Archive for August, 2002

Breakthrough on North Korea links

Friday, August 30th, 2002


The two Koreas have agreed to begin work on restoring road and rail links across their troubled border.

The agreement, which followed two days of economic talks in Seoul, is the latest sign that the secretive North is determined to end its diplomatic isolation.

The North has also agreed to receive Japanese Prime Minister Junichiro Koizumi for an historic visit in September.

The two countries have no diplomatic relations and no Japanese prime minister has ever visited.

Mr Koizumi was due to spend one day in the North on 17 September and hold talks with its leader Kim Jong-il.

“I want to discuss directly with him the possibility of restarting efforts to normalize our relations,” Mr Koizumi said.

Japan and South Korea’s eagerness to engage with North Korea appeared to sit at odds with American wariness towards the communist state.

On Thursday, a senior US diplomat warned that North Korea was the world’s leading exporter of ballistic missile technology and repeated President George W Bush’s assertion that it forms part of an “axis of evil”.

Mr Koizumi said he had discussed the visit with both US President George W Bush and South Korean President Kim Dae-jung. A Japanese official said the visit had been under discussion for more than a year.

North-South progress

According to the South Korean version of a joint statement issued on Friday, both sides had agreed to reconnect one railway line by the end of this year and construct a second by early next year.

Importantly, the two sides’ militaries will hold talks before work begins on 18 September.

The 4-kilometer-wide (2.5-mile-wide) demilitarized zone is heavily mined. Military co-operation is seen as a pre-requisite for the transport links, which have been cut since the end of the 1950-53 Korean War, to be restored safely.

South Korea said it had agreed to send 400,000 tonnes and 100,000 tonnes of fertiliser to North Korea on credit as soon as possible.

The North’s command economy has been unable to feed its people for several years and there have been widespread reports of famine.

Mr Koizumi’s proposed visit to North Korea was apparently raised at talks in Pyongyang this week between Japanese and North Korean officials.

Japan and North Korea relations are often tense, especially over Japanese allegations that some of its nationals were kidnapped to train North Korean spies.


North Korea’s Bankers Study Reform

Wednesday, August 28th, 2002

From the BBC:

North Korea has reportedly sent a delegation of bankers to China to study financial reform.  The eight-strong team from North Korea’s central bank has arrived in the Chinese capital on a three-month study tour, the Financial Times reported.  The bankers’ mission is the latest sign that communist North Korea may be considering fundamental reforms.

An executive of one of China’s top four commercial banks who has met the Korean team as saying they are “very keen to learn”. The Chinese banker added: “But it feels strange for us as we are students of financial reform too. The student has become the teacher.”

The North Korean team is thought to be visiting China’s top four commercial banks – the Bank of China, the Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank.

They have reportedly asked how many customers a bank would need, highlighting the fact that North Korea’s banking system is at a rudimentary stage.


N Korean ‘defector’ goes home

Wednesday, August 21st, 2002


A North Korean engineer who said he was forced to travel to South Korea against his will on a boat with 20 defectors has returned home to the Stalinist state.

Boat engineer Ri Kyong-song, 33, told South Korean officials that he had been detained against his will and wanted to be reunited with his family in the North.

Mr Ri walked back into North Korea on Wednesday, passing through the truce village of Panmunjom inside the Demilitarized Zone separating the two Koreas.

“Long live our great general!” Mr Ri called out as he crossed, referring to the North’s leader Kim Jong-il,

The 20 other North Koreans have sought asylum in the South.

The group had left North Korea by boat on Saturday and spent two days at sea before being intercepted by South Korean maritime officials.

It was the first direct maritime defection between the two Koreas in five years.

Tied up

South Korean officials said Mr Ri had made it clear that he was forced to travel to the South against his will and wanted to join the rest of his family in the North.

He told investigators that he had been imprisoned and tied up on the boat by other families who wanted to defect from the Communist state.

The head of the North Korean Red Cross had urged officials in the South to allow Mr Ri’s swift return on humanitarian grounds.

Both nations still remain technically at war, and share one of the world’s most heavily fortified land frontiers.

But despite the difficulties, the number of North Koreans reaching the South and seeking asylum continues to roughly double each year.

Nearly 600 have defected to the South this year, escaping food shortages and political repression in the North.

