CNS Reports

Implementing the Agreed Framework and Potential Obstacles

A Paper for the 12th Pacific Basin Nuclear Conference in Seoul, Korea, 29 October to 2 November 2000.

Daniel A. Pinkston, PhD(1)

Senior Research Associate
Monitoring Proliferation Threats Program
Center for Nonproliferation Studies
Monterey Institute of International Studies

Abstract

The Agreed Framework between the United States and the Democratic People’s Republic of Korea (DPRK) signed in October 1994 has frozen the DPRK’s nuclear weapons development program. However, the Agreed Framework has been under threat. Several obstacles remain before the agreement will be completed and the DPRK comes into full compliance with its commitments under the Nuclear Nonproliferation Treaty (NPT).

The ultimate goals of the Agreed Framework are laden with transactions costs that the agreement is designed to surmount. The Agreed Framework is not an international treaty subject to ratification; however, each of the steps in the process designed to build mutual confidence is subject to de facto ratification or approval by each of the parties, which creates the opportunity to opt out of the agreement at almost any time.

This paper presents some of the issues and obligations under the Agreed Framework, and potential problems that could lead to its demise. Ultimately, political decisions will determine whether or not the Agreed Framework will succeed. The recent summit meeting between the leaders of the DPRK and the Republic of Korea (ROK), and high-level talks between the United States and the DPRK are encouraging. Rapprochement between the two Koreas is necessary, but not sufficient for the completion of the Agreed Framework. A comprehensive “package deal” to resolve the DPRK missile program and other issues is probably also necessary for the completion of the agreement.

The recent political developments on the Korean Peninsula have been very dramatic. Only one year after the Democratic People’s Republic of Korea (DPRK) and the Republic of Korea (ROK) squared off in an intense sea battle,(2) President Kim Dae Jung was in Pyongyang holding talks with National Defense Commission (NDC) Chairman Kim Jong Il. The first ever meeting between the leaders of the two Koreas is even more remarkable in that it followed a series of recent events that seriously threatened the Agreed Framework between the United States and the DPRK, as well as President Kim Dae Jung’s “sunshine policy”(3) towards the DPRK.

The DPRK and the ROK have held high-level talks before, but the June summit and the rapid thaw in relations are unprecedented.(4) Following the summit, there have been continuous reports of sweeping changes in inter-Korean relations, which will have an impact on the Agreed Framework and other critical issue areas in Korea. The Agreed Framework has numerous technical issues that must be addressed. However, these technical issues are embedded in a set of broader political problems that must be solved in order to complete the Agreed Framework.

The Agreed Framework is a bilateral agreement that in reality is a multilateral arrangement designed to address the interests of the US, the DPRK, the ROK and Japan, as well as the international community’s proliferation concerns. The Agreed Framework is a short and imperfect contract dealing with a very difficult issue full of classic transactions costs problems. In general, the agreement was constructed to resolve the Korean nuclear crisis of the early 1990s, eliminate the threat of war that reached its zenith in the summer of 1994, and provide greater security for the region. The agreement was designed to achieve the divergent goals of each of the parties; each party will be better off if the agreement comes to fruition. However, several hurdles remain.

The countries directly affected by the Korean nuclear crisis of 1992-1994 were willing to compromise in order to avoid war and to seek greater security. The Agreed Framework generally embraces the security preferences of the signatories, but the agreement, which includes several ambiguous terms, is subject to the interpretation of each party. The US seeks the elimination of the DPRK’s weapons of mass destruction (WMD) and missile programs, while the DPRK seeks energy, economic assistance, and the elimination of external threats to its existence. The ROK wants greater inter-Korean dialogue, a reduction of tension, and greater transparency in the DPRK nuclear program, while Japan wants to eliminate the threat of the DPRK’s WMD and missile programs.(5) The general terms of the Agreed Framework are that the US is to lead an international consortium, the Korean Peninsula Energy Development Organization (KEDO), that will supply two LWRs of approximately 2,000MW total by a target date of 2003 in exchange for the DPRK suspending its withdrawal from the Nuclear Nonproliferation Treaty (NPT), freezing and dismantling its graphite-moderated reactors, and coming into full compliance with its safeguards commitments under the NPT. Furthermore, the international consortium is to finance the reactor project through an interest-free loan that will not enter into repayment until 20 years after the first reactor comes on line, and furthermore, the US is to provide heavy fuel oil to offset the energy given up by the freeze on the operation and construction of the DPRK’s graphite-moderated reactors.(6)

The Hold-Up Problem

The LWR deal between KEDO and the DPRK depicts a perfect example of what is called the “hold-up problem” in economics. The international system has no third-party enforcer to force compliance with contracts or agreements between countries. Even though two parties can be better off through trade, the hold-up problem prevents a transaction from taking place because neither party can make a credible commitment. In other words, in a one-time transaction, the first party to receive the item of exchange will “hold-up” the other party by not completing the transaction. Both parties know this, so neither will enter into the transaction in order to avoid being held-up.

