U.S. funding nuclear plant in China

Human Events, May 21, 2001 by Carney, Timothy P

The United States may be facing a national energy crisis-one that will be punctuated by blackouts in California and probably many other states this summer-- but across the Pacific Ocean in Shanghai, the Jiangnan Shipyards will be running at full power building warships for the Communist Chinese regime, thanks to funding provided by the U.S. government.

The Export-Import Bank of the United States has provided funding to help two U.S. corporations-Westinghouse Electric and Bechtel Power-to help the People's Republic of China (PRC) build the Qinshan. nuclear power plant near Shanghai.

Thanks to inaction by the Republicancontrolled Congress, and a statutory notice of approval signed by President Bill Clinton, the same American families that are now paying sky-high energy prices in the United States are also loaning money at low interest rates to the regime in Beijing to build this nuclear plant.

Two New Reactors

The Ex-Im Bank is a federal agency that receives an annual appropriation from Congress. Originally founded in 1934, it was rechartered in 1945, with the purpose of facilitating U.S. exports by providing loans or loan guarantees to U.S sellers or lenders, or to foreign buyers or banks. Despite its name, the Export-Import Bank no longer deals with imports.

Last year, Congress provided it with $863 million in tax dollars.

Although the bank's board of directors has broad discretion over how to use the tax dollars it is given, it must follow some legal guidelines. For example, it cannot finance loans to "Marxist-Leninist" countries, including the People's Republic of China, unless the President determines such a loan to be "in the national interest."

Also, it must notify Congress of all loans or loan guarantees over $100 million, or of any action it takes that would help the construction or operation of nuclear power facilities, but congressional approval is not required. The bank's board of directors serves at the pleasure of the President, with the advice and consent of the Senate.

The Ex-Im Bank, together with Westinghouse and Bechtel, has cooperated with the Chinese National Nuclear Corp. and the State Development Bank-both arms of the PRC government-to help build the nuclear power plant at Qinshan.

On March 21, 1995, Nucleonics Week reported that Westinghouse Electric Corp. had announced that it would "provide steam generators, reactor coolant pumps, and related motors" for two new reactors at Qinshan. Qinshan, which is 75 miles south of Shanghai, was already home to one nuclear reactor that -had been built in the late 1980s, also with help from Westinghouse.

According to the minutes of a July 9, 1996, Export-Import Bank board meeting, the directors approved a direct loan of $36,347,390 to China's State Development Bank (which serves as the treasury of the PRC) to help the Chinese buy "steam turbines and auxiliaries" from Westinghouse for the second phase of Qinshan.

Before the loan could be made final, the law required President Clinton to declare that it was in the national interest. He did so in a letter to the secretary of state dated June 29, 1996. The letter actually specified an even larger loan. It read: "I determine that it is in the national interest for the ExportImport Bank of the United States to extend a loan in the amount of approximately $120 million to the People's Republic of China in connection with the purchase of (1) nonnuclear island balance of plant equipment and services and (2) Westinghouse engineering services to the nuclear island."

The notification of this loan that the Continued on page 8 Export-Import Bank was required to send to Congress was transmitted in the form of a letter to then-House Speaker Newt Gingrich (R.-Ga.) and then-Vice President Al Gore in his constitutional role as president of the Senate. Gingrich and Gore forwarded the messages to the banking committees in their respective chambers.

Ex-Im officials told HUMAN EVENTS that Congress rarely acts on such letters, and there is no evidence of any congressional action in this case.

The same process was followed for a second loan of $323 million that was approved by the Export-Import Bank board of directors on Jan. 14, 1997. This loan financed Bechtel's sale of non-nuclear plant components to the China National Nuclear Corp. Days after winning reelection, Clinton declared this loan also to be in "the national interest." It was used for the third phase of the Qinshan plant.

China was required to pay back the Bechtel loan in 30 semi-annual payments beginning no later than April 15, 2004-more than seven years after the loan was approved, and after Bechtel expects to be done with the work, according to information posted on the company's website. The interest rate on the loan, set by a formula called the Commercial Interest Reference Rates, was 7.49%. At that time, the prime rate in the United States was 8.25%.

The Chinese Communists thus received financing for a nuclear plant from the U.S. government at a cheaper rate than most American businessmen could get financing from a domestic bank. The rate was even below the 7.8% then being paid by Americans for a home mortgage.