 |
 |
 |
 |
 |
|
 |
 |
US-DPRK Agreed Framework/Korean Peninsula Energy Development Organization (KEDO)
Summary:
Under the US-DPRK Agreed Framework, signed on 21 October 1994, North Korea (the DPRK) agreed to halt the operations and infrastructure development of its nuclear program in return for a package of nuclear, energy, economic, and diplomatic benefits from the United States. According to the Agreed Framework, North Korea agreed to freeze and eventually dismantle its graphite-moderated reactors; seal and eventually dismantle its reprocessing facilities; cooperate in finding a safe method to store existing spent fuel from its 5 MW experimental reactor and to dispose of such fuel in a safe manner; allow the International Atomic Energy Agency (IAEA) to monitor the freeze of its reactors; allow the implementation of its safeguards agreement under the Nonproliferation Treaty (NPT); allow the IAEA to resume ad hoc and routine inspections of facilities not subject to the freeze upon conclusion of a Supply Agreement for the light water reactor (LWR) project; come into full compliance with its safeguard agreement with the IAEA upon conclusion of a significant portion of the LWR project; remain a party to the NPT; take consistent steps to implement the North-South Joint Declaration on the Denuclearization of the Korean Peninsula; and engage in North-South dialogue.
In return for its obligations above, North Korea is to receive two light water reactors (LWRs), financed and supplied by an international consortium, by 2003; 150,000 tons of heavy fuel oil by October 1995 for heating and electricity production foregone due to the freeze of its graphite-moderated reactors, and 500,000 tons annually thereafter until the completion of the first LWR; and formal assurances from the United States against the threat or use of nuclear weapons.
In addition, the Agreed Framework requires the United States and North Korea to: reduce barriers to trade and investment, including restrictions on telecommunications services and financial services and transactions; open a liaison office in the other’s capital; and upgrade bilateral relations to Ambassadorial level as progress is made on issues of concern to each side.
The Korean Peninsula Energy Development Organization (KEDO) was established on 19 March 1995 to implement most of the 1994 US-DPRK Agreed Framework. KEDO’s primary responsibilities are to provide for the financing and supply of the light water reactor (LWR) project, to provide heavy fuel oil to the DPRK to meet its interim heating and electricity production needs, and to provide for the implementation of other measures required to meet the objectives of the Agreed Framework. Japan, South Korea, and the United States cover most of KEDO’s costs, including all administrative costs. Japan and South Korea will finance a major portion of the LWR project, while the United States will contribute to the cost of heavy fuel oil shipments and the safe storage of North Korea's spent fuel. Financial contributions are also made by a number of other countries.
KEDO's staff consists of 37 professionals and support personnel. The KEDO Secretariat is located in New York. KEDO officially broke ground on the LWR Project on 19 August 1997 at Kumho, in Shinpo on the northeast coast of the Korean peninsula. Since then, the preliminary construction work has proceeded smoothly. KEDO had over 250 personnel at Kumho by the end of September, 1999, the overwhelming majority of whom were South Korean nationals. KEDO signed a Turn-Key Contract (TKC) with the Korea Electric Power Corporation (KEPCO) on December 15, 1999. The TKC stipulates the terms and conditions of the design, construction, and commissioning of the light-water reactors (LWR) being constructed at Kumho. The TKC enables KEDO to proceed to full-scale construction work and the number of workers at Kumho is expected to rise sharply in the coming months.
On 9 November 1998, the Executive Board members of KEDO adopted a resolution on cost sharing for the LWR project. A budget estimate for the project was agreed at $4.6 billion. With regard to specific funding for the LWR project, the Republic of Korea (ROK) has agreed to provide 70% of the project's actual cost while Japan has agreed to contribute 116.5 billion yen (approximately $1 billion). The EU has agreed to contribute 75 million ECU equally over five years to help fulfill KEDO's financial needs, and the US has reconfirmed its commitment to seek funding for the supply of heavy fuel oil to the DPRK and for other KEDO needs, as appropriate. The ROK's Export-Import Bank and the Japan Bank for International Cooperation will provide loans for the LWR project as part of their respective government's commitments. North Korea is committed under the Supply Agreement that governs this project to repay KEDO for the cost of each LWR plant in equal, semi-annual installments over a 20-year period following the completion of each plant. This 20-year period includes a three-year grace period beginning with the completion of each plant.
