Archive for July, 2006

ASEAN and 5 regional naitons to pressure DPRK on talks

Tuesday, July 25th, 2006

From the BBC:

N Korea talks ‘unlikely’ at Asean

Hopes are fading that an Asean summit in Malaysia can kick-start negotiations on the North Korean nuclear stand-off.

Ministers from all six nations involved in talks on the North’s nuclear aims will be at the meeting later this week, but officials say progress is unlikely.

But the Malaysian hosts say North Korea has already signalled its unwillingness to restart the stalled talks this week, and a senior Chinese official told reporters that Beijing sees no reason for the other five countries involved to meet if North Korea refuses to participate.

From Yonhap: (7/26/2006)

U.S. formally asks N. Korea to attend six-way meeting in Malaysia: sources
By Lee Chi-dong

The United States has formally asked North Korea to join it in a six-way gathering with South Korea, China, Russia, and Japan on the sidelines of this week’s Asian regional security forum, diplomatic sources said Wednesday.

The request was delivered through Pyongyang’s mission to the United Nations in New York earlier this week, they added.

But it is unclear whether North Korea will accept the offer, with the U.S. ruling out any bilateral talks with the communist state outside of a six-way format.

The North’s intention is expected to be made public when its foreign minister Paek Nam-sun arrives here on Thursday afternoon to attend the ASEAN Regional Forum.

From the BBC: (7/25/2006)

Asean concerned at N Korea test

South East Asian nations have expressed concern over North Korea’s missile tests and urged a return to talks on its nuclear programme. The tests could affect regional peace and stability, the statement said.  The appeal came in a joint statement issued after a meeting of Asean foreign ministers in the Malaysian capital, Kuala Lumpur.

Foreign ministers from the 10 countries which make up Asean (the Association of South East Asian Nations) are holding talks in Malaysia until the weekend.  They will be joined later in the week by participants from other Asian nations for the Asean Regional Forum.  US Secretary of State Condoleezza Rice is expected to attend the conference on Thursday. Officials say North Korean Foreign Minister Paek Nam-sun will also take part.  Representatives from the other four nations participating in talks with North Korea – China, Russia, South Korea and Japan – will also be present, raising the possibility of informal talks on the nuclear issue.

But it is not clear whether North Korea will agree. South Korean Foreign Minister Ban Ki-moon said he had proposed a meeting with his North counterpart, but received no confirmation of it.

In the joint statement, Asean urged the six dialogue partners to “utilise their presence during the ARF to promote the resumption of the talks”.


ROK insists Kaesong Products made in ROK, US says “nope”

Monday, July 24th, 2006

UPDATE: Contrary to a previous post (Listed below), South Korea is now insisting that goods made in the Kaesong Industrial Zone be labeled “Made in South Korea” for trade with the US, and the US is insisting that this will not be possible under the proposed FTA.  I hope someone will blink because reduced trade barriers will be good for both countries.

From the Joong Ang:

U.S. reaffirms its stance against Kaesong in FTA
Franklin Lavin, the U.S. Department of Commerce international trade undersecretary, has reiterated the American position not to include goods produced in the Kaesong Industrial Complex in North Korea in the free trade agreement with South Korea.

“The simple fact is that a bilateral agreement is between two countries,” Mr. Lavin said in a lecture organized by the American Chamber of Commerce yesterday.

“We have no negotiating authority, no congressional authority, to include any other economic entity in that bilateral agreement.”

Koreans negotiators, pushing to include Kaesong products in the FTA with the U.S., cited earlier free trade pacts with Chile and Singapore, which accepted the offer, as a precedent. 

From the KBS:

Seoul Not to Compromise Kaesong Label
Friday, July 21, 2006

A top aide to South Korean President Roh Moo-hyun said Friday the South Korean government will not compromise on the issue of labeling goods manufactured in the inter-Korean industrial complex Kaesong as ‘South Korean-made’ in the ongoing talks for a free trade agreement (FTA) with the United States.

Senior presidential secretary for economic affairs Chung Moon-soo said that Seoul will never yield to Washington regarding the country-of-origin issue for South Korean products made in the Kaesong Industrial Complex.

South Korea’s Trade Minister Kim Hyun-chong also expressed a similar stance on the issue.

Earlier in Washington, U.S. Congress International Relations Committee Chairman Henry Hyde reportedly urged the U.S. government not to regard products made in Kaesong as South Korea-made.

In addition, Deputy U. S. Trade Representative Karan Bhatia has made clear that any deal that is beneficial to North Korea would run counter to the U.S. government’s position.

From the Korea Times:

Korea May Not Insist on Kaesong
By Park Hyong-ki
Kim Jong-hoon, chief of Korea’s negotiating team with the United States on a free trade agreement (FTA), Thursday hinted that Seoul may not insist on including the Kaesong issue in the bilateral trade pact.

“We have not decided on which areas we will defend at all costs,’’ Kim told economic editors of newspapers and broadcasting stations. “I will consult decision-makers on the list.’’

Kim’s remarks came after last week’s negotiations in Seoul where the U.S. delegation, led by Wendy Cutler, rejected Seoul’s request for the exemption of tariffs on products made in the South Korean-led industrial complex in the North Korean town, in the event Kaesong-made goods are exported to the U.S.

The U.S. has reportedly been sensitive to transfers of cash to North Korea for fear they may sustain Pyongyang’s programs of weapons of mass destruction. About 6,000 North Korean workers work in Kaesong for about $60 per month. Kaesong is still in a developing stage so if more companies move in to set up shop, it would spell larger cash flows into the financially-strapped communist state.

Regarding Seoul’s decision to halve “screen quota’’ or its mandatory 146-day viewing of Korean films at theaters before FTA talks began, Kim said, “It provided an atmosphere conducive to the start of FTA negotiations.’’

He said that previous efforts to establish a bilateral trade pact with the United States were thwarted over the screen quota issue.

“We believed that if the screen quota remained intact, it would hobble any agreement at the last minute,’’ he said. “Besides, culture is a two-way street. We can’t just keep on insisting our position.’’

Talking about the rupture of the second round talks, Kim said that Wendy Cutler, chief U.S. negotiator, didn’t have authority to make spot decisions so had to consult with Washington, costing a lot on negotiating time.

The two sides are scheduled to meet for the third round in September in U.S.

Here is the position of the US (From the Donga)

The dissensions that had grown between Korea and the U.S. over the Gaesong Industrial Complex and tourism of Mt. Geumgang show signs of evolving into serious rifts.

At the U.S.-Korea Inter-Parliamentary Exchange Council press conference held at Rayburn House in Washington on July 18, the American chairman Edward Royce (Republican) emphasized the importance of where the profits from the industrial complex end up, stating the concern that the North Korean leadership may use the cash it earns for developing weapons of mass destruction such as missiles,

Officials from the Bush administration also recently noted that three laws on terrorism must be amended if the U.S. was to allow tax-free imports of goods produced in countries that support terrorism, such as North Korea, adding that such revision would be impossible for the U.S. Congress to accept. In effect, the U.S. will not be including products made in the Gaesong Industrial Complex in the Korea-U.S. Free Trade Agreement negotiations, because of the inconsistencies with existing laws and regulations.

Stuart Levey, U.S. Treasury`s undersecretary for terrorism and financial intelligence who visited Korea on July 16-18 is also reported to have met with Korean government officials and expressed a deep interest in whether a U.N. Security Council Resolution controlling the shipping of military supplies into North Korea would conflict with Mt. Geumgang tourism and the Gaesong complex.

In his statement upon departure from Seoul, disclosed on the U.S. Treasury website on July 18, he declared that they had discussed “issues of common interest, including the new United Nations Security Council Resolution that requires all member states to prevent the transfer of any financial resources in relation to DPRK`s missile or WMD programs.”

On July 18 Levey visited the Ministry of Finance and Economy (MOFE) and requested to know the Korean government’s position on the recent Security Council’s Resolution against North Korea; however a senior MOFE official replied that as the issue lies with the Ministry of Unification, MOFE was not in a place to provide an answer.

“We explained it [to Undersecretary Levey before he asked] because some concerns had been raised that the U.N. Security Council Resolution could clash with the Mt. Geumgang tourism and Gaesong Industrial Complex,” said Song Min-soon, chief presidential secretary for unification, foreign and security policy.

He went on to deny allegations that tensions had arisen between the two countries over the issue, stating that “Korean government officials had expressed there was no problem with the two enterprises regarding the purpose and range of domestic statutes, judicial judgement or international law mentioned in the Security Council Resolution, and Undersecretary Levey had responded that he understood well.”

While Washington has not demanded outright for South Korea to stop its industrial and tourism enterprises in the North, it has been reported to have conveyed strong concerns over the businesses bringing cash into North Korea.

However, a senior Korean official displayed a firm determination in pursuing the Gaesong project. “The Gaesong Industrial Complex is the epitome of the [current administration’s] North Korean policies. We will carry on with it no matter what difficulties are to be faced,” he said.

