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China #1 food donor to DPRK, #3 in world

Friday, July 21st, 2006

From the Financial Times:

China’s food aid to North Korea soars
By Mure Dickie in Beijing
July 21 2006

China’s soaring cereal shipments to politically isolated North Korea made it the world’s third largest food donor last year, according to the United Nations World Food Programme.

The scale of China’s supplies of wheat, flour and coarse grains highlights the sensitive issue of Beijing’s support for a Pyongyang regime whose recent missile test launches have drawn international opprobrium.

It is likely to spur calls from the US and elsewhere for China to do more to push North Korea to rejoin international talks aimed at ending its nuclear weapons programme.

Pyongyang received more than 90 per cent of the 576,582 tons of cross-border food aid provided by China in 2005, according to data from the WFP’s International Food Aid Information System.

The shipments meant China’s total food donations climbed 260 per cent year-on-year and were surpassed only by those of the US and EU.

Beijing has long been North Korea’s most important supplier of fuel and food, but the World Food Progamme figures suggested a sharp increase in Pyongyang’s reliance on its traditional communist ally.

Chinese officials argue that they have little influence over Pyongyang, as shown by the limited results of their years of effort to persuade North Korean leaders to emulate Beijing’s economic reform and opening policies.

However, food aid from China and South Korea, which supplied nearly 400,000 tons, last year allowed North Korea to order international aid agencies out of the country, curtailing the work of the WFP itself. Seoul recently suspended shipments of humanitarian aid to the North in a response to the missile tests that was also linked by some observers to Pyongyang’s ejection of aid groups. Fears have since grown of another food crisis in North Korea, after typhoons and floods that have wiped out crops in some areas.

Chinese officials yesterday declined to comment on their plans for food donations to North Korea, with one official of the Ministry of Commerce saying: “I can’t tell you. It’s a state secret.”

From the New York Times:

The biggest recipient of [UNWFP aid] was Ethiopia, followed by North Korea and Sudan. The report is at www.wfp.org/interfais.

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Posted in Agriculture, China, International trade, UN World Food Program | Comments Closed

Hundreds dead and homeless after flooding

Friday, July 21st, 2006

From the BBC:

About 60,000 people have been left homeless by recent flooding in North Korea, according to the UN food agency.

The floods have also destroyed 30,000 hectares (74,000 acres) of farmland, causing the loss of 100,000 tonnes of food, the World Food Programme said.

On Friday North Korea’s official media admitted that “hundreds of people” were thought to be dead or missing after last week’s torrential rain.

The North already relies on outside aid to support its impoverished people.

Food aid from neighbouring South Korea is currently suspended after talks between the two sides collapsed last week, in the wake of Pyongyang’s 5 July missile tests.

South Korea has also been hit by the seasonal storms, with around 60 people dead or missing after last week’s rains.

Vulnerable population

The World Food Programme said it would initially help 1,300 people in the worst-hit region of South Pyongan, providing 74 tonnes of food.

According to the agency, the government is still trying to assess the situation, but “overall, the updates indicate rising levels of damage”.

North Korea has relied for more than a decade on foreign donations to feed its people.

The WFP began working in the country in the mid 1990s, after about two million people died from famine.

According to the most recent large-scale survey in October 2004, the WFP found that 37% of young children were chronically malnourished, and one-third of mothers were malnourished and anaemic.

from the BBC:

Hundreds are dead or missing in North Korea after days of heavy rain, according to state media.

Torrential rain has swept through the Korean Peninsula in recent days, causing flooding and landslides both sides of the border.

This is the first confirmation from Pyongyang that the severe weather has led to human casualties.

On Wednesday, state news agency KCNA said flooding had caused “tremendous” economic losses.

The Red Cross said in a statement on the same day that 100 people were dead or missing and entire villages had been swept away.

“This heavy rain left hundreds of people dead or missing in many parts of the country,” KCNA said in its latest statement, although it did not give specific figures.

Tens of thousands of houses have been destroyed and infrastructure such as roads and bridges has been badly hit, the agency said.

The worst damage was in central and eastern parts of the country. In South Pyongan Province, about 6,200 houses and 490 public buildings were damaged and large tracts of agricultural land under water, KCNA said.

Damage to farming land would be a blow for North Korea, which has in the past experienced severe food shortages caused by natural disasters and outdated agricultural methods.

Food aid from neighbouring South Korea is currently suspended after talks between the two sides collapsed last week in the wake of Pyongyang’s 5 July missile tests.

South Korea has also been hit by the seasonal storms, with around 60 people dead or missing after days of rain.

