North Korean Economy Watch

Joong Ang Daily
Lee Min-a
8/17/2007

Plenty of corporate leaders came along for the last inter-Korean summit, and the jockeying for which leaders will be selected this time has begun.

The Blue House said yesterday that it is looking for people who could play a substantial role in boosting North Korea’s economy.

“We don’t have any rule that says to exclude corporate leaders who went to Pyongyang last time, but we are hoping the new list will, if possible, first be filled with people who are already involved in North Korean businesses or who can play a substantial role in making investments there,” said Cheon Ho Seon, the Blue House spokesman.

About 200 people are expected to be in the entourage, up from 180 last time. The number of business leaders is expected to grow, too.

In 2000, corporate leaders going to Pyongyang included LG head Koo Bon-moo, then-SK head Son Kil-seung, late Hyundai chairman Chung Mong-hun, Samsung vice head Yun Jong-yong, then-Kohap head Chang Chi-hyeok and Rinnai Korea head Kang Sung-mo.

The Blue House is planning to invite corporate leaders to a financial seminar this week to discuss ways to help the North.

Youtube video of the flooding 

North Korea: Deadly Rains Ruin Big Part Of Farmland
Washington Post
Burt Herman
Associated Press
Thursday, August 16, 2007; A11

North Korea on Wednesday detailed the devastation caused by some of the country’s heaviest-ever rains, saying more than one-tenth of the impoverished country’s farmland had been wiped out during peak growing season.

The North Korean government reported that hundreds of people were killed or missing in this month’s floods, with as many as 300,000 left homeless.

Footage from Associated Press Television News showed citizens working to rebuild roads, clear debris and shore up sandbags along rivers in flood-affected areas outside Pyongyang, the capital. Video images also showed a farmhouse that appeared to have been swept down a hillside by the rain.

If the government’s numbers on agricultural damage are confirmed, the destruction would be about one-quarter of that suffered in massive flooding in 1995. That disaster, coupled with outdated farming methods and the loss of the country’s Soviet Union benefactor, sparked a famine that is estimated to have killed as many as 2 million people.

The vivid portrait of damage, in reports from the North’s state-run media, appeared to be a cry for help from a desperate government that maintains strict secrecy of its internal affairs. But the North has previously exaggerated the extent of disasters to obtain aid and to cover up ineptitude in providing for its people in a centrally controlled economy.

The official Korean Central News Agency reported Wednesday that downpours along areas of the Taedong River were the “largest ever in the history” of measurements taken by the country’s weather agency.

An average of 20.6 inches of rain fell across the country from Aug. 7 through last Saturday, 2.1 inches more than downpours in August 1967, KCNA said.

The recent rains have submerged, buried or washed away more than 11 percent of rice and corn fields in the country, KCNA reported, citing Agriculture Ministry official Ri Jae Hyon. “It is hard to expect a high grain output owing to the uninterrupted rainstorms at the most important time for the growth of crops,” KCNA said.

The U.N. World Food Program estimated that the amount of damage the North Koreans reported to their fields would result in losses of about 450,000 tons of crops — adding to the 1 million ton annual shortage that the country already faces.

The amount is less than the 2 million tons that the North said was lost in the 1995 floods at the start of the famine, said Paul Risley, a spokesman for the U.N. agency. “Nonetheless, this would be an extremely serious reduction in the amount of the harvest,” he said.

The North is especially vulnerable to the annual heavy summer rains that soak the Korean Peninsula because of a vicious cycle in which people strip hillsides of natural vegetation to create more arable land to grow food, increasing flood risks.

U.S. Assistant Secretary of State Christopher R. Hill said the U.S. government was considering how it could help the North Koreans.

The disaster reports precede a planned summit this month between leaders of the two Koreas. South Korea’s government has been criticized by opponents at home and abroad for having given unconditional aid to the North during an international standoff over the communist state’s nuclear weapons program.

Aid was already expected to be a key topic at the summit. Marcus Noland, senior fellow at the Washington-based Peterson Institute for International Economics, said the latest disaster gives Seoul justification to expand assistance to its neighbor.

