Nuclear Blackmail: The 1994 U.S.–Democratic People's Republic of Korea Agreed Framework on North Korea's Nuclear Program

INTRODUCTION

In 1993 the Democratic People's Republic of Korea (DPRK) refused to allow the International Atomic Energy Agency (IAEA) to inspect two North Korean nuclear waste sites to check whether that country had been secretly separating plutonium for nuclear weapons. This refusal violated North Korea's obligations under the nonproliferation treaty (NPT), to which it had adhered in 1985. This, the first time a treaty member had refused to allow IAEA inspections, posed a vital test for the treaty. When pressed by the IAEA to permit the inspections, North Korea threatened to withdraw from the NPT altogether. It seemed a good bet that the country had things to hide and that it was on its way to a nuclear bomb. As the treaty has no enforcement mechanism, the United States took the lead in dealing with North Korea's violation and nuclear threat. The result was the 1994 U.S.-DPRK Agreed Framework that stopped the North's plutonium production, at least for the time being, but at heavy cost, both political and financial. The nuclear agreement and its background in nuclear-related affairs are the subjects of this essay. The worst aspect of the agreement left the United States subject to continued blackmail. This essay suggests a way to limit this unfortunate consequence within the context of the deal negotiated in 1994.

The North Koreans had played their cards well in the negotiations leading to the agreement. The United States was in a difficult situation, but North Korea was in an even more difficult one. Its main supporter, the Soviet Union, had collapsed. North Korea's regime, still committed to regimentation and large military forces, was in deep economic trouble and was frantically seeking a way out of its economic and political isolation. Yet by skillfully presenting a picture of desperation and possibly suicidal violence, North Korea turned its weakness into its strength.

During the negotiations North Korea refused to consider allowing the disputed IAEA inspections anytime soon. But if the United States was willing to provide North Korea with a large, modern nuclear power station, then North Korea would consider putting its small, indigenous nuclear program on the shelf. For the United States that meant overlooking North Korea's flagrant NPT violation, accepting the uncertainties over whether North Korea had a bomb's worth of plutonium, and generously rewarding the North with nuclear power technology to keep it from making many bombs. The U.S. negotiators convinced themselves that the only alternative to this proposal was war. And perhaps North Korea would mellow or fall apart during the many years it would take to build the new reactors. As a result of this thinking, North Korea walked away with a multibillion-dollar nuclear power and fuel oil package.

Specifically, under the 1994 agreement, the United States promised to supply North Korea with two large, modern nuclear electric generating plants of the latest design, originally estimated to be worth more than $4 billion (an amount that the United States later convinced South Korea and Japan to fund). The United States also promised to provide North Korea with a substantial supply of fuel oil until the first of these reactors was operating. In return North Korea agreed to stop running a small indigenous reactor and constructing two larger ones and to remain a member of the NPT, that is, subject to IAEA inspection. North Korea did not, however, agree to allow the disputed IAEA inspections to take place until it got a substantial portion of the new reactors' equipment. Nor would it dismantle its indigenous facilities until both new reactors were completed, many years in the future.

The United States created an organization with South Korea and Japan to carry out the project, The Korean Peninsula Energy Development Organization (KEDO). KEDO negotiated a series of diplomatic and administrative agreements with the North in 1995 and 1996, and the organization was getting ready to start construction on the two-reactor project. It was on hold for several months in the wake of the North Korean submarine-launched guerrilla raid on South Korea in September 1996 that involved South Korean casualties and a February 1997 North Korean assassination of a defector living in South Korea. As of April 1997, the project is apparently back on track.

There are, of course, serious problems with giving North Korea large nuclear power reactors, both in terms of principle and in terms of proliferation. There was probably no peaceful way to stop the North's plutonium production without some compromise of the principle that treaty violators should not be rewarded. But paying North Korea in nuclear coin, and on a grossly disproportionate scale, magnified the unseemliness of the 1994 arrangement and its harmful symbolic significance. Also, the deal undermines the application of U.S. nuclear export controls because the reactor project will likely require nuclear equipment from the United States. To provide these, the United States will have to bend its nuclear export requirements to accommodate North Korea, whose past refusals of IAEA inspections would normally disqualify it under U.S. law. If North Korea were to become a different sort of country, these concerns might disappear, but that is not something we can assume, which is why, whatever else may be said about the arrangement, the new power reactors should not have been part of it.

The gravest flaw of the U.S.-DPRK deal is that it leaves intact the North's indigenous nuclear plants and materials whose reactivation it can continue to threaten. (We might say it corresponds to paying blackmail for a photograph but not getting the negative.) In 1994, the U.S. administration believed that an ongoing, large nuclear power project would give the United States leverage because the project's completion would be hostage to North Korea's good behavior. Now, two and a half years later, the new reactor project continues, but it looks more and more as if the leverage is reversed. The United States is being pressed to perform satisfactorily or face the consequences of North Korean threats, which it does not hesitate to make, to reopen its indigenous nuclear facilities. As for the disputed IAEA inspections that started it all, there remains little prospect that they will ever take place.