Fears have been raised that in case North Korea follows its arbitrary announcement on July 19 that it will no longer permit meetings of separated families with further measures to step up tension on the peninsula, South Korea and the U.S. could come to serious troubles over the Gaesong and Mt. Geumgang projects.

Meanwhile, a group of 56, comprised of people from credit assurance companies and from corporate banking divisions of banks such as Kookmin, Shinhan, Hana, Woori, Korea Development Bank (KDB), Kiup, City Bank Korea, Daegu, Busan, Kwangju, Jeonbuk and Kyongnam will be visiting the Gaesong Industrial Complex on July 21, sponsored by the Ministry of Unification.



China freezes DPRK bank accounts I

Monday, July 24th, 2006

This is big news.  The Bank of China has frozen DPRK-owned bank accoounts for one of two reasons:

1.  The Bank of China plans to list on the New York Stock Exchange (NYSE), as a result, it has to comply with western regulations and concerns…making its role as the new faciltator of DPRK monetary transactions more difficult to accept.  

2.  The Chinese now suspect the DPRK of counterfeiting the Chinese Yuan.

I am not sure of the real reason just yet.  Anyway, here is the coverage in the South Korean press: 

From the Joong Ang Daily:

Bank of China freezes North’s money accounts
Lawmaker, citing U.S. official, blames counterfeiting concerns
by Brian Lee 

The state-run Bank of China has frozen its North Korean bank accounts due to concerns over counterfeit money, a Grand National Party lawmaker claimed yesterday.

Lawmaker Park Jin said his information came from a former senior U.S. government official of the Bush administration, who served at the White House.

Nevertheless, an official with the Foreign Ministry said yesterday that there was no information in regard to Mr. Park’s claim while the Chinese Embassy to Seoul said it was not in a position to comment.

Mr. Park visited in Washington recently with ruling and opposition lawmakers.

The lawmaker said that after Washington initiated an operation called “Smoking Dragon” in September of last year, which was designed to target North Korean counterfeit activities, a Macao-based bank was put under financial sanctions and North Korea moved its bank accounts to China in response.

Mr. Park said the former official told him that continuing probes by Washington led to the measure taken by the Chinese bank.

Mr. Park said yesterday that the Chinese bank was opting to list its stock at the New York Stock Exchange and was told it had little choice but to freeze the accounts.

The lawmaker said he didn’t know the exact timing of when the Chinese bank had frozen the North Korean accounts but speculated that a recent rift between Beijing and Pyongyang was due in part to that incident.

China agreed to a UN resolution passed earlier this month that was drafted in response to North Korea’s missile launch, which occurred despite Beijing’s efforts to stop it.

Mr. Park asserted that Pyongyang is also forging Chinese yuan currency. However, Unification Minister Lee Jong-seok who was asked about it yesterday at a briefing to the National Assembly’s Unification, Foreign Affairs and Trade Committee, said Seoul had no information one way or the other about the forging.

From the Korea Times:

China freezes N.K. accounts: lawmaker
By Lee Joo-hee

A South Korean lawmaker yesterday claimed that the Bank of China froze its North Korean accounts in relation to the alleged counterfeiting activities of the communist regime.

Citing former and incumbent Washington officials, Grand National Party lawmaker Park Jin said the latest move by China was connected with the United States’ financial measures against North Korea’s counterfeiting and laundering of money.

“This is a virtual ban against dealing with North Korea by China, leaving North Korea all the more devastated,” Park said. Park was in Washington to attend a seminar that started on July 15.

Last September, the U.S. Treasury Department cautioned American banks from dealing with Banco-Delta Asia, a Macau-based bank, which allegedly helped circulate North Korea’s counterfeit U.S. dollars.

The measure eventually forced the Macau bank to freeze the North Korean accounts, which amounted to $24 million.

North Korea immediately protested the move and has since boycotted the six-party talks.

“According to U.S. officials, although the $24 million may not appear to be a large sum, North Korea is sensitive to this issue because most of the funds are used for bribery and purchases of weapon components,” Park said.

Park said that following the freeze of BDA, the U.S. Treasury Department trained their radars onto other banks in Macau. North Korea has moved its accounts into banks in China since, he said.

Washington is currently evaluating the data from BDA for proof that North Korea counterfeited U.S. dollars.

North Korea is apparently concerned that the BDA measure could also affect some $200 million to $300 million accounts that are scattered in Singapore, Austria, Switzerland and Russia.

In yesterday’s parliamentary session, Park questioned Unification Minister Lee Jong-seok over North Korea’s counterfeit currency.

Park contended that North Korea was also counterfeiting Chinese yuan, but Lee responded that he did not have any specific information about it.

Reports in Tokyo yesterday said Japan was contemplating revising foreign exchange and trade laws, as part of its additional sanctions on North Korea over its missile launches.

The revisions are likely to require about 300 Japanese-based companies with business ties with North Korea to suspend exports of about 40 materials to destinations that are believed to be linked to the North’s missile program, the Yomiuiri newspaper reported.

It will require the companies to report to the Trade Ministry the details of their exports of targeted materials, including large trucks, titanium alloys and carbon fiber, the Yomiuri said.

Japan is also considering banning cash remittances and freezing North Korean assets in the country.

From Yonhap:

Chinese bank said to freeze N.K. accounts for currency counterfeiting

North Korea is suspected of having printed fake Chinese currency, which prompted the Bank of China (BOC) to freeze all of its North Korean accounts in an apparent retaliation, a South Korean legislator asserted on Monday.

Quoting a number of unidentified U.S. officials, Rep. Park Jin of the main opposition Grand National Party (GNP) said the freezing of North Korean accounts at the BOC is tantamount to virtual imposition of sanctions by Beijing on the North.

“I understand the North is even more frustrated because this means China is in fact imposing sanctions on North Korea,” the opposition lawmaker told Yonhap News Agency in a telephone interview.

Park has just returned to the country after a three-day trip to Washington along with 12 other ruling and opposition party legislators.

The GNP lawmaker claimed Washington may have been aware of the Chinese bank’s move as early as late last year when its Treasury Department imposed sanctions on a Macau bank suspected of circulating counterfeit U.S. dollars printed in the North.

“I suspect (the United States) did not announce the part related to China considering the sensitivity of the issue,” Park said.

He later claimed Beijing may be working with Washington to crack down on Pyongyang’s alleged counterfeiting of Chinese yuan.

“Following U.S. dollars, North Korea is also counterfeiting China’s currency, the yuan,” Park said during a meeting of the National Assembly Unification, Foreign Affairs and Trade Committee.

The claim, if found true, is expected to further complicate the stalled negotiations over North Korea’s nuclear weapons program as the United States has been looking to China to convince the North to return to the multilateral talks.

Pyongyang has been staying away from the talks since November, shortly after Washington imposed sanctions on the Macau bank, Banco Delta Asia.


ROK suspends electricity transmission capacity expansion to Kaesong

Monday, July 24th, 2006

Say that title five times fast.  From Yonhap:

KEPCO postpones construction of transmission tower in N. Korea indefinitely

Korea Electric Power Corp. (KEPCO), South Korea’s state-run electricity monopoly, has postponed its plan to construct a transmission tower in an inter-Korean industrial park in North Korea indefinitely amid rising tension on the peninsula in the aftermath of the North’s missile launches, the chief of the company said Monday.

“Since the inter-Korean relationship hit a deadlock due to a string of negative factors, such as North Korea’s missile firing, we have decided to put off a groundbreaking ceremony that had been slated for Friday to mark the construction of the transmission tower in the Kaesong industrial complex,” KEPCO’s Chairman & CEO Han Joon-ho said in a meeting with reporters in Seoul.

KEPCO had planned to build a transmission tower capable of sending 100,000 kilowatts of electricity from the South to the industrial park, located just across the demilitarized zone that separates the two Koreas.

The company currently transmits 15,000 kilowatts of electricity via 23 telegraph polls for more than 13 South Korean companies operating there.

The South Korean-built complex is a product of a historic inter-Korean summit in 2000 which set off a series of cross-border projects. About a dozen South Korean garment and other labor-intensive plants are currently in operation in the complex.

KEPCO’s announcement comes amid escalating tension between the two countries, triggered by the North’s missile launches on July 5.

Last week, North Korea withdrew all of its government officials from a joint dialogue office in Kaesong, cutting off the last direct channel for communication with Seoul.


DPRK tops ROK in women’s quarter finals

Monday, July 24th, 2006


N. Korea advances to semifinals of regional football tournament

The North Korean women’s national football team reached the semifinals of the Asia Football Confederation Women’s Asian Cup as they beat South Korea 1-0 in Adelaide, Australia, on Monday.

The nine-country tournament doubles as an Asian regional qualifier for the FIFA Women’s World Cup finals in China next year. FIFA is world football’s governing body.


DPRK Travel – 2004

Sunday, July 23rd, 2006

After gaining my first exposure to the DPRK in 1996 from a Lonely Planet book on North East Asia, I was immediately curious about the country.  Off-and-on for several years I informally studied the DPRK.  In July 2004 I had the opportunity to visit the DPRK for the first time, which I did not think was possible until my plane landed in Pyongyang.  I was thrilled to be one of only a handful of Americans allowed into the country that year.