North Korea’s flooded ‘rice bowl’
BBC
8/16/2007

The UN World Food programme’s acting country director, Michael Dunford, has just returned from a visit to one of North Korea’s flood-affected areas, in the south of the country.

He told the BBC news website what he saw and how the floods are affecting a country already dependent on food aid.

“We went to Sogon, driving for about two hours to get there, and we saw extensive examples of flooding as we went down, with widespread inundation of arable lands which, of course, creates concerns as regards the long-term food implications.

We have been told by the government that the Kangwon province is one of the areas that is worst affected. The impression we are getting is that there is severe damage throughout the southern half of the country, across to the east.

The southern part of the country is the main food-producing area. As you go further north it is more mountainous and hence their ability to produce is limited.

The area that has been inundated is part of the ‘rice bowl’, hence this creates additional concerns as to what impact that may have.

We estimate that annually there is a food deficit of about a million tons of cereals – that’s maize and rice. So, in the past, North Korea has relied on bilateral, from China and South Korea predominantly, and also and multilateral support through the World Food Programme.

Collapsed houses

Last year, the amount of food that entered the county did not meet the food gap and hence we were concerned about the implications that was going to have for food security in the country and potentially the impact that may have on the most vulnerable.

Certainly for them to have the floods this year is only going to exacerbate the already food insecure situation in the country.

People are managing as best they can. We understand from the government that those who have lost their homes are now residing in either their place of work or some form of community shelter – either a schools or nursery, we expect.

We were dealing with local officials. They tell us that the waters have inundated houses, houses have collapsed, factories have been completely inundated and roads and bridges have been washed away. Certainly the impression we are getting is that this is very severe flooding.

We saw bridges that were knocked down, we saw roads that had been washed away. The infrastructure is typically old and anything that damages it further is going to have implications.

Wiped out

The landscape in the southern area is a combination of flatlands with quite dramatic mountains, there are fields with hills and mountains shooting up.

There are small villages and co-operative farms. These are very rudimentary houses – typically handmade.

People may have a small plot in the front of the house in which they try to grow their own vegetables – potatoes, beans, carrots, tomatoes – they are then surrounded by more extensive farmlands which have been damaged by flooding.

In one area, we were looking at what we thought was a river running through a field of maize but it was in fact the offshoot of a flooded river. Crops have just been wiped out.

We also saw a lot of areas that were completely underwater, knowing that the rice would not be able to recover.

This is the period of pollination and, hence, because the rice is underwater during this period, it won’t germinate and hence won’t produce for the harvest due in September-October.

N Korea floods devastate farmland
BBC
8/15/2007

Severe flooding in North Korea has destroyed more than one-tenth of the country’s farmland, according to the state news agency KCNA.

“As of 14 August, more than 11% of rice and maize fields were submerged, buried or washed away,” Ri Jae-Hyon, director of the Ministry of Agriculture, said.

Government officials also told aid workers in the region that 300,000 people may have been left homeless.

Aid teams visiting the area warned of a need for emergency shelter and food.

“Going forward, the crop damage is of major concern,” Michael Dunford, of the UN World Food Programme, told the BBC.

He added that he had been to see some of the damaged areas, and described the situation as “pretty grim”.

Food aid

“Areas of the capital, Pyongyang, have been inundated,” he said, “but certainly as you move out into the countryside there is widespread damage, and it is going to have a negative impact on DPRK [North Korea] most certainly.”

North Korea already suffered from severe food shortages, even before the floods.

About two million people are thought to have died from famine in the mid-1990s in North Korea, and the country remains dependent on foreign food aid.

United Nations Secretary General Ban Ki-moon has ordered a full evaluation of the needs of North Koreans and has promised assistance to the communist nation.

“I assured him that the United Nations will be prepared to render whatever possible humanitarian assistance and help to the DPRK (North Korean) government and people overcoming this difficulty,” he said after a meeting with North Korea’s UN envoy Pak Gil-yon.

The US and South Korea have both said that they would consider sending aid.

‘Huge damage’

North Korea made the rare plea for help after it announced late on Monday that storms since 7 August had led to “huge human and material damage”.

