Paper no. 2330	12-Aug-2007
CHINA & THE 123 AGREEMENT: An Update By B. Raman Between July, 2005, when India and the US agreed in principle on civilian nuclear co-operation, and June, 2006, Beijing's reaction was unmistakably unenthusiastic. It sought to justify its lack of enthusiasm on the ground that such a special waiver to India, when it has not signed the Nuclear Non-Proliferation Treaty (NPT) and not given up its military nuclear ambitions, could weaken the global non-proliferation architecture. 2.  While Chinese Government spokespersons avoided outspoken comments on the India-US deal while making obvious their lack of enthusiasm for it, the government-controlled media in China observed no such restraint. For example, the "People's Daily" wrote on November 4, 2005: "This would be a hard blow on America's leading role in the global proliferation prevention system as well as the system itself. This will bring about a series of negative impacts.  Now that the United States buys another country in with nuclear technologies in defiance of international treaty, other nuclear suppliers also have their own partners of interest as well as good reasons to copy what the United States did.  A domino effect of nuclear proliferation, once turned into reality, will definitely lead to global nuclear proliferation and competition.  Always calling itself a 'guard' for nuclear proliferation prevention, the US often condemns other countries for irresponsible transfers but this time, it hesitates not a bit in revising laws, taking the lead in 'making an exception' (in the case of India).Such an act of the United States once again proves that America is not at all a 'guard' of NPT and the treaty, however, is no more than a disguise serving the US interest.  The most immediate reason for the foundation of NSG (Nuclear Suppliers Group) was India's first nuclear test in 1974, after which the United States instantly cut off its nuclear cooperation with India and established the NSG in 1975 to restrict selling sensitive nuclear technologies and raw materials to non-NPT countries.  Over the past 30 years, the United States has always been trying to prevent India from access to nuclear technologies. Today, however, the United States wants a change." 3.  The editorial came in the wake of a meeting of the Nuclear Suppliers' Group (NSG) on October 20, 2005, at which a US representative briefed the NSG members on the Indo-US deal and spoke of the US intention to move for the lifting of the NSG restrictions against India after the passage of the enabling legislation by the US Congress and the finalisation of a formal bilateral agreement (the 123 Agreement now signed) by India and the US. 4.. The lack of enthusiasm for the Indo-US nuclear deal was again evident at the time of the visit of President George Bush to India in the first week of March, 2006.  In the daily media briefing of the Chinese Foreign Office at Beijing on March 2, 2006, its spokesperson Qin Gang said: "India should abandon nuclear weapons and strengthen atomic safeguards.  India should sign the NPT and also dismantle its nuclear weapons.  As a signatory country, China hopes non-signatory countries will join it as soon as possible as non-nuclear weapon states, thereby contributing to strengthening the international non-proliferation regime.  China hopes that concerned countries developing cooperation in peaceful nuclear uses will pay attention to these efforts. The cooperation should conform with the rules of international non-proliferation mechanisms." 5.  This negative attitude was in a great measure caused by the Chinese suspicion that the Indo-US nuclear deal was the US' quid pro quo for an Indian willingness to co-operate with the US in countering the growing Chinese power in the Asian region. This suspicion was strengthened when our Prime Minister, Dr. Manmohan Singh, decided not to attend the summit meeting of the Shanghai Co-operation Organisation (SCO) as an observer at Shanghai in June, 2006. The Indian explanation that since India was only an observer of the SCO and not a full-fledged member, its participation at the level of the head of Government was not warranted did not seem convincing to Beijing. The Prime Minister's decision not to go was interpreted as due to the US suspicion that one of the main objectives of the SCO was to counter the US presence and role in the Central Asian Republics. As a result, China's lack of enthusiasm for the Indo-US nuclear deal continued. 6.  In the meanwhile, President Pervez Musharraf of Pakistan initiated a campaign to counter the Indo-US deal at two levels. He did not oppose the deal. Nor did Pakistan energetically try to have the deal disapproved by the US Congress through Congressmen and Senators sympathetic to it. Instead, it sought to counter the deal by using the following arguments. First, it will be discriminatory to Pakistan if it was not made applicable to it too. Second, it will create a military nuclear asymmetry in the sub-continent by enabling India to divert its domestic stock of fuel for military purposes, while using the imported fuel for civilian purposes under international safeguards. Thus, it will have an adverse effect on Pakistan's national security. 