posted 02-12-2004 02:42 PM            

London Guardian May 9 2003

2000: director of a company which wins $200m contract to sell nuclear reactors to North Korea

2002: declares North Korea a terrorist state, part of the axis of evil and a target for regime change.

Donald Rumsfeld, the US defence secretary, sat on the board of a company which three years ago sold two light water nuclear reactors to North Korea - a country he now regards as part of the "axis of evil" and which has been targeted for regime change by Washington because of its efforts to build nuclear weapons.

Mr Rumsfeld was a non-executive director of ABB, a European engineering giant based in Zurich, when it won a $200m (£125m) contract to provide the design and key components for the reactors. The current defence secretary sat on the board from 1990 to 2001, earning $190,000 a year. He left to join the Bush administration.

The reactor deal was part of President Bill Clinton's policy of persuading the North Korean regime to positively engage with the west.

The sale of the nuclear technology was a high-profile contract. ABB's then chief executive, Goran Lindahl, visited North Korea in November 1999 to announce ABB's "wide-ranging, long-term cooperation agreement" with the communist government.

The company also opened an office in the country's capital, Pyongyang, and the deal was signed a year later in 2000. Despite this, Mr Rumsfeld's office said that the de fence secretary did not "recall it being brought before the board at any time".

In a statement to the American magazine Newsweek, his spokeswoman Victoria Clarke said that there "was no vote on this". A spokesman for ABB told the Guardian yesterday that "board members were informed about the project which would deliver systems and equipment for light water reactors".

Just months after Mr Rumsfeld took office, President George Bush ended the policy of engagement and negotiation pursued by Mr Clinton, saying he did not trust North Korea, and pulled the plug on diplomacy. Pyongyang warned that it would respond by building nuclear missiles. A review of American policy was announced and the bilateral confidence building steps, key to Mr Clinton's policy of detente, halted.

By January 2002, the Bush administration had placed North Korea in the "axis of evil" alongside Iraq and Iran. If there was any doubt about how the White House felt about North Korea this was dispelled by Mr Bush, who told the Washington Post last year: "I loathe [North Korea's leader] Kim Jong-il."

The success of campaigns in Afghanistan and Iraq have enhanced the status of Mr Rumsfeld in Washington. Two years after leaving ABB, Mr Rumsfeld now considers North Korea a "terrorist regime _ teetering on the verge of collapse" and which is on the verge of becoming a proliferator of nuclear weapons. During a bout of diplomatic activity over Christmas he warned that the US could fight two wars at once - a reference to the forthcoming conflict with Iraq. After Baghdad fell, Mr Rumsfeld said Pyongyang should draw the "appropriate lesson".

Critics of the administration's bellicose language on North Korea say that the problem was not that Mr Rumsfeld supported the Clinton-inspired diplomacy and the ABB deal but that he did not "speak up against it". "One could draw the conclusion that economic and personal interests took precedent over non-proliferation," said Steve LaMontagne, an analyst with the Centre for Arms Control and Non-Proliferation in Washington.

Many members of the Bush administration are on record as opposing Mr Clinton's plans, saying that weapons-grade nuclear material could be extracted from the type of light water reactors that ABB sold. Mr Rumsfeld's deputy, Paul Wolfowitz, and the state department's number two diplomat, Richard Armitage, both opposed the deal as did the Republican presidential candidate, Bob Dole, whose campaign Mr Rumsfeld ran and where he also acted as defence adviser.
One unnamed ABB board director told Fortune magazine that Mr Rumsfeld was involved in lobbying his hawkish friends on behalf of ABB.

The Clinton package sought to defuse tensions on the Ko rean peninsula by offering supplies of oil and new light water nuclear reactors in return for access by inspectors to Pyongyang's atomic facilities and a dismantling of its heavy water reactors which produce weapons grade plutonium. Light water reactors are known as "proliferation-resistant" but, in the words of one expert, they are not "proliferation-proof".

The type of reactors involved in the ABB deal produce plutonium which needs refining before it can be weaponised. One US congressman and critic of the North Korean regime described the reactors as "nuclear bomb factories".

North Korea expelled the inspectors last year and withdrew from the nuclear non-proliferation treaty in January at about the same time that the Bush administration authorised $3.5m to keep ABB's reactor project going.

North Korea is thought to have offered to scrap its nuclear facilities and missile pro gramme and to allow international nuclear inspectors into the country. But Pyongyang demanded that security guarantees and aid from the US must come first.

posted 02-12-2004 02:43 PM            

Fortune Magazine April 28 2003

What did Donald Rumsfeld know about ABB's deal to build nuclear reactors there? And why won't he talk about it?

