North Korean Economy Watch

Korea Times
Ryu Jin
10/8/2007

South Korean tourists might be able to visit Mt. Baekdu in North Korea from as early as April next year, as the top leaders from the two Koreas agreed to open a direct air route between Seoul and the auspicious mountain in their summit last week.

Hyundai Group is considering a comprehensive tour program that links Mt. Geumgang, Gaeseong City and Mt. Baekdu, even including Pyongyang, to attract more South Korean tourists, according to the company Monday.

Group Chairwoman Hyun Jeong-eun plans to visit the North Korean capital along with Hyundai Asan CEO Yoon Man-joon as early as this month for consultations of the cross-border businesses with North Koreans, a Hyundai Asan spokesman said.

“A variety of ideas are being considered for the new tour programs,’’ said the spokesman, who asked not to be named. “We cannot tell the exact time for the launch. But we are trying to get the new tour programs started as early as possible.’’

Mt. Baekdu, seated at the northern tip of the Korean Peninsula, has been a symbol of national spirit and unification along with Mt. Halla on South Korea’s southern resort island of Jeju. “From Baekdu to Halla’’ is how many people describe their fatherland.

Now on the borderline between North Korea and China, the auspicious mountain has been shared by the two states in modern times. Some 100,000 South Koreans visit what the Chinese people call “Mt. Changbai’’ every year from the Chinese side.

Industry sources expect that, once the direct tour route is developed, people could enjoy the grandiose scenery of the mountain, including the Cheongun Rocks and Baekdu Falls, which are said to be more spectacular than the Changbai Falls.

But travelers and experts say that a tour to the 2,744-meter mountain is possible only between May and September because of precarious weather conditions. On only a few days could the climbers clearly see Cheonji, a large caldera lake on top of the mountain.

“I hope that the tour program is launched as early as possible,’’ Hyun, who accompanied President Roh Moo-hyun to the summit in Pyongyang, told reporters on her way back home. “I heard that it is possible to climb the mountain in April.’’

Hyundai Asan, a Hyundai Group affiliate that operates various cross-border businesses, expects the direct air route to cut the travel time drastically from nine hours needed for trip via China to 1-2 hours, not to mention the reductions in travel expenses.

“Domestic travel agencies sell five-day tour programs to Mt. Baekdu, or Changbai, via China for prices from 800,000 won ($874) to two million won ($2,185),’’ a private tour agency said. “A direct tour would cut the travel expenses by almost half.’’

However, Hyundai Asan admitted that there are a number of tasks to be done before the launch of the direct tour program, including the establishment of infrastructure such as an airport, hotels and other facilities for travelers.

Billions of won would be required to develop the Samjiyeon Airport, the nearest airport from Mt. Baekdu, according to recent surveys.

Hyundai Asan will dispatch an on-site inspection team to the area next month to check the accommodation capacity and other necessary facilities. It has already given five billion won to North Korea for the arrangements of the airport.

Choson Ilbo
Song Hee-young
10/8/2007

One of the facts confirmed in the second inter-Korean summit is that North Korea is willing to push ahead with an open economic policy. Though he is reportedly averse to the terms of reform and opening, North Korean leader Kim Jong-il agreed to add Haeju, Nampo, Anbyeon and Mt. Baekdu as open areas, along with Mt. Kumgang and the Kaesong Industrial Complex. He also permitted opening infrastructure like railroads and ports.

Slow as it is, the direction of the flow can be confirmed. It resembles China’s early opening stage from the late 1970s to early 1980s when Deng Xioaping first pushed his reform policies.

Considering the pace, outsiders were pessimistic about reform in China then, and they predicted failure for companies that invested there. By the 1990s, however, it was clear that tremendous changes had taken place.

Korean entrepreneurs doing business in Kaesong and Mt. Gumgang believe that the North won’t move backwards now. Projects in those areas continued unhindered even during the nuclear test crisis, they point out. Unlike in the past, minor problems are eventually resolved through dialogue, albeit slowly, they testify.

