Archive for the ‘Inter-Korean summit’ Category

N.Korea still expects payment for summit

Friday, February 26th, 2010

Choson Ilbo
2/26/2010

North Korea is still demanding rice and fertilizer in return for an inter-Korean summit, even as it keeps sending increasingly urgent messages to Seoul to bring such a summit about.

Since a secret meeting between South Korean Labor Minister Yim Tae-hee and Kim Yang-gon, the director of the North Korean Workers’ Party’s United Front Department, in Singapore in October, “North Korea has kept asking us for a huge amount of economic aid in return for arranging a meeting” between President Lee Myung-bak and North Korean leader Kim Jong-il, a South Korean government source said on Thursday.

But the North seems to have no interest in giving in to South Korean demands to put denuclearization and the repatriation of prisoners of war and abduction victims on the summit agenda. “The North basically wants economic gain in return for letting us make political use of an inter-Korean summit for the upcoming local elections” on June 2, the source said. “It seems that the North still feels nostalgic for the Sunshine Policy,” which netted it huge benefits over the past decade.

The first inter-Korean summit in 2000 was announced only three days before the general election and was bought through a secret payment of billions of won. The second summit in 2007 was announced two months before the presidential election. Since 2000, the North has received more than 300,000 tons of rice and the same amount of fertilizer almost every year worth more than W1 trillion (US$1=W1,163) a year.

In another secret meeting between South Korea’s Unification Ministry and the North Korean Workers’ Party’s United Front Department in November, the North again insisted on specifying humanitarian aid in an agreement to be signed at an inter-Korean summit.

A “tree planting campaign for North Korea” initiated recently by the Presidential Committee on Social Cohesion also reportedly went awry because the North demanded a huge aid of food in return for letting South Korea plant trees there.

Kim Jong-il is apparently not aware that Seoul is serious about ending this cash-for-summits policy. A South Korean government official with experience in inter-Korean talks said, “At secret meetings, each side often had its own way of interpreting agendas. Maybe North Korean delegates who are accustomed to the Sunshine Policy are trying to interpret the current government’s messages the way they did with past governments.”

It seems the North has attempted to earn economic aid worth W1 trillion by prevaricating over the issue of the POWs and abduction victims, offering to handle it like part of reunions of separated families, and discussing the nuclear issue only with the U.S. 

Whether the attitude will change remains to be seen. The North is now in a worse economic situation than before in the wake of a recent disastrous currency reform on top of international sanctions and a severe food shortage.

Prof. Cho Young-ki of Korea University said, “The North is in dire need of support from the outside including South Korea to stabilize the regime for a smooth transition of power” to Kim’s son Jong-un. “It is possible that the North will reluctantly accept our request depending on progress in the six-party nuclear talks.”

The government believes that a dramatic turning point in inter-Korean relations could be reached if the North makes “big decisions” in the nuclear or POW issues, according to Kim Tae-hyo, the presidential secretary for foreign strategies.

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DPRK ministerial shakeup and SPA elections announced

Monday, January 5th, 2009

UPDATE 3: According to numerous media sources, Choe Sung Chol has been shot (h/t Marmot). Read more here: Bloomberg, Reuters, Korea Times.

UPDATE 2: According to the Joong Ang Daily:

North Korea’s point man on South Korea, who was earlier said to have been sacked for misjudgment, is said to be undergoing what sources called “severe” communist training at a chicken farm, sources here said yesterday.

Choe Sung-chol, once a vice chairman of the Asia-Pacific Peace Committee, the North’s state organization handling inter-Korean affairs, was reported to have been dismissed in early 2008 for what sources called his lack of foresight on South Korea’s new conservative administration under President Lee Myung-bak.

Political dissidents in North Korea are said to often undergo training on the communist revolution. This includes hard labor in harsh environments, such as mines or in labor camps.

Choe, 52, became better known to South Korean officials and the public in 2007, when he escorted then-President Roh Moo-hyun throughout his visit to Pyongyang for a summit with North Korean leader Kim Jong-il.

He is also known to have played a key role in arranging the summit.

Officials in Seoul have acknowledged the dismissal of Choe, but could not confirm his whereabouts or why he was sacked.

“He has been undergoing training for about a year now, so it really is hard to tell whether he will be reinstated or not,” another source said, also speaking on condition of anonymity.

(UPDATE 1) Shortly after the DPRK’s ministerial and leadership changes were dscovered, the DPRK announced the Supreme People’s Assembly will be recomposed in March.  According to Reuters:

The reclusive North’s official media said in a two-sentence dispatch the election for deputies to its Supreme People’s Assembly would be held on March 8, without offering details.

