Economic motives behind move to join KEDO

Date: 02/05/1996

EU governments are considering joining the US and Japan in a scheme designed to keep North Korea from breaking ranks with nations dedicated to nuclear non-proliferation.

But if the Union joins the Korean Peninsula Energy Development Organisation (KEDO), an international project aimed at bringing alternative energy sources to Korea, its motives will not be entirely altruistic.

European Commission recommendations to member states underline a range of political and economic benefits such a move could bring to the Union.

The Commissioners for trade, energy and foreign affairs - Sir Leon Brittan, Christos Papoutsis and Hans van den Broek - argue that by joining KEDO, the Union could help improve nuclear safety in east Asia.

But their arguments rest much more on the advantages of strengthening the Union's role as part of its much-valued EU-Asia strategy, while at the same time adding another stepping stone to the path being built with the US through the Transatlantic Agenda.

They also blatantly stress the potential advantages for European industry, saying that if the EU becomes a full member of KEDO, it will be able to promote and protect the interests of key sectors.

“KEDO is at the same time a major commercial industrial project” involving engineering studies, analyses, supplies and specific technologies, the Commissioners stress in a report to the Council of Ministers.

In other words, it is tailor-made for Europe's nuclear and industrial sectors, which, by joining in, could “enhance the image of, and the possibilities open to, European industry in Asia”.

Because the construction of the project's reactors will soon be under way, bids may be taken soon and EU companies should be there on time, the Commissioners argue, stressing: “Formal negotiations should...be opened as soon as possible.”

This urgent tone is new for the EU, considering the Union's original stance on KEDO.

When North Korea threatened to withdraw from the Nuclear Non-Proliferation Treaty (NPT) in 1994, the US persuaded them not to pull out by offering in return a valuable energy installation. But while Japan and South Korea joined in the project, the EU was sceptical about whether a negotiated settlement could hold.

Since the KEDO accord was signed in October 1994, the Union has been tiptoeing around its periphery. Five EU member states (France, Germany, Italy, the Netherlands and the UK) have given money to the 3.5-billion-ecu project and Finland has joined as a full member.

But the Commission argues that member states' responses and the 5 million ecu given by the EU are not enough to give the Union a high profile in the region.

The Commissioners propose an EU contribution of 15 million ecu per year for at least five years - a sum matching US contributions. They add that the money would have to be drawn from existing EU budget resources, but do not specify which.

“In return for this Community contribution, there should be a variety of significant commercial and industrial opportunities for the Community and in particular for the nuclear sector,” says their report.

Desiring full founder-member status to protect the Union's industrial interests, the Commission says it has secured agreement from Washington and Tokyo that they would welcome a new partner.

EU ministers are expected to take a decision on KEDO in June. EU industry may be safe in betting on a Yes vote, as Union governments have already accepted Tokyo's intention to link Japan's contributions to EU-led reconstruction of Bosnia-Herzegovina with Union promises to give more money to KEDO.