Congressional Research Service Reports

[CRS Issue Brief for Congress]

91141: North Korea's Nuclear Weapons Program

Updated December 12, 1996

Larry A. Niksch
Foreign Affairs and National Defense Division

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

North Korea's Nuclear Program
International Assistance
North Korea's Delivery Systems
State of Nuclear Weapons Development
Diplomatic Background to the Agreed Framework and Amending Agreements
The Agreed Framework: Provisions, Implementation, Costs, Future Issues
U.S. Objectives: Primacy to the Freeze of North Korea's Nuclear Program
Benefits to North Korea
Total U.S. Cost Projections
Light Water Nuclear Reactors
Oil at No Cost
Diplomatic Representation
Lifting the U.S. Economic Embargo
North Korean Obligations Beyond the Freeze of the Nuclear Program
Inspections
Disposition of Fuel Rods from the Five Megawatt Reactor
Dismantlement of Nuclear Installations
Peace and Security Provisions and Threats to the Armistice
Role of Congress


SUMMARY

North Korea's nuclear weapons program became an immediate foreign policy issue facing the United States because of North Korea's refusal to carry out its obligations under the Nuclear Non-Proliferation Treaty (NPT) and other nuclear accords it had signed. North Korea has constructed nuclear reactors and a plutonium reprocessing plant at a site called Yongbyon. U.S. and other foreign intelligence assessments have concluded that North Korea probably has acquired enough weapons-grade plutonium for the manufacture of at least one nuclear weapon.

The Clinton Administration attempted to arrange "comprehensive negotiations" with North Korea over the issue and other issues between North Korea and the United States; but North Korea's violations of its obligations under the NPT aborted such talks until August 1994.

The United States and North Korea signed an agreement on October 21, 1994, that offers North Korea a package of benefits in return for a freeze of North Korea's nuclear program. Benefits to North Korea include: light water nuclear reactors totaling 2,000 electric megawatts by the year 2003; shipments of "heavy oil" to North Korea (50,000 tons in 1995 and 500,000 tons annually beginning in 1996 until the first light water reactor is built); U.S. agreement to establish liaison offices as an initial step toward diplomatic relations; and a relaxation of the American economic embargo against North Korea. In December 1995, the United States and North Korea signed a supply contract for the light water reactors.

The Clinton Administration hopes to secure most of the money for the oil and light water reactors from other governments. South Korea and Japan will finance most of the cost of light water reactors. The Administration needs the cooperation of other states for the provision of oil to North Korea. Administration officials have acknowledged, however, that costs to the United States could run into the "tens of millions of dollars."

Dismantlement of North Korea's current nuclear facilities and a resolution of the International Atomic Energy Agency (IAEA) demand for a special inspection of suspected nuclear waste sites are postponed for at least five years by the Agreed Framework. The same is true of North Korean consent to the removal of reactor fuel rods, which North Korea removed from its operating reactor in May 1994.

There are numerous potential legislative initiatives available to Congress to affect the Agreed Framework. A certain role for Congress will involve Administration requests for appropriations to help finance the costs of the various benefits to North Korea. Moreover, Congress under law will have to review a prospective U.S.-North Korea nuclear agreement, which the Administration will have to negotiate before light water reactors with U.S. technology can be sent to North Korea.


MOST RECENT DEVELOPMENTS

The stepped-up pace in 1996 in the implementation of the nuclear provisions of the U.S.-North Korean Agreed Framework of October 1994 came to a halt in September 1996 because of a North Korean infiltration of commandos into South Korea by submarine. The commandos murdered several South Korean civilians. At the same time, evidence, albeit circumstantial, pointed to North Korean complicity in the assassination of a South Korean diplomat in Vladivostok, Russia. These actions were the latest in a succession of North Korean provocations that were contrary to the peace and security provisions of the Agreed Framework, which calls for improved security on the Korean peninsula and negotiations between North Korea and South Korea. The R.O.K. (Republic of Korea) government responded by demanding that North Korea apologize for the infiltration and guarantee that it will commit no further provocations.

South Korea announced that it was suspending its participation in the installation of two light water nuclear reactors in North Korea. The provision of these reactors to North Korea is a key nuclear provision of the Agreed Framework. North Korea responded by threatening to abrogate the Agreed Framework and start up its nuclear facilities, which are shut down under the Agreed Framework.

On December 15, 1995, the Korean Peninsula Energy Development Organization (KEDO) and North Korea signed a supply contract for the supply of the light water reactors to North Korea. Protocol talks in 1996 to implement the supply contract resulted in agreements over the legal and diplomatic status of personnel sent to North Korea in connection with the installation of the reactors and the types of services North Korea will provide to the personnel at the site. Groundbreaking at the construction site in North Korea was expected to take place by the end of 1996, but the submarine infiltration will delay this. The Clinton Administration has taken the position that North Korea must undertake an acceptable measure towards South Korea in the wake of the provocations, but it appears to view something less than a full apology as acceptable. Administration officials have stressed the importance of continued implementations of the Agreed Framework.