North Korea wants to promote economic elite to the assembly to help lay the groundwork for the next generation of its leadership, a think tank affiliated with the South’s intelligence service said in a report in December, Yonhap news agency said.

However, analysts cautioned against reading too much into the leadership changes, saying Kim Jong-il and his inner circle hold the real power while ministers and other government officials have almost no influence in forming policy.

The assembly session that typically meets in April each year is a highly choreographed affair focused on budget matters where legislation is traditionally passed with unanimous approval.

North Koreans can vote only for the candidates selected by supreme leaders who allocate assembly seats to promote rank-and-file officials and purge those no longer in favor.

“Even if we know that someone was replaced, everything related to it is pure speculation because we have no clue as to the individual inclinations of these people,” said Andrei Lankov, an expert on the North at the South’s Kookmin University. (Reuters)

The Joong Ang Ilbo provides some additional facts:

The election is also a mere formality in the North because the candidates are hand-picked by the Workers’ Party and then approved by North leader Kim Jong-il.

The five-year terms of the 687 representatives, selected in 2003, were supposed to end last September. North Korea watchers have speculated that Kim’s health was linked to the election delay. According to intelligence sources in Seoul, Kim suffered a stroke in August.

North Korea watchers said Kim’s appearance at a polling station will put an end to speculation about his health. Kim had cast ballots in the 1998 and 2003 elections, according to past North Korean media reports.

With the upcoming election, Kim’s regime will enter its third term. The newly formed legislature will, on paper, form a cabinet, devise a national budget plan and conduct foreign policy.

Following former leader Kim Il Sung’s death in 1994, the Supreme People’s Assembly did not meet for four years. At that meeting, it elected the younger Kim as the National Defense Commission chairman and officially launched his regime. At the time, the legislature also amended the Constitution and undertook a dramatic cabinet shakeup.

ORIGINAL POST
According to the Joong Ang Daily:

Yu Yong-sun, a 68-year-old Buddhist leader, has become North Korea’s senior South Korea policy maker, a top Seoul official told the JoongAng Ilbo yesterday.

Choe Sung-chol, deputy director of the United Front Department of the North Korean Workers’ Party, was in charge of Pyongyang’s South Korean affairs until early last year. After he lost the job, Yu, head of the Korean Buddhists Federation, was appointed to the post, the source said.

“Yu succeeded Choe in March last year,” the source said. “Choe was once deeply trusted by [North Korean] leader Kim Jong-il, but he stepped down because he had failed to accurately assess the outcome of the 2007 presidential election in the South, the Lee Myung-bak administration’s North Korea policy and the outlook for inter-Korean relations.”

The source also said corruption scandals involving the overseas North Korean assistance committee under the United Front Department played a role in Choe’s sacking.

Choe played a crucial role in arranging the second inter-Korean summit between the president of South Korea at the time, Roh Moo-hyun, and Kim in 2007.

Yu, the successor, is not an entirely new face in inter-Korean affairs. Since 2000, he represented the North in several rounds of inter-Korean ministerial talks. He has led the Buddhist group since May 2006.

“We’ve also obtained intelligence that Kwon Ho-ung, who used to be the chief negotiator for the inter-Korean ministerial talks, stepped down from the post and has been put under house arrest,” the source said.

The North reshuffled its cabinet recently, according to the South’s Unification Ministry. Ho Thaek, vice minister of the electric power industry, was promoted to minister. Other minister-level promotions also took place at the Ministry of Railways, Ministry of Forestry and Ministry of Foreign Trade. (Jeong Yong-soo, JoongAng Ilbo)

The Choson Ilbo reports on some more ministerial changes:

North Korea has reshuffled two cabinet ministers and appointed a new man to a key post in the Workers’ Party. North Korean state media reported that Kim Tae-bong was appointed new metal industry minister and Hur Tack new power industry minister. They replace Kim Sung-hyun and Pak Nam-chil. Kim Kyong-ok as newly-named first deputy director of the ruling party’s Organization Guidance Department that controls the party, Army and administration and is headed by leader Kim Jong-il.

It is rare for reshuffles to be announced separately. The new economic appointments may be related to the emphasis on “economic recovery” in a New Year’s statement released in the state media last week that is the closest the North has to an annual message from Kim Jong-il, a government official here speculated. The statement described the metal industry as the “pillar of the independent economy of socialism” and said the electricity, coal and railroad sectors “should take the lead in the people’s economic development through reforms.” Hence replacement of the metal and power industry ministers, according to the official. He admitted little is known about the newly appointed ministers.

