Tag Archive | "energy"

How Korea’s Nuclear Power Decision Could Impact the U.S.-Korea Trade Deficit

By Troy Stangarone

In one of his early decisions after taking office, South Korean President Moon Jae-in announced that he planned to end South Korea’s reliance on nuclear power and shut down ten coal fired plants to reduce reliance on coal power as well. The decision was taken with an eye to improving the environment and safety, while also moving towards a greater reliance on liquefied natural gas (LNG) and renewables. With the United States shifting to the exportation of LNG, the decision by the Moon Administration to shift from coal and nuclear power to LNG also has long-term implications for South Korea’s trade surplus with the United States.

The plan put forward by the Moon Administration was appealing in South Korea as it would address dual concerns over safety and clean air. The safety concerns arose in the aftermath of the 2011 nuclear meltdown at the Fukushima plant in Japan, combined with a series of nuclear safety scandals in South Korea. The public had also grown weary of the smog that pollutes South Korea’s air. The Moon plan would address both concerns by phasing out nuclear power and reducing the use of coal to produce electricity in South Korea.  It also has the added, unstated, benefit of providing an avenue to reduce South Korea’s trade surplus with the United States.

Reducing South Korea’s trade surplus with the United States has recently become more of an issue than it ordinarily would be. With the election of President Donald Trump, the level of South Korea’s trade surplus with the United States has become a political issue and the subject of one of President Trump’s campaign pledges that he seems intent on implementing. As a result, the United States has pushed South Korea to renegotiate the U.S.-Korea FTA (KORUS), which President Trump has called “horrible” to bring down the United States’ trade deficit with South Korea.

One way many expected to bring down the deficit, if over the long-term, was through increased exports of U.S. LNG to South Korea. With the shale gas revolution in recent years and increasing investments in export terminals, the United States was positioning itself to become a major exporter of LNG. As the world’s second largest importer of LNG, South Korea is also an attractive market for U.S. exports of LNG.

In 2012, South Korea’s KOGAS signed a contract to import 3.5 million tons of LNG annually from the United States. The first shipments were exported to South Korea this year. While the export of shale gas to South Korea will help reduce the deficit, it may no longer have the long-term impact that might have been expected when President Moon first unveiled his plan.

As part of the process of phasing out nuclear power, President Moon also established a public committee to review the closure of two nuclear power plants already under construction. The committee recently announced its findings and called for the two plants already under construction to be completed, but endorsed the administration’s long-term plan to phase out nuclear power. While President Moon has indicated that he will accept the committee’s decision and proceed with the completion of the two plants already under construction, his administration will not move forward with any new nuclear power plants and plans to shut down an older plant once alternative fuels are secured.

Had the full plan gone forward, South Korea was expected to import an additional 10 million tons of LNG a year by 2030. With two new nuclear power plants coming online by 2022 and a slower transition to LNG, South Korea will import less LNG over time. The United States was already going to face competition from new sources coming online and existing sources in Australia, Papua New Guinea, and Russia to meet South Korea’s new demand. Now with South Korean imports of LNG expected to grow at a slower rate, exports of U.S. LNG to South Korea will likely be smaller and the impact on the United States trade deficit less.

Troy Stangarone is the Senior Director for Congressional Affairs at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Think Defence’s photostream on flickr Creative Commons.

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Should South Korea Join the Transition to All Electric Vehicles?

By Troy Stangarone

The global automobile industry is on the verge of significant changes. Google, Uber, and traditional automobile manufacturers are pushing further into the development of autonomous vehicles and seeking to disrupt how vehicles are used by consumers. While the development of autonomous vehicles may change the way automobiles are used, they are not the only change that is likely to reshape the global automobile industry. Earlier this summer France and the United Kingdom announced that they will be phasing out combustion engines as part of a transition to only allow the sale of electric vehicles by 2040. China, the world’s largest automobile market, followed suit and announced that it was also planning to transition to electric vehicles in the future. While the moves by France and the United Kingdom are significant, the move by China could change the way South Korean policy makers need to think about automobile production and related issues.

In 2016, more than 23 million vehicles were sold in China, which is one of the top markets for Hyundai and Kia, accounting for more than a fifth of their global sales. If China follows through on its pledge to transition to electric vehicles, it will have a significant impact on the types of vehicles that Hyundai and Kia produce.

To date, the spread of electric vehicles has been held back by two issues. The first is what is commonly known as range anxiety. While the initial Tesla models average around 300 miles per charge, most electric vehicles on the market only get around a third of that distance on a single battery charge. With a limited infrastructure to charge electric vehicles consumers have been reluctant to purchase electric vehicles on a mass scale since they are limited in their usage compared to used gas powered vehicles.

The second issue is the ability of manufacturers to scale up demand and production to drive down costs so vehicles are price competitive with traditional combustion engines. Manufactures have tried to address this issue by introducing hybrid vehicles, increasing demand for the lithium ion batteries that power electric vehicles. This also addresses the range anxiety issue, and, in the case of Tesla, focuses on luxury vehicles where consumers are less price sensitive. At the same time, governments have offered subsidies to consumers to make electric vehicles price competitive.

The decisions by France, the UK, and especially China are already having an impact on the production decisions of major automotive producers. Under new regulations in China, automakers will be required to sell more vehicles that run on alternative fuels if they want to continue selling traditional vehicles. In response, global producers are looking to increase the production of electric vehicles in China, while in some cases shifting research and development to the Chinese market. GM and Ford have announced that they will be introducing 20 and 13 new electric vehicle lines over the next five years, respectively.

By mandating that all vehicles in the United Kingdom and France have electric engines, France, the UK, and eventually China are essentially working to address the scale issue by providing a guaranteed market for electric vehicles and signal to the private sector that it should continue to invest in the electric vehicle market. As the industry shifts toward electric vehicles, South Korea will need to consider the current state of the domestic market for electric vehicles, how market shifts abroad will affect the long-term competitiveness of Hyundai and Kia, the impact of the shift to electric vehicles on other South Korean industries, and how a shift to the mass usage of electric vehicles would impact the energy market in South Korea.

The Role of Electric Vehicles in the South Korean Market

The market for electric vehicles in South Korea is still embryonic. In 2016, only 5,914 electric vehicles were sold in South Korea, a market of 1.54 million vehicles. In contrast, 352,000 electric vehicles were sold in China last year and 159,139 were sold in the United States.

As other markets shift, the development of electric vehicles and their adoption in the South Korean market will increasingly become a competitiveness issues for the South Korean auto industry. While Hyundai and Kia have begun producing electric vehicles, they trail U.S. producers such as Tesla and GM, as well as Chinese firms which have dominated the market in China, where Tesla is the only foreign company to have had success.

While South Korea is behind the curve in the area of electric vehicles, the government has taken steps to promote the adoption of the technology through the development of the necessary recharging infrastructure and by providing purchase subsidies. The goal is to have ecofriendly vehicles account for 30 percent of sales in three years, up from 3 percent today. The question is will those steps be enough to jumpstart the industry in South Korea or should South Korea institute a mandate for electric vehicles similar to France and the United Kingdom?

The Battery Industry and Electric Vehicles

The potential future of South Korean auto industry isn’t the only other industry at stake in the shift to electric vehicles. In 20 years, the shift to electric vehicles is expected to create a $240 billion market for batteries. At the moment, LG Chem and Samsung SDI, are two of the leaders in battery market for electric vehicles, with LG Chem supplying the batteries for the Chevy Volt hybrid and Chevy Bolt electric vehicle. However, China hopes to claim this market for its own domestic producers, much as it has done in emerging energy industries such as wind and solar power, by driving down prices and restricting foreign competition. It has also refrained from certifying Samsung SDI and LG Chem vehicle batteries in China, limiting their ability to grow in the world’s largest electric vehicle market.

The Future of Energy Production in South Korea

The shift to electric vehicles is not only about production and the potential export industries it would affect, but also about the supply of power to charge a growing fleet of electric vehicles. Shortly after assuming office, President Moon Jae-in announced that he planned on phasing out coal and nuclear power plants and replacing them with new LNG plants and renewable energy. A commission established to study the issue has recommended pushing forward with plants already under construction, but has also suggested scaling back nuclear power in the long-term.