Defense Secretary Donald Rumsfeld rarely keeps his opinions to himself. He tends not to compromise with his enemies. And he clearly disdains the communist regime in North Korea. So it's surprising that there is no clear public record of his views on the controversial 1994 deal in which the U.S. agreed to provide North Korea with two light-water nuclear reactors in exchange for Pyongyang ending its nuclear weapons program. What's even more surprising about Rumsfeld's silence is that he sat on the board of the company that won a $200 million contract to provide the design and key components for the reactors.
The company is Zurich-based engineering giant ABB, which signed the contract in early 2000, well before Rumsfeld gave up his board seat and joined the Bush administration. Rumsfeld, the only American director on the ABB board from 1990 to early 2001, has never acknowledged that he knew the company was competing for the nuclear contract. Nor could FORTUNE find any public reference to what he thought about the project. In response to questions about his role in the reactor deal, the Defense Secretary's spokeswoman Victoria Clarke told Newsweek in February that "there was no vote on this" and that her boss "does not recall it being brought before the board at any time."

Rumsfeld declined requests by FORTUNE to elaborate on his role. But ABB spokesman Bjoern Edlund has told FORTUNE that "board members were informed about this project." And other ABB officials say there is no way such a large and high-stakes project, involving complex questions of liability, would not have come to the attention of the board. "A written summary would probably have gone to the board before the deal was signed," says Robert Newman, a former president of ABB's U.S. nuclear division who spearheaded the project. "I'm sure they were aware."

FORTUNE contacted 15 ABB board members who served at the time the company was bidding for the Pyongyang contract, and all but one declined to comment. That director, who asked not to be identified, says he's convinced that ABB's chairman at the time, Percy Barnevik, told the board about the reactor project in the mid-1990s. "This was a major thing for ABB," the former director says, "and extensive political lobbying was done."

The director recalls being told that Rumsfeld was asked "to lobby in Washington" on ABB's behalf in the mid-1990s because a rival American company had complained about a foreign-owned firm getting the work. Although he couldn't provide details, Goran Lundberg, who ran ABB's power-generation business until 1995, says he's "pretty sure that at some point Don was involved," since it was not unusual to seek help from board members "when we needed contacts with the U.S. government." Other former top executives don't recall Rumsfeld's involvement.

Today Rumsfeld, riding high after the Iraq war, is reportedly discussing a plan for "regime change" in North Korea. But his silence about the nuclear reactors raises questions about what he did--or didn't do--as an ABB director. There is no evidence that Rumsfeld, who took a keen interest in the company's nuclear business and attended most board meetings, made his views about the project known to other ABB officials. He certainly never made them public, even though the deal was criticized by many people close to Rumsfeld, who said weapons-grade nuclear material could be extracted from light-water reactors. Paul Wolfowitz, James Lilley, and Richard Armitage, all Rumsfeld allies, are on record opposing the deal. So is former presidential candidate Bob Dole, for whom Rumsfeld served as campaign manager and chief defense advisor. And Henry Sokolski, whose think tank received funding from a foundation on whose board Rumsfeld sat, has been one of the most vocal opponents of the 1994 agreement.

One clue to Rumsfeld's views: a Heritage Foundation speech in March 1998. Although he did not mention the light-water reactors, Rumsfeld said the 1994 Agreed Framework with North Korea "does not end its nuclear menace; it merely postpones the reckoning, with no assurance that we will know how much bomb-capable material North Korea has." A search of numerous databases found no press references at the time, or throughout the 1990s, noting Rumsfeld was a director of the company building the reactors. And Rumsfeld didn't bring it up either.

ABB, which was already building eight nuclear reactors in South Korea, had an inside track on the $4 billion U.S.-sponsored North Korea project. The firm was told "our participation is essential," recalls Frank Murray, project manager for the reactors. (He plays the same role now at Westinghouse, which was acquired by Britain's BNFL in 1999, a year before it also bought ABB's nuclear power business.) The North Korean reactors are being primarily funded by South Korean and Japanese export-import banks and supervised by KEDO, a consortium based in New York. "It was not a matter of favoritism," says Desaix Anderson, who ran KEDO from 1997 to 2001. "It was just a practical matter."

Even so, ABB tried to keep its involvement hush-hush. In a 1995 letter from ABB to the Department of Energy obtained by FORTUNE, the firm requested authorization to release technology to the North Koreans, then asked that the seemingly innocuous one-page letter be withheld from public disclosure. "Everything was held close to the vest for some reason," says Ronald Kurtz, ABB's U.S. spokesman. "It wasn't as public as contracts of this magnitude typically are."

