North Korean Economy Watch

Joong Ang Daily
Ser Myo-ja, Lee Sang-il
9/20/2006

Japan and Australia yesterday announced new sanctions against North Korea in another sign of increased financial pressure on the communist state, which has declared it possesses nuclear arms.

The announced purpose of the sanctions was to push Pyongyang back to six-party talks in Beijing to disarm the country in return for diplomatic recognition and financial aid.

In Washington, U.S. officials also signaled that additional sanctions against the North may be in store.

In Tokyo, the cabinet approved a partial freeze on North Korean assets in Japan, imposing restrictions on 15 North Korean agencies or companies and one individual.

“This shows the resolve of the international community and Japan,” said Shinzo Abe, the chief cabinet secretary and heir-apparent to Prime Minister Junichiro Koizumi.

The restrictions on financial transactions were directed, Tokyo said, at figures related to North Korea’s missile and nuclear programs.

After North Korea test-launched a barrage of missiles in early July, Tokyo barred the entry of a North Korean ship to its ports for six months and forbade the entry of North Korean government officials into Japan.

Australia, one of the few Western countries that had diplomatic relations with North Korea, acted the same day, imposing similar bans on financial transactions by people and companies it said were involved in North Korean arms programs.

Foreign Minister Alexander Downer told the press, “This supports and complements similar action taken by Japan today and previous actions taken by the United States, and sends a strong message to North Korea.”

In Washington, a State Department official told Korean journalists in a background briefing that the United States might reimpose sanctions lifted after an accord in 1994, which temporarily reduced tensions over the North’s nuclear programs. He said a proposal to restore the sanctions existing before 1994 was being studied. The relaxation was modest; U.S. companies were allowed to offer telephone service to North Korea and import some raw materials.

In Seoul, Song Min-soon, the Blue House senior security advisor, reacted cautiously to the announcements, saying it would be “inappropriate” to comment on sanctions imposed by other governments. He said the matter was one for capitals to decide, based on a United Nations Security Council resolution critical of North Korea’s missile and nuclear programs and those nations’ own laws.

Separately, Beijing rebuffed a U.S. invitation to a meeting Thursday of financial ministers in New York to discuss North Korea.

From the BBC:
New sanctions target North Korea

Japan and Australia have announced new financial sanctions against North Korea, stepping up pressure on the secretive state over missile tests.

The sanctions will freeze the transfer of money to North Korea by groups suspected of having links to its nuclear or missile programmes.

The move, which follows similar action by the US, comes after Pyongyang launched several missiles in July.

South Korea has urged other countries not to push the North into a corner.

The South is worried that the North may retaliate by carrying out a nuclear test, which would destroy any remaining hope of a diplomatic solution to the stand-off.

Japanese government spokesman Shinzo Abe said the new sanctions were in line with a United Nations resolution which denounced the missile tests.

The Japanese measures affect 15 groups and one individual, and will come into effect later on Tuesday, according to Japanese media.

The Australian measures applied to 12 companies and one person, according to Foreign Minister Alexander Downer, who said the sanctions were “consistent with our strong international stand against the proliferation of weapons of mass destruction.”

Media reports said the two lists were almost identical.

Tough stance

North Korea’s decision to test-fire seven missiles in July – including a long-range Taepodong-2 which is believed to be capable of reaching Alaska – angered the international community.

A UN resolution demanded that North Korea suspend its ballistic missile programme, and barred all UN member states from supplying North Korea with material related to missiles or weapons of mass destruction.

In the immediate aftermath, Japan imposed limited sanctions, including a decision to ban a North Korean trade ferry from Japanese ports and a moratorium on charter flights from Pyongyang.

The new measures also called for closer scrutiny of those wanting to send money or transfer financial assets to North Korea.

“By taking these measures, we have demonstrated the resolve of the international community and Japan,” said Chief Cabinet Secretary Shinzo Abe.

“I do not know how North Korea will respond, but I hope North Korea will accept the UN Security Council resolution in a sincere manner.”

The BBC correspondent in Tokyo, Chris Hogg, says there is still some doubt about how effective these sanctions will be.

