North Korean Economy Watch

Yonhap
5/2/2007

South Korea on Wednesday proposed a joint survey of two North Korean mines in part of efforts to facilitate cross-border economic exchanges, a South Korean official said.

The proposal was made when working officials of the two Koreas met in the North Korean border city of Kaesong to discuss the South’s agreement to provide the North with raw materials in return for natural resources, said the official at the Unification Ministry.

The South suggested the two Koreas conduct a joint exploration of mines in the mountains of Ryongyang and Geomdeok, both in the North’s northeast Hamkyong Province, the official said on condition of anonymity.

“The two mines are the best place for cooperative projects for underground resources both economically and geographically,” the official said, adding Ryongyang is rich in magnesite and Geomdeok in lead and zinc.

Last month, South Korea agreed to provide raw materials worth US$80 million to the North to help it produce clothing, footwear and soap in exchange for its natural resources. Wednesday’s meeting was the first of two-day talks, with both sides sending an eight-member delegation.

The two Koreas reached a similar swapping agreement in 2005, but it has never been implemented amid the North Korean nuclear dispute.

Yonhap
5/2/2007

A group of lawmakers from the pro-government Uri Party left for North Korea on Wednesday with a package of new proposals to boost economic and sports exchanges, including the construction of a second joint industrial park.

The five-member delegation, accompanied by agricultural and coal industry officials, will meet with top North Korean officials, including the North’s No. 2 leader Kim Yong-nam, during its four-day visit until Saturday, party officials said.

High on the agenda of the meetings will be the South’s proposals to create another South Korea-developed industrial complex such as one under operation in Kaesong; designate the mouths of the North’s Imjin River and the South’s Han River as a “joint security area”; and jointly collect sand from their beaches and build a cross-border canal linking Seoul and Kaesong.

The sides will also discuss the North’s proposed entry into the International Monetary Fund and the World Bank, the hosting of a joint academic forum and the possibility of North Korean footballers playing in the South Korean professional league, he said.

“I hear some critics asking what right our party has to do this, but we can play a role as a messenger between officials of the South and the North about important current issues,” Rep. Kim Hyuk-kyu, the delegation’s leader, said before departing at Incheon International Airport.

There have been a series of visits to North Korea by Uri Party lawmakers in recent months, prompting speculation that they were laying the groundwork for a summit between President Roh Moo-hyun and North Korean leader Kim Jong-il. The first and only inter-Korean summit, which took place in 2000, generated a series of economic and cultural exchanges.

Kim said the summit issue was not on the agenda, but acknowledged the delegation will respond if Pyongyang brings it up.

Accompanying the lawmakers are Nam Kyong-woo, livestock director of the National Agricultural Cooperative Federation, and Kim Weon-chang, head of the state-run Korea Coal Cooperation.

Korea Times
Jung Sung-ki
5/2/2007

A North Korean-made distilled liquor of soju is expected to make a foray into the U.S. market as early as this month, the Hankook Ilbo, a sister paper of The Korea Times, reported Wednesday.

The report said the “Pyongyang Soju’’ made by a factory in the North Korean capital has been exported to the U.S. since early last month through the Korea PyongYang Trading U.S.A. owned by a Korean-American Park Il-woo, 59.

Park and his business partner visited the North last month for the shipment of about 64,800 bottles of soju in three containers, it said.

“If the customs procedures go as scheduled, the soju will be sold at U.S. stores, marketplaces and restaurants as early as late this month or early next month,’’ Park was quoted as saying.

“The North Korean government shows a positive response to this business in that its product is to be exported to the U.S., which has long been considered as a hostile country, through legal procedures,’’ he said. “I think this will serve as a good opportunity to improve the relations between the two countries in the future.’’

On April 9, North Korean leader Kim Jong-il held a ceremony for Park when the soju shipment took place at the port of Nampo on the west coast, the report said.

Park received approval for the import of the North Korean-made soju from the U.S. government last July, according to the report.

The North Korean liquor will be first sold in the eastern states including New York, New Jersey, Pennsylvania, Virginia and Maryland with the help of Tang’s Liquor Wholesale, a liquor agency, it said.

N.K. soju to debut in U.S.
Korea Herald
Lee Joo-Hee

Americans will soon be able to get a taste of North Korea, in the form of soju – a traditional Korean rice liquor – that will debut in the U.S. market this month.

Steve Park, a South Korean-American businessman, said 2,520 boxes of Pyongyang Soju with a lowered alcohol content of 23 percent left for the United States last month.

“The North Korean government is pretty hyped about having its products exported to the United States through formal customs process,” Park was quoted as saying by Hankook Ilbo, a South Korean news daily.