The Organization and Guidance Department’s new first deputy director Kim Kyong-ok is reportedly in charge of regional party organizations.

“If the power succession is to move smoothly, the economy must be revived and control of the party organization is essential,” an intelligence officer here said. He predicted noticeable changes in the North’s power structure this year. A researcher at the Korea Institute of National Unification said North Korea “is going to take various steps in a bid to prevent Kim Jong-il’s authority from weakening due to ill health.”

And from Yonhap:

North Korea promoted industrial veterans to top posts in its latest Cabinet reshuffle, signaling Pyongyang’s stepped-up drive to rebuild the country’s frail economy, Seoul officials and analysts said Tuesday.

A reshuffle in the communist state is usually inferred when new faces appear in its media, as the country does not publicize such moves.

Five new names were mentioned as the North’s ministers of railways, forestry, electricity, agriculture and metal industry in the North’s New Year message and reports in October, Seoul’s Unification Ministry Spokesman Kim Ho-nyoun said.

“They are formerly vice ministers or those who climbed the ladder in each field. The reshuffle considered their on-spot experiences and expertise,” the spokesman said.

It was not clear when the reshuffle took place, he said.

North Korean media have been reporting a brisk campaign to rebuild the country’s ailing industrial infrastructure, following up on the New Year economic blueprint rolled out by leader Kim Jong-il. Kim called on citizens “to solve problems by our own efforts” and increase production in electricity, coal and daily equipment.

In the reshuffle, Jon Kil-su was named minister of railways; Kim Kwang-yong minister of forestry; Ho Taek minister of power industry; Kim Chang-sik minister of agriculture; Kim Tae-bong minister of metal industry.

Kim Kwang-yong and Kim Chang-sik were vice ministers and Jon held a senior post in their respective ministry. Ho was formerly a power plant chief, while little was known about Kim Tae-bong, Seoul officials said.

The shakeup was rumored to have affected more posts, but the Seoul spokesman could not officially confirm it.

Koh Yu-hwan, a North Korea studies professor at Seoul’s Dongguk University, said the reshuffle is a sign that the North is shifting its focus to the economy from the military. In its New Year message, Pyongyang pledged to build a “prosperous and powerful nation” by 2012, the 100th anniversary of North Korean founder Kim Il-sung’s birth, he noted.

“The key word this year is the economy,” Koh said. “The reshuffle seems to suggest officials with technical expertise should take the initiative to develop the economy.”

Kim Young-yoon, a researcher with the Korea Institute for National Unification, said Pyongyang is turning to its natural resources amid suspension of South Korean aid. The Seoul government halted its customary aid of rice and fertilizer this past year as Pyongyang refused offers of dialogue.

“North Korea has no other way but turn to its own natural resources as long as inter-Korean relations and the nuclear issue are in limbo,” he said.

Read the full articles here:
Buddhist leader gets North’s South policy spot
JoongAng Daily
Jeong Yong-soo
1/5/2009

N.Korea Reshuffles Economic Posts
Choson Ilbo
1/5/2009

N. Korea promotes industry veterans in Cabinet reshuffle
Yonhap
Kim Hyun
1/6/2008

North Korea says to elect MPs in government shake-up
Reuters
1/6/2009

North to hold parliamentary election
Joong Ang Ilbo
Ser Myo-ja
1/8/2009

Top North official said to be getting re-educated
Joong Ang Daily
1/12/2009

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Lim Dong Won book published

Thursday, June 12th, 2008

Today, the Daily NK publishes a review of Peacemaker: South-North Relations and the North Korean Nuclear Issue over the past 20 years,  by Lim Dong Won, “evangelist of the Sunshine Policy” and former director of South Korea’s National Intelligence Service.

The book (not available in English) publicizes dialogues between Kim Jong Il and the author when he visited Pyongyang for the first Inter-Korea Summit in 2000 and as a South Korean delegate in 2002.  

Actually, the Daily NK’s article is not so much a review of the book as it is a series of interesting excerpts:

[Kim Jong il speaking] Joint Security Areais a good movie. I showed it to the generals of the military and cadres of the Party.’ All of sudden, [KJI] asked [the] general of the People’s Army Lee Myung Su and secretary Kim Yong Soon how many series of a South Korean historical drama, “Petticoat Government” they had watched. [KJI] said that ‘South Korea produces historical dramas well. I’ve instructed the Director of the Propaganda Department of the Party to learn the South Korean way of making historical dramas.’