While the plan was put forward to address public concerns over air pollution, it could impact South Korea’s ability to transition to electric vehicles. While burning LNG is cleaner than coal, there are already concerns that the shift away from coal and nuclear power could lead to power shortages. A significant shift to electric vehicles would require an increase in electrical production and a movement away from nuclear power could reduce any of the benefits of zero emissions from electric vehicles or constrain their growth if South Korea faces power constraints in the future.

The actions by France, the UK, and China have the potential to reshape the global automobile industry. For a country such as South Korea, this has significant implications for the future of automobile production, but also larger sections of the South Korean economy. As a result, South Korean policy makers will need to consider how these shifts will impact not just the domestic auto industry, but how the shift will impact other industrial sectors, along with power generation in South Korea. The policy decisions made now could help to ensure that South Korea maintains a competitive automobile industry and develops the new technologies of the future.

Troy Stangarone is the Senior Director for Congressional Affairs at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from the National Renewable Energy Lab’s photostream on flickr Creative Commons.

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Conceptualizing South Korea’s Response to a Nuclear Power Accident in North Korea

This is the sixth in a series of six blogs looking at a nuclear crisis at North Korea’s Yongbyon nuclear facility. Other pieces will look at the prospective issues of a nuclear crisis in North Korea from the perspective of North KoreaRussiaJapan, China, and the United States.

By Duyeon Kim

South Korea’s response to a nuclear reactor crisis at North Korea’s Yongbyon complex depends heavily on many assessments and factors. Was it its 5 megawatt-electric (MWe) graphite reactor or experimental light-water reactor (ELWR) that experienced a meltdown? Was the ELWR operational at the time? Was it caused by an accident or an attack? How big is the damage and how much radiation has leaked? While answers to these questions are important when devising appropriate response measures and North’s nuclear safety standards are of grave concern, it is believed that the radiological consequences of a reactor accident or incident would be minimal and isolated.

Before assessments can be made based on the above scenarios, a quick review of standard reactor safety is necessary to help understand whether North Korea’s nuclear facilities are in fact safely constructed.

Nuclear Safety

Modern safety standards for nuclear power plants are built in throughout the entire lifespan of the facilities from (land) siting, design, construction, operations, and decommissioning. Nuclear power plants are designed with a concept called defense-in-depth, which are multiple layers of protection to reduce risks to both the workers and the public. The priority to the defense-in-depth strategy is to prevent accidents, and if they cannot be prevented, to then mitigate their consequences. The layering of protection—including, for example, placing reactors inside containment structures to keep radiation from reaching the environment—allows modern nuclear power plants less prone to accidents than many industrial facilities, although sometimes human error may cause accidents.

Over time, the 1979 Three Mile Island accident and the 1986 Chernobyl disaster helped identify weaknesses in defense-in-depth and the need for a safety culture. However, even the 2011 Fukushima Dai-ichi meltdown showed that nuclear power plants that are designed with defense-in-depth principles can still fail if they are subject to system failures and multiple traumas from forces greater than what they were built to withstand. Fukushima also illustrated that the same conditions can be created by humans with malicious intent.

In North Korea’s case, it is unclear whether its reactors are built according to international safety standards, and the quality of its safety culture, if it exists, continues to be a critical question. The North’s isolation, potential safety vulnerabilities with an unverified safety culture, and questions surrounding Pyongyang’s ability to respond in a timely manner to contain a nuclear accident from becoming a catastrophic disaster all raise serious concerns.

North Korea’s gas-cooled graphite-moderated reactors originated from the research reactor, IRT-2000, built by the Soviets in the 1960s. Then, under the 1994 Geneva Agreed Framework between the United States and North Korea on Pyongyang’s nuclear program, the international consortium called the Korea Peninsula Energy Development Organization (KEDO) began building two, commercial-scale (1000 MW) light-water reactors (LWR) at the Kumho site to help meet the North’s energy needs in return for dismantling its plutonium-production facilities. The KEDO project, however, was terminated under the George W. Bush administration.

In 2010, Pyongyang showed Siegfried Hecker and Robert Carlin its 25-30 MWe experimental light-water reactor (ELWR) under construction using with what they were told “strictly indigenous resources and talent.” They also saw a reactor containment vessel being built, which according to the North’s chief engineer, was expected to be 22 meters in diameter, 0.9 meters thick, and 40 meters high, later confirmed by commercial satellite imagery, but interlocutors have questioned the quality of the vessel, particularly the quality of the concrete used for the containment structure. Another unknown is whether the North used the reactor components and designs left onsite after the KEDO project’s termination to fabricate or use for its ELWR.

A design-basis accident is a “postulated accident that a nuclear facility must be designed and built to withstand without loss to the systems, structures and components necessary to ensure public health and safety.” In other words, they are the most severe circumstances a nuclear power plant is likely to face and the minimum considerations that go into the construction of the plants.

However, Fukushima illustrated that the long electricity cut-off actually went beyond the design-basis accident of most nuclear plants in most countries and that most backup power generators are not enough to restore power to cool the reactor core and spent fuel ponds. In other words, critical safety components are an adequate onsite power source to provide a functioning cooling system to prevent a reactor core meltdown, the reactor operators’ ability to immediately shut down the reactor if the core overheated or address any accidents in a timely manner, and an emergency backup cooling system in case of a station blackout, which includes a generator to provide electricity to cool the reactor core or the means to transport water from a nearby river.

As for North Korea’s ELWR, Hecker and Carlin saw a sign that read “Safety first – not one accident can occur!” Due to the prominence of anything nuclear in North Korea’s national objectives, it is imaginable that their scientists and engineers would put their lives on the line to construct safe nuclear power plants and not allow a reactor core meltdown, but it is unclear whether Pyongyang has used adequate siting, reactor safety designs, quality construction, and beyond design-basis accident considerations for its ELWR, which they claim will eventually be scaled up once they mastered the nuclear technology. In early 2016, satellite imagery showed the ELWR’s cooling system, via river water supply channels from the adjacent Kuryong River, has become functional. Satellite imagery also indicates that the construction of the ELWR is complete, but as of April2016, there is no evidence yet of operations. Nuclear safety concerns will continue after the ELWR becomes operational for the reasons mentioned above, but also because it is widely believed that North Korean personnel lack experience in operating this type of reactor. The Three Mile Island nuclear disaster occurred about two months after the reactor became operational.

South Korean Interests and Response

As David von Hippel and Peter Hayes astutely point out in 2014, a reactor meltdown could occur at the North’s experimental light-water reactor either by accident or attack, but the radiological release would be modest in scale and scope. Some scenarios include: an ELWR accident, an attack by the U.S. (or jointly with South Korea), or a terrorist attack by an external actor or an insider threat. The following assessment will focus on a potential crisis at the North’s ELWR, which is of more concern to international experts.

South Korean interests and concerns would depend on which of the above scenarios is the cause and status of a reactor meltdown as well as its scale and scope. The following assessment is based on the assumptions illustrated above.

In the event of an accident (by nature, system failure, or human error) at North Korea’s ELWR, conventional expert wisdom is that the radiological fallout would be local, only contaminating neighboring agricultural areas within North Korea and perhaps even spread to the Kuryong River if the accident is not successfully managed. The isolated impact may calm South Korean fears in the short-term, but the South would still worry about the environmental damages in the North when thinking about life after the reunification of Korean Peninsula.

Currently, scientists believe the radiological effects of an accident at or even attack on the Yongbyon ELWR would not be consequential to South Korea because the radiological exposure would be so small and source materials would dilute to near undetectable amounts by air, rain, and water systems. The caveat and concern is possible retaliation by Pyongyang against South Korean nuclear facilities if its reactors were attacked by the U.S. or by the U.S. and South Korea. The radiological exposure and damage—economic, health, environmental—from an attack on South Korean nuclear facilities would be far more catastrophic and devastating.

One major concern, however, would be Pyongyang’s lack of transparency in the event of a reactor accident, which could pose greater risks if the regime is unable to contain it. The international community would also need to rely on its own means to detect the radionuclides released from the accident with the Comprehensive Test Ban Treaty Organization’s International Monitoring System and with South Korea’s extensive and real-time radiation monitoring network. The most problematic consequence with Pyongyang withholding information from the international community would likely be the induction of panic in South Korea because of the uncertainty about the accident’s impact and potentially harmful effects of radiation exposure.