I travelled with the Korean Friendship Association, which might raise some eyebrows among readers.  The Korean Friendship Association is a pro-Pyongyang organization sponsored by the DPRK’s Committee for Cultural Relations with Foreign Countries (historically it is also known as the “Society for Cultural Relations…”).  Most communist naitons had similar offices with similar names.  DPRK offices with the word “Committee” in them seem to be the socialist alternative of “civil society” in more pluralistic countries.  The CCRFC’s mission seems to be to build these civil-society level contacts and constituencies in other countries to facilitate exchanges between the DPRK and these groups, bypassing the formal state- and ministerial-level channels of exchange.  I am only guessing about this, however…A brief introduction to the KFA can be found in a Naerna interview with Pak Kwang-ung, the secretary of the Korea-Spain Friendship Society and the KFA’s sponsor in the DPRK.

The CCRFC engages many overseas groups, such as the KFA and the National Lawyers Guild, in various cultural and informational exchanges.  In return, these groups bolster the Committee’s portfolio and budget by participating in DPRK friendship activities and exchanges.  The CCRFC and KFA have recently undertaken more explicit efforts at attracting foreign direct investment.

So why go with the KFA and not a regular tour group?  Firstly, Americans were not offered tourist visas at the time (except for the rare Mass Games festival).  Ironically, the Mass Games have been held annually since 2005 and more Americans than ever before are making the trip.  Secondly, I wanted to learn as much as possible about the DPRK from their unique perspective.  Joining the KFA delegation seemed to offer a solution to both of these concerns.  The experience was composed of activities I never expected nor things I will ever forget.

This web page is designed for me to warehouse as much information as possible about my trip to the DPRK in 2004.  Below, I have put all my pictures and comments.  Plus I have added the content that others from the trip have put on the web:

1. The trip was filmed and turned into a documentary called Friends of Kim.  It is on Youtube here: Part 1, 2, 3, 4, 5, 6, 7, 8.

2. Peter wrote an article for his college paper and posted this video on line in 2008 (description here). Peter also posted these clips on YouTube: here (at the DMZ) and this one documenting how Andrew was treated.

3. In 2003 Alejandro Cao de Benos was interviewed by KCNA.  Here is the KFA description in Wikipedia.

4. Here is the KFA photo gallery and Nayan’s photo set: 12, and 3.

5. Here are pictures of the trip I found on Naenara: 1,2,3,4,5,6,7,8.

Photos from 2004 trip to DPRK

We began in Beijing’s Capital Airport.  Air Koryo flights are designated with the call letters JS.  Air Koryo flights from Beijing are on an Ilyushin Il-62.  When I stepped on the plane, I was struck by the 1950s deco ambiance which jolts the traveler half-a-century back in time in just a few seconds.  The speakers played typical North Korean music which, at this point, was still charming.  The stewardesses made Donna Reid look like a street bum.  They served us a large meal and I drank some local beer called Ryongsong, which had a metalic after-taste.  It was definitely my least favorite of the DPRK brews as I came to find.  When the plane touched down in Pyongyang, the speakers welcomed us to the DPRK and told us about the Great Leader and the progress of the Juche Revolution.  Welcome to Pyongyang.

At Pyongyang’s Sunan Airport, we were escorted to a special VIP entrance, bypassing the baggage claim, customs and passport control desks.  This was so we could pose for pictures for the DPRK media and senior members of the KFA could give interviews, etc.  In the end it turned out to be kind of annoying because the airport people insisted that we go back through customs and passport control to retrieve our bags and come back through again, which was kind of a hassle because by that point we were behind everyone else in line.

Departures from Beijing  Ilyushin Il-62       FNJtroughwindow

FNJ1  KISatFNJ  pyongyang

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The Sosan Hotel, our home.
KFA delegations primarily stay at the Sosan Hotel.  (There was one exception in 2005 for a large conference of groups sponsored by the CCRFC).  The Sosan is isolated in Pyongyang’s sports district and it was not build to cater to foreigners like the Potongang, Koryo, or Yangdakdo.  So when you are there, there is not much to do besides watch state television, drink, and chat with the same members of the group.  As I recall, the hotel is over 25 stories with more than 12 rooms on each floor.  Aside from our group there was just one other group of North Korean athletes staying there.


March For Peace and Unification
After settling in, Alejandro gave us some quick tips on how to “march,” something not all of us were too comfortable with and were not expecting.  I personally had not anticipated such public political activities, but in the end I though it was hysterical and indicative of the kinds of activities that many North Koreans have to participate in regularly.  There were several DPRK politicians there, including the head of the Committee for Cultural Relations with Foreign Countries.  The march took place at the Monument to the three charters of national reunification.

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The March Continued in Sinchon, home to the Museum of American War Atrocities.  Although the Korean War is know as the “Forgotten War” in the United States, the citizens of the DPRK are reminded of it on a daily basis.  This museum plays a big part in that mission.  Next to the museum is a burial mound containing the victims of war atrocities. (This is much like the American War Atrocities Museum that used to be open in Hanoi)

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*Get rid of the Americans and unite the nation
**Revenge on the American wolves 1000 times

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*Long live the Workers Party of Korea

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Sariwon-North Hawnghae Province
We then traveled to Sariwon to “work with the people”… By the time we arrived, I had been drinking and sitting around for so long that I was itching for some exercise.  So when it came to the heavy lifting, I was ready to go.  I pretty much smoked everyone else.  They were unable to compete with my pent up energy.  Chollima Speed, American style.

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After KCNA completed their photos of the silly white-folks “working with the people,” we were treated to a great song and dance show. This was truly incredible.  Not to brag about myself, but the Dutch filmmakers who recorded this even told me I was a much better dancer than most of the other members of the group.  I have no idea of the name of the girl I was dancing with, but her look seems kind of haunting (in the pink dress below)…

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*Our ideology, our style political system, our style revolutionary way!

After spending the night in Sariwon (near Sinchon), we were off to Kaesong for the next leg of the “March.”  Kaesong used to be in South Korea before the Korean War, and people there can pick up South Korean radio if they are clever enough.  The cheering crowd was composed of all the old women, non-working mothers, and children.  I did however (superficially) interacted with more Koreans than I thought would be possible, and got to walk down the main street in Kaesong. The march felt weird, but hey I was in the DPRK, and this is the kind of stuff they have to do all the time.  Imagine.

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*The girl with the bandana was a Russian translator.  She was trying to copy my sophisticated bandanna look.

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After walking down the street for another round of DPRK-style agitation, it was on to the last leg of the March in Panmunjom (the DMZ).  This was one of the highlights for me.  I have never visited South Korea, so my experience visiting the DMZ is exactly the opposite of most Americans.  I was thinking about holding a sign up that said “Hello from Arlington, VA” for my fellow countrymen on the other side.  Unfortunately no American soldiers were close enough to the border to talk to.  We had to listen to yet another round of political speeches here as well.  I was baking in the sun and could pretty much recite the speeches on my own.  You simply take the same 50 words and move them around.  It all gets repetitive pretty quickly.  Afterwards, the Koreans who were listening to it all took lost of pictures, and wanted several with me.  In the end this was an incredible experience and one I will never forget.  One thing the march did for me was bring home to me how sad it is that the Korean people are divided like this.

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The Koryo Museum was kind of interesting and very pretty.  This museum is on the north-east side of Kaesong.

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Tomb of Wanggon, founder of the Koryo Dynasty.

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While in Kaesong, we stayed at the Folk Hotel.  Many people stay here, and as a result, most of the pictures of Kaesong that visitors post on the web look the same.  We visited a children’s palace there and saw a great show.  The children there were absolutely adorable and put on a very talented performance.

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* Thank you Father kim Jong Il

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*   We will honor the Great Leader Kim Il Sung as our eternal sun
** Lets become bullets and bombs protecting the Dear Leader Kim Jong Il

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*  The Leader goes to the front line, and the children go to the camp
**Lets armor ourselves with Kim il Sung’s revolutionary ideas

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Pakyon Waterfall
One of the most famous in the country.  It is truly beautiful and my pictures do not do it justice.  I was too busy having fun playing in the waterfall and throwing the Frisbee in the water to even explore the surroundings.

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Back to Pyongyang

“Monument to Victory in Fatherland Liberation War”
The Fatherland Liberation War is the official name of the Korean war in the DPRK.  This site, next to the war museum, is a huge plaza with statues laid out symmetrically along the sides which depict specific stories that took place during the war–highlighting various acts of heroism by the Korean People’s Army.  The scale of the plaza or the size of the statue behind me is not accurately portrayed by the pictures.