Lim Dong Won also revealed that at the Inter-Korea Summit in 2000, Kim Jong Il agreed with Kim Dae Jung’s comment, “Even after the unification, the U.S. military presence in South Korea will be needed.” The former president Kim asked him “Why are you insisting through your media on the withdrawal of the U.S. military from the South?” and Kim Jong Il replied to him that he wanted President Kim to understand it was just to soothe the peoples’ feeling.

When Lim asked Kim Jong Il to visit Seoul in April of 2002, Kim Jong Il said that “In fact, I tried to visit Seoul in the spring of 2001, but the situation was changed due to George Bush, who looked on us as an enemy, being elected President of the U.S. Furthermore, the situation of the South was such that the leftists demanded that the North apologize to them for the Korean War and the explosion of KAL, and my visiting Seoul would have deteriorated the relations between the North and the South. Therefore, my close associates held me back from going to the South.”

According to his book, Lim revealed that a hot line has been set up since the first Inter-Korea Summit in 2000 and has been used when crises happened between the South and the North. In June, 2002, when a battle occurred in the West Sea, the North sent an urgent telephone-notice, saying “I heard with regret that it happened accidently.”

Read the full story here:
Veiled Dialogues with Kim Jong Il Revealed
Daily NK
6/12/2008

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DPRK anti-corruption drive: purge, policy change, or both?

Thursday, February 21st, 2008

A little over a week ago, the North Korean government announced an anti-corruption campaign in two agencies: the United Front Department and the National Economic Cooperation Council

As I said then, these sorts of campaigns have nothing to do with making the bureaucracy more accountable or responsive to public demands, but are political maneuvers to prevent “rents” or funds from being channeled to uses that lie outside the leadership’s control (or some faction of the leadership).  In other words, they are regime enhancing (like a purge).

Today, the Daily NK offers a scenario whereby this anti-corruption drive might be a necessary precondition for a drastic policy change: 

The fact that the Guidance Department is involved in the current investigation may be a sign that Kim Jong Il is trying to rebuild the party so that he can change the focus of policy from the military to economic matters. Kim Jong Il has already created a militarily powerful country by acquiring nuclear weapons. Now he wishes to improve other areas.

Within the context of the anti-corruption campaign, today’s Daily NK does a wonderful job identifying the specific agencies involved in reorganizing the DPRK’s levers of power:

The Defense Security Command of the [Korean] People’s Army and the National Security Agency are also launching inspections, but these kinds of inspection are limited. A Defense Security Command investigation can inspect military organizations, local party organizations and individual cadres, but it cannot investigate party branches in the capital and the National Security Agency. At the same time, the National Security Agency’s investigators cannot access the party organizations in Pyongyang, the military and the Defense Security Command.

However, the Guidance Department’s inspection can examine every organization including party organizations in Pyongyang, the Defense Security Command, and the National Security Agency. [A Guidance Department investigation requires Kim Jong Il’s direct authorization. It is often said that if one is the target of such an investigation, one stands little chance of reprieve.]

There are only two known examples of a Guidance Department-led investigation in North Korean history. The first was the investigation of the National Security Agency in February, 1984. […] The second case occurred in 1997 and was known as the Shimhwajo case, resulting in the hushed-up removal of many of Kim Il Sung’s close associates. This inspection was approved by Kim Jong Il and was operated by Jang Sung Taek, Kim’s brother-in-law and the First Vice-Director of the Guidance Department. Through the investigation, thousands of high officials who followed Kim Il Sung were punished, expelled, secretly executed, or sent to prison camps.

To read about another similar change in the balance of power in the DPRK, read the rest of the story here:
Inside the North Korean Shake-up
Daily NK
Moon Sung Hwee
2/21/2008

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The reports of my death are greatly exaggerated..

Sunday, February 17th, 2008

Update:
It seems opposition efforts to spare the South Korean Ministry of Unification were not entirely successful. Yonhap is reporting that even though the ministry will retain its name, much of the rest of it is on the chopping block.

Sources said that if the ministry is retained, its five divisions and one office may be reduced to a single office and three bureaus, with part of its work transferred to the other ministries.

The ministry’s five division headquarters — including unification policy, economic cooperation and cultural exchange — are likely to be reorganized into smaller bureaus, with public relations and information analysis to come under the direct control of the minister.

The office in charge of the Kaesong industrial complex may be turned over to the newly created Ministry of Knowledge-based Economy.

