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A Nuke Deal With North Korea Could Still Blow Up


International Business

A NUKE DEAL WITH NORTH KOREA COULD STILL BLOW UP

On the surface, the long-running crisis over North Korea's nuclear program seems headed toward a happy ending. U.S. negotiators met with their North Korean counterparts in Berlin on Sept. 10. There they huddled to discuss building a new kind of nuclear energy system in the North to replace existing plants, which spawn weapons-grade material. A similar team of U.S. and North Korean diplomats met at the same time in Pyongyang to consider setting up an American liaison office there. Other top-level talks are scheduled for Sept. 23 in Geneva.

But a treacherous moment is approaching. Negotiators will soon face some of the most delicate questions yet: what kind of light-water-reactor technology will the U.S. and North Koreans agree on, who will supply it, and who uill pay an estimated $4 billion in costs.

It's far more than a commercial dispute. The South Koreans obviously want to sell their own technology, but more broadly they worry that they would not be able to guarantee the North's compliance with international safeguards if another nation provides a different system. In their view, the deal that the U.S. is cutting with the North won't guarantee full inspections. The North appears to want German or Russian technology, which would keep South Korean engineers and technicians out. The Americans are barred, by U.S. law, from providing technology or from financing construction of any such plant in the North, but they are eager to broker a deal.

The worst fear in Seoul is that the U.S. and South Korean governments will fall out of step on this crucial issue, scuttling further progress in dealing with the North and straining their own decades-old alliance. Easing those fears was the purpose of Foreign Minister Han Sung-Ju's hastily scheduled Sept. 8-9 visit to Washington. Both Secretary of State Warren M. Christopher and President Clinton have assured the South Koreans that U.S. ties with North Korea will not come at the South's expense. At a Sept. 14 press conference in Tokyo, U.S. Ambassador-at-Large Robert L. Gallucci said the U.S. is backing Seoul. "We see now no viable alternative" to a central role for South Korea, said Gallucci, who has been conducting the negotiations with Pyongyang.

But the South Koreans aren't convinced. They believe the Administration, eager for a political boost with midterm elections looming, could be on the verge of allowing North Korea to use the nuclear card to break its isolation and win economic benefits--while cutting the South out.

Some Korea-watchers in Washington are beginning to say Seoul's behavior has been counterproductive and provocative, aimed mostly at public opinion back home. James J. Przystup, director of the Asian Studies Center at the Heritage Foundation and a former State and Defense Dept. official, says he understands why Seoul is edgy. But, he adds, "there is no way the U.S. is going to cut a separate deal that embarrasses Seoul. Having fought two wars [Korea and Vietnam] alongside the South, the U.S. is not about to throw it over for folks who blow up planes and assassinate diplomats."

INTRANSIGENCE. The devil may well lurk in the details. The U.S. wants South Korea and Japan to pay for the bulk of the costs of building two 1 million-megawatt reactors. South Korea says it will not pay a penny if a South Korean-type reactor is not accepted by the North.

Seoul is arguing that German reactors can't be used because German law bans the transfer of the light-water technology to any country that's not a full signatory of the Nuclear Non-Proliferation Treaty. "The Germans won't finance it, and the U.S. can't for its own legal reasons," says one South Korean official. And in Seoul's view, the Russians lack the funds to pay for their technology to be used.

The dilemma is that if the U.S. does push Pyongyang to accept South Korean reactors, the answer is still likely to be no. Aside from any business considerations, Pyongyang's long-term goal has been to deepen its ties with the U.S. while avoiding direct contacts with the South. That's why resolving the issue will require far fancier footwork than negotiators are willing to admit.

THE TANGLE

OVER NUKES

The North Koreans and South Koreans are sharply at odds over what kind of nuclear energy system should replace the North's existing plants.

WHAT NORTH KOREA WANTS German or perhaps Soviet technology, paid for by Japan and others.

WHAT SOUTH KOREA WANTS South Korean technology that would allow Seoul to monitor the North's activity and pave the way for unification. Seoul and Tokyo would pay.

WHAT THE U.S. WANTS An agreement that would prevent the North from developing nuclear weapons. But no U.S. technology or financing would be involved.

DATA: BUSINESS WEEKLaxmi Nakarmi in Seoul, with Amy Borrus in Washington


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