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[Editorial] Money Pit

Posted February. 18, 2006 02:59,   


South Korea has agreed to pay the termination costs for a light-water reactor project in Sinpo, North Korea that was canceled earlier last month. Korea, the U.S., and Japan have reportedly agreed to let South Korea cover all of the costs. Korea, in return, will have the right to dispose of the assets and facilities at the construction site. Will South Korea ever stop pouring money into the North?

The total reactor termination costs are estimated to be roughly $200 to $300 million. Most of the cost is damages with penalties and money that needs to be given to construction companies and component suppliers. The costs could snowball even more if additional costs for moving equipment and construction vehicles out of the North are taken into account. The additional costs could amount to as much as $4.7 million (45.5 billion won).

North Korea currently refuses to return the equipment, however. Will the North ever agree to? The North is also likely to demand compensation for ending the light-water reactor project. If that is the case, who else can North Korea turn to for compensation but South Korea when the U.S. and Japan have washed their hands of any compensation involvement, and when the Korean Peninsula Energy Development Organization (KEDO) has been disbanded?

Some Korean officials argue that the South will be able to lead the discussion when light-water reactor provision talks are renewed, and that the project might be restarted. How much longer does the government believe it can fool the people? Despite the September 19 Beijing Agreement that declared the issue of light-water reactor construction could be discussed at an appropriate time, the U.S. has already crossed out that possibility as a solution to the nuclear issue.

Should the project be restarted, South Korea will end up covering most of the construction costs. In short, we will end up paying for the termination costs first, and then construction costs if the project is restarted. Even if we pay all of the costs mentioned, we still have to provide two million kilowatts of power to the North. Providing power is now a separate issue from light-water construction due to the government’s hasty offer, and so is the Beijing Agreement. Where will the government get money to cover such enormous costs? From taxpayers’ pockets.

It is not too late for the government to reveal all of its negotiation processes and ask for the people’s understanding. It must explain why we ended up paying for all of the costs when KEDO is a co-contractor, and what specific costs we will be paying. The government can no longer put this off.