CHINA-PAKISTAN CIVIL NUCLEAR COOPERATION

S E C R E T STATE 117570


E.O. 12958: DECL: 11/04/2028
TAGS: PARM PREL PGOV PTER PK EAID ECON EFIN CH ETTC AORC

SUBJECT: CHINA-PAKISTAN CIVIL NUCLEAR COOPERATION

REF: A. ISLAMABAD 3339

B. BEIJING 4031

C. BEIJING 4062

D. ISLAMABAD 3377

Classified By: SCA A/S Richard Boucher. Reasons 1.4 (b),(d).



1. (U) This is an action request. See paras 12-13.

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BACKGROUND
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2. (S/NF) Following the return of Pakistani President Zardari
from China, FM Sheh Mahmood Quereshi was quoted in the media
announcing new civil nuclear cooperation with China to build
two additional nuclear power plants referred to as Chasma III
and IV. In an October 18 meeting with SCA A/S Boucher,
Zardari confirmed the Chinese commitment to build two
additional nuclear power plants at Pakistan,s Chasma site,
but added that construction of the new reactors would not
commence until construction at Chasma II was complete.
Boucher told Zardari the United States would examine the
implications of the new nuclear deal and let the Pakistanis
know if we anticipated problems (REF A).


3. (C) Chinese officials have not publicly announced their
intention to provide nuclear reactors to Pakistan beyond what
is already &grandfathered8 under the Nuclear Suppliers
Group (NSG) Guidelines. Chinese Afghanistan and Pakistan
Division Director Zhang Yiming confirmed that China intends
to continue civil nuclear cooperation with Pakistan (REF B).
Though he would not discuss details of this cooperation, Vice
Foreign Minister He Yafei separately maintained the NSG
&grandfather8 exception for projects at Chasma I and II
would also apply to future projects at the site and that USG
views to the contrary are wrong (REF C).


4. (C) The U.S. position is that the provision of additional
reactors to Pakistan would be inconsistent with China,s NSG
commitments and would require an exception to the NSG
Guidelines. NSG consensus on an exception for Pakistan is
highly unlikely given Pakistan,s proliferation record. In
addition, as recently as during Congressional briefings
concerning the India Civil Nuclear Cooperation Initiative, we
have said the United States would not support an exception
for Pakistan.


5. (SBU) Washington is seeking information from China on the
scope and nature of the new civil nuclear projects under
consideration. Key themes will highlight concern over any
cooperation with Pakistan that goes beyond what was ongoing
at the time of China,s joining the NSG, per China,s 2004
statement (SEPTEL). We seek to make this a joint approach to
the Chinese along with key NSG partners (e.g., Australia,
Canada, France, Germany, Japan, Netherlands, Norway, Russia,
Sweden, Switzerland, and the United Kingdom).


6. (SBU) China,s NSG Commitments: As part of joining the
NSG in 2004, China disclosed its ongoing civil nuclear
cooperation with Pakistan. Thus, that ongoing cooperation
was grandfathered and is limited to construction of Chasma II
Nuclear Power Plant for Pakistan; life-time support and fuel
supply for the safeguarded Chasma I (construction completed
in 1999) and II (construction likely completed by 2011)
nuclear power plants; supply of heavy water and operational
safety service to the safeguarded Karachi nuclear power
plant; and supply of fuel and operational safety service to
the two safeguarded research reactors at the Pakistan
Institute of Nuclear Science and Technology (PINSTECH).


7. (SBU) China,s statement did not make any reference to
other nuclear cooperation activities that it had committed to
undertake in the future. The ongoing work was
&grandfathered8 under the exception in Paragraph 4(c) of
INFCIRC/254/Rev.9/Part 1 to the NSG Guidelines provision
requiring full-scope safeguards as a condition of nuclear
supply of trigger-list items. For countries, like China,
that adhere to the NSG Guidelines after April 3, 1992, the
exception in Paragraph 4(c) (for agreements or contracts
drawn up prior to April 3, 1992) does not apply to
&agreements (to be) drawn up after their date of
adherence.8


8. (SBU) Even where the &grandfather8 exception applies (as
in the activities mentioned in para 5),nuclear supply must
be conducted under International Atomic Energy Agency (IAEA)
safeguards to meet China,s obligations under the Treaty on
the Non-Proliferation of Nuclear Weapons and the NSG. To
date, China and Pakistan have indicated that all bilateral
civil nuclear cooperation would be subject to IAEA
safeguards.