However, the ministry may retain control of inter-Korean dialogue headquarters, the inter-Korean transit office, and a settlement support team for people who have fled North Korea.  (Yonhap)

Although I personally favor an engagement policy with the DPRK, sending the signal that MoU standard practices will no longer be tolerated might actually encourage the DPRK to use donated funds and supplies in an acceptible way.  Remember: carrots AND sticks.  See the game theory here.  However, since the DPRK’s new game seems to play the US, China, Russia, and South Korea off of each other, some are concerned that pushing the DPRK too hard on accoutability and transparency in managing their donations might simply shift North Korea more firmly into China’s corner–which according to Lankov, they already have a strong incentive to do… 

Original Post: 2/8/2008
In the political shake up following the recent South Korean elections, incoming President Lee Myung-bak floated the idea of merging the Ministry of Unification (responsible for the North Korea protfolio) with the South Korean Foreign Ministry.  The story is here.

Today, Reuters is reporting that the Unification Ministry is here to stay.  Afterall, the first rule of bureaucracy is, “Why have one ministry when you can have two at twice the cost!” 

South Korean lawmakers have agreed to spare the ministry responsible for relations with North Korea and reject a call for its closure made by the president-elect, local media reported on Saturday.

The compromise allows the Unification Ministry to stay while lawmakers try to strike a deal to shut other ministries in a plan backed by Lee to streamline government, local media reported lawmakers as saying.

Critics say Lee’s proposal to close the ministry primarily responsible for relations with North Korea could send the wrong signal to Pyongyang, which has long accused Lee’s conservative party of plotting to keep the peninsula divided.

The Unification Ministry has been at the centre of criticism that the outgoing government had been too soft on the impoverished North, pouring aid across the border despite internationally condemned missile and nuclear tests. (Reuters)

The full article can be found here:
South Korea to keep ministry on North: media
Reuters
Rhee So-eui
2/8/2008

New gov’t to downsize Unification Ministry
Yonhap
2/17/2008

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Miniunific: Show me the money!

Thursday, February 14th, 2008

On February 8, it was announced that the South Korean Ministry of Unification, the agency responsible for official interactions with the North, would not be merged with the Foreign Ministry (full story)–dealing an early policy blow to the newly elected South Korean President’s efforts to reduce the size of the South Korean government.

However, just three days later, on February 11,  the Chosun Ilbo reported that a South Korean government cash donation to North Korea (cash donations are apparently unlawful) has [surprisingly] gone missing:

In March last year South Korea gave US$3.8 million worth of aid, including $400,000 in cash and building materials, to North Korea to build a center for inter-Korean video-link family reunions in Pyongyang. But North Korea has not even started construction on the site, it was known on Sunday.

The donation violated a ban on cash aid to North Korea, but South Korea’s Ministry of Unification said at the time that there would be no room for suspicious dealings because the North agreed to inform the South where the money was spent and the South agreed to visit the construction site to find out whether the money and materials were used properly.

It has been almost a year since the aid was delivered, but it is not clear what the North has done with the cash and building materials. The South Korean government has demanded that it be allowed to visit the construction site, but the North has brushed off the requests, saying it will show the site “next time” or after the center is dedicated.

[and…] 

On eight occasions from early April to late August last year, South Korea delivered to the North building materials such as cement, iron bars, electric cable, tiles, drills, adhesive glue, interior furnishings, elevators, and air-conditioning and heating equipment. It also sent 10 buses and six Rexton SUVs.

When sending the materials, Seoul demanded five times that the North allow South Korean officials to visit the construction site and provide details on where the materials were used. All such demands were rejected. (Chosun Ilbo)

Today, February 14, South Korean military authorities admitted to knowing (since 2003, when the previous Roh Moo-hyun administration was inaugurated), that North Korea has transported rice supplied by the South for humanitarian purposes to front-line units of the Korean People’s Army.

The South Korean military has admitted it found no fewer than 200 South Korean rice sacks transported to North Korean Army units on about 10 occasions to the demilitarized zone including Gangwon Province between 2003 and recently.

This is the first corroboration by the South Korean military of testimony by North Korean refugees that the food aid provided by South Korea is being diverted for military purposes. But despite their knowledge of this fact, neither the South Korean government nor military authorities protested to North Korea or asked it for an explanation, apparently for fear of provoking Pyongyang. (Chosun Ilbo)

Updated: 2/21/2008: North Korea denies it diverted food aid to military

Now, I personally favor some kind of engagement policy with the North, but implementing an effective strategy is difficult.  Strict transparency and accountability are absolutely necessary to avoid mismanagement of public funds.  This is admittedly difficult, even in the OECD, much less in a secretive communist state.  Under the current circumstances, however, the North is treating the South like an unwanted lover, and this is not a healthy outcome. 