Securing funds to implement the Agreed Framework continues to challenge the Administration. The estimated cost of the light water reactor (LWR) project has risen from $4.5 billion to nearly $6.0 billion. South Korea is to provide most of the money, but North Korea's provocations are producing political resistance in South Korea to allocating the money. The Administration also has had difficulty in securing money to provide North Korea with 500,000 tons of heavy oil annually. The foreign operations appropriations bill for FY1996 grants the Clinton Administration's request for $22 million for U.S. funding of KEDO operations, including $19 million for 500,000 tons of heavy oil to be shipped to North Korea in 1996 under the Agreed Framework. Other governments will provide the remainder of the approximately $50 million for the oil. KEDO is negotiating to secure participation of the European Union (EU); the EU is expected to contribute $20 million annually to the cost of the oil.

The foreign operations appropriations bill for FY1997 grants the Clinton Administration's request for $25 million for U.S. funding of KEDO. However, initial House action on the FY1997 foreign operations appropriations bill has cut the Administration's request of $25 million to $13 million. H.R. 3540, passed by the House on June 11, 1996, contained the $13 million allocation for the KEDO. The Senate approved the $25 million request in H.R. 3540, which proved to be the basis for the final bill. In fiscal years 1996 and 1997, Congress appropriated $8 million and $12 million respectively for the encasing of about 8,000 nuclear reactor fuel rods, which North Korea removed from its operating reactor in May 1994. The Department of Energy, the U.S. agency participating in the encasing, estimated prior to the submarine infiltration that the encasing will be completed in March 1997. This too, will now be delayed.


BACKGROUND AND ANALYSIS

North Korea's Nuclear Program

From the U.S. standpoint, a key purpose of the U.S.-North Korean Agreed Framework of October 21, 1994 is to address the North Korean nuclear program, especially the potential of that program to produce nuclear weapons. North Korea has several nuclear facilities which have the potential to produce nuclear weapons. Most are located at Yongbyon, 60 miles of the North Korean capital of Pyongyang. The key installations are:

Satellite photographs reportedly also show that the atomic reactors have no attached power lines, which they would have if used for electric power generation. Some experts and reports from North Korean defectors point to possibilities that North Korea also may have other, hidden nuclear weapons facilities. Bakchon, 60 miles north of Pyongyang, has been cited as one such site. Hans Blix and a number of U.S. and South Korean experts have speculated that North Korea might have built a hidden "pilot" plutonium reprocessing laboratory as a prototype for the large reprocessing installation.

Persons interviewed for this study believe that North Korea has been constructing the two reactors and the apparent reprocessing plant with its own resources and technology. It is believed that Kim Chong-il, the son and successor of President Kim Il-sung who died in July 1994, directs the program, and that the military and the Ministry of Public Security (North Korea's version of the KGB) implement it. North Korea reportedly has about 3,000 scientists and research personnel devoted to the Yongbyon program. Many have studied nuclear technology (though not necessarily nuclear weapons production) in the Soviet Union and China and reportedly Pakistan. The training of nuclear scientists at North Korean universities reportedly is intense. North Korea has uranium deposits, estimated at 26 million tons. North Korea is believed to have one uranium producing mine.

International Assistance

Knowledgeable individuals believe that the Soviet Union did not assist directly in the development of Yongbyon in the 1980s. The U.S.S.R. provided North Korea with a small research reactor in the 1960s, which also is at Yongbyon. However, North Korean nuclear scientists continued to receive training in the U.S.S.R. up to the demise of the Soviet Union in December 1991. East German and Russian nuclear scientists reportedly are in North Korea. Russian military officials confirmed the presence of Russian nuclear scientists inside North Korea in January 1994.

Several analysts interviewed said that there is no direct evidence that China is assisting North Korea in its nuclear weapons program. The publication Nucleonics (June 21, 1990) asserted that "Some sources believe the country [North Korea] is being assisted by China...." Another publication Nuclear Fuel (October 2, 1989) cited U.S. officials as saying that the subject of China's nuclear cooperation with North Korea "has been raised" with the Chinese government and that there was "speculation" that China had provided technology for the North Korean reprocessing plant.

North Korea's Delivery Systems

North Korea is developing missiles believed capable of delivering nuclear warheads. In 1993, it tested a SCUD missile with a range estimated at 600 miles, capable of covering South Korea and part of Japan. In March 1994, the Central Intelligence Agency confirmed reports that North Korea was developing two intermediate range ballistic missiles whose range likely would include U.S. territories in the Western Pacific. Other experts believe these might have a range that would include Alaska. In addition, several North Korean military aircraft probably can deliver atomic bombs to targets in South Korea.

State of Nuclear Weapons Development

North Korea has denied in all of its statements that it intends to produce atomic weapons. North Korean spokesmen have described Yongbyon as a research facility. North Korea claims that it reprocessed a small amount of plutonium (80 grams), which has been used only for experimental purposes. There is evidence, however, from which U.S. and foreign intelligence agencies and experts have concluded a high range of likelihood that North Korea has acquired enough plutonium and has developed significant technology to produce a small number of nuclear weapons. North Korea's approximately 70 day shutdown of the five megawatt reactor in 1989 gave it the opportunity to remove nuclear fuel rods, from which plutonium is reprocessed. North Korea also ran the reactors at low levels for approximately 30 days in 1990 and 50 days in 1991. Such a low level of operation also would provide the technical possibility of removing fuel rods, though U.S. experts consider it unlikely.

