The Nuclear Suppliers Group at the Crossroads

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The Nuclear Suppliers Group at the Crossroads

The Group needs to adhere to its principles, if its role in nonproliferation is to continue.

Members of the Nuclear Suppliers Group (NSG) will meet in Prague this month for the group’s annual plenary meeting. At the top of this year’s agenda will be the completion of the first-ever comprehensive review of the NSG’s export control lists. This is a priority for the group given the complex and expanding landscape of global nuclear commerce and the associated proliferation risks. There are, however, two other issues looming over the NSG – India’s bid for membership and China’s continued flouting of the export guidelines. These issues have significant implications for the credibility of the NSG and its ability to support non-proliferation norms and international security.

The NSG’s Background

The NSG was established in 1975 to supplement the Non-Proliferation Treaty (NPT) by addressing nuclear commerce. The need for it became clear when the NPT, which was signed in 1968 and entered into force in 1970, failed to prevent India from conducting a “peaceful nuclear explosion.”

With the goal of preventing the spread of nuclear technology proliferation, seven nuclear supplier states established the NSG. It has since grown to include 47 participating governments (PGs) and has become the principle multilateral export control body for nuclear-related trade. Prospective members are evaluated on several factors and admission must be agreed on by all PGs. One inflexible criterion in this determination has been the adherence to the NPT or a nuclear-weapon-free-zone treaty – effectively barring any non-NPT nuclear weapon state. 

India’s Prospective Membership

India is not a party to the NPT. It could not become a nuclear-weapon state under the treaty, which limited admission to the nuclear club to the five states that tested before 1967. By testing after that date and by continuing to pursue nuclear weapons rather than accede to the NPT, India has long been a nuclear outlier. As such, it has been kept outside of the NSG and until recently barred from international nuclear commerce. While it has expressed interest in joining the NSG, New Delhi is waiting for broad international support before formally applying to the group.

Such support appears to be gaining momentum. During a state visit to India in November 2010, President Barack Obama announced that the U.S. would back India’s membership in the NSG, as well as the other multilateral export control regimes: the Missile Technology Control Regime (MTCR), the Australian Group, and the Wassanaar Arrangement. Several other countries have since echoed their support, especially those hoping to profit from India’s nuclear market.

This support is derived from the U.S.-led effort over the last few years to incorporate India into the global nuclear order. The watershed event in this process occurred in 2008, when the NSG issued an India-specific waiver allowing it to engage in nuclear trade. India has since signed civilian nuclear cooperation agreements with the U.S., UK, France, Canada, Argentina, Russia, Kazakhstan, Mongolia, Namibia, and South Korea.

With plans to perfect developmental nuclear technologies such as fast-breeder and thorium-based reactors, India also has ambitions to become a global nuclear supplier. By securing membership in the NSG, India would have a voice in determining new export guidelines related to those technologies – an influence not granted under its waiver for nuclear commerce. 

Prior to the last two NSG plenaries, the U.S. circulated white papers outlining how membership criteria could be adjusted to accommodate India. These efforts, however, made little headway. Press releases following those plenaries vaguely recounted that the body “continued to consider all aspects of the implementation of the 2008 Statement on Civil Nuclear Cooperation with India and discussed the NSG relationship with India.”

The issue appears to be gaining more traction this year. Following an informal meeting this past March in Vienna, it was reported that the U.S., U.K., France, and Russia all voiced support for an Indian NSG membership bid, while China was opposed. It also was noted that Japan, as well as certain European states, including the Netherlands, Switzerland, and Ireland, were not particularly favorable to the idea. However, none of the PGs publicly expressed intent to block such a move.

Implications of India’s Membership for the NSG

Critics of the 2008 NSG-waiver argued that the exemption to a long-standing policy weakened the nonproliferation regime – a trend India’s membership would only exacerbate. From a nonproliferation perspective, India’s NSG participation has several implications.

First, it threatens the credibility of the NSG, particularly given the irony of adding a member whose action—the 1974 “peaceful” nuclear detonation—was the very impetus for the body’s creation. India’s acceptance would make it the first non-NPT PG. Such a step would be a significant shift in NSG policy. It would trigger increased lobbying efforts for NSG membership by other nuclear outliers like Pakistan. Their likely denial would encourage charges of discrimination against the NSG, further damaging its credibility.

