North Korean Economy Watch

From the Joong Ang Daily:

Seoul gives its blessing to view North’s festival

July 21, 2006-The Roh administration said yesterday it would allow a private delegation to participate in North Korea’s celebration of Liberation Day, the August 15 anniversary of Japan’s surrender in 1945. It will also allow South Koreans to attend the annual Arirang Festival that begins the same day and runs for two months.

The festival is widely seen by critics as an extended paean of praise to Kim Il Sung, North Korea’s founder and leader until his death in 1994.

Lee Jong-seok, the unification minister, told a news conference yesterday that non-governmental exchanges such as those for the holiday and the festival would go ahead “according to procedures.” He said no decision had yet been made on whether Seoul would send an official delegation to participate in the North’s Liberation Day rites.

After the press conference, a Unification Ministry official said permission to travel to North Korea would be given to all comers except for those barred by law from traveling there. The latter group once included those convicted of National Security Law violations or those under investigation for alleged violations of that anti-communist statute; now, only those involved in a current criminal investigation of any kind are barred.

Tensions in the region escalated rapidly after North Korea test-fired seven missiles on July 5. Ministerial talks a week later collapsed after Seoul refused to continue providing material aid, and the latest sign of tension came yesterday when Pyong-yang, following through on an earlier threat, told Hyundai Asan to repatriate 150 workers from the construction site at Mount Kumgang for a separated family reunion center.

The work, funded by Seoul, was scheduled to be completed in June 2007 at a cost of 50 billion won ($53 million). North Korea’s Red Cross told its counterpart in the South earlier this week that if rice and fertilizer stopped flowing north, the family reunions could not be held.

The decision to allow civilians to travel for the festivities is in line with Seoul’s expressed intention to keep channels with the North open, but critics said darkly that North Korea was certain to abuse that good will.

At the failed inter-Korean talks last week, Pyongyang demanded that Seoul end its restrictions on where South Koreans in the North can travel. It wanted those visitors to be able to visit what it called “holy places and landmarks,” a reference not to religion but to the cult surrounding Kim Il Sung and his son Kim Jong-il, his father’s successor as the country’s leader. Those “holy places” include Kumususan Memorial Palace, where Kim Il Sung’s mausoleum is located.

Critics also saw a train wreck, in their view, in North Korea’s contention at the recent Busan ministerial meeting that South Koreans are being protected by North Korea’s “military-first” policy. The Arirang Festival performances in recent years have been heavy in praising that policy, and some of those allegedly “protected,” they say, will be in attendance.

by Lee Young-jong, Ser Myo-ja 

from the BBC:

Japan’s government says it has begun work on its own set of sanctions on North Korea, in addition to those agreed by the UN Security Council. 

Chief Cabinet Secretary Shinzo Abe says he has instructed officials to put in place procedures to ban cash remittances to the impoverished North.

After days of talks the UN Security Council unanimously passed a resolution on Saturday which condemned the tests.

But it was a milder document than Japan’s original draft.

The resolution was tabled in response to North Korea’s decision to test-fire seven missiles earlier this month, including a long-range Taepodong-2, which is believed capable of reaching Alaska.

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

But now Chief Cabinet Secretary Shinzo Abe has asked for an investigation into possible further sanctions.

“We have started preparations to properly achieve necessary steps involving financial restrictions,” Mr Abe told a news conference on Tuesday, although he added that Japan would consult with other nations before making a final decision.

He said he had instructed officials to start procedures to ban cash remittances by Koreans living in Japan who are sympathetic towards Kim Jong-il’s government – an important source of foreign currency for North Koreans.

Indications that Tokyo was about to take further steps against Pyongyang were reported in Japanese media on Monday, but now Mr Abe has made his intentions official in a press conference.

Japan could also place bans on bilateral trade and freeze North Korean assets, according to the newspaper reports.

Japan is one of North Korea’s most vehement critics – and takes a more hardline stance on Pyongyang’s activities than other countries in the region.

Chapter Seven dropped

The UN resolution passed over the weekend demands that North Korea suspend its ballistic missile programme, and bars all UN member states from supplying Pyongyang with material related to missiles.