Although Japan looks to be clamping down on North Korea, other countries that exert a strong influence on the country – notably China and South Korea – are reluctant to impose similar measures.

Following the Japanese announcement, China restated its opposition to sanctions and called for further dialogue.

Nuclear fears

In addition to fears over North Korea’s missile programmes, the international community is also worried about its nuclear intentions.

The United States, China, Japan, Russia and South Korea have repeatedly tried to persuade the North to abandon its nuclear programme.

But the so-called six-party talks have been on hold since November 2005, because North Korea refuses to attend until Washington lifted economic restrictions against it.

Exactly a year ago, North Korea agreed in principle to give up its nuclear weapons programme in return for economic help and security guarantees.

The move was greeted by surprise and relief, but a joint statement issued at the time failed to bridge the wide gulf between North Korea and the US. One year on, the North remains as isolated as ever.

The region remains on alert in case Pyongyang decides to follow up on the July ballistic missile tests with a nuclear test.

Analysts say the North has enough plutonium for several bombs, but has yet to prove it can build a reliable weapon.

From the Joong Ang Daily:
9/21/2006
Lee Young-jong

Contrary to its statement on Tuesday, the Unification Ministry pressured Woori Bank to consider allowing North Korea to open a bank account, government documents obtained by a Grand National Party lawmaker showed yesterday.

A Unification Ministry official who asked not to be named said it was just a discussion and not formal pressure against the bank. He said the bank made its own decision, without being pressured by the ministry.

Representative Kwon Young-se obtained a copy of correspondence that the Unification Ministry sent to Woori Bank on March 28, and provided it to the JoongAng Ilbo.

According to the letter, the ministry tried to stretch the laws governing inter-Korean projects to grant the North’s wish. The North, in September of last year, asked the bank, which operates a branch in Kaesong Industrial Complex, to open an account under the name of the Kaesong Industrial District Management Committee, headed by a South Korean official. The bank informed the Unification Ministry and consulted with it.

“The committee is composed of South Korean members, thus opening the account under its name is within the scope of approved inter-Korean cooperation projects,” the ministry told the bank in the letter.

The committee, however, is a North Korean corporation established under North Korean laws. Contrary to the ministry’s claim, North Korean officials are also working there.

Minutes of a meeting on March 7, where government officials discussed the issue, were also provided to the JoongAng Ilbo, showing the Unification Ministry apparently pressured the bank despite objections from other ministries. “We urge the bank to make a wise decision,” the ministry said, according to the minutes.

The bank, however, was opposed to opening an account for North Korea, citing South Korea’s financial laws and the U.S. Treasury Department’s anti-terror law. The bank also cited expected opposition from the Financial Action Task Force on Money Laundering in turning down the North’s request, the minutes said.
 

From Yonhap:
N. Korean request to open account with S. Korean bank in Kaesong rejected
Byun Duk-kun
9/19/2006

North Korea sought to open an account with a South Korean bank at an inter-Korean industrial complex in its border town of Kaesong last year, but the South Korean bank rejected the request, officials at the Unification Ministry said Tuesday.

The report comes amid U.S. financial sanctions against the communist state for its alleged involvement in illegal activities, including counterfeiting, laundering and the proliferation of weapons of mass destruction.

Ministry officials, however, dismissed suspicions that North Korea may have tried to use the South Korean bank to evade, or find a safehouse from, the U.S. financial sanctions.

“North Korea first filed its request to open an account with the Woori Bank on Sept. 14, 2005, one day before” Washington imposed sanctions on a Macau bank suspected of aiding the North launder counterfeit U.S. dollars, ministry spokesman Yang Chang-seok told reporters.

A spokesman for the South Korean bank said the bank first heard of the North’s request in December, but did not rule out the possibility that North Korea may have filed its initial request with the South Korean government as early as September.

Goh Gyeong-bin, the ministry official in charge of the inter-Korean project to develop an industrial complex in Kaesong, said an account with the South Korean bank, if one was opened, would not have provided a safe haven for the communist state.

“The North said it wished to open an account at the Woori Bank branch in Kaesong and collect the wages of its workers at the industrial complex through the account,” Goh said.

