Keeping The U.S. North Korean Nuclear Accord On Track

An Interview With Ambassador Stephen W. Bosworth:

On August 19, the Korean Peninsula Energy Development Organization (KEDO) reached an important milestone in the implementation of the 1994 U.S. North Korean denuclearization accord, when it held a groundbreaking ceremony near Sinpo in South Hamgyong Province where it is overseeing the construction of two proliferation resistant light water reactors. Established in March 1995 by the United States, South Korea and Japan, the international consortium is assisting in the implementation of the agreement, which commits North Korea to eliminate its nuclear weapons program in exchange for the reactors and the provision of interim energy supplies until the first reactor is completed.

Since its creation, KEDO has become one of the international community's most successful channels for engaging the secretive and often unpredictable North Korean government. In addition to negotiating the 1995 supply agreement with Pyongyang for the multi billion dollar project, KEDO has negotiated dozens of other agreements on a range of diplomatic, technical and juridical issues. Ambassador Stephen W. Bosworth, former U.S. ambassador to the Philippines and Tunisia, has led KEDO since his appointment as executive director in July 1995. Past president of the prestigious United States Japan Foundation, Bosworth has held a number of State Department posts, including director of policy planning, and has taught at Columbia University.

On August 14, just before his departure for the groundbreaking ceremony in North Korea, Bosworth spoke with ACA senior analyst Howard Diamond about KEDO's achievements and his experiences working with the North Korean government. What follows is an edited version of the interview.

Arms Control Today: How has KEDO's work progressed since the resolution of the North Korean submarine incident at the end of last year?

Stephen Bosworth: We really resumed where we left off when the submarine incident occurred and we suspended our engagement with North Korea on the light water reactor [LWR] project. Since then we have negotiated one more protocol and we have been intensely engaged in making arrangements to begin actual construction activity in North Korea. We are planning to have a groundbreaking ceremony at the reactor site August 19.

ACT: What is the status of the "canning" of spent fuel from North Korea's existing reactor?

Bosworth: I understand from the U.S. government that the canning is almost 90 percent completed and is to be 100 percent completed within the next few months.

ACT: October 20 is the end of the current annual cycle for heavy fuel oil deliveries to North Korea. What portion of the 500,000 ton obligation has been delivered so far? What is the status of the funding for the remaining deliveries?

Bosworth: The funding as always is tenuous. On the one hand I remain confident that we can supply the entire 500,000 metric tons but we are going to be shipping a lot of oil in the months of August, September and October.

ACT: What changes have you seen in KEDO since its inception in March 1995?

Bosworth: First of all, we didn't really start our operation here in New York until July of 1995 because the North Koreans were still negotiating over the reactor model issue. In two years we have come a long way as an organization. We are small but that is deliberate. We will remain small. We now have a well integrated staff composed of Korean, Japanese and American nationals. We have added several countries to our membership rolls as general members, and we also have completed the negotiations with the European Union for its accession to KEDO and its membership on the Executive Board. So in two years we have become more of a global organization, more broadly based. We have probably spent more hours in negotiations with the North Koreans than anyone else, and that has evolved into a business like relationship with the absence of polemic and political diatribe. The big difference is that we are two years old and we have accomplished quite a bit in those two years.

ACT: Are you satisfied with the current timeframe for the LWR project and the other activities contained in the Agreed Framework?

Bosworth: The timetable as you recall was set originally in the Agreed Framework and it was set as a best efforts timetable. We repeated that in the supply agreement that we negotiated with North Korea. The target date for the completion of both reactors is 2003. Now, even when we set that as a best efforts undertaking, we realized that it was extremely ambitious. Since then, of course, we have had the submarine incident which has caused a delay, and we find that so far things seem to take a little longer than one might reasonably expect. If this were a normal commercial project you could set a fairly detailed timetable and, without too much error, hope to meet it. It is going to be very hard for us to meet the 2003 timetable, but we have not made any effort to change that target date because it gives us something to continue to work toward.

ACT: What is your best estimate of the cost of the LWR project?

Bosworth: We are still refining our total estimate and should have something available for the member governments within the next two or three months. All I can do now is repeat the earlier estimate of $4.5 billion to $5 billion. But it makes a difference, of course, whether you are talking in 1995 dollars or 2002 dollars. The big uncertainty in terms of cost is that while Korea Electric Power Corporation [KEPCO], our prime contractor, has built these reactors in South Korea, it has never built them in North Korea. No one has ever done anything like this in North Korea. So it is very difficult to be terribly precise about how much, in the end, this project is going to cost.

ACT: How would you assess progress in KEDO's talks with KEPCO? When do you expect the negotiations on the prime contract to be complete? Has there been anything unexpected in the negotiations with KEPCO?

