The United States has learned the wrong lessons from previous diplomacy with North Korea

By Christopher Lawrence, May 25, 2018

As we scramble to make sense of the on-again/off-again prospect of diplomacy with North Korea, it is important to look at the record and see what previous efforts have yielded and what we can learn from them. On the one hand, commentators have been quick to point out “years of failed agreements,” backed by a “judicious mix of sanctions and bribes.” They warn that past administrations offered concessions too early in the process, only for North Korea to pocket the rewards and cheat anyway. But this formulation of engagement, which frames US diplomacy in terms of “carrots and sticks,” misses the key issues at stake in engaging with North Korea. If the regime ever agrees to give up nuclear weapons, it will not be for fleeting rewards or written security guarantees, but for a long-term, completely different political relationship with the United States going forward. For this reason, US concessions will only be meaningful if they speak credibly about the political future—and physical, real-world manifestations of a changing relationship, such as shared infrastructure investments, often speak more credibly than written words.

 

This is the ultimate take-away from the 1994 Agreed Framework, which to date represents the primary episode of engagement between the United States and North Korea. In that accord, North Korea agreed to dismantle its plutonium-production reactors in exchange for civilian power reactors from the West, and for a normalized political relationship with the United States. As construction of those civilian reactors fell behind schedule, however, North Korea embarked on a secret uranium enrichment program and the deal fell apart. Today, we look back at the civilian reactors of the Agreed Framework as a carrot—as in “we offered the carrot, and they cheated anyway.” But when we consider the unique technical attributes of civilian nuclear energy, and how reactor construction was to be situated in a diplomatic track to normalization, they appear to function more as a way to signal US commitment than as a carrot to bribe the regime. In this light, chronic construction delays, and the inability of the United States to foot any of the bill, can be interpreted as candid signals about America’s non-commitment to normalization with North Korea. And without a credible path toward normalization, North Korea would have little reason to disarm.

 

 

Civilian nuclear power and the Agreed Framework.To understand why the credibility of written US commitments to long-term political change would be difficult to establish in a denuclearization pact, we must acknowledge that a nuclear weapons capability has always been North Korea’s primary source of bargaining leverage. The United States has had few other reasons to engage with a regime it didn’t like. So if the regime were to trade that leverage away for written commitments from Washington, why would it expect the United States to follow through on those commitments going forward, once the North had given up its only bargaining chip?

 

This credibility issue severely complicated the US-North Korean nuclear negotiations in the early 1990s. Throughout those negotiations, diplomats on both sides agreed that the end goal was normalization and denuclearization. (While the definition of denuclearization is more fuzzy today, the Clinton and Bush Administrations were working from the definition articulated in the 1992 Joint North-South Declaration on Denuclearization.) But that envisioned future was not credible without an alternate source of North Korean leverage to replace the threat of nuclear proliferation. This is where the civilian reactor project comes in—as a way to express a US commitment to normalization in the form of shared energy infrastructure. In other words, building large Western reactors in North Korea, it was believed, could effectively “hardwire” the United States and North Korea into a more peaceful relationship going forward and make way for the regime to renounce nuclear weapons.

 

The regime first proposed to trade away its plutonium-production reactors for Western power reactors in high-level meetings in 1993, and this became the basis of a path toward normalization that was articulated in the 1994 Agreed Framework. North Korea agreed to freeze and slowly dismantle its own reactors, and in return a US-led consortium would build two 1,000-megawatt civilian reactors, of American design, in North Korea. That consortium was called the Korean Energy Development Organization (KEDO), and the main players were US allies South Korea and Japan.

 

But what does civilian nuclear energy have to do with political normalization, and why not just build cheaper conventional power plants? The answer is technological inertia and mutual leverage. Civilian nuclear power reactors require a massive up-front capital investment and a more drawn-out construction process than conventional power plants. This would mean a larger shared investment in North Korea’s energy future on the part of the US and its allies, and all sides would be embedded in a cooperative infrastructure project for a longer duration. Once these large investments are made, it would much more costly for either side to back out, because the new reactors could then produce financial returns for all parties involved, but only with further cooperative engagement. Since nuclear energy is one of the most global technologies in existence—dependent on raw materials, equipment, and expertise from around the world—civilian reactors inevitably draw the states that operate them into international collaboration networks associated with things like fuel supply, safety and liability, and reactor core management. And due to the long life of a civilian power reactor—40 years or more—the political relationships associated with its operation tend to stick longer than those associated with other energy technologies. So if the idea behind the Agreed Framework was to change North Korea’s relationships with the United States and its regional allies, then the KEDO project was a form of “diplomacy by other means,” because Western civilian reactors on the ground in North Korea would have amounted to a de facto change in those relationships.

