U.S., Allies End North Korea Reactor Project

The Korean Peninsula Energy Development Organization’s (KEDO) executive board announced June 1 that it had formally terminated its project to build a light-water nuclear reactor in North Korea.

The organization’s executive board, which is comprised of Japan, the European Union, South Korea, and the United States, had debated the reactor project since the most recent North Korean nuclear crisis began in late 2002. Washington repeatedly attempted to persuade the executive board to end the reactor project, but Seoul resisted. The board instead decided to suspend work on the reactors, first doing so in December 2003. (See ACT, December 2003.)

KEDO’s executive board said it made its decision based on the “continued and extended failure” of North Korea to comply with its relevant obligations under the 1994 Agreed Framework.

Washington established KEDO as part of that agreement, which the United States and North Korea concluded following an earlier crisis over Pyongyang’s plutonium-based nuclear weapons program. The organization was charged with providing two proliferation-resistant light-water reactors to North Korea, as well as 500,000 metric tons of heavy-fuel oil each year while the reactors were under construction. In exchange, North Korea agreed to freeze operation of its graphite-moderated nuclear reactor and related facilities, halt the construction of two larger reactors, and store approximately 8,000 spent fuel rods under international monitoring. (See ACT, December 2005.)

Plutonium separated from spent reactor fuel can be used as fissile material in nuclear weapons, but it is more difficult to use light-water reactors for that purpose.

Beginning in December 2002, Pyongyang took several actions that violated the Agreed Framework, including ejecting International Atomic Energy Agency inspectors charged with monitoring the freeze, announcing its withdrawal from the nuclear Nonproliferation Treaty, and restarting the reactor. Pyongyang claims to have reprocessed the stored spent fuel to obtain plutonium for nuclear weapons.

These actions followed KEDO’s November 2002 decision to suspend the fuel oil shipments in response to Washington’s announcement that North Korean officials during a meeting the previous month had admitted to having a clandestine uranium-enrichment program. Uranium enrichment can be used to produce fissile material for nuclear weapons. (See ACT, December 2003.)

South Korea’s Ministry of Unification said in a June 1 statement that delays in settling the North Korean nuclear issue influenced its decision to allow the project to end. Multilateral talks designed to resolve the nuclear crisis have not yet yielded a substantive agreement. Those talks began in August 2003 but have been stalled since November 2005. (See ACT, May 2006.)

In November, the executive board had agreed in principle to cancel the project and began discussions about the related legal and financial issues. The organization withdrew its personnel from the reactor construction site Jan. 8 following North Korea’s decision to “terminate…the agreements that governed KEDO’s presence at the site,” the organization’s June 1 statement said.

KEDO will continue as an organization, but its role will apparently be limited to carrying out the reactor project’s termination. Department of State spokesperson Tom Casey told reporters June 1 that KEDO’s headquarters in New York will “close as soon as practicable to terminate the operation.” An unnamed Unification Ministry official said the same day that completely liquidating the project “is expected to take a maximum of one year,” the semi-official Yonhap News Agency reported.

Seoul Left Holding the Bag

According to the Unification Ministry, KEDO’s executive board adopted a resolution May 31 saying that Seoul is to “cover the costs arising from the liquidation process,” such as resolving compensation claims from subcontractors. In return, the government-owned Korea Electric Power Corp., the prime contractor for the reactor project, would gain ownership over reactor “equipment and materials” located outside of North Korea.

The fate of assets remaining in North Korea, such as vehicles and construction equipment, is unclear. According to its June 1 statement, KEDO said it “requires payment” from Pyongyang for financial losses in connection with the reactor project. The statement did not specify an amount.

It appears unlikely that North Korea will soon provide any such compensation.

A State Department official told Arms Control Today June 20 that Pyongyang would “probably not” either surrender or pay for any KEDO assets remaining in the country.

Indeed, North Korea has argued that it should be compensated because the United States violated the Agreed Framework. Both governments have repeatedly accused each other of violating the agreement. (See ACT, December 2002.)