7.  The US rejected the Pakistani arguments by pointing out that Pakistan's economy was unlikely to grow as rapidly as the Indian economy in the short and medium terms and hence it should be possible to meet its energy requirements from conventional sources. The US also repeatedly made it clear that in view of the role of Dr. A. Q. Khan, the so-called father of Pakistan's atomic bomb, and some of his colleagues in clandestinely supplying nuclear technology to Iran, North Korea and Libya, Pakistan cannot be treated on par with India, which had an unimpeachable record of non-proliferation. 8.  While sticking to his arguments, Musharraf requested the Chinese leaders during his State visit to China in February, 2006, for Chinese assistance in the construction of six more nuclear power stations, with a capacity of 600 or 900 MWS each. The Chinese reportedly agreed in principle to supply two stations of 300 MWs each to be followed later by four more. This subject again figured in the General's bilateral discussions with Mr.HU in the margins of the SCO summit in June, 2006, and in the subsequent discussions between the officials of the two countries, who met at Islamabad and Beijing for doing the preparatory work for  Chinese President  Hu Jintao's visit to Pakistan from November 23 to 26. 9. Gen. Musharraf and his officials were so confident that an agreement in principle for the construction of two new nuclear power stations (Chashma III and IV ) would be initialed during Mr. Hu's visit that they even set up a site selection task force. 10. Then for reasons, which were not  clear, there were indications of changes in the Chinese attitude---less negative towards the Indo-US nuclear deal and increasingly guarded on the Pakistani request for new nuclear power stations. In the case of India, the changing Chinese attitude was reflected in the daily media briefing of the Foreign Office spokesperson and in a media interview given by the Chinese Ambassador in New Delhi. In the case of Pakistan, the change was reflected in the daily media briefings of the spokespersons of the two Foreign Offices at Beijing and Islamabad. 11.  In an interview to the Press Trust of India (PTI), which was circulated by the agency on November 20, 2006, before the arrival of Mr.Hu in New Delhi, Mr. Sun Yuxi, the Chinese Ambassador in New Delhi, was reported to have stated as follows: ``Every country has the right to develop energy in any form, including nuclear form, to meet its development needs.  The objectives of non-proliferation should also be maintained and strengthened." When it was pointed out by the agency that  India had contended that it abided by all non-proliferation rules although it had not signed the NPT, he said: ``Anything which can strengthen non-proliferation efforts should be welcomed by the international community.'' He added that Foreign Secretary Shivshankar Menon had recently apprised him about the issue and told him that India was trying to strengthen the non-proliferation regime.  “I (would) like to take his word... If India is making effort, if any effort (is being made) to strengthen non-proliferation, I agree,'' he said.  The Chinese envoy, however, refused to comment on the Indo-U.S. civil nuclear deal on the ground that it was a bilateral issue between India and the US. 12.  A few hours later, in response to a question on the subject, Jiang Yu, spokesperson of the Chinese Foreign Ministry, said at Beijing: "China has sought more information and explanations from India to address the concerns of some countries on the Indo-US civilian nuclear deal.  We hope that Indian side can attach importance to these opinions and provide more information and explanations.  Chinese side has noted that during the deliberations in the NSG regarding US-India nuclear cooperation, some countries expressed concern and doubts.  The Chinese side will continue to participate in these relevant discussions with an earnest and responsible attitude." 13.  Almost coinciding with these explanations at New Delhi and Beijing, the spokespersons of the Foreign Ministries of Pakistan and China tried to discourage expectations in Pakistan that Gen. Musharraf and Mr.Hu would be initialling a memorandum of understanding on the Chinese supply of two more nuclear power stations. They described the reports in this regard, which had been appearing in the Pakistani media for weeks before Mr. Hu's visit, as speculative and not based on facts. 14.  The Joint Declaration issued on November 21, 2006, at the end of the formal talks between Dr. Manmohan Singh and Mr.Hu said: "Energy security constitutes a vital and strategic issue for producing and consuming countries alike. It is consistent with the common interest of the two sides to establish an international energy order, which is fair, equitable, secure and stable, and to the benefit of the entire international community. Both sides shall also make joint efforts, bilaterally as well as in multilateral fora, to diversify the global energy mix and to increase the share in it of renewable energy sources. Global energy systems should take into account and meet the energy needs of both countries, as part and parcel of a stable, predictable, secure and clean energy future. In this context, international civilian nuclear cooperation should be advanced through innovative and forward-looking approaches, while safeguarding the effectiveness of international non-proliferation principles.  