“Now the North Koreans know the taste of money,” one businessman said, and they have begun to feel the fever for making more. A primitive sort of capitalist consciousness is growing, he said, and North Koreans are beginning to realize that making profits through a steady business is better than hoping for a windfall from the millions in aid money the Kim Dae-jung administration donated to the regime.

Having suffered through the Korean War, armed commando raids, naval skirmishes off the western coast and the nuclear crises, many South Koreans might dismiss the changes. Businessmen who were forced to hand over computers and fax machines as “entrance fees” or “meeting charges” when they visited Pyongyang may insist that nothing will change unless the regime is replaced.

But Mao Zedong’s Red Guards were also never expected to change, but they emerged as major Wall Street investors in three decades. If they truly feel the taste of money, there is no reason why the generations that follow Kim Jong-il will not change.

Now that we’ve seen the signs of such change, however small, we have to transform our formula for investing in the North. The government, above all, has to abandon its stance of controlling, coordinating and managing cross-border investment. The time has come to trust our businessmen. There should be no special treatment simply because the counterpart is North Korea; instead the government should leave investment in the North up to the investors, as it does with Vietnam and Africa.

Our corporations have had plenty of experience in the North. Daewoo, Hyundai, the Peace Motors Corp. owned by the Unification Church, and not a small number of small- and medium-sized firms have invested across the border. Many have come back with bitter tales, but now they can distinguish promising projects from dubious ones. They have paid their tuition.

What’s more, South Korean entrepreneurs have accumulated experience in making money in other dictatorial socialist countries, such as China, Russia and Eastern European nations, accessing the top leaders and breaking through bureaucratic barriers. In dealing with communists, businessmen can be far more competitive than public servants.

Nevertheless, the government requires advance notification when any South Korean company wants to contact North Korea, and the Unification Ministry and National Intelligence Service often get involved with even the smallest details. As it is now, North Korea asks our government what it can request from our businesses and the president had to be accompanied by a group of conglomerate heads when he visited Pyongyang.

Businesses that are forced to deal with our close-minded public servants in addition to the North Korean regime are liable to abandon cross-border plans altogether, especially when profitability is questionable. This is why the larger businesses have in many cases been the most reluctant to invest in the North.

Now that the opening of North Korea at last seems certain, it’s time that we adopted the same formula that succeeded in China. It was our businessmen who rushed into China first, and they contributed toward reconciliation and establishment of diplomatic ties between the two countries. We went through the same procedures in Russia and Vietnam.

The idea that the government should be the one to build industrial parks and conduct business and wage negotiations in North Korea is outmoded. When it comes to investing across the border, the government’s job should be to guarantee business freedoms. Then the investors should be left to negotiate with the regime and work out how to make money.

Version 5: Download it here (on Google Earth) 

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the fifth version.

Additions to the latest version of “North Korea Uncovered” include updates to new Google Earth overlays of Sinchon, UNESCO sites, Railroads, canals, and the DMZ, in addition to Kim Jong Suk college of eduation (Hyesan), a huge expansion of the electricity grid (with a little help from Martyn Williams) plus a few more parks, antiaircraft sites, dams, mines, canals, etc.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your additions to this project.

Joong Ang Daily
10/5/2007
Moon Gwang-lip

A raft of economic deals, including easing restrictions for South Korean companies hoping to invest on the western part of North Korea, new rail lines and more effective cooperation between the two countries filled yesterday’s agreement.

President Roh Moo-hyun and his North Korean counterpart Kim Jong-il agreed to accelerate the expansion of the Kaesong Industrial Complex in the North Korean border city.

Some economists and businesspeople in the South hailed the accord as a possible initial step toward developing the entire western section of North Korea.

Lim Soo-ho, a researcher at Samsung Economic Research Institute, said the agreement will provide a driving force for the two Koreas to produce “substantial” economic exchanges.

