North Korean Economy Watch

Institute for Far Eastern Studies
NK Brief No. 07-8-29-1

A Chinese manufacturer of artificial fingernails has become the first non-Korean business to set up shop in the Kaesong Industrial Complex. The (South) Korea Land Corporation announced that on August 27, a contract for entry into the Kaesong Industrial Complex was concluded with Dashing Diva, the South Korean subsidiary of Tianjin Jci Cosmetic, which had applied for a plot in the 1st stage of the KIC. Another firm, a plywood manufacturer located in Linyi, a city in China’s Shandong province and the hub of the country’s lumber industry, is preparing to close a contract for a 2000 square meter plot by the end of August.

In order to enhance the global image of the KIC, six plots in the first stage of the complex, designed to house small and medium-sized manufacturers, have been slated specifically for foreign manufacturers. In the event a foreign enterprise wishes to do business in the KIC, it must have a South Korean subsidiary with which a land development contract can be drawn. However, when applications were solicited last June, not a single company showed interest, so the lots were offered contract ad libitum beginning at the end of July.

In addition to these Chinese companies, representatives of the Kimberly-Clark Corporation, a U.S.-based global leader in health and hygiene products, met with KIC officials at the ROK Ministry of Unification on August 14 in order to reach an understanding on investment issues. Yuhan-Kimberly Ltd., Kimberly-Clark Corporation’s Seoul-based subsidiary, oversees all of the corporation’s Northeast Asian branches. Yuhan-Kimberly Ltd. CEO Moon Kook-hyun stated that the corporation’s Beijing plant was interested in a lot in the KIC, after Kimberly-Clark Corp. CEO Thomas Falk visited the complex earlier in the year.

Investment by foreign companies has special meaning for the inter-Korean joint project, as it reflects international confidence in the complex. In particular, when taking into account the importance of U.S.-DPRK relations, investment by the multinational Kimberly-Clark Corp. could have even greater meaning.

Yonhap
8/29/2007

The labor union of Hyundai Motor Co. decided to provide aid to North Korea to help a South Korean humanitarian group expand a corn-noodle plant in North Korea, union officials said Wednesday, despite the union’s steps to stage a possible strike next week.

The workers at Hyundai, South Korea’s largest automaker, are scheduled to vote Thursday on whether to launch a walkout over higher wages and better working conditions, almost an annual ritual for the 44,000-strong union.

In a statement, the union said it will provide the aid worth 500 million won (US$530,786), including noodle-processing machines, a minibus, a truck and a power generator, to the corn-noodle plant in the North Korean capital of Pyongyang.

The aid will be provided via the Seoul-based humanitarian group Movement for One Korea, an official at Hyundai’s union said by telephone from Ulsan, a port city on the nation’s southeast coast where Hyundai’s main plant is located.

“We decided to provide the aid to help North Korea recover from its food shortage and to implement the union’s corporate social responsibility,” said the official, refusing to give his name.

The timing and other details have yet to be decided, he said.

It is the first time that a union of a private company has decided to give aid to North Korea.

The North has had to rely on international humanitarian aid for the past decade, due to floods, drought and economic mismanagement.

Earlier in the day, conservative newspapers questioned the Hyundai union’s rationale, criticizing it for deciding to give aid to the North as the strike looms.

“It’s an inappropriate time for Hyundai Motor’s union to do this as public criticism is mounting over its 13th consecutive annual strike,” Bae Son-geun, a professor at Korea University, was quoted as saying by the daily Dong-a Ilbo.

Hyundai and its union have had 10 sessions of formal negotiations. The union is demanding an 8.9 percent increase in monthly basic salary, after rejecting the company’s offer of a 5.4 percent rise.

The strike vote will be held on Friday and the outcome is to be announced later in the day or early Saturday, union officials said.

So far this year, Hyundai workers staged a 13-day partial strike over a bonus dispute and a proposed free trade agreement with the United States which they argued could hurt the livelihoods of farmers and factory workers.

Hyundai’s union has held walkouts every year except 1994 since its foundation in 1987. In the past 20 years, the union has gone on strike for 313 days, costing the company 8.94 trillion won (US$9.53 billion) in total lost sales, according to the automaker.

