North Korean Economy Watch

UPDATE: Dr. Petrov made some interesting comments that deserve highlighting:

The BBC report is full of mistakes. The name of the ship was “Lidia Demesh”. On board were 23 members of crew and 1 passenger. After being arrested the ship was escorted to the port of Kimchaek.

The situation was resolved quickly thanks to the Russian Consular General, E.Val’kovich, who personally went to Kimchaek and sorted things out. Most Russian diplomats posted to DPRK are fluent in Korean and exempt from travel restrictions. So, no traditional Hawaiian symbol of respect is needed. 

ORIGINAL POST: The BBC reported last week that the North Koreans pulled a surprise ‘Pueblo’ on the Russians.

The Lida Demesh, carrying a consignment of cars from Japan, was heading for the Russian port of Vladivostok when it was stopped by patrol near Cape Musudan.

An armed group boarded the ship and ordered the captain to change course and go to a North Korean port [Chongjin],” he told the Russian NTV network.

Mr Yeroshkin said the centre had been told the ship’s 25 crew-members were fine and that there had been no threat to their lives. (BBC)

Strangely, this was not the first time this has happened… 

A similar incident in 2005 took 15 days to resolve through diplomatic channels. (BBC)

Fortunately for the crew, the situation did not last that long.

A Russian cargo ship released by North Korean authorities on Wednesday has arrived in the Far East port of Vladivostok.

Captain Yury Buzanov said on returning to Russia that he was forced to enter North Korean waters to avoid a shipwreck due to a heavy storm.

“To save the crew I decided to enter North Korean waters because the waves in the Sea of Japan were three to four meters high with winds of 25 meters per second. In such stormy conditions, the cargo could have shifted in an instant causing the ship to lurch and sink,” the captain said. (Novosti)

No word if they ever used the traditional Hawaiian symbol of respect.

The full stories can be found here:
North Korea Detains Russian Ships
BBC
2/23/2008

Russian ship arrives home after seizure by North Korea
Novosti
2/28/2008

Kang: North Korean Trade Potential
Council on Foreign Relations
12/17/2007

Last December, David C. Kang, a professor of government at Dartmouth College and an adjunct professor at Tuck Business School, discussed the North Korean economy for the Council on Foreign Relations. I have excerpted some of his comments below.

His view on the new North-South cargo train service:

It doesn’t have huge economic significance in the overall GDP of North Korea. But it does have major economic significance in the fact that what North Korea had to do in order to let a train go through was an awful lot of adjustment[…]in terms of linking up the railroad, all the ministries had to prepare.  The old [Korean Energy Development Organization] had this problem as well. [W]hen they wanted Americans and South Koreans working in North Korea to build this light-water reactor, [they] had to set up protocols [Post offices, phone calls, where they were going to stay, etc]. It is pretty significant in terms of how much they had to adjust.

He quoted the following figures on North – South trade:

From $200 million in 1998, to now exceeding $1.7 billion in 2007.   South Korea’s total trade volume is $250 billion.

His opinion on the direction of the North Korean economy:

At this point what we’re seeing is very initial steps on the part of North Korea as they try to open up reform and yet maintain control. At the same time, they are being forced into a number of institutional changes and mind-set changes that are the first step forward in this process.

His view of North Korea’s comparative advantage:

Most of the companies that have gone in—the South Korean companies that have gone in—are assembly and light manufactures, such as or textiles and light consumer goods. This is the sort of obvious point of departure. It’s not hugely capital intensive in terms of building factories, and can take advantage of North Korean cheap labor and South Korean technological advantages.

There are a lot of potential mineral resources in North Korea, which would require a whole infrastructure of legal reforms to happen before anyone would take care of them. But at this point the safest bets are the ones that are on the order of assembly and light manufactures in the North and then exporting them out.

His view of South Korea’s long term goals:

If there’s unification, or even better relations, and South Korean companies can use cheap North Korean labor, instead of having to send those factories to China or Vietnam—not only do they speak Korean, they’re culturally similar, and the labor would be cheaper.

[I]f you could reconnect the railroads, from Japan, through Pusan [South Korea], up through North Korea, then out to China and Russia, you would be linking up all these economies in a much more efficient way than they are now. So everybody wants that. But obviously there’s the political problem. And even on the infrastructure side, the North Korean rail system is so old and so decrepit, that basically it would have to be rebuilt from zero. But the potential upsides are massive, in the long run.