State news agency KCNA said hundreds of people were dead or missing.

Many areas were affected but worst hit were the three provinces of Kangwon, North Hwanghae and South Hamgyong, it said.

Television pictures from the capital Pyongyang showed people wading along streets through thigh-deep water after rivers burst their banks.

These floods are thought to be worse than the ones that hit last year. Hundreds of people are thought to have died in August 2006, but exact figures are not known.

Heavy rainfalls render 17,000 North Koreans homeless
Yonhap
8/15/2007

Hundreds of people were killed or missing in North Korea in heavy downpours that battered the impoverished communist country last week, a North Korean official said in a report on Wednesday.

The downpours, which flooded even the center of its capital, Pyongyang, and wide sections of the country’s western region, also left about 17,000 people homeless, said the official from Pyeongan Province in a report carried by Pyongyang Radio. 

South to Help North Recover From Floods
Korea Times
Jung Sung-ki
8/14/2007

South Korea is considering sending relief supplies to help the North recover from severe flooding, the Ministry of Unification said Tuesday.

Hundreds of people are dead or missing in North Korea following week-long torrential rain that has destroyed thousands of houses, and damaged roads and railway tracks, the North’s state media reported.

“North Korea seems to be suffering a greater loss of lives and property than it did during July’s flooding last year,” Seo Sung-woo at the ministry’s intelligence analysis bureau told reporters.

“I don’t think the inter-Korean summit will be affected by the floods. However, if the rains continue, it is hard to predict,” said Seo.

In 2006, monsoons rains hit much of the impoverished state, killing hundreds of people.

Floods in July that year left over 500 people dead and nearly 300 people missing, according to the Chonson Sinbo, a Japan-based pro-North Korean newspaper.

In the following month, Seoul sent $82 million worth of aid to Pyongyang. The South provided the North with 100,000 tons of rice and cement, five tons of iron, construction equipment, 80,000 blankets and 10,000 emergency kits, according to the ministry.

The North’s official Korean Central News Agency said this year’s heavy rain destroyed at least 30,000 homes of 63,300 families, and more than 540 bridges and sections of railway.

The agency said heavy downpours had caused “huge human and material damage.” Many parts of the country received between 30 and 67 centimeters of rain from Aug. 7 to 12, it said.

Gangwon Province was hit the hardest, with more than 20,000 homes damaged or destroyed.

Pyongyang and neighboring provinces including South Hwanghae and South Pyeongan were also badly affected, according to the report.

Experts blamed decades of reckless deforestation for North Korea’s flood problems, saying the country has been stripped of tree cover that provides natural protection.

The International Federation of the Red Cross (IFRC) emergency operations staff is on a 24-hour alert to monitor flood damage in North Korea and has distributed aid kits to some 500 families, its Web site said.

“People have been evacuated and brought to safety,” it said, and county governments are “appealing to cooperative farms to donate emergency food for homeless people.”

International Red Cross goes on alert in North Korea on flood damage
Yonhap
8/13/2007

The International Federation of Red Cross (IFRC) emergency operations staff is on a 24-hour alert to monitor flood damages in North Korea and has distributed aid kits to some 500 families, its Web site said Monday.

A bulletin dated Sunday said the torrential rain that started Aug. 5 has caused serious flooding in many parts of North Korea.
“People have been evacuated and brought to safety,” the IFRC Web site said, and county governments are “appealing to cooperative farms to donate emergency food for homeless people.”

“Warnings of high tides have been issued on national television. Indeed, weather forecasts predict continued heavy rains until Aug. 17.”

The Red Cross emergency operations room is on a 24-hour alert, it said, with its staff in the field assessing damage.

In a rare admission of a crisis, North Korea’s state run news agency said Monday the downpour so far has left hundreds of people dead or missing and destroyed more than 30,000 homes for 63,300 families.

The Korean Central News Agency said hundreds of public buildings, bridges and railway sections also were destroyed.

Korea Herald
Choi He-suk
8/13/2007

The Inter-Korea Cooperation Fund is riddled with problems, a team of civilian experts reported.