Japan Focus
Tessa Morris-Suzuki
3/15/2007

As the slow and difficult negotiations on North Korean denuclearisation unfold, one small group of a hundred people or so in Japan are watching proceedings with a unique personal interest. Some are Japanese, others ethnic Koreans. All are survivors of one of the modern world’s most bizarre, tragic and utterly forgotten “humanitarian” projects.

Between 1959 and 1984, these few were among the 93,340 people who migrated from Japan to North Korea in search of a new and better life. There were several particularly ironic features of this migration. First, it took place precisely at the time of Japan’s “economic miracle”. Secondly, although it was described as a “repatriation”, almost all those who “returned” to North Korea originally came from the south of the Korean peninsula, and many had been born and lived all their lives in Japan. Third, the glowing images of life which tempted them to Kim Il Sung’s “worker’s paradise” came, not just from the North Korean propaganda machine but from the Japanese mainstream media, supported and encouraged by politicians including key members of Japan’s ruling Liberal Democratic Party.

After decades in North Korea, around one hundred migrants have now escaped the harsh realities of life there, and made the perilous return journey back to Japan. Other survivors of the same project who managed to escape have settled in South Korea.

The story of their migration has been almost entirely unheard by the rest of the world. But it urgently needs to be heard, not least because it involves an injustice that resulted in the deaths of thousands of people, and is still causing the deaths and untold suffering today. The history of this migration also reveals the complexity of postwar Japan’s connections with North Korea: and without understanding this, it is impossible fully to understand the impasse which their relations have now reached.

As secret documents from the Cold War era are declassified and testimony from survivors emerges, the true story of this mass movement is now starting to emerge for the first time. We now know that it was the product of a deliberate policy, very carefully designed and implemented at the height of the Cold War by the North Korean and Japanese governments often working in concert, and supported in various ways by the Soviet Union, the United States and the International Red Cross movement. It is a history that sheds important light on the complex background to Northeast Asia’s contemporary conflicts. It also evokes chilling echoes of other coerced or manipulated migrations, including the repatriation of Eastern Europeans to the Soviet Union and other Communist countries in the immediate post-war era.

The story starts in the mid-1950s at the height of the Cold War. Some 600,000 Koreans were living in Japan, most having migrated to Japan from the southern part of the Korean Peninsula during the colonial period (1910-1945). Having been unilaterally designated “foreigners” by the Japanese government, they had no legal right to permanent residence and faced continual discrimination, prejudice and poverty. South Korea was then an impoverished nation under the authoritarian rule of Yi Seung-Man (Syngman Rhee) and had no interest in taking them back.

The newly released records show that from 1955 onwards, some Japanese bureaucrats and politicians (notably members of the ruling party then and now) began to develop strategies to encourage Koreans in Japan to “return” instead to North Korea. Knowing that this was a politically explosive issue, they tried to keep their role in the scheme covert and to ensure that the exodus was carried out under the auspices of the neutral and humanitarian Red Cross. However, as a leading Japanese Red Cross official put it, his government’s real aim was “to rid itself of several tens of thousands of Koreans who are indigent and vaguely communist”.

Via their national Red Cross Societies, Japan made secret contact with North Korea in 1956 and 1957, urging its government to accept a substantial influx of Koreans from Japan. The Japanese government and Japan Red Cross officials placed intense pressure on the International Committee of the Red Cross to lend its name and support to a mass “repatriation”, thus enabling the scheme to be presented to the world as an apolitical, humanitarian venture. To this end, they provided the international body with some highly questionable information.

Meanwhile, the limited welfare payments available to Koreans in Japan were being drastically slashed – a measure that must surely have made the prospect of life in communist North Korea look more appealing. At the same time, the Japanese Red Cross was engaged in a secret search for ships to carry out the project.

At first, the North Korean response to the proposal was cool. It was happy to accept a small number of “true believers”, but it was having enough problems feeding its own people in the wake of the Korean-US War without accepting a mass inflow of immigrants. In 1958, however, North Korean leader Kim Il Sung dramatically changed course. Apparently seeing the scheme as a valuable source of skilled labor, and as an international propaganda coup which might damage Japan’s relations with South Korea and the US, he issued a public welcome to ethnic Koreans from Japan, promising them housing, jobs, education and welfare.