However, cooperation can emerge in this situation if there is repeated interaction. If the parties know there will be repeated transactions, they may begin to cooperate without a third-party enforcer, unless future gains from trade are sufficiently discounted to make “holding-up” the other party during the current transaction preferable to capturing the gains from future trade. Cooperation will also unravel if there is a short “shadow of the future,” or in other words, when the end of repeated interaction is in sight.(7) The anarchy of the international system, and the security connotations of the Agreed Framework make it very difficult to implement. It is difficult for the parties to make the final “concession” in the deal because of the fear of being “held-up.” In a one-time transaction, neither the DPRK nor KEDO members can credibly commit to fulfilling its part of the bargain if it is to follow the other side’s “concession.” Therefore, negotiators designed the agreement to have several steps so that it would have the appearance of “repeated play” in order to build trust between the parties. Table One outlines the series of steps the two parties must take to complete the Agreed Framework.

There is a Korean expression “sijak un pan ida,” which means, “Starting is half of the task.” From a Korean traditional perspective we might say the LWR project is more than half finished, but in reality there are still many issues that might cause the Agreed Framework to fall apart. Since the Agreed Framework is a “framework” and not a legally binding treaty, it is subject to review along the way. This feature of the agreement was necessary to build trust and confidence between the parties; however, it also gives each side the opportunity to back out of the deal at almost anytime. The Agreed Framework was not subjected to the formal ratification as in the case of an international treaty,(8) but it could be described as an extended two-level game that requires continuous ratification at each step.(9)

Remaining Obstacles

One of the first obstacles facing the Agreed Framework is the US obligation to supply the DPRK with heavy fuel oil (HFO). Under the agreement, the US is responsible for KEDO supplying 500,000 tons of HFO on an annual basis until the first LWR begins operation. The potential failure to procure and supply HFO to the DPRK is a serious threat to the agreement because Pyongyang has threatened several times to restart its Yongbyon nuclear reactor if KEDO fails to provide the HFO. The severity of the DPRK’s energy shortage is well known. Part of the energy problem stems from inefficient use of energy resources, but institutional and infrastructure problems are also significant.(10) The amount of HFO to be supplied under the Agreed Framework was calculated according to the amount that would be used by the Sonbong Thermal Power Plant, which was considered to be equivalent in output to the nuclear power plants that were frozen under the agreement. The 500,000-ton amount was derived under the assumption that the Sonbong plant would be operating at 100 percent capacity; however, it has only been operating at about 40 percent of its capacity.(11) Other plants have been approved to use KEDO-supplied HFO, and the supplies are being monitored to so that none of the HFO is diverted to other consumers, such as the military.(12) Although the terms of the agreement regarding HFO have been upheld, neither party is completely satisfied. KEDO has continually had difficulty in financing the shipments of HFO, and recent increases in oil prices raises the question whether KEDO will be able fulfill its commitment to supply HFO until the first LWR begins operation.(13) On the other hand, the DPRK has been dissatisfied with the nature of the HFO deliveries. The DPRK does not have the infrastructure to receive large shipments of petroleum, and KEDO has failed to deliver the HFO in a timely and predictable manner even though the terms of the Agreed Framework were met in a legal sense.(14) Spokesmen for the DPRK have repeatedly said that Pyongyang should be compensated for the delays in reactor construction and HFO shipments. The DPRK government in recent years has conceded that the country has been facing a severe economic hardship and shortages of energy and food, so statements blaming KEDO or the US may be actually be directed towards the domestic audience.(15) However, DPRK threats to restart its nuclear program should not be taken lightly. If the DPRK resumes its nuclear program at the frozen facilities it would mean the end of the Agreed Framework.