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*Lets destroy the American invaders

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*Unity of military and people

Pyongyang Metro
Most visitors to the Pyongyang metro visit the same two stops: from Ponghwa to Yonggwang (near the Koryo Hotel).
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* If the Americans attack us, let us destroy them off the earth forever

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Kumsusan Memorial Palace
This is the mausoleum where Kim Il-sung is preserved in state like Lenin, Mao, and Ho Chi Minh.  I have seen all of these except “Uncle Ho” because he was in Russia getting touched up when I visited Hanoi.  Anyway, none of their facilities are nearly as complex and ornate as Kamsusan.  This building used to be Kim il Sung’s office, like the White (or blue) House.  Although plans were initially to bury Kim il Sung in Kim Il Sung Square, they decided to keep him in is office, since that “is where he spent all his time.”  Visitors to Kumsusan begin by checking any materials that they should not have, then they travel about a quarter of a mile by air conditioned moving sidewalk.   Along the way, you have the opportunity to clean your shoes and will also go through a metal detector.  At the end, you enter the first chamber playing the Song of Kim Il Sung.  Here you march in 4 person formation up to a large statue of the president in front of the room, upon which you are supposed to look at quietly for a few seconds.  Afterwards, you exit the room and go through a tunnel that blows air on you to remove any lint you might have, and then you are in the room with Kim il Sung himself.  You are supposed to bow respectfully on each side of his coffin.  The large tumor on the back of his neck has been removed.  After you exit the room, you observe the medals and awards Kim received from various nations and dictators.  You will also see his Mercedes, propped up on blocks, and his train cart.  After that you enter a room where a tour guide explains all of the great exploits of the leader.  Finally, you enter the last room where you can write something nice in the guest book.  It is illegal for south Koreans to visit here by South Korean law.

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* The Great Leader Kim Il Sung will always be with us

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*Lets get “armed?” with Kim Il Sung, Revolutionary Leader

Taesongsan Revolutionary Martyrs Cemetery
This is the graveyard for Kim Il Sung’s guerrilla fighters that served with him in World War II, including his most famous wife, Jim Jong Suk, mother of Kim Jong Il.  It is also illegal for South Koreans to visit here by South Korean law.

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*Grave of Kim Jong Suk, mother of Kim Jong Il

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Mangyongdae Funfair
Mangyongdae is where Kim Il Sung’s parents lived and he spent a lot of his childhood.  There is not much to it.  While we were there, the North Korean media were all over us.  I was never asked that much.  Afterwards we went to a nearby amusement park.  At first it was creepy as it was nearly deserted.  It seemed like we had discovered something that no one had seen in decades.  Eventually more people showed up in buses and livened the place up a bit.  There was a roller coaster there, but I gave it a pass.   It was fun to interact with all the children that showed up.  They got a kick out of playing “keep away” and posing for pictures with members of our group.

On a completely economic note, the fair seemed to operate a textbook two-part tariff pricing system.  This is when you pay an entrance fee to get in the park, but also a price per-ride.  This is a clever way for the provider to capture all of the “consumer surplus” of the visitor.

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*Amusement Hall

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*  I don’t envy anyone
**Refreshment and drinks

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Trip to Wonsan
We never had the opportunity to see much of Wonsan city itself.

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*  Hail to the Great Leader Kim Jong Il
**Great integrity of mother party
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Wonsan Childrens Camp
Empty but pretty fancy.  You can see this from Google Earth and you will also see that it is surrounded by some very nice houses.

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Sijung Lake and beach
This was a nice beach/lake experience.  Just chillin’.

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* Lets form ideology, technology, and culture in juche’s [way?]

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…then back to Pyongyang, and BOWLING!
Initially we asked to go bowling when we were bored in our hotel one night and we were told it was reserved for Koreans.  Then when an armistice day celebration was cancelled they decided to take us there.  Golden Lanes bowling alley, it turns out, has a “foreigners only” bathroom.

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Mansu Hill
Korean visitors to Mansu Hill approach the statue in formation, bow and leave flowers.  They also stand looking at the statue while a giant speaker reads out exploits of the great leader.  I don’t know how long it lasted, but it was longer than I could pay attention.  This statue was initially coated in gold, but was removed after the Chinese threatened to reduce direct assistance.

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Peoples’ Study House and Kim Il Sung Square
This is the large traditional style building that dominates Kim Il Sung square.  It offers language classes and meetings with specialists in various fields.  In a sense it offers some university-type services.

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*   Spirit of Pektu revolution
** Using the revoluitonary spirit of Pektu, build a strong great country

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*Long Live the DPRK
**Long live the the honorable DPRK Workers Party
***The Great Leader Kim Il Sung will always be with us

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Kimjongilia Flower Exhibition
How many politicians do you know that have flowers named after them?  Well the DPRK has two!  And both kinds are on display in a dedicated facility.

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Arch of Triumph
The arch is supposed to be built on the site Kim Il Sung delivered his first speech after World War II.  Its big. Its an arch.

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Moranbong Middle School
Moranbong was great.  We visited lots of classrooms, and while in in many classes the children did not look up from their notes, in others they were quite friendly and open.  I remember watching a girl take notes.  She wanted to look at the foreigner standing in front of her (me) by making repeating glances.  After realizing that I was just flat out looking at her without being coy enough to hide it in glances, she smiled and pulled half of her hand above the desk to wave at me without anyone else being able to see.  Priceless.

After touring the school and its numerous facilities, we were given another great performance by the school kids.  The incredible thing was that in the middle of the show, there was a power outage.  But they did not skip a beat.  They transitioned to an acoustic performance and opened up all the windows.  I felt bad for them, but they were professionals and took it all in stride.

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* Lets become true children of father Kim Jong Il
** 100 wars, 100 victories, Korean Workers Party

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*The Great Leader Kim Il Sung will always be with us
**Lets become youth heroes for fruitful struggle that ields the Kim Jong Il era

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* Lets learn from the Dear Leader Kim Jong Il honorable youth
**Get rid of the Americans and unite the motherland

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Tower of Juche Idea
This is one of the most famous landmarks in Pyongyang.  The view is incredible.  Our visit was at the same time as some Chongryun dancers from Japan.

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*The Great Leader Kim Il sung will always be with us
** Unity

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Film Studio

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Kochang Cooperative Farm
I did a lot of yard work here so I was sweating like a pig.  Although I had come to the DPRK expecting lots of propaganda, I was officially tired of it on this day.


Nampo is on the west coast of Korea and home to the famous “Sea Barge” which prevents salt water from the sea from flowing up the fresh water Taedong River.  We spent a very stress-filled afternoon sitting on the beach wondering what was going to happen to Andrew.

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Mangyongdae Children’s Palace

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USS Pueblo
I was able to briefly recapture the Pueblo, but unsucessful at getting it out of Pyongyang.

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*this is a video of me on KCNA

Random Pyongyang Photos

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*Pyongyang Metro station
** Let us inherit and complete the great work of the juche revolution

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*Famous Air Koryo hamburger (served on all outgoing flights)
** With Rifle, lets protect the socialist red flag

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* May day stadium

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*Lets keep our factory and workplace prudently
**Firm Protection
***Singe hearted unity

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* Let us inherit and complete the great work of the juche revolution
**Lets become a fortress and shield protecting the revolutionary leaders
***Single hearted unity

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*Protect the Leader Kim Jong Il

*Hold the torch of Lenin and rush to build a strong and powerful nation
**Military service is the peoples divine obligation! Death to the enemies of unification!

*Changwang street restaurants
**Koryo hotel
***Founding a strong great country is everlasting
****100 wars 100 victories

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* Lets become a fortress and shield Pyongyang!
**Product learning and living all anti-Japanese squad style

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Billboard for thw whipperan, or “Whistle,” a fiat car made in the DPRK.

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*Protect the leader Kim Jong Il
**These people are our heroes.  Lets be like them!& Lets accomplish what the party gives us!

*812.jpg *Protect the leaders of the revolution!

Back in Beijing!

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Is whooping cough on the upswing?

Sunday, July 23rd, 2006

From the Daily NK:

NK Whooping Cough…Infant Deaths Helpless

It has recently been confirmed that some children have died of ‘whooping cough’, an acute respiratory epidemic, in Hamhung and Chongjin. In Chongjin, children under 12 are restricted from taking long-trips.

Among North Koreans who have visited areas surrounding Yanbian, rumor has it that “Since this spring, the number of coughing children has increased”, yet this was the first time that a death from a respiratory epidemic was confirmed.

“In Hamhung, some infants have died”

On the 12th, Park Chul Man (pseudonym, 62, Hamhung) who came into China via Tumen said that, “Since mid-April, wooping cough has increased among preschool children, and since June, some infants have died. In Hamhung and Chongjin, all children from infancy to elementary school-age are restricted from going on long trips”.

Kang Sun Mi (pseudonym, 59, Sariwon), from Yanji said that, “Across areas of Hwanghae province, many children suffer from whooping cough”. Kim added that, “children with the illness are confined to preschools, or elementary schools, and their parents bring medicine and food to them daily”.

Whooping cough is an acute respiratory disease to which infants below 5 years old are particularly vulnerable. Throughout the world, 40,000 people die from it annually. After an incubation period of 1 to 3 weeks, children develop a high fever, a runny nose, and continue to cough and tear”.