“The agreement to upgrade the dialogue channel for economic cooperation shows the North’s willingness to push forward with wider inter-Korean economic exchanges,” Lim said.

In the joint declaration made yesterday on the final day of Roh’s three-day visit to Pyongyang, the two Koreas agreed to upgrade the Inter-Korean Economic Cooperation Promotion Committee, the discussion channel between the two nations, from a vice minister-level group to a minister-level group.

Lim said the North’s willingness to make deals “has already been shown by its agreement to improve the ‘three-tong.’ ”

Three-tong refers to the poor conditions of passage (tonghaeng in Korean), communication (tongsin) and customs clearance procedures (tonggwan), which have been singled out as the biggest hurdles for the North in attracting outside investment into the Kaesong Complex, where more than 20 South Korean firms employ about 15,000 North Korean workers.

In the agreement, the two leaders agreed to “promptly complete various institutional measures” to tackle those areas.”

Currently, entry to the Kaesong Industrial Complex is only granted several days after it is requested. Cell phones and the Internet are not available in the area due to a lack of facilities. It also takes considerable time to clear customs.

In other accords, the two Koreas agreed on development projects in west coast areas of the North, including the establishment of cooperative complexes for shipbuilding in Anbyon and Nampo.

In addition, they agreed to create a “special peace and cooperation zone in the West Sea” encompassing Haeju. Civilian ships from North and South Korea will be allowed to pass through the Northern Limit Line, the de facto sea border between the two countries.

It was also agreed that freight rail services would be opened between Munsan and Bongdong.

“The agreements may be seen as the North preparing to develop its whole west coast region as an extension of the Kaesong Complex,” Lim said. “That is a positive sign for businesses interested in investing in the North.”

Business groups in the South welcomed the agreements, calling them substantial.

“I believe the inter-Korean summit this time will relieve businesses, at home and abroad, of concerns over uncertainty regarding investment in North Korea and encourage them to extend their investment in inter-Korean economic cooperation,” Yoon Man-joon, CEO of Hyundai Asan, which has exclusive rights to South Korean tourism to the North, was quoted as saying by Yonhap.

In a visit to Kaesong Industrial Complex last night, Roh said he won’t take political advantage of the new economic opportunities.

“The Kaesong Industrial Complex is a place where the two Koreas will become one and share in a joint success, not to make the other party more reformed and accessible,” Roh said. “We will work hard to make workers more comfortable working here. I wouldn’t call it reform or openness.”

He said reform and openness is considered good in the South.

The government said it is still too early to hazard a guess about the cost of putting the new plans into action.

“We cannot figure out yet how much money is needed to implement the new agreement,” said an official of the Ministry of Budget and Planning, who refused to be identified. “But we guess a lot of money is not needed for next year, as it is just a preparation period.”

Still, the government has earmarked 1.3 trillion won ($1.4 billion) for next year’s inter-Korean economic cooperation projects.  Of that, 900 billion won has been set for use by the government, with 430 billion won available to businesses involved in implementing the new agreement.

Yonhap
10/5/2007

South Korean electronics giant Samsung Electronics Co. will consider investing in North Korea if the communist country provides better infrastructure and business-related regulations as promised in an agreement reached during the just-ended inter-Korean summit talks, the company’s top executive said Friday.

“We will review investment opportunities in the North if Pyongyang provides systems and regulations needed for safe business operation there, and guarantees improvement in the passage of civilians, customs clearance and communications as promised, along with a stable supply of electricity and water,” Yun Jong Yong, head of Samsung Electronics, said in a statement issued after returning from Pyongyang.

Yun and other business leaders accompanied President Roh Moo-hyun for the second-ever inter-Korean summit talks.

As they wrapped up the three-day summit, President Roh and his North Korean counterpart, Kim Jong-il, on Thursday agreed to a number of inter-Korean business projects, including accelerating the expansion of an industrial complex in the North’s border city of Kaesong, where more than 20 South Korean small- and medium-sized enterprises run facilities.