BACKGROUND

A bit of background is useful about the North Korean nuclear facilities. Since the 1960s North Korea has had a nuclear program based on Soviet technology and been familiar with plutonium separation. In 1993 the source of immediate concern to the United States and the IAEA was plutonium production at North Korea's small "research" reactor at Yongbyon, in the northwest of the country. The reactor is commonly described in terms of its rated electrical output of five megawatts, although any connection with the electrical grid seems to have been an afterthought on the part of the North Koreans. The small reactor is basically a little plutonium production reactor with a heat output (a better measure of plutonium production) of about twenty megawatts. If operated continually, it could produce more than five kilograms of plutonium a year, or about a bomb's worth. Because the reactor has been operating since 1986, its spent fuel may contain several bombs' worth of plutonium. North Korea also has an operational plutonium-reprocessing facility that could separate plutonium from the reactor's spent fuel.

Two other reactors under construction threatened to raise the stakes by increasing plutonium production and gave Western observers a shock when they were spotted. The construction of the first one was started in 1984, also at Yongbyon. It is nominally rated at an electrical output of fifty megawatts, which corresponds to a heat output of about two hundred megawatts (and a plutonium production capacity of more than fifty kilograms, or ten bombs' worth, a year). The construction of the second and larger one at Taechon, not far from Yongbyon, began in 1989. It is usually described in terms of an electrical rating of two hundred megawatts and, again, would have a heat rating of about eight hundred megawatts (and a plutonium production capacity of more than forty bombs' worth a year). Both the reactors under construction, as well as the small operating Yongbyon research reactor, are gas-cooled, graphite-moderated plants similar to the earliest British dual-purpose reactors of the same type.

The various electrical and thermal ratings make for some confusion but there is a reason for drawing a distinction. The usual electrical power designations are misleading in that it is not clear that either of the reactors under construction was intended for generating electricity. By using electrical ratings, official communiqués legitimize these indigenous projects and justify compensating North Korea for their loss.

Initial IAEA Inspections Postponed

Around 1985 the North Koreans appear to have gotten the Soviets to provide four nuclear electric-generating units with a combined electrical capacity of about two thousand megawatts. Apparently, the Soviets required North Korea to join the NPT to get these reactors. In any case, North Korea adhered to the treaty in 1985. The Soviets did not, however, supply the promised reactors, probably because of the breakup of the Soviet Union.¹ North Korea thus found itself an NPT member subject to IAEA inspections but without power reactors.

North Korea's early experience with the IAEA could not have left it with a high opinion of the agency's seriousness. Like any new adherent to the NPT, North Korea was required to supply the agency with an inventory of nuclear materials at all its facilities and to negotiate an inspection agreement (in IAEA terminology, a facility attachment) within eighteen months of treaty adherence. The North Koreans did not bother to supply such an inventory, and when, in time, the IAEA inquired about it, the North Koreans said they had been sent the wrong forms. Apparently they were right. The embarrassed Vienna agency then gave them another eighteen months and then more time again when North Korea missed the second deadline. The agency allowed the negotiations over the start of inspection to drag until January 1992, more than five years beyond the treaty deadline.

In the nuclear inventory the North Koreans finally supplied, they claimed that they had separated a small amount of plutonium, an amount insignificant from the point of view of weapons. U.S. intelligence believed that the North Koreans had separated more plutonium than they admitted to and that, in January 1992, they had hidden the telltale reprocessing waste at one of two waste sites. These sites were not on the list of seven facilities the DPRK gave to the IAEA as subject to normal inspections. Nevertheless, when IAEA inspection started in 1992, the agency, acting on a tip from the United States, insisted on checking the two waste sites for evidence that there had been more plutonium separation than North Korea acknowledged. North Korea refused, making it the first NPT member to openly breach its inspection obligations. The IAEA gave the North one month to allow the inspections of the waste sites to proceed. North Korea countered by threatening to exercise the ninety-day withdrawal provision in the NPT.

Threatened Withdrawal from NPT

The DPRK threat, which highlighted the treaty's weakness, sent chills through the worldwide NPT diplomatic community. It was more worried about a North Korean withdrawal than it was about enforcing the treaty against past illicit reprocessing. The extension of the treaty was going to be taken up in a 1995 conference, and the fear was that a North Korean withdrawal might worsen the treaty's prospects.²

In April 1993 the IAEA Board of Governors found North Korea in noncompliance with its inspection obligations. There was talk of the Security Council imposing economic sanctions. North Korea countered in May with a statement saying that imposing such sanctions would amount to a declaration of war. To drive the point home, North Korea tested, over the Sea of Japan, a missile capable of carrying a nuclear warhead six hundred miles. The message, which was not lost on Japan, increased U.S. worries that a nuclear Korea could push Japan toward nuclear weapons. Having turned up the heat, North Korea then brought the affair back to a simmer by "suspending" its decision to withdraw from the NPT and allowing IAEA inspections at the seven agreed-on facilities, although on a severely restricted basis.