Second, it impacts the efficacy of the group. The NSG is a consensus body that requires unanimous agreement on all actions. Therefore, new membership directly affects the NSG’s ability to function effectively in the evolving landscape of nuclear commerce. This difficulty was highlighted by the seven years it took to reach a consensus on new guidelines for enrichment and reprocessing technology (ENR) – an action to which India would not have consented. There is little to suggest that India would become an advocate of strong trade controls. It is more likely that India would try to relax existing guidelines or be an obstacle to addressing future proliferation threats.

Third, it would further solidify the perception of India as an accepted non-NPT nuclear-weapon state. This is a dangerous precedent to establish given the current situations with North Korea and Iran, as well as its impact on the future calculus of other states.

Finally, membership would eliminate the only leverage compelling India’s compliance with nonproliferation norms. To reassure the PGs of its “like-mindedness” on nonproliferation issues, India made several commitments prior to the granting of its 2008 NSG waiver: a continuation of its no-first-use policy regarding nuclear weapons and its moratorium on nuclear testing; an adherence to NSG and MTCR export guidelines; and cooperation with the international effort to establish a multilateral fissile material cutoff treaty (FMCT).

As stated above, India is not a party to the NPT. Nor is it a party to the Comprehensive Test Ban Treaty (CTBT), which prohibits the testing of nuclear weapons. As such, it has no obligation to abide by the norms of the nonproliferation regime. Moreover, while compliance with NSG guidelines is expected of its PGs, it is entirely voluntary. Should India fail to live up to the commitments it made prior to the 2008 exemption, the NSG could review and revoke its waiver. This leverage would disappear with its membership.

Support for India’s NSG waiver was motivated by two factors: the America’s strategic relationship with India and the economic benefit derived from access to India’s nuclear market. Both of these considerations were already achieved by the waiver and neither would be advanced further by India’s membership. Given the numerous negative implications of Indian participation for both the NSG and the nonproliferation regime, it is unclear what the benefit would be for the international community.  

China’s Guideline Evasion

Some within the NSG argue that the ability to regulate international nuclear trade and promote nonproliferation norms is enhanced by the inclusion of all nuclear supplier states. This belief undoubtedly served as a motivation for China’s inclusion in 2004, as it does now for India’s. The problem with this philosophy, which underscores the importance of like-mindedness, is highlighted by China’s continued flouting of NSG guidelines. Hence the second pressing matter for this year’s plenary – China’s new reactor agreement with Pakistan.

China and Pakistan have a history of nuclear cooperation going back to the 1970s. China helped facilitate Pakistan’s nuclear weapon program by supplying essential items, reportedly including warhead and missile designs, centrifuge ring magnets, and even fissile material. China has also assisted with Pakistan’s nuclear energy infrastructure. In 1986, the two countries signed a civilian nuclear cooperation agreement. This was followed by a contract in 1991 between the China National Nuclear Corp (CNNC) and the Pakistan Atomic Energy Commission (PAEC) for the construction of a nuclear reactor in Chashma, Pakistan (Chashma-1).

China acceded to the NPT in 1992 and gained membership in the NSG in 2004. Based on NSG’s guidelines, which restrict nuclear related exports to countries without full-scope International Atomic Energy Agency (IAEA) safeguards, China’s civilian nuclear assistance to Pakistan should have stopped after joining the group. But there was one exception. At the time of China’s NSG membership approval, Beijing informed the group of an existing CNNC contract for a second reactor at the Chashma nuclear complex (Chashma-2). Under the NSG’s “grandfathering” exception clause, fulfillment of this contract would not breach the group’s guidelines because the contract was executed prior to China’s membership. 

However, in 2010, China announced its intent to export two more reactors for the Chashma complex (Chashma-3 and -4). When the U.S. and other PGs requested clarification, China’s allusive response implied that the new reactors were also grandfathered in under its prior bilateral agreement with Pakistan. Despite repeated requests by the NSG, China has yet to provide any documentation confirming the scope of its previous agreements with Pakistan. The U.S. and others argued that any new exports must be considered new supplier arrangements unless supported by evidence of grandfathering, such as a pre-existing contract. Mark Hibbs, from the Carnegie Endowment’s Nuclear Policy Program, noted that this requirement was agreed upon by NSG consensus in 2006. Absent such evidence, Pakistan would require an NSG waiver before China could export new reactors.  