They also agreed upon improving related regulations for the passage of civilians, customs clearance and communications, which many businessmen have cited as challenges hindering operation in the North.

Yun said the leaders of the two Koreas had more “tangible” negotiations — especially on inter-Korean economic cooperation — than then South Korean President Kim Dae-jung had with the North Korean leader at the previous meeting held seven years ago.

Since the 1990s, Samsung Electronics has been engaged in business in the North, including software development projects, but has made little large-scale investment in the communist country.

Korea Times
10/5/2007

More than $11 billion is needed to implement cross-border business projects that the leaders of the two Koreas agreed to at the historic summit this week, a local research institute estimated Friday.

Wrapping up a three-day summit, the second one since 2000, South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il on Thursday agreed to a number of inter-Korean business projects.

According to Hyundai Research Institute, the development of a special economic zone in Haeju, the North’s western port city, will cost about $4.6 billion. Around $2.5 billion will be spent to finance the expansion of an industrial complex in the North Korean border city of Kaesong.

A project to build leisure facilities around Mount Baekdu is expected to cost $1.3 billion, the research institute said.

The estimated cost, when it is financed over five years, is equivalent to 8.75 percent of the North’s gross domestic income, and 0.25 percent of the South’s gross domestic product, Hyundai Research said.

The two leaders called for rapidly expanding the South-supported industrial park in the North’s border town of Kaesong and launching cross-border freight transportation via an inter-Korean railway between the South’s Munsan and the North’s Pongdong.

The two Koreas also agreed to jointly repair and maintain the North’s dilapidated expressway linking Kaesong and Pyongyang, as well as the North’s railway between Kaesong and Sinuiju on the North’s western Chinese border.

As part of a bilateral agreement to boost relations in tourism, history, language, education, culture, sport and art, the Koreas agreed to open a direct air route between Seoul and Mount Paekdu, allowing South Koreans to tour the scenic North Korean mountain on the North’s northern border with China.

The research institute, meanwhile, projected that the North would get $138 billion worth of economic benefits and the South $4.8 billion should the inter-Korean business projects be implemented as planned.

Institute for Far East Studies
NK Brief No. 07-10-4-2

1. The South and the North shall uphold and endeavor actively to realize the June 15 Declaration.

The South and the North have agreed to resolve the issue of unification on their own initiative and according to the spirit of “by-the-Korean-people-themselves.”

The South and the North will work out ways to commemorate the June 15 anniversary of the announcement of the South-North Joint Declaration to reflect the common will to faithfully carry it out.

2. The South and the North have agreed to firmly transform inter-Korean relations into ties of mutual respect and trust, transcending the differences in ideology and systems.

The South and the North have agreed not to interfere in the internal affairs of the other and agreed to resolve inter-Korean issues in the spirit of reconciliation, cooperation and reunification.

The South and the North have agreed to overhaul their respective legislative and institutional apparatuses in a bid to develop inter-Korean relations in a reunification-oriented direction.

The South and the North have agreed to proactively pursue dialogue and contacts in various areas, including the legislatures of the two Koreas, in order to resolve matters concerning the expansion and advancement of inter-Korean relations in a way that meets the aspirations of the entire Korean people.

3. The South and the North have agreed to closely work together to put an end to military hostilities, mitigate tensions and guarantee peace on the Korean Peninsula.

The South and the North have agreed not to antagonize each other, reduce military tension, and resolve issues in dispute through dialogue and negotiation.

The South and the North have agreed to oppose war on the Korean Peninsula and to adhere strictly to their obligation to nonaggression.

The South and the North have agreed to designate a joint fishing area in the West Sea to avoid accidental clashes. The South”s Minister of Defense and the North”s Minister of the People”s Armed Forces have also agreed to hold talks in Pyongyang this November to discuss military confidence-building measures, including military guarantees covering the plans and various cooperative projects for making this joint fishing area into a peace area.