At present, the country’s support measures for North Korea are carried out using the Inter-Korea Cooperation Fund.

According to reviews evaluating public funds’ relevance and the efficiency of asset management carried out by civilian experts, the management of the Inter-Korea Cooperation Fund is inefficient and poorly planned. The panel also said that the Unification Minister-led committee in charge of the fund lacks the expertise required for asset management.

However, the team, comprised of 67 civilian experts including university professors, accountants and researchers, did not include the fund among those slated for abolition.

The reviews, carried out during the first half of the year, showed that the fund’s sources of revenue must be diversified. The review panel said that most of the fund’s revenues are generated from the government budget and that the proportion of resources raised from the private sector and through in-house projects remain insignificant.

The reports added that despite the fact that those responsible for managing the fund realize the need to find new sources of revenue and to draw up detailed expenditure plans, such changes have failed to materialize.

The reports also highlighted the need to draw up long-term plans for the fund’s management and said that the Ministry of Unification should take the lead in establishing long term plans and strategies for the management of the fund to reflect the changes in inter-Korea relations.

The review panel also suggested that the private sector’s participation in the fund needs to be increased.

The reports said that although the government should continue to provide support for private organizations in inter-Korea projects, local financial institutions should be at the core of related projects in the future when non-governmental exchanges become the mainstay of economic relations between the two Koreas.

The reports also showed that some of the projects operated through the fund overlap with those financed by other public funds and that such projects should be operated in collaboration with concerned bodies.

Korea Times
Ryu Jin
8/9/2007

South Korea is expected to propose a large-scale investment plan in social overhead capital (SOC) in North Korea in the inter-Korean summit late this month to help the impoverished state revive its economy, according to officials on Thursday.

Officials in Seoul said that the package proposal will likely include the provision of electricity, renovation of the Pyongyang-Gaeseong highway, improvement of facilities in Nampo port and establishment of a fertilizer factory.

President Roh Moo-hyun and North Korean leader Kim Jong-il are set to meet in Pyongyang Aug. 28-30, seven years after Roh’s predecessor, Kim Dae-jung, met with the reclusive North Korean leader.

While the Roh administration finds itself in a difficult position to give direct assistance to the North, such as provisions of rice and fertilizer — not to mention cash — it appears to have opted for “indirect’’ SOC investment, according to the sources.

Former President Kim Dae-jung won the Nobel Peace Prize for the first-ever summit in June 2000, but his achievement was partly tainted by later revelation that Seoul had secretly transferred $500 million to Pyongyang to foster the historic summit.

Roh, who has put more weight on transparency in North Korea affairs, often stressed the need to help North Korea repair its devastated economy with its own hand and get out of its economic slump.

In February, the Unification Ministry drew up a roadmap for a large-scale economic cooperation, focusing on “what the North really wants.’’ Seoul will likely make some offers to Pyongyang in the upcoming summit, according to government sources.

Dubbed “Roadmap to Hope,’’ the ministry plan includes as many as 16 items such as the provision of 2 million-kilowatt electricity, worth some $900 million every year, and renovation of the 170-kilometer Pyongyang-Gaeseong highway ($307.7 billion).

Other items include the improvement of facilities in Nampo port, the construction of a 330,000-ton fertilizer plant and installation of tree nurseries in Pyongyang, Gaeseong and Hamheung.

“We are sorting out items that could be offered,’’ a high-profile government official said on condition of anonymity. “I think our proposal for the SOC investment could be discussed in the working-level preparatory talks in Gaeseong next week.’’

Experts estimated that the aid package could reach 9 trillion won to 13 trillion won ($9.7 billion to $14 billion) in the coming several years, if major items such as the highway renovation are included on top of the ongoing supply of heavy fuel oil.

Seoul is expected to demand the establishment of liaison offices across the border and the regularization of military talks headed by the defense ministers from the two sides in return for the economic incentives, according to the sources.

But the large-scale economic assistance is expected to trigger fiery debate in the South, as conservatives, represented by the opposition Grand National Party (GNP), have often lashed out at the government’s “single-handed’’ assistance amid the nuclear standoff.

