The Foreign Service Journal, December 2003

ping his previous insistence that North Korea dismantle its nuclear program as a precondition for dialogue, and by offering to join in a six-power security assurance to North Korea (i.e., the United States, China, Russia, Japan, South Korea and North Korea). But it is unclear whether the administration is prepared to offer a security guaran- tee that would commit the U.S. to co-existence with the Kim Jong Il regime, as Pyongyang has demanded — rul- ing out efforts to promote “regime change.” Nor is it clear that Washington is ready for the step-by-step process of simultaneous economic and security trade-offs that the North wants. By the same token, it is uncertain whether North Korea will agree to make a security assur- ance conditional on the “verifiable progress” toward denu- clearization that Washington understandably expects. In any event, even if a compromise formula can be devised (see “Turning Point in Korea,” the February 2003 report of The Task Force on U.S. Policy in Korea, [ww w.ciponline.org/Asia/Task Force.pdf] for a s uggested approach), a complete and definitive end to North Korea’s nuclear program would require a comprehensive settlement that addresses not only its military security but also its economic security — especially the energy crisis that underlies its economic stagnation. North Korea’s drive for nuclear weapons reflects a recognition that the foundations of its national security have been steadily eroding since the cutoff of the Russian and Chinese subsidies that kept it afloat during the Cold War. Even though the country has abundant coal deposits, Pyongyang built its economy primarily around the abundant, low-cost Chinese crude oil flowing directly to its refineries from the Daqing oil field. But since 1990, when Beijing and Moscow began to demand payment at commercial rates in hard currency, crude oil imports have dropped by 85 percent. Now North Korea receives care- fully doled-out installments of Chinese oil, on a grant basis, amounting to only a fraction of what it used to get. This has virtually immobilized industries dependent on petroleum, including fertilizer factories, as well as most tractor operations and many of the power generators in rural areas needed to run irrigation pumps. As a result, agricultural production has plummeted, aggravating the impact of famines in 1995 and 1996. Industries dependent on coal have also suffered, as coal production has been crippled by the reduction of electricity output from oil-based power stations that is needed for mechanized mining as well as for the electri- fied rail system used to ship coal out of the mines. With no significant petroleum resources yet discovered and only 18 percent of its largely mountainous terrain suit- able for agricultural production, North Korea has been dependent since its inception as a state on external ener- gy sources and international food aid, notwithstanding its rhetorical commitment to the slogan of “Juche” (self- reliance). Besides exacerbating that vulnerability, the economic decline triggered by the fall in Cold War-era aid levels has also left Pyongyang with less money to spend on conventional forces, undermining its ability to sustain a protracted war. The Kim Jong Il regime therefore fears that its fragility is emboldening those in Washington, Tokyo and Seoul who would like to promote its ouster. To escape from its energy bind, North Korea is prospecting for oil in the seabed off the coast of Anju, but those explorations have not been productive. It also has been counting on 2,000 megawatts of electricity annually to be generated by two light-water nuclear reactors that a U.S.-led consortium, the Korea Energy Development Organization, promised to build for the North under a 1994 U.S. nuclear freeze agreement with Pyongyang known as the Agreed Framework. A Broken Framework It is often forgotten that North Korea viewed the 1994 Agreed Framework in part as a step toward achieving energy security. In return for the U.S. commitment to build two light water reactors by a target date of 2003 and to provide 500,000 tons of oil annually pending their com- pletion, North Korea discontinued a graphite-based nuclear program that was consciously designed to serve dual purposes: helping to meet civilian electricity needs while producing plutonium for nuclear weapons. Although the United States did provide the oil as promised, the reactor project did not get beyond the preparatory stage during the ensuing seven years. Equally F O C U S 48 F O R E I G N S E R V I C E J O U R N A L / D E C E M B E R 2 0 0 3 Selig S. Harrison, former Northeast Asia bureau chief of the Washington Post , is director of the Project on Oil and Gas Cooperation in Northeast Asia at the Woodrow Wilson Center, and director of the Asia pro- gram at the Center for International Policy. He is the author of Korean Endgame (Princeton University Press, 2003). This article is based on a yearlong inves- tigation that took him to Russia, China, Japan and the two Koreas.