State Department officials estimate that North Korea may have acquired six to eight kilograms of plutonium from the five megawatt reactor at Yongbyon, enough, they say, for possibly one bomb. However, the U.S. Central Intelligence Agency and the Defense Intelligence Agency reportedly estimated in late 1993 that North Korea extracted enough fuel rods for about 12 kilograms of plutonium -- sufficient for one or two atomic bombs. The CIA and DIA apparently base their estimate on the 1989 shutdown of the five megawatt reactor. David Albright of the Institute for Science and International Security produced in 1994 a detailed study of the 1989 reactor shutdown and concluded that if North Korea removed all of the fuel rods from the reactor during the shutdown, the rods would have contained 14 kilograms of plutonium.

South Korean and Japanese intelligence estimates reportedly are higher: 16-24 kilograms (Japan) and 7-22 kilograms (South Korea). These estimates reportedly are based on the view that North Korea could have acquired a higher volume of plutonium from the 1989 reactor shutdown and the view of a higher possibility that North Korea removed fuel rods during the 1990 and 1991 reactor slowdowns. Russian Defense Ministry analyses of late 1993 reportedly came to a similar estimate of about 20 kilograms of plutonium, enough for 2 or 3 atomic bombs. Some individual U.S. Government experts believe that under optimum conditions, North Korea could have produced close to 20 kilograms of plutonium since 1989.

There also is emerging a body of analysis suggesting that North Korea could produce more nuclear weapons from a given amount of plutonium than standard intelligence estimates have believed. State Department and U.S. intelligence estimates of the plutonium/bomb production ratio are close to the IAEA standard that a non-nuclear state would need about eight kilograms of plutonium to produce a nuclear bomb. However, IAEA spokesman, David Kyd, stated in August 1994 that Agency officials have known for some time that the eight kilogram standard was too high. He said that the IAEA retained it because of the wishes of member governments.

Kyd was reacting to a report of the National Resources Defense Council. Using North Korea as a standard non-nuclear state, the report concluded that a non-nuclear state with "low technology" could produce a one kiloton bomb (a small atomic bomb but "with the potential to kill tens of thousands of people") with three kilograms of plutonium. A non-nuclear state with "medium technology" could produce a one kiloton bomb with 1.5 kilograms of plutonium.

Before the National Resources Defense Council released the report, the U.S. Department of Energy in January 1994 lowered its mean estimate of plutonium required for a small atomic bomb from eight to four kilograms. Secretary of Defense Perry suggested in July 1994 that, with a higher level of technology that believed, North Korea could produce more nuclear weapons with a given amount of plutonium: "If they had a very advanced technology, they could make five bombs out of the amount of plutonium we estimate they have."

Russian and U.S. intelligence agencies also reportedly have learned of significant technological advances by North Korea towards nuclear weapons production. On March 10, 1992, the Russian newspaper Argumenty I Fakty (Arguments and Facts) published the text of a 1990 Soviet KGB report to the Soviet Central Committee on North Korea's nuclear program. It was published again by Izvestiya of June 24, 1994. The KGB report asserted that "According to available data, development of the first nuclear device has been completed at the DPRK nuclear research center in Yongbyon." The North Korean Government, the report stated, had decided not to test the device in order to avoid international detection. In July and December 1993 respectively, the journal Nucleonics (July 8) and NBC News reported that North Korea had converted reprocessed plutonium from a liquid form to pure metal, apparently prior to 1993. Nuclear experts describe this action as the last step prior to the final assembly of an atomic bomb.

Additionally, there are a number of reports and evidence that point to at least a middle range likelihood that North Korea may have smuggled plutonium from Russia. In June 1994, the head of Russia's Counterintelligence Service (successor to the KGB) said at a press conference that North Korea's attempts to smuggle "components of nuclear arms production" from Russia caused his agency "special anxiety." In August 1994, members of Germany's parliament and Chancellor Kohl's intelligence coordinator stated that they had been briefed that a German citizen arrested in May 1994 with a small amount of plutonium, smuggled from Russia, had connections with North Korea. U.S. executive branch officials have expressed concern in background briefings over the possibility that North Korea has smuggled plutonium from Russia. One U.S. official, quoted in the Washington Times, July 5, 1994, asserted that "There is the possibility that things having gotten over the [Russia-North Korea] border without anybody being aware of it." The most specific claim came in the German news magazine Stern in March 1993, which cited Russian Counterintelligence Service reports that North Korea had smuggled 56 kilograms of plutonium (enough for 7-9 atomic bombs) from Russia.

Other evidence, albeit circumstantial, includes numerous reports in 1994 of poor security at Russian nuclear facilities; a warning in June 1994 by the Director of the FBI that Russian criminal organizations "may already have the capability to steal nuclear weapons, nuclear weapons components or weapons-grade material"; the close connections that North Korean intelligence and military organs have had with the former KGB and elements of the Soviet/Russian military; the network of agents North Korea is known to have inside Russia; and the publicized North Korean attempts -- some apparently successful according to Russian military officials -- to recruit Soviet/Russian nuclear experts, including missile experts capable of designing nuclear warheads. The Japanese newspaper, SANKEI SHIMBUN, reported on June 9, 1996, that Kim Chong-u, a leading North Korean economic official, asserted in a meeting with State Department officials on April 26, 1996, that South Korea and Japan would have to deal with four North Korean missiles with nuclear warheads if they didn't provide North Korea with food.