As mentioned, the concern over North Korea's nuclear weapon potential involved not only the possible stock of plutonium from several years of operating its small research reactor but also the possible plutonium production from the two larger reactors under construction. These were said to be one or two years from operation, although it is not clear whether that was a realistic estimate. Still, they raised U.S. fears because they threatened to multiply North Korea's plutonium production potential many times. To this day, it remains unclear whether North Korea was really headed for nuclear weapons or was (and is) skillfully exploiting U.S. fears to gain economic and political leverage.

For its part, the United States has tried in recent years to eliminate points of contention related to nuclear weapons. In 1990 and 1991 it scaled back its annual Team Spirit war exercises with South Korea. North Korea had complained about these, as it also complained about the presence of U.S. tactical nuclear weapons in South Korea. In late 1991, as part of a worldwide pullback by the United States and Soviet Union, the United States announced that it was withdrawing its tactical nuclear weapons from the Korean peninsula. At the same time, the United States pressed for North-South discussions that led to the signing of an agreement in late 1991 covering a series of measures pointing, at least in principle, to the eventual peaceful reunification of the two Koreas. The agreement included important nuclear provisions: that neither side would seek nuclear weapons, that neither side would carry out plutonium separation or uranium enrichment, and that both sides would accept mutual nuclear inspections.³ These provisions went beyond the NPT. In January 1992, in a hopeful gesture, the Bush administration canceled the Team Spirit exercises for that year. The North Koreans then refused to allow the IAEA waste site inspections, and in the ensuing quarrels the 1991 North-South agreement was forgotten.

Bilateral U.S.-DPRK Negotiations

In response to North Korea's March 1993 threat to pull out of the NPT, the United States held a series of bilateral meetings with the North Koreans. During the July 1993 discussions in Geneva, the North Koreans suggested that they would consider replacing their indigenous nuclear program--which the United States was so worried about--if the United States would supply them with modern light water reactors (LWRs), for the U.S. power reactors used around the world. The U.S. State Department negotiators seized on the suggestion as offering a possible way out of a difficult situation.

North Korea's gas-graphite reactors used natural uranium fuel, which the North Koreans produced themselves, meaning they were not dependent on foreign suppliers. LWRs require enriched uranium fuel, which North Korea would have to import. Also, the LWRs' spent (used) fuel could be disposed of economically, without reprocessing. It was therefore easier in this case to rule out plutonium separation, one of the results of reprocessing, and thus limit the proliferation risks. By contrast, the gas-graphite reactors' spent fuel is normally reprocessed and its plutonium separated. Such activity was in fact carried on in a number of countries--Japan, for example--and was entirely legitimate under the NPT so long as it was subject to IAEA inspection. (In reality, such inspections do not add much security as they cannot be counted on to provide a timely warning were plutonium to be spirited away.)

After the July 1993 discussions, the two sides issued a joint communiqué that included the following:

Both sides recognize the desirability of the DPRK's intention to replace its graphite-moderated reactors and associated facilities with light water moderated reactors. As part of a final resolution of the nuclear issue, and on the premises that a solution related to the provision of light water reactors (LWRs) is achievable, the USA is prepared to support the introduction of LWRs and to explore with the DPRK ways in which LWRs could be obtainable.⁴

The reason for the hedge on the solution's being "achievable" was that U.S. export law prohibits sale of U.S. reactors to North Korea or, for that matter, to any violator of IAEA inspections. Any waivers would require congressional approval.

As North Korea blew hot and cold, the United States did some tough talking, too. In this respect, it was ahead of South Korea and Japan, neither of which ever expressed the same concern as the United States over the possibility of North Korean nuclear weapons. In July 1993 President Clinton warned the North Koreans that if they used nuclear weapons it "will be the end of their country as they know it."⁵ In November the U.S. president said that North Korea "cannot be allowed to develop a nuclear bomb." A month later, however, after U.S. defense secretary Aspin awkwardly announced that North Korea may already have a "bomb and a half," officials suggested that the president had misspoken, that he had meant that North Korea could not be allowed to become "a nuclear power," that is a country with many nuclear bombs.⁶ Despite the simultaneous launching of a Pentagon counterproliferation initiative to stop the spread of nuclear weapons by military means, it was hard to pretend the United States had more stomach for war than Kim Il Sung. U.S. Air Force chief of staff General Merrill McPeak, when asked about a North Korean attack said, "I just can't answer whether we could stop them before they got to Seoul or not." This was reported in a front-page Washington Post story headlined "Trepidation at Root of US Korea Policy."⁷ The incoming chairman of the Joint Chiefs of Staff made a similar statement.⁸

In January 1994 a crisis started to build again. North Korea further restricted the already limited IAEA inspections, and the United States canceled the next round of Geneva talks. In April U.S. defense secretary Perry visited South Korea almost simultaneously with a battery of U.S. Patriot missiles. North Korea then threatened to unload the plutonium-laden fuel rods from its small operating reactor without allowing the IAEA to observe the process, despite IAEA warnings that information on past plutonium production would thereby be lost and that the agency could then not attest to the "continuity" of safeguards. Unfazed, North Korea unloaded the fuel rods in May. On June 2 President Clinton announced he would ask the Security Council to impose sanctions. North Korea responded by announcing that it would withdraw from the IAEA, which meant that it would no longer permit any international inspections.