Handing out public funds with weak- or no-strings attached (as the South has done for years) creates markets in political corruption in the North.  The North Koreans know that the Ministry of Unification has a bureaucratic incentive to spent the money on aid.  If they don’t, it will not be appropriated in the next fiscal cycle.  This is why government budgets almost never go down, and agency heads go on a spending spree just before the fiscal year ends–use it or lose it.  The North Koreans have simply learned how to say the right things, etc., so the Ministry of Unification can check the box and pay up, because they know there will be no consequences when they fail to deliver.

So what is the solution?  If the South Korean government demonstrated some desire to monitor development aid, and reduce it if necessary (say “no” once in a while), they might encourage the North Koreans to do with the money as they claim (at least more so).

Another option available to the South Korean government is to stop using public funds to develop North Korea and instead free the South Korean business community, and other individuals, to take their chances contracting with North Korean entities themselves.  Putting their own Won on the line will definitely encourage private investors and venders to keep an eye on their balance sheets, and will help depoliticize the development of a country with a poor reputation.  

See the gratuitous game theory here.

You can read the referenced articles below:
S.Korea Knew Its Rice Feeds N.Korean Military
Choson Ilbo
2/14/2008

N.Korea May Have Diverted Cash Aid
Chosun Olbo
2/11/2008

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IFES DPRK monthly recap: January 2008

Tuesday, February 5th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-2-5-1
2/5/2008

Kim Jong Il’s first visit of the year was reported on January 6 to have been to the Ryesonggnang hydro-electric power plant. Generally, the leader’s visits in the first months of the year, along with the New Year’s Joint Editorial, which focused on economic recovery, set the tone for the coming year’s policies. His second inspection of the year was to a military unit.

Defectors claim that prostitution is on the rise in North Korea, and on January 9, the aid group ‘Good Friends’ reported that the DPRK has begun to close massage parlors as part of a crackdown on prostitution. The agency reported that in the DPRK there was a “steady campaign to weed out decadent foreign culture,” and that in September, DPRK soldiers were ordered to avoid alcohol, sex, and money.

On January 16, it was reported that Kim Jong Il had instructed all DPRK institutions to reduce their bureaucracies, including senior staff, by thirty percent.

Figures released by North Korea’s Korean Central News Agency indicate that the DPRK’s population had increased to 23.6 million in 2004, the latest available figures. According to DPRK figures, the population has grown from 22.1 million in 1996.

North Korea announced the closure of its Australian embassy on January 22. While the DPRK will continue to maintain diplomatic relations with Australia, it apparently can no longer afford to maintain an embassy in Canberra.

According to a report released by the International Red Cross, North Korea has the largest number of people in the world killed by natural disasters over the past decade. The report states that 458 thousand North Koreans have died from natural disaster, 38 percent of the disaster-caused deaths in 220 countries from 1997-2006.

A U.S. Senate investigation reported that the DPRK funneled as much as 2.7 million USD through a bank account set up from UN development projects. The report stated that North Korea used the UN account due to fears that the United States would block its ability to transfer money internationally.

DPRK Nuclear Negotiations

2008 opened with the United States and Japan releasing statements expressing their disappointment at North Korea’s failure to meet its December 31 deadline to fully disclose the extent of its nuclear programs, while North Korea’s New Year’s Joint Editorial called for “stability on the Korean Peninsula and peace in the world” as well as an end to hostile U.S. policies. A U.S. White House spokesman stressed that there was still opportunity to move forward with negotiations, stating, “the important thing is that we get a declaration that…needs to be full and complete,” not whether the declaration is made by the deadline.

On January 4, North Korea claimed it had met its obligations to come clean on its nuclear programs, and that it had provided Washington with a list of its nuclear programs in November. Pyongyang also threatened to bolster its “war deterrent” because Washington had failed to provide promised aid following the declaration. Washington denied that any complete declaration had been made.

A senior Russian diplomat was quoted on January 11 as saying that while Russia regrets the slowed state of progress in talks on DPRK nuclear issues, Russia will fulfill its promise to provide the North with fuel oil. 50,000 tons of fuel oil were delivered on January 20~21.

According to a book of figures recently published by the National Statistical Office, ”Comparison of North and South Korean Socio-economic Circumstances”, the DPRK”s crude imports over the past several years bottomed out at 2,325,000 barrels in 1999, then rose to 4,244,000 barrels by 2001. Since 2001, imports have steadily fallen until only 3,841,000 barrels were imported in 2006, recording the least imports in the last five years.

