North Korean Economy Watch

From the Korea Herald:

Lee opposes additional sanctions on N. Korea

South Korean Unification Minister Lee Jong-seok has taken another shot at the United States, saying that additional sanctions against North Korea were undesirable.

“The solution to the missile problem is for South Korea and the United States to collaborate and for China, Russia and other countries to cooperate […] We must think about whether what the United States does immediately equals to what the international community wants to do.”

Lee’s comments are in line with the South Korean government’s policy to expand sanctions against the communist regime and avoid creating further tension on the peninsula, government officials later explained.

Lee underscored the “South Korean government, as a valid member of the international community must make our own voice known as well.”

The Seoul government has been visibly cautious against slapping sanctions on North Korea, which test-fired a barrage of ballistic missiles July 5 despite international warnings.

“There must not be any more comments or actions that will heighten military tension on the Korean Peninsula,” Lee said.

He urged that it was most important to bring North Korea back to the negotiating table and not give it more time to further develop any weapons.

But inter-Korean relations continue to take on a sour note. Upon North Korea’s demand to halt the ongoing construction of a family reunion center in Mount Geumgang, most of the 150 South Korean workers were set to return home yesterday afternoon.

The United States, in the meantime, reportedly refused a visa application for Ri Gun, North Korea’s director-general of the North American Division at the Foreign Ministry.

Ri was set to attend a seminar hosted by Massachusetts Institute of Technology and Stanford University later this month.

The United States is stepping up pressure on the North through investigating its alleged money counterfeiting and by highlighting its human rights abuses.

Japan has also made moves to fortify its defense lineup against the possible threat from North Korea.

“To solve this, any form of dialogue must be accomplished (with the North),” Lee said. Seoul officials said bilateral talks between the United States and North Korea should be considered as a possibility.

Here is what the US has been up to: 6/22/2006 From the Joong Ang Daily:

U.S. and Japan press on with plans for sanctions

The recent visit to Seoul by a U.S. Treasury Department official and his stops in other regional capitals is a sign that Washington intends to tighten the financial noose around Pyongyang. After telling Korean officials that Washington might reinstate trade sanctions on North Korea that were lifted during the Clinton administration, Stuart Levey, the under secretary for terrorism and financial intelligence, moved on to Vietnam, Singapore and Japan. Sources in Seoul said yesterday that the main purpose of his trip was to search for bank accounts linked to illicit activities in which North Korea is engaged.

On Tuesday, the under secretary reportedly met with Vietnamese government and financial officials. A diplomat in Seoul said, “A bank account that is used by Hyundai Asan and North Korea has been under investigation there.”

Last autumn, Washington warned Banco Delta Asia in Macao of financial sanctions if it did not tighten its controls against money laundering; about 40 North Korean accounts there have reportedly been frozen. Hyundai Asan once sent its payments to North Korea to that bank; Pyongyang has directed the payments to other bank accounts in Austria and Vietnam since then.

After arriving in Tokyo on Thursday Mr. Levey reportedly gave officials there a list of persons and companies suspected of being linked to North Korea’s missile programs. The U.S. official also discussed with his hosts possible measures to block the flow of cash from ethnic Koreans in Japan to their homeland, a move Tokyo has said publicly it was considering.

In Singapore, at least one bank account has been linked to money sent by the Hyundai Group to North Korea before the 2000 inter-Korean summit between Kim Dae-jung of South Korea and Kim Jong-il. Ironically, Don Kirk, a reporter for the International Herald Tribune in Seoul, mentioned that account in an article he wrote shortly after the summit; Seoul reacted with fury and the matter lay dormant for some time. Prosecutors eventually announced in 2003 that $450 million had been sent to North Korea to induce Kim Jong-il to host the summit meeting.

As other nations study ways to step up pressure on North Korea, the Roh administration remains defiant in pursuing reconciliation. But even more important to North Korea than the South is China. Efforts to coordinate sanctions have centered on the North’s major ally and provider of food and energy; Beijing is seen internationally as having enough leverage to bring Pyongyang back to the six-nation nuclear negotiations.