According to a WTO report, amongst poor countries. wooping cough accounts for 15% of total annual deaths, with the highest death rate recorded in children under 6 years old. The side effects from high fever are usually brain damage and liver failure.

According to Kang, the parents of the sick children take care of all the children confinded to preschools, or elementary schools.

Kang said that, “Because there is no medicine or doctors, it was decided that the should parents do all the nursing work”.

Except for in Pyongyang, the preventive inoculation system is totally destroyed

According to witnesses, since 2002, the preventive inoculation system has been completely destroyed, except for some operation in Pyongyang.

Kim, a defector doctor living in Longjing, explaiend that, “Til 2001, some medicine sent from the U.N. and other sources abroad had been available in Hwamkyung province. However, recently all the medicine goes into Jangmadang to be sold. It is impossible for poor parents to get their children inoculated”.

Kim added that, “the fact that Children over 10 years old have come down with whopping cough shows that the preventive inoculation system in the North is completely dysfunctional”.

According to the UNFPA, the 2004 infant death rate in North Korea is 58 out of 1,000 infants, which is ten times as high as that of South Korea (5.3 out of 1,000 infants).

In 2000, UNICEF reported that, “92.4% of North Korean children under 5 years old were inoculated with DPT to prevent whooping cough, tetanus and diphtheria”.


Is Typoid on the increase?

Sunday, July 23rd, 2006

From the Daily NK:

North Koreans “1 out of 10 Households Have Diseased Patients”

Paratyphoid, an acute illness of the digestive system, is spreading over North Hwanghae province, including Haeju City.

Paratyphoid is an epidemic which spread throughout Hamkyung, Jakang, Yangkang provinces during the ‘March of Tribulation’ in the mid-90’s.

“Just Education, No Inoculation”

On July 12, Choi Gil Yeo (pseudonym, 59, Haeju of South Hwanghae province) who returned from visiting her relatives in Dandong, China said that, “Since May, the number of Paratyphoid patients has been rising in Haeju city, Chongdan-gun and Shinwon-gun. At least 1 out of 10 households has a Paratyphoid patient”.

Regarding the measures the North Korean government has taken, Choi said that, “the administration and the Public Health administration instructed people “to drink boiled water” and “confine patients to houses”, but did not take any action on vaccination or prevention of the epidemics”.

On the 13th, Kim, a Chinese trader staying in Shinuiju, said during a phone interview that, “In Shinuiju, rumor has it that Paratyphoid is spreading over Hwanghae province, and wholesalers from Haeju, Sariwon, and Nampo have been purchasing increasingly more antibiotics, dextrose packs and syringes.

An interview with Choi is as follows:

To what degree is Paratyphoid spreading?Have there been any deaths?

“Some people have died. I heard from a people’s unit (a neighborhood association) meeting that some have died in Seohae-dong, Gwnagsuk-dong, Yeonha-dong, and Sukmi-dong of Haeju city. Chongdan-gun and Shinwon-gun have had a few deaths. I do not know what the number is, yet at least 1 out of 10 houses has a patient. In the apartment where I live there are two patients.”

The Main Causes Are Polluted Water and Malnutrition

How did the North Korean people discover the causes of the illnesses?

“Originally, tap water from Haeju city and South Hwanghae province was not sufficient to drink. Tap water is salty and has rust as well as some earthworms and insects in it, but that has been the case since two or three years ago. Each district has dug wells to solve the problem. People think that polluted water is the cause of the epidemic, although the more important cause is malnutrition.”

What symptoms do Paratyphoid patients experience?

“A woman living in the house below me had begun to get sick in mid-June, with a 41℃ temperature. She had a high fever, and for one or two days at a time she would be delirious, then would be herself again. But if diarrhea begins, there is no chance of survival. Surviving would mean living without normal brain capacity for the rest of your life.”

How are hospitals treating patients?

“Hospitals? At the moment, Haeju does not have any fully-functioning hospitals. No medicine, no doctors, no patients who want to go to the doctor. Only for surgical operations do people go to the hospital. These kinds of epidemics are not curable even at hospitals. People just treat themselves at home as much as possible. The Haeju 1 hospital and Haeju medical university are also hopeless.”

“The government takes “No responsibility”, everything should be solved in Jangmadang”

What does home treatment consist of?

“Wealthy people just go and buy medicine, but poor people put a cool towel on their head to lower fever and then eat warm soup. The poor do not care whether they live or die…Because they have no way of receiving help. A doctor’s visit costs about 5,000 to 10,000 won ($1.67~$3.33) each. With that money, they could buy medicine in Jangmadang and try to treat themselves.”

What kinds of medicine do they buy?

“Usually they buy Chinese medicine called “Lebo” in Jangmadang. “Lebo” consists of tablets and powdered medicine which is taken with dextrose. They also take antifebriles sent by the U.N.”

How much does the medicine cost?

“Syringes are 200 won ($0.07) a piece, which can be used again with sterilization. Dextrose (25 mg) is 250 won a pack. “Lebo” is 1,500 won ($0.5) a piece. Antifebriles sent by the U.N. are 300 won ($0.1) a tablet. “Lebo” is effective if injected with powdered medicine and dextrose twice a day. Twice daily injections and a piece of antifebrile cost 3.000 won ($1), which for a month costs a patient 10,000 won.”

Is it easy to buy the medicine in Jangmadang?

The Seo Market in Yeonha-dong, Haeju city has the biggest variety of medicine. You can buy the medicine anytime if you have the money. But the price of Paratyphoid medicine and antifebriles are increasing. In Seo Market there are a couple of stalls which buy medicine from wholesalers in Shinuiju and sell it. State-run drug stores do not have medicine any more, so they are used as grocery stores. In Jangmadang, most of the medicine is from the U.S. and China, and the little medicine that was made in North Korea is very coarse.

Paratyphoid is an epidemic from malnutrition and poverty

Are families of patients preparing for the epidemic?

“Paratyphoid is an epidemic that generally the poor and malnourished people are vulnerable to. A normal monthly wage for many is less than 2000 won ($0.67), which means if the people come down with the illness, they cannot afford to buy medicine. Poverty leads to the disease, and also often leads to the worsening of the situation.”

How about tap water?

“Only in places such as Gwangsuk-dong and Haewoon-dong, does tap water still run sufficiently. altough it is only public tap water. Almost everyone must rely on wells and springs buried in the mountains.”

What kind of action has the Health administration taken?

“The only thing the government does is “education”, instructing people to drink boiled tap water, confine patients to their houses, and sterilize bowls and spoons. The government has only watched as people die of starvation and illness.”

Have you ever received medicine sent by the U.N and South Korea?

“Everyone knows that the U.N. and South Korea send medicine. However, hospitals and clinics do not receive the medicine. Even state-run pharmacies do not have any medicine. All the medicine is sold in Jangmadang.”


DPRK super notes are of super quality

Saturday, July 22nd, 2006

From the New York Times (via NK Zone):

The counterfeits were nearly flawless. They featured the same high-tech color-shifting ink as genuine American bills and were printed on paper with the same precise composition of fibers. The engraved images were, if anything, finer than those produced by the United States Bureau of Engraving and Printing. Only when subjected to sophisticated forensic analysis could the bills be confirmed as imitations.

Counterfeits of this superior sort — known as supernotes — had been detected by law-enforcement officials before, elsewhere in the world, but the Newark shipment marked their first known appearance in the United States, at least in such large quantities. Federal agents soon seized more shipments. Three million dollars’ worth arrived on another ship in Newark two months later; and supernotes began showing up on the West Coast too, starting with a shipment of $700,000 that arrived by boat in Long Beach, Calif., in May 2005, sealed in plastic packages and wrapped mummy-style in bolts of cloth.

In the weeks and months that followed, federal investigators rounded up a handful of counterfeiting suspects in a series of operations code-named Royal Charm and Smoking Dragon. This past August, in the wake of the arrests, Justice Department officials unsealed indictments in New Jersey and California that revealed that the counterfeits were purchased and then seized as part of an operation that ensnared several individuals accused of being smugglers and arms traffickers, some of whom were suspected of having connections to international crime rings based in Southeast Asia.

The arrests also prompted a more momentous accusation. After the indictments were released, U.S. government and law-enforcement officials began to say in public something that they had long said in private: the counterfeits were being manufactured not by small-time crooks or even sophisticated criminal cartels but by the government of North Korea. “The North Koreans have denied that they are engaged in the distribution and manufacture of counterfeits, but the evidence is overwhelming that they are,” Daniel Glaser, deputy assistant secretary for terrorist financing and financial crimes in the Treasury Department, told me recently. “There’s no question of North Korea’s involvement.”

