Pakistan has secured China's help to build two new nuclear-power reactors in a deal being touted as a counterweight to rival India's recently concluded nuclear pact with the U.S.

But in his first official visit to Beijing last week, new Pakistan President Asif Ali Zardari apparently failed to nail down a firm Chinese commitment for another urgent need -- money to help replenish the country's sharply dwindling foreign reserves. With reserves at a six-year low, a Pakistani finance official said Saturday that Islamabad might seek assistance from the International Monetary Fund "as a last resort" to shore them up if it can't raise enough funds from other sources.

The nuclear deal with China would give Pakistan an additional 680 megawatts of power a year, or just over a quarter of the country's estimated current electricity shortfall.

China's leaders "do recognize Pakistan's need" for more energy, Foreign Minister Shah Mahmood Qureshi told reporters in Islamabad on Saturday.

But more importantly, Mr. Qureshi suggested, the deal would help restore the balance of power in South Asia following a much more comprehensive nuclear pact between India and the U.S., which gives New Delhi access to international atomic fuel and technology markets. In exchange, India has agreed to open its civilian reactors -- but not its military nuclear program -- to international inspections.

"China is one country that at international forums has clearly spoken against the discriminatory nature of that understanding" between Washington and New Delhi, Mr. Qureshi said, according to the Associated Press.

With ties between Washington and Islamabad strained over the faltering battle against Islamic militants along Pakistan's border with Afghanistan, Pakistan is increasingly turning to its long-time ally China for everything from help with propping up its teetering economy to boosting its woefully inadequate energy supplies.

Critics of the India-U.S. nuclear deal have argued that it could spark an arms race in South Asia by freeing up India's relatively small domestic atomic fuel supplies for use in the country's weapons program, a charge New Delhi denies.

Pakistani officials have pushed for a similar nuclear arrangement with the U.S. But Washington has repeatedly refused to discuss nuclear-energy cooperation with Pakistan, pointing to Islamabad's past record of clandestinely spreading atomic-weapons technology to countries such as Libya, Iran and North Korea through a smuggling ring run by scientist Abdul Qadeer Khan, the now-disgraced father of Pakistan's nuclear-arms program.

While Mr. Qureshi offered few details of the latest China-Pakistan nuclear deal, Chinese officials had previously said any agreement would be for peaceful energy purposes and would be supervised by the International Atomic Energy Agency, the United Nations' nuclear watchdog. The two new reactors are being added to the Chinese-built nuclear power plant in Chasma, a town in central Pakistan.

Despite the deep friendship, Mr. Zardari didn't appear to get an immediate pledge of help from China on the financial front.

Pakistan is seeking at least $5 billion to $6 billion from donors to shore up its dwindling foreign-exchange reserves -- down to about $7.75 billion from nearly $16.4 billion almost a year ago -- and to revive its ailing economy by boosting foreign investors' confidence.

Mr. Zardari is believed by diplomatic analysts to have asked China for $1 billion to $2 billion in a loan to Pakistan's central bank. Neither side has said whether any deal was struck, but Mr. Qureshi said Saturday that China would attend a so-called Friends of Pakistan donor conference next month in Abu Dhabi. He also said that China would invest $1 billion in various projects until June and that various Chinese organizations would invest in Pakistan's banking, mineral and industrial sectors.

Shaukat Tareen, an adviser to the prime minister, said that the country may seek the assistance of the International Monetary Fund if it fails to get the funds it needs. "We need $3 billion in the next few months, and efforts have been made to raise funds on time and we have received ample commitment from multilateral donor agencies and countries," Mr. Tareen said. "The next 30 to 45 days are crucial. ... We will seek assistance from the IMF as last resort."

While Pakistani authorities put the financing gap at $3 billion, the IMF believes it is $4 billion to $4.5 billion. Foreign-exchange reserves slipped to a six-year low of $7.749 billion in the week ended Oct. 11 as oil imports rose and the central bank sold dollars to prevent a sharp slide in the Pakistani rupee.

Mr. Tareen said the World Bank and the Asian Development Bank had agreed to give $1.5 billion each in the form of front-loaded concessional financing, with the money expected by June 30. In addition, the Islamic Development Bank and U.K.'s Department for International Development had agreed to double their assistance to $1 billion and £600 million ($1.04 billion), respectively.




Source: The Wall Street Journal.