 

If the carrot of energy generation were the real stake for North Korea in signing the Agreed Framework, then conventional fossil fuel power would have been a much better technology than civilian nuclear energy. They would be quicker to build (if you want a carrot, why not get it sooner?); they’d be much cheaper, and hence easier to justify to US domestic audiences; and they could be sized to better fit North Korea’s aging energy grid. But for those very same reasons, building conventional power in North Korea would represent a much more limited commitment on the part of the West.

 

The reactor supply agreement for the Agreed Framework further clarifies the role of civilian-reactor construction steps in making US commitments to normalization more credible. It called for North Korea’s most irreversible denuclearization steps to be spread out across time, and synchronized with the most costly and irreversible steps of the civilian reactor construction process. In this way, each pair of synchronized steps would constitute an exchange of costly gestures, indicating both sides’ willingness to continue down the path to normalization and denuclearization, and incrementally shifting the incentive structure in favor of taking the next step. By the time the Western reactors were operational, US allies would have invested upwards of $5 billion in 1994 dollars in North Korea’s energy future, and the physical destruction of North Korea’s plutonium-production complex would be complete.

 

Had the KEDO reactors been fully constructed, however, they alone wouldn’t have been enough to ensure expanded relations between North Korea and the outside world. Rather, the KEDO reactor project was seen as setting the stage for further engagements. For instance, in order to upgrade its electrical grid and connect to the reactors, North Korea would need to obtain financing from the international community. This in turn would require changes in US laws that opposed international loans to North Korea, and further exposure of the regime to international finance norms and western-style construction practices. Critics saw these requirements as serious flaws of the Agreed Framework, but those who negotiated the deal saw them more as a positive feature than a bug. Opening up North Korea to the outside world was a primary goal of the KEDO process for all parties involved. And as the construction process began, the Japanese and South Koreans were behind the scenes, planning billions of dollars of further infrastructure development in North Korea. Conventional power plants sized to fit the existing grid would not have given them the finacial incentive to pursue any of these further investments.

 

North Korea and KEDO achieved significant progress along this physical path toward denuclearization and normalization before the Agreed Framework fell apart in 2003. KEDO built approximately two-thirds of the first reactor (you can see it on Google Earth), which constituted close to a $2 billion investment, and North Korea effectively divested upwards of 90 percent of its plutonium-production capacity. To date, the Agreed Framework is the only US policy that has had any real success at physically rolling back North Korea’s nuclear weapons capability.

 

A non-committal United States and a hedging North Korea. Unfortunately, the story of the Agreed Framework does not have a happy ending. In 2001, US intelligence suggested that North Korea began expanding its secret enrichment program. This prompted the Bush Administration to accuse North Korea of cheating on the Agreed Framework, and to halt the US contribution to KEDO in early 2003. North Korea responded by restarting what was left of its plutonium-production complex.

 

Most Americans interpret North Korea’s centrifuge program as “cheating” on the Agreed Framework and write off the utility of future agreements. But this leaves out a crucial part of the story, which is that the US had been sending some pretty clear signals that it wasn’t committed to the path toward normalization with North Korea.

 

There are at least three good examples of these unintentional signals from the United States. First, implementation of the KEDO reactor project was somewhat poorly planned. By the admission of the US negotiators themselves, they negotiated an extremely ambitious, unprecedented construction project—building massive Western reactors north of the demilitarized zone—without sufficient appreciation for the technical and logistic difficulties of such a project. This led to unexpected challenges later, resulting in construction delays that from North Korea’s perspective implied that the United States might not have been serious about actually following through on the project. Second, shortly after the Agreed Framework was signed, a skeptical US Congress mandated that none of the funding for the reactors could come from the United States, leaving South Korea and Japan to pick up the bill. Due to these two factors, the KEDO reactor project didn’t even get off the ground until 1999, a full five years after the initial agreement.