Bosworth: No, I don't think so. Our relationship with KEPCO has evolved very well. We have just completed the contract for the preliminary work that we will launch next Tuesday. In fact, some of the work is under way already. The prime contract itself we would expect to complete somewhere around the end of this year or early next year. Many of the most difficult issues, of course, we have already resolved in this preliminary contract. Anyone with any experience in the nuclear power industry can appreciate how detailed and therefore time consuming these negotiations are.

ACT: According to the supply agreement, a U.S. company was to be selected to serve as technical support consultant [TSC] to KEDO to assist in the Agreed Framework's implementation. Since its selection last year, what has been the role of Duke Engineering and Services?

Bosworth: KEDO has relied on the TSC to provide technical oversight of the LWR project. The TSC fulfills a role similar to that of an owner's architect/engineer. Duke has provided technical assistance to KEDO on the Preliminary Works Contract, performed a detailed review of KEPCO's rough order of magnitude cost estimate, and reviews design and construction documents provided by KEPCO. It has also assisted in the development of KEDO's nuclear safety confirmation system, which establishes the process to ensure the safety of the LWR project.

ACT: Are there any protocols that remain to be negotiated with North Korea?

Bosworth: We have several that we will be negotiating over the next year or more. These protocols cover things like training, nuclear liability and repayment. While they are important, they were not necessary to have in place before we actually begin work. We have already completed those that we needed to begin work. We are going to be actively engaged in negotiations with the North Koreans for at least the next year and beyond that.

ACT: Were the negotiations with the North Koreans on the supply agreement and the protocols more difficult or easier than you expected? What did they teach you about dealing with the North Koreans?

Bosworth: I am not sure if I can say they were harder or easier. I expected them to be difficult and at times they were, particularly those on the supply agreement. But I think we have discovered that, as we move forward and conclude more agreements and have more experience¾not only on our side but also on their side¾there is a certain easing of suspicion and mistrust. That is not to say that the agreements are solely based on trust; rather, they are based on reciprocity and common interests. I guess what we have learned about negotiating with the North Koreans is that it is important to be consistent, to set out clearly the principles that are guiding your objectives in the negotiations and to hold to those. Above all, it is important to be patient.

ACT: Are you satisfied with the levels of regional and international participation in KEDO and what do you think can be done to increase support?

Bosworth: In general, I am satisfied with the level of international support, particularly now that the European Union is coming in. I must say I am a little nonplused by the absence of broader participation from countries in Asia, particularly Southeast Asia, where, as you know, only Indonesia has joined KEDO. The other countries have been supportive and have made modest financial contributions, but for reasons that are not clear, they have not yet joined KEDO. This remains, as I understand it, a high objective on the part of the three founding members and I expect that conversations with those Asian countries will continue over the next several months.

We always need more money and the fuel oil program is a constant millstone around our neck because every year we are going to need $60 million to $65 million to cover the cost of those shipments. The U.S. contribution has increased somewhat from $22 million to $25 million and the Clinton administration has requested $30 million for the next fiscal year. The European Union has made significant commitments and we get some money, significant in terms of the size of their economies, from countries like Australia, New Zealand and Canada. But we are still looking at a gap as we look to the future. That is not something that I can really solve here at the Secretariat. That is something that only the member governments can solve.

ACT: What type of financial and burden sharing arrangements do you think the KEDO governments will agree to for the LWR project?

Bosworth: I think it is a little premature to be at all precise because the first step, of course, is to get concurrence and a rough order of magnitude cost estimate which gives them a pie that they can then decide how to divide. The South Koreans have said that they expect to play a central role that has to do with both financing and technology; the Japanese have said that they will play a significant role. My hope is that central plus significant equals 100 percent.

ACT: What is happening with North Korea's efforts to upgrade its electrical power grid to accommodate the new reactors? Has Pyongyang attempted to add this issue to the KEDO North Korea agenda? What happens if the first reactor is completed before North Korea is ready?

Bosworth: When we negotiated the supply agreement, the question of power grid modernization was, of course, a major issue. Our view from the beginning was that modernization was not part of the LWR project and therefore was not KEDO's responsibility. In the end, North Korea accepted that view, because the scope of supply that we are responsible for in the supply agreement does not include the power grid. My understanding is that the North Koreans have given some thought to how they might obtain financing for the modernization. Most of the countries in Asia, in fact, have been modernizing power grids over the last decade or more. For them, the international financial institutions have constituted an important source of funding. To gain access, North Korea would have to become a member of these organizations. That in itself might be desirable. We stand ready on a best efforts basis to introduce them to people and help them, but it is their responsibility, not ours.

ACT: How has the uncertainty about KEDO's funding and financing affected its ability to operate and to plan for the future?

