PRC: MFA CONFIRMS UNSPECIFIED CIVILIAN NUCLEAR

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 004031

SIPDIS

E.O. 12958: DECL: 10/23/2033
TAGS: PREL PGOV ECON EAID EFIN PTER CH PK
SUBJECT: PRC: MFA CONFIRMS UNSPECIFIED CIVILIAN NUCLEAR
COOPERATION AND FINANCIAL ASSISTANCE TO PAKISTAN

BEIJING 00004031 001.2 OF 003


Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.4
(B/D).

Summary
--------------


1. (C) China wishes to continue the development of its
civilian nuclear cooperation with Pakistan, according to MFA
Asian Affairs Department Afghanistan and Pakistan Division
Director Zhang Yiming. In an October 23 briefing for the
U.S. and U.K. Embassies on Pakistan President Asif Zardari's
October 14-17 visit to China, Zhang refused to provide
details on China's planned civilian nuclear cooperation with
Pakistan, claiming only that further civilian nuclear
activities will conform to international nonproliferation
obligations. Zhang stated that China is considering
providing Pakistan budgetary assistance, but again offered no
details. Zhang reported that Zardari considers international
criticism of Pakistan's counter-terrorism efforts "unfair"
and believes that further international assistance is needed
to prevent the spread of terrorism to the entire region.
According to Zhang, Chinese leaders assured Zardari that
China will continue to develop the bilateral strategic
partnership "no matter what the political situation" in
Pakistan. Zhang said China will continue to funnel its
assistance to Pakistan through bilateral channels, and he
urged the United States and United Kingdom to take immediate
action to assist Pakistan. End Summary.


2. (SBU) In an October 23 meeting with diplomats from the
U.S. and U.K. Embassies, MFA Asian Affairs Department
Afghanistan and Pakistan Division Director Zhang Yiming
provided a briefing on Pakistan President Asif Zardari's
October 14-17 trip to China. Chinese media reported Zardari
met with PRC President Hu Jintao, Premier Wen Jiabao,
National People's Congress Standing Committee Chairman Wu
Bangguo and other senior officials. The two sides signed a
number of agreements and MOUs on economic, technical and
cultural issues.

Civilian Nuclear Cooperation
--------------


3. (C) In response to a query on media reports about China's
agreement to build two more nuclear power plants in Pakistan,
Zhang stated that Pakistan is in great need of energy and
noted that the United States and United Kingdom have refused
Pakistan's requests for assistance with civilian nuclear
energy. Zhang noted that China has signed agreements with
Pakistan in the past on the development of peaceful nuclear
energy and that China wishes to continue that development.
Though pressed repeatedly, Zhang offered no specifics.
Reiterating the standard Chinese position on the topic, Zhang
noted that every country has the right to develop peaceful
nuclear energy in accordance with international
nonproliferation obligations. Zhang stated that any new
power plants projects would be for peaceful use, and he
contended that such projects would be under IAEA safeguards
and not in violation of any international nonproliferation
obligation. When POLOFF noted that the exception to the NSG
Guidelines provision requiring full-scope safeguards as a
condition on nuclear supply applied only to Chasma I and II,
Zhang suggested the original grandfathering exception would
also apply to future projects. He added, however, that he is
not versed in the details of this aspect of the project.

Economy and Trade
--------------


4. (C) Director Zhang said that Zardari's main focus in
Beijing was bilateral economic and trade relations, noting
Zardari met with "over 20" Chinese CEOS from
telecommunications, petrochemical, cement, steel, banking and
military-related companies and presided over a China-Pakistan
business forum attended by over 300 leading business leaders.
Without providing details, Zhang said Zardari suggested a
number of "new ideas" for China-Pakistan economic cooperation
that Chinese officials will consider. For their part,
Chinese leaders assured Zardari that China will continue to
develop the bilateral strategic partnership "no matter what
the political situation" in Pakistan, according to Zhang.