He said the South Korean bank remained reluctant to comply with the North’s request since the beginning and notified the North Korean side in March that it decided not to approve the request. Woori Bank officials confirmed Goh’s statement.

“The North said it understood the bank’s position and that’s when the situation was concluded,” Goh said.

Nearly 8,300 North Korean laborers are currently working for 13 South Korean firms operating in the joint industrial complex, producing some US$5 million worth of goods a month, according to Goh.

A number of U.S. officials, including Jay Lefkowitz, a special envoy for North Korean human rights, have expressed concerns over possible violations of the North Korean workers’ human rights there and the diversion of their wages to help the North’s weapons program.

Seoul dismisses the concerns, saying the amount of money paid in wages is insignificant even for the impoverished North.

About $600,000, in U.S. dollars, are paid each month to North Korean workers there, whose minimum monthly wage is set at $57, according to Goh.

The joint industrial complex is expected to house some 2,000 South Korean firms, employing as many as half a million North Koreans, when it is in full swing in 2012, according to the Unification Ministry.

From the Korea Herald
9/20/2006

A bank spokesman said Woori serves South Korean companies and their employees from the South producing goods there.

“We rejected the request because we are not regulated to handle transactions with North Korea,” said Cho Seong-kwon.

The request was made last December, Cho said. It came after the U.S. strengthened its crackdown on firms it suspected of aiding Pyongyang in illicit activities such as counterfeiting.

Washington imposed sanctions on a Macau bank in September, accusing it of helping North Korea launder counterfeit U.S. dollars.

A month later, the United States also froze U.S.-based assets of eight North Korean firms on suspicions of illegal activities, including counterfeiting, laundering and proliferation of weapons of mass destruction.

The Unification Ministry, however, said the North’s request had nothing to do with the U.S. sanctions, saying an account with Woori Bank, if one were opened, would not have been used for such illegal financial activities.

“The North said it wished to open an account at the Woori Bank branch in Gaeseong and collect the wages of its workers at the industrial complex through the account,” Goh Gyeong-bin, ministry official in charge of the joint industrial complex project, said.

Goh said the South Korean bank was reluctant to comply with the North’s request since the beginning and notified the North Korean side in March that it decided not to approve the request.

The complex is run by an affiliate of the South’s Hyundai Group. The South sees the park as a model of economic integration that can serve as an example of the path for future unification of the peninsula.

From the Joong Ang Daily:
Ministry says North sought bank account with Woori
Ser Myo-ja, Shin Eun-jin
9/20/2006

North Korea attempted last year to open an account with a South Korean commercial bank at the Kaesong Industrial Complex, but the request was rejected, the Ministry of Unification said yesterday.

In response to a report by the Dong-A Ilbo newspaper, the ministry said a North Korean agency made a verbal inquiry to the Kaesong Industrial District Management Committee on Sept. 14, 2005 about opening an account with Woori Bank. In December, the agency submitted a written request.

Seoul held about four meetings to talk about the issue, the ministry said, but the matter was basically up to Woori Bank.

The North Koreans were quoted by the ministry as saying they wanted to collect income taxes from South Korean workers at the inter-Korean industrial complex.

The North also said it wanted the convenience of collecting salary payments for North Korean workers from their South Korean employers.

North Korean officials must visit the office of each South Korean factory in Kaesong every month for all financial transactions.

Woori Bank has continued to reject the North’s requests. Under Korean law, the bank said, the scope of its operations was limited to South Korean companies that operate factories in Kaesong and their South Korean employees.

The bank has not sought permission from the South Korean government to extend operations to North Koreans in order to meet Pyongyang’s request, the Unification Ministry said.

North Korea threatened Woori Bank that it would shut down the branch, but gave up in March, the ministry said.

From Joong Ang Daily:
9/18/2006
Seo Ji-eun

Hyundai Asan Corp., a Hyundai Group affiliate with the exclusive right to the North Korean tourism business, plans to take advantage of air routes to ratchet up its tourism operation at Mount Kumgang.