Diplomatic Background to the Agreed Framework and Amending Agreements

In 1991, the Bush Administration took several actions aimed at securing from North Korea adherence to Pyongyang's obligations as a signatory of the Nuclear NonProliferation Treaty (NPT); North Korea had signed the treaty in 1985. Bush Administration actions included the withdraw of U.S. nuclear weapons from South Korea in late 1991. North Korea entered into two agreements, which specified nuclear obligations. In a denuclearization agreement signed in December 1991, North Korea and South Korea pledged not to possess nuclear weapons, not to possess plutonium reprocessing or uranium enrichment facilities, and to negotiate a mutual nuclear inspection system. In January 1992, North Korea signed a safeguards agreement with the International Atomic Energy Agency (IAEA), providing for regular IAEA inspections of nuclear facilities. In 1992, North Korea rebuffed South Korea regarding implementation of the denuclearization agreement, but it did allow the IAEA to conduct six inspections during June 1992-February 1993.

In late 1992, the IAEA found evidence that North Korea had reprocessed more plutonium than the 80 grams it had disclosed to the Agency. In February 1993, the IAEA invoked a provision in the safeguards agreement and called for a "special inspection" of two concealed but apparent nuclear waste sites at Yongbyon. The IAEA believed that a special inspection would uncover information on the amount of plutonium which North Korea had produced since 1989. North Korea rejected the IAEA request and announced on March 12, 1993, an intention to withdraw from the NPT.

The NPT withdrawal threat led to low and higher level diplomatic talks between North Korea and the Clinton Administration. North Korea "suspended" its withdrawal from the NPT when the Clinton Administration agreed to a high level meeting in June 1994. However, North Korea continued to refuse both special inspections and IAEA regular inspections of facilities designated under the safeguards agreement. In the first half of 1994, North Korea defied the IAEA by interfering with IAEA inspectors during an inspection in March, which Pyongyang had agreed to in February. In May, North Korea refused to allow the IAEA to inspect the 8,000 fuel rods, which it had removed from the five megawatt reactor. Nevertheless, North Korea made concessions to the United States after each of these incidents after the Clinton Administration began discussions in the U.N. Security Council over U.N. sanctions against North Korea. In May North Korea allowed the IAEA to complete the aborted March inspection. In June, North Korea's President Kim Il-sung reactivated a longstanding invitation to former U.S. President Jimmy Carter to visit Pyongyang. Kim offered Carter a freeze of North Korea's nuclear facilities and operations. Kim took this initiative after China reportedly informed him that it would not veto a first round of economic sanctions, which the Clinton Administration had proposed to members of the Security Council.

The Clinton Administration reacted to Kim's proposal by dropping its sanctions proposal and entering into a new round of high level negotiations with North. The two governments announced a general agreement on August 12, 1994. Another round of negotiations ensued on September 23, when North Korea issued several recycled and new demands. This negotiation led to the Agreed Framework of October 21. Two amending agreements were concluded in 1995: a U.S.-North Korean statements in Kuala Lumpur, Malaysia in June and a supply contract for the provision of nuclear reactors to North Korea, concluded in December.

The Agreed Framework: Provisions, Implementation, Costs, Future Issues

U.S. Objectives: Primacy to the Freeze of North Korea's Nuclear Program

The heart of the Agreed Framework and the amending accords is a deal under which the United States will provide North Korea with a package of nuclear, energy, economic, and diplomatic benefits; in return North Korea will halt the operations and infrastructure development of its nuclear program. The Agreed Framework commits North Korea to "freeze its graphite-moderated reactors and related facilities" within one month of October 21 with the freeze to be monitored by the IAEA. Ambassador Robert Gallucci, who negotiated for the United States, stated that "related facilities" include the plutonium reprocessing plant. According to Gallucci, the freeze includes a halt to construction of the 50 and 200 megawatt reactors and a North Korean promise not to refuel the five megawatt reactor. The Agreed Framework also commits North Korea to "cooperate" with the United States in finding a way to store the fuel rods removed from the five megawatt reactor in May 1994 "in a safe manner that does not involve reprocessing in the DPRK [North Korea]."

North Korea announced in November 1994 that it had ceased construction of the 50 and 200 megawatt reactors and had ceased activities related to the five megawatt reactor, the nuclear fuel production installation, and the plutonium reprocessing plant. The IAEA conducted an initial monitoring inspection in late November 1994 and reported no contrary activities at these sites. However, in late February 1995, IAEA officials asserted that North Korea had limited the number of inspectors to less than four, a number inadequate to monitor frequently all facilities designated under the freeze. According to these officials, North Korea, too, had blocked verification inspections of large areas of North Korea's plutonium reprocessing plant.