While the DPRK feels it should be compensated for the delays in LWR construction and inconvenient shipments of HFO, threats to resume its nuclear program only encourage those in the US, the ROK and Japan who are seeking to overturn the agreement. There have been considerable resources devoted to monitoring the flow of HFO within the DPRK, and there is some evidence that up to five percent of the KEDO-supplied HFO may have been diverted from the approved thermal plants. According to the US State Department, “there is no clear evidence of any diversion to unauthorized purposes of the 500,000 metric tons of heavy fuel oil delivered annually to North Korea.”(16) Nevertheless, some policymakers in the US believe diversion is inevitable.(17) The diversion of HFO to the DPRK military would mean the end of funding for HFO deliveries and almost certainly the end of the Agreed Framework. However, many critics of the Agreed Framework believe any aid is fungible and the DPRK is inflexible and belligerent.(18) Under this premise, any trade or aid will only prop up the authoritarian government in Pyongyang and help the DPRK increase its military capabilities to threaten international security. Whether this is true or not does not really matter; any moves by the DPRK that are perceived to be belligerent will undermine congressional support in the US to finance HFO deliveries. The recent North-South summit and other confidence building measures should reduce the incentives for the DPRK to engage in provocative behavior that could erode remaining support for HFO funding in the US Congress.

The Agreed Framework also requires that “the two sides will move toward full normalization of political and economic relations.” The DPRK lifted restrictions on trade and telecommunications services with the US in early January 1995. The US followed suit in late January 1995, permitting telephone calls and credit card use in the DPRK.(19) However, these measures will do nothing to ease the DPRK’s economic difficulties; the US has so far only been willing to make gradual adjustments in its economic sanctions against the DPRK, most recently on 19 June 2000.(20) The US has lifted some economic sanctions, but full normalization of political and economic ties is linked to other issue areas. The major sticking point in the normalization of relations between the two countries is the US designation of the DPRK as a “terrorist state.” This designation requires the US to veto DPRK entry into international financial organizations such as the World Bank, which deprives the DPRK access to international financial resources.(21) The DPRK sought a relaxation of sanctions in bilateral talks that were held in New York from 27 September to 2 October 2000 on a variety of issues, including proliferation and terrorism. The talks were described as positive, but the only concrete result of the talks made public was NDC First Vice Chairman Jo Myong Rok’s visit to the US during 9-12 October.(22) The US acknowledges that the DPRK has not engaged in terrorist acts for several years; however, the US has refused to lift the terrorist designation because Pyongyang continues to harbor Japanese Red Army members since they hijacked a Japan Air Lines aircraft to the DPRK in 1970. The terrorist classification delayed high-level contacts between Washington and Pyongyang for over a year since the DPRK refused to send an emissary in reciprocation for William Perry’s May 1999 visit to Pyongyang. There may have been other reasons for Pyongyang’s delay, but the DPRK publicly claimed that no high-level official could visit Washington “under a terrorist’s cap.” Fortunately, this obstacle was finally cleared when Jo Myong Rok visited Washington in early October.(23) The removal of economic sanctions and the normalization of relations is primarily a benefit for the DPRK, but it is in the interest of the US and KEDO as well. The financing for the LWRs is being provided as a loan — not a grant. The terms of the loan, interest free with payments to begin 20 years after the reactors begin operation, may be considered quite generous. However, the DPRK must earn the foreign exchange to repay this loan. This is no trivial matter given the DPRK’s recent economic performance and past experience with foreign debt.(24) The DPRK complains that economic sanctions are the reason for its lack of access to the international economy and financial resources, but Marcus Noland points out that the DPRK “regularly has unused textile and apparel quotas in Europe, where it is not subject to sanctions.”(25)

Economic Reforms and Structural Adjustments

The DPRK will have to open its economy and accept inflows of capital and technology in order to reverse its economic stagnation. Contrary to strict interpretations of Juche, the official state ideology, Pyongyang knows it must receive foreign capital and technology to fulfill Kim Jong Il’s goal of building a “powerful nation.”(26) However, “building a powerful nation” does not mean expanding the DPRK’s military capabilities to impose its rule by force over the entire peninsula. The DPRK’s ruling elite realizes that any military effort to extinguish the ROK and unify Korea by force would almost certainly fail. The objective of “building a powerful nation” is more about instilling a strong sense of national pride that DPRK citizens can clearly identify as being inseparable from Kim Jong Il and the DPRK government. In other words, it is more about regime survival than regime expansion.

The DPRK will need foreign exchange to complete some of its obligations under the Agreed Framework, including refurbishing the power grid, and dismantling the facilities at Yongbyon and T’aech’on.(27) The costs of refurbishing the power grid may be as high as $300 million to $700 million, and the DPRK is presently unable to secure this kind of financing.(28) Furthermore, the DPRK has been under serious balance of payments pressure, and has resorted to drug smuggling, counterfeiting, and arms exports to finance the balance of payments deficit.(29) Unless the DPRK can find foreign exchange earning substitutes for its missiles, and for its technologies related to missiles and weapons of mass destruction, support from the KEDO consortium for the Agreed Framework will collapse.