His view of China’s engagement:

China has been essentially as deeply involved in economic engagement with North Korea as has South Korea—and by some measures, actually more so. Whereas South Koreans just do this assembling, some Chinese companies are moving in and building full factories in the North. There’s a lot of interest in Chinese-North Korean economic relations on both sides.

The New York Times (free registration required) ran an article today on Baengnyeong Island, South Korea’s northern most island which is below the NLL (the de jure, though disputed, sea border between the DPRK and the ROK), but only 10 miles from the coast of North Korea.

Fishermen have gone missing from this island for years, and occasionally, naval clashes erupt between the DPRK and ROK.  The latter problem, though not the former, was an agenda item on the most recent Inter-Korea talks between Kim Jong Il and the former South Korean President Roh Moo-hyun.

The island is now a sad reminder of the costs of division and isolation:

[F]or Chang Hyung-soo, a 64-year-old retired diver here, this narrow strip of water is what separates him from his hometown [in the PDRK]. It also separates him from three of his friends who were lost in fog while fishing and taken to North Korea three decades ago.

and… 

“A few weeks ago, a 93-year-old man came here to take a last look at his hometown across the channel before he died,” Mr. Chang, the retired diver, said from the hilltop. “But he could see nothing because of the fog. I still remember the old man’s tears of disappointment.”

Complicating the matter, however, is the competition from Chinese fishersmen granted territorial access by the DPRK:

To make matters worse, hundreds of Chinese fishing boats, after paying fees to the North Korean Navy, have sailed into waters between their islands and North Korea in recent years while the South Korean fishermen have been restricted to waters close to their own shores.

“The Chinese trawlers catch anything, everything, and deplete our seas,” said Kim Myong-san, 78, who first came to the island as a marine and settled here with his wife.

Notes:
One Eye on the Fish, the Other on North Korea
New York Times
Choe Sang-Hun
1/31/2008

Top image from Google Earth. Download “North Korea Uncovered” to see this location on your own Google Earth.

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…)

Bloomberg
Lucian Kim
12/18/2007

OAO Russian Railways plans to build a $100 million container terminal in North Korea as the world’s largest rail company tries to create a land transport corridor linking Asia to Europe.

State-run Russian Railways wants to turn the North Korean port of Rajin into a hub capable of handling 320,000 containers a year for shipment across Russia to Europe, the company said in a statement distributed to reporters today.

The investment is part of a plan that originated in 2001, when North Korean leader Kim Jong Il traveled by rail from Pyongyang to Moscow to visit President Vladimir Putin. As the first step in linking the Korean peninsula to the Trans-Siberian Railway, Russian Railways is upgrading 54 kilometers (34 miles) of track from the border south of Vladivostok to Rajin.

Russian Railways will spend 1.75 billion rubles ($70 million) on improving the track, the company said. Another $100 million will be needed to turn Rajin port into a terminal capable of loading containers shipped from South Korea on to freight trains bound for Europe. The proposed terminal will be operated by a Russian-North Korean joint venture.

Delays over financing and feasibility have plagued the plan for an “Iron Silk Road.” Russian Railways Chief Executive Officer Vladimir Yakunin previously said the rail link to Rajin would be completed by the end of 2006.

The two Koreas opened regular freight train service across the demilitarized zone on Dec. 11.

The most authoritative map of North Korea on Google Earth
North Korea Uncovered v.7
Download it here

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 sixth version.

Additions to the latest version of “North Korea Uncovered” include: A Korean War folder featuring overlays of US attacks on the Sui Ho Dam, Yalu Bridge, and Nakwon Munitians Plant (before/after), plus other locations such as the Hoeryong Revolutionary Site, Ponghwa Revolutionary Site, Taechon reactor (overlay), Pyongyang Railway Museum, Kwangmyong Salt Works, Woljong Temple, Sansong Revolutionary Site, Jongbansan Fort and park, Jangsan Cape, Yongbyon House of Culture, Chongsokjong, Lake Yonpung, Nortern Limit Line (NLL), Sinuiju Old Fort Walls, Pyongyang open air market, and confirmed Pyongyang Intranet nodes.

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.