It was passed unanimously by the Security Council after being revised to drop any mention of Chapter Seven of the UN Charter, which is legally binding and can authorise military action. The changes were made to appease China and Russia, which took a softer line than Japan and the US. China had threatened to veto the resolution in its original form.

As soon as the resolution was passed, North Korea’s ambassador to the UN rejected it and left the chamber.

A day later Pyongyang angrily denounced the resolution in a foreign ministry statement, and said it would continue to build up its military arsenal.

The statement described the resolution as the product of a hostile American policy and said Pyongyang would not be bound by it, and would “bolster its war deterrent” in every way.

Assuming the US does not impose tourist restrictions!

In August-October 2005, the DPRK permitted American tourists to enter the country to see the spectacular Arirang performance.  I saw this performance, and Kim Jong Il, and it is not to be missed.  From the DPRK perspective, the experiment must have been a success so it is being repeated again this summer.  If you are interested in going, and I recomend you do, there are several operators that can take you:

Koryo Tours has been running tours for a long time.  Based out of Beijing, but run by two great English chaps, Simon and Nick, Koryo has great access to the country.  I have personally seen them in action and marveled at how efficiently they handled the multiple requests of their customers.  Nick and Simon have worked on two documentaries in the DPRK, the Game of Their Lives and A State of Mind.  They are currently finishing up their third, Crossing the Line.

Today I got an email from Walter L. Keats at Asia Pacific Travel.  He tells me, “We are the only U.S. company to be directly authorized by the Korea International Travel Company (KITC) to bring American and other tourists to the DPRK during the Arirang period. You can see a copy of our letter of authorization on our website as well as a background sheet on our involvement with North Korea since 1995.”  (I am really surprised an American company could pull this off).

I have visited the DPRK twice with the Korean Friendship Association.  KFA trips are something else altogether.  The KFA is sponsored by a different DPRK ministry than the other tour companies and the agenda, aside from not being released until you are in Pyongyang, contains come political-ish activities that might make all but the hardiest of travellers blush.  And don’t expect to run for Congress when you get back home.  Still I had a great time and learned a lot.  The price is generally much cheaper, but more often than not, you will be staying in the isolated Sosan hotel.

If you visit the DPRK with any of these groups this summer, please let me know how it went and what you learned.  Don’t forget to tell them I sent you!

Joong Ang Daily
7/19/2007

The Bush administration is weighing the reinstatement of trade sanctions on North Korea that were lifted during the Clinton administration. A visiting U.S. Treasury Department official, Stuart Levey, described Washington’s policy direction to Korean government policymakers during a visit here from Sunday through Tuesday. Yesterday, a government official described those discussions to journalists, and the Treasury posted a cautious statement by Mr. Levey on its Web site.

The Treasury’s undersecretary for terrorism and financial intelligence had planned his visit before the July 5 North Korean missile tests, but the incident added urgency to the consultations. Giving no details of the content of the discussions, Mr. Levey said in his statement he and Korean officials had discussed issues including “the new United Nations Security Council resolution that requires all member states to prevent the transfer of any financial resources in relation to DPRK’s missile or WMD programs.”

Mr. Levey is also stopping in Tokyo, Hanoi and Singapore on his swing through Asia. Seoul was his first stop. The trip came at a time when Japan is planning its own sanctions, perhaps including a ban on cash remittances to the North.

A government official said yesterday that the undersecretary met with Vice Foreign Minister Yu Myung- hwan and officials from the Ministry of Finance and the Blue House. The official stressed that the meeting was not a consultation on policy toward the North. He said the topics included many international financial issues, but did not touch in any detail on Seoul’s participation in the Kaesong Industrial Complex and tourist trips to Mount Kumgang, both of which are revenue sources for North Korea.

Another official said Mr. Levey responded only with a nod to explanations of the purposes and justifications for those inter-Korean projects.