Immediately, propaganda campaigns began to sweep through Japan’s Korean community, orchestrated by a local pro-North Korean organization, but amplified by a flood of articles in the Japanese mass media. A special “Repatriation Cooperation Society”, involving politicians from across Japan’s political spectrum, was set up to distribute information encouraging Koreans to “return” to North Korea. Leading members included former Prime Minister Hatoyama Ichiro and prominent ruling-party politician Koizumi Junya (whose son Koizumi Junichiro was to become Prime Minister in 2001).

Another troubling aspect revealed by declassified documents is the United States attitude toward the scheme. The US State Department was at that time focussed on renegotiating its all-important security treaty with Japan, a process for which it relied on the enthusiastic cooperation of Japanese Prime Minister Kishi Nobusuke (grandfather of the present Japanese Prime Minister, Abe Shinzo).

The US appears to have been unaware of the secret contacts between Japan and North Korea in 1956 and 1957. When it first became aware of the repatriation plan a couple of years later, the Eisenhower administration regarded it with concern. But once the Japanese and North Korean Red Cross Societies reached an agreement on a mass “return” in mid-1959, the Eisenhower administration did not take any practical steps to halt the unfolding tragedy.

US Ambassador in Tokyo Douglas MacArthur II (who played a key role on the US side) told his Australian counterpart in 1959 that the “American Embassy had checked Japanese opinion and found it was almost unanimously in favour of ‘getting rid of the Koreans'”. At this sensitive moment in US-Japan relations, the State Department was clearly cautious of intervening in a scheme that was an obvious vote-winner for the Kishi regime. Besides, MacArthur personally sympathised with the public emotion, commenting (as the Australian Ambassador at the time reported) that “he himself can scarcely criticize the Japanese for this as the Koreans left in Japan are a poor lot including many Communists and many criminals.”

In fact, although some were doubtless ideologically committed to the Kim Il Sung regime, those who “returned” to North Korea included tens of thousands of people whose only dream was a better future for themselves and their families: people who included entrepreneurs, technicians and university lecturers as well as the poor and unemployed. While most were ethnic Koreans, their number also included over 6,000 Japanese nationals (mostly spouses of Korean men). Many thousands, of course, were children.

The International Red Cross “confirmation of free will”, which was set in place to guarantee to the world that this was a voluntary migration, proved (despite the best intentions of some of those involved) to be little more than a public ritual, too poorly-staffed, lacking the necessary information, and carried out too late in the day to have its intended effect.

Testimony from the small number of former “returnees” who have recently slipped across the border out of North Korea recalls the shock they felt on first arriving and realising the desperate poverty of the country to which they had come. Their plight was made worse some years after the start of the “repatriation”, when the North Korean government began to regard “returnees” from Japan with growing suspicion and prejudice. Thousands were sent to labour camps. Of these, many were never heard from again.

Today in Japan, relatives of those who “returned” to North Korea in the Cold War years watch the difficult process of nuclear diplomacy quietly but with intense concern. The support they send through unreliable communications channels is often the only means of survival for family members left behind in North Korea. While the story of the Japanese kidnap victims of North Korea has dominated news headlines, this tragic story of the 93,340 who were “returned” remains little known, and hostility to North Korea (as well as fears for the fate of relatives in the North) makes it difficult for the small group of survivors now living in Japan to raise their voices. Fears of a mass “re-return” of the ethnic Koreans who left under the repatriation scheme is also a little-discussed factor at work in Japanese government calculations on its relationship with North Korea.

The slow process of dialogue that began at the Six Party Talks in Beijing holds out a faint ray of hope for the future of these divided families. In the meanwhile, it is surely time for their story finally to be told.

Video Here:
http://myspacetv.com/index.cfm?fuseaction=vids.individual&videoid=14645562

Tessa Morris-Suzuki is Professor of Japanese History and Convenor of the Division of Pacific and Asian History in the College of Asia and the Pacific, Australian National University. Her book Exodus to North Korea: Shadows from Japan’s Cold War will be published next month at Rowman and Littlefield. Contact e-mail: tessams@hotmail.com.

Korea Times
Ryu Jin
8/28/2007

A Chinese company is going to be the first foreign enterprise to do business in the inter-Korean industrial park in the North Korean border city of Gaeseong, according to the Korea Land Corporation (KLC) Tuesday.

