A Risky Policy on N. Korea
Warning to American taxpayers: Without knowing it, you may soon take on responsibility for what could be billions of dollars in liability stemming from nuclear accidents in, of all places, North Korea.
At the behest of the General Electric Co., the Clinton administration is quietly weighing a policy change that would make the U.S. government the insurer of last resort for any disasters at the civilian nuclear plants being built for the North Korean regime.
In case of a Chernobyl-type disaster in North Korea (a country not known for advanced safety procedures), the U.S might wind up paying legal claims.
The proposed U.S. government guarantee, now being intensively studied by the State and Energy departments, would be aimed at easing the way for construction of two light-water nuclear reactors in North Korea. Those reactors are a key element in the Clinton administration’s 1994 deal in which North Korea agreed to freeze its nuclear weapon program.
North Korea, which has defaulted on debts in the past, is too poor and unreliable to be counted on to pay legal claims arising from a nuclear accident. Private insurers are unwilling to take on the potentially astronomical claims of a North Korean Three Mile Island. So, American companies supplying parts for the North Korean reactors worry that, if there were a disaster, they would be sued.
Both the Clinton administration and GE confirmed that the company asked several months ago to be indemnified by the U.S. government before participating in the North Korea deal.
“We would like indemnity before we sign” any contract, said a spokesman for GE, which makes the steam turbines that would be used in the project.
“If there’s an accident, they [GE officials] have to understand on what basis they’d be covered,” explained Charles Kartman, the State Department’s special envoy for North Korea.
Kartman acknowledged that GE’s request was unusual, if not unique: Other firms participating in the North Korea project have been willing to go ahead without the indemnity GE is seeking in hopes that the unsettled liability questions could be worked out over the next few years.
How will the Clinton administration go about granting new legal protection to GE? It is reluctant to seek a new law from the Republican Congress, which often has criticized the administration’s policy of engagement with North Korea.
That roadblock has sent administration lawyers scurrying through the U.S. code, and they have found an obscure law that might be used in a new way to cover GE.
This law--Title 85, Section 804--was intended to indemnify companies that took part in nuclear cleanup operations. But the State and Energy departments are now thinking of applying it to protect the firms participating in the North Korean civilian reactor project.
Presto! One little legal reinterpretation by the administration and one huge new legal liability for American taxpayers.
Not to worry, insisted Kartman. The idea that the U.S. government will ever have to pay these claims is “very hypothetical.”
He noted that the parts for the North Korean reactors would not be shipped for several more years and, in the meantime, the U.S. and other countries are trying to work out a new international agreement that would limit liability in nuclear accidents.
But ask yourself this: If the proposed international accord Kartman describes is such a sure thing and the prospects of claims from a nuclear accident are so remote, why can’t the Clinton administration persuade GE to go ahead without the indemnity it is seeking? Why does the U.S. government, rather than GE, have to take responsibility for this supposedly hypothetical risk?
Viewed strictly from GE’s self-interest, its request has a certain logic. GE is a relatively small player in the North Korea project; most of the work is being done by South Korean companies. The sale of GE’s steam turbines will bring in roughly $30 million, yet the company fears it could face lawsuits ranging in the billions.
Why don’t the organizers of the North Korea project simply do without GE and find another company more willing to take the risk?
They could. But doing that would require a redesign of the North Korea project, would lead to delays of a year or more and would increase the overall costs--most of which are being paid by South Korea. So, on the whole, everyone involved is eager to avoid losing the big American company.
For GE, it seems, the Clinton administration brings good things to life. The rest of us are left to pray that we don’t get stuck with massive bills from nuclear plants we won’t run in a country over which we have no control.
