How the South Korean Energy Program Has Been Saving the U.S. Nuclear Industry

Hundreds of diplomatic cables, recently acquired under the Freedom of Information Act, reveal how the U.S. government threw its full weight behind nuclear reactor exports to south Korea-all for the benefit of Westinghouse Electric Corporation.

Westinghouse has been involved in south Korea's nuclear program since it built the country's first research reactor in 1962. At that time, south Korea-like other third world countries in the U.S. orbit-was under strong pressure to buy nuclear technology as a part of the "Atoms for Peace" program.

But it was not until south Korea embarked on an export-led industrialization in the mid-1960's that U.S. pressure led south Korea to pursue nuclear power as a major energy source.

In 1965, the U.S. Agency for International Development, which was lending large amounts of money to the south Korean government, recommended the consideration of nuclear power "whenever KECO's (Korea Electric Company-the government-owned utility) electricity supply system becomes large enough" for high megawatt plants. Two years later, the south Korean government drafted a plan for two 500 MW reactors to be in operation by 1976.

The Role of the State Bar

Shortly after the Korean government announced it would buy nuclear power plants, the U.S. embassy in Seoul swung into action. In April, 1968, the U.S. ambassador, William Porter, cabled the State Department with the message that "from various standpoints it appears in the U.S.G. (government) interest that U.S. participate in this project. Recommend urgent policy determination."

The ambassador listed the advantages to U.S. participation in the nuclear program of south Korea: "A. Direct commercial benefits to U.S. companies. B. High additionality of supplying fuel. C. U.S. prestige as leader in developing peaceful use of nuclear energy. D. Visible monument to U.S. assistance program in Korea."

From 1968 on, Westinghouse looked to the U.S. government's ExportImport Bank (Exim) for funding-and to the U.S. embassy in Korea for help in persuading Exim to make the loans. "Westinghouse rep called on Ambassador," reads one cable, "and mentioned possibility of Westinghouse arranging international consortium of Westinghouse licensees, with Eximbank financing U.S. reactor." ("Westinghouse licensees" means company subsidiaries-this cable suggests Westinghouse sought Exim funding to help sales from numerous of its worldwide plants.)

Initially, the bank was reluctant, worried by the size of the loans Westinghouse was requesting and by the weakness of south Korea's economy.

A high-level lobbying campaign by Westinghouse and the State Department turned Exim around, however. The embassy cabled Washington in September, 1968 with the good news: "Eximbank believes it is stretching lending concept to limit by including nuclear power plants but prepared to do so in view of importance to U.S. of installing American reactor."

The U.S. government then threatened to punish south Korea if it didn't award the nuclear contract to Westinghouse. William Rogers, U. S. Secretary of State, cabled the embassy in July, 1969 to "notify informally responsible ROKG (Republic of Korea Government) officials that Eximbank does not intend to allocate equivalent resources to other projects if nuclear power plant contract is awarded to non-U.S. supplier."

Threatened by a possible cut-off of vital capital goods, the Korean government awarded the first of its many nuclear plant contracts to Westinghouse.

The president of Westinghouse, J. Decubas, was delighted. In a letter to Henry Kearns, then president of Exim, Decubas expressed his gratitude to Exim: "The support of ExportImport Bank has been of the greatest importance to U.S. industry in the export sales of nuclear power plants," wrote Decubas in his letter dated May 13, 1969. "This has been particularly true in the case of Korea because it was the initial statement of interest by the bank last October which encouraged Korea to award the 600 MW Kori nuclear project to Westinghouse."

Even with Exim's financial support, Westinghouse still ran into funding problems due to cost overruns. Once again Westinghouse used the State Department to pressure south Korea to help out the U.S. company. Informed of the funding problem by Westinghouse, the State Department cabled Seoul: "Believe sale of U.S. manufactured nuclear power plant in Korea would have very important `demonstration effect' in opening up U.S. export markets for similar equipment in neighbouring countries of East Asia area. .. would therefore appreciate Mission's assistance to Westinghouse's Kreuthmeier in having issue resolved at higher level in ROKG if KECO unable to get requirement included in ROKG budget."

The Westinghouse-U.S. dominance began to weaken after the company received its second contract. Canada in 1975 was awarded contracts for plant #3 and #4. With U.S. forces committed to pulling out of Indochina, the Park government feared the abandonment of south Korea by the U.S. and looked elsewhere for commercial support.