Gallucci and other officials have emphasized that the key policy objective of the Clinton Administration has been to secure a freeze of North Korea's nuclear program in order to prevent North Korea from producing large quantities of nuclear weapons grade plutonium through the operations of the 50 and 200 megawatt reactors and the plutonium reprocessing plant at Yongbyon. Gallucci has referred to the prospect of North Korea of producing enough plutonium annually for nearly 30 nuclear weapons if the 50 and 200 megawatt reactors went into operation. The Administration's fear is that North Korea would have the means to export atomic bombs to other states and possess a nuclear missile capability that would threaten Japan and U.S. territories in the Pacific Ocean. The freeze, thus, is intended to attain U.S. policy goals related to nuclear non-proliferation and the NPT and prevent the emergence of a significant regional nuclear security threat.

However, nothing in the Agreed Framework deals with North Korea's existing achievements regarding the production and acquisition of plutonium and the production of nuclear weapons. The freeze will not prevent North Korea from producing a few nuclear weapons if, according to the U.S. and foreign intelligence reports cited earlier, North Korea has enough plutonium, sufficient technology to manufacture them, and hidden facilities such as a pilot plutonium reprocessing laboratory, about which IAEA Director Blix and others have speculated. Pyongyang's continued small stockpile option appears to be a major weakness of the Agreed Framework. This would not constitute the broad strategic threat cited by Administration officials. However, a small nuclear stockpile would represent a new, dangerous element to the military situation on the Korean peninsula itself, if North Korean leaders concluded that possession of nuclear weapons provided them with insurance against unacceptable losses if they undertook a more militarily aggressive strategy toward South Korea.

Moreover, the Agreed Framework also has the potential to damage U.S. nonproliferation goals and the NPT if other government's adopt North Korea's strategy of demanding advanced nuclear technology in return for continued adherence to the NPT. Already, in talks preliminary to negotiations to renew the NPT in 1995, Iran has adopted such a stance towards its adherence to the NPT. The Clinton Administration's willingness to provide North Korea with light water nuclear reactors also make more difficult U.S. efforts to persuade several governments not to sell similar reactors to Iran.

Benefits to North Korea

Total U.S. Cost Projections. In December, Ambassador Gallucci told the Senate Foreign Relations Committee that the cost to the United States in implementing the Agreed Framework would be in the "tens of millions of dollars." Secretary of State Christopher estimated $20-$30 million annually in testimony before the Foreign Relations Committee.

Light Water Nuclear Reactors. North Korea is to receive two light water reactors (LWRs) with a generating capacity of approximately 2,000 megawatts by the year 2003. The United States is obligated to organize an international consortium arrangement for the acquisition and financing of the reactors. The Administration and the governments of South Korea, Japan, and other countries established in March 1995 the Korean Peninsula Energy Development Organization (KEDO) to coordinate the provision of the LWRs. North Korea initially rejected negotiating with either KEDO or South Korea over the LWR project, demanding that it deal only with the United States and that it would accept only U.S. reactors. North Korea and the United States reached an agreement in Kuala Lumpur, Malaysia, in June 1995 under which North Korea agreed to negotiate with KEDO. The Kuala Lumpur agreement left South Korea's role in the project unclear. However, South Korea's role has become apparent because of South Korea's participation in subsequent KEDO-North Korea negotiations, which concluded a supply contract in December 1995 and follow-up protocol accords in 1996. KEDO signed the supply contract with North Korea in December 1995.

The estimated cost of the reactors was about $4.5 billion. South Korea is to supply the reactors through a South Korean company as the main contractor; and South Korea and Japan will provide most of the financing. South Korea reportedly is offering to shoulder over $2.5 billion, and Japan reportedly has offered over $1 billion. The Japanese Government contends that Western European governments also should make a contribution, since Japan provided a large sum for the cleanup of the Chernobyl nuclear power plant in Ukraine. The Administration's objective is to secure all the money for the light water reactors from other governments. It has approached Western European and Southeast Asian countries about financial assistance. Actual construction will begin in 1997 or shortly thereafter; and the first reactor could be finished by 1999, according to South Korean officials.

The supply contract will add to the financial costs. KEDO accepted several of North Korea's demands for construction of auxiliary facilities: ports, roads, a nuclear waste storage facility, and a reactor simulator. These, plus KEDO's agreement to pay for the initial supply of nuclear fuel for the reactors, is reportedly estimated within KEDO to raise the estimated cost to nearly $6 billion. KEDO rejected North Korea's demand that KEDO finance modernization of North Korea's electric power grid. If North Korea follows past negotiating behavior, it can be expected to issue this demand (estimated cost, $750 million) in the future as well as other monetary demands for auxiliary facilities.

Clinton Administration officials have noted that before construction begins, the United States, in accord with the Atomic Energy Act, must enter into a nuclear cooperation agreement with North Korea, since U.S. technology is incorporated into the South Korean light water reactors that North Korea will receive. Administration officials state that light water reactors are less dangerous than North Korea's current graphite reactors, partly because plutonium produced from light water reactors is more technologically difficult to use in the manufacture nuclear weapons. They also assert that North Korea will have to secure enriched uranium fuel for light water reactors from outside North Korea. This, the officials claim, will give the United States leverage on the supply of fuel if North Korea should violate the Agreed Framework. However, non-government nuclear experts assert that North Korea could use the original supply of fuel for the reactors to produce enough plutonium annually for up to 70 atomic bombs before the United States could react by seeking a cutoff of future fuel shipments. Ambassador Gallucci has acknowledged that "a technical possibility" exists that North Korea could use light water reactors to produce plutonium for nuclear weapons. Moreover, exercising U.S. leverage over the supply of fuel would require that potential suppliers of fuel like China and Russia coordinate their policies with the United States. The Agreed Framework and subsequent Clinton Administration have provided no information on the projected costs of supplying the reactor fuel.