KLC officials said that Dashing Diva, the South Korean branch of Chinese artificial nail manufacturer Tianjin Jci Cosmetic, signed a contract to purchase a 6,000-square-meter lot in the Gaeseong Industrial Complex.

It marks the first time that a foreign company has bought a site in the inter-Korean joint venture, where about 15,000 North Korean workers commute to factories owned and operated by South Koreans.

While the first-phase pilot site has so far been occupied only by South Korean firms, the KLC designated a portion of land in Gaeseong for foreign businesses to boost the industrial complex’s international image and put the lots on sale in June.

Despite the South Korean government’s efforts to lure foreign investment there, no firms had come from outside the country until recently. Multinational sanitary goods maker Kimberly-Clark has also visited the complex to discuss investment there.

Located just north of the border, the Gaeseong Industrial Complex is a flagship project signifying reconciliation between the two Koreas, which remain still technically at war after a fratricidal conflict more than half a century ago.

Despite potential risks stemming from political uncertainty, the special zone has an inescapable economic logic: cheap labor and land of the North combined with the capital and technology of the South.

Gaeseong upbeat with foreign entrants
Korea Herald
Kim Yoon-mi
8/17/2007
 
The recent submissions of applications by two Chinese companies hoping to build factories in the Gaeseong industrial park in North Korea have further brightened the outlook on the joint economic project between the two Koreas, industry sources said yesterday.

South Korean government agency, The Korea Land Corp., said both a Chinese artificial fingernail manufacturer and a plywood producer submitted documents on July 30 in hopes of securing 6,000 square meters and 29,000 square meters of land, respectively, at the Gaeseong industrial park.

The Korea Land Corp. rents land in Gaeseong to individual South Korean or foreign companies under 50-year leases. The company had initially announced in late May that there were six applications available for foreign companies for 1,750,000 square meters of land in Gaeseong. No foreign applications were received until the two Chinese companies submitted their applications in July, according to an official at Korea Land Corp., who declined to be named.

“For foreign companies to build factories in Gaeseong, they should establish entities in South Korea. So, we are waiting for the two Chinese companies to finish that procedure first,” the official said.

The contract with the two companies is expected to be completed late this month, the official said.

Experts say Chinese manufacturers may have decided to move factories to North Korea because China’s rapid economic growth is raising wages and prices.

Currently, an average North Korean employed by any one of the 26 South Korean companies operating in the Gaeseong Industrial Complex earns $60.37 per month.

There have been unconfirmed news reports that the U.S. paper-based consumer product maker Kimberly-Clark Corp. may try to invest in the North Korean city.

Kimberly-Clark CEO Thomas Falk earlier hinted that the company would be interested in investing in Gaeseong, after he visited the North Korean city in late February.

“Gaeseong industrial part has the best environment (skilled labor) and facilities for South Korean SMEs to step forward…. Kimberly-Clark will be very interested in investment (in Gaeseong),” he was quoted as saying by the local daily, Maeil Business, on March 1.

The unnamed official from The Korea Land Corp. said he could not comment on the Kimberly-Clark proposition because he is not at liberty to discuss which foreign companies are in contact with his company.

However, the official said many foreign companies have contacted the Korea Land Corp., inquiring about going into North Korea.

The entry of foreign companies into Gaeseong will clearly be a boon for Hyundai Asan, the South Korean operator of major business projects in North Korea, the company’s officials said. This good news comes in light of a second summit between the two Koreas, another upbeat announcement for the park, Hyundai Asan officials said.

Hyundai Asan is in charge of the construction of factories in Gaeseong industrial park and operates South Korea’s tour business to Mount Geumgang resort in North Korea.

The Gaeseong industrial park, near the border with South Korea, was established in 2000 following the first landmark summit between South Korea’s then-President Kim Dae-jung and North Korean leader Kim Jong-il.

Chinese want some Kaesong action
Joong Ang Daily
8/13/2007

Two small Chinese light-industry companies have applied to build factories in an industrial complex in North Korea where South Korean companies are invested, a South Korean state land developer said on Saturday.

The Korea Land Corp. said a Chinese cosmetics manufacturer and a plywood firm submitted documents on June 30 requesting 6,000 and 2,000 square meters of land respectively in the Kaesong Industrial Complex near Kaesong, a North Korean city close to the border with South Korea.