But a senior Chinese general said Thursday there was little his government could do. Guo Boxiong, the vice chairman of China’s Central Military Commission, flatly told an audience at the National Defense University in Washington, D.C., that “China cannot possibly force the DPRK to do anything or not to do anything.”

Separately in Washington, the Bush administration is planning to implement the recent United Nations Security Council resolution on North Korean missiles and nuclear programs by enacting new legislation. Senator Sam Brownback, a Kansas Republican, told a news conference that a bill called the “North Korea Nonproliferation Act” is in the works. It would bar companies or individuals involved in North Korea’s mass weapons programs from doing any business with U.S. companies. The act is similar to legislation already in force, aimed at Iran in 2000 and then expanded to include Syria.

Defenses against missiles are also being given more attention. Washington and Tokyo are expected to sign an agreement on the operation of missile defense systems that includes commitments to more sharing of intelligence on North Korea. The Mainichi Shimbun, a Tokyo daily, added in an article yesterday that the agreement will allow Japan to receive U.S. satellite photos and data more quickly.

by Lee Chul-hee, Brian Lee

From the Associated Press (Via Korea Liberator)

Japan Won’t Rush Sanctions on North Korea
7/19/2006
Hiroko Tabuchi

Prime Minister Junichiro Koizumi said Wednesday Japan will not rush to impose more sanctions on North Korea, amid reports Tokyo may call for five-party talks on the sidelines of a regional security forum on the North’s nuclear ambitions.

Japan, meanwhile, plans to launch two spy satellites to monitor North Korean activity by the end of the year, a news report said.

Koizumi told reporters Wednesday Japan will wait for a further response from North Korea to a U.N. Security Council resolution and a Group of Eight summit statement condemning its missile test-launches.

“North Korea should take the resolution and the (G-8) chairman’s statement seriously. I think it’s better for us to wait and see,” Koizumi said.

He also urged Pyongyang to return to six-nation talks on its nuclear weapons program, which have stalled over the North’s anger at U.S. sanctions for alleged counterfeiting and money laundering activities.

Koizumi’s remarks seemed at odds with recent hardline remarks by Japan’s top government spokesman, as well as a report carried earlier Wednesday by Japan’s largest daily newspaper, the Yomiuri Shimbun.

Chief Cabinet Secretary Shinzo Abe suggested Tuesday that Tokyo had begun preparations to impose further economic sanctions on North Korea.

The Yomiuri said Wednesday Japan was considering banning cash remittances and freezing North Korean assets in Japan early next month. The newspaper did not say where it got the information.

Tokyo has so far imposed only limited sanctions — such as barring a North Korean trade ferry from Japanese ports — against North Korea in response to its missile tests.

A separate news report said Wednesday Japan has called for five-party talks, excluding Pyongyang, on the sidelines of the ASEAN Regional Forum next week to explore ways to resume stalled multilateral negotiations on the North’s nuclear ambitions.

It remained unclear whether the talks — potentially involving Japan, South Korea, Russia, China and the United States — would materialize, because Beijing hasn’t said whether it is willing to participate, Kyodo News agency reported. Kyodo did not say where it obtained the information.

Chun Young Woo, South Korea’s deputy foreign minister and chief South Korean delegate to the six-party talks, was slated to visit Japan for talks Thursday with Japanese counterpart Kenichiro Sasae.

Also Wednesday, Japan’s space agency, JAXA, said it would launch two more spy satellites using H-2A rockets, according to Kyodo. JAXA launched two spy satellites in March 2003 to monitor North Korea. JAXA officials couldn’t be reached for comment late Wednesday.

North Korea drew international condemnation this month after test firing seven missiles, including a long-range Taepodong-2 believed capable of reaching parts of the U.S.

On Saturday, the U.N. Security Council passed a resolution criticizing the missile tests and banning all U.N. member states from trading with Pyongyang in missile-related technology. The North has since rejected the resolution, warning of further repercussions.