A nuclear accident of or attack on the North’s ELWR would technically constitute a public health and safety issue, not a national security issue, for South Korea. Its Ministry of Public Safety and Security and particularly the Disaster Relief Headquarters would be first to address the situation and cooperate with the Korea Institute of Nuclear Safety (KINS) to make a probabilistic (radiation) risk assessment to help devise necessary measures because of the possibility of the southwestern down-winds that could carry radiation to the South. South Korean nuclear experts worry about Seoul, which is about 200 km away from Yongbyon. About 70 percent of the radioactive fallout from the Chernobyl nuclear catastrophe traveled 200 km way to Belarus, although one key flaw with the Chernobyl reactor was the absence of a containment structure.

Still, public fear is expected upon news of an incident at Yongbyon. Thus, depending on its assessment based on the scale and scope of the North’s nuclear accident or attack, Seoul may advise the public to, for example, temporarily avoid the outdoors or use umbrellas during rainfall to calm fears even in the absence of a downwind with radiation. If public fear peaks to panic and terrified levels, Seoul might even consider convening a National Security Council meeting to reassure public concerns even though the accident would be a public health and safety issue.

Duyeon Kim is a Visiting Senior Fellow at the Korean Peninsula Future Forum, a non-partisan think tank in Seoul founded and headed by former ROK National Security Advisor Chun Yung-woo aimed at devising practical policy solutions. The views expressed are the author’s own.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

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China’s Potential Actions in a North Korean Nuclear Contingency

This is the fourth in a series of six blogs looking at a nuclear crisis at North Korea’s Yongbyon nuclear facility. Other pieces will look at the prospective issues of a nuclear crisis in North Korea from the perspective of North KoreaRussia, Japan, South Korea and the United States.

By Yun Sun

Although information on the exact technical specifications of the North Korea nuclear programs remains scarce, insufficient and in-definitive, the prevailing perception is that many, if not most of these programs are located close to the Chinese border.  This is perhaps inevitable given the limited size and terrain of North Korean territory. The famous Yongbyon Nuclear Scientific Research Center, for example, is located 110 km from the Chinese border, while the Punggyeri Nuclear Test Site is around 90 km away. The safety of these nuclear facilities, especially the potential nuclear radioactive contamination has become an increasing concern for the Chinese government given their geographical proximity to China. In 2013, North Korea’s nuclear test had propelled the Chinese Ministry of Environmental Protection to set up dozens of radiation detectors and announced the results at an unprecedented press conference. Although the radiation levels in major cities were reported to be within the normal range, complains from the Chinese public opinions were still rampant.

China’s planning and preparation for a North Korean contingency in recent years have been mostly focused on an internal instability scenario, most likely an implosion caused by a military coup or an unexpected death of the North Korean leader. In such a scenario, the common expectation is that China is prepared to intervene to preserve a functional North Korean government as well as the survival of North Korea as a country if South Korean and/or American intervention is detected. Similarly, if the contingency is a conflict between the two Koreas and U.S. steps in as Seoul’s ally, China will also most inevitably intervene militarily. Depending on the scenario, the impact and the grand bargain, China could aim at supporting the North Korean regime against foreign invasion, establishing buffer zone along the border to prevent refugee inflows, or imposing a ceasefire.

Despite the Chinese preparation for a political/military contingency in North Korea, however, a North Korea contingency due to damage to its research reactor’s core causing the core to burn or a nuclear meltdown at its light water reactor is much less discussed in the Chinese policy community. This could be because that the probability of a nuclear contingency is significantly smaller than the probability of political instability due to implosion/explosion, therefore has not been prioritized. It could also reflect China’s lack of information, experience and anticipation for a nuclear meltdown scenario. After all, China has never been directly exposed to a nuclear crisis domestically or on its border.

In a Yongbyon reactor crisis, China’s first priority would be to prevent or minimize nuclear radioactive contamination of the Chinese territory. Yongbyon is located 110 km from the Chinese border. In both cases of Chernobyl and Fukushima, the nuclear disaster exclusion zones set up have been of 30-km radius approximately. This probably means that China will not be the center of nuclear contamination in the event of a nuclear crisis in Yongbyon, but some level of radiation contamination seems inevitable.

China will see the handling of a nuclear crisis within North Korean territory primarily as the responsibility of the North Korean sovereign government. After all, a crisis with North Korea’s nuclear reactor does not automatically constitute the sufficient justification for international intervention. However, given the widely shared assumption that North Korean capacity, equipment, resources and ability to handle a nuclear crisis are extremely limited, China as North Korea’s sole ally and main supporter will likely be the first country to be asked to provide assistance. And given the nature of a nuclear disaster, the Chinese agencies to provide such assistance are more likely to be military rather than civilian.

Some Chinese military analysts have demonstrated certain levels of confidence about the Chinese ability to deal with North Korean nuclear reactors, citing the shared Soviet origin of the nuclear technologies of both China and North Korea. However, the counter-argument against the Chinese presumed confidence is that older technologies and facilities are more difficult and more dangerous due to their outdated and less sophisticated design. Having said that, the Chinese policy community seems to be convinced that China will have to be responsible, at least partially, and provide technical assistance, dispatch experts, engineers and military personnel for evacuation and the establishment of the exclusion zone.

China will also prioritize the internal stability of North Korea in the event of a nuclear contingency. Depending on the level of disruption and turmoil the nuclear crisis creates, the Chinese military personnel could include a stabilization force to prevent political upheavals. This presumably will be done in coordination with the North Korean government.

China is highly likely to work with Russia to jointly intervene in a crisis involving a North Korean nuclear reactor. Russia is also subject to radioactive contamination given its geographical proximity and therefore has a vested interest. More importantly, Russia is better positioned and equipped to deal with nuclear disasters given its technical knowledge of North Korean nuclear programs and its past experiences with Chernobyl. Russia has a relatively friendly and positive relationship with North Korea. A joint operation with Russia will not only dilute the responsibility China has to carry, but also diffuse a perception of Chinese unilateral intervention by North Korea and by the international community.

Given that a nuclear crisis in North Korea will inevitably create a humanitarian disaster, including radioactive contamination crisis, food crisis and refugee crisis, international humanitarian aid will be solicited and most likely provided. However, HADR (humanitarian assistance and disaster relief) efforts by foreign militaries other than China and Russia most likely will be rejected by North Korea due to its heightened sense of insecurity and vulnerability in a nuclear contingency. North Korea and China will share the goal of preventing South Korea and the U.S. from exploiting the situation to facilitate invasion or unification.

South Korea and the U.S. could possibly refer the nuclear crisis to the UN Security Council. However, without sufficient justification that the nuclear crisis and radiation leakage creates a dire threat for regional and international peace and security, and/or a dire humanitarian disaster, any resolution that China will support will be unlikely to authorize a military intervention. China most likely will support the United Nations to organize and manage the international humanitarian efforts, including aids and donations from South Korea and the United States. China could even request that IAEA dispatch expert teams and provide technical assistance to deal with the nuclear situation. However, military personnel are unlikely to be the invitation list.

Despite North Korea’s damage of the Chinese national security through its nuclear program, a crisis at North Korea’s nuclear plant does not change the geopolitics involved in the Korean peninsula for China. A nuclear disaster in North Korea will increase the cost of China’s current policy, and China probably will use the opportunity to shape Pyongyang’s thinking and curtail its future nuclear provocation. However, China’s fundamental calculation regarding the U.S.-ROK military alliance and U.S. role in the region will not evaporate from a nuclear disaster in North Korea. Under the current circumstances, China will continue to want to preserve the North Korean state until it is shown a desirable endgame in a unification scenario. China’s potential reactions to a nuclear crisis, including military intervention, technical assistance, humanitarian aid and cooperation with Russia all originate from that calculus.

Yun Sun is a Senior Associate with the East Asia Program at the Stimson Center. The views expressed here are the author’s alone.

Photo from Beyond Neon’s photostream on flickr Creative Commons.

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The Challenges for Japan of a Nuclear Crisis at North Korea’s Yongbyon Facility

This is the third in a series of six blogs looking at a nuclear crisis at North Korea’s Yongbyon nuclear facility. Other pieces will look at the prospective issues of a nuclear crisis in North Korea from the perspective of North Korea, Russia, China, South Korea, and the United States.

