to export to Islamabad under the original agreement. [10] The NSG issue is crucial since under the group’s rules, nuclear fuel, reactors, and technology cannot be supplied to countries, such as Pakistan, who do not adopt full-scope safeguards. Beijing is seeking to “grandfather” the two-reactor deal through the 2003 agreement, since this agreement was concluded before China’s entry into the NSG. [11]

China did not bring its deal with Pakistan before the NSG, either to request a limited or across-the-board exemption (the latter would presumably be analogous to the India exemption). In addition to the two new reactors for the Chashma complex, the China National Nuclear Corporation (CNNC) will supply a fifth nuclear reactor to Pakistan with a 1GW capacity. [12] But there is no indication that this reactor deal, which presumably will not be part of the Chashma complex, was approved by or even brought before the NSG. [13] According to one account, at the 2010 NSG plenary meeting, even though several member states had requested clarifications from China regarding the deal, Beijing responded that all exports to Pakistan would follow NSG guidelines, implying that the latest round of reactor transactions would be grandfathered through the earlier 2003 agreement. [14] The Pakistani position is that the deal does not violate its nonproliferation obligations, because it is not connected to the military side of its nuclear program. [15]    

Motivations Behind the Deal

The Sino-Pakistani deal should be seen in the context of other strategic developments, such as the Indo-U.S. nuclear agreement and the increasingly close defense cooperation ties between New Delhi and Washington. Since the Indo-U.S. nuclear agreement was officially announced in July 2005, Islamabad has periodically asked for a similar nuclear agreement for itself, one that would allow it to engage in nuclear commerce with all of the suppliers. [16] But on numerous occasions, U.S. officials have emphasized that Islamabad is not eligible for a similar nuclear agreement. [17] The central argument put forward by Islamabad to justify a nuclear cooperation agreement is its pressing need for more sources of energy, and a need to prevent a strategic imbalance in South Asia. However, these calls came only after the Indo-U.S. nuclear agreement was announced, making it likely that Pakistan’s demands were actually a response to the Indo-U.S. nuclear agreement.

Islamabad has also stated that the proposed reactors at Chashma are crucial to its efforts to generate 8,800MW of nuclear energy by 2030. [18] Although Pakistan does have a major energy shortfall, these older generation reactors that comprise Chashma 3 and 4 will do little to address the problem – when they do become operational at least six years from now, the reactors will cover only 20% of the deficit. [19]

Islamabad has also expressed an interest in joining the NSG and other export control regimes (the Missile Technology Control Regime, and the Wassenaar and Australia Groups). [20] This comes close on the heels of India’s push to join the NSG, which was endorsed by the Obama administration in late 2010. Indeed, in recent years, Pakistan’s objections to the current Fissile Material Cutoff Treaty (FMCT) proposals have revolved around its position that the Indo-U.S. nuclear deal upsets the balance in South Asia. As U.S. Secretary of State Hillary Clinton said at a Congressional committee hearing, for Islamabad, ties between India and the United States are a “zero-sum game,” [21] meaning that any major initiative between the two sides has a negative impact on U.S.-Pakistan relations, and by extension, Pakistan’s position in South Asia.

This highlights two related themes governing Pakistani nuclear and overall foreign policymaking: [22] (1) that it is reactive to India’s policies on nuclear matters; and (2) that Islamabad is convinced of the need to appear as India’s equal in the nuclear realm. In other words, Pakistan has sought to roll back the nuclear “de-hyphenation” from India that has occurred in recent years, and which has been exacerbated by the revelations of the A.Q. Khan proliferation network and questions over Pakistan’s nuclear security in the face of growing terrorist violence. [23] Pakistan’s opinion is that it should be accorded any benefits or concessions that India has received from the international community. [24]

Some analysts have speculated that Islamabad’s demands for a nuclear deal from the United States might be a bargaining tactic for benefits in other areas, especially economic and conventional military aid. [25] It is not clear if Islamabad would be willing to accept intrusive oversight of its nuclear facilities, which would be the price of a nuclear deal with Washington, especially at a time when domestic audiences in Pakistan are suspicious of Washington’s intentions regarding Pakistan’s nuclear program. Therefore, Pakistan might prefer to seek nuclear assistance from Beijing, who is unlikely to demand such oversight.

