In 1996, the Clinton Administration shepherded millions in loans, backed by the guarantee of taxpayer dollars, to China’s nuclear power program via the Export-Import Bank of the United States (Ex-Im).
The $359 million in loans were directed to a Chinese military program that oversees the development of all nuclear programs in China. The loans arrived in three phases, and China’s National Nuclear Power Corporation (CNNP) would eventually receive the money from China’s State Development Bank and use it to construct the Qinshan II nuclear reactor with the assistance of the American Bechtel Corporation and Westinghouse Electric Corporation.
Ex-Im operates with a wide berth to determine how it distributes loans, but at the time of this disbursement, it was required to seek authorization directly from the President for any loan to be granted to a communist regime. For his part, Clinton would have to make a determination that such loans were in the “national interest”. While it must make Congress aware of any loans over $100 million or granted for the construction of nuclear technology, it does not require their authorization.
In the first phase, some $36 million was requested for transfer to China to assist in the development of steam turbines with Westinghouse technology. Clinton, fulfilling his obligation, forwarded a letter to then-Speaker Newt Gingrich declaring the loan in line with our national interest—but went one step farther and authorized as much as $120 million to be distributed. In the second phase, the same process was followed with a second loan worth $323 million.
Bechtel is a private, family-owned corporation, which, in the year the loan was processed, had been padding the coffers of both political parties equally before lobbying the Ex-Im for the loan. Congress, which at the time was controlled by Republicans, sat on its hands and watched. And, as they watched, the story developed into a far more pernicious debacle.
Dr. Strangelove: Or How The US Learned To Stop Worrying And Watch As China Gave Pakistan The A-Bomb
This same Chinese nuclear corporation that was gifted with our patronage was itself responsible for assisting Pakistan in their development of nuclear weapons—just one aspect of a military relationship that has flourished since at least the 1960s.[mfn] https://web.archive.org/web/20150320073242/http://www2.gwu.edu/~nsarchiv/NSAEBB/NSAEBB114/index.htm[/mfn]
Writing for the National Review, Timothy P. Carney noted Clinton’s direct involvement in approving the loan—a necessity since enacted legislation at the time prohibited loans being made to communist regimes:
For this loan to go through, President Clinton had to sign a letter saying the loan was in our national interest. His signature on that letter was interesting in the light of his administration’s finding weeks before that CNNP had transferred to Pakistan nuclear-weapons materials.
So just what were those nuclear-weapons materials? In 1995, China transferred 5,000 ring magnets to Pakistan. A ring magnet is used in gas centrifuges in order to extract enriched, weapons-grade uranium from uranium gas. Due to their critical use in manufacturing weapons of mass destruction, the International Atomic Energy Agency, by way of international treaty, strictly controls the trade of this device.
This same year, the Clinton administration was pressuring Congress to roll back a number of laws prohibiting the transfer of military hardware to Pakistan. The campaign was a success and soon the Brown amendment was passed allowing for the transfer of $370 million in military equipment to the regime. At the same time, sections of the Pressler amendment, an amendment which blocked any form of foreign aid being sent to Pakistan, was modified to allow assistance to begin again. The Pressler amendment was specifically enacted as a penalty for Pakistan’s possession of nuclear weapons. That’s when the deal started to really explode, so to speak.
In 1998, just three years after the sale of the rings, and two years after the repeal of the pertinent portions of the Pressler amendment, Pakistan conducted its first nuclear test—though it may be more accurate to call it their first five nuclear tests, as all five bombs were detonated simultaneously in the Ras Koh Hills.
While the American government foolishly relented with its sanctions against them, the Pakistanis were secretly continuing their development of nuclear weapons. While the Americans were transferring weapons and non-military aid to the regime, the Pakistanis were busy plotting and purchasing nuclear tech from China behind their backs.
When former Senator Pressler, the same senator who spearheaded the rescinded amendment, realized how badly the wool had been pulled over the eyes of his peers, he took to the Senate floor:
It is unfortunate enough that our Nation would transfer to Pakistan, United States-made military equipment without any non-proliferation concession. Now we face the real and embarrassing prospect of having weakened United States non-proliferation law for Pakistan’s benefit at the same time Pakistan was expanding its nuclear weapons capability in violation of United States law. This irony would be humorous if the issue wasn’t so serious.
Accordingly, in view of the confirmations of these transfers, I have written today to President Clinton urging that he enforce the law. Specifically, any contemplated transfer of military equipment to Pakistan, as called for in the Brown amendment, should cease immediately. Further, sanctions called for under the law also should be applied to Chinese exporting companies.
Finally, Mr. President, it may be worth exploring if officials within the Clinton administration knew of this blatant violation of U.S. nonproliferation law while the administration was lobbying to pass the Brown amendment.
American Tech Continues To Build Reactors In China To This Day
The Qinshan II, constructed with technology and plans provided by Bechtel, was the second of such reactors as the name would suggest. The first Qinshan was also built by the American-based Westinghouse Electric Company, which is today owned by Canada’s Brookfield Business Partners, but is still headquartered in Pennsylvania.
In 2014, Chinese hackers targeted the nuclear power company even as new deals were being cemented between it and the regime. The hackers were snooping on high-level conversations between Westinghouse executives who were discussing concerns about China emerging as a future competitor in nuclear technology. All told, some 700,000 emails, documents, login credentials, and attachments were stolen—information that a federal indictment claimed would accelerate China’s domestic production manifold.
Westinghouse, now in the hands of Canadians and operating out of Pennsylvania, continues to assist China’s energy sector by exporting American technology. Last year, the fourth AP1000 reactor, a Westinghouse mainstay, went live, making it the 46th reactor unit operating in the country. They were also responsible for the construction of three other Chinese reactors in 2018.
China would take what they learned from Westinghouse and Bechtel to construct their own reactor dubbed the CAP1400 which they market as an upgrade to the AP1000. To date, China has used what they’ve learned from American technology to begin exporting their own nuclear reactors to Pakistan. The regime has ambitious plans to build “as many as 30 nuclear reactors” abroad as part of its Belt and Road initiative—a scheme to gain regional and lasting economic supremacy with a modern-day Silk Road.
If they succeed, CNNP can expect to generate well over $100 billion. And that less than half-billion loan from the Clinton era may be largely responsible for enabling them in their designs.
American Loans Were Cheaper For Our Enemies
Ex-Im is a government agency dedicated to providing low interest loans to foreign corporations and governments in the hopes that this will encourage the export of American goods abroad. But while there is some merit to the program, the agency itself has been plagued by corruption and special interest groups. In recent years, a significant portion of all loans have gone to Boeing. In some cases, those loans amounted to over 40% of the total doled out.
At the time of the loan transfer, American homeowners were paying 7.8% interest on their mortgage loans, businessmen seeking the prime rate could hope for 8.5%, and China, blessed with a loan backed by American tax dollars, was charged just 7.49%.
In other words, America was funding a foreign enterprise at a cheaper rate than was available for its own businesses and that foreign business grew from the seed capital to become a net-exporter, all while making illegal deals with third-party nations and hacking American corporations who they were partnered with.
China’s nuclear relationship with Pakistan continues to this day. In 2017, the two governments reached an agreement for the construction of a new nuclear reactor.