Session VII: The KEDO and Europe

KEDO and Europe

by Glyn Ford

In 1994 the world came closer to a nuclear war than at anytime since the Cuban missile crisis in 1962, or at least it did if we believe the KGB and the CIA. It certainly came close to war. Both Security Services informed their respective Governments that the North Koreans had between one and five nuclear bombs made from diverting plutonium from their Russian designed graphite moderated reactor at Yongbyon. Refusing to allow Iraqi style special inspections by the International Atomic Energy Authority, North Korea announced a suspension of its membership of the Nuclear Non-proliferation Treaty.

America's Defence Planners prepared the plans for surgical strikes against the North, the F1-11's in Okinawa were fuelled, primed with engines ticking over. North Korea threatened in retaliation to turn Seoul into a 'sea of fire'. At the last minute, with little enthusiasm from the Clinton Administration, Ex-President Carter intervened directly with North Korean leader Kim Il Sung to seek to pull the world back from the brink. He did.

After a series of negotiations that resembled the worst face of medieval scholastic debate, a Framework Agreement was signed in 1994 that committed North Korea to stop work on their new reactor, and close and seal the Yongbyon plant. In exchange, the United States agreed that it would put together a consortium that would build two Light Water Reactors incapable of being used in the same way to produce weapons grade plutonium. In the interim, they would supply 500,000 tonnes of heavy fuel oil (HFO) per annum to North Korea to compensate for the shortfall in energy supply. When the plants were ready to come on line and not before, the North Koreans would allow the requested inspections to establish more clearly whether plutonium had been diverted and allow the spent fuel to be exported for permanent storage. A perfect technological fix to a political crisis.

Japan gently urged the European Commission to join KEDO as a political, if not financial partner, balance to Japan's massive contributions to reconstruction in Bosnia and democratisation in Central and Eastern Europe. The European Commission signed to join the Korean Energy Development Organisation (KEDO) in 1997. For a contribution of $15 million each year for five years the Commission had seat on the Executive and some theoretical influence on the project.

The European Parliament had always had deep reservations about both the process of adhesion to KEDO and the product that would ensue. Firstly there was the difficulties between the EU institutions. The European Commission brokered the deal for the EU to join KEDO without consulting the European Parliament. The European Parliament was flexing its new found powers, augmented in the Treaties of Maastricht and Amsterdam. Parliament controls the purse strings. The Commission could join KEDO but it takes the Parliament to vote for the membership due to be paid. The result initially was a stand-off. The Commission had joined and Parliament was not going to pay. Then Commissioner Sir Leon Brittan brokered a deal. Parliament would release the first year's tranche of money and simultaneously would prepare an opinion on KEDO membership and participation.

Then there were all kinds of opposition within the European Parliament that together may well have produced a majority opposed to KEDO. First, there were the anti-nuclear fundamentalists led by the German Greens in the European Parliament who would cast a knee-jerk vote against any budget line with nuclear in the title. They have in the past voted against expenditure on nuclear safety with the justification that it only encourages the nuclear industry. Second, there were the industrial nationalists particularly from the Union's Member States with indigenous nuclear industries. They saw no reason to provide out-relief to the beleaguered US nuclear industry, nor its more successful Japanese analogue. Yes, they knew that in theory European industry could bid for contracts but ground had already been broken for the two nuclear plants in North Korea. The design decisions were almost literally set in concrete, and not by a project team contemplating European designs. Equally, once bitten twice shy. Both Europe and Japan, a decade and more ago, signed memoranda of understanding (MOU's) with the US to benefit from the Star Wars Programme. We were promised the Earth and got peanuts. There is no reason to believe the Europeans were going to do better this time. It was seen as another US ramp with shared costs and undivided benefits.

There were also questions regarding the short term provision of heavy fuel oil to what is fundamentally a coal-fired system and whether it was the best way to underpin North Korea's Energy Economy and if there was any real intention of ever finishing the project. North Korea's coal production amounts to 10,000 tonnes/day against a national need of 41,000 tonnes. Since 1989 production has dropped to a third as a result of a combination of flooding, physical breakdown of machinery and the consequences of a dash for production during the late heroic stakhanovite days of Kim Il Sung bite. The Dockchon, Kangdong, Anju and Kudang mining complexes are all in the same disastrous state. Two million dollars of direct investment is reputed to be able to double output. But nobody saw spending this small change a way of boosting North Korea's energy self-sufficiency when the US nuclear industry had the tills already ringing.

Now in 2001 the European Parliament proved all top prescient. The eight year long KEDO project is currently running seven years late and continuing to slow. Visiting Sinp'o, a quiet coastal town on the edge of the Japan Sea in North Korea, almost two hours by helicopter from the capital Pyongyang, I saw the evidence of this. Sinp'o is a beautiful swathe of unspoilt beach, edged with bushes and shrubs typical of marine margins, and clusters of shabby houses and farms littered across the landscape. Curious. Afterall Sinp'o is the site of the Kumho nuclear plants, two 1000MW Light Water Reactors (LWR) scheduled to come on stream in 2003. One would expect the whole area to be a hive of activity ministered by thousands of scurrying workers, with towering structures of steel and concrete reaching for the sky, casting their shadows across the land. Instead all there is, is a small building site where workers accommodation is being erected, a bar and 'nightclub' provided on the edge of the site by the North Koreans, and a stretch of land where the remnants of a rocky outcrop are being whittled away and levelled by daily doses of dynamite and the gnawing of half a dozen mechanical diggers.

