[Federal Register Volume 61, Number 101 (Thursday, May 23, 1996)]
[Presidential Documents]
[Pages 26021-26026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12937]



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  Federal Register / Vol. 61, No. 101 / Thursday, May 23, 1996 / 
Presidential Documents  

[[Page 26021]]


                Presidential Determination No. 96-21 of April 4, 1996

                
Determination Under the Heading ``International 
                Organizations and Programs'' in Title IV of the Foreign 
                Operations Appropriations Act for FY 1996: U.S. 
                Contribution to the Korean Peninsula Energy Development 
                Organization (KEDO)

                Memorandum for the Secretary of State

                Pursuant to the requirements set forth under the 
                heading ``International Organizations and Programs'' in 
                Title IV of the Foreign Operations Appropriations Act, 
                1996 (Public Law 104-107), I determine and certify 
                that:

                    (a) in accordance with Section 1 of the Agreed 
                Framework, KEDO has designated a Republic of Korea 
                company, corporation or entity for the purpose of 
                negotiating a prime contract to carry out construction 
                of the light water reactors provided for in the Agreed 
                Framework;
                    (b) the Democratic People's Republic of Korea 
                (DPRK) is maintaining the freeze on its nuclear 
                facilities as required in the Agreed Framework; and
                    (c) the United States is taking steps to assure 
                that progress is made on (1) the North-South dialogue, 
                including efforts to reduce barriers to trade and 
                investment, such as removing restrictions on travel, 
                telecommunications services and financial transactions; 
                and (2) implementation of the January 1, 1992, Joint 
                Declaration on the Denuclearization of the Korean 
                Peninsula.

                You are authorized and directed to report these 
                determinations and certifications to the Congress and 
                to publish them in the Federal Register.

                    (Presidential Sig.)

                THE WHITE HOUSE,

                    Washington, April 4, 1996.

[[Page 26022]]

                MEMORANDUM OF JUSTIFICATION FOR DETERMINATIONS AND 
                CERTIFICATIONS UNDER THE HEADING ``INTERNATIONAL 
                ORGANIZATIONS AND PROGRAMS'' IN TITLE IV OF THE FOREIGN 
                OPERATIONS APPROPRIATIONS ACT, 1996 IN CONNECTION WITH 
                THE U.S. CONTRIBUTION TO THE KOREAN PENINSULA ENERGY 
                DEVELOPMENT ORGANIZATION (KEDO)

                Pursuant to the requirements set forth under the 
                heading ``International Organizations and Programs'' in 
                Title IV of the Foreign Operations Appropriations Act, 
                1996 (P.L. 104-107), I have determined that:

                    (a) in accordance with Section 1 of the Agreed 
                Framework, KEDO has designated a Republic of Korea 
                company, corporation or entity for the purpose of 
                negotiating a prime contract to carry out construction 
                of the light water reactors provided for in the Agreed 
                Framework; and
                    (b) the Democratic People's Republic of Korea 
                (DPRK) is maintaining the freeze on its nuclear 
                facilities as required in the Agreed Framework; and
                    (c) the United States is taking steps to assure 
                that progress is made on (1) the North South dialogue, 
                including efforts to reduce barriers to trade and 
                investment, such as removing restrictions on travel, 
                telecommunications services and financial transactions; 
                and (2) implementation of the January 1, 1992, Joint 
                Declaration on the Denuclearization of the Korean 
                Peninsula.

                The justification for these determinations is set forth 
                below.

                (a)--Designation of ROK Company

                    In section I of the Agreed Framework between the 
                United States of America and the Democratic People's 
                Republic of Korea (DPRK), signed in Geneva on October 
                21, 1994, the two parties stated that they would 
                cooperate in replacing the DPRK's graphite-moderated 
                reactors and related facilities with light-water 
                reactor (LWR) power plants. The U.S. further stated 
                that it would undertake to make arrangements for the 
                provision of the LWR project to the DPRK, including 
                organizing under its leadership an international 
                consortium to finance and supply the project. This 
                organization, the Korean Peninsula Energy Development 
                Organization (KEDO), was created on March 9, 1995, by 
                agreement of the U.S., Japan, and the ROK. These 
                parties have agreed that the ROK will assume the 
                central role in financing and building the LWR project.
                    On June 13, 1995, in Kuala Lumpur, the United 
                States and the DPRK issued a joint statement providing 
                that KEDO will select both the LWR reactor model and 
                the prime contractor to carry out the project. (These 
                points were confirmed in the LWR supply agreement 
                between KEDO and the DPRK, signed December 15, 1995 in 
                New York City.) On the same date as the Kuala Lumpur 
                statement (June 13, 1995), the KEDO Executive Board 
                decided by Board resolution that an ROK reactor model 
                (Ulchin \3/4\) would be built in the DPRK by an ROK 
                firm. The Executive Board resolution designated the 
                Korean Electric Power Corporation (KEPCO) as the firm 
                with which KEDO would begin negotiating a prime 
                contract for the light-water reactor project. These 
                negotiations are under way.

