The Foreign Service Journal, December 2003

important, the United States also failed to fulfill two other key provisions of the agreement: Article Two, which envis- aged the U.S. normalization of econom- ic and political relations with North Korea, and Article Three, which required “formal assurances” ruling out “the threat or use of nuclear weapons by the United States” against North Korea. Pyongyang repeatedly threatened to stop honoring the agreement unless Washington lived up to these obligations. Finally, in 1998, when Pakistan offered to pay for missiles with uranium enrichment tech- nology, Pyongyang accepted the offer and initiated an enrichment program. At the same time, apparently seek- ing to keep the door open for improved relations with the United States, North Korea continued to honor the oper- ative provisions of the Agreed Framework, which covered the plutonium program that had been under way when the agreement was concluded. However, discovery of the uranium program by the United States led to a showdown with Pyongyang in October 2002 that resulted in a U.S. cutoff of oil shipments. This, in turn, provoked North Korean abrogation of its commitment to freeze plutonium production. Prospects for a negotiated settlement of the nuclear crisis remain uncertain, and the Bush administration is unlikely to build the two reactors. Nevertheless, in a January 2003 interview with Tim Russert on “Meet the Press,” Secretary of State Colin Powell praised the Agreed Framework. It is also noteworthy that President Bush has resisted pressures to dismantle the Korea Energy Development Organization, which oversees the reactor project and could provide the regional umbrella for some form of future energy assistance to Pyongyang. An Offer Pyongyang Can’t Refuse Given the poor results of its oil prospecting efforts to date and the refusal of the Bush administration to build the promised nuclear reactors, North Korea is increasingly pinning its hopes for economic salvation on two competing pipeline projects that would bring Russian natural gas, either from Sakhalin Island or Kovykta in eastern Siberia, through North Korea to South Korea. (See box on p. 50.) Pyongyang would not only receive royalties for letting the pipelines pass through its territory but could also tap into them to supply fertilizer plants and power sta- tions. Accordingly, American support for these pipeline projects could provide the irresistible incentives needed to get North Korean cooperation in moving toward a definitive end to its nuclear weapons program. One pipeline would originate in gas fields off the northeast coast of Sakhalin Island, controlled by ExxonMobil, and would cross directly from Russia through North Korea en route to the South. (These gas fields are designated by Russia as “Sakhalin I” to distinguish them from another oil and gas concession area to the south of the island, being explored by a consortium consisting of Shell, Mitsui and Mitsubishi.) South Korea would be the main market for the pipeline’s gas, with an expected commitment to buy 10 billion cubic meters annually. Russia would buy some for the Khabarovsk-Vladivostok region, adjacent to the pipeline route, and North Korea would seek a steadily growing share as a supplement to nuclear power. The other pipeline would originate in the Kovykta complex of gas fields in eastern Siberia, controlled by British Petroleum, and would cross through China, and possibly North Korea, en route to the South, supplying up to 20 billion cubic meters of gas to China annually as its demand increases. Seven months before the nuclear crisis erupted in October 2002, a leading expert on Northeast Asian eco- nomic issues, Bradley O. Babson, senior consultant on East Asia to the World Bank, made a prescient proposal for a deal with Pyongang in an address before the Institute of Energy Economics in Seoul. If North Korea satisfies the United States that it has ended its nuclear and missile programs, Babson suggest- ed, Washington and the multilateral development banks should encourage the oil companies involved to proceed with commercially viable construction of a gas pipeline from Russia through the North and join with multilateral development banks in financing gas-based power plants, gas-based fertilizer factories and rehabilitation of the existing North Korean power distribution grid. The petroleum companies and regional governments involved would pay most of the pipeline costs, he said, but the ancillary facilities would require additional sup- port. “The idea of building a gas pipeline to cross North F O C U S D E C E M B E R 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 49 For Pyongyang, getting at least one of its reactors up and running is a political imperative.