“The fact that we’re seeing the launch, and we’re seeing the launch from a nuclear North Korea is the direct result of the failures of the first Clinton administration. The Clinton administration led the world in relaxing sanctions against North Korea. Billions of dollars flowed into North Korea in exchange for promises not to build nuclear weapons. They took those billions and built nuclear weapons.”
THE FACT CHECKER | Ted Cruz significantly overstates the monetary benefits of the Clinton deal to North Korea.
Clinton’s deal was called the Agreed Framework. Essentially, an international consortium was going to replace the North’s plutonium reactor with two light-water reactors; in the meantime, the United States would supply the North with 500,000 tons of heavy fuel oil every year to make up for the theoretical loss of the reactor while the new ones were built. (North Korea’s program was clearly created to churn out nuclear weapons; the reactor at Yongbyon was not connected to the power grid and appeared only designed to produce plutonium.) There were also vague references to improving relations and commerce.
The consortium was called the Korean Peninsula Energy Development Organization (KEDO). KEDO’s final annual report, issued in 2006, shows that 30 or so countries funding the project spent about $2.5 billion before it was shut down after the Bush administration accused North Korea of cheating on the Agreed Framework. (Most of the funds, about $2 billion, were contributed by South Korea and Japan alone.)
But this money did not go to North Korea. According to Joel S. Wit, who was in charge of implementing the Agreed Framework during the Clinton administration, it went to the companies that were building the reactors in South Korea, Japan and the European Union.
Between 1995 and 2003, the United States did spend about $500 million supplying the fuel oil that was required under the deal. (Another $100 million in fuel oil was supplied between 2007 and 2009, during Bush’s ill-fated deal.) But North Korea did not get those funds either; it just got the oil.
However, some experts note that North Korea did benefit broadly from South Korea pursuing joint projects with North Korea, such as the Kaesong Industrial Complex and tourism at Mt. Kumgang. The Congressional Research Service in 2011 estimated that Kaesong, which opened during the Bush administration, provided about $20 million in wage revenue a year to North Korea. Hyundai Asan also paid North Korea $12 million for a 50-year lease on the entire Kaesong site. CRS cited a 2004 estimate that North Korea could “receive $9.55 billion in economic gains over the course of nine years if the KIC were to be developed fully and operated successfully,” mainly from sales and corporate taxes. Kaesong, however, has been closed periodically because of tensions between the two countries.