By James L. Schoff

Containment is Paramount

Japan is highly vulnerable to airborne radioactive fallout from a nuclear incident on the Korean Peninsula, given prevailing westerly winds.  On an increasingly regular basis, Japan endures unhealthy waves of air pollution emanating from China via Korea, in the form of so-called yellow dust, yellow sand, or other fine particulate matter (PM 2.5).  The situation is worst in winter fueled by increased coal use and stronger seasonal winds.  Once the pollutants are airborne, there is little the Japanese government can do but alert the public to take basic precautions, such as wearing face mask or limiting outdoor exposure.  Radioactive material, however, would create an unmanageable health crisis.

A 2017 study by the Natural Resources Defense Council estimated that a nuclear accident in Busan South Korea—in this case a loss of cooling water leading to a fuel storage explosion—would force the Japanese government to evacuate more than 28 million people in Western Japan to avoid the severe health risks from breathing air contaminated by cesium-137 or other radioactive micro-particles.  A similar accident at Yongbyon in North Korea would probably be smaller in scale (given the smaller size facility) but could still affect millions, as the more densely populated Kanto region in Japan (including Tokyo, Kawasaki, Yokohama, and Chiba) is likely to be in the path of fallout from the DPRK.

For comparison, the costly and logistically challenging evacuation in Japan caused by the Tokushima nuclear crisis in 2010 involved about 300,000 local residents.  All of the U.S. bombing in Japan late in World War II forced evacuations of about nine million Japanese, requiring complete national mobilization.  To relocate 28 million is frankly unfathomable, not to mention the long-term economic toll this would take on the nation and the entire region.  Japan’s paramount interest, therefore, is doing whatever it can to help contain the local nuclear accident and prevent a worst-case scenario.

Information and Assistance are Priorities

Upon news of the accident, Japan’s National Security Council would convene an emergency meeting and stand up an interagency task force, led by the Deputy Chief Cabinet Secretary for Crisis Management.  Initial priorities include assessing the situation, preparing for possible invocation of the Civil Protection Law to authorize emergency powers for possible evacuations (in Japan and/or Japanese residents in South Korea), and mobilizing certain equipment that could aid in a North Korea or multilateral response to the crisis.  Mitigation would be much easier if North Korea allows for direct international assistance, perhaps under a UN umbrella with a team involving people experienced with disaster relief in North Korea and veterans of IAEA monitoring activities at Yongbyon in the early 2000s.

For example, Japan can make available equipment for aerial analysis and assessment of ground deposition of radioactive materials (utilizing specially configured helicopters and an unmanned reconnaissance plane received from the Americans in 2010).  Japan could also provide water pump trucks, radiation suits, robotic cameras for surveillance, decontamination facilities, and other material necessary for addressing potential nuclear risks.

The Japanese government would kick into high gear diplomatically, working bilaterally with the United States, the Republic of Korea, China, and Russia, looking to share information (including satellite imagery when feasible) and developing a coordinated response.  Coordinating with Washington would be relatively easy, given their close alliance and the experience working together in 2010 involving the military, diplomats, and nuclear authorities of both countries.  Tokyo would likely be uniquely forthcoming with Seoul sharing information, testing the limits of their military intelligence sharing agreement of 2016.  All three of these countries were critical players in the international response to a deadly Ebola virus outbreak in Africa in 2014-15, acting directly and through the UN system to provide hundreds of millions of dollars, medicine, in-kind contributions, and medical and logistics professionals to help contain the threat.  A similar approach would be sought in this case.

As for Japan’s diplomatic objective, its preference would be for at least a small international investigative team on the ground at Yongbyon as quickly as possible, ideally with some Japanese representation, but Tokyo would probably not insist on this point if North Korea balked.  A key question is what to do if North Korea refuses international assistance of any kind, while indications become clearer that a potentially catastrophic nuclear accident is occurring.

It is hard to see how the allies could impose their will upon North Korea, so all efforts would be made to convince Pyongyang to accept some outside help voluntarily.  This could include turning to different channels of communication, such as Chosen Soren (or the General Association of Korean Residents in Japan), which is a political group of ethnic Koreans in Japan who remain loyal to North Korea.  Perhaps they could be persuasive for the sake of protecting their own members.  Japan would go to great lengths to demonstrate benevolent intent toward North Korea in this particular instance, being more flexible with regard to spending money and providing assistance than is normally the case, even if it applies only to this situation.

As this crisis is unfolding, economic markets would be weakening, requiring government efforts to backstop Japanese firms and ameliorate volatility.  Soon after Japan’s nuclear crisis became evident in 2010, the nation’s stock indices suffered their worst two-day selloff—down about 17 percent—since 1987.  South Korean, Chinese, and U.S. markets would be hurting as well.  Beyond jittery markets, if radioactive fallout did begin to affect Japan and trigger mandatory evacuations in certain areas, it could affect supply chain management that can send ripples throughout the region.  This also happened in 2010, affecting various industries including autos, semiconductors, and electronics.  Thus, another priority for Tokyo would be to mobilize manufacturers to mitigate the potential impact of a worst-case scenario even as it pledges reassuring support for firms, banks, and insurance companies to discourage panic selling.  The economic dimension of this challenge involves both logistics and psychology.

The Japanese government is experienced at trying to manage natural disasters (home and abroad), financial crises, and also nuclear accidents, even if its performance is mixed given the enormous challenges involved.  The emotional scar of the Tokushima nuclear crisis in Japan is still so fresh that a similar crisis in North Korea would consume the public and the authorities.  They would drop everything to help contain the fallout and work with whomever necessary in the region and around the world to address the threat.  Japan has technical expertise and financial resources to offer, and it will leverage all of its multilateral and bilateral relationships to deliver what it can.

Underlying distrust of North Korean leadership, the outstanding issue of missing Japanese abducted by North Korea in the past, and the increasing nuclear and missile threats mean that Japanese flexibility and generosity would likely end once the nuclear safety issue is under control, but the experience might open a door to bilateral or multilateral cooperation with North Korea even after the incident is contained, if nuclear safety can be improved without extortion efforts by Pyongyang.

James L. Schoff is a Senior Fellow in the Asia Program at the Carnegie Endowment for International Peace. The views expressed here are the author’s alone. 

Photo from Alessandro Grussu’s photostream on flickr Creative Commons.

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How Might Russia Respond to an Accident at North Korea’s Yongbyon Nuclear Facility?

This is the second in a series of six blogs looking at a nuclear crisis at North Korea’s Yongbyon nuclear facility. Other pieces will look at the prospective issues of a nuclear crisis in North Korea from the perspective of North Korea, Japan, China, South Korea, and the United States.

By Khrustalev Vladimir

In the case of hypothetical accident with depressurization and ejection of radiation from a North Korean nuclear reactor: what actions might Russia take?

To start: the author must notify that the text written below is the author’s opinion and does not contain the information from inside documents of Russian authorities. Nevertheless, the possible Russian actions in this situation are rather predictable.

Firstly, Russia’s actions will be set by the scale of accident. And the scale of accident is determined by some objective limitations that are related to particular qualities of the working North Korean reactor.

It has rather low thermal power (not more than 30 megawatts) – so the supposed ejection of radioactive materials is hardly significant enough to be a threat for the life and health of Russia’s adjacent territories population.

For comparison – the full thermal power of Chernobyl’s RBMK-1000 was 3200 megawatts. So the full thermal power of North Korean reactor is less than 1 percent! It is the thermal power that determines the speed and volume of accumulated radioactive materials and also the potential energy intensity of different accidents with a thermal explosion. Even if we take the maximum valuation of territory recommended for evacuation (in big part just as precautionary measure) in areas adjacent to Chernobyl disaster – we’ll see only 2600 square kilometers. Any significant disaster’s effects (not all of them were dangerous) were recorded on the territory about 200 thousands square kilometers in size. In case of a hypothetical accident with the North Korean reactor we can unhesitatingly reduce these figures by 1-2 orders!

The supposed zone of occurrence of any conditions dangerous (at least potentially) for life and health is the territory of one or several neighboring counties. It is the maximum. Most of the accident scenarios set local effects.