In the midst of the mounting crisis, former U.S. president Jimmy Carter arrived in Pyongyang to talk to Kim Il Sung. Carter, who had been briefed by the State Department and asked not to negotiate, apparently felt unconstrained by this request. Thus, as the U.S. crisis team members were meeting in the White House to evaluate sanction options, they were startled to see Jimmy Carter on CNN announcing the deal he had worked out with the Great Leader. The State Department was miffed, but President Clinton embraced Carter's proposal. Kim Il Sung's blessing of the deal meant that it survived his death on July 9, and U.S.-DPRK talks resumed in Geneva. On October 21, 1994, the United States and the DPRK signed the Agreed Framework.⁹ It is difficult to believe that the outcome was not affected by the imminence of the November 1994 U.S. elections. The Clinton administration was in political difficulty and looking for a diplomatic success. To get North Korea's signature, President Clinton made an extraordinary personal commitment in a letter to Kim's son and apparent successor, Kim Jong Il. The president said that he would "use the full powers of [his] office to facilitate arrangements for the financing and construction" of the LWR project and an interim oil supply.¹⁰ Under the agreement the DPRK would freeze its indigenous nuclear program, eventually dismantling it, and eventually permit full IAEA inspection, in return for an immediate oil supply, a more than $4 billion package of two LWRs of a thousand megawatts each, and a step-by-step normalization of political and economic relations. The North Koreans were finally getting the two thousand nuclear megawatts they had expected ten years earlier from the Soviets.

THE JULY 1993 U.S.-DPRK AGREED FRAMEWORK

The details of the Agreed Framework are as follows.¹¹

• The United States will provide two LWRs of a thousand megawatts each to replace the DPRK's graphite-moderated reactors and related facilities by the target date of 2003. The United States will organize an international consortium to finance and supply the LWR project and will serve as "the principal point of contact with the DPRK."
• If the project requires U.S. equipment, as is likely, the United States and the DPRK will conclude a bilateral cooperation agreement, as required by U.S. law.
• The United States will arrange to supply the DPRK with 500,000 tons of oil annually "to offset the energy forgone" owing to the freeze of the DPRK's nuclear program, pending completion of the first LWR unit.
• The DPRK will freeze its graphite-moderated reactors and the related facilities and will eventually dismantle these reactors and the related facilities. The IAEA will be allowed to monitor the freeze. Dismantlement of the DPRK's reactors and reprocessing plant will be completed when the LWR project is completed.
• The United States and the DPRK will cooperate in storing the spent fuel from the 5-MW(e) experimental reactor during construction of the LWR project and disposing of the fuel in a way that does not involve reprocessing in the DPRK.
• The two sides will move toward full normalization of political and economic relations. Both sides will work together for peace and security on a nuclear-free Korean peninsula.
• The DPRK will remain a party to the NPT and will allow IAEA inspections under the treaty. On conclusion of the supply contract for the LWR project, IAEA inspections will resume at all declared sites.
• When a significant portion of the LWR project is completed, but before delivery of key nuclear components, the DPRK will allow inspection of the disputed sites. More precisely, it will allow the IAEA to take "all steps that may be deemed necessary by the IAEA, following consultations with the Agency with regard to verifying the accuracy and completeness of the DPRK's initial report on all nuclear material in the DPRK."

PROBLEMS WITH THE LIGHT WATER REACTOR DEAL

The 1993 agreement accomplished some useful things in the near term, mainly putting North Korean plutonium production on hold and easing the immediate crisis. The cost was high, however, both financially and symbolically, especially taking into account North Korean treaty violations. Aside from U.S. political concessions, the North Koreans got a generous and symbolically potent package of goods. The two large nuclear power reactors that the United States will provide (and South Korea and Japan mostly pay for) will have eight times the maximum potential electrical capacity of the indigenous North Korean gas graphite reactors they would replace (had those indigenous reactors been finished). The State Department has described the LWRs for North Korea as "proliferation-resistant LWRs," but their advantages even on that score are problematic. Although U.S.-type LWRs do produce less plutonium than gas graphite reactors of comparable thermal ratings, in this instance the LWRs are so much larger that they could actually produce more plutonium than the gas graphite plants they will replace. The LWRs' plutonium may be less accessible to the North Koreans than that from their indigenous reactors, but it is worth remembering that the LWRs are the same type of reactors that the United States considers a proliferation risk in Iran.

Technical Problems

There are other practical problems. Large nuclear units are an exceptionally poor choice for generating electricity in North Korea because the North Koreans do not have the necessary technical infrastructure. Their electrical grid of less than ten thousand megawatts is too small and unreliable to absorb individual units of one thousand megawatts.¹² (The limiting size for an individual unit is usually not much more than 5 percent of the grid capacity so as to be able to maintain grid power if the unit drops off-line suddenly.) Moreover, grid unreliability poses safety problems for nuclear reactors, which may need outside electrical power sources to maintain cooling in the event of a sudden shutdown since emergency diesel generators are not especially dependable.¹³ Providing the necessary grid infrastructure is likely to add $1 billion or so to the original project cost estimates. Altogether, the host of practical and political problems in transferring nuclear technology to North Korea ensures that, of all the ways of supplying North Korea's electrical needs, nuclear power will take by far the longest time to bring on-line. Why then did the North Koreans want nuclear reactors?