Regarding the supply of heavy fuel oil to North Korea, the United States has taken the lead in making financial contributions and in raising funds from other countries. According to current estimates, heavy fuel oil supplies may cost $600 million over the lifetime of the project. However, there has been insufficient funding for heavy fuel oil from the very beginning of KEDO's activities. KEDO can barely cover the cost of interim energy supplies. During the first half of 1997, KEDO had to purchase all heavy fuel oil on credit provided by the individual suppliers. In addition, KEDO oil shipments were delayed in early 1998 and 1999 because initial funding for the years was not available until that time and all available funds were needed to pay off KEDO's debt. As KEDO increases its activities, its dire financial situation will most likely become more precarious.
In addition, serious consideration should be given to expediting the KEDO reactor project. The project is already a few years behind meeting the target date of 2003 established in the Agreed Framework. North Korea has recently said that it will restart its development of nuclear capabilities if it is not compensated for the delay in the construction of the LWRs. A spokesman for North Korea's Foreign Ministry said, "If the issue of compensation for the loss of electricity caused by the indefinite delay of the US-led construction of light water reactors fails to find a smooth solution, the DPRK will have no option but to turn out electricity by graphite moderated reactors depending on its rich natural resources and its own technology." ["Spokesman for DPRK Foreign Ministry on Compensation for Loss of Electricity," KCNA, 1 July 2000].
The canning of North Korea's 8,000 spent fuel rods from its graphite reactor at Yongbyon was completed in October 1997. In addition, as of December 1999, segments of the spent fuel rods and precipitates in the cooling pond had almost been completely removed. Upon the completion of canning activities, the spent fuel will remain at the spent fuel storage basin at Yongbyon, where the fuel will continue to be subject to monitoring until it is shipped out of North Korea.
In a related development, the United States formally eased sanctions against
North Korea on 19 June 2000. This could allow a wide range of trade in
commercial and consumer goods between the two countries. Direct personal and
commercial financial transactions will now be allowed , and restriction on
investment will also be eased. US commercial ships and aircraft carrying
US goods will be allowed to call at North Korean ports. But this easing of
sanctions does not affect US counter-terrorism or nonproliferation controls on
North Korea, which prohibit exports of military and sensitive dual-use items and
most types of US assistance ["Implementation of Easing of
Sanctions Against North Korea," Fact sheet released by the Office of the
Spokesman U.S. Department of State, 19 June 2000].
China and Agreed Framework/KEDO:
China has supported efforts to denuclearize North Korea, and the Korean Peninsula as a whole. Although China was not directly involved in the negotiations for the Agreed Framework, it is widely believed that quiet Chinese pressure was instrumental in getting North Korea to go along with the deal. China is not a member of KEDO, nor is it a financial contributor, and therefore China has played only a marginal role in KEDO.
For additional information, please consult the Inventory of Nonproliferation Organizations and Regimes, which can be found on the CNS website at: http://cns.miis.edu/pubs/index.htm.
For more on China and the North Korean nuclear issue, see:
[TEXT OF US-DPRK AGREED FRAMEWORK]
[CHINA AND THE NORTH KOREAN NUCLEAR ISSUE]
[CHINA AND THE NORTH KOREAN NUCLEAR ISSUE - STATEMENTS AND DEVELOPMENTS]
This
material is produced independently for NTI by the James Martin
Center for Nonproliferation Studies at the Monterey Institute of
International Studies and does not necessarily reflect the
opinions of and has not been independently verified by NTI or
its directors, officers, employees, agents. Copyright © 2007 by
MIIS.
