U.S. to Fund Chinese Nuclear Agency

Human Events, Mar 7, 2005 by Carney, Timothy P

Agency Aided Iranian, Pakistani Weapons Programs

The arm of the Chinese government that has repeatedly aided the nuclear weapons programs of Pakistan and Iran is now in line for a $5-billion loan deal from the U.S. government-for the benefit of two major U.S. corporations.

The Export-Import Bank of the United States (Ex-Im), an independent federal agency that finances exports, has granted a preliminary commitment for the largest deal in it's history: $5 billion in loans and loan guarantees to the China National Nuclear Corp. (CNNC) to build nuclear power plants.

According to U.S. government reports, CNNC has been tied to at least three instances of nuclear-weapons technology proliferation involving Pakistan and Iran. Yet, the Chinesegovernment agency is still eligible for Ex-Im financing because of a Clinton Administration decision-made at the behest of U.S. businesses-not to punish CNNC for its actions.

Weapons Technology

Westinghouse Electric, which is owned by the U.K.'s state-owned British Nuclear Fuels Ltd., has developed a cutting-edge nuclear reactor, the AP-IOOO. As part of an ambitious plan to increase the country's nuclear power supply fourfold by 2020, state-owned CNNC is building four new reactors, two in Sanmen Nuclear Power Stations southwest of Shanghai and two in Yangjiang Nuclear Power Stations southwest of Hong Kong.

Westinghouse, which builds the AP-IOOO in Monroeville, Pa., is bidding for the contract against France's Areva and Russia's AtomStroyExport. The preliminary commitment from Ex-Im allows Westinghouse to promise China a very favorable finance packagecompliments of the U.S. taxpayer. China formally accepted bids on February 28.

In February 1996, the Washington Times reported that U.S. intelligence had found that CNNC had sold 5,000 ring magnets to the A.Q. Khan Research Laboratory in Pakistan. These magnets are critical in centrifuges used to enrich-weaponize-uranium. The State Department later confirmed this story. Congressional leaders called for sanctions on China or at least CNNC.

After the 1996 report that CNNC had sold the ring magnets to Pakistan, the Clinton Administration had suspended new Ex-Im financing to CNNC for one month but quickly removed all sanctions. A 2002 Congressional Research Service report states: "The Clinton Administration's decision-making was apparently complicated by considerations of trade interests of U.S. corporations with business in China."

The CRS report continues: "[Clinton] Administration officials reportedly considered imposing then waiving sanctions or focusing sanctions only on the China National Nuclear Corp., rather than large-scale sanctions affecting the entire PRC government and U.S. companies, such as Westinghouse Electric Corp. (which had deals pending with China National Nuclear Corporation) and Boeing Aircraft Co."

In May 1996 the State Department announced the U.S. would not sanction China and Pakistan. The Congressional Research Service reports, "Clinton Administration officials said China . . . reaffirmed its commitment to nuclear non-proliferation."

That fall, the Washington Times disclosed a CIA report that the China Nuclear Energy Industry Corp. (CNEIC), a wholly owned subsidiary of CNNC, had sold Pakistan high-temperature furnaces, which can be used in weaponizing uranium or plutonium. This deal happened in September, according to the Times, after China's "commitment" to the Clinton Administration.

Pakistan first tested a nuclear weapon in May 1998.

CNNC and CNEIC reportedly have helped Iran's effort to develop a nuclear weapon as well. In April 1995, the Washington Post reported that CNEIC was planning to sell Iran the equipment necessary to weaponize uranium. On March 13,1998, the Post reported similar findings that had apparently leaked out of a closed meeting of the Senate Foreign Relations Committee. The Post article stated:

"The Clinton Administration has uncovered new evidence that China tried to sell nuclear equipment with weapons applications to Iran and Pakistan within the past several weeks. The evidence was revealed during an unusual closed-door hearing of the Senate Foreign Relations Committee yesterday and undermines the administration's announced plan to certify that China has halted all efforts to export dangerous nuclear weapons technology...."

At the meeting, Clinton Administration officials reportedly revealed:

"... [E]fforts by Chinese manufacturers to sell nuclear components to the Iranian government program in charge of nuclear weapons and to facilities in Pakistan that are involved in nuclear weapons activities."

The article named CNEIC as the likely Chinese entity involved.

In July 1996 and January 1997, the Ex-Im board of directors approved two loans to help CNNC build nuclear power plants at the Qinshan nuclear facility near Shanghai. HUMAN EVENTS reported this in May 2001. That deal primarily benefited Bechtel, another beneficiary from the deal given preliminary approval by Ex-Im last month.

Undermining Bush

This $5-billion deal to aid CNNC seems to undercut two current efforts by the Bush Administration. First, President Bush has exhorted Congress to tighten its belt on spending. Approving Ex-Im's largest deal ever could undermine his credibility on that issue. Whether the $5 billion is made as a direct loan (which would come directly out of the U.S. Treasury) or a loan guarantee (for which a certain amount of cash would have to be set aside by the Treasury) or a combination of the two, it will take U.S. taxpayer dollars for the benefit of the Chinese regime. Whether the $5 billion ends up being a loan or a loan guarantee, the deal will put the U.S. taxpayer on the hook for the entire $5 billion in the case of a Chinese default.