Nevertheless Russia can’t ignore the hypothetically dangerous emergency situation. In many ways because the experience shows that any nuclear accident is perceived by citizens disproportionally dramatically to the actual hazard level. So, primarily the enhanced control of the radiation situation will be taken and the civil defense structures work will be implemented. Also, an awareness campaign for adjacent Russian regions’ (primarily Primorsky region) citizens about the current situation will be held.

Also, the Russian Federation (in case of a disaster that does not threaten Russia, but is still serious) will evacuate Russian residents who are in the potentially dangerous regions of North Korea. At the same time, Pyongyang will be offered neighborly assistance in eliminating the disaster’s effects. Russian specialists have unique experience in this field, have appropriate technologies, machines, equipment, and etc. In case of a nuclear accident our country is ready to offer help to any neighboring country and North Korea is not an exception.

From the point of view of the foreign policy approach the Russian Federation’s position basically implies any country’s inside freedom of choice to accept or reject help in this kind of situation. Therefore, efforts will be made to counteract attempts to use this accident for any kind of interventional actions against North Korea. Whenever possible there will be attempts to apply for external assistance in the specified formats of the UN and IAEA.

The most likely external partners in undertaking the operation are China, Belarus and Kazakhstan. With the last two countries mentioned there exist substantial communication in the nuclear field including the matters related to elimination of the consequences of any kind of nuclear activity.

From the technical point of view: the Russian Far East territory has sufficient stocks of materiel including some for in the case of nuclear accidents. The transport aviation operations of the Ministry of Emergency Situations or (in case of a lack of necessary equipment) the Ministry of Defense can be easily used for delivery of the needed volumes of materiel to North Korea. In the most prompt scenario the cargo will be delivered to the needed location in less than 24 hours. Most likely it won’t be necessary to deliver special heavy machinery (capable of functioning in the nuclear accident zone and providing protection to the personnel from radiation).  It will be easier to consult with the local specialists about the best ways of equipping common construction and the military machinery of North Korea with additional shielding. Russia has corresponding experience from the Chernobyl disaster. And North Korea would have appropriate industrial facilities.

Regarding the humanitarian aspect: the Russian Federation will also be ready to provide help for the evacuated civilian population with medicine and food supplies and other needs.

The other aspect is helping people affected by radiation. Probably (in case of other party’s agreement and medical possibility) the patients will be even evacuated to Russia for therapy. Our country has appropriate medical and scientific institutions that are highly practically experienced in healing such patients. Also, Russia is ready (if needed) to support corresponding specialists deployment to North Korea for work with injured people!

As for the situation with North Korean nuclear facilities: Russia does not accept any forceful actions against North Korean nuclear facilities in principle.

Firstly, an attack against these facilities could create consequences much more significant than just an accident. The point is that the impact can cause the depressurization of nuclear waste storage and spent nuclear fuel reprocessing facilities. Their destruction at the same time with the reactor would create a completely different hazard level – including the territory of Primorsky region that is adjacent to North Korea.

Secondly, such an attack would be considered a dangerous precedent for the destruction of nuclear facilities in another country’s territory. If such actions are taken by the U.S., Moscow will have to raise the limits of what is permissible in its foreign policy and to change a number of approaches to American activities near Russian borders. Also Moscow will have to accelerate joint activities in the area of collective security with China.

Therefore the Russian position implies the necessity of dialog and mutual concessions between Pyongyang and Washington. It also implies the destructiveness of both the approach in which only Pyongyang must make concessions and the threats of force against the North Korean nuclear complex.

Khrustalev Vladimir is a Russian defense analyst and editor-in-chief and author of “Northeast Asian Military Studies” (NEAMS.RU). The views expressed here are the author’s alone.

Photo from mariusz kluzniak’s photostream on flickr Creative Commons.

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What are the Potential Impacts of a Crisis at North Korea’s Yongbyon Nuclear Reactors?

This is the first in a series of six blogs looking at a nuclear crisis at North Korea’s Yongbyon nuclear facility. Subsequent pieces will look at the prospective issues of a nuclear crisis in North Korea from the perspective of Russia, China, Japan, South Korea, and the United States. This piece is a shorter version of a NAPSNet Special Report from the Nautilus Institute.

By David von Hippel and Peter Hayes

Nuclear Tensions on the Korean Peninsula

In spite of the May 10, 2017 election of a pro-engagement ROK President, tensions on the Korea peninsula remain high.  Although the reactions of United States President Donald Trump to further provocations—nuclear weapons or missile tests, for example, or simply the usual shrill rhetoric and next possible military provocation by the Democratic Peoples’ Republic of Korea (the DPRK, or “North Korea”) are difficult to predict, in his first few months in office Mr. Trump has already shown a willingness to use or show force as deterrent and a means of persuasion.   The U.S. use of cruise missiles in early April to attack a Syrian airfield in retaliation for the Syrian government’s chemical weapons use, the use of a huge “Massive Ordnance Air Blast Bomb” in Afghanistan a week later, and the dispatching of the aircraft carrier Carl Vinson and its strike group to the Western Pacific in late April have not escaped the DPRK’s notice,  and have resulted in further threats on the U.S. and its allies in the region from DPRK media, including threats of attacks with conventional and nuclear weapons.  For its part, the DPRK continues to fire missiles into the East Sea/Sea of Japan, although it has not tested a long range missile nor carried out a seventh nuclear test, as many had anticipated earlier this year.

How many nuclear weapons of what types the DPRK possesses, where those weapons are located, and whether the DPRK already has the technology to make weapons small enough to launch on one of its missiles are all subjects of debate among DPRK-watchers.  One thing that is clear is that the plutonium used to make at least many of the weapons in the DPRK’s arsenal was, and likely is being, produced in a small “magnox” reactor at the DPRK’s Yongbyon Nuclear Scientific Research Center in Pyong’an Province, about 90 km north of Pyongyang.  Analysts estimate that the magnox reactor has been reactivated since mid-2016.

A recently-built experimental light-water reactor (ELWR) at the complex also appears complete in satellite photos, although there is no evidence that it has operated as yet.  It too could be a source of plutonium for weapons.

Also in use at Yongbyon are a facility for separating plutonium from spent reactor fuel, and a center for enriching uranium, both of which can produce fissile material usable in nuclear weapons.  This set of facilities makes Yongbyon an obvious potential target for an adversary determined to damage the DPRK’s nuclear weapons production capability.

At the same time, due in part to the lack of a safety culture in the DPRK in both construction and operation practices, a nuclear accident at one or both of the reactors is not out of the question.  Such an accident or attack would likely result in some release of radioactive materials.  As such, populations potentially downwind from Yongbyon, and those concerned with their welfare, might reasonably ask “What could be the radiological consequences of an accident at or attack on one of the reactors?” And would the threat of such releases give U.S. policymakers pause before attacking such facilities?  And could North Koreans hope to obtain coercive leverage from the risk of accidents in negotiations to settle the nuclear issue?

Background: The DPRK’s Nuclear Reactors

Apart from a small research reactor, also located at Yongbyon, that is used occasionally to produced istotopes for medical use, the two operational (or potentially operational) nuclear reactors known to exist in the DPRK are the magnox and ELWR reactors mentioned above (see Figure One).

The magnox reactor uses graphite as a moderator (to slow neutrons produced by the nuclear chain reaction) and cooled with carbon dioxide gas.  “Magnox” refers to the magnesium alloy (magnesium/aluminum) cladding material used for the reactor’s fuel rods.  Construction on the reactor began in 1979, and was completed in 1986.  It has a nominal power rating of 5 MWe (megawatts electric), and a thermal power range of 20-25MW, though in fact it is our understanding that it does not generate electricity, but does provide some heat for the Yongbyon complex.[1]  By way of comparison, most commercial nuclear reactor units in use around the world are rated at on the order of 1000 MWe, so the DPRK’s magnox reactor is small in comparison.   The design of the reactor is modeled after the United Kingdom’s Calder Hall reactor,[2] though the DPRK reactor is considerably smaller.  The magnox reactor uses natural, not enriched, uranium.  The reactor core contains about 50 tonnes of uranium.


Yongbyon by Google Earth

Figure One:  The DPRK’s Experimental Light Water Reactor and Magnox Reactor[3]

Note: The ELWR is the white-domed building near the bottom of the picture, while the magnox reactor is the off-white building with the reddish roof and the smokestack located in the upper middle of the image.