The company signed a memorandum of understanding with Jeju Air Co. yesterday to develop tour packages to Mount Kumgang using an air route between two South Korean cities ― Gimpo in Gyeonggi province and Yangyang in Gangwon province, near the border with North Korea. Buses will ferry travelers to Mount Kumgang from Yangyan.

Flying between the two cities will shorten the travel period by almost three hours, from the six hours needed to reach Mount Kumgang by road.

The flights will run twice daily and may increase to three times a day within this year, said Yoon Man-joon, chief executive officer of Hyundai Asan, in a meeting with reporters.

The chief executive forecast that easier access to the North Korean tourist attraction will boost the number of tourists.

“Mount Kumgang travelers using the Yangyang Airport will be given discounts on air fees and travel package expenses,” he added.

He also revealed that Hyundai Asan and North Korea are in discussions to allow tourists to fly directly from Gimpo to Wonsan, a North Korean port city on the East Coast, about 110 kilometers from Mount Kumgang. That route would reduce the travel time to North Korea even further.

“We’ve had a large number of potential customers who gave up on the Kumgang tour because of the long land trip,” Mr. Yoon said.

He stressed that having tourists be able to take airplanes to North Korea has been a long-held dream of the company. He added that the realization of that dream would help the Mount Kumgang tourism business firmly establish itself as a cash cow for Hyundai Asan.

Korea Times
Andrei Lankov
9/17/2006

Nicholas Eberstadt once described the North Korean foreign economic strategy as a chain of “aid-maximizing stratagems.” Indeed, this is a good description.

For many decades, the international environment has made North Korea indispensable for some large sponsors, and Pyongyang diplomats have been very good at playing the aid-maximizing game and extracting money from those sponsors.

It is interesting that none of those great sponsors was inspired by the “aid idealism” that is so powerful in the West nowadays. Western left-leaning (and not necessarily left-leaning) intellectuals have for decades believed that the prosperous West has a duty to provide the less fortunate parts of the globe with aid. This belief became a part of Western psyche since the 1960s, but it is not shared by the countries of East Asia or by the former Communist world.

Indeed, most aid to the North was motivated by cold self-interest, not by some ideological construct. However, the North Korean diplomats could always steer this self-interest in right direction.

Actually, until the Korean War the USSR did not, in a strict sense, provide aid to the North. In the late 1940s, Stalin controlled the satellites (and I do not think that this is too strong an expression) via more direct channels, and even deliberately tried to bend the conditions of trade to Soviet favor.

In the case of North Korea, the USSR provided technical assistance, largely for military purposes. This required adequate payment, which had to be made in products that could be sold on the international market.

In those days Pyongyang paid in steel, iron, and monazite concentrate, the latter a substance that was then seen (mistakenly, as it turned out eventually) as potential raw material for producing nuclear weapons.

However, from 1953 the situation changed. The post-Stalin leaders relaxed their control over the Communist camp, and began to put more emphasis on economic dependency as an important additional tool to keep their involuntary allies from defecting.

North Korea was seen as a major strategic ally: it formed a protective buffer between the Soviet Far East and U.S. bases in the South. It had to be kept stable and, ideally, prosperous, so the late 1950s was the time of large-scale Soviet aid. Chinese aid was smaller, but the Chinese troops, stationed in the country until 1958, were widely used as an unpaid labor force on various construction projects.

In the late 1960s, Soviet aid dwindled, but the feud between China and the USSR provided Pyongyang with leverage over the two Communist great powers.

In essence, this was a policy of blackmail: if one of two quarrelling Communist giants refused to provide sufficient assistance or peculiar technology, Pyongyang switched to the other one. Both Moscow and Beijing wanted to have Pyongyang on their own side, but having it neutral was the second best option.

Thus, the great principle of the North Korean aid-maximizing approach was discovered: money was paid not for some action, but rather for nonaction.

With the Sino-Soviet rivalry, aid was extracted as a fee for not joining the other side. Ha[d] I been a fancy “political science” theoretician, I would probably call such an approach a “negative concession strategy.”

Of course, both China and the USSR also wanted North Korea to remain in good shape to contain the U.S. influence, even if this consideration was secondary to the politics of the Sino-Soviet rivalry.