                (b)--DPRK Maintenance of the Freeze

                    Section I(3) of the U.S.-DPRK Agreed Framework 
                provides for the immediate freeze and eventual 
                dismantlement of all graphite-moderated reactors and 
                related facilities in the DPRK. Within this context, 
                the DPRK agreed to implement the freeze on its nuclear 
                facilities within one month after the signing of the 
                Agreed Framework and to allow the International Atomic 
                Energy Agency (IAEA) to monitor the freeze on its 
                facilities, with the full cooperation of the DPRK. In 
                addition, the U.S. and DPRK agreed to cooperate in 
                finding a method to store safely the spent fuel from 
                the DPRK's 5 MW(e) experimental reactor during the 
                construction of the LWR project, and to

[[Page 26023]]

                dispose of the fuel in a safe manner that does not 
                involve reprocessing in the DPRK.
                    Since November 1994, all of North Korea's graphite-
                moderated nuclear facilities have been frozen. 
                Specifically, this means no refueling or operation of 
                the 5MW research reactor; no construction on the 50 and 
                200 MW reactors; no reprocessing and sealing of the 
                reprocessing facility; no operation of the fuel 
                fabrication plant; and no construction of new graphite-
                moderated reactors or related facilities. The IAEA has 
                maintained a continuous presence at the Nyongbyon 
                nuclear facility and has continued with inspection 
                activities related to verifying and monitoring the 
                freeze in the DPRK according to the terms of the Agreed 
                Framework. In addition to IAEA monitoring activities, 
                the United States continues to monitor the freeze 
                through National Technical Means.
                    With the successful conclusion of the December 15, 
                1995 agreement on the supply of light-water reactors 
                (LWRs) to the DPRK, signed between the DPRK and KEDO in 
                New York City, the IAEA will resume ad hoc and routine 
                inspections under the DPRK's safeguards agreement with 
                the IAEA with respect to the facilities not subject to 
                the freeze. The IAEA and DPRK meet periodically to 
                discuss any outstanding safeguards issues that arise, 
                most recently on January 22, 1996. During this meeting, 
                both sides agreed to measures for safely storing the 
                DPRK's spent nuclear fuel from its 5 MW(e) research 
                reactor. When the first LWR unit is completed, the IAEA 
                will have oversight over the dismantlement of the 
                DPRK's nuclear facilities which will be completed when 
                the second LWR unit is completed.
                    In January 1995, the U.S. and DPRK agreed on the 
                method for safely storing the DPRK's spent nuclear fuel 
                as an interim step before it is shipped out of the 
                DPRK, as defined in the Agreed Framework. U.S. 
                technical experts have been in the DPRK since July 1995 
                preparing the fuel for canning in a cooperative joint 
                effort with the DPRK. Actual canning is expected to 
                commence soon and will last approximately three months.

                (c)--North-South Dialogue and the Joint Declaration

                    The U.S.-DPRK Agreed Framework provides that ``the 
                DPRK will engage in North-South dialogue.'' Since then, 
                the U.S. has taken steps to support South Korean 
                initiatives toward the North and to encourage the DPRK 
                to fulfill its commitment to engage in dialogue as soon 
                as possible. In all of our bilateral contacts with the 
                DPRK, the U.S. has made clear that improvement in 
                North-South relations is the key to peace and security 
                on the Korean peninsula, and a requirement if U.S.-DPRK 
                bilateral relations are to continue to move forward. 
                Ambassador Robert L. Gallucci, during his tenure as 
                Chairman of the Senior Steering Committee on Korea, had 
                frequent occasion to raise the issue of North-South 
                relations in his correspondence with his North Korean 
                counterpart, First Vice Minister of Foreign Affairs 
                Kang Sok Ju. Deputy Assistant Secretary of State Thomas 
                Hubbard raised the North-South issue repeatedly during 
                the May-June 1995 negotiations with the North Koreans 
                in Kuala Lumpur on the LWR supply agreement. Most 
                recently, Mr. Hubbard raised this issue when he met 
                with North Korean Ambassador-at-Large Ho Jung in 
                December 1995. Finally, working level officials have 
                repeatedly stressed to their North Korean counterparts 
                the importance of the DPRK improving relations with the 
                South. Over the last year, these points have been made 
                at all three rounds of U.S.-DPRK negotiations on the 
                opening of liaison offices, and repeatedly in contacts 
                with officials of the DPRK Mission to the UN.
                    In support of ROK initiatives, we have conveyed 
                South Korean positions--and U.S. support for those 
                positions--to the DPRK and others. At South Korea's 
                request we have raised several particular issues with 
                the DPRK, sometimes with positive effect. The South 
                Korean government has expressed its appreciation for 
                these U.S. efforts. During this period North and South 
                Korea held a series of bilateral meetings in Beijing 
                that produced an agreement whereby the South provided 
                150,000 tons of rice to the North as a grant. In 
                December 1995, the DPRK released the crew of a South 
                Korean