For China, the deal with Pakistan is a way of providing some compensatory benefits to a key ally at a time when Islamabad has been under persistent international pressure in the context of the campaign against Al-Qaeda and the Taliban in the region. [26] However, given that Beijing did not press for an across-the-board NSG exemption for Pakistan, this deal is limited in its scope. It is, therefore, an attempt to restore some semblance of balance of power in South Asia and assuage a key ally. Beijing might also be concerned about expanding ties between New Delhi and Washington and India’s quest for a higher global role and status. Thus, the need to balance India’s ties not just with the United States but also with other Asian powers like Japan is likely to have been a factor behind the deal with Pakistan. [27] By allowing Islamabad to reinforce its strategic ties with Beijing at a time of added U.S. pressure on Pakistan to act forcefully and decisively against all terrorist and insurgent groups operating from its territory, China seeks to check Indian and American geo-strategic positioning in the region. Indeed, opinion surveys in Pakistan show that China is viewed as a long-term ally while the United States is a “fickle friend.” [28] Additionally, Beijing is also seeking to be an important player in international nuclear commerce, and the deals with Pakistan help demonstrate its increasing role in this regard. [29]

Nevertheless, China seems to have pursued the Sino-Pakistani deal with caution. There isn’t adequate information in the public domain regarding the Sino-Pakistani negotiating process in the years prior to the official announcement of the deal in 2010. Both China and Pakistan waited while the Indo-U.S. nuclear agreement went through the various stages of the negotiating process to see whether the deal would actually be approved by the NSG, the IAEA, and the Indian and U.S. legislatures. Although Islamabad was in favor of finalizing its own deal in 2006, Beijing preferred to see if the Indo-U.S. agreement fulfilled all procedural steps, including getting the NSG exemption. [30] An alleged U.S. diplomatic cable from 2006 which was released by Wikileaks backs the view that the Sino-Pakistani deal is a response to the Indo-U.S. deal. In the cable, a Chinese foreign ministry official is quoted as reassuring a U.S. interlocutor that reports of an agreement to supply two reactors to Pakistan were baseless, and that as an NSG member, Beijing would abide by its international obligations. [31] The ultimate passage of the Indo-U.S. agreement in 2008 can help explain why China reversed this position. It was only after the Indo-U.S. deal was approved and New Delhi re-entered international nuclear trade that the Sino-Pakistani deal was announced. In fact, Chinese officials have justified their deal with Pakistan by citing the Indo-U.S. nuclear deal. [32]

But the Sino-Pakistani deal is different from the Indo-U.S. agreement. In the Indian case, the agreement went through the various procedural steps, whether at the IAEA, the NSG or the legislatures of the United States and India, and only then was it implemented through specific deals with various suppliers. [33] In the Sino-Pakistani case, the parties did not seek formal approval from the NSG, and China preferred to “grandfather” the reactor transaction despite earlier commitments to desist from doing so. Moreover, attempts by China and Pakistan to conclude a nuclear deal that would add to the Chashma 1 and 2 reactors predate the Indo-U.S. nuclear agreement by several years; preparations for this deal were already made when the Indo-U.S. deal was announced. [34] Therefore, it may not be completely accurate to suggest that the Sino-Pakistani deal was a direct result of the Indo-U.S. deal.

At the same time, Beijing did not specifically support a broad exemption from NSG rules for Pakistan along the lines of the one granted to India. [35] Therefore, this deal, under its current form, has a limited scope. The question then is whether Islamabad would be satisfied with this deal or see it as a precursor for more expanded nuclear cooperation demands. It is unlikely that this is the end of Pakistan’s quest for nuclear cooperation, judging, for example, by its contention that Japan, which has held talks with India on a nuclear cooperation agreement, should also consider such an arrangement with Islamabad. [36]   

Responses from the International Community

Nuclear matters concerning Pakistan have been a source of unease for the international community for several years. The expansion of terrorist violence in Pakistan raised international concerns about the security of the country’s nuclear weapons, materials, and facilities. Additionally, although the Pakistani government terms the A.Q. Khan network’s activities as a “closed chapter,” for the international community, the lack of accountability and lingering questions about the illicit network’s scope and membership remains a source of unease. This is the broad context in which Pakistan has repeatedly sought reentry into international nuclear commerce.