A clandestine nuclear weapons program by the DPRK, if discovered, will certainly cause the agreement to collapse. The Agreed Framework has required the DPRK to freeze its graphite-moderated reactors and facilities, which include the reactor and radiochemical laboratory at Yongbyon, as well as the two reactors that were under construction at Yongbyon and T’aech’on. Although the facilities at Yongbyon and T’aech’on have been frozen, critics argue that the DPRK has continued its nuclear weapons development program at clandestine sites not covered by the Agreed Framework. Two visits by a team of US inspectors, most recently in May 2000, revealed an empty hole in the ground at Kumchang-ri; however, some argue there may be as many as 12 other sites where the DPRK is continuing work on the development of nuclear weapons.(30) The DPRK’s engagement in plutonium reprocessing, uranium enrichment, or the development of nuclear weapons technologies would bring us back to the nuclear brink of 1994. Therefore, IAEA inspections and monitoring of the freeze are paramount. However, the IAEA has recently complained that the agency is not being given complete access to nuclear sites in the DPRK.(31) At the IAEA General Conference in September 2000, member states “adopted a resolution that urged the DPRK to come into full compliance with its safeguards agreement, and to take all steps that the agency deems necessary to preserve relevant information for its verification.”(32) The DPRK views requests for special inspections as unreasonable and “a grave challenge to the sovereignty of the DPRK.”(33) The leadership in Pyongyang knows that the DPRK’s safeguards commitments must be met to complete the Agreed Framework. This includes the two suspect sites in Yongbyon that may contain reprocessed plutonium or evidence that the DPRK has reprocessed plutonium and diverted it to a bomb program. Kim Jong Il and the NDC will have to decide whether or not the DPRK will come into full compliance with its safeguards commitments; however, the top leadership can site “unreasonable inspections” as a reason to pull out of the agreement if domestic politics make the Agreed Framework unacceptable for any reason.

Resources must be moved from DPRK weapons programs to meet the terms of the Agreed Framework and to create economic activities that generate foreign exchange that will be needed to complete the agreement. However, it will be difficult politically to abandon WMD programs if no alternative opportunities are available for human resources in the military sector. If these structural adjustments are unsuccessful in the DPRK economy, it could be impossible to go against a strong coalition of supporters behind WMD programs.

Ambiguous Terms and Regulatory Issues

There are several ambiguous provisions in the Agreed Framework that are open to interpretation and that may cause problems with implementation. Ambiguity allows an easy exit while blaming the other side for the collapse of the agreement. The ambiguous provisions include: “Work for peace and security in a nuclear-free Korean peninsula; take steps to implement the North-South Declaration on the Denuclearization of the Korean peninsula; work together to strengthen the international proliferation regime; and engage in North-South dialogue.” No criteria have been set for these provisions; they are more of an indication of the success of confidence building measures and overall trust between KEDO members and the DPRK. If either side is unhappy with the progress of the agreement, dissatisfaction with any of these provisions can be cited for abrogating the Agreed Framework.

Legal and regulatory issues can also undermine the LWR project. The DPRK and KEDO have concluded a number of regulatory agreements that include protocols on juridical status, privileges, immunity and consular protection; communications; transportation; labor, goods, facilities and other services; site take-over, site access, and use of the site; and nonpayment.(34) These protocols essentially grant extraterritoriality to KEDO at the Kumho site. These agreements grant KEDO access to move forward with the project, but the DPRK must address a number of other regulatory issues before critical components for the reactors can be delivered, and before the operation of the LWRs can begin.

The DPRK and the US must conclude a nuclear cooperative agreement before any nuclear components can be delivered from the US The US president must reach the agreement with the DPRK, but the Congress can overturn it. Furthermore, the US Atomic Energy Act requires American firms to acquire a nuclear export license before shipping any nuclear components abroad. And before any firm receives an export license, the president must certify that the recipient has not violated IAEA safeguards.(35) If the DPRK does not come into full compliance with its safeguards commitments, this gives the president or US Congress another opportunity to veto the Agreed Framework.