Deputy Prime Minister and Minister of Finance and Economy Kwon O-kyu, who is to accompany Roh to Pyongyang, stressed on Thursday that the aid package would be offered “transparently’’ in close coordination with the international community.

“South-North Cooperation Fund, operated under the endorsement of the National Assembly, could be used first,’’ he told reporters. “I think we should also try to create a favorable environment for the inter-Korean economic projects in close cooperation with the World Bank and the Asian Development Bank.’’

New York Times
Normitsu Onishi
8/8/2007

The two Koreas announced Wednesday morning that they would hold a summit meeting later this month, the first since a groundbreaking meeting in 2000 began an ongoing reconciliation process on the Korean peninsula.

President Roh Moo-hyun of South Korea will meet the North’s leader, Kim Jong-il, during a three-day meeting Aug. 28 to Aug. 30 in Pyongyang, North Korea’s capital, the two Korean governments said in coordinated announcements.

The North said the meeting will carry “weighty significance in opening a new phase of peace,” according to the government’s Korean Central News Agency. The South, using similar language, added that the meeting would “provide momentum to settle the North Korean nuclear problem.”

Neither side released details about the agenda, and it was not clear how much can realistically be accomplished because the deeply unpopular Mr. Roh has only a few months left in office.

The meeting, which had been rumored for months, was immediately criticized by South Korea’s political opposition as a ploy to influence the presidential election in December. The trip by Mr. Roh is widely expected to boost the popularity of liberal presidential candidates who share his engagement policy toward the North.

While the main opposition Grand National Party also favors engaging North Korea, its candidates call for tougher concessions from the North. Two Grand National Party candidates, Lee Myung-bak and Park Geun-hye, lead in polls for the election.

“This summit is about politics between North and South Korea,” Nam Sung-wook, a North Korea expert at Korea University, said in a telephone interview from Seoul. “It is unlikely to solve the nuclear problem because North Korea has consistently argued that it is a problem between North Korea and the United States.”

Still, South Korea said the North had agreed to the meeting because of the recent progress in negotiations over the North’s nuclear program. The North shut down its nuclear reactor at Yongbyon last month, and talks are continuing over its entire nuclear program.

In 2000, Kim Jong-il and the previous South Korean president, Kim Dae-jung, met in Pyongyang in sessions that inaugurated a policy of reconciliation between the two cold war enemies, which remain technically at war. That meeting led to a profound change in relations between the two countries.

Joong Ang Daily
8/8/2007

North Korean youth soccer players arrive yesterday at Incheon International Airport. The North Korean team will participate in the U-17 World Cup organized by FIFA in South Korea from Aug. 18 through Sept. 9.

Daily NK
Kim Song A
8/2/2007

“In order to transform North Korea, outside news has to enter.”

North Korea, through the North-South Korea Military working-level talks held on the 10th, proposed the cease of scattering of flyers by private organizations. This is the 16th time that North Korea has made such a request.

The North Korean authorities, through the North-South General Officers Talks held in 2004, protested that South Korean private organizations are scattering defamatory flyers, despite the fact that North and South Korea agreed to stop advertisement activities, broadcasting, or public announcements in the Military Demarcation Line region.

Related to this, Lee Min Bok, Christian Defectors Association’s representative, evaluated in a phone interview with DailyNK on the 26th, “The reason why North Korea is reacting sensitively is because many North Koreans are exposed to materials distributed by ‘leaflet balloons’ and are being influenced.”

Mr. Lee revealed his intention to continue to carry out this work, “All North Koreans, with the exception of Kim Jong Il, probably appreciate the information distribution even though they cannot outwardly express it. We will continue to carry out this work with the single-hearted purpose of relaying outside news.”

Lee, who entered South Korea in `95 via Russia and China after defecting from North Korea in `90 is well-known as “the first refugee from North Korea defined by UN.” Presently, he graduated from seminary in South Korea and is involved in spreading Christianity in North Korea.

Through the balloon, his strategy is to transform North Korea while disseminating outside news such as evangelism flyers to North Korea. The members of defector and missionary organizations sent 207 large-size balloons (as of July 18th) to North Korea this year alone.