It is the first time that foreign companies have applied to build plants at the complex where 26 South Korean labor-intensive companies are currently operating with a North Korean workforce of 15,000.

By 2012, it’s anticipated the complex will have several hundred South Korean plants employing as many as 500,000 North Koreans. South Korea is responsible for water, electricity and other infrastructure at the complex which opened three years ago.

The complex is a much-vaunted achievement of the first-ever inter-Korean summit of leaders in 2000 in the North Korean capital, Pyongyang. The second-ever summit of Korean leaders is scheduled to begin on Aug 28, also in Pyongyang.

Yonhap
8/26/2007

South Korea will likely lose 2.2 trillion won (US$ 2 billion) in its food loan to North Korea, because the price was set by international market standards, an opposition lawmaker said Sunday.

Since 2002, South Korea has loaned 2.1 million tons of rice worth 2.86 trillion won to North Korea to help alleviate chronic food shortages in the impoverished communist country.

The loan was offered at international prices at the time of the shipments, although 2.1 million tons of the shipment were homegrown products, whose domestic price is four times higher than international prices, said Rep. Hong Moon-pyo of the Grand National Party.

Citing data from unification and agriculture ministries, Hong said the total monetary value of the South Korean food loaned to North Korea during the period comes to 2.86 trillion won.

North Korea is required to pay back the loan at international market prices, which currently stand at US$380 on the average, the lawmaker said.

“According to the terms of the contract, South Korea will not be able to recover about 2.2 trillion won, so the difference should be offset by taxpayers’ money,” Hong said, adding that the government should unveil the exact amount of the loan and its conditions.

Joong Ang Daily
Jin Se-keun
8/27/2007

A U.S. orchestra may visit North Korea while Pyongyang sends its own orchestra to the United States, an official of a Hong Kong-based company said yesterday.

Bae Kyeong-hwan, vice president of Daepung Investment Group, told the JoongAng Ilbo that his company has been authorized by the North’s Culture Minister, Kang Neung-su, to schedule and plan the events.

“We contacted the New York Philharmonic orchestra first, but if its schedule does not permit, the Boston Philharmonic or the Philadelphia Philharmonic could be an option,” Bae said.

The New York Philharmonic earlier confirmed that it has been invited to visit North Korea, but has not yet made an official decision.

After a performance in Pyongyang, the U.S. orchestra may return via South Korea, crossing the inter-Korean border at Panmunjeom Village, Bae said.

The North’s National Symphony Orchestra will then return the visit by going to the United States for a performance, according to Bae.

He claimed that negotiations for these reciprocal visits have been worked out by Christopher Hill, Washington’s chief negotiator to the six-party talks, and his North Korean counterpart Kim Gye-gwan.  

North invites the New York Philharmonic
Joong Ang Daily
Brian Lee
8/16/2007

It’s up to the New York Philharmonic orchestra to decide whether it will accept an invitation to perform in North Korea, a U.S. State Department spokesman said Tuesday.

“We’ll consider it,” Eric Latzky, the orchestra’s director of public relations, told Agence France Press. “We received an invitation to perform in Pyongyang through an independent representative on behalf of the ministry of culture of North Korea.”

Latzky said the request, which had just been received, was “unusual” and that the orchestra would consult with Washington before making any decision. Furthermore, Latzky said, any such visit would come as part of a tour in the region.

The Philharmonic is scheduled to play in China in February 2008.

When asked whether such a visit was feasible, U.S. State Department spokesman Sean McCormack said, “I think it’d be fully up to them whether or not they accept such an invitation. As for the details of being able to go there and whether there’s any compensation, that sort of thing, those are probably technical details.”

Financial sanctions and restrictions regarding arms, missile and nuclear technology are in place under a United Nations resolution adopted last year in the aftermath of a nuclear test by the North, but there are no restrictions on travel to the North by ordinary U.S. citizens.

But despite the symbolic meaning the orchestra’s visit could have, McCormack said he suspected it would only play for Pyongyang’s elite. “Whether or not your average North Korean gets an invitation if the New York Philharmonic’s in Pyongyang, I have my doubts about that.”

North Korea interested in inviting New York Philharmonic
Korea Herald
8/13/2007

North Korea has shown interest in inviting the New York Philharmonic to perform in its capital, Pyongyang, apparently as part of its efforts to improve ties with the United States, sources here said Sunday, according to Yonhap News Agency.