Oil at No Cost. Prior to the construction of light water reactors, the Agreed Framework commits the United States to facilitate the provision to North Korea of "alternative energy" to compensate for the freeze of nuclear facilities. The alternative energy is to be "heavy oil". In January 1995, the Clinton Administration arranged for the shipment of 50,000 metric tons of U.S. heavy oil to North Korea. This was followed by a shipment of 100,000 metric tons of oil in October 1995. Starting in October 1996, the United States is to facilitate shipments of 500,000 metric tons of heavy oil to North Korea annually until 2003 or until the first of the two light water reactors becomes operational. The total cost of the oil from 1995 to 2003 is estimated at up to $500 million. The Administration financed the initial shipment of 50,000 tons of oil with $4.5 million from appropriated Defense Department funds designated for "emergency expenses." Foreign aid legislation for FY1996 and FY1977 allocated $19 million and $25 million respectively for oil shipments in 1996 and 1997. Japan has been the other major financial contributor. The Administration is discussing membership of the European Union on KEDO's current three member (the United States, Japan, and South Korea) executive board, which reportedly would bring in $20 million annually from Western Europe to meet the costs of the oil shipments. It has had little success in securing financial support from Southeast Asian and Persian Gulf countries.

The State Department asserts that the heavy oil will compensate for the electricity which North Korea could have generated if it completed construction of the 50 and 200 megawatt reactors. Department officials also state that the heavy oil has no direct military benefit. However, U.S.-facilitated heavy oil shipments may allow North Korea to shift its own financial resources from purchases of heavy oil from China and other countries to purchases of additional quantities of lighter grade oil, which it could use for multiple purposes, including military transport. During the 1988-1993 period, North Korea is estimated to have imported 340-400 thousand metric tons of heavy oil annually.

The Agreed Framework states that the heavy oil is "for heating and electricity production." North Korea has only one oil-fired electrical power plant, but 500,000 tons of oil annually exceeds the capacity of this plant. Other potential uses of heavy oil are for ship transport and steel production. U.S. officials disclosed in February 1995 that North Korea had "diverted" a "small amount" of the heavy oil received in January to industrial uses. Ambassador Gallucci hinted that it was used in steel production.

Diplomatic Representation. The United States and North Korea announced in the Agreed Framework an intention to open liaison offices in each other's capital and establish full diplomatic relations if the two governments make progress "on issues of concern to each side." By April 1995, most technical arrangements for liaison offices were completed. However, North Korea since has displayed more reluctance to finalize arrangements. Ambassador Gallucci has asserted that a full normalization of diplomatic relations will depend on a successful resolution of non-nuclear military issues, especially the heavy deployment of North Korean conventional military forces along the demilitarized zone separating North and South Korea and North Korea's program to develop and sell to other governments longer range missiles.

Lifting the U.S. Economic Embargo. The Agreed Framework specifies that within three months from October 21, 1994, the two sides will reduce barriers to trade and investment, including restrictions on telecommunications services and financial transactions. This requires the Clinton Administration to relax the U.S. economic embargo on North Korea, which the Truman Administration and Congress put in place during the Korean War. On January 20, 1995, the Administration announced initial measures, including permission for telecommunications links with North Korea, permission for U.S. citizens to use credit cards in North Korea, permission for American media organizations to open offices in North Korea, permission for North Korea to use U.S. banks in financial transactions with third countries, and permission for U.S. steel companies to import magnesite from North Korea. A relaxation of the U.S. economic embargo on North Korea is not likely to result in a major increase in U.S.-North Korean economic and business dealings in the near term. Imports of North Korean magnesite are expected to amount to $5-$10 million per year. However, it likely will trigger similar moves by the South Korean and Japanese governments, which could produce near term economic benefits for North Korea. Thus, in 1996, North Korea has pressed the Clinton Administration to end all economic sanctions. The South Korean Government responded to the Agreed Framework by lifting some restrictions on contacts between South Korean companies and North Korea, but it reimposed restrictions after the September 1996 submarine infiltration.

The impact of these U.S. and allied moves on North Korean economic policy could have an important bearing on North Korea's future nuclear policies and policies toward South Korea and the United States. Proponents of such moves, including large-scale, unconditional food aid to North Korea, argue that they will strengthen the hand of "moderates" in the North Korean government who advocate economic reforms similar to those of China in the 1980s. Trade, investment, and large-scale food aid, the proponents contend, inevitably will open up North Korea's economy and closed society to outside contacts and influences. This, in turn, will compel the North Korean Government to adopt reformist, moderate policies. Skeptics, on the other hand, doubt the existence of an inevitable process. They acknowledge that North Korea was motivated to accept the nuclear freeze by the need to obtain more economic intercourse with other countries to prevent a further deterioration to an economy in severe difficulty. Nevertheless, they point to an apparent North Korean strategy of securing oil through the Agreed Framework, using the Agreed Framework to reopen talks with Japan on the payment of Japanese "reparations" to North Korea, trading with other countries mainly through barter arrangements, and acquiring technology from foreign companies for production of goods in North Korea but not allowing direct foreign investment except in a special economic zone which North Korea has set up in the remote northeast corner of the country. The North Korean Government apparently hopes to acquire enough foreign exchange and technology to alleviate economic problems while still isolating its people and economy from outside contacts and thus containing pressures for reforms. North Korea applied the same strategy in 1996 to deal with mounting food shortages: pressing the United States and other countries for free, unconditional food aid while eschewing any real reform of its Stalinist agricultural system.