This space, apparently chosen on the basis of an earlier Russian site investigation, will eventually be the site for the two reactor cores. It is only to be hoped these geologists were more diligent than those who surveyed the site for the Yongbyon plant where they've run into a series of unexpected difficulties because of inaccurate hydrological forecasting and geological surveying.

The hold-ups have been political, financial and administrative. Even before the project could get off the ground there were problems.

First the Americans having brokered the deal expected someone else to pick up the tab, and it was a hefty one. $4.5 billion to be exact. The South Koreans had little option and stumped up 2/3rds, while the Japanese were strong-armed to put up $1.0 billion and a rag, tag and bobtail collection of countries tossed in some small change. The largest of which was the $75 million from the European Union through Euratom (European Atomic Agency), leaving the project with a financial credibility gap.

Worse followed. The US was at least supposed to stump up for the HFO, but the Republicans who controlled Congress wouldn't play or pay. The result was that initially at least supplies were sporadic. It did little for North Korean belief in US good faith to find in the coldest months of the year, with the electricity supplies in Pyongyang going on and off like Christmas lights, that the expected deliveries failed to materialise. In the end the Euratom contribution was diverted to buy HFO; certainly against the spirit and probably the letter of the EU Treaties.

Politically the Japanese put on the brakes after the North Koreans attempted, and failed, to launch a satellite on the tip of a three-stage rocket that flew over Japan. The Japanese public was furious and there were reports of violence against Japan's Korean residents. The Framework Agreement however says no nuclear power, not no rockets. The North needs to sell rockets for rice. A quarter of its exports over the past ten years, $3.5 billion worth, have been missiles, and still one in eight of the population died from hunger. The Japanese Diet bent to public opinion, putting back the project probably by a further twelve months.

Currently the problem lies with the North Koreans. In the Framework Agreement they agreed to supply thousands of labourers at $110/month. Having since discovered that the South Korean labourers doing similar work were on eight to ten times that amount they have now withdrawn all but a hundred workers from the site. It looks like it could be a long stand-off. In the meantime KEDO has flown in dozens of Uzbekistanis as surrogate workers.

The final problem is the very nature of complex high technology projects. They run late and costs escalate. KEDO shows all the signs of conforming exactly to type. With the delays past, current and future, it will be a surprise if the first LWR comes on line before 2010 and if the total cost is not at least double the initial $4.5 billion. That turns the financial credibility gap into a chasm. The South Koreans 2/3rds gives $6.0 billion, plus the Japanese billion makes $7.0 billion, leaving a shortfall of $2.0 billion. This was not helped by the frankly pathetic proposal by the European Council of Ministers to increase their contribution from the previous $75 million over five years to a beggarly $87.5 million for the next five. Following the recent historic visit to Pyongyang by the President in Office of the European Council, Göran Persson, Commissioner Patten, and Javier Solana, the High Representative responsible for the EU Common Foreign and Security Policy, there may be some small shift. Commissioner Patten told the Foreign Affairs Committee we should do more. But the North is looking for direct help to themselves from the EU for the new grid required rather than help to the US to solve its legacy of the past. Neither is the Bush Presidency nor the current Congress likely to dig into its pockets for North Korea. They'd rather use them as a scapegoat for funding National Missile Defence and repay all those who contributed so generously to the $3.0 billion spent on America's recent electoral farce. Now the bush Administration is talking of renegotiation. An offer the North Koreans will find hard not to refuse.

The KEDO project still has its flaws. It's a pity those who will have to pay in the end didn't have more control and more say. Yet once it loses its credibility with North Korea and once they realise its completion date has begun to recede faster than the passage of time as the financial gap yawns, the nightmare returns for it it's then they start to unpack the stored fuel and American bombers start revving up their engines again.

Equally if it becomes clear that KEDO is to dig a nuclear hole again and fill it in again, to mark time waiting for North Korea to collapse and in the meantime throw other peoples money to the US nuclear industry with no prospect of any return it will kill the European Parliament's support.

Japan has a different political, industrial and energy agenda. Unfortunately its message is not heard clearly in Europe. It may well be worth the European Union supporting KEDO purely as a cheap quid pro quo for Japan's support for post cold-war Europe. This strategic argument is not fully appreciated in the European Parliament, let alone by ordinary Europeans. The tactical arguments fare little better. Japan's position is seen as deeply contradictory to a European Union that this year threatens to be the largest single donor of humanitarian assistance to North Korea. If you are going to starve North Korea into short term change you have a tiger by the tail, but certainly KEDO then serves no useful purpose.

$9.0 billion is a cheap price to pay to avoid the global economic, environmental and humanitarian tragedy that may be the alternative. Nietzsche said, 'madness is rare in individuals, but common in parties, groups and organisations'. If you didn't know better, you might have thought he drew those conclusions from a case study of the KEDO project.