The scale of the aid will never be known for sure, since a large part of it was provided indirectly: through preferential pricing or through a willingness to accept substandard North Korean merchandise in lieu of currency payment.

However, the depth of the crisis that struck North Korea after the collapse of the USSR once again confirmed how important the aid was for keeping the North Korean economy afloat.

The collapse of the USSR and the reforms in China around 1990 seemingly made such blackmail impossible. But soon the North discovered new rivalries to exploit.

First, there was a nuclear program, the same old good type of “negative concession” Pyongyang expected to be paid for not developing its nuclear weapons. The Geneva framework of 1994 was a masterpiece of blackmail diplomacy.

Then, there was (and is) a veiled but clearly present rivalry between China and the U.S. Beijing does not want a nuclear North Korea, but it is not happy about a unified country which might become _ or rather remain _ pro-American. It also needs a Communist regime or two hanging around and thus helping the current government to survive. This means that China is willing to keep the North in operation by providing it with aid, especially with food aid.

Finally, there are South Korean phobias to exploit. Seoul is increasingly uneasy about Chinese presence in the North.

There are other phobias as well. The South is afraid of a democratic revolution in the North, politely known as an “implosion.”

German-style unification is seen as a disaster since it will lead to a dramatic decline in the living standards of South Koreans.

This is a unique situation with few parallels in world history: a government feeds its enemy precisely to avoid its own swift victory!

However, it seems that the expectations of Seoul politicians are based on incorrect assumptions.

From the Korea Times:
China’s Ambition Over Mt. Paektu Angers Koreans
Lee Jin-woo
9/15/2006

A single torch lit at the top of Mount Paektu – the Korean Peninsula’s highest mountain, erected near the North Korean-Chinese border – angered South Koreans earlier this month.

The torch was lit for the sixth Winter Asian Games to be held in Changchun, China from Jan. 28 to Feb. 4 next year. The host city’s mayor said the mountain was chosen as the torch flaming site on Sept. 6 because three rivers _ Tuman, Amrok and Songhua _ originate there. Tuman and Amrok rivers are also known as Tumen and Yalu in Chinese.

Not many South Koreans, however, see the move merely as part of the athletic event. Many see it as the Chinese government’s sly move to promote the mountain, which Koreans regard as a sacred place, as its very own.

Under an agreement struck in 1962, China and North Korea, two sovereign states and U.N. members, agreed to share the mountain. The North controls 54.5 percent of the mountain, and China occupies the remaining 45.5 percent.

On Sept. 5, another news report on China’s move to hold the 2018 Winter Olympic Games at Mount Paektu surprised South Koreans.

Based on a press conference by a Chinese official from Jilin Province in northeastern China, South Korea’s Yonhap News Agency reported that China unveiled its intention to hold the international winter sports festival at Mount Paektu or Changbai-shan as it is known by the Chinese.

The report enraged many South Koreans, who have already been upset by China’s moves to put the 2,744-meter mountain on the UNESCO’s “World Geopark” list and similar efforts by Beijing to register it with the U.N. agency as a “World Heritage” site.

Dubbed the “Mount Paektu project,” China’s actions are believed by many South Koreans to be part of the “Northeast Project,” a Chinese academic project to reexamine ancient history in the region. Many Koreans view the project as an attempt to distort ancient Korean history in the northeastern territory of what is now China, including the Koguryo Kingdom (37 B.C.-A.D. 668) and the Palhae Kingdom (698-926).

Unlike the angry South Korean public and news media, the government has remained calm over China’s recent provocations.

“We acknowledge that a provincial government official in China did express a tentative future plan for the 2018 Winter Olympic Games, but the central Chinese administration has not revealed any plan,” an official of the Ministry of Foreign Affairs and Trade told The Korea Times on condition of anonymity.

“There have been suspicions over the construction of a new international airport near the mountain, but it’s hard to link the project to the winter sports event,” he added.

Once the Fusong airport, located just a 10-minute drive from Mount Paektu, is completed by August 2008, some 540,000 passengers are expected to use it, reports said.