Bosworth: It really has not. It is something we struggle with on a day to day basis, but we have to assume that, one way or another, the governments that created this organization will ensure that it has the funding it needs. So we continue to plan for the long term. We continue to negotiate with the North Koreans and to work on the prime contract with KEPCO. We are currently in the midst of elaborating a safety confirmation process for the LWR project. This will ensure not only that we have built safe reactors that can be operated safely by the North Koreans, but that we have done it in such a transparent fashion that the international community is confident that we have done what we are supposed to do. While the funding problem is a millstone around our neck, it has not really hampered our ability to carry out, over the longer term, the programs for which we are responsible.

ACT: Do you believe there is a point at which KEDO's operations or its mandates might be affected by the status of the related issues of spent fuel removal and the dismantlement of its nuclear facilities?

Bosworth: Well, of course. At certain points in the schedule of KEDO's construction of the LWRs, the North Koreans are going to have to fulfill their obligations. If they were unwilling to fulfill those obligations, it would certainly call into question the future of KEDO's programs.

ACT: With the exception of the submarine incident, have KEDO's relations with North Korea generally been spared from the ups and downs of the broader political agenda outlined in the Agreed Framework?

Bosworth: Yes, I think by and large. As the submarine incident taught us, we do not exist in a political vacuum, and things that happen in the broader context have some implications for us. But our relationship with North Korea has been very business like. Now, if there were to be some significant improvements in North Korea's broader engagement with the world, particularly in terms of North South dialogue, I think there is no question that it would make KEDO's job easier.

ACT: What are your impressions of the dialogue that has begun between the North and South Koreans who are working together on implementing the Agreed Framework? Have there been any surprises?

Bosworth: No, I think the only surprise is that it has been proceeding as smoothly as it has. We have got KEPCO personnel now up in North Korea. They are negotiating labor and other supply contracts with North Korean entities. This is all taking place, of course, under a KEDO rubric. So far, the relationship between KEPCO and the North Korean entities has been quite smooth.

ACT: Given the different and sometimes competing national interests of KEDO's founding members, what do you think KEDO has offered each of them?

Bosworth: Starting with the United States, KEDO is a response to the threat of global nuclear proliferation which drove U.S. policy primarily in the beginning. However, KEDO is also a vehicle for working toward a stable and peaceful environment in Northeast Asia, a region of the world which is terribly important to the United States. It is also a way of bringing about greater contact on a constructive basis between North and South Korea. For Japan, KEDO is a way of meeting an acute national security threat in a political fashion and preserving stability on the Korean Peninsula, which is right in the middle of Japan's neighborhood. For South Korea, of course, we are dealing with things that are right at the heart of its future and its present. I don't want to speak for the South Koreans, but I think what they have found is that, at present at least, KEDO is about the only place where they have the opportunity for regular contact with North Korea, albeit not on the full range of political issues, but certainly on a range of issues which are very important to both of them.

ACT: With North Korea facing a famine and economic crisis, are you concerned that KEDO might be overtaken by events? Should KEDO expand its focus beyond energy development and think more about economic development?

Bosworth: Well, I think KEDO has quite enough on its plate right now. The broader question may be whether there could be some future utility in a KEDO like structure for addressing certain problems. But that is difficult to foresee. It will depend upon the decisions of the individual governments concerned.

ACT: Do you think the North Koreans are satisfied with the Agreed Framework? Do you think they believe they have gotten what they were promised?

Bosworth: Whenever I am asked to speculate about the attitudes of the North Koreans on any subject, I become very wary because it is very hard, as you know, to penetrate that system. All I can say is that I look at what they have done. They have, in fact, complied quite assiduously with the commitments that they made under the Agreed Framework and with the commitments that they made to KEDO in the supply agreement and elsewhere. I draw from that the inference that they remain satisfied with the agreement, but, beyond that, I really can't speculate.

ACT: Having led KEDO since its creation, what do you wish you could have known? What would you have done differently?

Bosworth: There are always things you look back upon and wish that perhaps you had the knowledge then that you do now. By and large, I think we made our way through this labyrinth in which we find ourselves in a fairly effective fashion. It would have been useful, had the governments, from the beginning, been more alert to the need for steady sources of funding, particularly for the heavy fuel oil program. But in the broader sweep of what we have done, I don't have any big regrets.

ACT: What do you think will be the key issues facing your successor?

Bosworth: Well, over time the executive director's job should become more a task of project management and a little less a task of political management. But as long as the situation remains as it is now, there is always going to be high political content in this organization. Whoever comes in to replace me is going to have to be able to deal with that.

ACT: It has been reported that you are going to South Korea to serve as the U.S. ambassador. If confirmed, what do you think your tenure at KEDO will allow you to bring to that role?

Bosworth: Should I be formally nominated and confirmed—that I have to specify and stipulate—I think it obviously gives me a level of experience in dealing with the South Korean government and a sensitivity to its concerns, as well as a certain amount of practical experience in dealing with North Korea.