A total of 597,816 leaflets were sent to North Korea through these balloons. Six radios and medicine such as aspirin were included as well. He who has been continuing this activity since 2002 emphasized that disseminating outside news was more important than any other work.

“In East Germany and the former Soviet Union, outside news caused the fall of Communism. East Germany’s last prime minister Lothar de Maiziere said at the time of Germany’s reunification, “West Germany tried to relay news of the outside world to East Germany. Russian-born North Korean expert, Professor Andrei Lankov said, “Soviet Union was toppled because of the radio.”

“As when Romanian citizens executed dictator Ceaucescu, the potential power of North Korean citizens will be great if North Korea collapses,” confirmed Lee of the enormous impact dissemination of flyers and radio broadcasting has had on North Korean citizens.

He said, “Failure to support or back such activity might actually ignore the latent energy of North Korean citizens. When I was in North Korea, I learned a lot from the flyers from South Korea. What I saw then is significantly helping me produce flyers to be distributed to North Korea now.”

He recalled his experience then and has produced flyers which are considerate of North Korean citizens by expressing terminology or inscriptions which may not be understood in a more North Korean way.

Regarding the content of the flyers, he explained, “It focuses on North Korean society’s devotion towards Kim Jong Il and helping them realize the areas of propagandistic lies about South Korea.”

He added, “I have lived in North Korean society, so I know what to capture to reveal the true nature of North Korea’s political power. From such intent, the defectors have to become owners of this work and must actively step forward.”

Sending one large-sized balloon to North Korea costs around 140 dollars. The cost adds up if the one counts the failed balloons due to the weak north wind. The support money from defector or missionary organizations and civilian organizations have been appropriated for this work.

Lee, who believes that a single flyer he sends can change the North Korean people, emphatically said, “There is no one who significantly recognizes our work, but in order to open and reform North Korea, I do not think there is any other way. Until North Korea democratizes and becomes reunified, I will continue this work.”

Joong Ang Daily
Jo Dong-ho
8/1/2007

The environment for economic relations between South and North Korea has changed.

In 1998, when the Sunshine Policy was started, South Korea’s national per capita income was $7,355, while North Korea’s stood at $573. At the time, South Korea’s export volume was $132.3 billion, and North Korea’s was $600 million. In a nutshell, South Korea’s national per capita income was 13 times higher and its export volume was 220 times bigger than North Korea’s.

Since then, South Korea’s national per capita income has rapidly increased, to $18,372 as of 2006. Meanwhile, according to an estimate by the Bank of Korea, North Korea’s national per capita income hovers at around $900.

South Korea’s exports are worth $325.6 billion, nearly triple 1998 numbers, but North Korea’s export volume is merely $900 million.

Accordingly, the gap between the two Koreas’ economies has widened. Now, South Korea’s national per capita income is 20 times higher than North Korea’s. South Korea’s export volume is 325 times larger than North Korea’s.

In particular, South Korea’s economy has developed and matured a great deal in terms of quality because it opened its doors more widely after the financial crisis 10 years ago.

But North Korea still cries out for an independent, self-sufficient economy, leading to a wider discrepancy in the economies of the South and North.

In the meantime, economic cooperation between South and North Korea has developed a great deal. In 1998, trade volume between South and North Korea was worth around $200 million. In 2006, it was more than $1.3 billion. Today, large-scale projects by both the private and the public sectors are in progress, something that was unthinkable back in 1998.

Examples of these are a building project at the Kaesong Industrial Complex and the government’s project for social overhead capital, such as railways and highways between the two Koreas. A variety of agreements have already been prepared, such as one protecting investments.

As a result, South Korea is North Korea’s largest export market, its second-largest trade partner and largest investor. South Korea also provides support and more assistance to North Korea than other countries.

The number of visitors to North Korea has increased as well. In 1988, 3,317 people went to North Korea, but last year more than 100,000 people visited there.

The reason why I included these lengthy statistics is to underscore the change in South and North Korea’s economies as wellas their economic relations.