Despite these concerns, so far the international community has essentially accepted the deal as a fait accompli, and despite some dissatisfaction with the deal, has not opposed its progress. In March 2011, the International Atomic Energy Agency (IAEA) approved a safeguards agreement with Pakistan for the Chashma 3&4 reactors, with no objections from any IAEA board members. [37]

The U.S. position has tried to balance various competing regional and global priorities. In March 2011, U.S. Assistant Secretary of State, Robert Blake said that, “we expect China to abide by the commitments that it made when it joined the Nuclear Suppliers Group in 2004, and in particular we think the construction of new nuclear reactors such as Chashma 3 and 4 would be inconsistent with these commitments.” [38] At the same time he said that, “we’ve been very clear on the need to support Pakistan’s energy development. There’s a lot that can be done in non-nuclear areas that help do that.” [39]

Thus, despite the deal being “inconsistent” with China’s NSG obligations, the U.S. did not oppose it on the grounds that it is important for Pakistan’s energy requirements. [40] But it is likely that the need to maintain Pakistan’s support in the campaign against the Taliban and Al Qaeda played a bigger role in Washington’s acquiescence to the deal. Other important objectives might also have affected Washington’s capacity to pressure China to desist from proceeding with the agreement, especially the need for Beijing’s support for tougher sanctions against Iran. [41] This might help explain the relatively limited nature of the Sino-Pakistani agreement. There was some call for Washington to ensure that in exchange for this cooperation deal, Islamabad reverses its opposition to negotiations on the Fissile Material Cutoff Treaty (FMCT), but this quid pro quo does not appear to have taken place. [42]

Some senior analysts in Washington had favored some sort of a limited nuclear deal for Pakistan, although not along the lines of the India deal and requiring certain commitments to “responsible” nuclear behavior by Islamabad. [43] Others recommended strong pressure on both China and Pakistan to desist from going ahead with the deal, saying especially that the U.S. acquiescing to the nuclear reactor deal would not necessarily lead to Beijing’s support on other nonproliferation issues, especially Iran and North Korea. [44]    

Various officials and governments had also said that the agreement should first be approved by the NSG before proceeding. NSG members have expressed dissatisfaction with the proposal and disagreed with the contention that the latest two reactors can be grandfathered. [45] This was in line with the NSG’s views in 2004 when China joined the group; namely, that while the second reactor at Chashma would be grandfathered in, subsequent reactors would not. [46] However, at this point it seems that the NSG is not actively seeking to stop the deal – the official statement at the end of the NSG’s plenary meeting in Noordwijk, Netherlands, in June 2011 did not mention the agreement at all.[47]

New Delhi has also essentially acquiesced to the deal and has not expressed any public opposition to it. [48] India did, however, ask Beijing for “clarity and transparency” on the deal. [49] According to some Indian analyses, the reactor deal does not significantly strengthen Islamabad’s nuclear arsenal, mainly because the facilities would be under safeguards. [50] Moreover, the key determinant of Islamabad’s nuclear weapons program is not the Chashma complex, but rather the capacity of the Kahuta enrichment facility, the heavy water reactor at Khushab, and Pakistan’s uranium stock. [51] This reinforces the notion that Islamabad’s insistence on a civilian nuclear agreement is, in large part, an attempt to maintain some degree of geopolitical parity with India.
    
Conclusions

The Sino-Pakistani nuclear deal appears to have been driven primarily by balance of power considerations, as well as issue linkages with other pressing matters. From the Pakistani perspective, the agreement is a way of closing the gap with India on nuclear matters and reversing the “de-hyphenation” with its South Asian neighbor. For China as well, the deal is about balance of power issues. Beijing is trying to ensure that India’s profile is restricted to South Asia by bolstering Pakistan and countering increased U.S. influence in the region. The deal also raises questions about the capacity of the Nuclear Suppliers Group, and particularly its ability to hold its member states accountable for their export commitments, given that the Sino-Pakistani deal was presented to the NSG as a fait accompli.

The broader implications of the Sino-Pakistani deal for the nonproliferation regime will also be dependent on whether the scope of the deal is limited to the specified reactors or, in fact, leads to other such purchases. It would be extremely difficult for China to maintain that additional new reactors were part of the pre-2004 agreement with Pakistan. At the same time, it is also unlikely that Islamabad will give up pursuing a more substantial agreement that involves a broader NSG exemption.      