Both countries are committed to non-proliferation objectives and agree to expand their dialogue on the related issues, in bilateral and international fora." 15. The reference to promotion of international civilian nuclear co-operation through "innovative and forward-looking approaches" was interpreted, with some validity, as confirming the evolution of the Chinese view on the Indo-US deal from negative to hopefully positive. As a result, there was a greater confidence in New Delhi that China might  not oppose the removal of restrictions applicable to India when the matter formally came up before the NSG at the initiative of the US. This guarded optimism was also evident from an interview given by Shri Pranab Mukherjee, the Indian Minister For External Affairs, to Shri Karan Thapar of the IBN-CNN TV channel on November 26. The relevant extract is annexed. 16.  Dr. Manmohan Singh and Mr.Hu had formal talks hardly for a little more than an hour. The carefully-formulated position on the nuclear issue could not have been the outcome of such a brief meeting. The final version of the Joint Declaration was already ready before the two leaders formally met and approved it. It had been drafted by the officials of the two countries in their preparatory meetings in the weeks before Mr. Hu's arrival. The change in the Chinese position must have been the outcome of these discussions in the weeks before Mr. Hu's visit and not a sudden change on the eve of the summit or at the summit itself. 17.  As against this, the change in the Chinese position with regard to Pakistan's request for six more nuclear power stations came about suddenly in the days (not weeks) before Mr. Hu's arrival in Islamabad.  Well-informed Pakistani sources attributed the more guarded Chinese position to the bilateral discussions between President George Bush and Mr.Hu at Hanoi in the margins of the summit of the Asia Pacific Economic Co-operation (APEC) Organisation on November 18 and 19, 2006. The speculation was that during these bilateral discussions, Mr. Bush pointed out to Mr.Hu that the Chinese supply of new nuclear power stations to Pakistan could not be projected as a continuation of the Chinese assistance to Pakistan under a 1985 bilateral co-operation treaty under which CHASHMA I and CHASHMA II were given and hence would need the clearance of the NSG. According to this speculation, Mr. Bush was also reported to have referred to the Pakistani rejection of repeated requests from the International Atomic Energy Agency (IAEA) to hand over Dr. A. Q. Khan for an independent interrogation and pointed out that the Chinese supply of the new power stations could encourage Pakistan's non-cooperation with the IAEA. 18. It was believed by these sources that Beijing, which has been projecting itself as a responsible and co-operative interlocutor of the US, Japan and South Korea  on the question of North Korea's nuclear test and has won praise for its role in bringing North Korea back to the negotiating table, did not want this positive image to be dented by disregarding the reservations of Mr. Bush relating to the supply of new power stations to Pakistan. It, therefore, changed its stance at the last minute. 19.  There was no substantive reference to the co-operation between China and Pakistan in the field of civilian nuclear energy during Mr. Hu's visit to Pakistan.  The joint statement issued on November 25, 2006, by Gen. Musharraf and Mr.Hu said: “The two sides also agreed to strengthen cooperation in the energy sector, including fossil fuels, coal, hydro-power, nuclear power, renewable sources of energy as well as in the mining and resources sector.” Addressing a press conference after his talks with Gen. Musharraf, Mr.Hu said in reply to a question on nuclear co-operation: "Cooperation in the energy sector is an important component in the relationship between the two countries. We reached a common understanding on strengthening energy cooperation. We would continue this cooperation in future as well." While Mr.Hu himself did not refer to any future supply of new nuclear power stations, some Pakistani analysts  interpreted Mr. Hu's remarks as indicating a willingness to supply more nuclear power stations. 