Many hoped that China would be dissuaded from following through with the export or that the financing for the project would fall through due to Pakistan’s struggling economy. This proved to be wishful thinking. Thanks to substantial Chinese loans, construction of Chashma-3 and -4 has moved forward. This past March, the CNNC issued a press release describing the project’s progress and included a photograph of the dome being lowered over the third reactor.  

Some PGs appeared ready to accept or ignore these exports, justifying them as compensation to Pakistan to balance the exception made for India. They also assumed that there would be no future exports. Recent reports, however, suggest otherwise. Citing U.S. intelligence sources, journalist Bill Gertz reported earlier this year that China and Pakistan signed a new deal for a 1000 MW reactor. This claim was seemingly substantiated a few weeks later when the CNNC announced its first foreign contract with an undisclosed country for a 1000 MW reactor. Then last week, a Pakistani newspaper stated that not one, but two CNNC 1000 MW reactors were planned for the Karachi nuclear power plant. Since the 1991 CNNC contract was specifically for the Chashma complex, claiming grandfathering for reactor exports to another facility would be nonsense. But if this report is true, China will likely do just that.

In response to criticism following Gertz’s article, China argued that “cooperation between China and Pakistan does not violate relevant norms of the NSG” (emphasis added). This statement and China’s actions suggest that norms are interpretable and adherence to them is flexible. Such an understanding undermines the NSG and emphasizes the importance of like-mindedness amongst its PGs.

Responding to China

Industry and economic motives play a role in China’s continuing nuclear exports to Pakistan; however, their strategic value is the driving force. Sino-Indian animosity has been a principle driver of China’s relationship with Pakistan. Mark Hibbs wrote that Beijing stalled after Islamabad’s initial request in 2006 to build Chashma-3 and -4. China was supposedly waiting for the outcome of the U.S.-Indian nuclear negotiations before agreeing to move forward with the export. If true, China’s decision to move forward with the deal in 2010 was an opportunistic reaction to India’s waiver; and its recent announcement of another reactor sale is either another bi-product of that waiver or a reaction to India’s prospective membership in the NSG.

The NSG PGs have thus far been unable to agree on how, if at all, to respond to China’s continuing exports to Pakistan. There is a fear that pushing China too far could result in its withdrawal from the NSG. Given its burgeoning nuclear industry and supplier ambitions, Chinese nuclear exports completely unrestrained by NSG guidelines pose a considerable international security risk. Not to mention the fact that NSG’s guidelines are voluntary.

While these are legitimate considerations, the NSG does have options to address the situation. China remains sensitive to its international standing and its blatant support of a proliferation black market is unlikely. Moreover, China relies heavily on the NSG for access to uranium and nuclear technology. Therefore, there is room for more vocal and public criticism by the other PGs. At the very least, the PGs need to push China into securing nonproliferation commitments from Pakistan such as those made by India to secure its waiver. The PGs should also engage China on the issue bilaterally. For instance, Washington could use the upcoming re-negotiation of the U.S.-China nuclear cooperation agreement, set to expire in 2015, as leverage over future Chinese exports. 

The NSG’s Future

In 2012, the IAEA reported that 29 countries without nuclear power plants are considering or planning to incorporate nuclear power into their energy infrastructure. The report also forecast that worldwide nuclear power capacity will reach between 501 GW to 746 GW by 2030 – the latter being more than double current capacity. 

Given the projected growth in the volume of nuclear trade, the number of transit points involved, the scope of new technologies being developed, as well as the proliferation threat posed by both state and non-state actors, the regulation of global nuclear commerce is essential to international security. Without a feasible mechanism to create or enforce international laws, normative regimes are the only option in a global environment and these are only effective if guided by stable principles.

In any normative regime, precedents matter. India’s NSG waiver was a shock to the non-proliferation regime, but not an insurmountable one. The exemption did provide leverage over India’s compliance with nonproliferation norms. Since granting the waiver, the group has attempted to reinforce the importance of the NPT with a guideline change restricting ENR exports to non-NPT states.

However, granting Indian membership and continuing to ignore Chinese export violations will further legitimize opportunistic and strategic export arrangements to the detriment of nonproliferation norms.  How the group resolves these issues will inevitably shape its future identity. Without a steadfast adherence to principles, the NSG risks becoming a purely consultative export body, no longer capable of effectively mitigating the risks associated with global nuclear commerce. 

Daniel Painter is a research assistant in the Non-Proliferation and Disarmament Programme of the International Institute for Strategic Studies.