Park, who runs Korea Pyongyang Trading USA, has been devoting a lot of time trying to get U.S. approval to bring in the North Korean beverage.

“When calculating the customs process, I believe Pyongyang Soju will be able to go on sale in the eastern region of the United States at the end of this month or early next month,” Park said.

“It can be a positive sign for the trust level of the two countries that the United States approved the import of liquor that usually requires a strict customs process,” Park was quoted as saying.

Park has completed producing a poster and advertisements to promote sales of the soju.

Park immigrated to the United States in early 1980s and has been involved in businesses with North Korea for the past 10 years.

He most recently visited North Korea’s Nampo Port between April 4-12 to oversee the shipment of the products.

Pyongyang Soju is the representative soju of North Korea and is made with corn, rice and glutinous rice flour. It has been exported to Japan and China.

The total shipment of Pyongyang Soju to the United States includes some 60,000 bottles.

The items received permits from the United States Patent and Trademark Office and the Food and Drug Administration, the news reports said.

Addendum: From the KFA forum:

Korea Pyongyang Trading U.S.A. Inc.
98 Thayer Street, Apt. 1B
New York NY 10040-1108

Korea Times
5/2/2007

Despite Pyongyang’s ardent plea, Washington has recently decided to retain North Korea on the list of countries that sponsor terrorism. In its annual report called “Patterns of Global Terrorism,” the United States stipulated North Korea as a state sponsor of terrorism, along with Iran, Cuba, Syria and Sudan. However, the U.S. State Department has considerably reduced and revised the grounds for designating it as a terrorism-sponsoring state, opening the way for dropping Pyongyang from it.

In other words, Washington is hinting if the North shows sincerity in abiding by the Feb. 13 agreement on denuclearization, it could de-listing Pyongyang from the list. The latest U.S. decision to keep the North on the list appears to reflect Washington’s judgment that actual situations in the Stalinist country have not changed much, although Pyongyang has persistently called for its exclusion from the list since the landmark agreement.

Everyone knows now the frozen funds at the Banco Delta Asia have obstructed the implementation of the Feb. 13 agreement. Still it is clear what Pyongyang has to do to extricate itself out of the current doldrums and move further towards being dropped from the list: Put the Feb. 13 accord into action without delay. The reclusive regime should show visible actions, such as inviting back international inspectors to its Yongbyon reactor site, indicating Pyongyang thinks the BDA issue has all but been settled.

It is not hard to understand North Korea’s position, but doing nothing only citing the BDA funds would solve nothing. Pyongyang should explain its current circumstances to the international society and ask for its help. By keeping to its original stance of linking the initial steps to the funds issue, the isolationist regime will have little to gain, only deepening its isolation from the rest of the world.

Aside from North Korea, South Korea needs to take issue with the U.S. State Department’s annual report that erased the part that “the South Korean government estimates about 485 persons were kidnapped or detained by North Korea since the Korean War (1950-53).” Washington, which must be well aware of two Koreas being at odds over the POW and abductee issue, has all but raised the ire of Pyongyang by removing the part on South Korean abductees. This would have a negative effect on Seoul if and when the two Koreas retake this issue.

The U.S. action comes as all the more regrettable, considering it has retained the Japanese abductee issue in close linkage to excluding Pyongyang from the list. The government should ask for a proper explanation and call for its correction.

And from the US State Department:

North Korea
The Democratic People’s Republic of Korea (DPRK) was not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987. The DPRK continued to harbor four Japanese Red Army members who participated in a jet hijacking in 1970. The Japanese government continued to seek a full accounting of the fate of the 12 Japanese nationals believed to have been abducted by DPRK state entities; five such abductees have been repatriated to Japan since 2002. In the February 13, 2007 Initial Actions Agreement, the United States agreed to “begin the process of removing the designation of the DPRK as a state-sponsor of terrorism.”

(no mention of Myanmar, with which the DPRK just re-established diplomatic relations)

Yonhap
5/1/2007

The U.N. Development Program (UNDP) has completed the process of wrapping up all of its operations in North Korea, a Washington-based radio station reported Tuesday.

At the request of North Korea, the UNDP’s two remaining staff members are supposed to leave Pyongyang on May 3.

But the pullout will have no influence on the ongoing external audit of all U.N. operations in North Korea, which began in March amid U.S. allegations that U.N. aid money was being diverted to the North’s regime, David Morrison, spokesman for the UNDP, said in an interview with Radio Free Asia.

The agency suspended operations on March 1 because North Korea failed to meet conditions set by its executive board following suspicions that the aid money might be diverted for illicit purposes, including development of nuclear weapons. It withdrew seven of its nine international staff in mid-March.

