Chinese grandfathering and the Asian nuclear balance

Beijing is brazenly thumbing its nose at the international non-proliferation regime it signed up to less than a decade ago, says Nitin Pai

While the world’s attention is captured by yet another round of the familiar North Korean nuclear threats, another, perhaps more serious, bit of nuclear shenanigans has gone unnoticed. China and Pakistan have reportedly agreed to construct another reactor in the latter’s Chashma complex. It is hard to say with certainty if this is the third or the fifth reactor that China is constructing there. Either way, Beijing is brazenly thumbing its nose at the international non-proliferation regime it signed up to less than a decade ago.

China applied to join the Nuclear Suppliers Group in January 2004, as its membership was to come up for consideration at the nuclear technology cartel’s meeting in May that year. Joining the NSG required Beijing to refrain from supplying nuclear technology and fuel to countries that were not signatories to the nuclear Non-Proliferation Treaty.

There is, however, a loophole in the NSG rules: states that had contracts before the date of their joining the NSG are allowed to fulfil their commitments. In other words, if China signed a deal with Pakistan – a non-signatory of the NPT – before the former became a member of the NSG, then it could continue its supply relationship even after joining the NPT.

That is exactly what China did. In March 2004, it emerged that a deal had been in the works, and, indeed, a supply agreement was signed on May 4 that year. Three weeks later, on May 28, the NSG approved China’s membership, which took effect on June 10, 2004. China had managed to create a back door through which it could continue its proliferation activities.

Thus, the second nuclear reactor at Chashma was “grandfathered”. The opacity of the NSG means that it is still unclear how many reactors were included in the deal the two countries signed on May 4, 2004.

In late 2008, two more reactors were grandfathered over the United States’ objections that the “cooperation on the construction of two new reactors, Chashma III and IV, would be inconsistent with the commitments China made at the time of its adherence to Nuclear Suppliers Group guidelines in 2004”.

Subsequently, Beijing dropped all pretence and openly stated why it was boosting Pakistan’s fissile material factory, linking it to the US-India nuclear deal and the India-specific exemption at the NSG that Washington and New Delhi had painstakingly negotiated. Then, as now, the Obama administration had too many irons in the fire, many that required China’s co-operation to object.

Reports in the US media this month suggest that China and Pakistan signed a secret agreement in February for a 1,000-megawatt plant in Chashma. This might be the fifth reactor at the complex and the fourth one to be grandfathered.

Why is China making a mockery of the non-proliferation regime?

There are some commercial strategic motives. Mark Hibbs, a scholar at the Carnegie Endowment for International Peace, posits that Beijing might be using the deal as a bargaining chip to clear the decks for its nuclear reactor suppliers who want to sell to the international market.

More importantly, there are geopolitical motives. The highly elastic grandfathering claim is part of a tit-for-tat game with the US. It saw the US-India nuclear deal as a move to check its own power. It has responded by giving reactors away to Pakistan. Indeed, it could have done so by going through the due process of the NSG, as the US did in India’s case. But tit for tat becomes all the more effective when you show that you can break the NSG norms and there’s nothing anyone can do about it — the Obama administration can just lump it. The sanctimonious Europeans, New Zealanders and others are likely to quietly accept the fait accompli.

The reactors it sells Pakistan are expected to be subject to International Atomic Energy Agency safeguards. The arrangement, however, allows Islamabad the full use of other nuclear facilities to ramp up its fissile material for the weapons programme. Pakistan boasts it has more nuclear warheads than India does, and advertises what it calls “tactical” nuclear weapons fitted on cruise missiles.

Should India be concerned? Yes, but only to the extent of satisfying ourselves that our nuclear arsenal constitutes a minimum, credible deterrent as circumstances evolve. We should not be provoked into responding to often absurd statements made by Pakistani officials as to their nuclear capabilities and strategy.

Moreover, the more fissile material Pakistan stockpiles, the more it puts its own security at risk. It makes the US more nervous, causing it to act in ways that makes the Pakistani military a little more nervous.

Though no US official will admit this publicly, it would take blinkers of enormous proportions for Washington to be oblivious to the Pakistan-Saudi nuclear relationship. If a part of the fissile material Pakistan is cranking up is on behalf of the Saudis (who, for their part, have an eye on the Iranian nuclear project), then it is an interesting exercise to trace who the eventual beneficiary of the Chinese grandfathering is.

The writer is director of the Takshashila Institution, an independent, networked think tank