Aid groups estimate that tens of thousands of North Koreans are sheltering illegally in China, which shares a porous border with the North.

Beijing does not recognise them as refugees and has tended to send those caught back to North Korea.


Kim Jong-il rolls into Russia

Tuesday, August 20th, 2002


North Korea’s reclusive leader Kim Jong-il has begun a visit to the Russian far east.

The plane-shy leader’s private train crossed the two countries’ border at Khasan where he was met by regional officials as the train’s wheels were changed to fit the Russian gauge.

Mr Kim was accompanied by senior officials including the army’s chief of general staff, Kim Yong Chung.

He is expected to meet Russian President Vladimir Putin in the region’s main city, Vladivostok, on Friday.

Russian officials reported earlier that special care had been taken to ensure the North Korean leader’s train would not snarl up rail traffic in the region after a similar visit last summer caused widespread disruption.

“The railway authorities have… given an assurance that the timetable will be drawn up so that passenger train schedules are not violated,” said Yevgeny Anoshin, a regional official in Vladivostok.

Mr Kim was due to travel on to the defence industry town of Komsomolsk-on-Amur, 900 km (560 miles) to the north, after an hour’s stopover at Khasan. He is expected to visit defence plants there.

The North Korean leader earlier sent a message to Mr Putin in which he talked of the two countries’ relations entering a new phase.

Russian diplomats said the main reason for the visit was for Mr Kim to witness Russia’s experience of economic reforms.

North Korea has recently introduced a number of economic changes, including price and wage hikes. Analysts suspect the measures are designed to lift production and rein in the black market rather than a genuine reform of the state-controlled system.

North Korea has also embarked on a number of new diplomatic initiatives in recent weeks – meeting South Korean officials, planning talks with Japan and offering to host a US delegation.

Correspondents say all Pyongyang’s moves are being scrutinised to see if its often erratic behaviour can be trusted.


Light from the North?

Sunday, August 11th, 2002

Donald MacIntyre

Richard Savage kneels in the rich brown earth of a field on the outskirts of Pyongyang and reverentially spreads out the broad, green leaf of a young paulownia tree. The saplings have been in the ground for only a month but already they are a meter high; the first harvest could take place in just five years. Eyes shaded by his black cowboy hat, the Singaporean native gazes down the rows of juvenile trees, each worth thousands of dollars at maturity, with a satisfied grin. The experimental lumber crop has survived the harsh North Korean winter and is flourishing in the loamy soil. “The paulownia loves this,” he says. Glancing at another leafy plant, a new hybrid, he confides, “We’re going to let the Dear Leader name it.”

Hermit state, international pariah, charter member of the “axis of evil”?North Korea is hardly an obvious place for long-term investments like tree farms. The decrepit Stalinist economy depends on international handouts to prevent widespread starvation. The Dear Leader, strongman Kim Jong Il, runs the country like a medieval fief. But Savage is confident that his $23 million, 20,000 hectare Paulownia plantation south of Pyongyang will pay off. His Singapore-based company, Maxgro Holdings, is investing $5 million in North Korea this year, and he even has plans to build a resort there, complete with a 70-room hotel, horseback riding, trout fishing and all-terrain vehicles. “This is a mega-growth area,” he says. “If you don’t move now, you will have missed the boat.”

Whether Savage has boarded the Titanic remains to be seen, but there are increasing signs that North Korea at last may be opening its barbed-wire gates, economically and diplomatically. Last month, the authoritarian leadership increased food prices, set artificially low by the government, by as much as 50 fold, while increasing miners’ and scientists’ salaries by almost as much. Many observers say the reforms, including the elimination of some manufacturing subsidies, signal that Kim is edging toward a market economy instead of perpetuating a system in which North Koreans rely on virtually free handouts from the government.

Just as intriguing is the sudden burst of sunshine out of Pyongyang diplomats, the normally reclusive North Koreans are now clamoring to talk to Seoul, Tokyo and Washington all at once. Senior North Korean government officials are scheduled to travel to Seoul this week for ministerial-level talks, the first such tete-a-tete in nine months. Says Yim Sung Joon, a senior advisor to South Korea’s President Kim Dae Jung: “This is a very important moment for the two Koreas.”

