September 25, 1997

MEMORANDUM TO: OPINION LEADERS

FROM: GARY SCHMITT, Executive Director

SUBJECT: U.S.-CHINA NUCLEAR COOPERATION

The Reagan Administration negotiated an agreement on nuclear cooperation with China in the early 1980s. In late 1985, Congress passed a joint resolution approving the agreement but noted that, prior to its actual implementation, the Atomic Energy Act requires the president to certify that any state with whom we were signing an agreement not be involved in helping states who did not have nuclear weapons gain that capability. Ignoring China’s history as a proliferator, the Clinton Administration intends to make that certification for China in anticipation of President Jiang Zemin’s visit to the U.S. next month.

Until now, no president has dared take that step. And with good reason. China has, by its actions, made it clear that it believes proliferation is in its interest. Beijing understands that the proliferation of strategic weaponry and weapons of mass destruction has the effect of reducing U.S. military supremacy and complicating the exercise of American leadership in key regions of the world. Since the end of the Cold War, the spread of weapons and weapons of mass destruction has become an integral feature of a Chinese geopolitical strategy designed to undermine what it openly refers to as American “hegemony” and, in turn, enhance its own position as an emerging power.

Turning a blind eye to both China’s proliferation practices and its strategic goals, the Clinton White House will certify that China is, in effect, a reliable partner with whom the United States can share its most sensitive, civilian nuclear technology. Stated simply, the administration’s view is that (based on a few months of apparent good behavior) China deserves certification and that (based on speculative estimates of the corporate profits to be earned) the decision will be good for the U.S. nuclear industry.

But, as Henry Sokolski suggests in the following memorandum written for the Project, the actual result will almost certainly be much different. By certifying China now, the administration will be lowering (once again) our nonproliferation standards. And it will also, in Beijing’s mind, reaffirm the view that the Clinton White House is incapable of carrying out a policy of “engagement” that is both resolute when it comes to American security and above being compromised by elect commercial interests.

Certifying China: A Dubious Nuclear Decision

Henry Sokolski

Having sold China advanced computers, satellites, and a myriad of other militarily useful technology, the Clinton Administration now wants to offer it sensitive, civilian nuclear technology at the upcoming visit of Chinese president Jiang Zemin to Washington. Until now, U.S. law (P.L.99-183 & P.L.101-246) blocked such commerce by requiring the president first to certify that China is not helping other nations acquire nuclear weapons. To date, no president has felt comfortable making such a certification given China’s notorious proliferation record. President Clinton, anxious to please U.S. industry and China, is ready to make that certification and sell that decision to Capitol Hill.

Sixty-two Republican and Democratic members of Congress, however, are not buying. In a letter sent to the president on July 31, they note that no “substantial evidence” exists that China is in fact committed to ending its proliferation practices and that certification will only make it easier for Iran and Pakistan to secure nuclear weapons assistance.

Why would the White House take such a step and risk increasing the very proliferation it claims it wants to stop? First, the State Department has convinced itself that China’s most recent nonproliferation pledges are believable and that nuclear trade is an excellent way “to engage” the PRC’s nuclear and military elites. And, second, the Commerce Department and the U.S. nuclear industry believe there are billions to be made in new reactor sales -- up to $15 billion over the next 14 years.

But is this progress in nonproliferation on China’s part real? And will U.S. sales of nuclear technology actually result in the profits being touted? The answer to both questions is almost certainly no.

As for the profits supposedly to be made by U.S. nuclear vendors, the only U.S. firms to invest heavily in China’s nuclear future so far -- Westinghouse and Bechtel -- have done so, not with their own money, but with $800 million in taxpayer-supported Export Import Bank loans. Why no private financing? The reason is simple: it’s too risky. China’s record of paying off its loans in connection with state-run, high-technology projects is poor. Presumably, once the president certifies China’s compliance with U.S. non-proliferation statutes, and deals between China and U.S. corporations are struck, the U.S. Congress will be asked to approve billions more in Export Import and Overseas Investment Bank loan guarantees to cover possible losses.

And what about the size of the sales claimed by industry? Well, it sounds good but, revealingly, the firm talking the loudest about possible sales to China ($60 billion over the next 25 years) is the same firm -- Westinghouse -- that is reportedly trying to sell off its money-losing nuclear division to the German firm Siemens. For their part, the Chinese have been entirely above aboard about what they expect from these sales. According to their own nuclear engineers, their interest in buying American nuclear technology and plants extends only until they can reverse engineer the technology and build plants on their own.

As iffy as the claims of future profits in making nuclear deals with China are, they are no less dubious than State Department claims about China “getting religion” when it comes to nonproliferation. This is a refrain that State has sung consistently for the past fifteen years. Indeed, in 1983, when the first nuclear coop-eration agreement with China was signed, State Department officials assured Congress that China had pledged not to proliferate. Yet, at that very time, China was helping Algeria covertly build a nuclear reactor suspected of being used to build nuclear bombs and clandestinely giving Pakistan the technology it needed to build its own nuclear weapons. Today, despite all the diplomatic hoopla about China’s new export controls (cynically timed to correspond with the administration’s announcement), not much has changed. China is still suspected of helping Pakistan with its illicit nuclear weapons program and of offering Iran nuclear reactors and the plans for facilities to fabricate materials for making bombs. And the CIA continues to identify China as one of the world’s worst proliferators, providing Iran and Pakistan, for example, with missile and chemical weapons technology as well.

Furthermore, China refuses to join the Nuclear Suppliers Group (NSG). Not a single state that publicly acknowledges having nuclear weapons and with whom the U.S. has signed a nuclear cooperation agreement has failed to become a member. China, however, will not join. Why? Because the NSG prohibits the transfer of nuclear materials to any nation, like Pakistan, that has not yet placed all of its nuclear materials and activities under international inspection.

So, what should be done? President Clinton is expected to make the necessary certification about China’s compliance with the nonproliferation laws sometime before Jiang Zemin’s visit. Before any nuclear cooperation agreement with China goes into force, however, Congress should take the following steps.

1. Make sure that this supposed money-making agreement does not end up burdening U.S. taxpayers. To ensure that it doesn’t, Congress should prohibit the use of U.S. taxpayer loans or loan guarantees to implement this or any other nuclear cooperation accord. This should be U.S. policy whether one is in favor of the agreement of not.

2. At a minimum, Congress should condition implementation of the agreement upon China’s joining the Nuclear Suppliers Group. Given China’s proliferation history, asking it to abide by the standard that every other nuclear weapons state with which the U.S. has a nuclear cooperation agreement is the least the government should require. Anything less would establish a lower nonproliferation standard for China that is sure to encourage proliferation later.

3. The House and Senate intelligence committees should be asked to examine the intelligence upon which the administration is making its assessment of China’s recent and current nuclear, chemical, biological and missile weapons proliferation activities. The committees should report their findings to the Majority and Minority leadership in both houses and, as needed, to the leadership of relevant committees. The report should be prepared before Congress goes out of session and before the end of the 30-day period between when the determination is announced by the president and when the agreement takes effect. If based on that report, Congress believes the administration’s certification is unwise or premature, then, they should take whatever legislative steps are necessary to block the agreement’s implementation.