[[Page 26024]]

                fishing vessel which strayed into North Korean waters 
                earlier in the year, a step which the ROK had been 
                urging the DPRK to take.

                    On January 1, 1992, the Republic of Korea and the 
                Democratic People's Republic of Korea issued the Joint 
                Declaration of the Denuclearization of the Korean 
                Peninsula. The provisions of the Joint Declaration 
                state that the North and South:
                    --shall not test, manufacture, produce, receive, 
                possess, store, deploy or use nuclear weapons;
                    --shall use nuclear energy solely for peaceful 
                purposes;
                    --shall not possess nuclear reprocessing and 
                uranium enrichment facilities, and;
                    --in order to verify the denuclearization of the 
                Korean Peninsula, shall conduct inspections of the 
                objects selected by the other side and agreed upon 
                between the two sides, in accordance with procedures 
                and methods to be determined by the South-North Nuclear 
                Control Commission which shall be established within 
                one month of the effectuation of this joint 
                declaration.
                    The DPRK and the ROK held a series of South-North 
                Joint Nuclear Control Commission meetings in early 1992 
                as specified in the Joint Declaration, but these were 
                discontinued as relations between the two Korean states 
                worsened and the DPRK threatened to withdraw from the 
                Nuclear Non-Proliferation Treaty (NPT) and refused to 
                cooperate with the IAEA. As a result, the absence of 
                sustained governmental talks between the ROK and DPRK 
                has delayed further implementation of the 
                Denuclearization Declaration.
                    The United States has, however, taken steps to 
                encourage DPRK compliance with the Joint Declaration by 
                encouraging North-South dialogue and ensuring DPRK 
                implementation of the Agreed Framework. The Agreed 
                Framework, as a step towards full implementation of the 
                Denuclearization Declaration, has succeeded in 
                illiciting positive DPRK movement on key provisions of 
                the Declaration. Specifically, North Korea's 
                willingness to freeze immediately and eventually 
                dismantle its graphite-moderated nuclear reactors and 
                related facilities has halted activities which would, 
                had they not been stopped, given the DPRK a nuclear 
                weapons capability. Such a capability would have been a 
                threat to peace and security on the Korean Peninsula as 
                well as to Northeast Asia. The DPRK agreement to forego 
                reprocessing under the Agreed Framework and to replace 
                its existing nuclear reactors with proliferation-
                resistant LWRs represents a major step toward assuring 
                the DPRK will not test, manufacture, produce, store, 
                deploy or possess nuclear weapons. In addition, by 
                agreeing to allow a continuous IAEA inspector presence 
                on the ground and to come into full compliance with its 
                IAEA safeguards obligations, including taking all steps 
                that may be deemed necessary by the IAEA with regard to 
                verifying the accuracy and completeness of the DPRK's 
                initial report on all nuclear material in the DPRK, the 
                DPRK has not only gone beyond its NPT and IAEA 
                safeguards obligations but also is taking steps related 
                to the inspection objectives set forth in the 
                Denuclearization Declaration.
                MEMORANDUM OF JUSTIFICATION UNDER SECTION 614 OF THE 
                FOREIGN ASSISTANCE ACT TO PROVIDE U.S. CONTRIBUTIONS TO 
                THE KOREAN PENINSULA ENERGY DEVELOPMENT ORGANIZATION 
                (KEDO)

                The Administration proposes that up to $22.0 million in 
                FY 1996 International Organizations and Programs (IO&P) 
                funds be used for a U.S. contribution to the Korean 
                Peninsula Energy Development Organization (KEDO), an 
                international consortium established to implement the 
                Agreed Framework signed between the United States and 
                the Democratic People's Republic of Korea (DPRK) on 
                October 21, 1994. This funding level for U.S. contribu-

[[Page 26025]]

                tions to KEDO was specified in the Administration's 
                congressional presentation documents for the Foreign 
                Operations Appropriations Act, 1996 (P.L. 104-107). 
                KEDO would be permitted to use the U.S. contribution to 
                help cover the FY 1996 administrative and heavy fuel 
                oil shipment expenses.

