North Korean Economy Watch

Yonhap
5/2/2007

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

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

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

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

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

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

Yonhap
5/2/2007

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

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

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

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

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

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

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

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

Joong Ang Daily
ser Myo Ja
4/27/2007

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

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

The specifics of the agreement were not released.

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

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

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

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

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

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

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

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

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

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

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

Korea Herald
4/23/2007

South Korea and the United States have agreed not to apply International Labor Organization regulations to an inter-Korean industrial park in North Korea’s border city of Gaeseong, a South Korean lawmaker claimed yesterday.

Kim Won-woong, head of the National Assembly’s unification, foreign affairs and trade committee, said the Gaeseong industrial park is certain to remain an exception to the ILO’s labor rules, paving the ground for Seoul and Washington to designate Gaeseong as an “outward processing zone” (OPZ) on the Korean peninsula.

Gaeseong, located just north of the inter-Korean border, currently houses 23 manufacturing plants, which combine South Korea’s capital with North Korea’s cheap labor.

Under an FTA deal concluded at the beginning of this month, South Korea and the United States agreed to set up a joint OPZ review committee that will identify areas in North Korea that might be designated as OPZs and consider their qualifications if they meet the necessary criteria, including labor and wage practices. But the labor sector was expected to pose a dilemma as North Korea is not a member of the ILO, which stipulates three basic labor rights, namely the right to unionize, collective bargaining and industrial action.

“South Korea and the United States agreed to consider North Korea’s non-ILO member status and unique labor circumstances in the designation of OPZs in the communist state,” said Kim, citing a document he obtained from the Foreign Affairs and Trade Ministry.

In related news, the two Koreas agreed yesterday at the 13th economic cooperation talks in Pyongyang to continue discussing how to fortify the operations at the industrial complex from next month.

Gaeseong park is considered a signature inter-Korean project symbolizing the efforts of expanding exchanges.

South Korea, under the engagement policy of President Roh Moo-hyun, aims to gradually open up North Korea towards market economy for an eventual reform.

Yonhap
4/20/2007

South Korea sustained a loss of some US$3 million on Friday as its contract for fuel oil aid to North Korea expired, the Unification Ministry said.

South Korea had planned to send 50,000 tons of heavy fuel oil to the North unless the communist country missed last Saturday’s deadline for taking initial steps toward its nuclear dismantlement under a landmark deal signed in February.

“The contract between the procurement authorities and GS Caltex expired today. The exact amount of penalty money is not clear, but it will amount to some 3.6 billion won given the cost of loading and storage,” the ministry said in a statement.

On Feb. 13, North Korea pledged to shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, North Korea would receive aid equal to 50,000 tons of heavy fuel oil from South Korea.

North Korea could receive another 950,000 tons in fuel aid if it disables the reactor irreversibly and declares a list of all nuclear programs to the International Atomic Energy Agency. The cost of the aid will be equitably distributed among the other countries in the six-nation talks.

But the North failed to shut down and seal its nuclear facilities by last Saturday, saying it would take first steps toward nuclear dismantlement as soon as it confirms the release of its funds frozen in a Macau bank since September 2005.

Macau’s financial authorities unblocked the North’s US$25 million in Banco Delta Asia, but the North has neither withdrawn the funds nor said when it will start implementing the initial steps.

“The contract was signed with an eye on the Saturday deadline and the IAEA’s nuclear inspection, but the unexpected Banco Delta Asia issue delayed the implementation of the agreement, costing us the penalty,” a ministry official said, asking to remain anonymous.

The official added that a new contract for heavy fuel oil will be made in consideration of the progress in the six-nation talks, involving the two Koreas, the United States, China, Japan and Russia.

Yonhap
4/19/2007

South and North Korea on Thursday discussed a range of economic issues, including food aid, at a belated session of talks after the North withdrew preconditions for the formal opening, pool reports said.

But the plenary session, which took place about eight hours later than scheduled, did not appear to go smoothly as Chu Dong-chan, chief of the North Korean delegation, left the conference room, slamming the door shut behind him, just half an hour after the start of the meeting.

“Both sides delivered their position to each other during the meeting. We have to be engaged in further discussion, but the situation is not that good,” Chin Dong-soo, chief of the South Korean delegation, was quoted as saying by reports from Pyongyang, the venue of the talks.

The session was supposed to be held at 10 a.m., but failed to materialize because the North abruptly demanded to exchange keynote speech texts prior to the meeting.

The North also called for seeing a draft of a written agreement on the South’s provision of rice aid, as well as a draft of the joint press statement to be issued at the end of the four-day talks.

But the South rejected all of the requests, calling them “unprecedented” and “unproductive.”

Instead, they started the closed-door plenary session at 5:30 p.m., and the keynote speech texts were exchanged just before the session in the same manner as in previous meetings, a South Korean delegate was quoted as saying.