North Korean Incentives

The U.S. negotiators would have preferred to supply conventional electric-generating technology to North Korea rather than nuclear technology. This would have made economic sense and could have been done in perhaps one-third the time. Of course, the North Koreans attach great symbolic significance to getting a nuclear project from the United States. It forces extensive U.S. engagement with North Korea and, if carried through to completion, will force the United States to bend its nuclear export laws for the DPRK. But the North Koreans must also have chosen this course because completing the electric-generating project was not their top priority. Had they gotten another kind of electric-generating technology, which would have been delivered quickly, they would also have had to perform quickly. The nuclear deal allows them to stretch out their performance and to maintain their threat to reopen their indigenous nuclear plants.

All this means that the North Koreans may not necessarily be motivated to perform their part of the bargain in the way the United States has assumed. They may not be counting on the LWRs anytime soon or perhaps at all. What they wanted most, they got: direct negotiations with the United States while keeping their nuclear weapons option in mothballs as security for U.S. performance.

Progress on the Reactor Project

As mentioned, the reactors will be built mainly by the South Koreans, who will supply the bulk of the funds, the rest coming mostly from Japan.¹⁴ The North Koreans balked at accepting a South Korean nuclear power station, or pretended to, but have agreed with the understanding that the United States will play a central coordinating role. The North Koreans have insisted on dealing directly with the United States and on the whole have gotten their way. The entity that will direct the work and contract for services is the Korean Energy Development Organization, led by the United States. At North Korea's insistence, the United States will serve as the point of contact with the DPRK and U.S. citizens will lead all delegations and teams of KEDO. KEDO was responsible for selecting a prime contractor, a South Korean firm. But, again at the North's insistence, a U.S. firm will serve as program coordinator.¹⁵

In December 1995 KEDO and the DPRK signed a supply agreement for the LWRs.¹⁶ The reactors are supposed to conform to standards "equivalent" to those of the United States. The DPRK is to repay KEDO in cash or "in kind," interest free, over a twenty-year period starting three years after the completion of the plants. Realistically, however, the plants are a gift that the South Koreans hope to regain after eventual reunification.

The DPRK, as owner, has the right to participate in quality inspections of the equipment and construction, which may lead to interesting DPRK-KEDO exchanges since KEDO will guarantee the work. KEDO will also train DPRK personnel, assist in obtaining fuel for the life of the plants, and at its option take ownership of the spent fuel. This last provision is necessary to close a loophole in the Agreed Framework, which lacks the reprocessing controls that are standard in all U.S. export agreements.

KEDO and the DPRK have also reached an agreement on diplomatic immunities and consular protection.¹⁷ The project seems to be gaining political and commercial momentum. In March 1996 KEDO selected a South Korean consortium led by the Korean Electric Power Company as a prime contractor.¹⁸ South Korean firms, which are trying to break into the world nuclear power plant market, see this as a way to demonstrate their new plant design at taxpayer expense. Since there is not much nuclear work around the world, other contractors are eager to join in and the project has taken on a life of its own. (Much about the project is reminiscent of The Bridge on the River Kwai.) KEDO has acquired offices in New York on a long lease and in July 1996 hired Duke Engineering and Services, a subsidiary of Duke Power, as a subcontractor and adviser.¹⁹ As of April 1997, KEDO and the DPRK are scheduled to sign more than ten protocols to implement a supply contract signed in December 1995. So far, the two parties have signed protocols on privileges and immunities, transportation, communications, and the takeover of reactor sites and services.²⁰ KEDO has yet to complete a site safety study.²¹

OTHER AGREED FRAMEWORK ISSUES

The Agreed Framework raises other issues. In the order they appear in that document:

Oil Supply to North Korea

As mentioned, after the signing of the 1994 U.S.-DPRK Agreed Framework, the United States started supplying North Koreans with fuel oil, an arrangement that continues. Although the tonnage is modest in absolute terms, it now amounts to more than 40 percent of the North's annual oil imports. The calculation that arrives at the promised oil supply of 500,000 tons a year itself reflects important concessions. That amount of oil is based on the 250 megawatts of electrical capacity that the North Koreans are supposed to have given up by putting their nuclear construction program on hold. The calculation generously assumes that the reactors under construction would have been finished on schedule and would, in fact, have generated electricity, a debatable conclusion since they appeared to be plutonium production reactors. The oil calculation also assumes that the plants would have run at 100 percent of capacity. Under the agreement, the North Koreans will continue to receive oil shipments until the first of the two LWRs is completed, which at this point cannot be before about 2005.

