Nuclear Nonproliferation

During the 1990s, North Korea's nuclear program was suspected of producing nuclear material capable of being fashioned into nuclear weapons. To address this threat, the United States and North Korea signed the Agreed Framework in October 1994. In exchange, the United States pledged to help North Korea acquire two light-water nuclear reactors for electricity generation. The United States also pledged to arrange for deliveries of 500,000 metric tons of heavy fuel oil annually until the first reactor was completed. The agreement stipulates that the fuel oil is to be used for heating and electricity generation. Reports have alleged that North Korea has diverted some of the heavy oil for purposes not specified in the Agreed Framework, including resale abroad. This is GAO's fourth report on issues related to the implementation of the Agreed Framework. This testimony summarizes the September 1999 report, GAO/RCED-99-276.

GAO noted that: (1) as of July 31, 1999, 1.9 million metric tons of heavy fuel oil had been delivered to North Korea at an approximate cost of $222 million; (2) for the first 3 years of the Agreed Framework's implementation, shipments to North Korea were not regular and predictable because the Korean Peninsula Energy Development Organization (KEDO)--the organization that has arranged and paid for the majority of the heavy fuel oil shipments--did not always have sufficient funding to pay for heavy fuel oil deliveries; (3) for the past 2 years, shipments of heavy fuel oil to North Korea have been made more regularly because of increased contributions from the organization's members and decreasing commodity and freight prices; (4) however, a recent rise in oil and freight prices caused the organization to seek additional funding from the United States in order to pay for this year's remaining scheduled heavy fuel oil deliveries; (5) the Department of State and KEDO, with the cooperation of North Korea, have implemented a monitoring system at the seven North Korean heating and electricity-generating plants that are authorized to use KEDO-supplied heavy fuel oil; (6) the purpose of this system is to ensure that North Korea uses the heavy fuel oil only for heating and electricity generation at the facilities; (7) KEDO's portion of the monitoring system consists of meters that measure the flow of fuel to oil-fired boilers at the plants, recorders that compile daily and cumulative information on flow rates, and periodic monitoring visits to each plant; (8) power outages and the poor quality of the electrical power available to the plants have affected the operation of the monitoring equipment; (9) KEDO's monitoring system by itself is not designed to provide complete assurance that the heavy fuel oil delivered to North Korea is being used as prescribed by the Agreed Framework; (10) however, the U.S. government supplements KEDO's monitoring system with national technical means to provide additional confidence that the heavy fuel oil is being used for heating and electricity generation; (11) State officials have acknowledged that there is some evidence that North Korea has used perhaps 5 percent (or 75,000 metric tons) of the heavy fuel oil for unauthorized purposes; and (12) according to State, no clear evidence has emerged of any significant diversion of the deliveries of heavy fuel oil to North Korea to unauthorized purposes.