4. The South and the North both recognize the need to end the current armistice regime and build a permanent peace regime. The South and the North have also agreed to work together to advance the matter of having the leaders of the three or four parties directly concerned to convene on the Peninsula and declare an end to the war.

With regard to the nuclear issue on the Korean Peninsula, the South and the North have agreed to work together to implement smoothly the September 19, 2005 Joint Statement and the February 13, 2007 Agreement achieved at the Six-Party Talks.

5. The South and the North have agreed to facilitate, expand, and further develop inter-Korean economic cooperation projects on a continual basis for balanced economic development and co-prosperity on the Korean Peninsula in accordance with the principles of common interests, co-prosperity and mutual aid.

The South and the North reached an agreement on promoting economic cooperation, including investments, pushing forward with the building of infrastructure and the development of natural resources. Given the special nature of inter-Korean cooperative projects, the South and the North have agreed to grant preferential conditions and benefits to those projects.

The South and the North have agreed to create a “special peace and cooperation zone in the West Sea” encompassing Haeju and vicinity in a bid to proactively push ahead with the creation of a joint fishing zone and maritime peace zone, establishment of a special economic zone, utilization of Haeju harbor, passage of civilian vessels via direct routes in Haeju and the joint use of the Han River estuary.

The South and the North have agreed to complete the first-phase construction of the Gaeseong Industrial Complex at an early date and embark on the second-stage development project. The South and the North have agreed to open freight rail services between Munsan and Bongdong and promptly complete various institutional measures, including those related to passage, communication, and customs clearance procedures.

The South and the North have agreed to discuss repairs of the Gaeseong-Sinuiju railroad and the Gaeseong-Pyongyang expressway for their joint use.

The South and the North have agreed to establish cooperative complexes for shipbuilding in Anbyeon and Nampo, while continuing cooperative projects in various areas such as agriculture, health and medical services and environmental protection.

The South and the North have agreed to upgrade the status of the existing Inter-Korean Economic Cooperation Promotion Committee to a Joint Committee for Inter-Korean Economic Cooperation to be headed by deputy prime minister-level officials.

6. The South and the North have agreed to boost exchanges and cooperation in the social areas covering history, language, education, science and technology, culture and arts, and sports to highlight the long history and excellent culture of the Korean people.

The South and the North have agreed to carry out tours to Mt. Baekdu and open nonstop flight services between Seoul and Mt. Baekdu for this purpose.

The South and the North have agreed to send a joint cheering squad from both sides to the 2008 Beijing Olympic Games. The squad will use the Gyeongui Railway Line for the first-ever joint Olympic cheering.

7. The South and the North have agreed to actively promote humanitarian cooperation projects.

The South and the North have agreed to expand reunion of separated family members and their relatives and promote exchanges of video messages.

To this end, the South and the North have agreed to station resident representatives from each side at the reunion center at Mt. Geumgang when it is completed and regularize reunions of separated family members and their relatives.

The South and the North have agreed to actively cooperate in case of emergencies, including natural disasters, according to the principles of fraternal love, humanitarianism and mutual assistance.

8. The South and the North have agreed to increase cooperation to promote the interests of the Korean people and the rights and interests of overseas Koreans on the international stage.

The South and the North have agreed to hold inter-Korean prime ministers” talks for the implementation of this Declaration and have agreed to hold the first round of meetings in November 2007 in Seoul.

The South and the North have agreed that their highest authorities will meet frequently for the advancement of relations between the two sides.

Oct. 4, 2007

Pyongyang
[Document signed by both Roh Moo-hyun and Kim Jong Il]

Korea Times
Ryu Jin
10/1/2007

Mt. Geumgang tourism project, launched in 1998, has grown up as one of the three major inter-Korean economic projects in accordance with the reconciliation of the two Koreas. And it now braces itself for another leap with the 2007 South-North Summit.

But the project went through a rough and difficult road in the past nine years, largely due to exterior factors such as the political instability such as the nuclear standoff between North Korea and the United States since 2002.

