Saturday, December 28, 2002

North Korea To Expel U.N. Inspectors

Vow to Reopen Nuclear Plant Escalates Confrontation
By Peter S. Goodman
Washington Post Foreign Service
Saturday, December 28, 2002; Page A01

SEOUL, Dec. 27 -- North Korea today announced its intention to expel U.N. inspectors from its Yongbyon nuclear reactor complex and said it would reopen a factory that extracts weapons-grade plutonium, sharply escalating its confrontation with the United States while leaving the world guessing about events in the reclusive Communist country.

In a letter sent to the U.N. nuclear watchdog, the International Atomic Energy Agency, North Korea said that because "our freeze on nuclear facilities has been lifted, the mission of IAEA inspectors has naturally drawn to an end," according to North Korea's official press. "Our government has decided to send them out."

The letter added that North Korea plans to reopen its plutonium extraction factory to provide "safe storage" for spent fuel rods taken from the reactor. Those fuel rods contain plutonium that, once it is extracted, can be used to make nuclear weapons.

In a swift reply, also by letter, the U.N. body insisted that the inspectors remain in the country to ensure that North Korea complies with its 1994 agreement with the United States that it would not develop nuclear weapons. The agency's director general asked the North Korean government to "inform him immediately should they have a contrary view, so that, if necessary, arrangements for the departure of IAEA inspectors can be made," the IAEA said in a statement.

The White House denounced the planned expulsions and urged the North to end its nuclear weapons program. "We will not respond to threats or broken commitments," said spokesman Scott McClellan in Crawford, Tex.

North Korea's latest moves were seen by arms control experts as predictable if alarming steps in its path of escalation with the Bush administration, a tactic aimed at forcing the United States to resume aid and pursue diplomatic relations. But if North Korea follows through on restarting its reprocessing plant -- the factory where plutonium is extracted from fuel rods -- that would be interpreted by its neighbors and the United States as a far more serious threat than any so far, South Korean and Western officials said. Though the United States has insisted that diplomacy is its favored means of resolving the crisis, a contrary course by North Korea would increase pressure on the Bush administration to consider a military response or at least threaten one, these sources said.

Extracting plutonium "really is crossing the red line," said Han Sung Joo, who served as South Korea's foreign minister during the outbreak of nuclear brinkmanship on the Korean Peninsula eight years ago. "If they go ahead and do that, that's really playing with fire."

Some 8,000 spent fuel rods are being stored in a cooling pond adjacent to the reactor, according to the IAEA. They contain enough plutonium to produce three to six nuclear weapons, said Shin Sung Taek, a nuclear expert at the Korea Institute for Defense Analyses, a research group in Seoul affiliated with the Defense Ministry. If North Korea restarted the reprocessing plant and began extracting plutonium from the fuel rods, it could manufacture those weapons in as little as five to nine months, Shin said.

The Yongbyon complex is 55 miles north of the North Korean capital, Pyongyang.

"This puts Washington at a crossroads," said Kim Tae Woo, an arms control expert at the Korea Institute for Defense Analyses. "They either need to heighten their level of threat to North Korea or come down to the table. This situation cannot be left to go on endlessly."

Given that South Korea and perhaps Japan fear they could be devastated by counterstrikes in any U.S. attack on North Korea, analysts have generally ruled out that option. But today's actions appear to have escalated the crisis. "The tension has risen to the degree where a military attack by the U.S. would not be inconceivable," said Tsutomu Nishioka, an analyst at the Modern Korea Institute in Tokyo.

The United States had assumed that North Korea would eventually resume its reprocessing operation, according to a Western diplomat who spoke on condition of anonymity. "All the signs are that they are moving beyond merely powering up and putting in good order" the reactor, "and they are in fact focusing on all the facilities at Yongbyon," the diplomat said today, before North Korea's announcements.

Still, he added that reviving the reprocessing plant would amount to "a very serious, serious development -- the most serious in a series of developments. Reprocessing is, in a certain sense, in a realm by itself. It is a step above and beyond." He declined to predict how the United States would respond to such an eventuality.

Arms control experts said such a course would almost certainly prompt the IAEA to file a complaint with the U.N. Security Council asserting that North Korea has violated its commitments under its agreement with the Clinton administration to abandon the development of nuclear weapons. The Security Council could then issue a warning or impose consequences ranging from economic sanctions to military force. An IAEA spokesman said the decision to take a complaint to the Security Council would be up to the agency's board of governors.