However discreet ABB tried to be about the project, Kurtz and other company insiders say the board had to have known about it. Newman, the former ABB executive, says a written summary of the risk review would probably have gone to Barnevik. Barnevik didn't return FORTUNE's phone calls, but Newman's Zurich-based boss, Howard Pierce, says Rumsfeld "was on the board--so I can only assume he was aware of it."

By all accounts Rumsfeld was a hands-on director. Dick Slember, who once ran ABB's global nuclear business, says Rumsfeld often called to talk about issues involving nuclear proliferation, and that it was difficult to "get him pointed in the right direction." Pierce, who recalls Rumsfeld visiting China to help ABB get nuclear contracts, says, "Once he got an idea, it was tough to change his mind. You really had to work your ass off to turn him around." Shelby Brewer, a former head of ABB's nuclear business in the U.S., recalls meetings with Rumsfeld at the division's headquarters in Connecticut. "I found him enchanting and brilliant," he says. "He would cut through Europeans' bullshit like a hot knife through butter."

posted 02-12-2004 02:44 PM            

Swiss Info February 24 2003

Donald Rumsfeld, the US secretary of defense, was on the board of technology giant ABB when it won a deal to supply North Korea with two nuclear power plants.

Weapons experts say waste material from the two reactors could be used for so-called "dirty bombs".

The Swiss-based ABB on Friday told swissinfo that Rumsfeld was involved with the company in early 2000, when it netted a $200 million (SFr270million) contract with Pyongyang.

The ABB contract was to deliver equipment and services for two nuclear power stations at Kumho, on North Korea's east coast.

Rumsfeld - who is one of the Bush administration's most strident "hardliners" on North Korea - was a member of ABB's board between 1990 and February 2001, when he left to take up his current post.

Wolfram Eberhardt, a spokesman for ABB, told swissinfo that Rumsfeld "was at nearly all the board meetings" during his decade-long involvement with the company.

Maybe, maybe not

However, he declined to indicate whether Rumsfeld was made aware of the nuclear contract with North Korea.

"This is a good question, but I couldn't comment on that because we never disclose the protocols of the board meetings," Eberhardt said.

"Maybe this was a discussion point of the board, maybe not."

The defense secretary's role at ABB during the late 1990s has become a bone of contention in Washington.

The ABB contract was a consequence of a 1994 deal between the US and Pyongyang to allow construction of two reactors in exchange for a freeze on the North's nuclear weapons programme.

North Korea revealed last year that it had secretly continued its nuclear weapons programme, despite its obligations under the deal with Washington.

The Bush government has repeatedly used the agreement to criticise the former Clinton administration for being too soft on North Korea. Rumsfeld's deputy, Paul Wolfowitz, has been among the most vocal critics of the 1994 weapons accord.

Dirty bombs

Weapons experts have also speculated that waste material from the two reactors could be used for so-called "dirty bombs".

Rumsfeld's position at ABB could prove embarrassing for the Bush administration since while he was a director he was also active on issues of weapons proliferation, chairing the 1998 congressional Ballistic Missile Threat commission.

The commission suggested the Clinton-era deal with Pyongyang gave too much away because "North Korea maintains an active weapons of mass destruction programme, including a nuclear weapons programme".

From Zurich to Pyongyang

At the same time, Rumsfeld was travelling to Zurich for ABB's quarterly board-meetings.

Eberhardt said it was possible that the North Korea deal never crossed the ABB boardroom desk.

"At the time, we generated a lot of big orders in the power generation business [worth] around $1 billion…[so] a $200 million contract was, so to speak, a smaller one."

When asked whether a deal with a country such as North Korea - a communist state with declared nuclear intentions - should have been brought to the ABB board's attention, Eberhardt told swissinfo:

"Yes, maybe. But so far we haven't any evidence for that because the protocols were never disclosed. So maybe it was a discussion point, maybe not," says Eberhardt.

A Pentagon spokeswoman, Victoria Clark, recently told "Newsweek" magazine that "Secretary Rumsfeld does not recall it being brought before the board at any time".

It was a long time ago

Today, ABB says it no longer has any involvement with the North Korean power plants, due to come on line in 2007 and 2008.

posted 02-12-2004 02:45 PM            

Bloomberg January 17 2003

President George W. Bush is seeking $3.5 million for the international consortium that continues to build two nuclear reactors for North Korea, even as the U.S. confronts the communist regime over nuclear arms.

The funding, which must be approved by Congress, would go toward the New York-based Korean Peninsula Energy Development Organization's administrative funding, State Department spokesman Richard Boucher said. The money wouldn't fund reactor construction, he said.

``We're not prejudging the decisions on the organization's future,'' Boucher told reporters. ``Proposals for funds are intended to maintain the flexibility we need to achieve our global nonproliferation goals.''