The experimental LWR at Yongbyon was revealed in 2010 to a delegation from the United States including Siegfried Hecker of Stanford University.  Shortly thereafter, Hecker described his visit in a report that also expressed concerns about the potential safety shortcomings of a DPRK reactor.  If those safety concerns are realized, the DPRK LWR could, once commissioned, be vulnerable to accidents causing significant radioactive releases. As described to Hecker by his Korean hosts, and as observed by Hecker and his colleagues, the under-construction DPRK LWR was planned to have (and, we assume, has or will have) a designed heat output of 100 thermal megawatts (MWth), an electricity generation capacity of 25-30 MWe, and a level of enrichment in U235 of 3.50 percent, with a mass of uranium in the reactor core of 4 tonnes heavy metal (tHM).

Potential Release of Radioactive Materials from DPRK Reactors as a Result of Accident or Attack

Concerns about the release of radioactive material from damaged reactors, and concerns regarding potential exposure of populations living downwind of the reactors, focuses on the radioactive isotope cesium-137 (Cs137).  Cs137 can be distributed by prevailing, and is easily dissolved in water and thus can make its way into the tissues of the body, where its decay produces gamma radiation that can cause damage including increasing the probability of the growth of cancers.  The Cs137 inventory in the DPRK’s magnox reactor is about 3.7 PBq, a measure of radioactivity.[4]   Our estimate of the potential Cs137 inventory in the ELWR reactor core is a maximum of about 9 PBq just before refueling, with up to an additional 40 PBq building up in the reactors’ spent fuel pool over 20 years (assuming that spent fuel is not removed for reprocessing or disposal).   By way of comparison, the inventory of Cs137 in the reactors and spent fuel pools involved in the Fukushima accident totaled nearly 3000 PBq, although only a small fraction of that total was released during the accident.

The summary of our estimates of radiation release resulting from several scenarios of accident at or attack on the DPRK ELWR was that even in the event of an worst-case attack that caused releases from the reactor AND the spent fuel pool, and which occurred when the spent fuel pool was full (some 20 years from start-up), exposure to individuals exceeding United States Environmental Protection Agency guidelines for long-term radiation exposure would be limited to Yongbyon and small DPRK towns in the vicinity, and would not extend to, for example, Pyongyang or Seoul, even if prevailing winds were in those directions.  Given the much smaller inventory of Cs137 in the DPRK’s magnox reactor, even in the event that the entire inventory was released (presumably because the graphite core burns, although we do not know the likelihood of such an event[5]), the exposure would be less than our estimate for the ELWR.

It is unclear what additional inventories of Cs137 a large attack on Yongbyon might release—perhaps from the spent fuel pool storing spent magnox fuel or from reprocessing wastes located at the site, for example—but these quantities would not change our general finding that significant radiation exposure is highly unlikely to occur except in DPRK territory within about 20 kilometers of Yongbyon.


In the event of even a large and targeted attack on Yongbyon, significant radiological consequences will be limited to DPRK territory nearby.  The major impacts of the attack or the threat of an attack beyond the local area will therefore be in the response elicited from the DPRK military, the psychological influences on more distant populations, and the effects on policies in the region.

Following an attack on Yongbyon, the possibility of a reciprocal, retaliatory attack by the DPRK, given DPRK rhetoric, would seem substantial.  DPRK retaliation could come either in the form of an attack by the DPRK with conventional weapons on ROK military and civilian targets, essentially starting a war, or an attack on one of the ROK’s much larger LWRs or spent fuel storage sites, via, for example, missile strikes or invasions by a commando group.  Thus, rather than the risk of radiological release making the United States and its allies think twice about attacking the DPRK’s nuclear facilities, the real risk that is likely to give the United States and its allies pause when considering an attack on Yongbyon is the risk of North Korean “reciprocal but a-symmetric and escalatory retaliation.”

This deterrent effect exists because the risks to populations and economic losses arising from successful North Korean missile bombardment of ROK LWRs or spent fuel sites are much greater to the ROK (including not only radiological exposure, but prospective loss of large fractions of the ROK’s power supply) than the consequences of a successful attack on the DPRK’s reactors.  In short, the United States and its allies control most of the variables that would result in substantial radiological release from the DPRK’s small reactors, but any leverage arising from that dominance is offset by the reciprocal threat posed by DPRK retaliation to ROK LWRs, neutralizing the US-ROK threat from the DPRK’s perspective.

Similarly, subsequent to an attack on one or both of the DPRK’s reactors, even though radiation doses above a threshold for substantial harm would not reach populations in the Republic of Korea—for winds blowing toward the south, as prevail in winter—or in China—for winds blowing toward the north, as prevail in summer—populations in these neighboring countries would certainly be concerned.  Thus, the primary predictable impacts of a radiological release—or the threat of a release—from the DPRK’s LWR will be psychological, in terms of downwind perceptions and anxiety on the part of exposed or potentially exposed populations, and political, in terms of the policies adopted in anticipation of or as a result of such an event.  As such, it is the consideration of the response of ROK and/or Chinese public mobilization in advance of a strike on Yongbyon due to fear of war—compounded by fear of radiation, even if ill-founded—that would serve as a deterrent to an attack on Yongbyon, rather than consideration of the direct radiological consequences of such an attack.


Dr. David Von Hippel is a Nautilus Institute Senior Associate and Peter Hayes is Honorary Professor, Center for International Security Studies, Sydney University, Australia and Director, Nautilus Institute in Berkeley, California. The views expressed here are the authors’ alone.

Photo from Wapster’s photostream on flickr Creative Commons.


[1] Other sources suggest that the DPRK”s magnox reactor does produce, or at least has produced, electricity.  See for example Chaim Braun, Siegfried Hecker, Chris Lawrence, and Panos Papadiamantis (2016), North Korean Nuclear Facilities After the Agreed Framework, dated May 27, 2016, and available as http://cisac.fsi.stanford.edu/sites/default/files/khucisacfinalreport_compressed.pdf.

[2] An early description of the Calder Hall reactors is provided in Kenneth Jay (1956), Calder Hall: The Story of Britain’s First Atomic Power Station.  Harcourt Brace and Company, New York, 1956.

[3] Credit: GoogleEarth, May 14, 2017

[4] A petabecquerel, or 1015 Bq, represents a rate of radioactive decay equal to 1 disintegration per second.  37 billion (3.7 x 1010) Bq equals 1 curie (Ci). See, for example, US Nuclear Regulatory Commission (2013), “Becquerel (Bq)”, available as http://www.nrc.gov/reading-rm/basic-ref/glossary/becquerel-bq.html.  Our estimate assumes a reactor core that is ready for refueling, that is, has been subjected to an average of 635 MW-days/tU of “burnup”, a value reported as the average burnup for the DPRK magnox reactor by Jooho Whang and George T Baldwin (2005) in the Sandia National Laboratory Report Dismantlement and Radioactive Waste Management of DPRK Nuclear

Facilities (available as https://www.osti.gov/scitech/servlets/purl/957471/), although other sources suggest that burnup in this reactor could be higher, which would increase its maximum Cs137 inventory.

[5] In a 1957 accident at the Windscale plutonium production facility in the UK, some of the graphite moderator did catch on fire, though that reactor was cooled with air, not CO2 as the DPRK’s magnox reactor is.  Similarly, in the 1986 Chernobyl disaster, the graphite moderator of that water-cooled reactor burned, contributing to the atmospheric dispersion of radioactivity in the core.  We do not know whether an attack on the DPRK’s magnox reactor could cause a substantial fraction of the graphite core to burn, though we suspect that some organization has probably analyzed such an event.  Our point here is that even if the graphite core were to burn and the entire Cs137 inventory in the reactor core was released, the event would be insufficient to exceed radiological risk thresholds even tens of kilometers from Yongbyon.

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An Agenda for U.S.-Korea Relations Under the Trump Administration

By Troy Stangarone

As the Trump administration settles into Washington, DC, it inherits an alliance with South Korea that is not only in good shape, but that has been well run for nearly a decade now under both Republican and Democratic administrations. While the Trump administration inherits a solid base from which to begin its relations with South Korea, it also faces a potentially more difficult environment than the administrations of George W. Bush and Barack Obama. As the Trump administration begins to build its foreign policy, what should its agenda be for relations with South Korea and handling North Korea?