North Korea opened its first online shopping mall in January. The site offers items from fourteen categories ranging from machinery and building materials to stamps and artworks. The site, www.dprk-economy.com/en/shop/index.php, is based in China.

Orascom Telecom, a Cairo-based phone operator, has been granted the first commercial license for provision of mobile phone services in North Korea. The license was granted to CHEO Technology, a subsidiary that is 25 percent-owned by the state-run Korea Post and Telecommunications Corporation.

DPRK Abduction Issue

The Cambodian Foreign Minister announced on January 16 that his country had been working behind the scenes to find a resolution to the DPRK-Japan abduction issue. The minister stated, “Cambodia is in a position where it can hold high-level meetings with North Korea, and it has the ability to persuade North Korea.”

Inter-Korean Affairs

The incoming Lee Myung-bak administration announced on January 4 a plan to develop an international cooperative fund to support North Korea’s economy. The plan is said to call for World Bank and the Asia Development Bank to help, and for South Korea to provide 40 billion USD.

On January 7, it was reported that Lee Myung-bak’s presidential transition team had asked the ROK Unification Ministry to slow the pace of inter-Korean economic projects and to link them to progress in the six-party talks. The incoming administration has promised not to link humanitarian projects such as rice and fertilizer aid to nuclear negotiations.

The Lee Myung-bak administration announced plans for downsizing the South Korean government, including disbanding of the Ministry of Unification. Opposition to the plan points out the role played by the ministry in improving inter-Korean relations, while proponents to the plan of relegating the ministry’s duties to the Ministry of Foreign Affairs and Trade applaud the move to align North Korea policy with standing foreign policy directives.

On January 14, it was reported that Lee Myung-bak had asked the United States to further engage in talks with DPRK military leaders, while presenting a balanced approach, stating that “our people don’t support the idea of giving lavish aid to the North nor do they want to irritate it too much, I believe.” He went on to add that the United States holds the key to easing DPRK fears of opening up.

The net worth of inter-Korean exchanges totaled 1,797,890,000 USD in 2007, up 33% from the 1.35 billion USD in the previous year. The almost 1.8 billion dollars in trade recorded in 2007 is the highest to date, and is equal to 65 percent of the DPRK”s non-Korean trade volume of 2.996 billion USD in 2006.

The Seoul-based International Vaccine Institute announced on January 14 that it will soon begin inoculating approximately six thousand North Korean children against bacterial meningitis and Japanese encephalitis.

The two Koreas began working-level military talks on January 25, marking the first talks of the year. During talks, the North proposed reducing the frequency of the inter-Korean rail services, citing a lack of cargo. The Southern delegation felt that the frequency was an important indication of inter-Korean cooperation. The two sides agreed to continue daily runs, but to reduce the number of empty carriages in the future.

North Korea is still not as attractive to businesses as other Asian neighbors. A survey released by the (South) Korea Chamber of Commerce and Industry on January 28 indicated that China and Vietnam are more attractive to ROK businesses. According to the survey, 80 percent of businesses have difficulties starting or operating businesses in North Korea.

An ROK special envoy returned on January 23 from Moscow after proposing a joint ROK-DPRK-Russian cooperative project in eastern Siberia. President-elect Lee Myung-bak sent a letter to Russian President Vladimir Putin pushing for cooperation of “North Korea’s workforce, Russia’s resources and capital, and [South] Korean technology.”

U.S.-DPRK Relations

On January 9, amidst reports concerning possible DPRK-Syria nuclear connections, it was reported that in 1991 Israel was posed to strike a ship suspected of delivering missiles from the DPRK to Syria, but was dissuaded by Washington.

A U.S. State Department official stated on January 22 that North Korea had met the legal criteria to be removed from the U.S. list of state sponsors of terrorism. This came just after reports of conflicting opinions within the Bush administration, with Secretary of State Condoleezza Rice sharply rebuking Special Envoy on North Korean Human Rights Lefkowitz, who stated that North Korea is not serious about nuclear disarmament. Rice went so far as to say that Lefkowitz “certainly has no say on what American policy will be in the six-party talks,” dismissing his negative position on the failure of North Korea to meet its obligations. The White House later stated that North Korea must make a full declaration of its nuclear activities before being removed from the list.

Five officials from the DPRK recently visited the United States in order to learn how to treat and prevent tuberculosis, a serious concern for the North that is “practically non-existent in most developed countries.” The officials were invited by The Korea Society, which is based in New York.