The sum is the U.S. share of KEDO's $17 million operating budget, including its 40 workers in New York and eight in North Korea, KEDO spokesman Brian Kremer said. As many as 1,500 construction workers remain in Kumho, in northeastern North Korea, pouring the concrete foundations for the reactors, which won't be completed for several years, he said.

The 1994 Agreed Framework created the organization, committing the U.S., Japan and South Korea to build the reactors and deliver enough fuel oil for North Korea's energy needs until the facilities were ready. South Korea is paying for most of the reactor project.

In exchange, North Korea would scrap reactors tied to a nuclear arms effort and allow international inspectors to verify compliance. Two new 1,000-megawatt, light-water reactors, valued at $4.6 billion, would provide enough power to light 2 million U.S. homes, or about 20 percent of North Korea's energy.

The pledge shows the U.S. is still pursuing its commitments to North Korea even as the two countries are squaring off over U.S. allegations North Korea essentially annulled the agreement by covertly enriching uranium for weapons use.

Inspectors Sent Home

North Korea sent home two International Atomic Energy Agency officials who were monitoring the country's compliance with the agreement and withdrew from the Nuclear Nonproliferation Treaty.

This week North Korea reacted angrily to U.S. offers to resume dialogue if the regime abandons its nuclear weapons program, alleging the Bush administration is threatening war.

posted 02-12-2004 02:47 PM            

Newsmax October 19 2002

Light water nuclear reactors provided to North Korea under a 1994 deal negotiated by the Clinton administration have the capacity to generate enough nuclear fuel to produce
almost 100 nuclear bombs per year, a 1999congressional study warned.

The study was undertaken by the House North Korea Advisory Group, chaired by Rep. Benjamin A. Gilman, R-N.Y. Members of the panel included Rep. Doug Bereuter, R-Neb., then chairman of the Subcommittee on Asia and the Pacific, Rep. Porter J. Goss, R-Fla., chairman of Permanent Select Committee on Intelligence, and Christopher Cox, R-Calif., then chairman of the Republican Policy Committee.

In its November 1999 report to the speaker of the House, the Advisory Group sounded the alarm about North Korea's nuclear weapons program, cautioning that the "Agreed Framework" that President Clinton had promised would derail Pyongyang's nuclear weapons program had backfired.

"Through the provision of two light water reactors [LWRs] under the 1994 Agreed Framework, the United States, through KEDO, will provide North Korea with the capacity to produce annually enough fissile material for nearly 100 nuclear bombs, should the Democratic People's Republic of Korea [DPRK] decide to violate the Nonproliferation Treaty [NPT]," the Advisory Group warned.

The report explained:

"If the 1994 Agreed Framework is implemented and two LWRs are eventually built and operated in North Korea, the reactors could produce close to 500 kilograms of plutonium in spent reactor fuel each year; enough for nearly 100 bombs annually if North Korea decides to break its obligations and reprocess the material."

Officials in Pyonyang acknowledged this week that North Korea had indeed broken its obligations under the Clinton accord and are now rapidly proceeding with a full-blown nuclear weapons program.

The Advisory Group further cautioned:

"Although the 1994 Agreed Framework was essentially aimed at eliminating North Korea's ability to make nuclear weapons, there is significant evidence that nuclear weapons development is continuing, including its efforts to acquire uranium enrichment technologies and its nuclear-related high explosive tests."

In one of the Advisory Group's most chilling observations, the report warned that since the implementation of the Clinton accord, North Korea had made significant progress in developing an intercontinental ballistic missile fleet capable of targeting the U.S. with weapons of mass destruction:

"In the last five years, North Korea's missile capabilities have improved dramatically. North Korea has produced, deployed and exported missiles to Iran and Pakistan, launched a three-stage missile [Taepo Dong 1], and continues to develop a larger and more powerful missile [Taepo Dong 2].

"Unlike five years ago, North Korea can now strike the United States with a missile that could deliver high explosive, chemical, biological, or possibly nuclear weapons. Currently, the United States is unable to defend against this threat."

The report also features a bar graph that shows a direct correlation between increases in Clinton administration aid and North Korea's enhanced ICBM capacity.

The Advisory group also contended that the "Agreed Framework" had made North Korea "the largest recipient of U.S. foreign aid in the Asia-Pacific region."

"In an astonishing reversal of nine previous U.S. administrations, the Clinton-Gore administration, in 1994, committed not only to provide foreign aid for North Korea, but to earmark that aid primarily for the construction of nuclear reactors worth up to $6 billion," the House report noted.

To read the full Speaker's Report by the House North Korean Advisory Group, go to: http://www.house.gov/international_relations/nkag/report.htm