The Korean officials said the U.S. sanctions Mr. Levey mentioned had been lifted in 1999 by President Bill Clinton as U.S.-North Korea tensions eased. They included trade restrictions and licensing requirements and strict limits on the amount of money U.S. travelers to North Korea could spend there.

Well, since the ROK has suspended further food/fertilizer aid to the DPRK in response to the current missle situation, the DPRK has suspended family reunions.

From the Joong Ang:

In a tit-for-tat reaction to Seoul’s decision to suspend rice and fertilizer aid, Pyongyang yesterday canceled a separated family reunion and said future ones were in jeopardy.

The Korea Central News Agency broadcast a letter from the North Korean Red Cross to its counterpart in Seoul. The letter said Seoul had refused to talk seriously about a family reunion the North had proposed be held during the Chuseok holidays in October. “Furthermore,” the letter continued, “the South refused to ship rice and fertilizer, one of the inter-Korean humanitarian projects that are conducted on the basis of reciprocity.” Pyongyang, the letter went on, sees no reason to continue family reunions.

“We want to make clear that the video conference call reunion, scheduled to mark August 15, and the construction of a reunion venue at Mount Kumgang will be terminated,” the letter concluded. The Japanese surrendered on Aug. 15, 1945, to end World War II. Both Koreas celebrate a Liberation Day holiday on that date. Although reunions have been held frequently at Mount Kumgang, the two Koreas had agreed to build a permanent reunion site there rather than using tourist hotels.

The Unification Ministry said it would do its best to restart the reunions. It said it anticipated that reaction by Pyongyang but regretted it.

And from the BBC:

The North accused the South of “sacrificing” humanitarian co-operation under pressure from Japan and the US.

Seoul announced the suspension of rice and fertiliser deliveries after inter-Korea talks collapsed last week.

The talks followed North Korea’s missile tests on 5 July, which have raised international concern.

Pyongyang test-fired seven missiles, including a long-range Taepodong-2 believed capable of reaching Alaska.

South Korea says it will not discuss further humanitarian aid with its neighbour until progress is made on resolving issues relating to the missile tests and the North’s nuclear ambitions.

After the high-level talks in Busan fell apart last week, the delegation from Pyongyang issued a statement warning of consequences for inter-Korean ties.

In the latest statement, North Korea’s Red Cross head Jang Jae-on accused the South of “abusing the humanitarian issue for meeting its sinister purpose to serve the outsiders”.

“Our side is, therefore, of the view that it has become impossible to hold any discussion related to humanitarian issues, to say nothing of arranging any reunion between separated families and relatives between the two sides,” he said.

A video reunion meeting scheduled for 15 August would not take place and the planned construction of a reunion centre in the North’s Mt Kumgang was “impossible”, he said.

The reunions bring together families divided by the partitioning of the Korean Peninsula in 1953. The policy has been a key part of reconciliation efforts between the two Koreas.

Earlier, South Korean President Roh Moo-hyun told a meeting of security advisers that Pyongyang’s missile tests were “wrong behaviour” that increased regional tensions.

But he warned against overreacting, saying: “An excessive response to North Korea’s missile tests creates unnecessary tensions and confrontation.”

On Tuesday, the Japanese government said it had begun work on its own set of sanctions for North Korea, in addition to those agreed by the UN Security Council.

The council unanimously passed a resolution on Saturday which condemned the missile launches, but it was softer than the draft initially proposed by Japan.

Japan would look into banning cash remittances to the North from Korean residents, Chief Cabinet Secretary Shinzo Abe told reporters.

But on Wednesday, Japanese Prime Minister Junichiro Koizumi said he would not rush to impose more sanctions.

“We should wait and see for a while whether North Korea will seriously respond to the (UN) resolution,” he said.

Korea Times
7/17/2006

KT, South Korea’s leading fixed-line telecom carrier, signed a 360 million won ($380,000) outsourcing contract last week with a North Korean agency to develop six smart software programs.

A Ministry of Unification official yesterday said the deal between KT and Samcholli General Corp. was struck last Thursday as planned (see the front page of The Korea Times, July 13 edition).

