KUMHO (North Korea): Sceptics may scoff, but a project to build communist North Korea nuclear reactors at this remote site could one day provide access to revival to a poor country that forms part of Washington’s “axis of evil”.

North Korea has gingerly, almost imperceptibly, dipped a toe into the unclear waters of economic reform. Western diplomats and economic analysts differ on the significance of a decision in June to raise prices and wages, but agree something has shifted.

“They are the first real changes for 50 years or so,” said David Morton, who has just ended a four-year stint as head of the World Food Programme in Pyongyang.

But he said in Beijing the process, if it becomes more tangible and continues, was likely to be painfully slow. A crucial factor is energy shortages, and that is compounded by a rickety infrastructure and malnourished workers in one of the most isolated countries in the world.

So, on the face of it, there is rich irony in the United States helping to fund a $4.6 billion international plan for light-water nuclear reactors for hungry and energy-short North Korea, while also lumping it together with Iraq and Iran as part of an “axis of evil” bent on making weapons of mass destruction.

Under a 1994 US-North Korea deal known as the Agreed Framework, Pyongyang froze its suspected nuclear weapons programme in exchange for reactors and fuel oil. Before that deal, the peninsula had slid uncomfortably close to war.

North Korea also promised to let International Atomic Energy Agency (IAEA) inspectors check for weapons-grade plutonium and Soviet-era atomic sites, but leader Kim Jong-il has yet to do so.

“PLUTONIUM PARTY”: The Asian Wall Street Journal was scathing about the Kumho project in an editorial headlined “Pyongyang Plutonium Party” that ran the day before an August 7 ceremony — complete with fireworks and fanfare — at the site to mark the pouring of concrete foundations for the reactors.

“It is a menacing, tyrannical regime that survives by starving its own people, peddling weapons and blackmailing the free world,” the newspaper said. “Merrily waving this along is not only morally offensive, it’s dangerous.”

But a senior US envoy and officials from the Korean Peninsula Energy Development Organization (KEDO) overseeing the project rejected such criticisms.

With cement still sloppy in the rough-hewn rock foundations of the reactors and fireworks smoke in the air, US envoy Jack Pritchard told reporters: “There’s nothing contradictory at all.”

Pritchard was the most senior US official to visit North Korea since President George W. Bush took office in 2001, and his robust speech at the ceremony was clearly designed to counter domestic critics as well as send a strong signal to North Korea.

“What this programme has done to date has frozen their graphite-moderated reactor, their processor, the spent fuel that is under inspection,” he told reporters. “Ultimately, when all the commitments are met, that spent fuel will be removed from the country and that programme will no longer be of concern to us.”

There is little doubt the KEDO project has less to do with electricity and more to do with thwarting nuclear ambitions and boosting stability on the divided Korean peninsula.

But the spin-off could — eventually — be considerable, if North Korea plays along, including a broader range of talks with the United States, Japan and South Korea in coming months. North and South Korea were holding ministerial talks this week.

KEDO officials made the connection between the project and any reforms that may develop, noting estimates varied on how much electricity North Korea produces. Conservative figures are around 3,000 megawatts, not enough to sustain industrial revival.

The first of the two KEDO reactors, from which it is hard to extract weapons-grade plutonium, would provide 1,000 megawatts.

“There’s a third of your existing capacity right off,” said one official.

For now, the project has entered a crucial phase but is far from finished. The concrete-pouring at Kumho, 10 hours by road from Pyongyang, marked the switch from digging to building.

The bulk of the work will be finished in mid-2005, but key parts will not be delivered or installed if North Korea fails to fulfil its obligations.—Reuters