From Yonhap:

Pyongyang cuts off last direct dialogue channel with Seoul: ministry

North Korea has withdrawn all of its government officials from a joint facility with South Korea in its border town of Kaesong this week, cutting off the last direct channel for communication with Seoul, an official at the Unification Ministry said Saturday.

“The North Korean side notified (Seoul) on Friday that some of its representatives at the inter-Korean economic cooperation promotion committee office are withdrawing,” Yang Chang-seok, a spokesman for the Unification Ministry, told reporters.

The spokesman said Pyongyang pulled out its government officials from the joint dialogue office, where nine representatives, including five to six civilian and business delegates from each side, have been permanently stationed to discuss government and business projects between the divided Koreas.

“Therefore, we think we will face difficulties for a while in working-level negotiations between the governments which have been conducted at the economic cooperation promotion committee office,” Yang said.

From the Joong Ang Daily:

Experts say money squeeze on North is working

For 10 months, Washington has enforced a systematic plan to clamp down on cash going into North Korea. The measures are working, experts say.

Nam Sung-wook, a North Korea expert at Korea University, estimated yesterday that the recent measures have led to a 40 percent decline in North Korean leader Kim Jong-il’s income.

Since the 1980s, Kim Jong-il has regularly collected money from four sources: forged bank notes, arms sales, drug trafficking and money coming from ethnic Koreans living in Japan who acquire money by operating legal gambling casinos there.

Mr. Kim used the money to cement his hold on the North Korean elite, such as the military. Those in the right position received from the “Dear Leader” gifts ranging from German luxury cars to Japanese electronics.

However, since 2002, when the Bush administration started to tackle the issue with its North Korea Working Group, the situation changed and has squeezed the North. The U.S. group is composed of 14 government organizations, including the U.S. treasury department. Washington’s efforts against counterfeit money have yielded results: At the end of last year Irish national Sean Garland and six others were indicted for distributing North Korean-manufactured “supernotes.”

The North is believed to have produced annually $15 million to $25 million of forged money.

As a result of international pressure, one government official said it would be harder for the North to print new forged bank notes and circulate them.

The arms trade is also an important money maker for the North. However, since it sold 15 Scud-type missiles in December 2002 to Yemen, Pyongyang has not inked another arms deal. Sources said yesterday Pyongyang tried last year to sell missiles to African nations, but in light of Washington’s international call to prevent the transfer and sales of weapons of mass destruction, cautious African nations have distanced themselves from Pyongyang.

In the international arms market, Chinese-manufactured AK-47 assault rifles and other cheaper alternatives are being preferred over North Korean-made ones. The North’s drug trafficking is reportedly giving Pyongyang an annual income of $100 million. From 1998 to 2002 Japanese authorities seized 1,500 kilograms (3,300 pounds) of North Korea-manufactured philpone, a methamphetamine.

Nevertheless, a continued crackdown has narrowed the avenues of sales to organized crime groups such as the Japanese yakuza.

Money sent from the North Korea- backed Chongryon, the General Association of Korean Residents in Japan, amounted to 2 billion yen ($1.7 million) to 3 billion yen annually until 2002 with the money being shipped by a North Korean ferry.

However, since 2003, Tokyo has imposed regulations on the ferry, dropping the money flow to 1 billion yen per year. With the recent missile launch, Tokyo is now considering cutting off the money flow even more by strengthening the monitoring of insured postal parcels above a certain amount.

From Yonhap:

Hyundai Asan withdraws all workers, equipment from N.K.

South Korea’s Hyundai Asan, the North Korean business arm of the Hyundai Group, pulled its workers on Friday from the construction site of a separated family reunion center on North Korea’s Mount Geumgang.

The pullout follows an earlier notification from the communist state that the South Korean workers should withdraw from the construction site before Saturday.

A group of 24 workers returned to the country earlier in the day and an additional 104 workers were pulled out around 5:10 p.m., according to the company.

The withdrawal comes as the first visible sign of soured relations between the divided Koreas after North Korea launched seven ballistic missiles, including a long-range Taepodong-2, on July 5, despite strong opposition and appeals from the South.