“Let’s work hard together and come up with good results for the Korean people,” Chu said in his opening remarks.

Chin echoed his view, saying, “Let’s pool efforts to make the talks benefit us mutually and become a stepping-stone on the path of joint prosperity.” The South is scheduled to hold a press briefing in Pyongyang to explain what they discussed during the meeting later Thursday.

South Korea was to call upon North Korea to fulfill its promise to shut down its main nuclear reactor at the earliest possible time.

According to South Korea’s keynote speech text obtained by pool reporters, Vice Finance Minister Chin was to call for the North’s immediate action on the denuclearization process.

“The quick implementation of the Feb. 13 agreement is a shortcut to draw firm international support for inter-Korean economic cooperation,” the text said.

South Korea was also to propose to conduct test runs of reconnected cross-border railways sometime in May, according to the reports. The two sides are scheduled to hold a series of negotiations until Saturday, the last day of the four-day meeting.

“The overland transportation of economic cooperation goods will be offered in consideration of the high cost of logistics from maritime transportation,” a South Korean delegate said, asking to remain anonymous.

The two Koreas will also address the North’s request for 400,000 tons of rice in the form of a loan. South Korea is likely to accept the request unless the situation surrounding the North’s nuclear reactor shutdown gets worse.

Shortly after the North conducted missile tests in July, the South suspended food and fertilizer aid. But fertilizer aid was resumed in late March, a few weeks after the two sides agreed to repair their strained ties.

The inter-Korean dialogue came just days after the communist nation failed to meet a Saturday deadline to shut down and seal its nuclear facilities under a landmark six-nation agreement signed in Beijing in February.

Last Friday, North Korea said it would take first steps toward nuclear dismantlement as soon as it confirms the release of its funds frozen in a Macau bank since September 2005.

Macau’s financial authorities unblocked the North’s US$25 million in the Banco Delta Asia, but the deadline passed with no word from the North on whether it has confirmed the release of the funds or when it will start implementing the initial steps.

In the February accord, North Korea pledged to shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, North Korea would receive aid equal to 50,000 tons of heavy fuel oil from South Korea.

The U.S. promised to resolve the financial issue within 30 days, but it failed to do so because of technical complications.

Meanwhile, during a luncheon meeting with South Korean delegates, Chu flatly denied that North Korea is considering sending back the USS Pueblo to the United States.

“Return? Why do we return such an important thing?” Chu said when asked about press reports on the possible repatriation of the warship.

The USS Pueblo, docked on the bank of the Taedong River in Pyongyang, is used to stoke anti-American feeling among the North Korean public. It was seized on an intelligence-gathering mission off North Korea’s east coast in 1968.

On Wednesday, U.S. Republican Sen. Wayne Allard introduced a resolution demanding that North Korea return the Pueblo in exchange for a Korean battle flag captured in the 19th century and now on display at the U.S. Naval Academy in Maryland.

South and North Korea had already expressed their commitment to carry out what they had already agreed upon at the latest ministerial meeting held in March. The Koreas agreed to discuss food aid and schedules for test runs of cross-border trains as part of efforts to expand economic cooperation for the sake of joint prosperity.

“Let’s implement already agreed-upon issues, overcome barriers bravely and advance grandly as united people,” Kwon Ho-ung, chief councilor of the North Korean cabinet, said in a welcoming speech during the reception for the South Korean delegation Wednesday evening.

In response, Chin stressed that the two sides should upgrade their economic ties. “I expect that the meeting will actualize and develop economic cooperation,” he said.

The six-member South Korean delegation arrived in Pyongyang Wednesday afternoon on a direct flight from Gimpo Airport. The delegates attended a banquet hosted by Kwon, following a brief meeting with their North Korean counterparts.

Also high on the agenda are test runs of the cross-border railways in the first half of this year, and the implementation of an economic accord in which South Korea was supposed to provide raw materials in exchange for the North’s natural resources.

North Korea abruptly called off scheduled test runs of the railways in May under apparent pressure from its hard-line military. The cancellation also led to the mothballing of the economic accord. North Korea’s subsequent missile and nuclear weapons tests further clouded hopes of implementing the agreement.

The tracks, one line cutting across the western section of the border and the other crossing through the eastern side, were completed and set to undergo test runs. A set of parallel roads has been in use since 2005 for South Koreans traveling to the North.

South Korea has repeatedly called on North Korea to provide a security guarantee for the operation of the railways, but the North has yet to respond on the issue.

The reconnection of the severed train lines was one of the tangible inter-Korean rapprochement projects agreed upon following the historic summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

In 2005, South Korea agreed to provide the North with $80 million worth of raw materials to help it produce clothing, footwear and soap starting in 2006. In return, the North was to provide the South with minerals, such as zinc and magnesite, after mines were developed with South Korean investments guaranteed by Pyongyang.