“Samcholli agreed to develop six computer programs in such fields as next-generation networks and voice recognition by the end of this year for 360 million won,’’ said the ministry official, who declined to be named.

“Under the contract, KT can refuse to pay the promised money, if Samcholli fails to meet pre-set requirements by the operator,’’ he added.

However, the two sides could not reach an agreement on the pilot run of value-added processing this year with a pair of telecom items _ polyvinyl chloride (PVC) and splitters _ for some reason.

They initially planned to ink a deal on the test run of the value-added processing, under which KT will provide raw materials while Samcholli will crank out final products in return for commission.

From the Korea Times:

South Korea’s economic assistance to North Korea in the first half of this year topped 141 billion won ($148 million), while the total government aid to the impoverished state since 1995 exceeded 1 trillion won ($1 billion).

According to government statistics on Sunday, the Unification Ministry gave assistance worth 141 billion won to the North in the first half of the year, the highest ever on a yearly basis. Last year’s assistance reached around 123 billion won, including rice aid.

Update: from the Daily Comet (Its in Louisiana)

An Orange County pastor who wrote the best-selling book “The Purpose Driven Life” has delayed a planned visit to North Korea amid heightened tension with the U.S. over the country’s recent missile launches.

Rick Warren, pastor of Saddleback Valley Community Church, had planned to meet with North Korean officials Monday to arrange a future preaching trip, Warren’s spokesman A. Larry Ross said.

The trip has now been delayed, but may be rescheduled within the week, a statement from the church said.

The statement did not say whether the delay was due to the increased tensions between the U.S. and North Korea, which have flared since North Korea test fired seven missiles on July 4.

Warren was in Seoul, South Korea Sunday for meetings with church and government leaders and U.S. troops.

The proposed March 2007 preaching trip to North Korea would be to commemorate the 100th anniversary of a Christian revival in Pyongyang, now the country’s capital, and was to include a rally at a 15,000-seat stadium.

A 2002 U.S. State Department report estimated the country of 23 million has some 10,000 Protestants and 4,000 Catholics.

The U.S. does not maintain diplomatic relations with North Korea, though it has participated in negotiations over ending the country’s nuclear program.

Original Post: 7/8/2006

This is too bizarre to be fiction.  From World Net Daily (Which I do not read, BTW):

‘Purpose-Driven’ pastor to preach in N. Korea
Warren planning 1st evangelical stadium crusade in 60 years inside communist

Rick Warren may be put to a tough test next year when the Southern California preacher holds the first evangelical stadium crusade in 60 years in North Korea.

Warren, who is on a 40-day, 13-nation tour, will visit Kaesong on July 17 to plan for the March 2007 crusade after being invited by a group of North Korean businessmen who visited him at his Saddleback Church’s Lake Forest office last month.

“I will be the first preacher in 60 years to speak publicly in North Korea,” Warren told the Orange County Register. “I’m honored.”

He said the North Korean government would allow him to preach in a stadium seating 15,000 but a larger venue would be provided if he could fill the seats.

Because there are no diplomatic relations between the two countries, the businessmen, who say they met with Warren and extended the invitation to preach with approval of the North Korean government, are facilitating his visit next week.

“We are ready to go on our end. We’re just waiting for information back on approval and access,” Anne Krumm, a spokeswoman for the church, said.

North Korea’s missile tests have cast uncertainty on whether Warren, who is presently in Indonesia, can enter North Korea as planned.

“They’re trying to figure out how they can get in and how to do that,” she said.

Warren compares his opportunity to preach in the communist state to Rev. Billy Graham’s visit to the then-Soviet Union, saying he hopes to be able to promote religious freedom where it has been severely restricted since 1945.

“When you go in they have to loosen up on religious freedoms,” Warren said. “They have to just by your presence. It’s like Mandela going into a country. Automatically people start loosening up.”

Suzanne Scholte, chairman of the North Korea Freedom Coalition isn’t so sure.

“To go in there and believe that you could actually preach freely is an illusion. It won’t do anything to help the church. It will only put the true church at risk, and it will be used as a propaganda piece by the Kim Jong Il regime.”