Pyongyang said earlier in the week that it was no longer able to continue inter-Korean humanitarian projects, mainly Red Cross-sponsored programs to reunite North and South Korean families separated by the countries’ division.

The announcement came after Seoul said it would suspend humanitarian aid shipments to the impoverished North until the missile crisis is resolved.

North Korea accused the Seoul government of abandoning its northern brethren to please Washington and Tokyo, which spearheaded the passage of a U.N. Security Council resolution condemning the North’s missile launches. The countries are apparently looking to impose additional sanctions.

South Korean Unification Minister Lee Jong-seok dismissed the accusation Thursday, saying the suspension of aid shipments was based on his country’s “own judgment.”
“The reason the government decided to suspend additional food and fertilizer aid was because the North aggravated the situation without considering our position or concerns,” the minister said in a regular press briefing.

The South Korean company, which is also the North’s business partner for a cross-border tour program to the North’s mountain resort, has been working to construct the 12-story separated family reunion center.

North Korea has agreed to allow two South Korean engineers to stay and continue with other business tasks while overlooking the incomplete facility, Yang said.

Another group of 29 Korean-Chinese workers would also be reassigned to the company’s tourism section in the North, according to Yang.

A Hyundai Asan spokesman said Thursday that tours to Mount Geumgang will continue.

The Koreas officially remain in a state of war since the fratricidal Korean War (1950-53) ended only with a cease-fire. More than 90,000 people from the South alone remain separated from their loved ones.

From Yonhap 7/20/2006 (via the Lost Nomad):

N. Korea tells S. Korean contractor to leave site of family reunion center
By Byun Duk-kun

North Korea has told a South Korean company to withdraw all of its workers from the construction site of a separated family reunion center before Friday, one day after it said it would no longer hold reunions of families separated by the division of the Koreas, the Unification Ministry said Thursday.

The one-day notice came in a letter faxed to Hyundai Asan, the North Korea business arm of the Hyundai Group, Yang Chang-seok, a spokesman for the Unification Ministry, told reporters.

“The main point of the letter was for Hyundai to halt its construction of the family reunion center on Mount Geumgang by Thursday and have all of its construction workers leave the site before the end of Friday,” Yang said.

The message was delivered Wednesday shortly after the head of North Korea’s Red Cross society told his South Korean counterpart that his country can no longer hold the humanitarian project to reunite separated families due to what it claimed to be Seoul’s submission to international calls for economic sanctions against the communist state.

Seoul suspended its humanitarian aid for the impoverished North after Pyongyang launched seven mid- and long-range missiles on July 5, despite repeated opposition and warnings from the South and its allies.

South Korea’s point man on North Korea, Unification Minister Lee Jong-seok, said in an earlier press briefing that North Korea’s decision to halt the humanitarian project was regrettable, but that the suspension of aid was not intended to be a sanction or to put pressure on the North.

The decision, according to Lee, was based on Seoul’s “own judgement” that the North has seriously undermined security and peace on the Korean Peninsula by test-firing the missiles despite Seoul’s concerns.

The U.N. Security Council on Saturday adopted a resolution that condemned the North’s missile launches while prohibiting missile-related dealings with the Stalinist state.

Lee said the U.N. resolution must be interpreted “strictly,” a repeat of his opposition against imposing other economic sanctions on the North.

Currently, 150 South Korean workers are working at the North’s mountain resort to build the 13-story reunion facility, according to Yang.

“We are moving toward pulling the workers out,” he said.

The divided Koreas have held 14 rounds of the Red Cross-sponsored reunions between separated families since the historic inter-Korean summit in 2000.

More than 90,000 people from the South alone still remain divided from their loved ones on the other side of the heavily fortified inter-Korean border, according to the ministry.

The Koreas officially remain in a state of war since the 1950-53 Korean War ended only with a cease-fire, not a peace treaty.

From the Joong Ang Daily:

Guarantees for Kaesong

Detailed plans for providing private loans to companies moving to the Kaesong Industrial Complex are being made. Even though the relationship between the two Koreas is in a state of confusion because of the recent missile crisis, several senior officials from big banks and the credit guarantee funds are planning to visit the industrial complex in North Korea.

