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N. Korea Initiates Huge Energy Project

TOKYO, Aug. 19—With its people starving and its economy failing, North Korea today broke ground on a $5 billion energy project that international officials hope will make the reclusive Stalinist nation more economically stable, less of a military threat and more engaged with the outside world.

In a remote corner of North Korea's east coast, more than 100 diplomats, journalists and officials from at least 10 nations watched in a light drizzle as an explosion of fireworks, a shower of confetti and the roar of bulldozers marked the symbolic beginning of an internationally funded project to build two nuclear power reactors that will produce electricity for ailing North Korea.

While the immediate goal of the project has been to pull the plug on North Korea's nuclear weapons ambitions, the groundbreaking today has taken on broader importance. It is being heralded as a significant opening to the outside world and a sign of hope for future agreements between North Korea and a skeptical outside world.

In a statement read on his behalf at today's ceremony in the town of Kumho, President Clinton said the project was "at the top of the United States' foreign policy agenda," and he described the groundbreaking as "a major new milestone . . . [that] will contribute significantly to peace and stability on the Korean Peninsula."

The project, managed by a U.S.-led consortium known as the Korean Peninsula Energy Development Organization (KEDO), has been a top priority of the governments in Washington, Seoul and Tokyo since North Korea agreed to it in 1994.

Under the deal, North Korea agreed to suspend its efforts to build nuclear weapons and dismantle its existing graphite nuclear power reactor. In exchange, North Korea will get two light-water nuclear reactors, whose fuel is much more difficult to convert to weapons use. Those reactors may take as long as 10 years to build, and in the meantime, North Korea will receive 500,000 tons of fuel oil each year.

North Korea is so short of fuel that some factories throughout the country have shut down. Western officials say North Koreans have been dismantling factories and trucking their machines and other metal across the border into China to sell for scrap.

"The nuclear issue . . . is a product of the Cold War that stems from the historical distrust and abnormal relations between [North Korea] and the U.S.," said North Korean diplomat Ho Jong in a speech at the site today. Ho pledged that North Korea would continue to honor the deal to "forge . . . future-oriented relations with the U.S. through reconciliation and cooperation."

North Korea has long resisted dealing directly with its rivals in the South, preferring to try to engage in bilateral agreements with the United States -- much to the annoyance of Seoul. Ho never mentioned South Korea in his speech today, even though South Korea is paying most of the cost for the reactors and providing most of the labor. Instead, all his references were to North Korea-U.S. relations only.

A South Korean official at the ceremony, Chang Sun Sup, called the KEDO deal "a kind of test or touchstone to know if the divided two Koreas can work together."

Eventually, thousands of South Koreans are to work and live at the construction site in North Korea -- a remarkable breakthrough for the isolated North. U.S. officials said they could not overestimate the impact on North Korean laborers of working alongside South Koreans and learning about how the South has prospered. North Koreans are taught that South Korea is far poorer than the North.

For half a century it has been impossible for families on either side of the military zone that divides the Korean Peninsula to call each other on the phone, but because of the project new phone lines were installed this month. The first mail between the two nations in decades was delivered this week: a letter from the construction site to a construction company in Seoul. Many hope that increased contact between ordinary North and South Koreans will help forge what many see as an inevitable reunification of the Korean Peninsula.

"It brings a Western presence in [and] exposes North Korea to Western technology," Bill Richardson, U.S. ambassador to the United Nations, said in an interview here last week. "It also shows that the West is keeping its word."

Today's groundbreaking is perhaps the most important sign of recent, grudging engagement with the outside world by North Korea. While it continues to drag its feet on proposed four-party peace talks with the United States, South Korea and China, it has allowed U.S. teams to enter the country to search for the remains of U.S. soldiers killed in the Korean War. And today, the International Monetary Fund said it was sending a fact-finding mission to Pyongyang this month, at North Korea's invitation.

The North Korean government would only allow a small pool of journalists into the country for today's ceremony, and they were not allowed to stay overnight. All foreigners who attended today had to go by boat from South Korea, and no one was allowed to stray far from the site. CNN was permitted to broadcast the ceremony live, but reporters said local villagers generally were kept far from the construction site.

According to reporters at the ceremony, the port where their ship landed was drab and filled with rusted ships. The only thing in town that appeared to be freshly painted was a large portrait of national founder Kim Il Sung. They said the mood was friendly and relaxed, and one smiling North Korean customs officer joked that so many foreigners were allowed into North Korea today, "If it keeps on like this, there will be more every trip, and the whole of the South Korean population will soon be in the North."

Although South Korea and Japan are financing most of the reactor project, the United States already has contributed $80 million to $90 million, according to Stephen W. Bosworth, KEDO's executive director. Some in Washington have questioned whether that is a wise investment. Many congressional Republicans have said the United States should take a tougher line against North Korea; they say the nuclear deal was a great concession, with no proof that Pyongyang is not still attempting to add nuclear weapons to its stockpiles of chemical and biological weapons.

Many U.S. officials agree that North Korea may have secreted away up to 22 pounds of plutonium from its old nuclear plant. But there is disagreement about whether it actually has produced a bomb.

North Korea has promised to allow the International Atomic Energy Agency to conduct inspections of all its facilities to determine that it has not hidden away any plutonium. U.S. officials said North Korea would not receive working nuclear reactors until the agency gives its okay.

Today's ceremony also was satisfying to international aid workers who believe the KEDO project could help humanitarian aid efforts.

The North Koreans made sure that today's ceremony took place in a field surrounded by healthy cornstalks and lush rice fields.

Still, Kathi Zellweger of the relief group Caritas, who last month made her 11th visit to North Korea, said conditions in North Korea have deteriorated severely from those she saw in April. She said people for the first time are openly talking about the tragedy of children dying from hunger. She said she saw many sick and listless children and nurseries with special sections for children afflicted with malnutrition and weak from related diseases.

In the last few weeks, international aid agencies visiting North Korea have produced a mountain of evidence that millions of North Koreans are at risk of starvation. Failure of the communist state-run economy combined with two years of summer floods and now a crop-killing drought have resulted in food shortages that aid groups say could soon rival the great African famines of of the past 15 years.