On the agenda: everything from reunions of separated families to rebuilding a railway across the heavily mined dmz dividing North and South. In a surprise move, Pyongyang has already agreed to send athletes to the Pusan Asian Games next month, the first time North Koreans will take part in an international sporting event in the South. Japanese officials head to Pyongyang next week for talks that will include the awkward issue of Japanese nationals allegedly abducted in the 1970s and ’80s, Japan wants them back before the two countries can normalize relations. Meanwhile, North Korean Foreign Minister Paek Nam Sun met with U.S. Secretary of State Colin Powell for a 15-minute chat on the sidelines of the asean meeting in Brunei two weeks ago, the highest level encounter between the two sides since George W. Bush became President.

Is this the same country whose navy six weeks ago shelled South Korean patrol boats off the west coast of the peninsula, killing five sailors? It is, say observers, who speculate that the naval battle may have been an accidental clash rather than a deliberate provocation. The country’s recent reforms and overtures are, in fact, in keeping with an agenda dating back to the late 1980s, when the Soviet Union unraveled and left its client state, North Korea, without a dependable source of oil and food. The conventional wisdom has been that Kim is too scared of losing control to risk reform. But a devastating famine in the mid-’90s made it clear the country could not go it alone–that it must, to some degree, join the international economic community.

Frequent business visitors to Pyongyang say the North Koreans have been overhauling their investment laws and welcoming international trade delegations in the hope of attracting foreign capital. Government connections are still essential, but there are fewer layers of bureaucracy than in China, say experts on North Korean business practices. Once a joint venture is signed, getting things done is no tougher than in other developing countries. “I find it very refreshing to be here,” says Savage. “The guys are very straight.”

But North Korea’s agricultural output has fallen dramatically and its infrastructure is crumbling. Most of its factories have shut down and its electric power system is in shambles. The country has one of the worst credit ratings in the world and its currency, the won, is not convertible. Building the basic services that might make North Korea alluring to more foreign investors will take billions of dollars in loans from international lenders like the World Bank.

Lending cannot take place without assent from the U.S., and Washington won’t approve until North Korea allows inspections of all its nuclear weapons facilities. The country froze its nuclear program under a 1994 agreement with the U.S., in return receiving oil imports and a commitment–backed by South Korea and Japan–to build two light-water nuclear power plants in North Korea. Ground has been broken for construction of one in the port city of Kumho. But under the agreement, North Korea must allow the International Atomic Energy Agency to assess whether Pyongyang is living up to its promise to come clean on all of its nuclear programs, a process that could take several years. The U.S. and its partners want to begin soon. So far, Kim has refused to allow inspections to resume, and the standoff goes on. Says a Western diplomat: “The North Koreans are going to have to be viewed as extremely clean.”

Nevertheless, a few brave pioneers have set up shop in North Korea in anticipation of better times. Swiss data-processing company has run a joint-venture data-entry center in Pyongyang since 1997. Some South Korean companies have launched joint ventures in areas like animation and computer software. And Chinese traders do a booming business back and forth across the China-North Korea border. Robert Suter, who heads the Seoul office of Swiss power generation company ABB Ltd., says his firm is staking out a position in North Korea, “It is the same as it was in China years ago. You had to be there and you had to build trust.”

The question on many minds is whether Kim Jong Il, who has a history of trading friendly relations and empty promises for monetary assistance, is merely giving the world another head fake. His market reforms, according to skeptics, are designed not to liberalize the economy but to control the informal black markets that burgeoned during the famine, when the government could not feed everybody.

If North Korea is indeed serious about reform, it will begin by rebuilding its decimated manufacturing sector. The country needs to export goods if it is to earn hard currency to pay for the food and fertilizer it cannot produce itself. Cutting off subsidies to deadbeat factories is just a first step, and there is no evidence the government has a blueprint for moving further. “They aren’t scrapping the socialist system,” says Koh Hyun Wook, an expert on North Korea at Kyungnam University near Pusan. “These are makeshift moves to overcome the current economic crisis.”

Savage, the tree farmer, believes otherwise. He will be in North Korea with his Israeli irrigation engineers this week, setting up greenhouses and touching base with his North Korean partners. But he acknowledges his venture will require patience. The country “may be a bit backward,” he concedes, “but so what? If you are prepared to help, it will take off like a bloody bullet.” Or a paulownia tree.