The DPRK must enter into an indemnity agreement with KEDO to protect KEDO and its supplier firms, and the DPRK must also obtain liability insurance and pass legislation to deal with litigation in the case of a nuclear accident.(36) Discussions were held between officials from KEDO and the DPRK regarding the liability issue in August 2000. The talks covered preparations for protocol negotiations over indemnity, safety and liability issues; however, further talks have not yet been scheduled.(37)

Linkage to Other Issues

The DPRK has complained that the LWR project has been delayed even though Pyongyang has upheld the letter of the Agreed Framework. However, the remaining obstacles to the LWR project can only be resolved through a political “package deal.” Linkage to other issues, particularly the DPRK missile program and missile exports, can easily kill the agreement. Indeed, the so-called “Perry Report” recommends that US engagement with the DPRK be linked to the “verifiable cessation of testing, production and deployment of missiles exceeding the parameters of the Missile Technology Control Regime.”(38) Furthermore, ROK Minister of Foreign Affairs and Trade Lee Joung Bin recently declared that rapprochement between the DPRK and the ROK will also fail unless the DPRK missile problem is solved.(39) Critics argue that issue linkage exacerbates the complexity of the Agreed Framework and guarantees failure. Issue linkage does create greater complexity and offers more opportunities for the parties to withdraw from the agreement. However, linkage to other issues is necessary to create the conditions for each party to fulfill its obligations with confidence under the agreement.

If we look at the Agreed Framework in a vacuum, “slicing” it into several transactions creates the appearance of “repeated play” in a “prisoners’ dilemma” type of transaction. But this does not solve the “hold-up problem” because either party would “hold-up” the other on the final transaction of the agreement. If the DPRK remains isolated from the rest of the world, we should expect the Agreed Framework to eventually collapse because it would mean the end of interaction. Under these conditions, neither party can make a credible commitment to fulfill its final part of the bargain. Each party knows this, and each party knows that the other party knows this, etc., so cooperation will come unraveled.

Issue linkage from the perspective of both parties—economic sanctions, missiles, the terrorism list, improved diplomatic relations—all bring the DPRK out of its isolation to become a member of the international community. This extends interaction and generates “repeated play” beyond the final transaction of the Agreed Framework. In this case, the agreement becomes embedded in a larger game; thus, the hold-up problem becomes less likely because of the potential gains in future interaction.

Conclusion

The June 2000 meeting between President Kim Dae Jung and Chairman Kim Jong Il has set the stage for numerous exchanges between the DPRK and the ROK. For example, the decision to re-establish a railroad and highway linking the two Koreas is indicative of increasing trust and confidence between the two sides. The first meeting between the defense ministers of the DPRK and the ROK in late September 2000 led to an agreement to establish a working committee for the clearance of mines in the Demilitarized Zone and other issues related to the railroad and highway construction.(40) This is the type of mutual confidence that will be required to complete the Agreed Framework, but it is not sufficient. The DPRK will ultimately have to introduce full transparency into its nuclear program and come into full compliance with its safeguards commitments for the Agreed Framework to be completed.

Jo Myong Rok’s visit to Washington, D.C. in October 2000 indicates that the US and DPRK may be willing to complete a bilateral agreement to address mutual issues of concern. The US holds the key to many of the DPRK’s security concerns, and the Washington has a veto over Pyongyang’s integration into the international economic system. And the US will continue to exercise this veto power until the DPRK is willing to compromise on the issues discussed here.

In sum, there are several hurdles that must still be cleared to complete the Agreed Framework and to verify that the DPRK has abandoned its nuclear weapons development program. These hurdles can only be cleared if all relevant parties have the security and trust to take the subsequent steps in the process. Issue linkage creates numerous potential pitfalls, but is necessary to extend “repeated play” and make completion of the Agreed Framework possible. Ultimately, completion of the Agreed Framework is a political problem — not a technical problem.

Steps Required to Complete Agreed Framework

US-KEDO Status
Form consortium for LWRs Completed
Secure supply contract Completed
Supply heavy fuel oil Ongoing
Reduce barriers to trade and investment Ongoing
Establish liaison office Pending
Establish diplomatic relations Pending
Bilateral agreement for peaceful nuclear use Pending
Work for peace and security in nuclear-free Korea Ambiguous
US renounces threat of nuclear weapons against DPRK Completed
Work together to strengthen international nonproliferation regime Ambiguous
Provide training for LWR operation Pending
Help provide financing for power grid Pending
Turn over key components for operation Pending
DPRK Status
Provide legal and regulatory environment for KEDO access Completed
Reduce barriers to trade and investment Completed?
Freeze graphite reactors and facilities Ongoing
Permit IAEA monitoring of freeze Ongoing?
Store spent fuel rods Completed
Establish liaison office Pending
Establish diplomatic relations Pending
Bilateral agreement for peaceful nuclear use Pending
Work for peace and security in nuclear-free Korea Ambiguous
Take steps to implement N-S declaration on denuclearization Ambiguous / pending
Engage in N-S dialogue Ambiguous / ongoing
Work together to strengthen international nonproliferation regime Ambiguous
Remain in NPT and fulfill safeguards commitments Ongoing? Ambiguous?
Permit IAEA inspections at other facilities for continuity of safeguards Ongoing?
Come into full safeguards compliance, including two suspect sites Pending
Receive training for LWR operation Pending
Provide legal and regulatory environment for plant operation, liability, etc. Pending
Obtain financing and refurbish power grid Pending
Dismantle Yongbyon and T’aech’on facilities Pending
Begin Operation of LWRs and repay loan Pending

