August 6, 2002

MEMORANDUM TO: OPINION LEADERS

FROM: DAN McKIVERGAN, Deputy Director

SUBJECT: North Korea

Tomorrow, construction will start in North Korea on two large U.S.-type nuclear reactors as part of a deal struck in 1994 between the Clinton Administration and the government in Pyongyang. Under the agreement, a U.S.-led coalition would build the reactors in exchange for North Korea's ending its secret nuclear bomb-making program and allowing inspections to confirm it was no longer violating its pledges under the Nuclear Nonproliferation Treaty.

The problem is that North Korea has not lived up to the terms of the 1994 agreement, as Henry Sokolski and Victor Gilinsky point out in today's Asian Wall Street Journal ("A Bad Deal Gets Worse," August 6). According to Sokolski and Gilinsky, "the U.S.-directed builders plan to pour the reactors' concrete foundations … in spite of the North's stiff-arming of even the start of inspections." What's more, Pyongyang may interpret Washington and Seoul's faint response to their stonewalling on inspections as a green light to do whatever they want with the completed reactors, each of which will be "capable of producing over 50 bombs worth of weapons-grade plutonium within the first 15 months of operation."

A Bad Deal Gets Worse
Henry Sokolski & Victor Gilinsky
Asian Wall Street Journal
August 6, 2002

While planning for military action against Iraq and talking tough talk about regime change in Iran, the White House is failing its first test on nuclear inspections in North Korea. It is not holding Pyongyang to its 1994 pledge to open up to international nuclear inspections in step with the construction of two large U.S.-type nuclear power reactors they were promised in return for complying with this commitment. The U.S.-directed builders plan to pour the reactors' concrete foundations on Wednesday in spite of the North's stiff-arming of even the start of inspections. It's even likely that a U.S. ambassador will be in attendance in the shape of special envoy Charles Pritchard, although the State Department has so far refused to confirm this.

The diplomats' rationale for going easy is that to insist on inspection now would rock the boat because the North never expected Washington to enforce the 1994 deal. Under the agreement, former U.S. President Bill Clinton gave the North a few years to erase their violation of the Nuclear Nonproliferation Treaty. Two years earlier, the North had been discovered to have surreptitiously separated plutonium for bombs. The inspection schedule to make sure they were clean was tied to the construction schedule of the large reactors that America -- in partnership with South Korea and Japan -- offered as a sweetener. The deal provides that when a specified milestone was reached -- about half-way to project completion -- Pyongyang was to be in full compliance with the NPT. In specific, the International Atomic Energy Agency must be satisfied that the North is out of the nuclear bomb business. Without this IAEA declaration, Pyongyang is not supposed to get the nuclear power project's key nuclear components.

It's easy to rationalize letting concrete pour despite the lack of an inspection start. Why make a fuss now, American diplomats argue, especially after the North last week offered to talk to the U.S.? After all, it will still be possible to get tough later, they insist: If the North keeps refusing to let the IAEA in, then the U.S. and its allies could simply hold up sending the key nuclear components.

The trouble is that when the full compliance milestone is reached there will no doubt be new rationalizations -- like those used in l994 when Pyongyang was given its first inspections extension -- for bending on the key components issue. With thousands of South Korean workers waiting on site to receive the completed key nuclear parts, American diplomats will argue that holding up construction would risk provoking Pyongyang or upsetting U.S. allies who are paying for the project.

The Bush administration will have to face this issue soon. The Korean Peninsula Energy Development Organization, which is building the reactors, expects to reach the construction milestone for full compliance in 36 months. Thirty-six months is also the minimum time the IAEA estimates for carrying out all the technical checks to determine whether North Korea is clean -- and this estimate assumes full cooperation by the North. In other words, if Pyongyang doesn't open up now it will have no chance of being in full compliance at the half-way construction point. For every month of delay in starting inspection now, there will be a month of construction downtime waiting for the inspectors to finish their work.

The interesting thing is that those in the consortium building the reactors as well as the U.S. and allied diplomats who say they will be tough later have made no plans for such construction downtime. In other words, they have no intention of giving the IAEA the time it needs -- they are planning to finesse the issue. One already hears that the IAEA time estimate is too long, that the IAEA really doesn't have to do all of the inspections it is planning, and that what's good enough in the way of inspection ultimately turns on political judgment. Anyhow, they say, Pyongyang reads the 1994 U.S.-North Korea agreement differently and having gone along with the North's interpretation up to now it would be awkward to insist on the agreement as written.

The threat American diplomats present to backstop these arguments is that Pyongyang might restart its nuclear bomb making if the U.S. isn't flexible on inspections. The trouble is that there is a long line of decision points and agreement interpretation issues ahead, at each of which the same concern will arise. If the diplomats see America's hand as so weak that it is necessary to give in at each stage that is what will happen.

If, on the other hand, the U.S. understands its current strengths, then there are other options. In fact, Pyongyang now has much more to lose by resuming plutonium production than it could gain. For one thing, North Korea needs European and Asian support for international financial institutional funding. If it restarted plutonium production, foreign investment would fall victim. It wouldn't gain much militarily, either. Instead, resuming plutonium production would only tighten U.S.-Japan-South Korean military cooperation -- the very opposite of what North Korea seeks. Would North Korea do this merely to get a few more bombs beyond the two the Central Intelligence Agency already credits them with?

A more worrisome scenario, on the other hand, is what the North might do if the reactors are completed. The two large power plants they are being given are each capable of producing over 50 bombs worth of weapons-grade plutonium within the first 15 months of operation. Pyongyang could easily gain the capability to separate that much plutonium in a few months or less by either enhancing its current reprocessing plant or building one or more small laboratories. A forgotten 25-year-old study by the Oak Ridge National Laboratory, vetted by the U.S. General Accounting Office, shows in detail how they could do this cheaply and secretly. From plutonium metal to warheads would then probably take a matter of weeks.

American diplomats have not been able to face up to this scenario, partly because they would have to admit they didn't understand the technical facts when they signed the 1994 agreement. They still don't seem to get it; that barring a regime change in the North -- something that can hardly be counted upon -- controlling events will become more difficult as the two large reactors near completion and the North's technical options increase.
To deal with this, three U.S. Congressmen on May 31 urged President George W. Bush to halt the August 7 concrete pour until North Korea opens up to the IAEA. They recognize that despite all the high-pitched propaganda from the North, and hand wringing in the foreign policy crowd, Mr. Bush's tougher stance on enforcing the inspection provisions in the agreement with the North had a salutary effect on Pyongyang's behavior. Now Mr. Bush has been pulled off his game. As a result, the road ahead will not be easy.

The U.S. should be ready to talk to the North and to meet its 1994 commitments, but it is necessary to get back to insisting that North Korea do the same, starting with inspections. The reactors being built in the North are simply too dangerous to give to anyone who is still interested in nuclear bomb making. Washington is not putting up with Iraq's playing games with international inspections and it should not put up with it in North Korea.

Mr. Sokolski is the executive director of the Nonproliferation Policy Education Center, and Mr. Gilinsky is a senior associate at NPEC.