Science Magazine
Vol. 316. no. 5822, p. 183
DOI: 10.1126/science.316.5822.183
Richard Stone
4/13/2007

In a dramatic new sign that North Korea is emerging from isolation, the country’s first international university has announced plans to open its doors in Pyongyang this fall.

Pyongyang University of Science and Technology (PUST) will train select North Korean graduate students in a handful of hard-science disciplines, including computer science and engineering. In addition, founders said last week, the campus will anchor a Silicon Valley-like “industrial cluster” intended to generate jobs and revenue.

One of PUST’s central missions is to train future North Korean elite. Another is evangelism. “While the skills to be taught are technical in nature, the spirit underlying this historic venture is unabashedly Christian,” its founding president, Chin Kyung Kim, notes on the university’s Web site (www.pust.net).

The nascent university is getting a warm reception from scientists involved in efforts to engage the Hermit Kingdom. “PUST is a great experiment for North-South relations,” says Dae-Hyun Chung, a physicist who retired from Lawrence Livermore National Laboratory and now works with Roots of Peace, a California nonprofit that aims to remove landmines from Korea’s demilitarized zone. To Chung, a Christian university is fitting: A century ago, Christianity was so vibrant in northern Korea, he says, that missionaries called Pyongyang “the Jerusalem of the East.”

The idea for PUST came in a surprise overture from North Korea in 2000, a few months after a landmark North-South summit. A decade earlier, Kim had established China’s first foreign university: Yanbian University of Science and Technology, in Yanji, the capital of an autonomous Korean enclave in China’s Jilin Province, just over the border from North Korea. In March 2001, the North Korean government authorized Kim and his backer, the nonprofit Northeast Asia Foundation for Education and Culture (NAFEC), headquartered in Seoul, to establish PUST in southern Pyongyang. It also granted NAFEC the right to appoint Kim as PUST president and hire faculty of any nationality, as well as a contract to use the land for 50 years.

NAFEC broke ground in June 2002 on a 1-million-square-meter plot that had belonged to the People’s Army in Pyongyang’s Nak Lak district, on the bank of the Taedong River. Construction began in earnest in April 2004. That summer, workers–a few of the 800 young soldiers on loan to the project–unearthed part of a bell tower belonging to a 19th century church dedicated to Robert Jermain Thomas, a Welsh Protestant missionary killed aboard his ship on the Taedong in 1866.

NAFEC’s fundraising faltered, however, and construction halted in fall 2004. The group intensified its Monday evening prayers and broadened its money hunt, getting critical assistance from a U.S. ally: the former president of Rice University, Malcolm Gillis, a well-connected friend of the elder George Bush and one of three co-chairs of a committee overseeing PUST’s establishment. “He made a huge difference,” says Chan-Mo Park, president of Pohang University of Science and Technology (POSTECH), another co-chair. South Korea’s unification ministry also quietly handed PUST a $1 million grant–more than it has awarded to any other North-South science cooperation project. This helped the school complete its initial $20 million construction push.

At the outset, PUST will offer master’s and Ph.D. programs in areas including computing, electronics, and agricultural engineering, as well as an MBA program. North Korea’s education ministry will propose qualified students, from which PUST will handpick the inaugural class of 150. It is now seeking 45 faculty members. Gillis and other supporters are continuing to stump for a targeted $150 million endowment to cover PUST operations, which in the first year will cost $4 million. Undergraduate programs will be added later, officials say. PUST, at full strength, aims to have 250 faculty members, 600 grad students, and 2000 undergrads.

PUST hopes to establish research links and exchanges with North Korea’s top institutions and with universities abroad. “It is a very positive sign,” says Stuart Thorson, a political scientist at Syracuse University in New York who leads a computer science collaboration between Syracuse and Kimchaek University of Technology in Pyongyang. “Key to success will be achieving on-the-ground involvement of international faculty in PUST’s teaching and research.”

Some observers remain cautious, suggesting that the North Korean military could use the project to acquire weapons technology or might simply commandeer the campus after completion. A more probable risk is that trouble in the ongoing nuclear talks could cause delays. At the moment, however, signs are auspicious. Park, who plans to teach at PUST after his 4-year POSTECH term ends in August, visited Pyongyang last month as part of a PUST delegation. “The atmosphere was friendly,” he says. “The tension was gone.” The Monday prayer group continues, just in case.

Korea Herald
Annie Bang
4/10/2007

Twenty organizations of North Korean defectors established a politically unified group in Seoul yesterday and pledged to lead activities to democratize the North.

The group also revealed satellite photos of 17 private houses in the North owned by the North Korean leader Kim Jong-il.