(1) The views expressed in this paper are those of the author only, and do not necessarily reflect the opinions or policies of the Center for Nonproliferation Studies or the Monterey Institute of International Studies. I would like to thank Robert Brown, Gaurav Kampani, Kase Yuri, Kim Byung Koo, James Clay Moltz, Peter Saracino and David Stilwell for their suggestions and comments. Of course, I am solely responsible for any errors.

(2) After a nine-day standoff, the confrontation escalated into an exchange of fire that resulted in casualties and the sinking of a DPRK torpedo boat. See Lee Sung-yul, “S-N Navies Exchange Gunfire; N.K Boats Open Fire First; 1 Sunk as S. Korean Ships Shoot Back (sic)” Korea Herald, 16 June 1999, http://www.koreaherald.co.kr/news/1999/06/__02/19990616_0225.htm. The sea battle of June 1999 was only one of several naval confrontations in recent years that included the sinking of a DPRK semi-submersible high-speed boat in December 1998. In September 1996, a disabled DPRK submarine was discovered just off the shore near Kangnung on the east coast. This incident resulted in the death of 24 North Koreans, and 11 South Koreans, including civilians. For a list of DPRK provocations see Rinn S. Shinn, “North Korea: Chronology of Provocations, 1950-2000” (Washington, D.C.: Congressional Research Service, 15 March 2000).

(3) President Kim Dae Jung has implemented the “sunshine policy,” or policy of engagement with the DPRK, in an effort to reverse decades of animosity between the two Koreas. See Pak Jong Wha et al., The Sunshine Policy (Seoul: Millennium Books, 1999).

(4) The two sides held prime ministers’ talks in December 1991 that culminated in the “Agreement on Reconciliation, Non-Aggression and Exchanges between North and South Korea” (also known as the “Basic Agreement”) and the “Joint Declaration on the Denuclearization of the Korean Peninsula.” However, the agreements were never fully implemented because of the nuclear crisis that ensued in 1993-1994.

(5) These national preferences are simplified and not exhaustive.

(6) See the “Agreed Framework between the United States of America and the Democratic People’s Republic of Korea” http://www.kedo.org/Agreements/agreedframework.htm.

(7) See Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984).

(8) Ralph A. Cossa, “The U.S.-DPRK Agreed Framework: Is it Still Viable? Is it Enough?” (Honolulu: Pacific Forum CSIS, April 1999), http://www.csis.org/pacfor/pubs.html, pp. 5-6.

(9) For an explanation of “two-level games” in international diplomacy, see Peter B. Evans, Harold K. Jacobson and Robert D. Putnam, eds., Double-Edged Diplomacy: International Bargaining and Domestic Politics (Berkeley: University of California Press, 1993).

(10) In 1990, the DPRK per capita commercial energy use was three times that of China, and about half of Japan’s; however, had a per capita GDP ten to twenty times higher than the DPRK. Hydroelectric plants also suffered damage during the floods of 1995 and 1996. See Peter Hayes and David F. Von Hippel, “DPRK Energy Sector: Current Status and Scenarios for 2000 and 2005” September 1997, pp. 4, 10-11, http://www.nautilus.org.

(11) United States General Accounting Office, “Status of Heavy Fuel Oil Delivered to North Korea Under the Agreed Framework” (Washington, D.C.: USGAO, September 1999), p. 4.

(12) The other thermal plants are located in Chongjin, Pukchang, Pyongyang, East Pyongyang, and Suncheon. See ibid.