Sources:
[1] The author thanks Robert Shaw, Stephanie Lieggi, and Jessica Varnum for their insightful comments on earlier drafts of this article.
[2] Geoff Dyer and Farhan Bokhari, “China-Pakistan reactor deal to open fresh US rift,” Financial Times, September 23, 2010.
[3] Paul K. Kerr and Mary Beth Nikitin, “Pakistan’s Nuclear Weapons: Proliferation and Security Issues,” Congressional Research Service, CRS Report for Congress, July 20, 2011, pg. 5.
[4] Ibid.
[5] See for example, “T.V. Paul, “Chinese-Pakistani Nuclear/Missile Ties and the Balance of Power,” The Nonproliferation Review, Summer 2003; R. Jeffrey Smith and Joby Warrick, “A nuclear power’s act of proliferation,” The Washington Post, November 13, 2009.
[6] “T.V. Paul, “Chinese-Pakistani Nuclear/Missile Ties and the Balance of Power.”
[7] Geoff Dyer and Farhan Bokhari, “China-Pakistan reactor deal to open fresh US rift.”  According to one report, the financial assistance involves soft loans of up to 82% of the cost of the two reactors, which is about $1.9 billion. See Toby Dalton, Mark Hibbs, and George Perkovich, “A Criteria-Based Approach to Nuclear Cooperation With Pakistan,” Carnegie Endowment for International Peace, Policy Outlook, June 22, 2011, www.carnegieendowment.org.  
[8] Mark Hibbs, “Pakistan Deal Signals China’s Growing Nuclear Assertiveness,” Nuclear Energy Brief, Carnegie Endowment for International Peace, April 27, 2010.
[9] “China confirms 2 nuclear reactors for Pakistan,” The Daily Times, September 22, 2010.
[10] Mark Hibbs, “Moving forward on China, Pakistan, and the NSG,” Arms Control Wonk, June 23, 2011, www.armscontrolwonk.com.   
[11] Chris Buckley, “China pushes ahead Pakistan nuclear plant expansion,” Reuters, March 24, 2011.
[12] “China to build 1GW nuclear power plant in Pakistan,” The Daily Times, September 21, 2010.
[13] The public statements at the end of the NSG meetings in Christchurch, New Zealand in June
2010 and Noordwijk, Netherlands, June 2011, do not reflect any discussion of Sino-Pakistani nuclear cooperation, even as other crucial nuclear issues that were discussed are noted. See www.nuclearsuppliersgroup.org/Leng/PRESS/2010-06-NSG_Public_Statement_Final.pdf and www.nuclearsuppliersgroup.org/Leng/PRESS/2011-06-Public%20statement%202011%20NSG%20v7%20-%20final.pdf. However, one analysis however, mentions that the issue was discussed at the NSG’s meeting in New Zealand in 2011. See Daniel Horner, “Chinese-Pakistani Reactor Deal Moves Ahead,” Arms Control Today, April 2011.   
[14] Mark Hibbs, “Moving forward on China, Pakistan, and the NSG.”
[15] Chris Schneidmiller, “IAEA Board Sets Plan for Monitoring New Pakistani Nuclear Reactors,” Global Security Newswire, March 9, 2011.
[16] “Pakistan keeps up pursuit of U.S. nuclear agreement,” Global Security Newswire, October 15, 2010; “Pak fully qualifies for civil nuclear deal like India: Gilani,” The Times of India, April 7, 2010.  Islamabad has also touted its experience in operating nuclear plants and offered nuclear fuel cycle-related assistance under IAEA safeguards as a means of changing the international community’s perceptions of its nuclear program, which would then strengthen conditions in which it could be offered a nuclear cooperation agreement. See “Pakistan seeks equal access to civil nuclear technology,” The News, April 12, 2010.
[17] “Pakistani Atomic Trade Talks Off The Table, U.S. Says,” Global Security Newswire, October 20, 2010.   
[18] Chris Schneidmiller, “IAEA Board Sets Plan for Monitoring New Pakistani Nuclear Reactors.”
[19] Toby Dalton, Mark Hibbs, and George Perkovich, “A Criteria-Based Approach to Nuclear Cooperation With Pakistan.”  
[20] Zia Khan, “Pakistan Wants to Join Nuclear Suppliers Group,” The Express Tribune, July 15, 2010.
[21] Narayan Lakshman, “U.S.-India ties a “zero-sum game” for Pakistan: Hillary,” The Hindu, June 25, 2011.
[22] See also, Hasan Askari-Rizvi, “Critical Issues in India-US Relations,” Daily Times, November 7, 2010.
[23] Historically, major powers like the United States have treated India and Pakistan as equivalent states whose foreign and security policies were interconnected. That is, bilateral dealings with one had to be balanced with ties with the other, reducing the possibility of a strategic alliance or partnership with one side. Thus, for decades India and Pakistan had a “hyphenated” identity in the perceptions of major powers, although some, like the Soviet Union and China, did not necessarily subscribe to this notion. In recent years, these countries tried to formulate bilateral ties with each, independent of the other. This can be termed as “de-hyphenation,” and the Indo-U.S. nuclear agreement is a prominent example of this trend. Islamabad’s worry is that de-hyphenation would lead to a decline of its regional status vis-à-vis India. See also, Howard and Teresita Schaffer, “Dealing with India in the U.S.-Pakistan relationship,” The Hindu, June 13, 2011.        