Hyundai Asan, the operator of the cross-border tourism project, expects the summit to provide a fresh momentum for their business. Hyundai Group Chairwoman Hyun Jeong-eun will accompany President Roh Moo-hyun to Pyongyang.

Riding on Reconciliation

In June, Mount Geumgang opened the elegance of its inner part to outsiders for the first time since the pre-modern Korea was divided into two different systems — the capitalist South and the communist North — more than half a century ago.

Since it became accessible in 1998, Mt. Geumgang has emerged not only as a popular tourist destination for South Koreans but also one of the few places in North Korea where foreigners could travel relatively easily.

But the inner part of the mountain, better known as “Naegeumgang” in Korean, has been closed by North Korea despite the repeated requests by Hyundai Asan in the past several years.

Geumgang-san, a 12,000-peak mountain that has long held aesthetic and spiritual allures for Koreans, could be divided into three parts: “Naegeumgang” (inner, western part), “Oegeumgang” (outer, eastern part) and “Haegeumgang” (seashore part).

In the past, people took trains to Cheorwon to explore the auspicious mountain _ they climbed up through Naegeumgang to get to the highest Biro-bong peak (1,638 meters), looked around Oegeumgang and then came down to Haegeumgang.

Former Unification Minister Lee Jong-seok, who climbed up the new course, said it was quite meaningful that Pyongyang has finally decided to open the secretive area, given the strategic importance of the military bases facing the South’s Cheorwon.

After a four-month operation of the Naegeumgang tour, more than 50,000 people are expected to visit Mt. Geumgang in October to break the record for the number of visitors in a single month, according to Hyundai Asan.

For Another Leap

Since the first tour to Oegeumgang in late 1998, more than 1.5 million visitors have made the trip to the mountain resort as of May. Most visitors were South Koreans, while nearly 8,000 visitors came from 48 other countries.

But Hyundai Asan’s tourism business has often been affected by security situations on the peninsula. It met difficulties when North Korea conducted a nuclear test in October last year.

Amid the heightened tension, the number of tourists to the mountain resort plummeted to some 240,000 last year, putting a damper on Hyundai Asan’s target of securing more than 400,000 visitors.

Hyundai Asan CEO Yoon Man-joon said earlier this year that the company set the target at 400,000 again for this year. By the end of May, about 100,000 people have made the trip to Mt. Geumgang this year, according to Hyundai Asan spokespersons.

Yoon said that the company would also try to revamp tour programs to draw more younger visitors as part of its new marketing strategy for the existing tour to the outer side of the mountain, Oegeumgang.

Company officials added, once the 500,000-pyong (408-acre) 18-hole golf course is completed in October, Mt. Geumgang would be reborn as a new resort complex with “things to see, eat, buy and enjoy.”

Hyundai Asan has a new plan for the next year. “Our tourism business would be put on the right track next year, if the visitors could drive their own cars all the way to the resort area across the border and clime up to the highest Biro-bong,” a spokesman said.

Chosun Ilbo (h/t Tim Beal)
9/19/2007

The government is seeking to incorporate the cost of electricity supply for the Kaesong Industrial Complex in North Korea into South Korea’s own electricity fee system. Combining the two would allow losses from the Kaesong complex worth several billions of won a year since 2005 to be absorbed by the overall scheme. But that would mean the South Korean public has to shoulder the cost.

Grand National Party lawmaker Eom Ho-sung on Tuesday released official documents exchanged between the Unification Ministry and power monopoly KEPCO. “According to a feasibility study by Deloitte HanaAnjin accounting firm commissioned by KEPCO, electricity transmission to Kaesong costs the South an annual W19.3 billion (US$1=W930) and an estimated total of W966.8 billion by 2054,” he said. It cost the South W5.8 billion in the 2005/2006 fiscal year.