In a sign of the region's growing unease, South Korea's president-elect, Roh Moo Hyun, assailed North Korea's continued defiance, saying it jeopardized his ability to continue his country's "sunshine policy" of engagement after he takes office in February. Roh was elected on the strength of his calls to continue South Korea's moves toward reconciliation with North Korea.

"Whatever North Korea's rationale is in taking such actions, they are not beneficial to peace and stability on the Korean Peninsula and in Northeast Asia, nor are they helpful for its own safety and prosperity," Roh said in a statement.

Japan's foreign minister, Yoriko Kawaguchi, assailed North Korea's decision to expel the U.N. inspectors, saying it violated international agreements and raised "grave concerns" about nuclear nonproliferation. Japan's deputy cabinet secretary, Shinzo Abe, said North Korea "is playing an extremely dangerous game."

Today's actions were the latest outgrowth of the unraveling of the deal that settled the previous nuclear standoff on the Korean Peninsula. Under its terms, North Korea would abandon its nuclear aspirations and submit to continuous inspections in exchange for shipments of fuel from the United States and its allies. But following disclosures in October that North Korea had secretly pursued production of uranium-enriched nuclear weapons at another site, the Bush administration halted the aid. In response, North Korea began reactivating Yongbyon.

President Bush has flatly ruled out any dialogue unless North Korea first abandons its pursuit of nuclear weapons, not only at Yongbyon but also at the uranium-enrichment site. North Korea has refused such demands, saying it would consider such a step only if the United States proffers a guarantee of nonaggression.

Last weekend, North Korea began to resume activity at the reactor complex. First, it dismantled U.N. surveillance cameras while removing seals that had validated the continued closure of the facilities. Later, it said it would revive the reactor -- not to make weapons, it emphasized, but to produce electricity. That claim was pilloried by South Korea and the United States, which argue that weapons production is the only purpose of the reactor complex.

On Thursday, North Korea moved fuel rods into the area of the 5-megawatt reactor, the heart of the Yongbyon complex, in preparation for restarting it. And today it took steps to ensure that the world can no longer see what it is doing there.

While most continue to interpret these actions to be levers being pulled in a negotiation, some call that view naïve, noting that North Korea has genuine fears about U.S. intentions, particularly after Bush labeled it part of an "axis of evil" with Iran and Iraq.

"North Korea is intent on succeeding in making nuclear weapons," said Satoshi Morimoto, a national security expert at Takushoku University in Tokyo and a former Defense Agency official. "It's not just their diplomatic card. Once North Korea has nuclear weapons, or makes others believe that it does, the U.S. cannot attack."

North Korea's neighbors continue to try to persuade it to pull back from its nuclear brinkmanship, according to foreign diplomats. South Korea has been engaging the North through a series of such informal channels as an economic cooperation committee. Britain has communicated with North Korea through its embassy in Pyongyang, according to a British diplomat. China and Russia say they have been holding discussions as well.

Even the United States has been maintaining a "New York channel" with North Korea, according to a Western diplomat. North Korea's deputy ambassador to the United Nations holds regular conversations with the State Department's country director for Korea affairs, the diplomat said.

The United States has counted on other governments to pressure North Korea to pull back. The Bush administration views China as central to this effort. "The Chinese, in a certain sense, are the only game in town," said the Western diplomat. "They are the North Koreans' lifeline for food and fuel."

But today came the latest signs that the United States may not enjoy the support it needs. In Beijing, the official China Daily lashed out at Defense Secretary Donald H. Rumsfeld for comments this week in which he asserted the United States was prepared to wage successful wars in both Iraq and North Korea if necessary.

"This is a hawkish and dangerous warning," the English-language newspaper said. "It will poison the warming relations between the two sides on the Korean Peninsula."

Meanwhile, Russia accused the United States of sparking the crisis by halting fuel shipments to North Korea.

Special correspondents Sachiko Sachimaki and Akiko Kashiwagi in Tokyo contributed to this report.

Tuesday, December 10, 2002

Bush Nominates Snow As Treasury Secretary

By Mike Allen
Washington Post Staff Writer
Tuesday, December 10, 2002; Page A01

President Bush tried for a fresh start on a listless economy yesterday by nominating railroad executive John W. Snow for treasury secretary, with the mission of selling new tax cuts to voters and lawmakers.

The president nominated Snow, chairman and president of CSX Corp. of Richmond, three days after firing Treasury Secretary Paul H. O'Neill to make way for a more polished spokesman for measures designed to promote growth before the 2004 presidential campaign gets hot.

