Project Links Two Koreas, but Who Will Pick Up the Tab?

When it comes to tense standoffs, the Korean peninsula is in a class by itself. The site of a bitter war in the 1950s, it remains a tinderbox - pitting a US-backed, capitalist economy in the south against a stubborn, but crumbling, bastion of communism in the north.

While this might be the last place you'd expect to find cooperation, in a remote and barbed-wire-enclosed corner of North Korea, South Korean engineers and North Korean workers are side by side, laying the groundwork for a nuclear-power plant.

Advocates say the landmark project - traded for a North Korean promise in 1994 to freeze a suspected nuclear-bomb program - can be a catalyst for peaceful Korean reunification. But as work goes on, who pays for how much of the $5.5 billion project is still unresolved.

Peace is everyone's espoused goal. But how much contributors pay will hinge on other interests, real and perceived.

According to the "Agreed Framework" deal, South Korea's role will be "central," Japan's "significant," and America's "meaningful." Soon, these players in the Korean Energy Development Organization (KEDO) will discuss how those words will translate into dollars.

For the United States, helping pay for the reactors is a bit too "meaningful." Citing a strong aversion to nuclear power, an American KEDO official, who asked that his name not be used, says, "We have absolute political blockage" to funding reactors, especially in an "enemy" state. The project is "in Korea, for Koreans," adds a US diplomat in Seoul, who also asked that his name not be used. Most of the project money goes to Korean contractors.

So far, the US has helped to pay for heavy fuel oil to fill North Korea's energy needs while its nuclear reactors are inoperative. If Congress approves this year's budget request, the US will have paid more than $100 million.

Persuading Congress to fund anything was a challenge. The American KEDO official says some lawmakers called the deal "a sellout, [that we were] succumbing to nuclear blackmail by North Korea." But "Congress has come a long way from what was originally skepticism to a position of support," he says.

South Korea wasn't happy with the deal, either. The government was sidelined in negotiations by North Korea, which refused to talk to Seoul. The US dealt directly with the North, while consulting South Korea on every move. But many here complain the US gave away too much, too easily, and they want America to pay more.

American taxpayers already spend $3 billion annually to keep 37,000 troops in South Korea to deter northern aggression. And South Koreans are rubbed raw by North Korean propaganda, labeling the South a "lap dog" of imperialist Americans.

Most South Koreans would hate to see the US go. But that "America has been our overweening presence grates on the pride of South Korean people," says Lho Kyong Soo, a professor at Seoul National University.

Some Koreans say the US uses its military presence to tip arms sales and trade in its favor. US diplomats recoil at the suggestion. "We never threaten them with any erosion of the alliance or the friendship," the diplomat says. "It is, in many ways, the closest alliance the US has."

Trade is something else. Because of quiet US pressure, and partly to show appreciation for America's security help, South Korea sent buying missions to the US in the 1980s.

"This was our effort to show the US that we're not free-[loaders]," Mr. Lho says. South Korea is one of the only Asian countries that has a trade deficit with the US, nearly $12 billion annually.

But there has been a backlash against continuing pressure from American special interests to open Korea's markets. And unlike the past, Koreans are standing up to trade pressure. South Korea is also more independent economically these days. By trading with more countries, it can rely less on the US export market.

But on the sensitive issues between the Koreas, the South feels tethered to the US. "In their rational moments," Koreans like US help, but there's "a deep ambivalence," the KEDO official says.

And envy. A South Korean official told him, "You did consult with us every step of the way [on the nuclear deal]. But when you were in that room with the North Koreans, you were in there alone."

Advocates say the landmark nuclear-power deal, backed by the United States, can be a catalyst for a peaceful reunification of the North and South.