To develop an agenda for any administration it is necessary to consider the challenges and opportunities it is likely to face in the near and long term. In the case of the Trump administration and the Korean peninsula the immediate term is likely to present the most challenges. The impeachment of President Park Geun-hye has changed the political environment and the Trump administration will need to manage relations with the interim administration while preparing to build a relationship with the successor to President Park Geun-hye either later this year or in early 2018 depending on how the Constitutional Court rules on President Park’s impeachment.

At the same time, at some point during the first year of the Trump administration North Korea will likely present the administration with a crisis by conducting another nuclear test or the test of an intercontinental ballistic missile. With pressing needs related to North Korea and political change on the horizon in South Korea, there are five key areas where the Trump administration should focus its efforts in relations with South Korea.

Maintaining the Current Strength of U.S.-Korea Relations

With the alliance between the United States and South Korea in good shape, the first priority should be to make sure it stays that way. With South Korea entering a period of political transition this will present the administration with new challenges, but since it may also seek change in the alliance new opportunities. To best maximize those opportunities and maintain good relations the administration should begin building relationships with all of the four major political parties in South Korea to help identify areas of common agreement where the relationship can be grown.

The New Frontier Issues

Growing the relationship between South Korea and the United States beyond the security alliance has been a hallmark of the past two administrations. One area of opportunity for the Trump administration is continuing the New Frontiers initiative. The New Frontiers are efforts by the United States and South Korea to cooperate on issues such as cybersecurity, global health, and climate change. While the new administration may have its doubts about climate change, energy cooperation, a subset of any climate change initiative, is one area ripe for potential cooperation in light of South Korea’s need for energy and the United States ability to supply both LNG and renewable sources, and hence to could be an opportunity for the new administration to expand job growth in the United States.

Both the United States and South Korea also face increasing threats from cyberattacks, and a common adversary in this realm in North Korea. In light of North Korea’s suspected hacks of banks and government facilities in South Korea, and Sony pictures in the United States, Seoul and Washington have a shared interested in cooperating on detecting, deterring, and defending critical infrastructure from North Korean and other attacks.

Trilateral Relations Between the United States, South Korea, and Japan

Much as with the Obama administration, the Trump administration will need to focus on the trilateral relationship with Japan. While the Obama administration put significant effort in bringing the two countries together, South Korea’s relationship with Japan is still fragile. While the December 2015 agreement on the comfort women remains in place, some South Korean presidential candidates have suggested that it might not be adequate.  Japan has recently temporarily recalled its ambassador to South Korea and paused talks over a currency swap in response to the placement of a statue honoring the Comfort Women outside of its consulate in Busan. The intelligence sharing agreement between South Korea and Japan is also relatively new and controversial in South Korea. With this relationship still in a fragile state, like the Obama administration, the Trump administration will need to work behind the scenes to maintain a working trilateral relationship and allow South Korea and Japan space to continue to work through their difficulties.

Negotiating a New Special Measures Agreement

More of a medium term issue for the Trump administration will be negotiating a new Special Measures Agreement (SMA). The SMA is the vehicle through which South Korea’s contribution to the stationing of U.S. troops is set. The current agreement is set to expire in 2018. Increasing the contribution of U.S. allies has been a key issue for President Trump and the new SMA negotiations will provide the administration an opportunity to increase South Korean contributions. If the Trump administration seeks an increase in line with prior negotiations, it should be able to achieve its objective of increasing South Korean contributions. However, one tactic it should avoid is seeking to reopen the current SMA or issue a threat to withdraw U.S. troops until Korea pays all or nearly all of the cost of stationing our troops on the peninsula. That could lead to pushback in South Korea and, in light of the increasing threat from North Korea, would be a case of fighting the wrong battle at the wrong time.

North Korea Policy

When it comes to dealing with North Korea, the Trump administration will need to maintain close coordination with South Korea. The alliance functions best when the United States and South Korea are on the same page on North Korea, and this will be increasingly the case as Pyongyang looks to finish the development of its nuclear weapons program and its related delivery systems.

There are three main areas where the United States needs to ensure common agreement with South Korea – sanctions, engagement, and missile defense. The first is the overall approach to North Korea.  This is where sanctions and engagement come into play. The Obama administration and the Park administration have sought to pressure North Korea to return to talks over its nuclear program. It seems likely that the Trump administration will pursue a similar policy and it will be important to ensure that that there is bipartisan support in Seoul for continued sanctions, especially if the Trump administration chooses to be more aggressive on sanctions than the Obama administration.

The new administration in Seoul may seek to increase its engagement with North Korea, so the Trump administration will need to develop a sanctions policy that could dovetail with engagement by South Korea, preferably by working with Seoul to develop ways to engage North Korea that do not undermine efforts to roll back Pyongyang’s nuclear program. Similarly, President Trump has suggested in the past that he would be willing to meet with Kim Jong-un. If either administration in Seoul or Washington seeks to hold a summit meeting with North Korea, there will need to close coordination to make sure misunderstandings to not develop and that policy remains coordinated.

There will also need to be coordination on defensive matters such as the deployment of the Terminal High Altitude Area Defense (THAAD) system and missile defense more broadly. As deterrence plays a more important role in containing a potentially nuclear armed North Korea, improved missile defense in both South Korea and the region will be a key policy issue. However, China will continue to pressure South Korea to refrain from deploying a missile defense system and the alliance will need to maintain a common position on the issue.

The dynamics of North Korea and political change in South Korea, along the with Trump administration’s desire to develop a new type of relationship with U.S. allies, will make navigating U.S.-Korea relations more challenging than in the past. Ultimately, however, the Trump administration’s goal should be to develop the relationship with South Korea so that it that passes the alliance it inherited on to future successors in as good or better shape as it received it. If this means scaling back some of the administration’s own ideas for the alliance or finding a way to find successful compromises that meet both countries objectives that would good policy and alliance building. As the old saying says, “if it ain’t broke, don’t fix it.”

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Gage Skidmore’s photostream on flickr Creative Commons.

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Nuclear Power is Not the Answer for North Korea’s Economy

By Troy Stangarone

At North Korea’s recent Party Congress, Kim Jong-un laid out a five-year plan to boost economic growth in North Korea. As part of his plan, Kim Jong-un raised the need to address North Korea’s chronic energy shortage by increasing North Korea’s energy production, including the production of nuclear power. While addressing the North Korean economy’s need for reliable sources of energy would be a key part of any economic revival in North Korea, the emphasis on nuclear power suggests that the North Korea is less interested in economic development than the rhetoric might indicate.

A number of issues hold the North Korean economy back. While North Korea’s “one percenters” live a fairly upscale life increasingly filled with Western luxury goods, the North Korean economy faces a series of constraints. To increase economic growth, Pyongyang needs to implement a series of wide ranging reforms. A few examples include reforms to the money and banking system, a loosening of labor markets, and measures to strengthen investor confidence in the private sector. These prospective reforms don’t even address the larger issue of sanctions and denuclearization that hinder the economy. In the absence of a deal with the international community to address its nuclear program, international sanctions will continue to be a constraining force on economic growth in North Korea. While Iran reached this conclusion and sought out a negotiated solution, North Korea has resisted a similar course.

Why Increased Economic Activity in North Korea Requires More Power Generation

If North Korea is to develop its economy, a significant increase in power generation will be required. According to estimates, North Korea generates about the same amount of power on an annual basis as Cuba, Puerto Rico, the Dominican Republic, Tajikistan, and Iceland,or, about 3.6 percent of the power generated in South Korea.

All of those countries, South Korea excepted, and Puerto Rico, have populations less than half the size of North Korea. Only Iceland and Tajikistan have smaller economies, but both also have significantly smaller populations. Looked at in terms of per capita income at purchasing power parity, all are better off than North Korea by a significant amount, other than Tajikistan which still has a per capita income $1000 more than North Korea. In a relative sense, North Korea is clearly under-generating the power needed to drive its economy.

Problems with Power Generation in North Korea

While North Korea uses a mixture of thermal power, largely from coal, hydropower, biomass, and petroleum, much of the infrastructure dates back to the 1950s and 1960s for the thermal plants and many of the hydroelectric plants date back to prior to 1945. As a result, plants often run below operating capacity and in some cases parts for maintenance are no longer produced.