                In order to make available the funds appropriated for 
                this contribution, the President intends to exercise 
                his authority under section 614(a)(1) of the Foreign 
                Assistance Act of 1961, as amended, to authorize the 
                voluntary contribution to KEDO without regard to 
                applicable statutory restrictions within the scope of 
                this section, including any restrictions in sections 
                307, 620A, 620(f), or 530 of the Foreign Assistance Act 
                or sections 507, 516, 523, or 527A of the Foreign 
                Operations Appropriations Act.

                The Agreed Framework addresses U.S. and international 
                concerns about the DPRK's nuclear weapons program and, 
                if fully implemented, will lead ultimately to the 
                complete dismantlement of North Korea's current nuclear 
                program. Under the U.S.--DPRK Agreed Framework, the 
                U.S. represented that it would ``organize under its 
                leadership an international consortium to finance and 
                supply the light-water reactor (LWR) project to be 
                provided to the DPRK.'' In order to meet this pledge, 
                the U.S., South Korea (ROK) and Japan agreed on the 
                creation of an international organization, KEDO, to 
                implement the reactor project, the annual delivery of 
                500,000 metric tons of heavy fuel oil delivery to North 
                Korea and other possible projects called for in the 
                Agreed Framework (e.g., the transfer of spent fuel out 
                of the DPRK for ultimate disposition). The U.S., ROK 
                and Japan have played and will continue to play leading 
                roles in KEDO.

                KEDO's purpose is to coordinate cooperation among 
                interested parties in the international community and 
                to facilitate the financing and execution of projects 
                needed to implement the Agreed Framework. KEDO members 
                have agreed to cooperate in taking the steps necessary 
                to implement the Agreed Framework consistent with the 
                Charter of the United Nations, the Treaty on the 
                Nonproliferation of Nuclear Weapons, the North-South 
                Declaration on the Denuclearization of the Korean 
                Peninsula, and the Statute of the International Atomic 
                Energy Agency. Moreover, KEDO will obtain assurances 
                that nuclear materials, equipment, or technology 
                transferred to the DPRK in connection with projects 
                undertaken by KEDO will be used exclusively for such 
                projects, only for peaceful purposes, and in a manner 
                that ensures the safe use of nuclear energy. The 
                continued funding of KEDO is critical to the success of 
                the specific objectives of the Agreed Framework, the 
                general goals of international nuclear 
                nonproliferation, and the aim of maintaining peace and 
                security on the Korean Peninsula.

                KEDO is located in New York and is directed by an 
                Executive Board consisting of representatives of the 
                original member countries--the U.S., Japan, and the 
                ROK. Other members may participate in its activities by 
                serving on advisory committees covering the 
                organization's projects, attending the KEDO General 
                Conference, participating in ad hoc technical meetings 
                relating to KEDO projects and, in some cases, sending 
                technical experts to serve in the KEDO secretariat. The 
                day-to-day operations of KEDO are directed by Executive 
                Director Stephen Bosworth, former U.S. Ambassador to 
                the Philippines, assisted by two Deputy Executive 
                Directors (one from Japan and one from the ROK). KEDO 
                is seeking to contract with private firms for the bulk 
                of the legal, technical, and financial expertise 
                required to oversee the LWR project and other projects. 
                It will have a secretariat consisting of approximately 
                30 people to carry out its functions.

                The U.S. contribution to KEDO will help fund: 1) KEDO's 
                FY 1996 costs for office space, office supplies, 
                communications, consulting costs and legal services, 
                and employee remuneration for a staff of thirty people, 
                including the Executive Director, the two Deputy 
                Directors, and support personnel; and 2) a portion of 
                the estimated $50 million worth of heavy fuel oil due 
                to be shipped in 1996. These funds are essential to 
                KEDO's ability to meet the terms of the U.S.-DPRK 
                Agreed Framework regarding the provision of heavy fuel 
                oil. Should KEDO fail to meet these deliveries, the

[[Page 26026]]

                DPRK might renege on its Agreed Framework obligations, 
                including possibly breaking the freeze on its nuclear 
                program. Hence, early transfer of these funds is 
                essential to meeting our nonproliferation objectives in 
                the DPRK.

[FR Doc. 96-12937
Filed 5-22-96; 8:45 am]
Billing code 4710-10-M