By Thomas W. Lippman
Washington Post Staff Writer
Monday, July 6, 1998; Page A01

The 1994 agreement between the United States and North Korea that halted North Korea's nuclear weapons program is under severe strain because the administration has not found the money to carry it out.

North Korea has accused the United States of failing to honor some of its commitments under the agreement, including lifting economic sanctions and delivering 500,000 metric tons of heavy fuel oil annually. In a step regarded here as ominous, North Korea recently began maintenance work on the plutonium separation plant it shut down when the agreement was signed, and it did so during a visit by two congressional staff aides to make sure Washington got the message that North Korea is capable of resuming its nuclear program, according to U.S. officials and independent analysts.

The United States and North Korea both insist they are committed to the agreement, one of the Clinton administration's proudest foreign policy accomplishments, and work is continuing on preparing a site for the two nuclear reactors that are to be built in electricity-short North Korea. But North Korea has displayed impatience at the delays and has warned that the price of more waiting could be the renewal of work on the facilities that raised fears of nuclear weapons production early in the decade.

"The U.S. side should take practical steps to fulfill its obligations under the agreement as soon as possible," North Korea's foreign ministry said in a May 8 statement. "In case the U.S. side repeats empty words, the consequences will be unpredictably grave," the statement said, noting that North Korea has the option to "open and readjust the frozen nuclear facilities and do everything our own way."

The immediate problem is that the Korean Peninsula Energy Development Corp. (KEDO), the New York-based international consortium established to deliver the nuclear reactors and provide the fuel oil, does not have the money to meet this year's 500,000-ton oil commitment. Under the 1994 agreement, known as the "agreed framework," KEDO is required to supply that amount each year until the first of the two planned nuclear power reactors comes on line, in 2003 at the earliest.

Operating on an Oct. 21 to Oct. 20 year, KEDO has delivered 152,000 tons this year. It cannot buy much more because it is $47 million in debt from previous years, officials said. There is no date for the next delivery of oil.

Key Republicans in Congress are reluctant to put up more cash for several reasons: They never liked the agreed framework from the start, they resent the fact that KEDO incurred the debt even though Congress appropriated all the money the administration sought for oil purchases, and they believe the administration deceived them by promising that other countries would volunteer to cover most of the cost.

"I was very disappointed when I found out about that debt, and I strongly indicated that I do not consider this an obligation of the United States," said Rep. Sonny Callahan (R-Ala.), who chairs the Appropriations subcommittee on foreign operations. "When I found out they had borrowed money -- they didn't tell me, I found out -- they said it was secured by pledges from other nations. So I told them, call those pledges."

Several countries and the European Union have joined KEDO and have made modest contributions to oil purchases, officials said. But they added that at least two oil-rich countries, Kuwait and Brunei, have declined contributing to the gap between KEDO's obligations and its resources.

Callahan said he generally defers to the president on foreign policy matters but finds "this KEDO thing very questionable." He said he believes the entire premise of the agreed framework -- peaceful nuclear energy in exchange for an end to the nuclear weapons program -- is invalid because North Korea is pursuing nuclear weapons at facilities other than those frozen under the agreement, a belief for which administration officials said there is no evidence.

The administration has opened negotiations with Congress on ways to find additional money. But those negotiations are complicated by the insistence of some Republicans that KEDO ask for a contribution from Taiwan.

The Taiwanese are willing to put up money and become members of the KEDO consortium, sources in the administration and on Capitol Hill said. But China opposes KEDO membership for Taiwan, which in Beijing's view is a renegade province of China not entitled to separate membership in international organizations. During his trip to China last week, President Clinton accepted Beijing's position on this issue.

China has declined to join KEDO or provide money, arguing that it is already a major aid donor to North Korea.

South Korea and Japan, buffeted by the Asian economic crisis, have committed to supplying most of the $5 billion projected cost of the two reactors and are unwilling to contribute additional funds to the oil purchases, officials said, particularly since their economies slumped.

Secretary of State Madeleine K. Albright "believes that it is extremely important for the agreed framework to continue lest we return to the period of great danger that existed prior to 1994, when we faced the prospect of a nuclear-armed North Korea," her spokesman, James P. Rubin, said.

"Therefore, continuing the freeze on North Korea's nuclear program is a matter of the highest priority. We are committed to ensuring that heavy fuel oil continues to be provided pursuant to that agreement. We have fulfilled our part of the framework and will continue to do so. In order to meet our share of the heavy fuel oil cost, the president is able to invoke certain provisions of American law that will free up additional funds so that KEDO can fulfill our commitment, and we are involved right now in consultations with Congress to that end," Rubin said.

Congress appropriated $35 million for KEDO in the current fiscal year, plus $10 million as a "challenge grant," which will be released when other countries contribute a similar amount. The administration is seeking another $35 million next year. Neither amount would cover the cost of the oil, even at today's depressed prices, but the administration is reluctant to ask for more because Warren Christopher, secretary of state in Clinton's first term, promised Congress that the U.S. share would never be more than $30 million a year.

The agreed framework was negotiated after North Korea threatened to withdraw from the Nuclear Nonproliferation Treaty, a move that stirred fear in Washington of an all-out attempt by North Korea to develop nuclear weapons and finance the program by selling nuclear materials and technology abroad. The pact calls for North Korea to mothball and eventually dismantle its plutonium-producing nuclear reactor and other weapons facilities, and to store its spent nuclear fuel in sealed containers under supervision of the International Atomic Energy Agency.

In exchange, the United States agreed to arrange for North Korea to acquire the two commercial nuclear reactors, with a target date of 2003 for the first, and to help KEDO deliver the fuel oil. By doing so, Washington, in effect, accepted Pyongyang's assertion that its nuclear program had been developed for electricity purposes rather than for weapons. But some members of Congress have opposed the agreed framework from the beginning because they saw it as a bribe to North Korea to carry out its obligations under the nonproliferation pact.

In addition to complaining about the delay in oil deliveries, North Korea also has expressed unhappiness about the pace of construction at the site where the two 1,000-megawatt reactors are to be built. According to Jason Shaplen, policy adviser to KEDO, there is no basis for that complaint because preliminary work is on schedule.