Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Aug 7, 2012

‘Chinese Checkers’ at the Nuclear Suppliers Group

published in the Institute of Peace and Conflict Studies, New Delhi, No. 3695, August 7, 2012, available at http://www.ipcs.org/article/india/chinese-checkers-at-the-nuclear-suppliers-group-3697.html

(Source:ExpressTribune, Pakistan)
The Nuclear Suppliers Group (NSG) held its annual plenary session in Seattle on 21-22 June 2012. As in the previous two plenary meetings, the issue of Indian membership to the NSG and the Pakistani-Chinese claim of supply of two additional nuclear power reactors to Pakistan (Chasma-III and IV) under the ambit of the 1991 bilateral agreement came up for discussion. However, given the internal differences, the NSG was unable to reach a consensus on either issue. This is not unusual as the decision that the NSG takes on both issues will have great bearing on its future course.

Following the June 2012 plenary meeting, two articles authored by former Pakistani diplomats - Asif Ezdi and Maleeha Lodhi - appeared in the Pakistani newspaper, The News, which described the issues as being “two sides of the same coin.” National interest seems to have inflicted the Pakistani diplomats with selective amnesia. One could argue - like the Pakistani diplomats do – that the US decision to offer the nuclear deal to India was driven by strategic concerns.

However, it would be prudent to remember that despite American backing, the deal would not have gone through, but for India’s clean non-proliferation record. In a June 2011 interview to Der Speigel, AQ Khan clearly stated that the Pakistan Army knew of his nuclear ‘Wal Mart’, thereby depriving Islamabad of the ‘fig leaf’ of an arguement that it remained in the dark about the Khan proliferation network. Thus, despite Islamabad crying hoarse, its proliferation of nuclear and missile technology to Iran, North Korea and Libya will come in the way of its efforts of securing a similar deal. What the Pakistani authors bemoan is the de-hyphenation of India and Pakistan by the United States, which the Indo-US nuclear deal signifies.

While the issue of India’s membership of the NSG can be seen as the next logical step, and has received support from the US, France, Russia among others, the Chinese-Pakistani claim of ‘grandfathering’ the supply of Chasma-III and IV is a much more complex issue.

This claim is based on the bilateral agreement signed between China and Pakistan in 1991. However, when China joined the NSG in 2004, it had pledged not to supply any additional nuclear technology to Pakistan other than what had already been committed. At that time, China had disclosed that the ‘grandfather’ clause would apply only to life-time support and fuel supply for the safeguarded Chasma-I and II nuclear power plants, supply of heavy water and operational safety service to the safeguarded Karachi nuclear power plant, and the supply of fuel and operational safety services to the two safeguarded research reactors at PINSTECH. This Chinese assertion was publicly reiterated by the then US Secretary of State, Condoleezza Rice in April 2006.

Thus, the Chinese claim - made public in early 2010 – of ‘grandfathering’ Chasma-III and IV contravenes its earlier commitment made to the NSG. Under the current NSG guidelines, Pakistan being a state outside the NPT would have to commit to place all its current and future nuclear facilities under safeguards (full-scope safeguards) as a condition for the supply. The claim of grandfathering the transfer of nuclear reactors is can be seen as an attempt to sidestep this requirement.

The problem with this claim is two-fold. Firstly, the claim of grandfathering cannot be used in perpetuity. China cannot keep expanding the scope of cooperation which it had listed out in 2004. Secondly, in 2006, the group agreed by consensus that any future claim made by a member that specific exports should be considered under the grandfather clause would have to be backed up with documentary evidence, such as commercial contracts with agencies in the recipient state. The demand for clarifications from Beijing by the NSG members should be seen in this context.

As Mark Hibbs states, Beijing in mid-2011 informed the NSG that in 2004 it had appraised the IAEA of its intended future exports of nuclear reactors to Pakistan as part of an expanded declaration of its nuclear activities under the Additional Protocol. This claim cannot be verified because communication between the IAEA and the member states regarding the implementation of the Additional Protocol are confidential.