The administration’s rationale for the visit is to get immediate financial support from the private sector to implement its special loan guarantee program to companies in Kaesong. The banks are certainly willing to give the loans once they have a guarantee certificate from the fund, which is backed by the government. The guarantee fund has nothing to worry about because the government will probably patch up the damage if the companies default on the loans.

Although the funding is considered private capital, it is in effect a loan using tax money as security.

It is not right to support an inter-Korea project through such means. Even if the Kaesong Industrial Complex is a symbol of the economic cooperation between South and North Korea, the competitiveness and the business potential of companies moving to the complex should come first.

The companies should be able to make profits on their own and without any special treatment or support from the government. The banks will be making loans as if they are only hypothetical. They have no intention of giving out loans without the government guarantee. This demonstrates just how uncertain the business potential of the Kaesong Industrial Complex really is.

There is also the problem of getting products made at Kaesong acknowledged as South Korean products. The United States, which is Korea’s most important export market, is not accepting the idea. Without solving this problem, the prospects of the Kaesong Industrial Complex are uncertain.

Giving huge financial support to the Kaesong Industrial Complex at a time when tension in the international community is rising because of the test launch of North Korean missiles sends the wrong signal to the international community. The United States is worried about the cash that the project will generate for North Korea and probably its military programs. This funding is contradictory to the international mood. 

Also from the Joong Ang: Apparently the subsidy-providing agency says it needs a bigger budget!

‘Guarantees’ and ‘North Korea’ sound risky to a state-run fund

As corporate bankers and the Korea Credit Guarantee Fund trek to the Kaesong Industrial Complex today for an inspection visit, the state-run loan guarantor sounds less than happy about its role in funding companies at the North Korean complex.

Last month, the Finance Ministry said the government would give loan guarantees of up to 10 billion won ($11 million) per company to help South Korean companies who have set up plants there.

Several of the big banks here will join the group visiting the complex ― they include representatives from Kookmin, Shinhan and Hana ― and say they are looking for business. “This visit is a step in our preparations for possible financial dealings with the companies there,” said an official at one of the banks who asked not to be identified.

But a credit guarantee fund spokesman seemed to hope that won’t happen under the present ground rules. “We feel the companies at Kaesong present enough financial risk that without special funding from the government, it would be difficult to guarantee all the loans on our own,” he said.

Seoul estimates that about 1.2 trillion won in aggregate will have to be made available to companies operating at the complex; most of them are smaller manufacturers. The program announced by the government on June 16 said the loan guarantees would extend for as long as seven years. So while from the lenders’ point of view any loans would be nearly free of risk, the credit guarantee fund has a different perspective.

“We will do what the government tells us to do,” the fund’s spokesman sighed, “but the government should be responsible [for our losses].”

Seoul has about 7 trillion won available in its Inter-Korean Cooperation Fund, but those funds are spread across many programs, including tourism at Mount Kumgang and funding of both North and South Korean visitors at conferences and festivals.

Fifteen companies have set up plants in Kaesong; 24 more have reserved sites, and Seoul’s ambitious plans call for about 800 manufacturers to set up shop by 2012.

From the Joong Ang Daily:

The United States is blocking all possible ways of transferring money to North Korea. Along with a United Nations resolution, Washington is putting pressure on companies and banks of all countries that have business transactions with North Korea to cut the relations. Japan has blocked money transfers to North Korea, banned a North Korean ferry from entering its ports, frozen North Korea’s assets and banned companies from having transactions with North Korea.

The hardest blow on North Korea was China’s approval of the UN resolution. As the only ally to North Korea, China has provided it with more than half the food and energy the North needs. It is North Korea itself that has made China change its stance.

North Korea-China relations these days are the worst since in June 1995. Back then, North Korea’s leader Kim Jong-il released a statement in the Rodong Sinmun, or Newspaper of the Workers that China had betrayed the spirit of socialist revolution by introducing a market economy. Although the head of North Korea depends heavily on China for the survival of his country, he recently told an American delegate that China was unreliable.

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 

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.