20.Pakistani officials and analysts close to the Government tried to give the impression that the fact that no memorandum of understanding was signed did not mean that the Chinese were not going ahead with the project. But, the Chinese Foreign Office spokesperson was very clear on this point during a media briefing on November 20, 2006, at Beijing. He said: "As far as I know, there will be no new arrangement in this area." 21. Interestingly, in reply to a question on this subject, Mr. Sean McCormack, a spokesperson of the US State Department, said in Washington as follows on November 27,2006: "The US welcomes  strong ties between China and Pakistan and urges China to play a constructive role in world affairs. We encourage development of bilateral relations between Pakistan and its neighbours. China and Pakistan have a long history of relations. As for any sort of nuclear angle on this, I’m not aware of anything new that was announced or is allowed for by these agreements other than what was already grandfathered in by the Nuclear Suppliers Group. So I don’t think there’s anything new on that front.” 22.What he apparently meant was that in addition to the Chashma I and Chashma II power stations given by China under an old agreement of 1985 for civilian nuclear co-operation between China and Pakistan, there would be nothing new  for the present till approved by the NSG.  What was significant was that China paid attention to the US reservations on this subject instead of going ahead with its assistance as it did in the past in matters such as the supply of M-9 and M-11 missiles and nuclear equipment to Pakistan. This new attention to US reservations is what the Americans welcomed as China's constructive role. 23.There was no reference to China's possible assistance to Pakistan for the construction of Chashma IV and V for nearly seven months ---either from the Pakistani side or from the Chinese side. On July 18, 2007, there was a surprising reference to it in a Chinese statement on the Pakistani commando action in the Lal Masjid. This caused anger against the Chinese, who were suspected to have forced Musharraf to order the commando action after the kidnapping of  six Chinese women by some students of the girls' madrasa attached to the Masjid. The "China Daily" reported as follows on July 18, 2007: "China did not push Pakistan for operations against the Red Mosque, Chinese Ambassador to Pakistan Luo Zhaohui said. It is the consistent policy of China not to meddle in the domestic affairs of other countries, he told The News, a major Pakistani daily. Luo said he was considering an invitation to visit the mosque but it was made impossible due to the unstable security situation. "We enjoy very cordial relations with the ruling party here and likewise we maintain friendly ties with other segments of the society including the political parties of the opposition," he said.  "I had no knowledge as to why Chinese nationals are being targeted and were the victims in five recent incidents", Luo said, referring to several Chinese who were killed in that country.  He said if Chinese continued to be targeted, cooperation between the two countries could suffer. To protect the 3,000 Chinese working in Pakistan, China and Pakistan have decided to set up a Joint Task Force (JTF), the Ambassador revealed. China and Pakistan are still close friends and neighbors, Luo said. The Chinese Government is in discussions about proposed Chashma-III and IV for nuclear power projects. Chashma-II will be completed early next year, he said." 24.Apparently concerned over the anti-Chinese turn in some sections of public opinion in the tribal areas, the Chinese once again started talking of possible Chinese assistance for the construction of Chashma III and  IV in order to reassure Pakistani public opinion that China would continue to be a steadfast friend of Pakistan. China's reversion to its pre-November,2006, positive stand on Chashma III and IV also came in the wake of reported Chinese concerns over the real purpose of the reported concert of democracies involving India, the US, Japan and Australia and moves for a joint naval exercise involving these four countries plus Singapore. 25.On August 2,2007,Pakistan's  National Command Authority met under the  chairmanship of  President General Pervez Musharraf, to discuss, inter alia, India's 123 agreement with the US. A statement issued at the end of the meeting said:“The US-India nuclear agreement would have implications on strategic stability of the region as it would enable India to produce significant quantities of fissile material and nuclear weapons from un-safeguarded nuclear reactors.The objective of strategic stability in South Asia and the global non-proliferation regime would have been better served if the US had considered a package approach for Pakistan and India with a view to preventing a nuclear arms race in the region and promoting nuclear restraints.While continuing to act with responsibility in maintaining credible minimum deterrence and avoiding an arms race, Pakistan will neither be oblivious to its security requirements, nor to the needs of its economic development which demand growth in the energy sector.The meeting reviewed Pakistan’s objective and plans for civil nuclear power generation under IAEA safeguards, which is part of the overall energy strategy to meet the requirements of economic growth in the country. This objective will be pursued on priority basis especially in view of the increasing oil prices." 