Thus, the NSG is faced with a Hobson’s choice. It can either choose to let the current Chinese-Pakistani claim be, in the hope that it would not be repeated in the future. However, as reports indicate, plans already seem afoot for the transfer of two additional nuclear power reactors at Karachi by China. If China claims - as is suspected it will - that these too are grandfathered under the ambit of the 1991 agreement, Beijing would in essence be throwing down the gauntlet to the NSG. Beijing could be doing this as it possibly believes that the groups’ members would not like to push it to the brink, as it would only harm the NSG’s credibility. However, it is possible that since adherence to NSG Guidelines are voluntary, China is trying to test how far it can go before reaching break-point. In any case, the NSG will have to confront the challenge posed by Beijing’s supply of power reactors to Pakistan, especially since it is inconsistent with China’s past commitments to the NSG.

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Nov 29, 2011

What are friends for? The supply of restricted items to Chashma via China




published in the Institute for Defence Studies and Analyses, as IDSA Comment, November 29, 2011, available at http://www.idsa.in/idsacomments/ThesupplyofrestricteditemstoChashmaviaChina_avishwanathan_291111

On November 15, 2011, Xun Wang, a former Managing Director of the Shanghai-based PPG Paints Trading Co. Ltd. (fully-owned subsidiary of the American PPG Industries based in Pennsylvania)
Pakistan's stamp depicting the Chasma Nuclear Power Plant
pleaded guilty to the charges levelled against her before the federal judge at the US District Court at Washington DC. Ms. Wang has been charged with conspiring to export and re-export specially designed high-performance epoxy coatings to the Chashma-II Nuclear Power Plant (CNUPP-II) in Pakistan without requisite export licenses.[1] Ms. Wang - a Chinese citizen and a permanent US resident - has been charged with one count of conspiracy and three counts of violating export laws under the International Emergency Economic Powers Act (IEEPA) and the Export Administration Regulation (EAR).

Ms. Wang was arrested on June 16, 2011 at the Atlanta airport and made her first appearance before the US District Court in Washington DC on July 7, 2011. While pleading guilty on November 15, Ms. Wang has reportedly reached a $200,000 settlement with the Department of Commerce and agreed to cooperate with investigators. Ms. Wang’s arrest and guilty plea is intrinsically linked to the December 21, 2010 guilty plea made by PPG Paints Trading, Shanghai, to one count of conspiracy and three counts of acting with knowledge of a violation under various sections of the EAR and the IEEPA. PPG Industries Inc which is based in Pennsylvania and its fully owned Chinese subsidiary PPG Paints Trading which is based in Shanghai, paid a total sum of US $ 3.75 million in criminal and administrative fines and over US $ 32,000 in restitution. The amount of these fines represents one of the largest penalties imposed in the history of the Bureau of Industry and Security, US Department of Commerce for export violations.

Background
The current proceedings against Ms. Wang trace their origins to the January 2006 agreement signed between the PPG Paints Trading and the Chinese government-owned company China Nuclear Engineering Huaxing Construction Co. Ltd. to supply material to the Chinese companies working at the Chashma nuclear power plant in Pakistan. Huaxing Construction had been sub-contracted by the Chinese government owned Zhongyuan Engineering Corporation which is one of the Chinese companies involved in the construction of the Chashma Nuclear Power Plant.

However, a licence from the US Department of Commerce to export the item was necessary. This was due to two reasons. Firstly, epoxy paint and thinner was designated as EAR 99. This meant that it was not on the US Department of Commerce Control List but, was subject to regulations. Secondly, the Chashma reactor - where the item was to be used - is owned and operated by the Pakistani Atomic Energy Commission (PAEC) which is an entity on the Department of Commerce Entity list. Therefore, PPG Industries or any other organisation would require a licence from the Department of Commerce’s Bureau of Industry and Security (BIS) to export any material destined to be used at Chashma.

Following the inking of the above mentioned agreement, PPG Industries submitted an application to the US Department of Commerce for a license to export the epoxy paint coatings to Chashma in January 2006. Given that the PAEC was on the Entity List, the license was denied by the BIS. Subsequently, PPG Paints Trading, Shanghai and Ms. Xun Wang (who had joined PPG Paints Trading in May 2006) were informed of this development by PPG Industries.

It is interesting to note that prior to the January 2006 agreement with the PPG Industries, the Huaxing Construction had unilaterally applied for an export license to export the epoxy paint to Chashma on five separate occasions previously. Each time its application had been rejected. The rejection of the PPG Industries application thus constituted its sixth attempt at procuring a license – either directly or indirectly – to export the paint to be used at the Chashma nuclear power plant.

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