 

Finally, the small financial contribution that Washington had committed to provide—negotiators had agreed to fund regular shipments of heavy fuel oil to North Korea while the new reactors were being constructed—quickly proved problematic. Within the first year of its existence, KEDO was operating on deficit financing due to shortfalls in US funding. By 1998, KEDO was $50 million in debt, and was expected to become financially insolvent that year. At that time, North Korea indicated its skepticism about US commitment, prompting Congress to approve enough funding to sustain heavy fuel oil shipments and slowly reduce KEDO’s debts.

 

If KEDO’s activities are simply carrots to bribe the regime, these issues seem minor—North Korea was still getting its heavy fuel oil, and even if the reactor project was delayed, Japan and South Korea had already committed the funding to carry it out. So why would North Korea care who pays for the carrots, as long the carrots arrive? But if KEDO’s steps were to function as signals to support the credibility of a political future of normalization, in which the United States is the primary player, then an unwillingness to pay for those steps implies that Washington may not be very committed to that future. Indeed, when asked about the delays in reactor construction, some Washington analysts at the time suggested that the reactors would never be built because the North Korean regime didn’t have a future. If analysts in Washington were interpreting KEDO’s financial struggles that way, we can imagine that the North Koreans are reading them that way as well.

 

Now when we look at the timing of North Korea’s centrifuge procurements, they start to look like a hedge in response to these negative signals. US intelligence dates North Korea’s first procurement of centrifuge parts to around 1997-1998. This falls right at the height of KEDO’s financial insolvency, and in the midst of the regime’s expressed skepticism about US commitment to the Agreed Framework. The shipment itself contained enough centrifuge parts for a small-scale R&D effort—exactly the kind of steps you would expect as a hedge, and not the large-scale effort you would expect from a country committed to building the bomb. And the enrichment program doesn’t appear to have been scaled up until 2001, just after the inauguration of the George W. Bush administration—which had already expressed hostility to the Agreed Framework during the election.

 

Other aspects of North Korea’s behavior follow a similar trajectory. Its first long-range rocket test occurred in 1998, around the same time as their centrifuge procurements. But as KEDO’s financial status improved and the reactor construction finally took off, North Korea suspended its missile tests and presented a detailed plan to end its entire missile program. Some of the brightest moments of engagement with South Korea during Kim Dae-jung’s Sunshine Policy also coincided with the height of reactor construction. While these developments probably had multiple causes, it is hard to dismiss a connection between the KEDO process and North Korea’s major nuclear choices throughout the Agreed Framework era.

 

A theory of engagement with North Korea.The primary lesson we can learn from the history of engagement with North Korea is that the regime’s nuclear choices have been most in response to US moves that speak credibly about North Korea’s place in a political future, and that the regime is relatively immune to sanctions and transient rewards. Physical steps in the KEDO reactor construction process around the turn of the millennium, for instance, constituted shared investments in North Korea’s energy future, and these in turn coincided with the most positive steps on the missile track. Our current paradigm of diplomacy with the regime centers around a contrast between coercion and isolation on one hand, and written promises and transient rewards on the other. Consequently, it fails to capture questions about the credibility of the political future enshrined in those promises, and about what happens when the fleeting rewards have been consumed.

 

A future-oriented theory of engagement offers very different policy prescriptions than the carrot-and-stick framework. For instance, if we think of US concessions as “carrots” to reward denuclearization, then clearly they must only come after North Korea unilaterally dismantles its nuclear program. But if North Korean denuclearization is a step toward a different relationship with the United States, then the regime will want to see Washington taking concurrent steps toward that same goal. This is why a phased process of reciprocal steps is the only realistic path toward denuclearization in North Korea. Throughout that process, US concessions should be designed not simply to “reward” North Korea, but also to demonstrate a US commitment to improve the relationship by placing some American skin in the game. Shared investments in energy or transportation infrastructure can constitute that skin in the game, because these shared vested interests are also de facto changes in the political relationship. Simple aid packages and sanctions relief would not, so while they may “reward” North Korea in the present, they don’t say much about the political future. And finally, any path to denuclearization will likely include a hedge for North Korea, as an insurance plan in case the other aspects of the promised political future never materialize. The goal of a nonproliferation diplomacy should not be to snuff out all forms of nuclear hedging in North Korea, but to build a new political reality that renders them irrelevant.


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