In the past, South Koreans wanted to buy products made in North Korea out of curiosity, but now an item from North Korea is simply commonplace.

A small project involving North Korea made headlines in the past, but now many go unnoticed.

However, the Sunshine Policy, which has been in place since the Kim Dae-jung administration, has not changed at all.

The Sunshine Policy was aimed at inducing North Korea to change and expanding contact and exchange with North Korea was a means to achieve that goal.

That is why we did our utmost to cooperate economically with North Korea and to increase assistance to the country. As seen in statistics, these efforts have produced significant achievements on the outside.

But in the process, we became preoccupied with the means and forgot about the original goal of the policy. We continued economic cooperation with North Korea even though it carried out a nuclear test. We wanted a summit meeting with North Korea even though it meant we had to put a tremendous amount of money under the table. The Donghae line is not of much use because the railway does not run northbound from Gangneung. We connected it because North Korea wanted us to.

Maintaining contacts and exchange with North Korea has become the ultimate goal of the policy. Because of the Sunshine Policy, in which the means have become the goal, North Korea receives assistance even though it sticks to its old-fashioned ideology.

Thus, now we need to straighten out the means and the goal. The environment for economic relations between South and North Korea has changed. We can’t define the Sunshine Policy as either a failure or a success.

We have long since passed the stage where we have to pour all our efforts into the means, but we have not changed our direction to focus our energy and attention on a new goal. It is meaningless that presidential hopefuls discuss whether they will embrace or abolish the Sunshine Policy in its entirety.

In the past, starting economic relations with North Korea was the top priority even though it meant “shoveling aid across the border.” The time has come to steer the policy in the right direction.

Korea Herald
Ko Kyoung-tae
7/30/2007

Trade between South and North Korea expanded fast this year as South Korean manufacturers picked up investment and output at the Gaeseong Industrial Park, trade data showed yesterday.

The Korea International Trade Association said the inter-Korean trade rose to a record high $720 in the first half, up nearly 30 percent from a year earlier.

Imports from the North jumped over 60 percent to $390 million, while exports slightly declined to $330 million, according to the association.

The large leap in imports from North Korea largely resulted from the fast-growing manufacturing facilities in Gaeseong.

The two Koreas have traded around $190 million of products and machineries through the industrial complex in the first six months, up almost 80 percent from a year earlier.

The KITA officials expect the rising interests in the Gaeseong complex to further push up the cross-border investment and trade in the coming years.

South Korean conglomerate Hyundai Group built the manufacturing park in the North’s border city of Gaeseong in 2004 in a bid to attract South Korean manufacturers looking for cheap labor.

More than 20 South Korean companies currently employ around 11,000 North Korean workers.

Gaeseong’s output accounts for about one-third of the total inter-Korean commercial trade, the KITA noted.

Other regular trade also soared over 65 percent to $210 million as fishery and commodity imports grew in recent months.

In contrast, aid from South to North Korea remained stagnant.

Private cross-border aid dropped 15 percent to $140 million while government aid more than doubled to $20 million, the KITA noted.

The association estimated that 2007 inter-Korean trade would surpass $1.7 billion, four times that of 2000.

Yonhap
7/29/2007

South Korea on Sunday sent 22,590 tons of heavy fuel oil to North Korea, its last oil shipment to the communist neighbor under the first stage of a landmark nuclear disarmament deal.

Under a Feb. 13 deal signed with five other regional powers, North Korea agreed to shut down its nuclear reactor in Yongbyon in return for 50,000 tons of heavy fuel oil aid from South Korea.

The oil shipment, the fifth of its kind, left this southeast port at 1 a.m. and is to arrive at Sonbong Port in northeastern North Korea at 7 a.m. on Monday, South Korean officials said.

North Korea shut down the Yongbyon reactor after South Korea sent the first shipment on July 12. The February deal also calls for North Korea to disclose and disable all its nuclear programs in return for an additional 950,000 tons of oil or equivalent aid.

The six nations — the two Koreas, the U.S., China, Russia and Japan — met in Beijing earlier this month but the talks ended without setting a date to meet again.