(13) At a KEDO executive board meeting in New York on 26 June 2000, Charles Kartman stated that rising oil prices would make it difficult for the US met provide the HFO as required under the Agreed Framework by 22 October 2000. See FBIS Document JPP20000627000022, “U.S. Says Difficult to Fulfill Fuel Oil Pledge to N. Korea,” Kyodo (Tokyo), 27 June 2000. The Issue was raised again at KEDO’s fifth annual meeting in late September 2000. The US asked other KEDO member countries for financial aid in providing the HFO. The US has delivered 390,000 tons of HFO this year, and the project has a $20 million deficit. See, FBIS Document ID: JPP20000927000039, “U.S. Requests Funds for N. Korean Oil at KEDO Meeting,” Kyodo (Tokyo) 27 September 2000. However, KEDO Executive Director Desaix Anderson said that HFO deliveries would continue despite rising oil prices. See FBIS Document ID: JPP20000926000084, “KEDO Opens 5th Annual Meeting in New York,” Kyodo (Tokyo), 26 September 2000).

(14) United States General Accounting Office, “Status of Heavy Fuel Oil Delivered to North Korea Under the Agreed Framework” (Washington, D.C.: USGAO, September 1999), p. 9.

(15) For example, earlier this year Vice Premier Jo Chang Dok blamed energy shortages on the US failure to honor its commitments regarding the provision of heavy fuel oil and the construction of the LWRs. He further hinted that the DPRK would reopen its closed nuclear reactor if not compensated for the energy loses. See David Jones, “North Korea May Reopen Nuke Reactor,” Washington Times, 4 February 2000.

(16) United States General Accounting Office, “Status of Heavy Fuel Oil Delivered to North Korea Under the Agreed Framework” (Washington, D.C.: USGAO, September 1999), pp.12-13.

(17) US House of Representatives Policy Committee Chairman Christopher Cox recently issued a report that stated, “the fuel the US is now providing in 2000 is almost double what North Korea’s civilian economy can use, diversion to military uses and to hard currency for military hardware purchases is practically guaranteed.” See Christopher Cox, “Clinton-Gore Aid o North Korea Supports Kim Jong-Il’s Million-Man Army: Enough Plutonium to Build 65 Bombs a Year” 27 July 2000.

(18) See Chapter Four “Sustaining The North Korean Government” in the “North Korea Advisory Group Report to The Speaker US House of Representatives” November 1999, http://www.house.gov/international_relations/nkag/report.htm.

(19) Alexandre Y. Mansourov, “The Origins, Evolution, and Current Politics of the North Korean Nuclear Program,” The Nonproliferation Review, Vol. 2, No. 3 (Spring-Summer 1995), p. 33.

(20) Office of Foreign Assets Control, US Department of the Treasury, “An Overview of the Foreign Assets Control Regulations as They Relate to North Korea,” http://www.ustreas.gov/ofac/t11korea.pdf. The DPRK is subject to US economic sanctions under the “Trading with the Enemy Act.” See http://www.ustreas.gov/ofac/legal/statutes/twea.pdf.

(21) The DPRK formally applied for membership into the Asian Development Bank on 21 August 2000. Song Sang-hoon, “North Korea Applies for Entry into Asia Development Bank (sic)” Joongang Ilbo (English Edition), 1 September 2000, http://english.joins.com.

(22) Lee Chul-min, “US-NK Wrap Up Preliminary Talks Positively,” Chosun Ilbo (English version), 3 October 2000, http://www.chosun.com/w21data/html/news/200010/200010030406.html.

(23) Jo met with President Clinton, Secretary of State Albright and Defense Secretary Cohen during his visit. The two sides issued a joint communiqué on 12 October 2000 that called for closer bilateral ties and continued support for the Agreed Framework. Furthermore, the DPRK reaffirmed its opposition to international terrorism as declared in a joint statement with the US on 6 October 2000. The DPRK also acknowledged that resolution of the missile issue “would make an essential contribution to a fundamentally improved relationship between them and to peace and security in the Asia-Pacific region.” See “U.S.-DPRK Joint Communiqué,” http://www.state.gov/www/regions/eap/001012_usdprk_jointcom.html.

(24) See Gregory F. T. Winn, “Sohak: North Korea’s Joint Venture with Western Europe,” Chapter 12 in Koh Byung Chul, Kwak Tae-Hwan and Park Jae Kyu, eds., The Foreign Relations of North Korea: New Perspectives (Seoul: Kyungnam University Press, 1987), pp. 299-301.

(25) The DPRK has a comparative advantage in light manufactures and some natural resource products according to Noland, but DPRK exports to OECD countries have declined over time. See Marcus Noland, Avoiding the Apocalypse: The Future of the Two Koreas (Washington, D.C.: Institute for International Economics, June 2000), p. 109.