U.N. Secretary-General Ban Ki-moon ordered an external audit of all U.N. operations in North Korea which began on March 12.

The audit is being made of the related documents and the UNDP made sure that inspectors get all the copies needed for the audit, the spokesman said. Currently, the deputy resident representative and the operations manager are the only UNDP officials in North Korea to support the independent external audit.

The UNDP’s office equipment and materials will be turned over to North Korea, another UNDP official said.

Joon Ang Daily
Brian Lee
5/1/2007

Still seeking access to the international financial system, Pyongyang has asked Macao authorities to transfer $25 million in funds to unnamed banks in Russia and Italy, signaling some progress in the deadlock over money held in a Macao bank.

Chinese Deputy Foreign Minister Wu Dawei told Japanese lawmakers visiting Beijing that North Korea broached the idea, the Kyodo News Agency reported. Wu said that Macao authorities are trying to determine whether the move is possible.

South Korean government officials held out hope that the news could be a catalyst in finally resolving an issue that has been dragging on for weeks. “We are ready at anytime to move on; we are just waiting for the clouds to clear,” said one official. Italy was the first European country to open diplomatic ties with Pyongyang in 2000.

The dispute over the money led the North to miss the April 14 deadline for shutting down its main nuclear reactor.

In what was viewed as a major concession, Washington announced on April 10 that it supported measures by Macao to unblock the North Korean funds held in Banco Delta Asia. The U.S. had said the money was the result of illegal activities.

However, other than saying that it has taken notice of such measures, Pyongyang has delayed withdrawing the money. Instead, through state media, the North said it was looking to integrate itself into the international financial system rather than just retrieve the money.

With China and Macao entering the labor day holiday starting today, it could be a few days before any transfer takes place, the government official in Seoul conceded.

A source said that Pyongyang had also asked banks in Singapore, Vietnam and Mongolia to agree to a transfer but was rebuffed.

Washington has endorsed measures to unfreeze the funds, but it has not withdrawn its designation of Banco Delta Asia as a confirmed money launderer.

Yonhap
4/30/2007

Years of efforts to cultivate North Korea’s mountainous farmland is beginning to yield results, and Swiss and Korean officials are testing a bank credit program for the farmers in the Asian country, a Swiss aid office said on Sunday.

North Korea is showing “many promising signs of changes in progress,” including the emergence of consumer markets that are now established as part of the country’s economic system, Adrian Schlapfer, assistant director-general of the Swiss Agency for Development and Cooperation (SDC), said on the agency’s Web site.

Schlapfer was comparing the current situation to that during his previous visit to Pyongyang four years ago.

“The farming land in which the starving people started to work back then is now recognized as providing scope for agricultural initiative,” he wrote.

“The SDC, together with North Korea’s Central Bank, is therefore in the process of testing a micro-credit program to encourage farmers to base their investment decisions on economic feasibility considerations — an innovation for North Korea,” he said.

But North Korea still suffers from food scarcity, and aid is still essential, he said.

The SDC, an agency of the Swiss Foreign Ministry, has maintained an office in Pyongyang since 1997, focusing on agricultural programs to improve food production and on supporting domestic reform. The Swiss government started providing humanitarian assistance to North Korea in 1995.

Schlapfer described North Korea as the most little-known and enigmatic partner of the SDC, and acknowledged there are constant doubts on whether Swiss engagement there will yield results.

“Are there any meaningful approaches for long-term development partnership in this country with its planned economy, backwardness and secretiveness? Given the context, is it at all possible to initiate change?” he asked.

Pyongyang is “not an easy partner,” he said. “The key values, priorities and methods of Switzerland’s development cooperation have to be repeatedly insisted upon.”

“However, the projects implemented over the past 12 years are encouraging,” Schlapfer added.

Austrailian Associated Press
4/27/2007

Australia will provide almost $4 million in humanitarian aid to a hungry and malnourished North Korea.

Millions of the 23 million people in the communist country are living in poverty.

Foreign Minister Alexander Downer said Australia’s $4 million commitment will focus on improving the health, hygiene and nutrition of North Koreans.

“Thirty-seven per cent of North Koreans suffer from chronic malnutrition, and two-thirds of North Korean children do not receive enough food because of a one million tonne food shortfall,” Mr Downer said in a statement.

“Many North Koreans also lack access to clean water and sanitation.”

Mr Downer said Australia’s assistance will be provided through a number of United Nations agencies and the International Red Cross.

About $1.5 million will go towards UNICEF’s water and sanitation program.

A further $1.5 million will provide food for 1.9 million people through the World Food Program.

The rest of the money will be spent on emergency health and essential medicines, disaster management, water supply and sanitation.

