N. Korea Politicking on Nuke Program Bid

North Korea (search) is holding South Korean construction cranes, bulldozers, road graders, dump trucks and almost 200 cars hostage at the site of a suspended power plant project as a bargaining chip in the international standoff over its bid to develop nuclear weapons (search).

The South Korean companies that own the construction equipment are dismayed since North Korea has refused to back down on demands for compensation for the suspension of the power-plant program.

The Korean Peninsula Energy Development Organization (search) (KEDO), the New York-based consortium set up to build safe power plants in North Korea in exchange for Pyongyang's agreement to dismantle its weapons program, says no progress has been made on the impasse.

Construction of two 1,000-megawatt light-water reactors to replace North Korea's Russian-model, plutonium-producing nuclear plants was suspended in 2003 after the United States raised suspicions that Pyongyang also concealed a secret program to enrich uranium to weapons grade.

The freeze on the nuclear plant project was extended last week for another year, effective Dec. 1, by KEDO, which is led by the United States, Japan, South Korea, and the European Union.

The Bush administration has been contending that the project has "no future," as the State Department said a year ago.

South Korea and Japan, which are most heavily invested in construction of the $4.6 billion nuclear plant project about 125 miles north of the 38th parallel on North Korea's east coast near Sinpo, hope to keep it on the table to entice North Korea back into disarmament talks.

KEDO's extension of the freeze noted that "the future of the project will be assessed and decided by the Executive Board before the expiration of the suspension period," suggesting it will be revived or killed based on North Korea's willingness to rejoin disarmament talks in coming months.

But in the meantime, North Korea has barred the removal of 93 pieces of heavy construction equipment, including three cranes, plus bulldozers, steam shovels, dump trucks, road graders and forklifts, and about 190 South Korean cars and some buses from the site at Kumho, demanding that the United States pay unspecified "compensation" for the suspension of the program.

Pyongyang has threatened to go in and seize the equipment along with computers, office equipment and any technical documents still on the site, but has made no move to do so.

KEDO's executive director, Charles Kartman, raised the issue in talks with North Korea prior to the consortium's announcement Nov. 26 of the extension of the freeze on construction.

KEDO spokesman Brian Kremer confirmed on Monday that no progress has been made recently on breaking the impasse, but added, "We're certainly hopeful that KEDO can resolve this issue."

The South Korean companies with the most equipment at stake are Hyundai, Doosan, Daewoo and Dong-ah, which subcontracted with Korean Electric Power Co. to provide construction work.

A spokesman for the four major Korean subcontractors, speaking in Seoul on condition of anonymity, said the seized equipment amounted to a major loss and said the situation was "awkward" for the construction consortium since they had not been compensated for it.

Their equipment had been shipped from South Korea directly to a port at Kumo, avoiding the difficulty of negotiating road access through the almost hermetically sealed North Korea.

KEDO is continuing to pay leasing fees to the South Korean companies "for equipment that is not being used. We have a budget that we have to live within," Kremer said. The reduced KEDO staff at the Kumho site is maintaining the partially built project and caring for the equipment and vehicles.

The major and lesser subcontractors had sought to retrieve their equipment when the nuclear project was shelved about a year ago, when the project was a third of the way toward completion.

But a North Korean Foreign Ministry spokesman said at the time, "We will never allow the U.S. to take out facilities, equipment and materials for the light water reactor construction and technical documents now in the Kumho area unless the U.S. pays a penalty."

"Our measure has nothing to do with subcontractors participating in the light water reactor construction," the Foreign Ministry spokesman said, quoted by North Korea's official news agency.

The value of the vehicles and equipment — perhaps in the tens of millions of dollars — is a small fraction of the overall $4.6 billion estimated cost of the Kumho reactor project, which is 70 percent funded by South Korea.

But the impasse over removal of the equipment is emblematic of the conflicting political demands from the United States, South Korea and Japan, which the KEDO project is entangled in.

KEDO was set up in 1994 to fulfill a deal to take North Korea's plutonium-producing nuclear plants offline and remove and seal more than 8,000 used fuel rods, in exchange for the light-water reactors and 500,000 tons of fuel oil sent annually by the United States — which has also been halted for two years.