FLASHBACK: U.S. Funding Nuclear Plant in China

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 Republican-controlled 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

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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 Export-Import 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) non-nuclear island balance of plant equipment and services and (2) Westinghouse engineering services to the nuclear island.”

The notification of this loan that the 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

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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.

The cash from both Export-Import Bank loans was deposited in the PRC’s State Development Bank, which handed the money over to the state-owned CNNP in the case of Qinshan III, and to the China Nuclear Energy Industry Corp. for Qinshan II.

In approving the Bechtel loan, Clinton disregarded an August 1995 “discovery” issued by his own administration revealing that the CNNP had recently sold ring magnets to Pakistan. Ring magnets are a component needed for enriching uranium so that it can be used in nuclear warheads. Pakistan is not a signatory of the Nuclear Non-Proliferation Treaty and in 1998 tested a nuclear weapon for the first time in an underground explosion.

Nuclear News reported in September 1993, that the CNNP built a nuclear power plant for Pakistan using knowledge it had gained from Qinshan I (a project that involved Westinghouse).

Building the later phases of Qinshan-with financing from U.S. taxpayers-helped the PRC develop its nuclear-reactor-building expertise. Xinhua, the Chinese government’s official news agency, reported earlier this year that “through the development of . . . Qinshan Phase 3 [and other plants] the corporation has basically mastered the advanced modern methodology for the management of nuclear power development projects.”

As the law stands, it takes only the President’s signature plus the votes of three out of the five board members of the Export-Import Bank to approve a loan to China. At the time of the Bechtel and Westinghouse-related loans, there were two vacancies on the board, and the three remaining members voted unanimously to send the money to China.

The three were Board Chairman Martin A. Kamarck and members Maria Haley and Julie Belaga. Kamarck is the husband of former Gore aide Elaine Kamarck.

On Feb. 14, 1997, a month after she voted to approve the Bechtel-related loan, the New York Times reported that “Ms. Haley’s first job in Washington was in the White House personnel office, where she helped John Huang, the Riady family’s senior American executive, get a job at the Commerce Department.” Huang, Human Events readers will recall, helped funnel tens of thousands of dollars in illegal foreign contributions to President Clinton and the Democrats.

Julie Belaga was a regional administrator for the Environmental Protection Agency and an executive in a public relations firm. She was recommended for the Ex-Im job by Sen. Chris Dodd (D.-Conn.).

Bechtel is also working on the Daya Bay Nuclear Plant in China. The Bechtel corporation and Bechtel family have given hundreds of thousands of dollars to Republicans and Democrats alike over the last eight years, Federal Election Commission (FEC) records show.

Between corporate gifts and personal gifts from CEO Riley Bechtel and brother Stephen, the Bechtel company has given well over $1 million in federal political contributions since 1992. The contributions have been almost evenly split between Republicans and Democrats.

In an e-mail response to a Human Events inquiry, Nar Goel of Bechtel described the company’s role in the Qinshan II and III projects. “Bechtel is responsible for design and engineering of the major [non-nuclear] structures such as the turbine buildings, intake structure/pumphouse, water treatment plant, standby diesel generators buildings, auxiliary boiler building and outfall structure,” he wrote. “Bechtel is also responsible for the procurement of the equipment and materials for the BOP systems in these buildings. . . . Bechtel is also providing some engineering design and equipment/materials for the plant switchyard which is shared with Qinshan II unit.”

Goel was forwarded the inquiry by Frank Lopez, who included this warning to Goel: “Please note that this request came to us via the external website, so any information provided should consider that it leaves our control . . . that is, responses should be factual, but not overly specific. Thanks.”

Westinghouse, like Bechtel has been very generous to both parties. Since 1992, FEC reports show over $375,000 in contributions to the GOP, and $208,250 to Democrats. Most of the money to Democrats comes from Westinghouse’s Government Services division.

According to Jane’s Defence Weekly, Jiangnan Shipyards, which sit on the power grid fed by Qinshan, is one of the “most important naval shipbuilders” in China for “surface warships.”