Electricity used at Kaesong is rated as industrial-use costing W4,190-5,520 per kilowatt, cheaper than for South Korean homes, so a loss is inevitable. According to the documents released Tuesday, the ministry told related departments in June to review a way to compensate for the fee loss at Kaesong, by using the Inter-Korean Cooperation Fund to fill in for the past loss and combining the Kaesong fees with the domestic electricity bills in the future.

Korea Times
Jung Sung-ki
9/17/2007

Former Unification Minister Park Jae-kyu said reducing economic inequality between the two Koreas is the foremost task to achieve reunification of the two Koreas.

In an exclusive interview with The Korea Times in Seoul on Sept. 6, the former point man on North Korean affairs reiterated the importance for closer cross-border economic ties, which he said would make the North open to the outside world and eventually help achieve reunification.

Park, however, said a “unilateral give-away”policy centered on huge inter-Korean business projects should be refrained from and any economic assistance for North Korea should contribute to opening up the communist neighbor, as well as proceed in tandem with progress in six-party talks over the North’s nuclear program.

He also said big-budget programs for the North, a so-called “Marshall Plan,” touted by some of President Roh Moo-hyun’s aides, is premature and not feasible.

“But a proposal for a second industrial complex on the Gaeseong model may be within the realm of feasibility,” he said. “Even though few people expect the Roh government to make any covert cash payments to the North either before or after the second inter-Korean summit, the possibility that a huge economic cooperation project may be unveiled cannot be ruled out.”

Lee Hae-chan, who served prime minister and as Roh’s political adviser, said last month that President Roh would propose several joint economic projects to North Korean leader Kim Jong-il at the Oct. 2-4 summit in Pyongyang.

He cited plans to build industrial parks in the North’s port city of Nampo and other cities, modeled after the Gaeseong industrial park, as well as invest in the North’s public infrastructure projects, including the renovation of the 170-kilometer Pyongyang-Gaeseong highway.

Launching South Korean-backed tourism projects in the North’s scenic mountains modeled on the Mount Geumgang program is also considered, said Lee, a presidential hopeful of the pro-government United New Democratic Party.

Roadmap for Korean Unification

Park referred to the German reunification process as a case in point from which South Korea should take a cue for the reunification of the peninsula.

“Since March 1970, East and West Germany had held a total of nine summit talks for about 20 years before they achieved the goal of reunification,” said Park, president of Kyungnam University.

“Through the summits spanning two decades, West Germany focused on exchanges and economic cooperation with East Germany,”he said. “In return, the West demanded of the East offsets like the opening of news media and exchanged visits by separated families. Such efforts bore fruit and paved the way for eventual reunification.”

West Germany provided East Germany with $2 billion-worth economic support annually before the reunification. Even after reunification, however, a disparity in economic strength between the sides has caused many social problems in Germany, he said.

“When the two sides were reunified, a gap in economic powers between West and East Germany was a three-to-one level. The West continued to offer $150 billion worth support to the East annually for 16 years after the reunification,” he said. “Still, Germany sees a jobless rate between 15 and 20 percent and has various social problems.”

The German reunification model should serve as an important lesson for South Korea to not try to achieve Korean reunification in a hasty manner without proper preparations, said Park, who served as unification minister between 1999 and 2001 under former President Kim Dae-jung.

“I expect inter-Korean reunification will be achieved 20 to 30 years from now under the condition that a gap in economic capabilities between the South and North is to be narrowed to a five-to-one level,” he said.

“But we should not forget we are still in theearly stage of inter-Korean cooperation. It, therefore, behooves us not to make haste, although envisioning and conducting in-depth research on various ways of attaining unification should not be discouraged,”he said. “If the two Koreas are to be reunified suddenly without preparation, the unified Korea will face severer social problems and conflicts than experienced by Germany.”

Park said the idea of establishing an inter-Korean federation or confederation on the heels of the Joint Declaration issued at the end of the historic 2000 summit is premature at the moment.

The former unification minister added setting the stage for institutionalizing the inter-Korean summit should be a small but most important goal for the upcoming Roh-Kim summit.