[24] See for example, Maleeha Lodhi, “Cementing a strategic partnership,” The News, December 28, 2010. See also, Shamshad Ahmad, “Nuclear ‘status’ and security,” The News, March 10, 2010. The author, a former Pakistani foreign secretary, says that Washington must rethink its “strategic partnership” with New Delhi, including the nuclear deal with India, and recommends a similar deal for Pakistan to maintain a regional balance.   
[25] Rachel Oswald, “In Pakistani Pursuit of Nuclear Trade Deal, Some See Other Motives,” Global Security Newswire, March 18, 2011.
[26] For a brief discussion on this, see Chris Allbritton, “Analysis: Pakistan relying too much on China against U.S.,” August 2, 2011, http://news.yahoo.com/analysis-pakistan-relying-too-much-china-against-u-140331219.html.
[27] See Harsh V. Pant, “Power game in Asia Trips Nuclear Non-Proliferation,” YaleGlobalOnline, August 12, 2010.
[28] Griff Witte, “Pakistan courts China as relations with U.S. grow strained,” The Washington Post, June 22, 2010.
[29] Geoff Dyer and Farhan Bokhari, “China-Pakistan reactor deal to open fresh US rift”; Stephanie Ho, “China to sell Outdated Nuclear Reactors to Pakistan,” Voice of America, March 24, 2011, www.voanews.com.
[30] Mark Hibbs, “Pakistan Deal Signals China’s Growing Nuclear Assertiveness.”
[31] Sachin Parashar, “China still supplying N-reactors to Pak: Wikileaks,” The Times of India, June 7, 2011; “2006: Islamabad, Beijing had differing views on Sino-Pak nuclear cooperation,” Wikileaks diplomatic cable, Dawn, June 3, 2011.
[32] Geoff Dyer and Farhan Bokhari, “China-Pakistan reactor deal to open fresh US rift.”
[33] See Ashley J. Tellis, “The China-Pakistan Nuclear “Deal”: Separating Fact from Fiction,”
[34] Carnegie Endowment for International Peace, Policy Outlook, July 16, 2010.
Ashley J. Tellis, “The China-Pakistan Nuclear “Deal”: Separating Fact from Fiction.”
[35] Mark Hibbs, “Pakistan Deal Signals China’s Growing Nuclear Assertiveness.”
[36] “Pakistan demands atomic trade with Japan,” Global Security Newswire, February 22, 2011.
[37] Siddharth Varadarajan, “IAEA approves safeguards for new Pakistani reactors,” The Hindu, March 9, 2011.
[38] Daniel Horner, “Chinese-Pakistani Reactor Deal Moves Ahead,” Arms Control Today, April 2011.
[39] Ibid.
[40] Ananth Krishnan, “U.S. to give China a pass on NSG commitments for Pakistan nuclear deal,” The Hindu, March 20, 2011.
[41] Mark Hibbs, “Pakistan Deal Signals China’s Growing Nuclear Assertiveness.”
[42] Ibid.
[43] Ashish Kumar Sen, “Pak wants N-parity with India, US mum,” The Tribune, March 23, 2010.
[44] Ashley J. Tellis, “Stop the Sino-Pak Nuclear Pact,” The Wall Street Journal, August 16, 2010; Lisa Curtis and Nicholas Hamisevicz, “U.S. Should Block China-Pakistan Nuclear Reactor Deal,” Heritage Foundation, WebMemo No. 2910, May 20, 2010.
[45] Daniel Horner, “Chinese-Pakistani Reactor Deal Moves Ahead,” Arms Control Today, April 2011.
[46] Ibid.
[47] See “NSG Public Statement,” Nuclear Suppliers Group Plenary, Noordwijk, the Netherlands, 23-24 June 2011, www.nuclearsuppliersgroup.org/Leng/PRESS/2011-06-Public%20statement%202011%20NSG%20v7%20-%20final.pdf.
[48] Sachin Parashar, “India reconciles to China’s N-commerce deal with Pak,” The Times of India, December 16, 2010.
[49] “Be transparent in N-ties with Pak: India to China,” The Tribune, February 13, 2011.
[50] “Don’t lose sleep over Chashma,” Editorial, The Hindu, June 23, 2010.
[51] Siddharth Varadarajan, “China, Pakistan and the NSG,” The Hindu, June 24, 2010.
 

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This material is produced independently for NTI by the James Martin Center for Nonproliferation Studies at the Monterey Institute of International Studies and does not necessarily reflect the opinions of and has not been independently verified by NTI or its directors, officers, employees, or agents.

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Sharad Joshi discusses the motivations behind and implications of China's decision to sell Pakistan two more plutonium-producing heavy-water reactors.

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