Warren said he is aware that some might misinterpret his visit as an endorsement of the North Korean regime.

“When Billy Graham went to the Soviet Union, there was a lot of criticism of: ‘Well, they’re using you.’ And he said: ‘Well, yeah, they’re using me, but I’m using them too.’,” Warren said.

Graham was criticized following his 1982 visit to Moscow for letting himself be used by the communists when he said he had seen no evidence of religious persecution by the Soviet government and observed that religious freedom was somewhat greater among the people than he had anticipated.

When preaching at the Yelohovski Russian Orthodox Cathedral, Graham exhorted his audience to be better members of the communist state: “God can make you love people you normally would not love. He gives you the power to be a better worker, a more loyal citizen because in Romans 13 we are told to obey the authorities.”

Since 2001, North Korea has been designated a “country of particular concern” for violations of religious freedom. Its citizens may not belong to unauthorized religious groups, and believers who proselytize or have ties to evangelical groups in China are arrested, tortured or executed, a 2005 State Department report said.

Given North Korea’s history of persecution, Scholte’s fear is that the government will use the crusade to identify Christian believers who will be “rounded up and sent to a political prison camp” once Warren leaves the country.

Addendum from the Korea Times:

According to Warren’s own account posted on his Web site, a delegation of South Korean businessmen visited him at Saddleback Church in late June and invited him to speak at the public outdoor Christian service to be held in the North Korean capital in March next year marking the 100th anniversary of the Pyongyang Revival in 1907. The South Koreans had obtained permission for the service, which will be the first of its kind in 60 years as the dictatorial North Korean regime virtually bans any religious activities in public.

“My hope is that these visits will promote religious freedom in a country where the practice of individual faith has been tightly controlled and virtually prohibited since 1945,” he wrote.

The 2005 winners of the Nobel Prize in Economics were selected for “having enhanced our understanding of conflict and cooperation through game-theory analysis”.  I would check out thier work in order to make sense of the current DPRK/ROK diplomatic posturing.

From the Washington Post:

South Korea on Thursday suspended humanitarian aid to North Korea until it agrees to return to international nuclear disarmament talks.

The action infuriated visiting North Korean officials, who immediately cut off high-level talks in South Korea and stormed back home.

The decision to postpone consideration of a North Korean request for 500,000 tons of rice marked the South’s first punitive action against its impoverished communist neighbor since it defied the international community and test fired seven missiles, including a long-range Taepodong-2, on July 4.

The move came as the administration of South Korean President Roh Moo Hyun has come under sharp public criticism at home for what many there viewed as a weak response by Seoul to the North’s missile tests.

South Korea on Thursday reiterated its deep opposition to a push by Japan and the United States to impose broader sanctions on North Korea through a draft resolution at the United Nation’s Security Council. Seoul has also vowed to maintain its “sunshine policy” of engagement, which has fostered the warmest ties between the Stalinist North and capitalist South since the Korean War divided them in two more than half a century ago.

But the decision to follow through with a previous threat to suspend food aid if North Korea tested missiles — a threat many experts doubted the South Koreans would stick to — displayed a new willingness by the South to use its significant economic clout to apply pressure on the North.

The North Koreans — for whom economic assistance by South Korea is topped only by China — appeared jolted by the decision. At talks being held in the South Korean city of Pusan that were originally scheduled to end Friday, Pyongyang’s delegation abruptly departed Thursday afternoon.

South Korea’s Yonhap news service reported that the North Korean officials left after circulating a statement calling the rupture the result of “reckless” attempts by South Korea to raise “irrelevant issues.” Those issues, South Korean officials said, were the recent missile tests and the North’s refusal to return to six-party talks on its nuclear programs.

The North bitterly condemned Seoul’s decision to suspend food aid, saying “the South side will pay a price before the nation for causing the collapse of the ministerial talks and bringing a collapse of North-South relations.”

South Korean officials, who in recent years have rolled out the red carpet for their visiting North Korean kin, this time offered them a simple meal and welcome bereft of customary sightseeing excursions and photo opportunities. When the North’s representatives understood they would not be returning with promises for more food aid, they simply left.