Another ranking government official also said most Chinese officials dismissed such allegations, saying, “Preparing for the 2008 Summer Olympics in China has made us too busy to push ahead with another massive project.”

On Sept. 8, Rep. Kim Gi-hyeon of the main opposition Grand National Party disclosed an internal document produced by South Korea’s Cultural Heritage Administration, which suggested that the Mount Paektu project is closely related to China’s plan to prepare for territorial disputes, which are expected after the possible unification of the Korean Peninsula.

The administration later said the document cannot be considered the government’s official stance over the dispute, but it has been collecting information on the matter.

Many South Korean academic and civic groups, as well as the press, have urged the government to join hands with the North to address the dispute.

The communist nation, however, has remained quiet.

Unlike in 2004, when China’s treatment of Korean history angered the two Koreas, the North has not issued a single statement denouncing its traditional ally.

The 2004 dispute seems to have subsided after Beijing promised to resolve the row through academic discussions and not allow it to develop into a political dispute.

Ryoo Kihl-jae, a professor at the University of North Korean Studies in Seoul, said North Korea seems to have understood China’s desperate situation to push ahead with the “Northeast Project” to control various ethnic groups and suppress their increasing calls for independence.

“The Chinese government is having a hard time handling a number of minority ethnic groups,” Ryoo said. “Unless China dispatches a large number of its military units to Mount Paektu, North Korea is not likely to find fault with the recent moves.”

The professor was also skeptical about the possibility that North Korea would cooperate with the South to block any further attempts by Beijing to distort history.

“It’s hard to expect North Korea to cooperate with the South to confront China,” he said. “I believe the ongoing historical disputes with China should be resolved by scholars and civic groups, not by government-level talks.”

From Yonhap:
9/14/2006

South Korea’s vice unification minister on Thursday said his country would continue its economic cooperation with North Korea, adding that increased cooperation between the divided Koreas is the key to peace and stability on the Korean Peninsula.

“Economic cooperation between the North and the South is playing a key role in various ways to manage the situation on the Korean Peninsula stably,” Vice Unification Minister Shin Un-sang said.

The remarks came as part of a congratulatory speech at the opening of a symposium here on inter-Korean economic cooperation, co-hosted by the Citizens’ Coalition for Economic Justice and the National Unification Advisory Council.

Shin said inter-Korean economic cooperation has significantly reduced tension on the Korean Peninsula by replacing, or removing, the North’s heavy artillery unit in the border town of Kaesong with a joint industrial complex for South Korean firms.

He also claimed the North would now have to think twice before performing any acts that could heighten or cause tension on the Korean Peninsula as increased economic cooperation gives it a greater interest in pursuing peace and stability.

“Inter-Korean economic cooperation is playing a role in preventing additional tension (on the Korean Peninsula). Various forms of economic cooperation between the two, including the Kaesong industrial complex, are helping the North and South Korea to move toward (promoting their) mutual interests,” Shin said.

Relations between the Koreas improved significantly after their leaders met in an historic summit in Pyongyang in 2000. The amount of inter-Korean trade increased to over US$1 billion last year from $290 million in 1995, according to Kim Chun-sig, director of the ministry’s inter-Korean economic cooperation bureau, who also joined Thursday’s symposium.

The government believes that economic cooperation with the North also helps open the reclusive state to the outside world by offering chances for its people to meet with South Korean officials and businesspeole, as well as being an opportunity to witness the South’s advanced economy.

From NewKerala.com
9/14/2006

China today scotched media reports that the ruling Communist Party may revise the 1961 defence treaty with North Korea, which is engaged in a diplomatic stand-off with the United States on the nuclear issue.

“We don’t plan to amend the treaty,” Chinese Foreign Ministry spokesman Qin Gang told reporters when asked to comment on media reports.

The ruling Communist Party of China, which will hold its annual meeting in October may discuss the possibility of revising the treaty with North Korea that commits Beijing to come to the aid of Pyongyang should it come under attack from foreign forces, a Hong Kong rights group had claimed yesterday.