Daily NK
Yang Jung A
11/24/2007

It turns out that the North Korean regime asserts to its people that the South has decided to invest in the North because the South’s shipping industry is doomed.

The North Korean authorities argued such at public lectures held in October to report on the results of the second Inter-Korean Summit, according to a report released on Wednesday by Good Friends, a Seoul-based aid organization for North Korea.

The report says that a cadre from Pyongsung delivered a public lecture saying, “South’s shipbuilding industry is on the verge of doom, and that is why it has decided to build a shipyard in Anbyun of Kangwon and to establish cooperative complexes for shipbuilding in Nampo in the West Sea.” The cadre also announced that two Koreas have agreed to transform the military demarcation line in the waters of the West Sea into ‘peace line’ and create a joint fishing zone there, the report says.

Nevertheless, the report says, “Most participants had no interest in the lecture. They could only care about putting some bread on the table and making money, instead of wasting time on discussing the country’s affairs”

According to the report, the North Korean people strongly oppose the recently market regulatory measures. It has been reported that the number of individuals who violate the measures is increasing.

“Lately, the chairman of People’s Committee in Pohang district of Chongjin was fired and demoted to a regular worker’s position because the chairman had complained about the state’s measure, which bans females under 45 years old from doing business in the market starting with December 1st this year,” the report says. The chairman is quoted as saying, “In today’s society, women are breadwinners. If women under 45 are banned from making a living in the market, who is going to earn bread and butter for their households?”

“In Sinam district of Chungjin, a female was arrested after having expressed discontent about the regulation. She was pulled along to a Social Safety office and underwent all sorts of hardships. Later, she was made to take criticism at a regular evaluation meeting of a women’s unit in her district, and then released,” says the report.

“In Pyongyang, agents on a mission to crack down anti-socialist activities are going the rounds of the households of individuals who do business in the market. The agents ask the individuals when and how they started business, what their children do, and where they procure sales items,” says the report.

The report also tells an account of an old couple who has retired from the party and recently visited by inspection agents. The report says, “Although the couple spent most of their life serving the party, they had to come to the market to make a living at their old age. The old couple felt very bitter about their situation. They grumbled against the regime saying that it frequently regulates the market and inspects those engaged in the business. The old couple was at a loss what to do.”

Korea Times
Jung Sung-ki
11/19/2007

South Korea is considering directly supplying electricity to Anbyeon on North Korea’s east coast, where a South Korean-funded ship block plant is to be constructed next year, to help ease the power shortage there, a government source said Monday.

“The government has concluded after a recent on-site inspection that without resolving the electricity issue, the plan to build a shipbuilding complex (in Anbyeon) would not be successful,” the source said, asking not to be named.

“So the government is considering taking the initiative to resolve the problem, so that the private sector can stably invest in the inter-Korean business program,” he said.

The two Koreas are to break ground for a shipyard in Anbyeon, Gangwon Province, during the first half of next year as part of large-scale cross-border economic projects agreed upon at the second inter-Korean summit last month.

A group of South Korean officials and shipbuilding businessmen visited the town early this month.

South Koreas plans to propose North Korea the option of a direct supply of electricity next month when a second inspection team visits Anbyeon, the source added.

Experts say the project will cost a sizable amount.

It will require hundreds of billions of won to build steel pipes, transmitters and transmission roads from the northeastern town of Goseong in the South to Anbyeon, a 130-kilometer route, they say.

In case of the Kaeseong Industrial Complex, just a few kilometers north of the inter-Korean border, South Korea spent 35 billion won ($38 million) to build electricity supplying facilities.

The electricity supply will require consultation with countries involving in multinational talks aimed at ending Pyongyang’s nuclear ambition, as energy aid is one of the key incentives for the communist state in return for its denuclearization efforts.

The two Koreas, the United States, China, Japan and Russia have engaged in six-party talks to scrap North Korea’s nuclear weapons program.

Korea Times
Yoon Won-sup
11/16/2007

The prime ministers of the two Koreas have agreed to set up Internet, wire and mobile phone services including mobile phones in the Gaeseong Industrial Complex in North Korea.

They also agreed to allow free movement of people and vehicles of the South in the complex starting next month in order to expand inter-Korean economic cooperation.

The agreement was made between Prime Minister Han Duck-soo and his North Korean counterpart Kim Yong-il Friday.

The rare talks between the prime ministers, the first in 15 years, went smoothly.