26. A Press Trust of India despatch from Beijing after the conclusion of the 123 agreement has cited a Chinese spokesperson as indicating that China would adopt a "creative" approach to the development. This recalls the use of the expression "innovative" at the time of Hu's visit to India. 27. When the issue of the NSG relaxing or lifting its present restrictions  on India comes up before it formally in the wake of the 123 agreement, three Scenarios are possible:   SCENARIO I: China does not agree to it. This Scenario is unlikely as this could affect the forward momentum in Indo-Chinese relations. SCENARIO II: China agrees to it without any conditions in the interest of its good relations with India without worrying about its impact on its relations with Pakistan. It seems to be an over-optimistic scenario for the present. SCENARIO III: China agrees to it subject to the condition that there is a similar relaxation of the NSG guidelines in the case of Pakistan so that it could sell Chashmas III and IV to Pakistan.This Scenario was posed to Shri Pranab Mukherjee  by Shri Karan Thapar. His answers were evasive, but one got the impression that India would not be unduly concerned over this so long as the restrictions on its international purchases are lifted. 28. In the eventuality of Scenario III materialising, there could be a delay in the implementation of the 123 agreement due to the following reasons:   The US might insist that before clearing the supply of Chashma III and IV to Pakistan, China and Pakistan should sign a formal agreement similar to the Indo-US deal under which Pakistan would separate its military and civilian infrastructure and sign a Pakistan-centric safeguards agreement with the IAEA, which would apply to its civilian infrastructure. There could be Congressional opposition to the US agreeing to this till the Pakistan Government makes A.Q.Khan available for interrogation by IAEA experts. (The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and presently, Director, Institute For Topical Studies, Chennai.He is also associated with the Chennai Centre For China studies. E-Mail: seventyone2@gmail.com) ANNEXURE EXTRACTS FROM SHRI PRANAB MUKHERJEE'S INTERVIEW TO SHRI KARAN THAPAR Karan Thapar: Hello and welcome to Devil’s Advocate. As attention starts to focus on India’s relationship with China and United States, those are the two key issues I shall raise today in an exclusive interview with External Affairs Minister Pranab Mukherjee. Mr Mukherjee, let’s start with the Chinese President’s visit to India, which has just been concluded. The joint declaration says, “International civilian nuclear cooperation should be advanced through innovative and forward-looking approaches while safeguarding the effectiveness of international non-proliferation principles.” Do you interpret that as an endorsement of the Indo-US nuclear deal? Pranab Mukherjee: No. After all we are also for non-proliferation. At the same time, what is being done with India, especially with regard to the Indo-US nuclear deal, they are giving a special treatment to India because of India’s track record related to non-proliferation. Karan Thapar: So, you’re saying that China has not endorsed it? Pranab Mukherjee: No. China has endorsed it. I am just explaining the ‘innovative’ word. Karan Thapar: So, when officials of your ministry have given an assessment to The Hindu, as they did on Friday, to say that China will not come in the way of any decisions of the Nuclear Suppliers Group to lift restrictions on international civilian nuclear cooperation with India,” you agree with that agreement? Pranab Mukherjee: I hope so. Karan Thapar: When you say hope so, is there some doubt? Is there some uncertainty? Pranab Mukherjee: No. There is no uncertainty. I hope that they will not come in the way. Karan Thapar: So you’re confident that China will not come in the way? Pranab Mukherjee: Why are you playing with words? In diplomacy, we don't play with words. What we say is we wait till the official outcome comes. Karan Thapar: But you are confident? Pranab Mukherjee: I am confident. Karan Thapar: There is a lot of speculation that China might end up offering a similar nuclear deal to Pakistan. So far in the newspapers, there is no mention of it. But if it were to have been offered quietly and not made public, would you be concerned? Pranab Mukherjee: We shall have to recognise the fact that different countries have different relationships with different countries, keeping in view their own perspectives. Relationship of one country need not stand in the relationship of the other country. Therefore, we shall have to keep that fact always in view while assessing the relationship between two countries. Karan Thapar: Very interesting. Most people will interpret that to mean that if China does give Pakistan a nuclear deal similar to the Indo-US nuclear deal, India will have no objection? Pranab Mukherjee: It's not a question of my objection or non-objection. It's a question of what happens in the ground reality. Therefore, we shall have to keep in view… For instance, Pakistan is being supplied with sophisticated weapons by the USA over a long period.
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