DPRK diverts aid….again.
According to the Choson ilbo:
Following a request from the North in July 2005, the Unification Ministry and the Korea Tourism Organization bought 8,000 tons of asphalt pitch and subsidiary materials with about W4.9 billion from the Inter-Korean Cooperation Fund to repair Mt. Baekdu runway.
But inspection by the KTO in December 2005 showed construction to be shoddy because an insufficient amount of asphalt had been used. The Unification Ministry and the KTO bought another 8,000 tons of asphalt pitch and other materials with W4.4 billion from the fund in January 2006 and delivered them to the North.
But an inspection in 2007 by the Korea Expressway Corporation found that the paving was no different from that in December 2005, and that 3,497 tons of asphalt pitch had not been used to repair the runway, the BAI said.
The BAI presumes that W2 billion worth of aid materials were diverted illegally for other purposes.
And how did the South Korean’s respond?
The [Board of Audit and Inspection] said agencies including the Unification Ministry “made no preparations to deal with shoddy construction or illegal diversion of the fund.” They took “no action even when a senior North Korean cabinet counselor publicly said in 2006 the North would use a shipment to Nampo Port out of the aid materials to pave the runway of Sunan International Airport in Pyongyang” rather than Mt. Baekdu Airport.
As discussed before (here and here), South Korean development efforts (as conducted via the Ministry of Unification) have been poorly administered. There is little transparency and less accountability for poor decision making and results. Given this institutional environment, we can predict that resources will continue to be frequently diverted.
An alternative, and I believe more effective, economic development strategy which South Korea could adopt towards the DPRK is simply to end MoU structural development programs and allow South Korean businessmen to directly negotiate business opportunities with North Korean counterparts (as the Chinese, European, and others currently undertake). In this way, business persons risk their own capital and they are fully incentivized to make sure their efforts are properly administred. Even if some graft is necessary to get things done, at least it does not come from the South Korean Treasury.
Comments welcome.
Read the full article here:
N.Korea Diverted W2 Billion in Aid: BAI
Choson ilbo
8/26/2008