North Korean Obligations Beyond the Freeze of the Nuclear Program

For approximately the first five years of the Agreed Framework, North Korea's primary obligation is the freeze of its nuclear program. However, as the time comes for delivery to North Korea of plant and equipment for the light water reactors, the Agreed Framework alludes to certain other obligations for Pyongyang. Ambassador Gallucci and other Administration have been more specific in describing these. They have disclosed the existence of a secret minute that the Administration and North Korea concluded in conjunction with completion of the Agreed Framework. North Korea, however, has not acknowledged such a secret minute.

Inspections. The Agreed Framework contains a clause which the Administration claims constitutes a North Korean obligation to allow the IAEA to conduct the special inspection of the two suspected nuclear waste sites at Yongbyon in conjunction with the delivery of equipment for the light water reactors. However, the Agreed Framework does not refer to "special inspections." It does state: "When a significant portion of the LWR [light water reactor] project is completed, but before delivery of key nuclear components, the DPRK will come into full compliance with its safeguards agreement with the IAEA, including taking all steps that may be deemed necessary by the IAEA, following consultations with the Agency, with regard to verifying the accuracy and completeness of the DPRK's initial report on all nuclear material in the DPRK." Ambassador Gallucci contends that this binds North Korea to accept a special inspection before the key nuclear components of the first light water reactor are delivered to North Korea, if the IAEA still wishes to conduct a special inspection. However, North Korean descriptions of its obligations omit reference to special inspections.

Gallucci has stated that it would take about five years from October 1994 before implementation of the light water reactor project would reach the point when North Korea would be obligated to allow special inspections. Gallucci has defended the likely five-year delay by arguing that it was more important to secure a freeze of North Korea's large reactors and the plutonium reprocessing plant. He has cited the key role the IAEA will play in monitoring the freeze. Moreover, the Agreed Framework also provides that North Korea will allow the IAEA to resume regular inspections of several other facilities not covered by the freeze at the time the initial supply contract for the light water reactors is concluded. Nevertheless, the postponement of the special inspection of the suspected waste sites will abrogate any possibility of learning the amount of plutonium that North Korea reprocessed after the 1989 shutdown of the five megawatt reactor and/or the 1990 and 1991 slowdowns of that reactor -- and from that, knowledge of North Korea's likely atomic bomb production. It also will preclude any other IAEA initiative to investigate other suspicious activities that may be identified.

Disposition of Fuel Rods from the Five Megawatt Reactor. Following Kim Il-sung's offer of a nuclear freeze to former President Carter, Administration officials stressed the importance of securing North Korean agreement to the removal to a third country of the 8,000 fuel rods which North Korea removed from the five megawatt reactor in May 1994. The Administration abandoned the objective of securing an immediate removal of the rods after the negotiations started in August 1994. It also gave up support for the IAEA's attempts to inspect the fuel rods in order to gain information on the amount of weapons grade plutonium that North Korea secured from the five megawatt reactor prior to 1994. The Agreed Framework provided for the storage of the rods in North Korea and a North Korean promise not to reprocess plutonium from the rods. It also provides for subsequent talks on the "ultimate disposition" of the rods. The Administration also has agreed to provide technical assistance to North Korea for the safe storage of the fuel rods in a hard encasement. The encasement process began on April 27, 1996. The U.S. Department of Energy estimates the encasing will be completed by March 1997. The Administration estimated the cost of this technical assistance at $5-$10 million, but the total cost in fiscal years 1996 and 1997 has totaled $20 million. The South Korean Government, however, reportedly estimates that the cost of safe storage of the fuel rods will be about $30 million.

In early 1996, the IAEA renewed attempts to inspect the fuel rods before they were encased, only to be rebuffed by North Korea. IAEA statements indicate that the Clinton Administration gave no support to the IAEA attempts.

The State Department asserts that the Agreed Framework constitutes a North Korean commitment to allow the removal of the rods from North Korea "when significant nuclear components begin to be delivered for the first LWR." The Department adds that "The fuel must be completely shipped out of North Korea by the time the first LWR is completed." The Agreed Framework does not specify removal of the fuel rods, but the supply contract states that the fuel rods will be transferred "from the DPRK." The South Korean Government reportedly estimates that the cost of removal would be around $70 million. Other South Korean experts reportedly place the costs of storage and removal higher, around $200 million. The supply contract does not specify who would assume the cost of dismantlement.