The North Korean delegates were very favorable to suggestions made during the three-day talks in Seoul, according to sources.

Particularly, Han and Kim took a stroll together in the morning and toasted each other with soju at dinner, Thursday, boasting of their friendship.

President Roh Moo-hyun hosted a lunch for the delegations, Friday, and thanked them for reaching an agreement. The North Korean delegates returned to Pyonyang by plane afterwards.

The two prime ministers issued a joint statement after the talks, which were aimed to follow up agreements reached at the second inter-Korean summit held in Pyongyang from Oct. 2-4.

They agreed to create a committee for a special zone of peace and cooperation in the West Sea coastal area under which five subcommittees will be set up to deal with an economic zone in Haeju, North Korea; the common use of Haeju port and the southern part of the Han River estuary in South Korea; the safe passage of private ships near Haeju; and a common fishing area in the West Sea.

The first committee meeting, chaired by a minister-level official, will be held in Gaeseong next month.

They also agreed to have a premier-level meeting and vice premier-level economic cooperation committee’s meeting every six months, one in Pyongyang in the first half of 2008 and the other in Seoul.

A cross-border freight and cargo railway linking Munsan in the South and Bongdong in the North will start operation from Dec. 11.

Working-level talks will be held in Gaeseong for two days from Tuesday to finalize the agreement on the cross-border train service, according to the statement.

As part of reconciliation measures, South Korea will help North Korea repair the Gaeseong-Sinuiju railway and Gaeseong-Pyongyang highway in 2008.

Han and Kim agreed to start the construction of shipyards in Anbyeon and Nampo next year.

For family members displaced since the 1950-53 Korean War, the two Koreas will allow exchanges of video calls starting next year and complete the construction of a family reunion center at Mount Geumgang next month.

A series of talks will be held next month to discuss the launch of a tourism program to Mount Baekdu, as well as the use of the North’s Pyongyang-Shinuiju railway to transport a joint supporters group from the two Koreas to the 2008 Beijing Olympic Games.

“The agreement is the first step toward enhancing inter-Korean relations through the virtuous circle of peace and economy,” Unification Minister Lee Jae-joung said.

Lee said the joint statement contained implementation measures for the summit accords, except the military measures that guarantee the cooperative plans.

Apparently mindful of the importance of these, he added: “The coming inter-Korean defense ministers’ talks will deal with the implementation.” The military talks are slated for Nov. 27-29 in Pyongyang.

Korean PMs ‘agree rail-link deal’
BBC
11/15/2007

A regular freight train service over the heavily-armed border between North and South Korea could start before the end of the year, officials say.

The deal, on the second day of talks between prime ministers from the two countries, marks the first agreed schedule for the train link.

The South has pushed for reliable transport links to supply the factories its firms run in the North.

It follows an agreement made last month at a summit of the countries’ leaders.

‘Shared understanding’

North Korean Prime Minister Kim Yong-il and his counterpart from the South, Han Duck-soo, are spending three days in discussions in the South’s capital, Seoul.

The South’s Unification Ministry spokesman, Kim Nam-shik, said the two sides were now trying to set a specific date for starting the rail service.

The 25km (16 mile) track runs from the heavily-guarded border to a joint industrial complex in the North’s city of Kaesong.

“Both sides shared an understanding that it would be meaningful in further vitalising the Kaesong industrial complex,” said the spokesman.

The meeting – the first at prime ministerial level for 15 years – follows October’s historic summit in Pyongyang between the two countries’ leaders.

Divided families

The summit between the North’s Kim Jong-il and the South’s President Roh Moo-hyun was only the second such meeting since the Korean peninsula was partitioned over half a century ago.

The two leaders signed an accord calling for greater peace and economic partnership, despite the two countries remaining technically at war with each other.

They also agreed in principle for the regular cargo rail service to be established.

The prime ministers are using their meeting to discuss more specific proposals.

One key issue is the establishment of a joint fishing area around the disputed western sea border – the scene of naval clashes in the past – and a new economic zone around the North Korean port of Haeju.

The South also hopes to increase the number of reunion meetings for families separated when the peninsula was split.

Prime ministerial meetings between the two Koreas were suspended in 1992 amid growing concern over Pyongyang’s nuclear ambitions.