“The North Korean side expressed their position that additional negotiations would be unnecessary under the circumstance that additional humanitarian aid they need would be impossible,” Lee Kwan Se, a South Korean Unification Ministry official, told reporters.

For the United States and Japan, both pushing for a strong draft resolution at the United Nations that would ban international trade of North Korean missile and other military technology, the South Korean action was a rare diplomatic bright spot.

Christopher Hill, Washington’s top envoy on North Korea, left Beijing for Washington on Thursday after it became clear that Chinese efforts to persuade the Pyongyang government to come back to the six-party talks had apparently failed.

Before leaving, Hill said there was no indication that the North Koreans had changed their position to boycott the talks, which have been stalled since last November.

Japan, which has been deeply rattled by the North’s missile tests, vowed to continue pushing for a tough resolution that would impose sanctions on the North Koreas. But China and Russia back their alterative U.N. resolution unveiled on Wednesday. That draft would censure North Korea for its missile tests, but would endorse only voluntary measures aimed at restraining Pyongyang’s ballistic missile and nuclear weapons programs.

“The Chinese are as baffled as we are,” Hill told reporters in Beijing before departing. “China has done so much for that country and that country seems intent on taking all of China’s generosity and then giving nothing back.”

By Anthony Faiola
Washington Post Foreign Service

Korea Times
Kim Yon-se
Staff Reporter

S-N Economic Cooperation Showpiece Under Double Threat

Nowadays the Kaesong Industrial Complex, the flagship of inter-Korean economic cooperation, is stuck between a rock and a hard place.
The United States has rejected a South Korean request to include it in their bilateral trade talks, taking away one of the few incentives for companies to set up shop there.

The Kaesong complex is a collaborative industrial park developed by South and North Korea located in North Korea close to the Korean Demilitarized Zone with direct road and rail access to South Korea.

The Kaesong complex is also bearing the fallout from Pyongyang’s missile tests that raised an uproar in the international community, giving Washington an excuse to push hard for its ongoing effort to choke the North’s cash flow.

“Kaesong is a lifeline that keeps alive inter-Korean business cooperation,’’ said an official who is involved in the project. “It is at a fragile stage so if anything happens that changes the current status of the Kaesong complex, there would be no turning back.’’

He said that the government is expected to keep the project going at all costs.

In the Kaesong complex, about 7,700 North Koreans work for Hyundai Asan, the project manager and scores of South Korean companies there. A North Korean worker there earns $64 in wages and allowances a month, making for half a million dollars in the monthly total payment. Most of the money is paid on the 10th of the month. This month, it was paid as scheduled.

“It is unthinkable that the wages would be withheld,’’ the official said, when asked what would happen if economic sanctions were slapped on the communist country. “I don’t think that the government would do that.’’

Some U.S. officials have said South Korea’s continuation of pushing Kaesong goods as an item for the FTA talks may be a big hurdle for signing the final pact.

“The agreement should only cover products of the U.S. and the Republic of Korea. That is our position,’’ Assistant U.S. Trade Representative Wendy Cutler told reporters.

Aside from the negative stance toward products created by North Korean employees from the North’s raw materials, the U.S. has strategies not to allow made-in-South Korea products, especially clothes, made from imported materials from China or Taiwan, according to sources.

If the U.S. allows the Kaesong products as an FTA item, it has no choice but to accept the products made from non-Korean textiles.

The U.S. clothing market has already been flooded with cheap products from China and Southeast Asian countries that are labeled as premium brands, such as Polo and Burberry.

Korean civic protestors argue the Korean government is unprepared for the talks and has few negotiation strategies. In fact, the government is falling short in making Kaesong products acknowledged as an FTA item.

According to the Chosun Ilbo, an ultra-conservative vernacular daily, a government official said Korea will ultimately drop the issue in the future talks though it will not scrap the issue on the official negotiation table.

Citing the officials’ remarks, the newspaper said it is impossible for Korea to receive concessions from the U.S. on Kaesong products and the government will use the issue as leverage for other issues.