Bush hopes Snow, a Transportation Department official during the Ford administration who has spent the past 25 years in industry, will inspire confidence at a time when unemployment has risen and the value of stock portfolios has fallen. White House officials said they believe Snow, athletic and amiable, will be as disciplined as O'Neill was erratic in making Bush's case to Wall Street and Capitol Hill.

Bush had hoped to use yesterday's ceremony to present successors to both O'Neill and economic adviser Lawrence B. Lindsey, who also was forced out Friday. Lindsey's planned replacement, investment banker Stephen Friedman, has run into complications in the review of his financial holdings, and his nomination has been delayed.

Friedman, former co-chairman of Goldman Sachs, was supposed to be at Bush's side yesterday. But an official who last week put the chance of Friedman's nomination at 95 percent said yesterday it was 75 percent. "That situation is fluid," one aide said. A senior official said that scattered expressions of discontent from conservatives, who fear Friedman is not a sufficiently devout disciple of tax cuts, are not part of his problem.

Reflecting their view that Bush's handling of the economy is one of his vulnerabilities, Democrats made it clear they plan to give Snow no honeymoon and said they will use his Senate confirmation hearings to promote debate about Bush's stewardship of the economy in general and his tax cuts in particular.

Democratic strategists said they see the Finance Committee hearings as a chance to challenge Bush on the economy more clearly than they did during last month's elections. "They're plunging us back into deficits and dramatically increasing the national debt, and their only answer is to dig the hole deeper," said Sen. Kent Conrad (D-N.D.), a Finance Committee member and outgoing chairman of the Budget Committee.

Democrats, casting Snow as a new face promoting an old policy, said they would closely examine Snow's CSX compensation, about $20 million last year. "These are the kinds of things that can be said about any modern CEO," said Peter G. Peterson, who is chairman of the Federal Reserve Bank of New York and co-chairs with Snow a Conference Board commission examining corporate governance. "He's a decent, straightforward person, and if any CEO can get through the process today, he can."

Republicans said they will begin confirmation hearings shortly after the Senate convenes on Jan. 7, and said the hearings should take a few days. Snow will have to remain silent on administration policy until then. He made more than 20 courtesy calls to lawmakers yesterday.

Snow, 63, tried to dispatch one controversy right away by saying he would resign his membership in the Augusta National Golf Club, which does not admit women. Snow made the decision even though White House press secretary Ari Fleischer said Bush "does not judge that to be a disqualifying factor" for a Cabinet nominee.

A White House official said Bush will try to preempt criticism of Snow with a series of events designed to build support for a new economic stimulus package in the weeks before the State of the Union address in late January. "We have the bigger microphone," the official said.

Aides said that shortly after Jan. 1, Bush will announce proposals that could cost at least $300 billion over 10 years. Components are likely to include an extension and acceleration of last year's $1.35 trillion, 10-year tax cut, plus new incentives for investors, such as reducing the tax on dividends. Bush said he will be "proposing specific steps to increase the momentum of our economic recovery, and the Treasury secretary will be at the center of this effort."

"John returns to public service at an important moment for our economy," Bush said. "This economy is strong, and we can make it stronger. I'm eager for the task, and so is our next secretary of the Treasury."

Bush declared that many Americans "have very little money left over after taxes" and that some parts of the nation "are experiencing persistent unemployment."

"Some struggle under a weight of debt that makes it difficult to save for retirement," he said. "Investor confidence needs to be strengthened in practical ways."

That was an unusually bleak description for Bush, who usually emphasizes bright spots in statistics while acknowledging that the recovery could be steadier. But aides said the overhaul of Bush's economic team was designed to show he recognizes problems and is determined to be as aggressive in handling the economy as he has been in running the war on terrorism.

Snow, who in the past has emphasized balancing the budget instead of cutting taxes, took the microphone and said he shares Bush's view, often expressed in campaign speeches, "that we cannot be satisfied until everyone -- every single person who is unemployed and seeking a job -- has an opportunity to work."

Mentioning an aspect of the job that Bush omitted, Snow said he understands "the importance of working closely with other countries to build and maintain a prosperous, growing and stable global economy as we successfully prosecute the war on terror."

"I pledge to you to use all my talents, my power, my energy and my ability to strengthen the current economic recovery and create an environment where millions of job creators . . . will grow and prosper," Snow said.