Ministerial infidelity
Joong Ang Daily
11/16/2007
Lee Yang-soo

The prime minister of North Korea holds one of the top positions in the country’s hierarchy, officially fourth in political power.

Many believe, however, that the prime minister may actually be about 20th in actual influence, as there are plenty of hidden power elites in the political and army circles.

The post of prime minister in North Korea was created after the introduction of the state president in 1972. Since then, eight people have occupied the post. Among them, the person who impressed us the most was Yeon Hyung-muk, who held the job from 1988 to 1992.

The prime minister of North Korea faces tough and dangerous working conditions.

Kim Il Sung emphasized the significance of the post by insisting that the “prime minister is the general of the nation’s economy.” The prime minister, in turn, has often been made the scapegoat for the people’s discontent about the country’s struggling economy.

And to make a bad situation worse, the public economy always took a backseat to the military economy, which led to nuclear and missile development.

One after another, numerous ministers have stepped down in dishonor or suffered incurable illness.

After the dishonorable withdrawal of former Prime Minister Li Gun-mo (1986-1988), Li’s successor, Yeon Hyung-muk, was demoted after four years to the post of candidate member for the Political Bureau Presidium, or secretary of Jagangdo Provincial Party. In addition, Prime Minister Park Bong-ju was demoted last April to manager of a small-town company.

Since assuming the reins of government, Kim Jong-il has recruited people who know the economy well to the top posts.

However, he took a “military first” attitude whenever the cabinet, the Workers Party, and army were in discord over the issue of opening and reform.

In contrast, the president of the People’s Republic of China, Jiang Zemin, gave Zhu Rongji, premier of the state council, a carte blanche to decide every affair in public administration and the national economy.

For example, when rumors spread that the yuan would be further devalued, he consulted Zhu. At that time, Zhu’s nickname was “emperor of the Chinese economy.” China has shown great fidelity to the principle that the “prime minister is the general of the national economy.”

Come to think of it, South Korea has had 27 prime ministers since 1972, representing its own infidelity to the prime minister. Six of one, half a dozen of the other.

Koreas agree to open cargo railway, but key issues remain unresolved
Yonhap
Kim Hyun
11/15/2007

South and North Korea agreed Thursday to open a cross-border cargo railway by the end of this year — resuming the service halted more than half a century ago — as part of economic cooperation projects agreed upon in their leaders’ recent summit.

Seoul proposed Dec. 11 as the date to start the railway service through the demilitarized zone, a Unification Ministry official said on condition of anonymity. But North Korea’s response was not yet known.

The agreement to open a freight railway came on the second day of talks between South Korean Prime Minister Han Duck-soo and North Korean Premier Kim Yong-il in Seoul. The rare prime ministerial talks were aimed at devising concrete plans to implement wide-ranging accords reached between the leaders of the Koreas.

In their summit in early October, President Roh Moo-hyun and North Korean leader Kim Jong-il agreed on a slew of economic cooperation and peace projects. They also agreed that the agreements should be implemented through two follow-up talks — one between prime ministers and the other between defense ministers.

“There is a growing understanding between the sides for the start of the cargo rail service,” Kim Nam-shik, a spokesman for the Unification Ministry, told reporters. He said that the project “seemed highly possible,” even though more consultations are needed to secure a military guarantee by North Korea.

The 20-km cross-border route between South Korea’s Munsan and the North’s Bongdong will allow the mass transport of goods from a joint industrial complex in North Korea to the South, Seoul officials say.

The Koreas also agreed to set up a joint committee to create a peace zone in the disputed border area in the West Sea, part of key summit accords to reduce tension, the ministry spokesman said. Bloody skirmishes occurred in 1999 and 2002 near the disputed sea border, which North Korea does not acknowledge. The western sea border was unilaterally drawn by the U.S.-led United Nations Command at the end of the 1950-53 Korean War. Pyongyang has called for a new line to be drawn further south.

The peace project in the West Sea will likely include the creation of a joint fishing area in the western sea border area, and the establishment of an economic special zone in Haeju in southwestern North Korea, which will transform the naval base area into an economic stronghold.

The Koreas also made progress in social and cultural areas, the spokesman said, without elaborating on specifics.

But key issues remained unresolved.

The top item on North Korea’s agenda is South Korea’s heavy investment in the renovation of its antiquated railways and roads, said the Chosun Sinbo, published by ethnic Koreans in Japan.