Joong Ang Daily
ser Myo Ja
4/27/2007

North Korea and Burma, two of the world’s harshest dictatorships, agreed yesterday to restore diplomatic ties 24 years after Pyongyang was implicated in a deadly bomb attack which targeted South Korean President Chun Doo Hwan, who was visiting Rangoon.

North Korea’s vice foreign minister, Kim Young-il, arrived in Rangoon, the former capital of Burma, also known as Myanmar, on Wednesday. Kim and Kyaw Thu, Burma’s deputy foreign minister, signed an agreement yesterday to reestablish relations between the two countries, Thu said.

The specifics of the agreement were not released.

The October 9, 1983 bombing was one of the most audacious acts of terror ever attributed to a nation-state. During an official visit, Chun planned to lay a wreath at a mausoleum dedicated to Aung San, the founder of modern Burma. Chun was delayed by traffic, but 21 people were killed, including three Korean cabinet ministers, when bombs in the roof of the mausoleum exploded. Burma quickly blamed the attack on North Korea.

Shortly after the bombing, Burmese authorities arrested three North Korean agents, one of whom killed himself. The other two were convicted and sentenced to death. Jin Mo was executed in 1985, but Kang Min-chol’s sentence was reduced to life in prison because he confessed.

Kang, 51, has been held at Insein prison near Rangoon. Irrawaddy, a magazine published by Burmese exiles, reported in its current issue that Kang did not wish to return to either Korea if he is released from prison. A former inmate told the magazine, “Kang said he did not want to go to the North because he would be treated as a traitor and he did not want to go to the South because he would be punished for the terror.”

North Korea has denied responsibility for the incident, claiming that it was a South Korean conspiracy to frame the North.

South Korea respects Myanmar’s decision to restore ties with N. Korea
Yonhap
4/26/2007

South Korea respects Myanmar’s decision to restore diplomatic ties with North Korea, a government spokesman said Thursday.

The spokesman said that South Korea expects the reestablishment of diplomatic relations between the two countries after 24 years will provide momentum for North Korea’s opening and contribute to peace and stability in the region.

Myanmar severed ties with North Korea following a bomb attack by North Korean agents on the entourage of then South Korean President Chun Doo-hwan at the Aung San Mausoleum in Yangoon in October 1983.

Meanwhile, North Korea confirmed foreign news reports that the two sides agreed to reopen diplomatic relations, quoting a joint communique on the reestablishment of diplomatic relations between the DPRK and the Union of Myanmar.

DPRK is the acronym for Democratic People’s Republic of Korea, the North’s official title.

The North’s official Korean Central News Agency reported, “According to the joint communique, the government of the Democratic People’s Republic of Korea and the government of the Union of Myanmar, desirous of developing friendly relations and bilateral cooperation between the two countries and peoples, based on the principles of respect for each other’s sovereignty, non-interference in their internal affairs, and equality and mutual benefit, as well as the norms of international law and the objectives and principles of the United Nations Charter, have agreed to reestablish diplomatic relations at the ambassadorial level in accordance with the provisions of the Vienna Convention on Diplomatic Relations of 18th April 1961.”

BBC
4/25/2007

Japanese police have raided the offices of a pro-North Korean group in Tokyo in connection with the alleged kidnapping of two children in the 1970s.

Police moved in on two offices linked to the General Association of Korean Residents in Japan, Chongryon, and the house of a 55-year-old woman.

They suspect the woman played a key role in the abduction of two children aged three and six in 1974.

North Korea has admitted abducting Japanese citizens in the 70s and 80s.

But it says that of the 13 people its agents seized, five have been released and eight are dead.

Tokyo has always suspected more citizens were kidnapped, and has refused full-scale economic assistance or the establishment of diplomatic ties with the North until the issue is resolved.

Angry scenes

The Japanese authorities said the raids were part of an investigation into the 1974 abduction of two children born to a Japanese woman and a Korean man.

Police sources said they suspected the 55-year-old woman of helping a North Korean agent – who left Japan in the late 70s – to kidnap the children, Kyodo news agency reports.

Three top Chongryon officials are also wanted for questioning over the case, the sources said.

There were angry scenes as police moved in on one of the Chongryon offices, Kyodo news agency reports.

Chongryon staff and supporters clashed with police and one man was reportedly arrested for trying to block the search.

Chongryon described the raid as a “political crackdown” by the Japanese authorities ahead of Prime Minister Shinzo Abe’s visit to the US.

Mr Abe, who has always taken a strong line on the issue of abductions, is expected to raise the issue when he meets US President George W Bush later this week.

The two children are not thought to be on the government list of Japanese citizens Tokyo believes were spirited away by the North to train its spies in Japanese language and culture.