Saturday, March 03, 2007

The Price of Diplomacy with the DPRK: $13.4 million

I came across a post on by Tim Colligan that, though dated, was pretty interesting because it provided some very granular detail on an aspect of the deal reached with North Korea via the 6PT. (Note: he references a scholar from the Nautilus Institute in his post.)

In exchange for shutting down its main Yongbyon nuclear site, the 6 parties have agreed to provide the North with 50,000 tons of "heavy fuel oil" (HFO). I'm guessing that like most folks, I read this, nodded, and thought "Oil=energy. Oil not nuclear. Oil substitute for nuclear energy. Spring training starts soon. I hate the Yankees." (A window into my brain...just being honest.)

Well, it turns out that HFO is:
  • The cheapest grade of oil available
  • Full of carbon residue, sulfur, and other pollutants (HFO is literally the sludge left over after other petroleum products are made)
  • Incredibly inefficient despite being full of potential energy (it's extremely difficult to use & process)
  • So high in sulfur that it actually degrades the Soviet-era power plants in the DPRK that are processing it (they're designed to process coal)

It's a favorite of donors, apparently, because it's extremely difficult to turn HFO into just about any other product (for example military use petroleum products).

The Slate post notes that, based on historical figures for energy use in the DPRK, the initial shipment of 50,000 gallons of HFO might account for less than one quarter of one percent of the DPRK's energy needs.

This brings me to my question. That being the case, can we really say the HFO shipment was about North Korea's energy needs? Does this imply it might be mostly symbolic in nature? So...$13.4 million just to get the ball rolling. (And that doesn't include weeks of hotel expenses at the St. Regis in Beijing...which is pretty frickin' sweet, let me tell ya.) Worth it? Not that I'm a proponent of the "Kim as mafia boss" view, but when put in this light, it seems the shoe kind of fits here.

Note: Work on my paper has stopped. In light of the above, I'm now going nuclear. If Kim can get $13 big ones just to get the ball rolling, think I can get $5 mill to give 'em up completely? Cross your fingers. If so, the kimchi's on me.


Sean said...

13 mil actually doesn't seem that bad. I was actually expecting worse in light of how much it took to purchase the Kim-Kim summit. You might feel better if you remind yourself that the left side of the Yankees infield makes about 45 mil this year (although I think the Rangers pick up 13 or 18 of A-Rod's deal)

Eric said...

I want to point out that the agreement is for 50,000 and 950,000 tons of HFO or equivalent in energy aid.

This language is deliberately vague, so as to allow us to decide how we will deliver the second half of the deal, if they live up to the terms of the first segment. We could give them anything we want really, and since it's out in the open already, I can point out that NK may not be physically able to recieve, store, and process 1 million tons of HFO due to infrastructure.

I doubt very much that we will deliver anything to them that is liquid (in the figurative sense, not the matter state sense), such as $USD or refined petroleum - just as Slate says - because of diversion to military uses, or it being sold for KJI slush funds.

If the entire deal is worth somewhere between $300-$500 million, I'd say you're on the right track in stopping work on the paper and putting all efforts on becoming a nuclear power Jap Chae. If the North Koreans can make it work, a GWU student should be able to as well!

Grace said...

I agree with Eric that the language was intentionally left vague as to allow room for diplomatic fudging. As bilateral negotiations between Christopher Hill and the DPRK Vice Foreign Minister have started in NYC, it should be interesting to see what the final deal hammered out will look like.

Haha, as for going nuclear, in that case Larry you can get me a kimchee fridge AND a lifetime supply of kimchee! ^_^