The Nuclear Handshake

Is the Pakistan-Saudi weapons program for real?

BBC Newsnight, a British equivalent of ABC's 20/20, ran a story on Nov. 6 saying intelligence reports judged that Pakistan was ready to deliver nuclear weapons to Saudi Arabia. The purpose would be to counter Iran's perceived nuclear weapons program: "It is now possible that the Saudis might be able to deploy such devices more quickly than the Islamic republic [of Iran]," the report concluded.

The story ran the night before the next round of talks between international powers and Iran in Geneva. The implicit message was that Riyadh had a fallback option in case a deal is cut with the Islamic Republic that is not to its liking. Some may be skeptical about the report due to the denials of both nations and some vagueness about the source of these claims, but dismissing the report out of hand would be foolhardy: The outline of the Newsnight story has been circulating among Saudi watchers for several months as Riyadh's frustration with Washington over its Middle East policies have grown.

Although the latest information does not appear to have come from Saudi Arabia -- an unnamed "senior NATO decision-maker" was cited as the principal source -- any transfer of Pakistani warheads or missiles would fit neatly into the category of "ways the House of Saud could make things unpleasant for Washington."

Well before the uprisings of the so-called Arab Spring, King Abdullah regarded the threat of a nuclear Iran as a major destabilizing force. More than 10 years ago, the Guardian reported the kingdom was debating a strategy paper setting out three options: acquiring a nuclear capability of its own, maintaining or entering into an alliance with an existing nuclear power that would offer protection, or trying to reach a regional agreement on a nuclear-free Middle East.

In February 2012, a correspondent of the London Times was summoned to Riyadh, where he was told by an unnamed senior Saudi official that the kingdom could acquire nuclear warheads "within weeks" of Iran developing atomic weapons. In the event of a successful Iranian nuclear test, Riyadh would "immediately launch a twin track nuclear weapons program," according to the Saudi source, while warheads would be purchased "off the shelf" from abroad. At the same time, the kingdom would upgrade its planned civil nuclear program to include a military dimension.

President Barack Obama's administration will find it challenging to shrug off these stories as mere rumors. Among those interviewed by Newsnight was Gary Samore, until recently the National Security Council's WMD czar, who expressed his belief that the Saudis have an understanding "that, in extremis, they would have claim to acquire nuclear weapons from Pakistan." (Full disclosure: I was interviewed for the program and some of my sager comments were included in the film report.)

In a studio discussion that immediately followed the film, Sir William Patey, who was British ambassador in Riyadh from 2006 to 2010 and had previously been in charge of the Middle East department at the Foreign Office, did not contradict the report.

The collaboration between Saudi Arabia and Pakistan on Islamabad's nuclear program has deep roots that could go as far back as the early 1970s, when Saudi King Faisal agreed to fund what is now the main mosque in the Pakistani capital of Islamabad. Riyadh was almost certainly also tapped for funds by then Prime Minister Zulfikar Ali Bhutto to pay for Pakistan's uranium enrichment program in the mid-1970s -- when the enrichment plant was revealed in 1979, diplomats and journalists in Islamabad saw the kingdom as one of the only likely sources of funds for such a project. The head of Pakistan's nuclear program, A.Q. Khan -- who was later condemned for proliferating nuclear technology to Iran, Libya, and North Korea -- told me he visited the kingdom more than 40 times and was offered citizenship by one of King Abdullah's half-brothers.

In 1999, Khan hosted Saudi Defense Minister Prince Sultan at the Kahuta uranium enrichment plant outside Islamabad, along with Pakistani premier Nawaz Sharif and Army chief Gen. Pervez Musharraf. The general would overthrow Sharif a few months later, sending him into exile in Saudi Arabia, an altogether more comfortable interlude than the inside of a Pakistani prison.

Sultan also saw more than Kahuta's enrichment centrifuges: He was also shown a mock-up of the Pakistani bomb. According to A.Q. Khan, Khalid bin Sultan, the defense minister's son, tried to pick up the hemispherical "tamper," which is used to contain the initial moment of the nuclear explosion, but it was too heavy for him to lift.

Some may expect U.S. intelligence to know every in and out about such dealings, but Washington's knowledge of Saudi military planning has not always been perfect. In 1988, the kingdom took delivery of Chinese CSS-2 missiles even before Washington realized that Saudi Arabia and China had inked a deal two years earlier. The missiles were spotted by a U.S. satellite being trucked to launch sites south of Riyadh, having been flown in on giant transport aircraft that landed at a private airport on a farm belonging to Prince Sultan.

Those missiles, previously part of China's nuclear strike force, were arguably already obsolete, being liquid-fueled with unstable industrial alcohol and nitric acid. The immediate fear in Washington and other Western capitals was that they had come with nuclear warheads, though Riyadh insisted that they only contained conventional explosives. In another twist, the atomic bomb design that China gave Pakistan in 1982 would fit nicely on a CSS-2 -- Pakistani scientists redesigned it to make it fit on one of their own missiles.

Last week's reported schism between Riyadh and Washington was supposedly patched up by the visit of Secretary of State John Kerry to Riyadh on Monday. According to former Saudi intelligence chief Prince Turki al-Faisal, addressing a private group in Washington on Nov. 6, the two men "exchanged the frankest words ever."