Promised Dismantlement of the DPRK Facilities

The final step in North Korean compliance with the agreement is the ultimate dismantling--the elimination--of North Korea's plutonium production plants. The completion of the second of the two reactors is contingent on this. Realistically speaking, however, dismantling the North Korean plutonium production facilities is just a hope on the part of the United States. In the best of circumstances, these events will be far in the future--perhaps, say, 2010. By then North Korea may have softened or have unified with the South. That cannot, however, be the intention of the North Korean regime. If it holds out to the end point of the agreement, with the first reactor finished and the second nearly so, the United States will have little leverage over the nuclear project. Thus, barring a major political change in North Korea, its plutonium facilities will remain a latent threat for the indefinite future.

North Korean Spent Nuclear Fuel

To a somewhat lesser extent, the same conclusions apply to shipping research reactor spent fuel out of North Korea, which is supposed to take place before the completion of the first LWR, again, many years in the future. U.S. leverage--in terms of the agreement--will have been much reduced owing to the substantial completion of the reactor project. The key components for both plants will likely have been delivered because that is how such projects work. If the North Koreans have softened by then, the United States will have won its gamble. If not, the situation will be difficult.

IAEA Inspections of Disputed Sites

Under the agreement, to qualify for "key" nuclear components the North Koreans are to allow the IAEA to conduct "special inspections" of the disputed waste sites when a "significant portion" of the LWR project is finished, perhaps five years after the start of the project (which has yet to begin construction). The December 1995 KEDO-DPRK agreement spells out what "significant portion" means, and a separate protocol will spell it out further. It includes fabrication of the major reactor components for the first reactor, delivery of nonnuclear components including the turbines and generators, construction of plant buildings to the point where the nuclear components can be installed, and, for the second LWR, civil construction and fabrication and delivery of nonnuclear components. The entire nuclear package--the reactor, steam generators, and associated components--makes up only about 15 percent of the total plant in terms of cost. The nuclear equipment is not all installed at the end, of course, but one can build much of the plant without the "key components."

It also appears that some of the key nuclear components will have to come from the United States. The LWRs are, after all, basically a South Korean version of a U.S. design. U.S. law requires that such U.S. equipment exports be covered by a formal agreement for cooperation with the importing country, subject to congressional approval. Individual exports must be licensed by the Nuclear Regulatory Commission (NRC). By law, the NRC must be convinced that IAEA safeguards "will be applied" in perpetuity. It is difficult to see how, on the basis of its record of violations, the present government of North Korea could meet that and other strict statutory criteria, regardless of whether the IAEA inspections take place.²² Yet, the project is proceeding on the assumption that the NRC and Congress will go along with a permissive reading of the law.

How strictly the United States and the IAEA will interpret the condition in the agreement related to clearing up past noncompliances is, in fact, debatable. Large projects have a dynamic of their own. In this case, South Korean, Japanese, and U.S. commercial entities will have been mobilized and engaged; jobs will be at stake. In addition, thousands of South Korean workers may, in effect, be hostages in North Korea. In such a situation the tendency is to rationalize away past noncompliances that threaten project continuation.

Significantly, the Agreed Framework does not say that the question of past North Korean reprocessing has to be resolved but only that North Korea has to satisfy the IAEA. It would not be the first time that the IAEA used its political judgment to resolve the inevitable technical ambiguities. In the topsy-turvy world of this agreement, where the United States will be trying to speed the LWR project thinking that this will speed the dismantling of the North Korean reactors, the IAEA's failure to make a favorable finding will become a problem for the United States rather than for the North Koreans.

QUESTIONS AND LESSONS

There are other questions. Thousands of technical personnel were apparently involved in North Korea's existing nuclear program. If North Korea was building a bomb, some of these scientists and engineers must have been working on bomb design and manufacture. What are these people doing now?

There are some lessons, too, about the so-called international nonproliferation regime. Consider the system of protection afforded by the NPT and IAEA inspections. If North Korea had not been so foolish as to hide its plutonium separation but had let the IAEA look in on it, the North would have been entirely in compliance with international rules and there would have been no legal cause for complaint. North Korea could have accumulated plutonium, and by the terms of its standard agreement with the IAEA, the agency would have been obligated to keep any information about the plutonium stockpile confidential.

Meanwhile, the U.S.-DPRK agreement continues to unfold. The United States continues to supply oil and doing everything it can to keep the twin power reactor project on track. North Korea has kept its nuclear plants closed. It is, however, back to imposing restrictions on IAEA inspections, even when it has agreed to them, if that suits its purpose.²³ Whereas the United States is counting on the North's eventual softening and demise, the North is presumably betting that the opening to economic and political normalization will allow it to survive and plans to hang on to its mothballed nuclear program for leverage. Concern about the effects on the nuclear agreement did not hold North Korea back from sending a spy submarine into South Korean waters in September 1996. The reactions to this incident indicate the current "state of play." In response to the military incursion, and the death of some of its citizens, South Korea froze its participation in the KEDO reactor project and insisted on an apology from the North before it would resume its contribution. The State Department, presumably anticipating North Korea's reaction, made clear it saw no reason to slow down participation in the KEDO project, despite the submarine incident.²⁴ North Korea then threatened to restart its indigenous nuclear projects if the KEDO project did not get under way.²⁵ When South Korea did not budge, the State Department agreed on the need for North Korea's expressing "regret or making some other gesture" concerning the incident but contemplated additional aid to North Korea to induce it to make the necessary gesture,²⁶ which says something about who has leverage over whom. In the end, the North made a grudging statement that was taken as the functional equivalent of an apology.