Dismantlement of Nuclear Installations. The Agreed Framework states that "Dismantlement of the DPRK's graphite-moderated reactors and related facilities will be completed when the LWR project is completed." A State Department interpretation holds that dismantlement will begin when the first light water reactor is installed and completed when the second reactor is fully installed. Administration officials have not estimated the cost of dismantlement and from where the money would come. South Korean government experts reportedly estimate that dismantlement of the 50 and 200 megawatt reactors will cost about $500 million but that dismantlement of the radioactive five megawatt reactor and the plutonium reprocessing plant will require a much higher cost.

Peace and Security Provisions and Threats to the Armistice

The Agreed Framework contains a joint pledge that "Both sides will work for peace and security on a nuclear-free Korean peninsula." It stipulates that "The US will provide formal assurances to the DPRK against the threat or use of nuclear weapons by the U.S." The State Department states that the Clinton Administration will issue a "negative security assurance" to North Korea, pledging not to use nuclear weapons against North Korea as long as it remains a member of the NPT. North Korea pledges to "take steps to implement" the North Korea-South Korea denuclearization agreement and "engage in North-South dialogue."

Since the signing of the Agreed Framework, there has been no progress in implementing any of the peace and security clauses. North Korea has taken no initiatives on the North-South denuclearization agreement. It has refused to re-open the negotiations with South Korea over improving relations that it broke off in 1992. North Korea and South Korea did negotiate an agreement in June 1995 under which South Korea shipped 150,000 tons of rice to North Korea. North Korean authorities, however, harassed and threatened the crews of the South Korean boats, which delivered the rice. South Korea responded with new conditions for future talks -- designation of the talks as "official government-to-government" negotiations and that talks be held on the Korean peninsula. North Korea rejected the conditions, and the contact ended.

The overall security situation also has deteriorated since the signing of the Agreed Framework. North Korea has conducted a number of provocative acts against South Korea, including kidnappings of South Korean citizens and commando infiltrations into South Korea. The tensions resulting from the September 1996 submarine infiltration and the possible North Korean assassination of the South Korean diplomat in Vladivostok were the latest in North Korean provocations. Moreover, North Korea has taken a series of steps since the signing of the Agreed Framework to undermine the mechanisms of the Korean armistice in order to exert pressure on the Clinton Administration to agree to a bilateral U.S.-North Korea negotiation (excluding South Korea) of a Korean peace agreement to replace the 1953 armistice agreement. North Korea issued more frequent demands for a bilateral peace agreement, including the threat of unilateral actions if the United States continued to refuse bilateral military talks. On February 28, 1995, North Korea expelled Polish members of the Neutral Nations Supervisory Commission (NNSC) from North Korean soil. North Korea previously had expelled Czech members of the Commission, which was established under the Korean armistice agreement. North Korea announced on May 3 restrictions on the movement of U.S. and NNSC personnel in the Joint Security Area at Panmunjom on the demilitarized zone (DMZ). This unilaterally abrogated a 1976 agreement between North Korea and the United Nations Command. North Korea warned in the May 3 statement and subsequent pronouncements that its next step against the armistice would be to alter the status of the DMZ. North Korea announced on April 4, 1996, that it no longer would uphold the status of the DMZ. it subsequently launched several temporary military incursions into the DMZ. It so far has rejected a U.S.-R.O.K. proposal of April 1996 for a four party negotiation of a peace agreement.

Role of Congress

Congress potentially could exercise legislative initiatives on a number of provisions of the Agreed Framework related to U.S. benefits to North Korea. This is especially the case regarding a relaxation of the U.S. economic embargo, the establishment of liaison offices, or a subsequent establishment of full diplomatic relations. Passage of sense of Congress resolutions or issuance of committee reports constitute means for Congress to voice opinion on the implementation of the Agreed Framework.

The 104th Congress has voiced much skepticism regarding the Agreed Framework, but its actions have given the Administration flexibility in implementing U.S. obligations. Congress so far has played three roles. First, there have been numerous oversight hearings. Second, Congress considered proposals for legislated guidelines on U.S. implementation of the Agreed Framework, but it did not legislate any such comprehensive packages. Third, Congress has considered and approved Administration requests for funds to finance implementation. Congress approved for fiscal years 1996 and 1997 Administration requests for $22 million and $25 million respectively for U.S. support of KEDO and $8 million and $12 million respectively for the encasing of nuclear fuel rods.

On October 20, 1994, President Clinton sent a letter to North Korean leader, Kim Jongil , stating that he "will use the full powers of my office" to carry out U.S. obligations related to light water reactors and alternative energy (oil). President Clinton added that if contemplated arrangements for light water reactors and alternative energy were not completed, he would use the powers of his office to provide light water reactors and alternative energy from the United States "subject to the approval of the U.S. Congress."

Another role for Congress is that of review of a prospective U.S.-North Korea nuclear agreement that the Administration will have to negotiate with North Korea if, as expected, South Korean-produced light water reactors contain U.S. nuclear technology. Under the Atomic Energy Act, the President must conclude such a nuclear agreement and submit it to Congress before U.S. nuclear technology or equipment can be transferred to a foreign country. The President must submit a nuclear agreement to the Senate Foreign Relations Committee and the House International Relations Committee, accompanied by a Nuclear Proliferation Assessment Statement prepared by the Arms Control and Disarmament Agency, Congress has 30 days of continuous session to consider the agreement; it can either adopt a resolution of disapproval or consent to the agreement by taking no action.