KEDO Signs Contract to Begin Work on North Korean Reactors

IMPLEMENTATION OF THE 1994 Agreed Framework progressed this month with the completion of a turn-key contract between the Korean Peninsula Energy Development Organization (KEDO) and the Korea Electric Power Corporation (KEPCO) for the construction of two light-water reactors in North Korea. U.S. State Department spokesman James Foley called the contract, which was signed in Seoul on December 15, a "milestone in the international cooperative effort of all the parties in implementing the Agreed Framework."

Preparations for the reactor construction have been on the drawing board since the completion of the Agreed Framework, which promises the two reactors to North Korea in exchange for the abandonment of its nuclear weapons program, the abandonment of its graphite-moderated reactors at Yongbyon, and the canning and disposal of its remaining spent fuel. KEPCO began preliminary site preparation in August of 1997 in Kumho, North Korea, and with the signing of the turn-key contract, actual construction activities may begin shortly.

The contract was completed later than originally expected, in part due to complicated legal and financial provisions that needed to be negotiated with the governments of Japan and South Korea, which are responsible for funding almost all of the $4.6 billion project. Perhaps more importantly, international reaction to several political crises on the Korean Peninsula—notably North Korea's 1998 test of a three-stage Taepo Dong-1 missile, which passed over Japan—slowed progress considerably when both primary contributors froze their contributions to the project in protest.

Some funding details remain to be resolved. Seventy percent of the project is to be funded by South Korea, with an additional $1 billion provided by Japan. The balance, several hundred million dollars, will have to be raised before the project can be completed. The United States is not currently contributing directly to the reactor project, but is responsible for coordinating annual shipments of heavy fuel oil as an interim energy source until the reactors are finished. KEDO's executive board will revisit the issue of the funding shortfall, but financing agreements completed earlier this year with the governments of South Korea and Japan will allow construction to continue in the interim.

KEDO's next step will be to negotiate an implementation accord with the North Korean government, hammering out the precise details and timeline of the construction project. The target date for completion of the first reactor officially remains sometime in 2003—an ambitious goal that would require a greatly accelerated construction schedule.