WHAT NOW?

What is to be done now? The U.S.-DPRK arrangement must be seen against the broader picture of events and circumstances in Korea and, more generally, in East Asia that are beyond the nuclear perspective of this analysis. Still, several points stand out in relation to the proposed transfer of nuclear power reactors to North Korea. The starting point for thinking about what to do has to be the recognition that, as the project proceeds, the U.S. bargaining position will grow weaker, not stronger. If we are still dealing with the same North Korean regime when the power reactor project nears completion, our ability to influence its nuclear plans will be small. Only when the second of the two power reactors nears completion are the North Koreans required to dismantle their indigenous nuclear plants. What if they do not do so at that point? After all, why would they give up the basis of their blackmail?

The administration defended the 1994 agreement, when it was announced, on the grounds that it phased the performance of both sides so that the North Koreans would not get the power reactors unless they kept their part of the bargain every step of the way. I argue that under the agreement the United States has to do a great deal of construction and turning over of nuclear power technology before the North Koreans have to do much of anything. Also, the realities of a major international project involving large contractual commitments and labor forces will put heavy pressure on the United States to interpret the agreement's tests, in particular the disputed waste site inspections, in favor of the North Koreans.

The only way to limit the most objectionable, and even dangerous, aspects of the agreement will be to require real phased performance by both sides. That is, if the agreement speaks of dismantling by a certain point in the project, that should not mean dismantling at the last moment but rather progressive dismantling as the reactor project goes forward, starting now. The North will, of course, object. But can we count on its compliance at the end of the project, when we will be in an even weaker position to demand it?

The two new nuclear electric-generating units to be built by KEDO are supposed to replace the electric-generating capacity the North Koreans are giving up by not continuing with their indigenous program. But the first new nuclear plant will have a capacity four times that of the plants the North had in operation and under construction (5 megawatts in operation and a maximum of 250 megawatts under construction). Once that first KEDO-built reactor is in operation, what reason can the DPRK have to hold off dismantling its indigenous facilities--except to continue threaten to build nuclear weapons? If that is so, why do we think it will give up this option when the second reactor is built? The United States should insist that, before the first new large reactor goes into operation, the North dismantle at least two of the four major nuclear facilities (the very small operating reactor, the reprocessing plant, and the two larger reactors under construction), preferably the small reactor and reprocessing plant.

The same principle of phased performance should apply to the promised IAEA inspections of the disputed waste sites. Under the 1994 U.S.-DPRK agreement, the North Koreans must allow IAEA inspection of the waste sites before getting delivery of "key nuclear components." We should not allow the key components to be on the dock waiting to be shipped, while the IAEA is deciding whether it is satisfied and the DPRK is threatening to reactivate its nuclear program. We should expect phased performance, starting now, toward completion of such an inspection. Again, if the North Koreans object now to such a start, why should we expect them to comply later?

To the extent such "key nuclear components" will be from the United States, they will require a congressionally approved U.S.-DPRK agreement for cooperation and an export license from the Nuclear Regulatory Commission (or a presidential waiver with congressional consent). Inherent in the 1994 agreement is the assumption that such approvals, which require a satisfactory report from the IAEA, will be forthcoming when needed. Unfortunately, the most likely scenario is one in which the IAEA finally conducts some sort of inspection at the disputed DPRK waste sites and arrives at a technically inconclusive result that is resolved, on political grounds, in favor of moving forward. Congress should make clear, well in advance, that it will not bend U.S. nuclear export laws on behalf of North Korea on this basis and that it expects a solid report from the IAEA following a thorough inspection.

It is difficult to imagine North Korea allowing a thorough IAEA inspection of the waste sites if, as we think, it has been lying all along about how much plutonium it has separated. The diplomats have written this issue off as unimportant; from the start, our negotiators told the North Koreans that, if they would only come clean about past plutonium separation, we would treat their treaty violation as an "error" in material accounting. But, if the current North Korean regime is still in power, could we really just correct the material accounting books and proceed with the nuclear reactor project? In particular, could Congress go along with such a result? Yet that it will do so seems to be the working assumption in the State Department--a point Congress could usefully address, earlier rather than later.²⁷

¹ There is some indication that in 1992 Russia was still interested in pursuing the export but was warned against it by the United States. (I have this from a participant in 1992 U.S.-Russian conversations.)

² The treaty was adopted in 1969 with the understanding it would be reviewed in twenty-five years. In 1995 the treaty was extended for an indefinite term.

³ Joint Declaration for a Non-Nuclear Peninsula, initialed December 31, 1991, and signed January 20, 1992.

⁴ Reuters, July 19, 1993. This and other citations come from the useful compendium on Northeast Asian security affairs e-mailed daily by the Nautilus Institute in Berkeley.