Last September, the Treasury Department took action to signal its displeasure. The department announced that it was designating Banco Delta Asia, a bank in Macao with close ties to North Korea, a “primary money-laundering concern,” a declaration that ultimately led to the shutting down of the bank and the freezing of several key overseas accounts belonging to members of North Korea’s ruling elite. In a public statement, Treasury officials accused Banco Delta Asia of facilitating North Korea’s illicit activities by, among other things, accepting “large deposits of cash” from North Korea, “including counterfeit U.S. currency, and agreeing to place that currency into circulation.”

The counterfeiting of American currency by North Korea might seem, to some, to be a minor provocation by that country’s standards. North Korea, after all, has exported missile technology in blatant disregard of international norms; engaged in a decades-long campaign of kidnapping citizens of other countries; abandoned pledges not to pursue nuclear weapons; and most recently, on July 4, launched ballistic missiles in defiance of warnings from several countries, including the United States.

But several current and former Bush administration officials whom I spoke with several months ago maintain that the counterfeiting is in important ways a comparable outrage. Michael Green, a former point man for Asia on the National Security Council, told me that in the past, counterfeiting has been seen as an “act of war.” A current senior administration official, who was granted anonymity because of the sensitivity of relations between the United States and North Korea, agreed that the counterfeiting could be construed by some as a hostile act against another nation under international law and added that the counterfeits, by creating mistrust in the American currency, posed a “threat to the American people.”

Whether counterfeiting constitutes an economic threat, the issue of North Korean counterfeiting is aggravating diplomatic relations between the two countries. According to some analysts, the freezing of North Korea’s bank accounts helps explain the regime’s decision to launch its missiles on July 4. Bill Richardson, the governor of New Mexico and a former U.S. ambassador to the United Nations, visited North Korea last fall, not long after the Treasury Department’s crackdown. When I spoke with him in mid-July, he said that the missile launch was in part a protest of the department’s actions. “When I was in Pyongyang in October,” he said, “my interlocutor raised the counterfeiting issue and the freezing of the assets as a major irritant for the government.” He continued, “The counterfeiting issue, and the crackdown on Banco Delta Asia, is a major factor which is contributing to Kim Jong Il’s posturing.”

How much of a concern should the counterfeiting be? Is it worth adding the issue to an already volatile diplomatic situation? The current South Korean government, which has made détente with North Korea a centerpiece of its foreign policy, has shied away from an open confrontation with the regime over the issue. Even many American law-enforcement officials who are upset that North Korea is counterfeiting nonetheless question the view that the counterfeiting poses an urgent threat. In Congressional testimony delivered in April, Michael Merritt, deputy assistant director of investigations for the Secret Service, which is responsible for protecting the nation’s currency from counterfeiters, said that the supernote was “unlikely to adversely impact the U.S. economy based on the comparatively low volume of notes passed.”

The Bush administration, though, is taking a hard line. In response to a question after a speech in Philadelphia in December, President Bush himself suggested that counterfeiting is among the regime’s gravest affronts. “North Korea’s a country that has declared boldly they’ve got nuclear weapons,” he said. “They counterfeit our money. And they’re starving their people to death.”

Funny Money

In December 1989, while counting a stack of $100 bills, an experienced money handler in the Central Bank of the Philippines became suspicious about one bill in particular. It passed the usual tests for authenticity but still felt a bit odd. The bill eventually found its way to the offices of the United States Secret Service. All counterfeits sent to the Secret Service headquarters, in Washington, are examined under a microscope, scrutinized in ultraviolet light and otherwise dissected to reveal their flaws and shortcomings, as well as the printing techniques used in their manufacture. This information is then cross-checked with a database of all known counterfeits.

As the mystery note underwent the usual scrutiny, it became apparent that this was no ordinary counterfeit. For starters, it was printed on paper made with the appropriate mix of three-quarters cotton and one-quarter linen of real U.S. currency. Making secure paper with this mix requires a special paper-making machine rarely seen outside the United States.

In addition, the note was manufactured using an intaglio press, the most advanced form of currency-printing technology available. These intaglio presses are far more expensive than ordinary offset, typographic or lithograhic presses, which yield inferior counterfeits. An intaglio press coats the printing plates with ink, and then wipes the surface clean, leaving behind ink in the recesses of the engraving. The press then brings paper and plate together under pressure, so that the ink is forced out of the recessed lines and deposited on the paper in relief. While counterfeits made using the intaglio process had been seen on rare occasions before, this note surpassed all of them in the quality of the engraving.

As with other new species of counterfeits arriving in the offices of the Secret Service, the bill was given its own flat-file drawer and christened with a sequential number: C-14342. In time, its remarkable quality earned it its more informal honorific: the supernote. But as soon became clear, the supernote was merely one member of a family of counterfeit notes. Technicians at the Secret Service soon linked it to another intaglio note detected around the same time, C-14403. This counterfeit had a few defects that the note from the Philippines did not, suggesting it was manufactured before C-14342. Nonetheless, C-14342 was soon known by the name Parent Note 14342, or PN-14342.

The Secret Service has drawn up what looks like a genealogical chart of these and related bills, which agents showed me during a visit to their Washington offices this spring. The chart displays the many members of the supernote clan: C-21555, for example, the first “big head” $100 (so-called because of the design of the most recent U.S. bills), which was initially identified in London; and C-22500, a more recent arrival that appeared in Macao. The family, which now has 19 members and remains unparalleled even in the world of high-quality counterfeits, also includes two $50 notes: C-20000, a small-head supernote that appeared in Athens, in June 1995; and C-22160, a big-head version, first sighted in Sofia, Bulgaria.

Thanks to sophisticated tools, including mass spectroscopy and near-infra-red analysis, along with old-fashioned visual inspection, the labs of the Secret Service have established genetic links between the family members. These links are not a matter of resemblance so much as they are an indication of a common ancestry: the notes in the PN-14342 family have been created by an individual or an organization using the same equipment and the same materials, and most likely operating from a single location.

As the number of supernotes multiplied, the question arose: who created them? In theory, only governments can buy intaglio printing presses used for making money, and only a handful of companies sell them. Those facts alone pointed toward government involvement, but for some time there was no consensus as to which nation was behind the counterfeiting. Many of the supernotes surfaced in the Middle East, notably in the Bekaa Valley of Lebanon and in Tehran. In 1992, Bill McCollum, a Florida congressman and chairman of the House Task Force on Terrorism and Unconventional Warfare, issued a report accusing Iran of printing the supernotes. The report estimated that the value of supernotes in circulation might eventually approach “billions.”

The Secret Service, however, distanced itself from this accusation. In a letter written in 1995 in response to a Government Accounting Office report on counterfeiting overseas, the Secret Service called the task force’s allegations “unsubstantiated” and characterized its conclusions as being based on “rumor and innuendo.” In reality, evidence was pointing elsewhere.

A Picture Emerges

With a country as closed and secretive as North Korea, information about government activities is hard to come by. But in the late 1990’s, a new source of information arrived in the form of defectors. Starvation, corruption and desperation had prompted thousands of North Koreans, many of them government officials, to flee the country. In 1997, two high-ranking bureaucrats — Hwang Jang Yop, a former secretary of the North Korean Workers’ Party, and Kim Duk Hong, head of a government trading company — sought political asylum at the South Korean Embassy in Beijing. They were the most prominent officials to defect, but they were hardly alone: thousands of North Koreans have fled to South Korea. Many thousands more have escaped to China.

In the international intelligence community, vetting accounts from defectors about activities in North Korea soon became a specialty — as well as a necessity, for the accounts were not always reliable. Raphael Perl, an analyst at the Congressional Research Service who has written extensively on North Korea’s counterfeiting operations, told me that “a lot of defectors or refugees give us information, but they tell us anything we want to know. You have to question the reliability of what they say.”

Nonetheless, the most trustworthy of these accounts, when combined with more traditional intelligence sources, permitted a best guess of what might be happening in North Korea. And as far as counterfeiting was concerned, the picture that emerged suggested that moneymaking had long been a passion for the country’s dictatorial ruler, Kim Jong Il, dating back to the 1970’s, years before he took over the reins of power from his father, the country’s founder and first president, Kim Il Sung.

Today, on Changgwang Street in Pyongyang, the capital of North Korea, there is a barricaded compound of government buildings. Judging from satellite photos, these are unremarkable, rectangular structures that suggest no special purpose. Yet according to a North Korean specialist based in Seoul whom I spoke with recently, and who has interviewed many high-ranking North Korean defectors, including Hwang Jang Yop and Kim Duk Hong, these buildings are the home of Office 39, a government bureau devoted to raising hard currency for Kim Jong Il. (The specialist was granted anonymity because of the sensitivity of relations between North and South Korea.)

While the operatives of Office 39 may well direct legitimate enterprises, including the export of exotic mushrooms, ginseng and seaweed, a substantial portion of the office’s revenue comes from its involvement in illicit activities: drug manufacturing and trafficking, sales of missile technology, counterfeit cigarettes and counterfeit $50 and $100 bills. According to Ken Gause, director of the Foreign Leadership Studies Program at the CNA Corporation, a policy group in Virginia that consults on national-security issues, the activities of Office 39 overlap with those of two other offices that occupy buildings in the same complex. The first, Office 38, manages the money acquired by Office 39, he said, while the second, Office 35, handles kidnappings, assassinations and other such activities.