The Information Centre for Human Rights and Democracy said in a statement that the revision to the mutual friendship and cooperation treaty will be discussed in a bid to prevent China from becoming involved in a possible war on the Korean Peninsula.

China is North Korea’s traditional ally and main aid provider to the reclusive nation.

Beijing is apparently unhappy with Pyongyang’s recent missile tests and refusal to return to the six-party talks on its nuclear programmes.

From Yonhap:
9/12/2006

The U.N. food agency said Tuesday that North Korean children may have to spend this year’s Christmas without food unless the country gets additional donations from abroad within the coming weeks.

John M. Powell, Deputy Executive Director of the World Food Program (WFP), stressed that the WFP’s stockpiles for North Korea will dry up within the next two months without any fresh pledges.

“We expect to be running out of commodities within the next two months,” he told a press conference in Seoul.

He said it takes at least three or four months to translate a pledge into food that can be consumed by a hungry child.

“Unless we get a pledge in the next month or so, no one will eat after Christmas,” he said.

Powell said that his agency is struggling to accomplish its two-year project to provide food aid to the North due to a lack of donations.

He said his agency received only eight percent of the US$102 million required for its current two-year feeding program, which aims to feed 1.9 million people.

Powell said he met with South Korean officials earlier in the day and discussed ways of providing more aid to the North.

But he did not clarify whether he asked for South Korea’s contribution nor say how much, if any, was requested.

Seoul suspended its regular food and fertilizer aid to its communist neighbor after Pyongyang test-launched seven missiles in July.

It recently provided a one-time shipment of aid to the North, which suffered huge damage from summer floods.

North Korea has been depending on outside handouts to feed many of its 23 million population, and the WFP said it has been feeding some 6 million people there, mostly women, children, the sick and the elderly.

From the Korea Times:

The U.N. food agency said Tuesday that North Korean children may have to spend this year’s Christmas without food unless the country gets additional donations from abroad within the coming weeks.
John M. Powell, deputy executive director of the World Food Program (WFP), stressed that its stockpiles for North Korea will dry up within the next two months without any fresh pledges.

“We expect to be running out of commodities within the next two months,’’ he told a press conference in Seoul.

He said it takes at least three or four months to translate a pledge into food that can be consumed by a hungry child.

“Unless we get a pledge in the next month or so, no one will eat after Christmas,’’ he said.

Powell said that his agency is struggling to accomplish its two-year project to provide food aid to the North due to a lack of donations.

He said his agency received only eight percent of the $102 million required for its current two-year feeding program, which aims to feed 1.9 million people.

Powell said he met with South Korean officials earlier in the day and discussed ways of providing more aid to the North.

But he did not clarify whether he asked for a South Korean contribution nor did he say how much, if any, was requested.

Seoul suspended its regular food and fertilizer aid to its communist neighbor after Pyongyang test-launched seven missiles in July.

It recently provided a one-time shipment of aid to the North, which suffered huge damage from summer floods.

North Korea has been depending on outside handouts to feed many of its 23 million population, and the WFP said it has been feeding some 6 million people there, mostly women, children, the sick and the elderly.

From Yonhap:
9/12/2006

North Korea on Tuesday signed an agreement on diplomatic cooperation with Mongolia, the North’s state-controlled media said.

The agreement was signed by Kim Yong-il, North Korea’s vice foreign minister, and Mongolian Ambassador to Pyongyang Janchivdorjyn Lomvo, reported the (North) Korean Central News Agency (KCNA), monitored here.

The news agency, however, failed to provide details on the contents of the agreement.

North Korea and Mongolia established diplomatic relations in 1948. Mongolia closed its embassy in Pyongyang in August 1999 before reopening it five years later.

The KCNA also reported North Korean parliamentary representatives held a meeting with an Indonesian parliamentary delegation to discuss ways of promoting bilateral cooperation.

“Both sides exchanged views on issues of mutual concern and ways of furthering the relations between the parliaments of the two countries amid growing bilateral cooperation in various fields,” the news agency said.

The Indonesian delegation arrived in Pyongyang on Monday.