During a meeting of six-party nuclear disarmament talks in Beijing in July, U.S. envoy Christopher Hill met his North Korean counterpart, Kim Kye-gwan, and proposed that the two countries start civilian exchanges as part of confidence-building measures, said the sources who spoke on condition of anonymity.

Kim responded positively, saying that his government has already thought about such exchanges and would be interested in inviting the New York Philharmonic, according to the sources.

Eric Latzky, spokesman for the New York-based philharmonic, told Yonhap News Agency that he was unaware of any invitation by the North but said discussions were under way with South Korea for a performance tour there.

Yonhap
8/25/2007

North Korea has started building fences along its border with China in an apparent attempt to forestall defections of its hard-pressed citizens, local residents said Sunday.

The move comes amid growing international criticism of China which sends back home North Korean border trespassers under an agreement with Pyongyang.

Some human rights activists have been pressuring Beijing not to repatriate North Korean refugees, threatening to launch a campaign to boycott the Beijing Olympics in 2008.

About a month ago, North Korean workers were spotted erecting wire fences along a 10-kilometer area near a narrow tributary of the Yalu River, a major border-crossing point, local residents said.

China already built fences along its side of the border late last year.

“North Korea started building a dike early this year and building posts about a month ago,” one resident said.

An increasing number of North Koreans are fleeing their impoverished communist homeland, hoping to defect mostly to South Korea. Some of them travel as far as Vietnam and other Southeast Asian countries via China for safe passage to South Korea.

More than 10,000 North Korean defectors have so far arrived in South Korea amid reports that up to 300,000 North Korean refugees are roaming in China on their way to South Korea and other countries away from their impoverished homeland.

Yonhap
Sohn Suk-joo
8/23/2007

South Korea made Thursday the first delivery of 7.1 billion won ($7.5 million) worth of emergency aid to North Korea to help the communist country recover from flood damage, officials said.

About 40 truckloads of instant noodles, blankets, emergency kits and mineral water were delivered to the border town of Kaesong via a reconnected road in the western section of the Korean Peninsula. The aid shipment will be completed by the end of this month.

On Tuesday, Pyongyang requested more help from the South, and the Seoul government is considering what to offer in response to the North’s plea for construction materials and heavy equipment, they said.

Devastating floods are believed to have destroyed a revised 14 percent of the North’s farmland, South Korean officials said. South Korea, other countries and international agencies are extending a helping hand to the North.

The number of dead and missing is estimated at more than 300, with the homeless numbering about 300,000. An estimated 46,580 homes of 88,400 families were destroyed or damaged, according to the North’s media.

“The total damage would be 10 times more than that of last summer in terms of money,” Cho Yong-nam, chief of North Korea’s flood damage control committee, said in an interview with the Choson Sinbo, a Japan-based pro-North Korean newspaper which usually reflects the views of the communist country.

The severe flood damage caused the two Koreas to postpone their second summit, originally scheduled for late this month, until early October. Their leaders are to meet Oct. 2-4 in Pyongyang.

According to North Korean officials, the expressway linking Pyongyang and Kaesong has been damaged by the heavy flooding, interfering with transportation. Roh plans to travel to Pyongyang via the overland route, and South Korean officials expressed hope that the expressway will be repaired before the summit takes place.

Yonhap
Sohn suk-joo
8/22/2007

North Korea’s most powerful organization is leading efforts to clean up damage from heavy floods and restore the country’s infrastructure, the North’s state media reported Wednesday.

The National Defense Commission (NDC), the highest decision-making body under the communist country’s constitution that was revised in 1997 to reflect its “songun” or military first policy, supervises relief operations involving military forces and equipment.

“We’ve achieved recovery and restoration by appealing to party, government and labor officials to go out to damaged areas under the guidance of the National Defense Commission,” Kim Kyong-san, a senior official of the Pyongyang Railway bureau, said in an interview with Radio Pyongyang.

According to North Korea watchers, North Korea’s cabinet has usually spearheaded flood relief efforts in the communist country in the past. The NDC’s involvement signifies the extent of the damage and is also meant to speed up restoration ahead of the summit between President Roh Moo-hyun and North Korean leader Kim Jong-il, who leads the commission, they said.