But all the frank talk in the world may not convince Riyadh to back down if it believes Iran is on the path toward a nuclear weapon. The best the Obama administration can probably hope for at the Geneva talks is to convince Iran to place restrictions on its nuclear program -- actually stopping it seems increasingly unlikely without the use of military force. In these circumstances, the Saudis may well judge that the years of preparation they have devoted to going nuclear were well spent.



Third Time's the Charm

Will China's leaders go big and enact serious reforms at the upcoming Third Plenum?

Chinese leaders haven't exactly downplayed the importance of the Third Plenum, the big Communist Party confab to be held in Beijing from Nov. 9 to Nov. 12. China's president Xi Jinping has promised to unveil a "blueprint of comprehensive reform" at the meeting, while Yu Zhengsheng, ranked fourth in the Party hierarchy, called the reforms it plans to "explore" at the upcoming meeting "unprecedented."

Indeed, China's slowing economy and unprecedented pollution, among other pressing concerns, indicate that there is an overwhelming need for reform. And the Third Plenum is often the venue to roll out bold new plans. While Party Congresses generally announce new leadership -- the 18th such soiree in November saw Xi Jinping ascend to the presidency -- and the subsequent First and Second Plenums generally deal with personnel and organizational matters, Third Plenums have traditionally enacted the most meaningful changes.

There are two historic Third Plenums to which the upcoming meeting is being compared. The Third Plenum in 1978 opened China to the global economy and abandoned the policy, known as the "two whatevers," of obeying whatever Mao Zedong had decided or decreed. And in 1993, a year after Deng Xiaoping urged more economic openness on his influential Southern Tour by visiting areas like the boomtown of Shenzhen and publically praising reform, that Third Plenum approved the concept of building a "socialist market economy," giving Chinese leaders political cover for introducing more free market features.  

And on economic matters, there is much that needs to doing. The country has enjoyed double-digit growth for 30 years, an unprecedented feat which lifted hundreds of millions out of poverty. This monumental effort, however, relied on massive state spending, huge volumes of low-cost exports based on cheap labor, and more recently, a real estate bubble. But this strategy hasn't allowed the growth of a consumer-based economy necessary for China to transition to a sustainable model. As China's economic boom slows -- 2013 gross domestic product growth is expected at 7.5 percent or less, down from 10.4 percent in 2010 -- Chinese leaders are casting around for a new model.

China's top officials favor serious economic reforms, with Premier Li Keqiang playing the role of point man. But most other members of the seven-man Standing Committee of the Politburo -- the top of China's power pyramid -- seem risk-averse, hindering Li's efforts. In early July, for example, the State Council, helmed by Li, approved the opening of a new kind of special free trade zone in Shanghai. Free of many restrictions found elsewhere in the country, the zone was to reverse the usual Chinese practice of forbidding everything unless specifically authorized: Instead, it would allow practically any business venture not specifically prohibited.

At least, that was the idea. But when the zone opened on Sept. 29, neither Li nor any other senior official attended the opening ceremony, suggesting the leadership was having second thoughts about just how far they dared go. Moreover, the day after the opening, the Shanghai government released a list of nearly 200 restrictions on foreign investment in the zone, placing further restrictions on it potential.

Finance is another key area where China's leaders could push for change. SOEs (State-Owned Enterprises), which account for about 40 percent of total industrial assets, thrive on cheap loans from state banks, yet are only half as profitable as China's private companies. This cozy arrangement also favors not only SEO executives, who frequently have close ties to officials setting financial policies, but often their friends and relatives. This forces smaller private companies to scramble for capital, often by plunging into a "shadow banking" network of lenders whose rates can be extortionate.

The finance system would benefit from more competition and less party control, with bankers having more freedom to adjust saving and lending rates and practices. However, SOEs needn't worry about radical change. They pay dividends to government agencies and minority shareholders, and serve policy purposes, such as securing international oil and mineral rights. They also have allowed powerful and entrenched families to enrich themselves: for example, members of former Premier Li Peng's family have held a dominant role in the electricity sector. SOEs, as official documents state, are "an important foundation of Communist Party rule" -- that's unlikely to change anytime soon.  

What will likely change, however, is the system of local government finance. According to a Ministry of Finance report, local governments now get more than half of their total revenue from land sales, incentivizing them to seize farms and homes for resale to developers at high prices. Some proceeds then go into local treasuries, some to corrupt officials and lesser amounts to those who were displaced, often leading to angry -- even violent -- protests. Beijing knows this must change, and Chinese economists expect a new tax and grant regime. Likewise, the discriminatory hukou system -- residence permits that give access to local benefits such as places in public schools, and which excludes some 200 million migrant workers who fill important city jobs but can't live there legally -- will likely be modified to allow more benefits for migrant workers.

As for political reforms, the ruling elite have made it clear that widespread calls for greater openness and accountability will not be granted, at the plenum or elsewhere. Xi continues to crack down harshly on public dissent and on social media. Activists who have called on leaders to disclose their personal assets as anti-corruption measures, like legal scholar Xu Zhiyong, have been jailed. And while a campaign against corruption high and low will continue throughout and after the Third Plenum -- swatting both "tigers and flies" -- its goal is to purge political embarrassments at least as much as it halts the corrosive practices that benefit so many officials.

But the chances of Xi unveiling a "blueprint of reform" as striking as that of his predecessor Deng is unlikely. And five years from now, Chinese leaders may be striking the same notes about the importance of reform -- but with fewer people believing them.