Even when North Korean has attracted attract foreign investment, the North has had to rely on foreign power to run factories. In the case of the Kaesong Industrial Complex, to ensure a stable power supply that would not damage equipment electricity was provided by a power plant in South Korea. In the case of Rason, an obsolete power plant in Sonbong was being utilized, but it limited investment capacity and China had agreed to build a new plant to provide power.

However, North Korea faces problems beyond generation capacity and the degradation of facilities. The country also has two antiquated electrical grids that are deficient in three ways. First, they are of differing voltages which creates compatibility issues. Second, they do not cover the whole country, so there are areas that are not on the main grid. Lastly, because of their age and disrepair 20-30 percent of the power that is generated is lost.

Fixing North Korea’s Power Problems

Kim Jong-un has suggested increasing North Korea’s nuclear power capacity as one solution to North Korea’s energy needs. Setting aside the issue of the international concerns that the construction of additional nuclear power plants in North Korea would raise, nuclear power would not be an ideal method for rebuilding North Korea’s economy.

Nuclear power plants require significantly more upfront costs to construct than other sources of power and take longer to build. In light of leaks in a quickly constructed hydropower dam in North Korea, the words “North Korea,” “nuclear power plant,” “construction,” and “quick” are likely not a combination anyone would like to hear soon.

If North Korea were serious about trying to improve the energy infrastructure in the country to grow the economy, nuclear power is not the route anyone would take. Instead, North Korea should turn to either coal thermal plants or natural gas plants, with an increasing degree of renewable sources in the mix, something North Korea is trying to do. A mix of source makes sense for North Korea as LNG plants for baseloads would be the quickest to build, while the usage of renewable energy could help bring basic services such as hot water and power to charge phones and other electrical equipment to areas cut off from power much more quickly.  LNG could be supplied to baseload plants from Russia as part of a deal that has been on the table to supply South Korea via a pipeline for years.

Of course, all of this suggests that North Korea is more interested in expanding the options for its nuclear weapons program than generating the power needed to revive the economy. Any effort to build additional nuclear plants would not only delay the economic benefit but might also lead to deeper economic sanctions on the economy.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own.

Photo from sharkhats’ photostream on flickr Creative Commons.

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The Beginning of a New South Korea-Iran Relationship?

By Troy Stangarone

On May 1, South Korean President Park Geun-hye will travel to Iran for a three-day summit with the newly emerging regional power. Her visit will represent the first summit meeting between Iran and South Korea since the two nations established relations in 1962. However, while relations with Iran hold significant promise with the removal of economic sanctions, they also have the potential to be extremely complex.

The summit meeting comes shortly after the implementation of an agreement between Iran and the P5+Germany to place limits on Iran’s nuclear program in exchange for the removal of international sanctions that had cut off Iran’s access to international markets through financial, maritime insurance, and secondary sanctions.

For Asian, European, and in the future, American investors, Iran represents an appealing economic opportunity. With the world’s fourth largest oil reserves and largest reserves of LNG, coupled with a population of 80 million that is largely under the age of 30, Iran holds significant economic potential as both an energy producer and consumer market.

The Economic Promise of Improved Relations with Iran

For South Korea, Iran holds significant economic potential. The impact of the oil embargo on Iran and its removal from the SWIFT financial system has severely cut into trade between South Korea and Iran. Trade between South Korea and Iran had reached a high of $17.4 billion in 2011, the year before the EU oil embargo went into effect. Since that time, bilateral trade has declined by 65.5 percent to $6.1 billion in 2015.

SK-Iran Trade Graph

From 2011 to 2015, the value of oil imports from Iran declined from $9.4 billion to $2.2 billion. This was due to both a drop in the price of Dubai crude, which was around $100 a barrel in 2011 but had dropped into the $40 range by 2015, and a drop in the overall volume of imports which fell by 54 percent.

SK-Iran Petrolium Graph

However, trade with Iran was not only impacted in terms of petroleum imports, but South Korea also saw its exports to Iran decline by 39 percent over the same period. In 2011 South Korea was exporting over $235 million in refrigerators and $270 million in vehicles and even more in vehicle parts to Iran. By 2015, sales of refrigerators were down significantly, but sales of vehicles had shot up to more than $372 million after having been well below $100 million in the period of 2012-2014.

As Iran’s economy revives and its young consumer base sees increases in wages, South Korean consumer goods from cars, to smartphones, to televisions, to durable goods such as refrigerators are well placed to make significant gains.

Beyond consumer goods, Iran holds promise for helping to meet Seoul’s energy needs. South Korea lacks domestic petroleum reserves and is therefore dependent upon imports for its energy needs, for which petroleum based products account for nearly 40 percent of energy consumption.

South Korea can benefit from an enhanced energy partnership with Tehran in multiple ways. First, Iran can serve as another significant source for South Korea’s energy needs and if energy exports only return to pre-2012 levels we should expect to see South Korea’s imports of Iranian petroleum to at least double. Second, South Korea stands to benefit from investment projects in Iran’s energy industry, and the South Korean construction industry stands to benefit from Iran’s economic revival more broadly. Iran is expected to engage in $186 billion in construction projects between now and 2020. This boom in projects comes at a time when the Korean construction industry is struggling abroad.  Lastly, as Iran looks to increase its exports of oil, South Korea’s shipping industry hopes to benefit from Iranian efforts to modernize its tanker fleet.

While there is significant promise in new economic ties with Iran for South Korea. Expectations should also be tempered. During the recent sanction period, trade between the two countries could only be settled through won-based accounts in Seoul. Because the financial institution involved in those transactions, Woori Bank, has U.S. dollar denominated accounts it found its access to the U.S. financial system at risk had its won transactions with Iran been in violation of sanctions. With sanctions now removed, however, European firms have seen slow progress in arranging deals with Iran due to the reluctance of banks to finance transactions with Iran due to new U.S. sanctions on Iran’s missile program. South Korean firms may run into similar difficulties.

South Korea’s Security Interests in the Middle East

As South Korea’s economic relationship with Iran develops, there is also a security dimension for Seoul to consider. In 2015, more than 80 percent of its petroleum imports came through the Strait of Hormuz. As imports from Iran increase, Seoul’s dependence on the Middle East for petroleum will likely only rise.

Dependence on the Middle East for energy imports creates risks for the South Korean economy. In the past, Iran has threatened to mine the Strait of Hormuz, an action which would put South Korea’s energy lifeline at risk. As a result, Seoul has a strong interest in peace and stability in the region. However, Iran continues to support groups such as Hamas and Hezbollah, and is engaged in a competition with Saudi Arabia for regional influence. Some have expressed concerns that an economically stronger Iran could further destabilize the region.

The North Korean Dimension

While South Korea playing a greater role in encouraging stability in the Middle East is an important dimension to the security portion of President Park’s trip, the more direct security interest for South Korea is Iran’s relationship with North Korea, which President Park is expect to raise with Ayatollah Ali Khamenei if they are able to meet.

As South Korea and the international community try to isolate North Korea, encouraging Tehran to distance itself from Pyongyang will be an important part of the trip. Iran and North Korea are known to have shared technology on missile development, and there has long been concern that they might be sharing information on their nuclear programs as well.

Beyond the nuclear and missile programs, Tehran may, if only indirectly, be supporting the North Korean regime. Iran and its proxy Hezbollah have been providing arms and financial support for the Assad regime in Syria. In 2013, Turkey seized gas masks, arms, and munitions from North Korea bound for Syria. Under the new UN sanctions, all arms purchase from North Korea are prohibited and South Korea should encourage Iran to push its allies to enforce the sanctions on Pyongyang.

Seoul’s outreach to Iran could be the beginning of a fruitful new relationship for South Korea and Iran. The initiative holds significant economic potential for South Korea, and the prospect to gain additional influence with a key partner of North Korea. Tehran stands to gain significantly from increased trade and investment with South Korea as it seeks to upgrade its infrastructure, boost its economy, and improve the life of its people. However, North Korea holds the potential to be a sticking point in any new relationship, and as long as Iran maintains cooperation with Pyongyang there is also the potential for it to be an increasingly complex relationship.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own.

If you are interested in more information on this topic, you can also listen to our podcast on the South Korea-Iran summit with Alex Vatanka of the Middle East Institute at keia.podbean.com.

Photo from peyman abkhezr’s photostream on flickr Creative Commons.

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