DPRK-PRC Relations

According to the PRC General Administration of Customs, China’s oil exports to North Korea were the same in 2007 as they were in 2006. China sent 523,160 tons of oil to North Korea in 2007.

A senior PRC Communist Party official traveled to Pyongyang for a meeting with Kim Jong Il on January 30. Wang Jiarui, director of the International Liaison Department of the Chinese communist party, was to convey a message to Kim, inviting him to the opening ceremony of the Beijing Olympics. While Kim reportedly told Wang that there would be no change in the DPRK stance on nuclear negotiations, he also assured the Chinese envoy that North Korea had no intention of harming DPRK-PRC relations.

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2007 Biggest year for inter-Korean exchange, at USD$1.79 billion

Monday, January 7th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-1-10-1
1/10/2008

The net worth of inter-Korean exchanges totaled 1,797,890,000 USD in 2007, up 33% from the 1.35 billion USD in the previous year. Exchanges between the two Koreas began in 1989, and topped one billion dollars for the first time in 2005. The almost 1.8 billion dollars in trade recorded in 2007 is the highest to date, and is equal to 65 percent of North Korea’s non-Korean trade volume of 2.996 billion USD in 2006.

Inter-Korean commercial trade was worth 1,431,170,000 USD, 54 percent higher than the 928 million USD in 2006, while non-commercial trade fell 13 percent, from 421,660,000 dollars in 2006 to only 366,720,000 dollars last year. Overall, commercial trade made up over 80 percent of cross-border exchanges, proving that inter-Korean exchanges continue to grow based on commercial transactions. Commercial trade growth was centered around the mining and fishery sectors (52 percent) and increased production in the Kaesong Industrial Complex (48 percent). Textiles and other goods processed on commission also grew by 30 percent.

Additional manufacturing by companies entering the KIC, as well as the installment of equipment used to increase output by those manufacturers already established in the first phase of the complex, saw a great jump last year. Additionally, South Korea loaned the North 80 million USD for equipment, cloth, soap, polyester fibers, synthetic leather, and other materials to be used in light industry, while the North repayed 2.4 million USD (3 percent) of the loan by delivering 1,000 tons of zinc. This was the first example of the North repaying funds to the South, and shows opportunities for the two Koreas to fulfill each other’s needs and carry out friendly economic cooperation in the future.

With increases in domestic use and export of Bukhan Mountain’s minerals and timber, improvements in communications, customs, and transport issues at the KIC and a growing number of companies moving into the complex leading to an increase in production and manufacturing activity, inter-Korean exchanges are expected to continue to grow in the future.

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Will the new ROK govt revisit inter-Korean projects?

Monday, January 7th, 2008

Yonhap (Jan 7, 2008) reports that newly elected South Korean president Lee Myung-bak will revisit the agreement struck between former President Roh and Chairman Kim Jong il last fall.

(excerpt) Projects under review will be the construction of a shipyard complex and its infrastructure in [Haeju] North Korea, along with the establishment of a “peace zone” along the disputed [Northern Line Limit] border in the West Sea, the site of deadly naval clashes between the two Koreas in 1999 and 2002.

“Humanitarian projects, such as the reunion of family members living separately in the two Koreas, and rice and fertilizer aid can be continuously pushed for, but economic cooperation projects should be carried out in parallel with the pace of North Korea nuclear talks,” a key member of the team was quoted as saying at the briefing.

——

Projects in the North are not the only things potentially headed for the chopping block–so it seems is the South Korean Ministry of Unification itself, which could potentially be merged with the South Korean Foreign Ministry. 

The incoming president, however, did suggest a carrot to go with his sticks.  Yonhap reported on January 4 that the new administration plans to launch a USD$40 million fund to promote economic growth in North Korea. 

(excerpt from Yonhap) The planned fund is in line with Lee’s ambitious plan to help increase the impoverished North’s per capita income to $3,000 within a decade if it makes the bold decision to abandon its nuclear program and open its market, said the team’s spokesman Lee Dong-gwan. There are no accurate data on the reclusive nation’s economy but some estimates put its per capita income at around $1,300.

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Koreas Begin Talks on Shipbuilding Project

Tuesday, December 25th, 2007

Korea Times
Yoon Won-sup
12/25/2007

The two Koreas began four-day talks in the southern port city of Busan Tuesday to discuss ways of establishing shipbuilding areas in North Korea, according to the Unification Ministry.

A sub-committee for shipbuilding and marine cooperation, part of an agreement reached at the inter-Korean prime ministers’ meeting last month, convened for the first time to map out the details of the shipbuilding project.

(more…)

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