Power Plant Construction Snarled in Politics

On the desolate, wind-whipped seacoast of North Korea is one of the more improbable construction projects in the world.

Dropped into the barren landscape are a golf driving range, an indoor swimming pool, two gymnasiums, tennis courts, a sauna, a karaoke bar and 2,000 modern apartment units, all for construction workers. There are also half a dozen restaurants and canteens, including one specializing in the cuisine of Uzbekistan for hundreds of workers from that country. Despite North Korea’s ban on religion, there are three houses of worship: Roman Catholic and Protestant chapels and a Buddhist temple.

“It’s a little piece of suburbia set down in the middle of North Korea,” said one supervisor at the site who asked not to be quoted by name.

But nothing is stranger than the centerpiece of the project: twin light-water nuclear reactors that were supposed to provide energy for North Korea, a country alleged by U.N. arms inspectors to be a major threat to nuclear nonproliferation.

The project was conceived as part of a 1994 treaty under which the communist regime promised to mothball its nuclear program in exchange for the light-water reactors, which are difficult to convert to military use.

More than $1.4 billion has been poured into the project by an international consortium made up of the United States, South Korea, Japan and the European Union. If everything had gone as planned, the first reactor would have been producing electricity this year. Instead, it looks like the entire project might amount to nothing more than an extravagant monument to diplomatic failure.

North Korea’s renewed nuclear ambitions and blustery threats have made it very difficult to continue construction in the remote county of Kumho, on the east coast almost a 10-hour drive from the capital, Pyongyang. But it is not so easy for the international community to disentangle itself from the project.

“You can’t just walk away from a project like this and leave it to the North Koreans. There is an investment that has to be protected,” said Scott Snyder, Korea representative of the Asia Foundation, a think tank.

Predictably, a debate is raging among consortium partners about what to do. Some officials in the Bush administration believe that further investment would be like tossing money down a sinkhole.

The South Koreans -- supported to a lesser extent by the Japanese -- believe that canceling the project might dangerously provoke the North Koreans. Seoul also stands to lose the most money if the deal collapses because the South’s main electric company is the prime contractor.

The structure of the international consortium requires that all decisions be made by consensus, and in the absence of agreement the project has been paralyzed.

“All four governments have worked mightily to find consensus where it exists, but it isn’t always there,” conceded Charles Kartman, executive director of the Korean Peninsula Energy Development Organization, or KEDO, as the consortium is called.

One likely compromise is to not pull the plug entirely on the project but to suspend construction pending a resolution of the diplomatic crisis. A board meeting to make a decision had been expected last month but was delayed in part because of the resignation of Jack Pritchard, the U.S. special envoy for North Korea and representative to the KEDO board.

“Suspension is something that I expect the governments eventually to decide to do,” Kartman said in a telephone interview. “It makes a lot of sense given all of the uncertainties.”

The deal calls for the U.S. to pay a portion of the consortium’s administrative costs and to supply heavy fuel oil to North Korea during the construction period. The Bush administration stopped oil deliveries last year after revelations that North Korea was cheating on the treaty with a secret uranium-enrichment program, but the United States has promised to contribute $3.7 million next year toward administrative expenses.

For the time being, construction work is still ongoing in Kumho, although the number of employees has been reduced from 1,400 to about 800. Most are South Koreans, although there are also Uzbeks and North Koreans. They are still working on one key structure: the steel lining of the cylindrical container building for the first reactor. But the pace of work has been slowed considerably while the diplomats wrestle with the difficult decision of what to do.

“Frankly, I must admit that morale is affecting the workers. They feel uneasy about the future of the project, uneasy about the security of their jobs.... And conditions are getting worse and worse for us to go forward,” said a senior consortium official in Seoul, who requested anonymity.

“There is no question that there is disappointment that we cannot go forward at the same pace as we did a year ago,” said another official, who noted that only a year ago the consortium was training North Korean workers on how to operate the plant and was planning to send them to South Korea to study.

Even before the current dispute with North Korea blew up at about that time, the light-water reactor project was fraught with political peril. U.S. conservatives loathed the very concept of building a nuclear reactor for the North’s unrepentant communist leader, Kim Jong Il.

“This was a cockamamie idea from the get-go to let a communist tyranny have this sort of thing,” said Henry Sokolski, the head of the Washington-based Nonproliferation Policy Education Center and one of the harshest critics of the project. “It is unnecessary, wasteful and dangerous.”

Other incidents, such as the 1996 discovery of a North Korean spy submarine off the South Korean coast and North Korea’s 1998 test-firing of a missile over Japan, also caused months of delays.

John Hoog, a former U.S. Foreign Service officer who lived and worked for three years at the site as a consortium official, recalled that North Koreans were hypersensitive about any slights from the South Koreans, even though the South was paying for two-thirds of the costs.

“The North Koreans don’t have much, but they have a lot of pride. Things could get pretty petty,” Hoog said.

On one occasion, the North Koreans demanded that thousands of safety reflectors embedded in a newly built road around the site be removed because they had tiny lettering identifying them as coming from a South Korean company. KEDO ended up filing off the lettering to satisfy the demand, according to Hoog.

In another incident, North Korean workers walked off their jobs over a perceived insult to Kim Jong Il by a South Korean worker. The North Koreans also took umbrage that their workers were being paid a fraction of the salaries of South Korean counterparts and demanded a raise from $110 per month to $600. As a result the consortium began importing Uzbek workers to replace most of the North Koreans.

The international community also at times appeared to be dragging its feet on the project, in part because of funding delays by the U.S. Congress. Although it was seldom made explicit, diplomats say there was a lack of urgency on the part of consortium members because many North Korea analysts believed the country was on the verge of collapse anyway.

“Sometimes the engineers got frustrated because of all the delays. From an engineering point of view, they wanted to get on with it and build something,” Hoog said. “But others felt the main purpose was to keep North Korea from firing up its own nuclear reactors. Every day that passed that the North Koreans weren’t splitting atoms was another day that the world was safer.”

North Korea has been furious about the delays, which it blames for its desperate energy shortage. Indeed, the country of 22 million people has less electricity available than many mid-sized U.S. cities, leaving most industry idled and much of the population spending nights in the dark.

Even if the project were to go forward at full steam, the first reactor would not be ready until 2008.

Many critics say it would have been quicker, cheaper and easier to solve the North Korean energy crisis by building conventional power plants or repairing existing power grids. The cost of completing the reactors is budgeted at $4.6 billion. However, the North Koreans were adamant in 1994 that they get nuclear power, apparently as a point of pride because they wanted to keep up with the heavily nuclear-dependent South Koreans.

“If this deal was to be appealing to the North Koreans, it had to be nuclear technology and the most modern nuclear technology,” said Robert Gallucci, a former State Department official who negotiated the 1994 pact. He added that, given what has happened, it would be preferable that any future deal not be based on nuclear power.

But that leaves open the question of what would happen to the project in Kumho.

There have been various suggestions -- among them, using the site for a conventional thermal plant, an industrial park or even a tourist complex.

“If the project is canceled, there is an awful lot up there that would be useful. We’ve developed the infrastructure for living and working in North Korea, and what we’ve put in place is very impressive compared to everything else in North Korea,” said Kartman, the KEDO director.

Others say that for all the glaring and well-publicized failings of the project, there is still a chance that it will be built for lack of any other alternative to dealing with North Korea.

Said one South Korean official: “Maybe somebody will pull a magic rabbit out of a hat, but so far nobody has come up with a better idea than this one.”