The North Korean premier said in the talks that such South Korean support will help implement the summit accords “in a relatively short amount of time,” the paper said.

Pyongyang also expects Seoul’s money to develop shipbuilding facilities in the country, Seoul officials said.

South Korea is expected to seek North Korea’s support in improving the business environment in the Kaesong industrial complex, where communication facilities are poor and border customs inspections are highly restrictive.

The Kaesong complex, where scores of South Korean factories produce garments, shoes and other labor-intensive goods with North Korea’s cheap but skilled labor, emerged from agreements at the first-ever inter-Korean summit in Pyongyang in 2000. But business restrictions and political strains have limited its development.

Other issues include reunions of families separated since the 1950-53 Korean War, with South Korea pushing to regularize the sporadic events.

The two Koreas are expected to issue a joint statement wrapping up their three-day talks on Friday. To settle outstanding details, Seoul has proposed to hold follow-up economic talks between vice prime ministers in the second week of December, a Unification Ministry official said on condition of anonymity.

The Koreas held eight rounds of prime ministerial talks until 1992, when they signed an accord calling for an end to Cold War hostilities on the Korean Peninsula. But the talks were suspended afterward as relations soured over a dispute on North Korea’s nuclear weapons program.

This week’s talks, covering economic projects, will put aside thorny issues on military tension, which will be dealt with in defense ministers’ talks set for Nov. 27-29 in Pyongyang, Seoul officials said.

Unification Minister Lee Jae-joung said on the first day that this week’s talks were “a bit more flexible, a bit more amicable” than previous inter-Korean meetings.

South Korea expects that improved inter-Korean ties will facilitate progress in ongoing multilateral talks to persuade North Korea to abandon its nuclear ambitions.

The communist nation has shut down five key nuclear facilities under an aid-for-denuclearization accord signed in early October in talks involving the two Koreas, the U.S., Japan, China and Russia.

Pyongyang is also supposed to disable its key nuclear facilities at Yongbyon and submit a full list of its nuclear programs by the end of the year in return for the normalization of ties with the U.S. and Japan, as well as economic and energy assistance from the other parties involved.

N.K. asks for help in repairs to facilitate implementation of summit agreement: report
Yonhap
Byun Duk-kun
11/15/2007

North Korea has asked South Korea to help repair its dilapidated railways and roads so the agreements at the recent inter-Korean summit can be quickly implemented, a pro-Pyongyang newspaper published in Japan reported Thursday.

In a rare report from Seoul, the Chosun Shinbo said North Korean Prime Minister Kim Yong-il proposed the modernization of North Korea’s railway between the border town of Kaesong and the northwestern city of Shinuiju at his talks with South Korea’s Han Duck-soo.

Kim, 63, was also quoted as saying that projects to modernize railways and roads will enable the joint declaration from the inter-Korean summit to be implemented “in a relatively short amount of time.”

The North Korean arrived here Wednesday for three days of talks to follow up on the summit held in Pyongyang on Oct. 2-4.

At the summit, President Roh Moo-hyun and North Korean leader Kim Jong-il called for a quick expansion of economic cooperation and an end to military hostilities between the divided Koreas.

This week’s talks had been expected to focus on economic issues as separate talks between the defense ministers of the two countries are to be held in Pyongyang later this month.

Seoul is also calling for an early opening of cargo rail service between the North’s border town of Kaesong, where dozens of South Korean businesses are producing over US$1 million worth of goods each month, and its border town of Munsan.

Still, the Seoul government is placing more weight on the opening of other areas in the reclusive North to South Korean businesses as well as establishing a joint fishing area in the West Sea, where a maritime border dispute led to deadly clashes between the navies of the divided Koreas in 1999 and 2002. The Koreas technically remain at war as the 1950-53 Korean War ended with an armistice, not a peace treaty.

Seoul officials are also calling for easier access for South Korean businesses to the South Korea-funded industrial complex in Kaesong as well as the relaxing of customs and quarantine inspections at the border.

The North Korean premier said his country is ready to resolve the difficulties facing the South Korean businesses operating in Kaesong, according to the report.

“The North side believes what the leaders (of the two Koreas) agreed are not mere economic cooperation projects, but projects that will lead to the reconciliation, unification and prosperity of the nation,” the report said.