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KEDO demands compensation for reactors from North Korea

Nuclear Monitor Issue: 
WISE Amsterdam

KEDO, an international consortium tasked to build two light-water reactors in North Korea earlier this decade will soon demand the Stalinist state hand over US$1.89 billion (1.4 billion euro) to compensate for losses incurred by the failed project. KEDO agreed in 1994 to build two 1,000-megawatt light-water reactors as part of a denuclearization-for-aid deal and the  project was about 35 percent complete when cancelled.

The demand by the Korean Peninsula Energy Development Organization (KEDO) is the latest in a back-and-forth debate over the project once considered a sign of progress toward the North's denuclearization. It comes after North Korea filed its own compensation claim worth some US$5.8 billion in September, saying it suffered heavy financial losses and other troubles from the failed project.

KEDO, comprised of South Korea, Japan and the United States, agreed in 1994 to build two 1,000-megawatt light-water reactors in the North as part of a denuclearization-for-aid deal between Washington and Pyongyang. After years of delays due to poor funding and other problems, the project fell through in 2006 after the U.S. caught North Korea pushing a second nuclear weapons program based on enriched uranium in addition to its widely known plutonium-based one. The US$4.2 billion project was about 35 percent complete when the KEDO called it off.

A government official said on condition of anonymity that KEDO has sent a letter to the North each year requesting it to pay for the losses incurred by its breach of the agreement. "North Korea has given no response, and its sudden claim for compensation is completely unacceptable." The wrangling also comes as part of increased regional dialogue as players try to resume long-stalled multilateral talks on Pyongyang's denuclearization. Those
'Six-Party Talks' between North Korea, South Korea, Japan, China, Russia, and the United States began in 2003 with the goal of denuclearizing the Korean Peninsula.

The North walked out of the six-party talks in April 2009 over international sanctions for its missile and nuclear tests. Last year, it upped the ante for their resumption by revealing the uranium program and twice waging deadly attacks on the South. Tensions have cooled somewhat since July, when the two Koreas sat down for surprise denuclearization talks that led to similar meetings between Washington and Pyongyang that aimed to resume the multilateral format.

Seoul and Washington want the North to halt the uranium program and allow for international verification of the move among other steps before coming back to the table, while Pyongyang insists the talks should start without preconditions.

Domestic Light-water reactor
Meanwhile, North Korea has made rapid progress on the construction of its new nuclear reactor, with work nearly complete on the building's outside walls, an analysis of recent satellite images shows. The 25 or 30-megawatt light-water nuclear reactor has been constructed with no apparent outside help and no international oversight. The reactor is part of a recent North Korean plan to revamp its nuclear capabilities.

Outside analysts weren’t sure whether isolated and impoverished North Korea had such a capability, even though it had received important Pakistani technology and manuals in the 1990s. That skepticism disappeared last November when a U.S. scientist was given a tour of the Yongbyon nuclear facility. The scientist, former Los Alamos National Laboratory director Siegfried Hecker, was shown a modern uranium-enrichment facility with 2,000 centrifuges — enough to produce fuel for a modest light-water reactor. North Korea also would have to produce uranium dioxide fuel pellets to power the reactor. When Hecker toured the facility last year, he was told that the uranium-enrichment facility was operational, but he didn’t see it in use.

Hecker also saw the beginnings of North Korea’s light-water reactor. At the time, the reactor was just a 23-foot hole in the ground and a concrete foundation. Hecker spotted 50 workers in blue coveralls and a sign that read, “Safety first — not one accident can occur!”

Because the reactor building is yet to be loaded with sensitive nuclear equipment, the plant might not be operational for another two or three years, one analyst said. But the accelerated pace of construction lends credence to Pyongyang's claim that it has the materials and know-how to build nuclear plants on its own.

There is concern about how North Korea would reliably cool the reactor core; newly laid piping connects to a nearby river that freezes in winter. And it is less clear whether North Korea wants the plant as a power source or as a decoy for its weapons program.

North Korea is trying to build up its infrastructure — improving its factories, its electrical grid and its supply of hard currency — in advance of 2012, the 100th anniversary of the birth of founder Kim Il Sung. North Korea has touted 2012 as a showpiece year for its achievements, and officials told Hecker that the light-water reactor would be finished in time for the anniversary.

Sources: Korean Times, 14 November 2011 / Yonhap News Agency, 14 Nov, / Washington Post, 15 November 2011