“The defectors, who experienced living under the dictatorship of North Korean leader Kim Jong-il, must seek more systematic ways to democratize North Korea,” said Sohn Jung-hoon, secretary of the newly founded Committee of Democratizing North Korea.

The committee was formed by almost all the organizations of North Korean defectors in the South, including Democracy Network against North Korean Gulag, and Association of the North Korean Defectors.

“It is impossible for North Korea to recover its economy and resolve the shortage of food without freedom,” the committee said in a statement. “Democratizing North Korea is a must to bring peace on the Korean Peninsula, to improve inter-Korean relations and to recover the North Korean economy.”

Hwang Jang-yop, chairman of NKD, who was secretary of the Central Committee of the North Korean Workers’ Party, will lead the unified group.

There are over 100,000 North Koreans who defected from the North as of February, and the Seoul government believes the number will exceed 200,000 in five years.

Yonhap
4/10/2007

South and North Korea on Tuesday agreed to dispatch a joint team to China to disinter and repatriate the remains of a prominent independence fighter buried there.

They will also push to organize joint commemorative events for the 100th anniversary of the death of the freedom fighter An Jung-geun in 2010, according to a statement released by the Unification Ministry.

The agreement came at the end of the one-day working-level talks held in the North Korean border city of Kaesong. The talks were resumed after a 13-month hiatus.

“The joint excavation team will be sent to China for about a month beginning in late April. We will work out details for the dispatch later at the truce village of Panmunjom,” the statement said.

An was executed in Dalian in 1910, a year after assassinating Hirobumi Ito, Japan’s first resident-general in Korea, on a railway platform in Harbin. His remains are still buried near a former prison run by Japanese authorities in Dalian.

An’s assassination of Hirobumi was an attempt to prevent Japan’s annexation of Korea, but the Korean Peninsula was formally colonized by Japan from 1910 to 1945.

During the Japanese colonial period, millions of Koreans are believed to have been killed or sent into forced labor, including sexual servitude for the Japanese military.

The South Korean delegation was headed by Lee Byeong-gu, director general of the Ministry of Patriots and Veterans Affairs, while Chon Chong-su, deputy bureau chief of the Committee for the Peaceful Reunification of the Fatherland led the North Korean team.

Choson Ilbo
4/9/2007

“Why are so many crosses out there?” “Why do most children wear glasses?” “Can I see your mobile phone?” These were just a few of the many questions North Korea’s youth football squad had over the weekend. On the pitch, they are not different from young South Korean players. But moving around by bus or train, they were full of curiosity about the things they saw. Twenty-three members of the under-17 football team have been staying in South Korea for 20 days.

Many questions
The lobby of the Suncheon Royal Tourist Hotel at 9 a.m. on Saturday. The North Korean soccer squad look trim in their black uniform, shoes in hand. They had countless questions for the South Korean officials of the Sports Exchange Association accompanying them. “What is the cross for?”, one asks, and when told asks again, “What is a church?” The answer seemed to baffle them. When an official explained that many young South Koreans wear glasses because they use computers a lot, one team member said, “In North Korea, only few children and scholars who read lots of books wear glasses.”

The players were particularly taken by mobile phones. They wondered how people could make calls without lines and play games or take pictures with their phones. Whenever officials from the association used their mobile phones, the North Korean youngsters gathered to see their phones.

When shown magazine photos and asked to pick the most beautiful among actresses, Jeon Ji-hyun, Song Hye-gyo and Beyonce Knowles, they chose Beyonce Knowles, still insisted they didn’t care.

◆ They enjoyed playing chess and cards when taking a rest.

The squad had three meals in their hotel restaurant and only left the hotel for training for three hours in the morning and afternoon. In the hotel, they spent most of the rest of their time playing Chinese card games and chess. They did not watch TV except football games. When the team was moving to Suncheon by bus, one player started reading a memoir by former North Korean leader Kim Il-sung, and others asked to borrow it.

Ri Chan-myong, the head of the North Korean youth squad, and the other eight North Korean officials accompanying them drank together with South Korean officials of the sports exchange association. The North Korean officials drank a lot, finishing off 200 bottles of soju or Korean distilled liquor during their 11 days in Jeju.

◆ “I miss my parents”

Five members got wounds in the middle of training. Those players sometimes said, “I miss my parents.” North Korean soccer players, who did not talk much when they first arrived in Jeju, began talking on the third days. At first, North Korean soccer squad ate only Kimbab(rice rolled in dried laver) and Kimchi, now they eat sushi, sliced raw fish, cake and fruits such as banana, apple and pineapple. North Korean soccer squad will move to Seoul on April twelfth and depart for North Korea on twentieth after having a friendly match on fourteenth. Kim Kyung-sung, chief executive member of the South and North Korean Sports Exchange Association, said, “North Korean soccer team is considering going out before they leave but nothing is confirmed.”