9. (S/REL TO US/FVEY) Intelligence reporting indicates that
&tentative agreement8 was reached in July 2008 between the
Pakistan Atomic Energy Commission and China National Nuclear
Corporation officials over plans to build two additional
reactors at Chasma AND two new reactors in Karachi.
Additional reporting with information from June indicated
that &funds apparently have not yet been allocated.8


10. (SBU) Washington has also taken into account the fact
that Pakistani Economic Affairs Division (EAD) Deputy
Secretary, Waqar Ali, recently downplayed the agreement to
supply two new reactors, saying that the various MOUs reached
during President Zardari,s visit (including agreement on
providing two nuclear power reactors) were intentionally
vague and not legally-binding, and that details were still
being negotiated on largely unspecified timeframes.
Department notes Post,s belief that the two reactors were
part of a plan made several years ago when the Chinese helped
construct the Chasma I and II reactors (REF D).


11. (SBU) Notwithstanding China and Pakistan,s assertions
that additional nuclear power reactors are a part of
&grandfathered8 cooperation, Washington notes that Chasma
III and IV, or any other possible reactors, were not referred
to in China,s written statement to the NSG at the time of
China,s NSG adherence. Therefore, expansion beyond the
scope of China,s 2004 statement is inconsistent with its NSG
commitments and would undermine the integrity of the regime.
The NSG Chair (Germany) has expressed concern about
additional nuclear cooperation between China and Pakistan
beyond what was declared to be grandfathered, as have other
NSG partners.

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ACTION REQUEST
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12. (SBU) Drawing on the key themes in para 14 below,
Department requests Post approach appropriate-level host
government interlocutors and report response via cable or
email to the points of contact identified in para 15.


13. (SBU) In light of our recently concluded civil nuclear
cooperation agreement with India, Washington understands that
there may be high sensitivity in the Disarmament wing of
Islamabad,s Foreign Affairs Ministry to any perceived U.S.
&digging8 into Pakistan,s proposed cooperation with China.
Washington appreciates Post,s decision on how, when, and
with whom to address this issue in Islamabad, but would
appreciate a timely response if at all feasible.

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KEY THEMES
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14. (S//REL PAKISTAN)

-- We appreciated President Zardari informing Assistant
Secretary Boucher about future cooperation with China in the
civil nuclear field. We wanted to follow up with you on this
matter, as promised.

-- We appreciate the sensitivity of discussing your
cooperation with China in this field. We feel it is very
important that we remain open with one another about how
Pakistan,s nuclear cooperation with other countries could
impact U.S. policy in international fora, including, perhaps,
in the Nuclear Suppliers Group (NSG).

-- Along with other NSG partners, we are having similar
conversations in Beijing.

-- We understand that China agreed to provide Pakistan two
more reactors, Chasma III and IV, once Chasma II is
completed. Was this agreement reached in an MOU? When was
this agreement reached?

-- What specific types of cooperation do you envision with
China in addition to the construction of Chasma III and IV?
Has China agreed to provide nuclear fuel?

-- (If other efforts are being considered) What would be the
expected timeline of implementation for these projects?

-- Have contracts been signed for these activities? How will
these projects be financed?

-- It is important for us to be clear about our position:
from what we understand, we believe your planned cooperation
with China, in particular to construct Chasma III and IV
reactors )- irrespective of their location within Pakistan
-- would go beyond the cooperation that was considered to be
&grandfathered8 for China, based on what China told the NSG
when it joined the NSG in 2004. As such, consensus approval
by the NSG of an exception to the NSG guidelines would be
needed in order to permit China, as an NSG member, to engage
in such supply.

-- Consensus among the 45-nation NSG for such an exception
would be very difficult and the United States does not
support such an exception.

-- The United States wants to help Pakistan with its energy
needs. You have abundant potential in coal, hydro, gas and
alternative energy. We are firmly committed, as are other,
to helping Pakistan develop this potential.

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POINTS OF CONTACT
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15. (U) If Post would like to consult further, over email,
prior to the delivery of this demarche, please feel free to
reach out to Krista Fisher, ISN/RA, (202-647-7544,
fisherkk@state.sgov.gov); Jason McClellan, SCA/RA,
(202-647-1136, mcclellanjc2@state.sgov.gov); or Tom West, P,
202-647-0994, westtw@state.sgov.gov). Department appreciates
Post conveying, by email and/or cable, any and all reactions
to the same list of contacts. End text.
RICE


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