All three divisions employ the same narrow coterie of elites, and all answer directly to Kim Jong Il, who lives in a villa less than a mile away. The history of the operations of Offices 39, 38 and 35, Gause told me, closely follows Kim Jong Il’s own rise to power through the party apparatus. In the early 70’s, after helping his father purge the ranks of the Korean Workers’ Party of competing factions, Kim Jong Il assumed control of North Korea’s covert operations, mostly involving South Korean targets.

In the mid-70’s, according to defector accounts related to me by the North Korean specialist, Kim Jong Il issued a directive to members of the Central Committee of the Korean Workers’ Party instructing that expenses for covert operations against South Korea be paid for by producing and using counterfeit dollars. Officials in charge of the operation supposedly brought back $1 bills from abroad, bleached the ink and then used the blank paper to print fairly sophisticated counterfeit $100 bills — though nothing close in quality to a supernote. Many of these notes were later used by North Korean agents implicated in attacks on South Korean targets, like the operatives arrested for the bombings of a South Korean government delegation in Rangoon in 1983 and a Korean Airlines jet in 1987.

According to the same defector accounts, Kim Jong Il endorsed counterfeiting not only as a way of paying for covert operations but also as a means of waging economic warfare against the United States, “a way to fight America, and screw up the American economic system,” as the North Korean specialist paraphrased it to me.

In a similar vein, according to Sheena Chestnut, a specialist on North Korea’s illicit activities who has also interviewed several key defectors, counterfeiting was seen as an expression of the guiding idea of the regime: the concept of juche. Often loosely translated as “self-reliance” or “sovereignty,” the idea of juche entails an aggressive repudiation of other nations’ sovereignty — a reaction to the many centuries in which Korea capitulated to its larger, more powerful neighbors. “It appears that counterfeiting actually contributed to the domestic legitimacy of the North Korean regime,” Chestnut told me. “It could be justified under the juche ideology and allowed the regime to advertise its anticapitalist, anti-American credentials.”

By 1984, as North Korea’s planned economy began to fall apart, Kim Jong Il, who by that time was effectively running much of the government, issued another directive, according to the North Korean specialist, who told me he has obtained a copy of the document. It explained that “producing and using counterfeit U.S. dollars” was a means, in part, for “overcoming economic crisis.” The economic crisis was twofold: not only the worsening conditions among the general population but also a growing financial discontent among the regime’s elite, who had come to expect certain perquisites of power. Counterfeiting offered the promise of raising hard currency to buy the elite the luxury items that they had come to expect: foreign-made cars, trips for their children, fine wine and cognac.

Laundering, Wholesaling and Redesigning

Earlier this year, I visited David Asher, a former senior adviser for East Asian and Pacific affairs in the State Department and an outspoken critic of the North Korean regime. In late 2001, he explained to me, Assistant Secretary of State James Kelly asked him to study why the North Korean regime had not collapsed, given that the country’s economy had declined even further over the previous decade, with industrial output alone falling by as much as three-quarters. Former Communist countries had ended their subsidies, Kim Il Sung had died, the country was stricken by floods and famine and the food-distribution system had collapsed. (Party slogans betrayed more than a hint of desperation: “Let’s Eat Two Meals a Day” was one of the era’s more uplifting exhortations.) Yet Kim Jong Il, defying all expectations, managed to cling to power.

“How this was happening was perplexing, given the huge trade gap, even with adjustments for aid flowing into the country,” Asher recalled. “Something just didn’t add up. It didn’t account for why Kim was driving around in brand new Mercedes-Benzes or handing out Rolexes at parties and purchasing truly large quantities of cognac.”

As Asher and his colleagues began amassing intelligence, evidence of an array of illicit activities began surfacing — everything from ivory smuggling to the production of high-grade methamphetamine. And counterfeiting was at the core. “The more we found out about this counterfeiting of dollars, the more we thought it was outrageous,” Asher told me. These activities provided what Asher calls “an alternative framework for existence” and “the palace economy of Kim Jong Il.”

In the spring of 2003, the State Department established the Illicit Activities Initiative, an interagency effort designed to investigate and counter North Korea’s criminal activities, and appointed Asher coordinator. The department began to systematically collect a variety of forensic and other evidence gathered by its own investigators, the Secret Service and elements of the intelligence community linking North Korea to the supernotes. (Asher declined to comment on the nature of the evidence, most of which remains classified.)

In addition, the department put together circumstantial evidence of North Korean counterfeiting that had been accumulating for more than a decade. In 1994, for example, authorities in Hong Kong and Macao apprehended five North Korean diplomats and trade-mission members carrying about $430,000 in bills that turned out to be counterfeits of the supernote variety. Additional North Korean diplomats, including an aide close to Kim Jong Il who was attached to Office 39, were caught trying to launder millions of dollars worth of supernotes over several years, prompting an increased scrutiny of North Korea’s diplomatic and trading missions.

Thwarted, the regime seems to have changed tactics, harnessing new distribution networks and wholesaling the counterfeits to third parties who would funnel them to criminal gangs. In the late 1990’s, for instance, British detectives began tracking Sean Garland, the leader of the Official Irish Republican Army, a Marxist splinter group of the I.R.A. According to an unsealed federal indictment in Washington, Garland began working with North Korean agents earlier in the decade, purchasing supernotes at wholesale prices before distributing them through an elaborate criminal network with outposts in Belarus and Russia, as well as Ireland. (Garland denies the charges and is currently fighting extradiction to the United States from Ireland.)

Details of the actual manufacture of counterfeit notes also began filtering into the State Department, much of the information derived from defector accounts. According to similar accounts compiled by Sheena Chestnut and the North Korean specialist in Seoul whom I spoke with, the regime obtained Swiss-made intaglio printing presses and installed them in a building called Printing House 62, part of the national-mint complex in Pyongsong, a city outside Pyongyang, where a separate team of workers manufactures the supernotes.

In 1996, frustrated by the high-quality imitations of its currency in worldwide circulation, the United States government redesigned the money for the first time since 1928. Out went the old-fashioned symmetrical designs, replaced by the big-head notes. Almost everything about the new design was aimed at frustrating potential counterfeiters, including a security thread embedded in the paper, a watermark featuring a shadow portrait of the figure on the bill and new “microprinting,” tiny lettering that is hard to imitate. The most significant addition was the use of optically variable ink, better known as O.V.I. Look at the bills in circulation today: all 10’s, 20’s, 50’s and 100’s now feature this counterfeiting deterrent in the denomination number on the lower-right-hand corner. Turn the bill one way, and it looks bronze-green; turn it the other way, and it looks black. O.V.I. is very expensive, costing many times more than conventional bank-note ink.

A Swiss company named SICPA is the major manufacturer of O.V.I., and the United States purchased the exclusive rights to green-to-black color-shifting ink in 1996. Other countries followed, purchasing color-shifting inks of different colors for their own currency. One of the first countries to do so, interestingly enough, was North Korea, whose currency, the won, counterfeiters ignore. North Korea purchased O.V.I. from SICPA that shifts from green to magenta. For the purposes of counterfeiting American currency, it would be a smart choice: magenta is the closest color on the spectrum to black. “The green-to-magenta ink can be manipulated to look very close to green-to-black ink,” Daniel Glaser of the Treasury Department told me. “They took this stuff the same year we went to O.V.I.” According to Glaser, the North Koreans managed to fiddle with the new ink, obtaining an approximation of the O.V.I. on the bills.

Though there is some dispute on the timing, the first counterfeit big-head supernotes might have arrived on the market as early as 1998. Like the earlier generation of supernotes, the big-head imitations show an ever-growing attention to detail. “They would certainly fool me,” said Glaser, who points out that the “defects” of the supernote are arguably improvements. He recalled looking at the back of a $100 supernote under a magnifying glass and noticing that the hands on the clock tower of Independence Hall were sharper on the counterfeit than on the genuine.

From all accounts, superb quality is a feature of much North Korean contraband: methamphetamine of extraordinarily high purity; counterfeit Viagra rumored to exceed the bona fide product in its potency; supernotes. It’s an impressive product line for a regime that can barely feed its people. When I discussed this with Asher, he let out a sigh. “I always say that if North Korea only produced conventional goods for export to the degree of quality and precision that they produce counterfeit United States currency, they would be a powerhouse like South Korea, not an industrial basket case.”

The Threat

How many supernotes are in circulation, and what sort of provocation do they represent?

Most government officials interviewed for this story declined to give an estimate, but several, including Michael Merritt of the Secret Service, noted that his agency has removed $50 million worth of supernotes from circulation. That is a far cry from the “billions” predicted by Representative Bill McCollum’s task force in the early 1990’s, and while it may still sound like a lot, it is insignificant relative to the $12 trillion dollar American G.D.P.