Concerned about an independent nuclear weapons program in Korea, the U.S. began to increase the pressure on Korea to buy American. Westinghouse secured the next four contracts for Korean reactors. Of these, the order for nuclear plants #7 and #8 saw perhaps the most intense lobbying campaign of any nuclear contract in history.

High government officials from France, Germany, and the United States streamed to Seoul to lobby on behalf of their respective companies: Framatone, Kraftwerk, and Westinghouse. In June, 1979, President Jimmy Carter and Secretary of State Cyrus Vance paid a visit to Park Chung Hee - a man Carter had criticized as a tyrant only three years before. The reactor contracts were a major item of business.

The U.S. embassy was also pressing hard on the Korean government to favor Westinghouse, as the following cable of November, 1979 illustrates. "Jones (an embassy official) raised nuclear power plants #7 and #8 during call on DPM (Deputy Prime Minister) and Minister of Commerce and Industry ... we have done everything here to make sure that ROKG is aware of the importance we attach to these projects."

Westinghouse was awarded the contracts in September, 1979.

By this time, south Korea was in an economic and political crisis. Public opposition to continued military rule built up through the spring of 1980 , (after Park's assassination), and U.S. ' investments and the flow of foreign capital looked increasingly threatened. Labor unrest erupted, and hundreds of thousands of students took to the streets in May protesting against the military government. On May 27 in Kwangju, capital city of a southern province, between 2,000 and 3,000 people were killed when Korean troops - who were ultimately under U.S. command - put down the uprising in the city.

One week later, on June 5, 1980, Carter sent Eximbank president John Moore to Seoul. According to an embassy commercial attach�, interviewed in 1981, Moore's trip was vital. "It ensured the Korean government that support would continue." It also gave Westinghouse another boost. "We reviewed previous commitments and lobbied for American sales for plants #9 and #10," the embassy official said.

Westinghouse has been well served by the U.S. government in South Korea. Each of its six reactor contracts is worth at least $1 billion. Financing for these reactors has come largely from the Eximbank. Over the years, Exim has lent a total of $3.6 billion for projects in south Korea, $2.5 billion of which went for Westinghouse's nuclear contracts. Still, sales might not have gone through for Westinghouse if the U.S. embassy in Seoul hadn't pressed the Korean government so hard.

When asked about Westinghouse's relationship with the U.S. embassy in Seoul, one Westinghouse executive told us, "that's been the greatest embassy of all the embassies around the world in supporting businesses."

Tim Shorrock is a researcher with Nautilus Pacific Asia Research Center, a San Francisco-based public interest group.

U.S. embassy's corporate spying Diplomatic cables obtained by Nautilus Pacific Action Research Center show that the U.S. embassy in Seoul passed on corporate intelligence to several U.S. companies. A 1968 cable, for instance, from U.S. ambassador William Porter to the State Department reads: "Korea Electric Co. recently received letter dated August 12 from Nuclear Power Group, Ltd, Cheshire, England, stating readiness to offer, finance and supply complete nuclear power plant of 600 to 625 MW on I, turnkey basis ...U.K. firm offered send top level team around September 5 prepared negotiate contract. .. Embassy suggests that above information re. nuclear power group offer be passed to, I.G.E., Westinghouse, and Combusion Engineering Corp." The British never did get a contract in South Korea.

Koreans Kept in the Dark In their rush to expand industry in the 1970s, the south Korean government and its corporate supporters have given little attention to questions of safety and pollution. A 1978 private study by the New York-based A.D. Little Company stated that pollution standards in south Korea are "virtually non-existent" and "resisted" by KECO. "Meeting the demand for electric power takes precedence over environmental and regulatory issues in Korea," the study concluded. These problems are compounded because of the south Korean government's control over the news media and its suppression of criticism and dissent. A 1980 World. Bank report mentioned this: "Public opposition to nuclear power [in south Korea] is non-existent; however, it is not clear that the acceptance may not just be a result of the public not having been given the entire risk-benefit picture." A nuclear accident in south Korea could be a catastrophe. Three million people live within a 20-mile radius of the Kori nuclear site, where Westinghouse will have built four reactors by 1990. Kori I has already had difficulties. Prior to its opening in 1978, inspectors found that the reactor's condensers had been eroded by sea water, and much of the reactor's piping had to be replaced. Last year, several south Korean activists told this writer that nuclear power was a major concern for the movement: But they added, "our number one concern here is restoring democracy and creating the atmosphere to discuss other problems like reunification and nuclear power. Until we have democracy there is nothing we can do about it."