⁵Washington Post, July 17, 1993.

⁶Washington Post editorial, January 4, 1994.

⁷Washington Post, December 12, 1993.

⁸ Press conference transcript, General John Shalakashvili, Department of Defense, Public Affairs, December 14, 1993. Cited by U.S. Army lieutenant general John H. Cushman (ret.), "Military Options in Korea's Endgame," Nautilus Institute working paper, May 1994.

⁹ Agreed Framework Between the United States of America and the Democratic People's Republic of Korea, Geneva, October 21, 1994.

¹⁰ President Clinton's letter to Kim Jong Il, October 20, 1994.

¹¹ Agreed Framework Between the United States of America and the Democratic People's Republic of Korea, Geneva, October 21, 1994.

¹²The CIA World Factbook, 1995 (available on the CIA World Wide Web Page: www.odci.gov), lists an electrical capacity of 9,500 megawatts. This is not all connected to a grid.

¹³ "Criteria for Safety-Related Electrical Systems for Nuclear Power Reactors," U.S. Nuclear Regulatory Commission, Regulatory Guide, 1.32, Revision 2, February 1977.

¹⁴ A number of other countries are involved in a minor way. The United States sought the widest possible international participation for political and financial reasons. The European Union is expected to join the KEDO board soon. AP–Dow Jones News Service ("KEDO $35 Million in Debt, Expects E.U. Will Join Soon," Seoul, March 13, 1997).

¹⁵ Joint U.S.-DPRK press statement, Kuala Lumpur, June 13, 1995.

¹⁶ Agreement on the Supply of a Light-Water Reactor Project to the Democratic People's Republic of Korea Between the Korean Peninsula Energy Development Organization and the Government of the Democratic People's Republic of Korea, New York, December 15, 1995.

¹⁷Korea Times, Seoul, May 25, 1996. Also KEDO, Annual Report, New York, July 1996 (hereafter, KEDO, Annual Report.

¹⁸ KEDO, Annual Report.

¹⁹ KEDO, Annual Report.

²⁰Korea Times, "NK, KEDO to Hold Talks on Non-Payment Protocol," March 14, 1997.

²¹ This was scheduled for completion in October 1997 (KEDO, Annual Report). It was delayed for about six months by the September 1996 DPRK submarine incursion incident. A site review team was in North Korea in March 1997, in Sinpo, on the DPRK's northeast coast. Stephen Bosworth, KEDO director, said he was optimistic that KEDO could "begin the physical work at the site in late spring." Bosworth added that he is "cautiously optimistic" that KEDO can meet its target date of 2003 to complete the reactor. AP–Dow Jones News Service (Seoul, March 13, 1997).

²² Victor Gilinsky and William Manning, "A US-Type Light Water Reactor for North Korea? The Legal Implications," Nautilus Institute working paper, December 1993.

²³ UPI ("N. Korea Withholds Nuclear Information," United Nations, November 7, 1996) reported that Hans Blix, the IAEA director general, complained to the Security Council that the DPRK "still did not accept some important verifications measures."

²⁴ U.S. State Department spokesman Nicholas Burns ("State Department Noon Briefing, November 8, "U.S. Information Agency transcript, November 12, 1996) stated that the Agreed Framework remains in place despite recent moves by the ROK to suspend construction of the two new nuclear reactors in the DPRK called for in the agreement. "We are meeting our commitments, and we've not seen any North Korean action that would indicate that the North Koreans are not meeting their commitments. The Agreed Framework is going forward--it's being implemented." Burns added that the United States does not acknowledge any linkage between implementation of the Agreed Framework and other recent sources of conflict in U.S.-DPRK relations.

²⁵ The AP ("N. Korea May Renege Nuke Accord," Seoul, November 7, 1996) reported that a South Korean newspaper known for its close contacts with the North carried a story that the DPRK will restart its nuclear program if LWR construction does not resume soon. Other November 15, 1996, wire reports from AP ("N. Korea May Resume Nuke Plan," Seoul), Reuters ("N. Korea Says Nuke Deal with U.S. in Jeopardy," Seoul), and UPI ("N. Korea Says Nuke Freeze Dead," Seoul) conveyed the North's threats. These were said to have been communicated in a formal DPRK letter to the State Department as well.

²⁶ Warren Christopher, secretary of state, quoted in "Seeking Gesture on Sub Incident, U.S. Mulls Aid to North Korea," Washington Post, December 18, 1996. The full December 17 AP story ("U.S. Mulls Aid for North Korea") has Mr. Christopher adding that the incident "does require some action or comment before we can proceed."

²⁷ The U.S. contribution to KEDO must be approved by Congress. The administration has submitted a request for $30 million for fiscal 1998 for funding the U.S. contribution to KEDO. Assistant Secretary McNamara said the KEDO budget request "is essential to finance KEDO's administrative expenses and projects, particularly the provision of heavy fuel oil to the DPRK." ("Asst. Sec. McNamara 3/12 Congressional Testimony," U.S. Information Agency, transcript excerpts, March 14, 1997.)