Meanwhile, North Korea is in the final stages of restoring the railway line in Pyongyang.

“The Pyongyang railway line is fundamental in connecting the country to the east and west. All workers have labored hard and are urged to do more at the final stage,” Kim Kyong-san said.

Devastating floods are believed to have destroyed a revised 14 percent of the North’s farmland, South Korean officials said. South Korea, other countries and international agencies are extending a helping hand to the North.

The number of dead and missing is estimated at more than 300, with the homeless numbering about 300,000. An estimated 46,580 homes of 88,400 families were destroyed or damaged, according to the North’s media.

This year, South Korea is providing 400,000 tons of rice to the North, while it plans to send 7.1 billion won (US$7.5 million) worth of relief goods to North Korea.

On Tuesday, Pyongyang requested more help from the South, and South Korea is considering what to offer in response to the North’s plea for construction materials and heavy equipment.

The severe flood damage caused the two Koreas to postpone their second-ever summit, originally scheduled to be held late this month, until early October. Their leaders are to meet Oct. 2-4 in Pyongyang.

According to North Korean officials, the expressway linking Pyongyang and Kaesong has been damaged by heavy flooding, interfering with transportation. Roh plans to travel to Pyongyang via the overland route, and South Korean officials expressed hope that the expressway will be restored before the summit takes place.

Reuters
Patrick Worsnip
8/20/2007

The U.N. ethics office found evidence that the United Nations Development Program retaliated against an employee who tried to expose its alleged wrongdoing in North Korea, a letter leaked on Monday said.

The letter sent on Friday by the office to UNDP chief Kemal Dervis is likely to lend fresh ammunition to the United States in a long-running dispute with UNDP over its North Korean operations, centering on claims of financial irregularities.

The agency has denied that it fired Artjon Shkurtaj, a native of Albania with Italian citizenship who was head of UNDP’s operations in North Korea from 2005-2006, because of his criticisms. It says his contract was not renewed.

The case came before the Ethics Office because Shkurtaj applied for U.N. whistleblower status under a two-year-old directive. But the office cannot launch a formal investigation without UNDP’s agreement because, as an agency with its own executive board, UNDP does not come under its jurisdiction.

In his letter, Ethics Office director Robert Benson told Dervis that the evidence it found would have supported a case against the UNDP if jurisdiction had applied.

UNDP has decided against waiving its right not to be investigated by the Ethics Office, but Benson urged the agency to do so, saying: “I believe this would be in the best interests of the United Nations and UNDP.”

His confidential letter first appeared on the Web site of Inner City Press, an independent blog on U.N. affairs.

The United States accuses UNDP of sloppy accounting, handing over cash to North Korean bodies without proper documentation and hiring staff hand-picked by the communist Pyongyang government.

OUTSIDE REVIEW

A U.N. audit published on June 1 said rule breaches had occurred but did not find systematic diversion of U.N. funding. UNDP quit North Korea in March after Pyongyang refused to accept changes ordered by its board of directors.

UNDP and U.S. officials have been unable to agree how much money Pyongyang, whose nuclear program has for years been the subject of international concern, received from UNDP.

Some of Washington’s information came from Shkurtaj, who has said publicly that UNDP violated “multiple rules and regulations” and engaged in “criminal conduct” in North Korea.

UNDP spokesman David Morrison told a news conference last month that Shkurtaj had been invited to submit evidence to back up his allegations but had so far not done so.

He admitted that UNDP barred Shkurtaj from entering the U.N. compound in New York after his contract expired in March, even though his U.N. pass was still valid.

Instead of agreeing to be investigated by the Ethics Office, UNDP has opted for an outside review — yet to be set up — that would look simultaneously at Shkurtaj’s allegations and other aspects of UNDP’s North Korea operations.

“UNDP believes that having multiple processes reviewing related or identical issues would not be the most effective way to achieve closure of this matter,” agency spokeswoman Christina LoNigro said.

U.N. spokeswoman Michele Montas said Secretary-General Ban Ki-moon was “very much concerned about this whole issue,” including the fact that Ethics Office jurisdiction did not cover UNDP, which has no such office of its own.

“There is no doubt that the Secretary-General is going to discuss ways of filling” the gap, she told a news briefing.