“In Germany’s case, the institutionalization of the summit had contributed significantly to exchanges and economic cooperation between East and West Germany, laying the groundwork for tearing down the Berlin Wall,” he said. “The same is the case with Korea. Institutionalizing the inter-Korean summit is a key step toward the reunification.”

POWs, Abduction Issues

Besides issues of the North’s nuclear program and peaceful reunification, PresidentRoh should put high priority on the issue of South Korean abductees and prisoners of war (POWs) in the planned talks with Kim Jong-il, Park said.

“I cautiously anticipated that Kim will make a bold decision on the topic in exchange for Roh’s possible offer for social overhead capital investment in North Korea,” Park said, referring to the meeting between Kim Jong-il and then Japanese Prime Minister Junichiro Koizumi in 2002.

In the summit in September 2002, Kim apologized to Koizumi for the kidnapping of Japanese nationals in return for normalizing ties with Japan. After Koizumi’s second visit to Pyongyang in 2004, the North allowed five victims to return to Japan. Japan calls on the North to allow the other victims to return home.

“It is of utmost importance that Roh broach the topic in a conciliatory way, summoning all of his diplomatic skills, love for compatriots, and humanistic instincts,” Park said. “He should find a way of accentuating the benefits that would accrue to the North should it display a constructive attitude.”

“Chairman Kim may be the only person who can spring a surprise that may spawn unexpected consequences, both positive and negative,”he continued. “`Let us hope that the surprise that will emanate from the upcoming inter-Korean summit will be of a positive variety.”

The Seoul government has been reluctant to take up the kidnapping issue not to harm relations with North Korea, especially since the Kim Dae-jung administration that advocated engagement policies toward the North.

NLL Controversy

As for a controversy over a redrawing of the Northern Limit Line (NLL) in the West Sea, Park said it is not desirable for the issue to be included in the summit agenda.

“Given its controversial nature in politicaland military terms, especially in the context of presidential elections in the South, I believe that it will be prudent to leave the NLL issue for future discussion in inter-Korean military talks,”he said. “But the North is certain to raise it, hence the South should be well prepared to defend its long-standing position on the issue.”

Park said Defense Minister Kim Jang-soo’s planned visit to Pyongyang with Roh would be a good opportunity to help ease tensions between the two militaries.

“Whether it would be an open or closed meeting, if Kim is able to have talks with the North Korean defense chief, that will be meaningful,”he said. “And if the two defense chiefs set a schedule for the second defense ministerial talks, that would be great.”

Kim will be the first South Korean defense minister to visit the North in the 54 years since the armistice was signed at the end of the 1950-53 Korean War. The defense ministers from the two Koreas met in September 2000 following the first summit.

Drawn by the U.S.-led United Nations Command (UNC) at the end of the 1950-53 Korean War, the NLL has served as the de facto maritime boundary between the two Koreas. But the North has refused to recognize the line and insisted it be nullified and redrawn.

Seoul maintains a firm stance that the NLL cannot be a matter of discussion, which it sees as a territorial concession.

The 1992 Basic Agreement stated inter-Korean inviolable borderlines and boundaries are recognized as in the armistice signedat the end of the Korean War. But the agreement added the two Koreas could discuss the matter later.

The NLL has emerged as a hot potato ahead of the summit as some government officials expressed support for discussing the matter at the summit, citing the 1992 agreement.

Presidential Chief of Staff Moon Jae-in told a National Assembly session last week if the North offers to discuss the issue, the South would accept it.

Unification Minister Lee Jae-joung said last month that he believes the NLL isnot a territorial concept open to future discussions. He also said the inter-Korean naval clash in 2002 was caused by Seoul’s refusal to negotiate the NLL.

Park expected that unless the North gives up its “military-first” policy, progress in military confidence building between the South and North would take time, and it is likely to follow the escalation of economic cooperation and the building of a peace structure on the peninsula.