(26) Building a “kang song tae kuk” or “powerful nation” has emerged as a DPRK state objective since the constitutional revision of September 1998. However, “kang song tae kuk” encompasses more than just military capabilities. The concept also includes “political, economic and ideological power.” It expands upon the concept of Juche, or “self-reliance, in order to maintain the DPRK’s “unique brand of socialism” (“uri sahoejuui”) while the DPRK cautiously opens to the outside world. See Chong Nak Kun, “Kim Jong Il ui ‘Kyongje kangsongdaeguk’ Master Plan,” Shindonga, August 2000, http://www.donga.com/docs/magazine/new_donga/200008/nd2000080030.html.

(27) According to Chaim Braun at the Center for International Security and Cooperation (CISAC) at Stanford University, it can take up to three or four years to dismantle a nuclear power plant (not including the radiochemical laboratory), and the dismantlement of the dismantlement of the Yongbyon reactor is to begin after the first LWR becomes operational. This could delay the construction of the second LWR. Comments at the CISAC Workshop on Safeguarding DPRK Reactors, 27-28 September 2000.

(28) Joel Wit, “The Korean Peninsula Energy Development Organization: Achievements and Challenges,” The Nonproliferation Review (Winter, 1999), p. 63. The DPRK transmission and distribution grid is inefficient, in disrepair, and suffers from various institutional problems. See Peter Hayes and David F. Von Hippel, “DPRK Energy Sector: Current Status and Scenarios for 2000 and 2005,” Prepared for the conference “Economic Integration of the Korean Peninsula” in Washington, D.C., 5-6 September 1997, http://www.nautilus.org.

(29) For an overview of the DPRK economy, its balance of payments deficit and other problems, see Chapter Three “The North Korean Economy” in Marcus Noland, Avoiding the Apocalypse: The Future of the Two Koreas (Washington, D.C.: Institute for International Economics, June 2000), pp. 59-141.

(30) FBIS Document ID: FTS19990207000027, “DPRK Said to Have 12 More Secret Underground Facilities,” Joongang Ilbo (Seoul), 6 February 1999.

(31) FBIS Document ID: EUP20000911000239, “IAEA Says North Korea Not Allowing Nuclear Access,” Agence France Presse (Paris), 11 September 2000.

(32) See WorldAtom press release, “Nuclear Cooperation Targets Global Challenges: States Back Main Pillars of the IAEA’s Work to Strengthen Nuclear Safety, Verification and Technology Transfer,” 22 September 2000, http://www.iaea.org/worldatom/Press/P_release/2000/prn2400.shtml.

(33) Korean Central News Agency, “Unreasonable Resolution of IAEA,” Korean News, 28 September 2000, http://www.kcna.co.jp.

(34) For a complete text of the protocols, see http://www.kedo.org/agreemen.htm.

(35) Henry Sokolski, “Implementing the Korean Nuclear Deal: What U.S. Law Requires,” The Nonproliferation Review, Vol. 7, No. 3, (fall/winter 2000, forthcoming).

(36) For details on KEDO nuclear safety policy, see KEDO, “Nuclear Safety Policy,” http://www.kedo.org/NuclearSafety.htm. LG Insurance of the ROK has been named the lead manager for selling policies covering the LWRs. “LG Insurance Named Manager for N. Korean Reactor Insurance,” 18 April 2000, http://asia.biz.yahoo.com.

(37) E-mail correspondence with Kenji Nakano of KEDO, 29 September 2000.

(38) William J. Perry, “Review of United States Policy Toward North Korea: Findings and Recommendations,” 12 October 1999, http://www.state.gov/www/regions/eap//991012_northkorea_rpt.html.

(39) Shin Yong-bae, “Peace May Flounder if N.K. Fails to Address Missiles,” Korea Herald, 18 September 2000, http://www.koreaherald.co.kr/news/2000/09/__02/20000918_0208.htm.

(40) Kang Seok-jae, “Defense Ministers of Koreas Agree to Ease Tensions, End War Threat,” Korea Herald, 27 September 2000, http://www.koreaherald.co.kr/news/2000/09/_02?20000927_0210.htm.

Daniel A. Pinkston is a Senior Research Associate for the Monitoring Proliferation Threats Program at the Center for Nonproliferation Studies in Monterey, Calif.

 

Author(s): Daniel A. Pinkston
Related Resources: Nuclear, Asia/Pacific, Reports
Date Created: 24 October 2000
Date Updated: -NA-
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