KEDO Resolves Cost-Sharing For North Korean Reactor Project

Howard Diamond

AFTER MEETING in New York July 28, the Executive Board of the Korean Peninsula Energy Development Organization (KEDO) settled on a cost-sharing arrangement for the $4.6 billion light-water reactor (LWR) project, the centerpiece of the 1994 U.S.-North Korean Agreed Framework. Under the accord, Pyongyang agreed to freeze and eventually dismantle its existing nuclear facilities in exchange for the construction of two 1,000-megawatt (electric) LWRs and annual shipments of heavy fuel oil until the first reactor is completed. KEDO provided no details on the cost-sharing arrangement, but State Department spokesman James P. Rubin said on July 30 that the United States had not made "a specific financial commitment."

According to press reports, South Korea reconfirmed its commitment to pay 70 percent ($3.2 billion) of the costs, while Japan reiterated its pledge of a fixed sum of $1 billion. It remains unclear where the estimated balance of $380 million will come from.

The cost-sharing agreement should clear the way for KEDO to complete negotiations of the project's prime, or turn-key, contract with the Korea Electric Power Corporation (KEPCO). The reactor project is currently more than two years behind schedule due to delays in negotiations between KEDO and North Korea, and political disruptions.

North Korea has been increasingly critical of the Clinton administration's implementation of the framework since late April, when Pyongyang blocked the cleanup of spent fuel residue at the Yongbyon nuclear complex by the Department of Energy. Complaining about U.S. economic sanctions, the slow pace of oil deliveries and delays in the construction of the LWRs, Pyongyang demanded better performance by Washington and threatened to revive its nuclear infrastructure.

As of the end of July, KEDO has delivered only 218,000 tons of the annual total of 500,000 tons that is to be delivered by October 20. But North Korea seems especially angry that the improvements in political and economic relations between Washington and Pyongyang called for in the Agreed Framework have failed to materialize. The Clinton administration has made several minor gestures with regard to sanctions but has refrained from taking larger steps, citing North Korea's exports of ballistic missile technology and its support for terrorism.


The Missile Sanctions

In April, the United States imposed missile proliferation-related sanctions on North Korea for assisting Pakistan's 1,500-kilometer-range Ghauri missile program with technology from its own 1,000–1,300-kilometer-range Nodong missile. Technology from the Nodong is also believed to be the foundation for Iran's 1,300-kilometer-range Shahab-3 missile, which was test fired on July 22.

The United States and North Korea last held talks on missile proliferation in August 1997, but those discussions failed to produce any agreements or an agenda for further discussions. On July 9, Defense Secretary William Cohen confirmed that the Nodong's development has been completed, but refused to provide any details about possible deployment.

In a June 16 Korean Central News Agency statement, Pyongyang objected to Washington's linkage of missile proliferation with improved political and economic relations and insisted that due to the threat posed by U.S. ICBMs, North Korea "will continue developing, testing and deploying missiles." Pyongyang also offered to cease its international missile trade in exchange for an end to Washington's "economic embargo" and "compensation for the losses to be caused by discontinued missile exports."

During his visit to the United States in early June, South Korea's new president, Kim Dae Jung, appealed to both Congress and the administration to support his new "sunshine" policy toward Pyongyang by ending sanctions imposed on North Korea under the "Trading with the Enemy Act." Clinton initially appeared cool to the idea, but The Washington Times reported on June 12 that Secretary of State Madeleine Albright and her South Korean counterpart, Park Chung-soo, reached an agreement in principle to coordinate the lifting of U.S. sanctions with Kim's efforts to engage Pyongyang.