From the Korea Times:
Andrei Lankov
9/10/2006

Recently I was talking to a Westerner who has been working in Pyongyang for quite a long time. Describing the recent changes, he said: “Once upon a time, one had to come back from an overseas trip with a truckload of cigarettes. Now my North Korean colleagues want me to bring movies, especially tapes of South Korean TV dramas.’’

Indeed, North Korea is in the middle of a video revolution which is likely to have a deep impact on its future.

What killed Soviet-style socialism? In the final analysis, it was its innate economic inefficiency. The state is a bad entrepreneur, and the entire history of the 20th century testifies to this. The capitalist West outproduced and outperformed the communist East, whose countries were lagging behind in many regards, including living standards.

Thus, the communist governments had to enforce the strict control of information flows from overseas. There were manifold reasons to do so, but largely this was done exactly because the rulers did not want commoners to learn how vastly more prosperous were people of similar social standing in the supposedly “exploited’’ West.

But people learned about it eventually, and once it happened, the fate of state socialism was sealed.

In the USSR and other countries of once communist Eastern Europe, uncensored information was largely provided by a short-wave radio broadcast. The BBC, the Voice of America and Freedom Radio were especially popular. The USSR was a more liberal place than North Korea, so Soviet citizens could easily buy radio sets in shops.

As far as I know, Moscow never considered a ban on short-wave radio sets in peacetime-perhaps, because in a vast country such a measure would prevent a large part of population hearing the news. The government occasionally resorted to jamming, but it was not always efficient as it could only work around major cities.

In North Korea, where the radio sets are sold with pre-fixed tuning, their role is less prominent even if some North Koreans do listen to foreign broadcasts.

However, North Koreans found another way to access foreign media. If the Soviet Union was brought down by the short-wave radio, in North Korea the corresponding role is likely to be played by videotape.

As with many other great social changes, this one began with a minor technological revolution. DVD players have been around for quite a while, but around 2001 their prices went down dramatically. Northeast China was no exception. Local Chinese households began to purchase DVD players, and this made their old VCRs obsolete. The Chinese market was instantly flooded with very cheap used VCRs that could be had for $10 or $20.

Many of these machines were bought by smugglers who transported the goods across the porous border between North Korea and China. They were re-sold at a huge premium, but still cost but some $30 to $40.

This made VCRs affordable to a large number of North Korean households. In the 1990s, they would have to pay some $200 for a VCR-a prohibitive sum with the average monthly salary hovering around $5. A $35 VCR is within reach of many (perhaps, most) North Korean households, even if they have to save a lot to afford one.

Against the dull background of the official arts, the VCRs were a vehicle for accessing good entertainment. Needless to say, people do not buy these expensive machines to watch the “Star of Korea,’’ a lengthy biopic about the youth of the Great Leader! Since the only major producer of Korean language shows is South Korea, it is only natural that most programs come from Seoul via China. The South Korean soaps are a major hit.

In a sense, the much-talked “Hallyu’’ or “Korean Wave,’’ a craze for all things Korean across East Asia, is a part of North Korean life as well. Young North Koreans enthusiastically imitate the fashions and parrot the idioms they see in South Korean movies. And this does not bode well for the regime’s future.

Of course, the moviemakers did not deliberately pursue any political goals, and their plots involve the usual melodramatic stories of love, family relations and escapist adventure. They are not even produced with a North Korean audience in mind. But the movies reflect the life of South Korea, and this image is vastly different from what the official North Korean media say.

I do not think that the North Koreans take what they see in the movies at face value. They know that their own movies grossly exaggerate the living standards in their county, so they expect moviemakers from other countries, including South Korea, to do the same.

Thus, they hardly believe that in the South everybody can eat meat daily or that every Seoul household has a car. Such an improbable affluence is beyond their wildest dreams.

But there are things that cannot be faked _ like, say, the Seoul cityscape dotted with high-rise buildings and impressive bridges. It is gradually dawning on the North Koreans that the South is not exactly the land of hunger and destitution depicted in their propaganda.

It became cool to look Southern and behave like Southerners do. This is yet another sign of coming change, and I do not think that these changes are likely to be as smooth as many people in Seoul would like them to be.