When supernotes are discovered in a smaller foreign economy that makes use of American currency, they can cause a local crisis of confidence in the dollar (this has happened in Taiwan and Ireland, for instance). But in the United States, the economic threat is minimal. For this reason, many analysts, particularly those outside the administration, like Raphael Perl of Congressional Research Service, express concern about making the issue into a diplomatic crisis. Perl, who agrees that the North Koreans are behind the counterfeiting, told me that because American government officials often view the violation of the currency as “a matter of national honor,” there is “an emotional factor that could get blown out of proportion.” In the process, he argued, counterfeiting can become conflated with other, more pressing problems posed by the North Korean regime, like its nuclear threat.

This conflation may also be deliberate. According to Kenneth Quinones, who was the North Korea country director in the State Department in the 1990’s, hawks in the current administration may be trying to use the counterfeiting issue to impede negotiations with the regime over its nuclear program. Critics of this approach note that the freezing of the North Korean bank accounts took place in the same month that participants in the six-party talks, the multination negotiations over North Korea’s nuclear program, hammered out an agreement that the regime would abandon its nuclear-weapons program. North Korea soon reneged on its promise to abandon its nuclear program and has since refused to rejoin the talks until the United States lifts the designation on Banco Delta Asia. The hawks, Quinones told me, “are attempting to use these sanctions” to help “bring down the regime.”

The senior administration official interviewed for this article dismissed that claim. “The notion that there was a grand conspiracy by hard-liners is just wrong,” he told me. “It’s not accurate. This was done as a law-enforcement action by appropriate U.S. government agencies based on the facts of the case.”

Even if the counterfeiting is not worthy of being a diplomatic issue unto itself, the fact that North Korea is counterfeiting may still serve as a grim reminder of the difficulty of good-faith negotiations with North Korea. Just consider that the supernotes that were seized by law-enforcement officials in New Jersey and California arrived in the United States while the six-party talks were going on. Asher, for one, was stunned by the audacity of the regime. “If they’re going to counterfeit our currency the entire time they’re engaged in diplomatic negotiations, what does that say about their sincerity?” he asked me. “How can they want normalization with a country whose currency they’re counterfeiting? How can they expect it?”

However the diplomatic standoff is resolved, Asher said that he believes North Korea won’t continue to counterfeit much longer. Next year, the Bureau of Engraving and Printing is issuing an updated version of the $100 bills. The notes will be expensive to manufacture, requiring the purchase of a new set of presses at a cost that Asher estimated in the “hundreds of millions” of dollars. The Treasury Department characterizes the next generation of notes as part of a routine redesign that it will undertake on a regular schedule every decade. But Asher has no illusions as to the timing. “It might be a routine update,” he said, “but it’s a routine update that’s being instigated by one country: North Korea.”

Stephen Mihm teaches history at the University of Georgia. He is at work on two books about the history of counterfeiting in the United States, one to be published by Harvard University Press and the other by HarperCollins.


DPRK wants to switch tour operators in Kaesong

Saturday, July 22nd, 2006

From the Korea Herald

North Korea has demanded a change in its business partner for tours to Gaeseong and has been banning South Koreans from entering the border town since the beginning of this month, Seoul government sources said yesterday.

The Gaeseong tour has been a source of dispute between the two Koreas since the North demanded last year that its current partner, Hyundai Asan Corp., be replaced with Lotte Tours Co.

Since last May, the North has delivered messages on three different occasions saying that it has “decided to operate the Gaeseong tour with Lotte Tours Co.,” the Seoul government sources said yesterday.

In what Hyundai Asan calls a breach of contract, the North asked Lotte Tours between August and September last year to launch a tour program to Gaeseong, a city near the inter-Korean border rich in historical attractions. The North said it could no longer discuss the tour with Hyundai Asan. Lotte did not respond to the proposal.

Lotte Tours Co. is South Korea’s third-largest travel company.

At the end of last month, Pyongyang sent an invitation to Lotte to visit North Korea, the sources said. Lotte requested permission on July 5 for the visit but Seoul denied it following the North’s test-firing of seven missiles the same day.

Since the 1990s, Hyundai Group has exclusively led North Korean tourism projects.

However, Hyundai recently fell out of North Korea’s favor after it sacked chief executive of Hyundai Asan, Kim Yun-kyu, over allegations of embezzlement last year. Kim had been Hyundai’s point man for North Korean businesses following the death of Hyundai Group founder Chung Ju-young, who paved the way for economic exchanges with the reclusive state.

But conflicting positions over the price of the tour are the real reason behind North Korea’s refusal to work with Hyundai Asan, some sources suggested.

During a pilot tour program for Gaeseong conducted by Hyundai Asan between the end of August and early September last year, North Korea reportedly wanted as much as $150 for every tourist, almost 10 times it charges to Mount Geumgang on the east coast.

Hyundai Asan refused the price, saying it would never break even.

Seoul said yesterday Hyundai Asan remained the official partner for all tour projects with North Korea.

“The North wants to change partners unilaterally, but the Seoul government’s approval of (Hyundai Asan as the main partner) for the Gaeseong tour remains valid,” a government official said.

Lotte has also acknowledged the present situation and decided not to participate in the Gaeseong tour unless the contract between Hyundai Asan and the North is fully sorted out, the official said.

It is Seoul’s position that it cannot overturn its original approval for Hyundai Asan, but that it could be possible for Lotte to sign a separate contract with the North.

Observers said it could thus be possible for Hyundai Asan and Lotte to join hands in the tour business.

One of the alternatives could be for Hyundai Asan to remain as the main business partner but to pass actual operation authority to Lotte Tours. The Seoul government is positively considering the option as well, sources said.

In a letter to South Korean Unification Minister Lee Jong-seok last month, the North Korean representative for inter-Korean tour projects said that it would ban South Koreans visiting the inter-Korean Gaeseong industrial park from entering the streets of Gaeseong. The industrial complex sits on the outskirts of the border town.

Observers said the entry ban is considered to be North Korea’s pressure on the South to allow Lotte to replace Hyundai Asan.

Hyundai Asan and the North signed a $500 million deal in 2000 for the exclusive rights to seven economic programs, including tours to Gaeseong.

The Seoul government consequently approved Hyundai Asan to be the official tour business partner for Gaeseong in March 2003.

Upon North Korea’s first request in August, Lotte Tours Co. said it will not pursue a tourism business in Gaeseong unless North Korea cleared terms with Hyundai Asan Corp.

By Lee Joo-hee

From the Korea Times on 7/21/2006:

North Stops Kaesong Tours
By Lee Jin-woo

North Korea has banned South Koreans from visiting Kaesong, a city near the inter-Korean industrial complex claiming it wants to replace Hyundai by Lotte as a new partner for arranging tours of South Koreans to the capital of the ancient Korean kingdom.

The Unification Ministry downplayed the shutdown, saying it is unreasonable to link the gridlock of the tourism project to the recent missile crisis.

“North Korea brought up the issue months ahead of the present disputes involving the missile launches on the Korean Peninsula,’’ Kim Chun-sig of the ministry told reporters yesterday.

He said Pyongyang has asked the South three times since May to accept Lotte in place of Hyundai Asan, a North Korea-related business arm of Hyundai Group.

“We believe the contract signed between the North and Hyundai is still effective and legally binding unless the two sides agree to nullify the deal,’’ he added.

He said Unification Minister Lee Jong-seok has asked Lotte Tour Chairman Kim Ki-byung not to get involved in the inter-Korean business during their meeting on June 30.

Lotte has made it clear that it would not join the project unless Hyundai-Asan drops the project.

Hyundai has already arranged three trial tours to the ancient city. However, last October, the North Korean committee abruptly announced it would not initiate the program with Hyundai-Asan, only two months after the sides signed a contract.

The relationship between the two sides turned sour after Hyundai Chairwoman Hyun Jeong-eun dismissed Hyundai-Asan CEO Kim Yoon-kyu. Kim was accused of diverting millions of dollars in corporate funds to an undisclosed source.

In addition, the North wants a payment of $150 per tourist to the city, nearly 20 times more than the $20 Hyundai Asan pays to North Korea for every South Korean traveler to Mt. Kumgang. Hyundai has been reluctant to accept the North’s request.

On June 22, the North announced that from July 1 it would not allow South Korean visitors to the industrial complex to visit the city’s downtown area that includes historic sites.

Hundreds of South Koreans, mostly businesspeople and government officials, have been allowed to visit the city during their visit to the industrial complex.

“In a letter, North Korea’s Asia Pacific Peace Committee said no South Koreans will be allowed to visit the city from July 1,’’ Kim said. “We’ve decided to kept it confidential as we wanted to handle the issue during the South-North ministerial talks that ended poorly in Pusan earlier this month.’’

The director added it is technically incorrect to say the “Kaesong tourism project came to a halt or became suspended’’ as there have been only trial tours to the city.

The communist country test-fired seven missiles earlier this month, including one believed to be capable of reaching parts of the United States.

It also said Wednesday that it would halt family reunions of relatives split by the heavily fortified Korean border after the South refused to discuss aid at recent high-level talks.