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5. (C) Zhang said that Zardari explained the serious economic
situation in Pakistan to the PRC leadership and "very
diplomatically" and without suggesting specific dollar
figures requested that China consider providing assistance
"as China used to do before." Chinese leaders, according to
Zhang, responded that they understand Pakistan's economic
difficulties and that China is willing to consider assistance
"as China used to do before." Pressed to elaborate, Zhang
said that as a developing country China does not typically
provide a large amount of development assistance, noting the
relatively small RMB 70 million (approximately USD 10
million) grant to Pakistan on technical cooperation. Pressed
on other possible financial support, Zhang noted Pakistan's
request for budgetary assistance, given its dwindling foreign
exchange holdings. However, because of current global
economic uncertainty and China's own financial problems,
Zhang said, the two sides had spoken "only in generalities."
Zhang added that Pakistan Finance Minister met with officials
from the People's Bank of China on the issue, but Zhang was
unaware of the outcome of those discussions.


6. (C) Pressed for specifics on China's financial assistance
and civilian nuclear program commitments to Pakistan, Zhang
stated that China wants to keep a "low profile" to avoid
creating misunderstandings. Zhang said China does not want
its relationship with Pakistan to be perceived as "aiming at
a third country."

Counter-Terrorism Challenge
--------------


7. (C) According to Zhang, Zardari told Chinese leaders that
Pakistan is facing a terrorism situation not of its own
making, stating that the Pakistan's terrorism problem is a
legacy of the Soviet invasion of Afghanistan and was "created
by some countries." Zardari said that Pakistan is "bearing a
huge cost" in addressing the issue and that the international
community's criticism that Pakistan is not making enough
effort to combat terrorism is "unfair," Zhang reported.
Zardari highlighted the need for increased international
assistance to combat the problem, suggesting that if the
problem of terrorism in Pakistan is not addressed soon,
terrorism will spread to the whole region.

Counter-Terrorism Cooperation
--------------


8. (C) Stating that Pakistan and China enjoy close
cooperation on counter-terrorism issues, Zhang reported that
Advisor to the Pakistani Prime Minister Rehman Malik
discussed strengthening counter-terrorism efforts with PRC
State Councilor and Minister for Public Security Meng
Jianzhu. Zhang said that China expressed appreciation for
Pakistan's "efforts and sacrifice" in counter-terrorism
efforts. The two sides discussed Pakistan's acquisition of
unspecified PRC "counter-terrorism equipment," though Zhang
added that military cooperation was not a focus of the visit.

Zardari
--------------


9. (C) Director Zhang commented that Zardari is a
"controversial figure" in Pakistan and that his visit drew
widespread attention from Chinese officialdom and the media.
Zhang said Zardari noted that his trip to China was his first
official visit as President of Pakistan and stressed to his
Chinese interlocutors that he was the "first businessman" to
be elected President, reflecting his trade and finance agenda
in China. In his meetings with Chinese leaders, Zardari
referred to himself as the "third generation" of Bhuttos
(after his father-in-law Zulfiqar Ali Bhutto, former
President and Prime Minister and founder of the PPP, and his
late wife and former Prime Minister Benazir Bhutto) to have
friendly relations with the PRC, Pakistan's "all-weather
friend." Zhang said Zardari seemed "anxious to get support,"
particularly in this time of economic crisis.

Friends of Pakistan Agenda
--------------


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10. (C) Noting that a collapse of Pakistan's economy is in no
country's interest, Zhang stressed that China will to do all
it can through bilateral channels to assist Pakistan and
suggested the United States and United Kingdom take concrete
measures "immediately" to assist Pakistan. He expressed
concern about negative media reports regarding SCA Assistant
Secretary Boucher's recent visit to Pakistan that indicated
U.S. unwillingness to assist with Pakistan's dire financial
situation and asked whether this position also reflects the
agenda of the Friends of Pakistan (FOP) group. POLOFF
responded that the United States fully supports the
development of a stable and prosperous Pakistan and that
credible steps by Pakistan to stabilize its economy would
make further financial assistance more effective. Both the
U.K. Embassy representative and POLOFF encouraged China to
fully participate in the FOP group in order to better achieve
our common goals in Pakistan.
RANDT