White House officials said they approached Snow several weeks ago as a possible successor to Harvey L. Pitt as chairman of the Securities and Exchange Commission. Members of Bush's inner circle, including Vice President Cheney, liked Snow so much that they decided to make him the leader of the economic team. The deal was sealed with a call from Bush on Friday night, after O'Neill angrily tendered his resignation.

O'Neill is the first member of Bush's Cabinet to be replaced. He was in his office next to the White House yesterday, but was conspicuously absent from the ceremony, where Bush said O'Neill and Lindsey "share credit for an historic tax relief and other economic policies that moved our economy from recession to growth."

Lindsey sat in the front row, next to Commerce Secretary Donald L. Evans. Asked if O'Neill had been invited, a White House official said, "Secretary O'Neill was told of the event well before it took place and he did not express an interest in attending."

Wednesday, December 04, 2002

Kerry Blasts Bush's Tax Cuts, Offers Own Plan

By Dan Balz
Washington Post Staff Writer
Wednesday, December 4, 2002; Page A04

Likely Democratic presidential candidate John F. Kerry yesterday slammed President Bush's tax cuts as "unfair, unaffordable and unquestionably ineffective" and said the best way to stimulate the sluggish economy is by shelving most future installments of the president's plan in favor of immediate payroll tax relief for all working Americans.

The Massachusetts senator, in a speech at the City Club of Cleveland, charged that Bush's economic priorities represent "tax giveaways that reward" wealthy Americans and big corporations at the expense of middle-class workers and small businesses. "The hard fact is that the new tax cuts proposed by the president don't make economic sense, and they're not fair," Kerry said, according to the text that was released in Washington.

In the speech, Kerry sketched out a broad economic blueprint for the country that calls for a series of short-term actions to invigorate the economy and longer-term measures, including tax simplification and closing corporate tax loopholes, that he said will restore fairness to the system.

Arguing that Bush's policies have turned "fiscal responsibility on its head," Kerry said the return of deficit spending in Washington means that "the largest cost of the Bush tax giveaway . . . will be paid for by our children" because of the need to borrow from Social Security and Medicare to pay the government's bills.

Although Democratic leaders avoided the issue of Bush's tax cuts during the midterm elections, a number of the party's prospective presidential candidates are on record opposing full implementation of that plan, particularly the income tax rate cuts aimed at the wealthiest taxpayers and the repeal of the estate tax.

But Kerry is the first of the presidential field to call for payroll tax relief, an idea both Robert Reich, the liberal former labor secretary in the Clinton administration, and the Business Roundtable have recently embraced.

Kerry called for a one-year holiday on payroll tax payments for the first $10,000 in income, which he said would mean a $765 tax cut for every worker, or $1,530 for a two-income family. Spokesman David Wade estimated the cost of the tax relief at $100 billion and said Kerry would pay for it from general revenue, not Social Security funds.

White House spokesman Scott McClellan tried to brush aside Kerry's criticisms of the administration, saying Democrats are "trying to resolve differences within their own party" on tax policy. He would not address Kerry's argument that payroll tax relief would provide quicker stimulus and more equitable distribution of future cuts than the remaining installments in the president's plan.

Other Kerry proposals for short-term stimulus include an extension of unemployment benefits due to run out at the end of the year for 820,000 families, an increase in the minimum wage and an expansion of the earned income tax credit for low-income working families. Kerry also recommended a tax credit to reward job creation, the elimination of capital gains taxes for what he called "investments in critical technology companies" and elimination of double taxation on dividends.

Longer term, Kerry said that eliminating offshore tax havens, corporate tax shelters and "corporate welfare" will ensure a tax code that is fair to all Americans. He also said he supports job training assistance for dislocated workers and "empowerment accounts" for low-income Americans.

Kerry's proposed tax cuts and criticism of wasteful corporate subsidies appeared to be an effort to head off Republican criticism that Democrats opposed to future phases of Bush's tax cuts actually favor raising taxes.

On Sunday, Kerry announced that he will file a presidential exploratory committee this week, with a formal declaration of candidacy likely in the coming months. He became the second Democrat, after Vermont Gov. Howard Dean, to take a formal step toward running in 2004.

Former vice president Al Gore, outgoing House Minority Leader Richard A. Gephardt (Mo.), Senate Democratic leader Thomas A. Daschle (S.D.) and Sens. Joseph I. Lieberman (Conn.) and John Edwards (N.C.) are expected to make decisions about whether to run by early in the new year. Civil rights activist Al Sharpton of New York also has said he will seek the Democratic nomination.