From Reuters 7/20/2006 (via Korea Liberator):

Floods could push North Korea back into famine
Jon Herskovitz
7/20/2006

North Korea, constantly battling food shortages, could be tipped into famine after heavy flooding this month in key farming regions hit its potato and rice crops, experts said on Thursday.

Two major storms over the past 10 days have hit the impoverished country with some of the heaviest rainfalls in years just as it faces greater international isolation over missile tests this month and the prospect of less food aid from its major donor, South Korea.

“Conditions have never been that good in North Korea and this could push them over the edge again,” said Peter Beck, an expert in Korean affairs for the International Crisis Group.

“This has increased the probability of a famine returning to North Korea,” he said.

Up to 2.5 million North Koreans, or about 10 percent of its population, died in the 1990s due to famines caused by droughts, flooding and mismanagement of the agriculture sector, the United Nations World Food Program (WFP) said studies have indicated.

Anthony Banbury, director of the WFP’s Regional Bureau for Asia said the floods hurt the potato crop, which is used as a filler until the rice crop comes in.

The floods will also likely hurt rice production and come with the North already short of fertilizer.

“There is a real risk that this combination of factors is going to have a very negative impact on the food security situation in the coming months,” Banbury said by telephone from Bangkok.

He said Pyongyang’s main benefactor China probably shipped North Korea far less food in the first quarter of this year than it did in the same period of last year.

South Korea has sent huge amounts of rice and fertilizer aid to North Korea over the past several years. But it has rejected the North’s latest request for 500,000 tons for rice for this year, unless Pyongyang returns to stalled talks on ending its nuclear weapons programs.

Beck said if North Korea faces a real humanitarian crisis, it would be difficult for South Korea and other countries not to donate food.

Even in a good year, North Korea’s harvest falls about 1 million tons short of its needs, experts have said.

FLOODING IN RICE BASKET

The Red Cross said floods struck North Korea’s South Pyongan province and Hwanghae province. Both surround the capital Pyongyang and are part of the country’s rice basket.

“Extensive areas of arable fields have been inundated, wiping out much of the anticipated harvest,” the International Federation of Red Cross and Red Crescent Societies said this week.

South Korean Unification Minister Lee Jong-seok told reporters on Thursday that Seoul is sticking by its decision to suspend food aid for now. He added South Korea will still push for peaceful engagement with its neighbor.

Ties between the two Koreas, which have warmed considerably in recent years, have been severely tested by the missile tests. North Korea stormed out of a cabinet-level meeting last week after Seoul pressed Pyongyang to explain why it defied international warnings by firing seven missiles on July 5.

Severe winters keep North Korea to a single food producing season that runs from June to October.

Even then, it has a difficult time raising food because of outdated and dilapidated farm equipment, energy shortages and a lack of fertilizer and pesticide.

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If Kaesong is so successful, why does it need subsidies?

Thursday, July 20th, 2006

From the Joong Ang Daily:

Guarantees for Kaesong

Detailed plans for providing private loans to companies moving to the Kaesong Industrial Complex are being made. Even though the relationship between the two Koreas is in a state of confusion because of the recent missile crisis, several senior officials from big banks and the credit guarantee funds are planning to visit the industrial complex in North Korea.

The administration’s rationale for the visit is to get immediate financial support from the private sector to implement its special loan guarantee program to companies in Kaesong. The banks are certainly willing to give the loans once they have a guarantee certificate from the fund, which is backed by the government. The guarantee fund has nothing to worry about because the government will probably patch up the damage if the companies default on the loans.

Although the funding is considered private capital, it is in effect a loan using tax money as security.

It is not right to support an inter-Korea project through such means. Even if the Kaesong Industrial Complex is a symbol of the economic cooperation between South and North Korea, the competitiveness and the business potential of companies moving to the complex should come first.

The companies should be able to make profits on their own and without any special treatment or support from the government. The banks will be making loans as if they are only hypothetical. They have no intention of giving out loans without the government guarantee. This demonstrates just how uncertain the business potential of the Kaesong Industrial Complex really is.

There is also the problem of getting products made at Kaesong acknowledged as South Korean products. The United States, which is Korea’s most important export market, is not accepting the idea. Without solving this problem, the prospects of the Kaesong Industrial Complex are uncertain.

Giving huge financial support to the Kaesong Industrial Complex at a time when tension in the international community is rising because of the test launch of North Korean missiles sends the wrong signal to the international community. The United States is worried about the cash that the project will generate for North Korea and probably its military programs. This funding is contradictory to the international mood. 

Also from the Joong Ang: Apparently the subsidy-providing agency says it needs a bigger budget!

‘Guarantees’ and ‘North Korea’ sound risky to a state-run fund

As corporate bankers and the Korea Credit Guarantee Fund trek to the Kaesong Industrial Complex today for an inspection visit, the state-run loan guarantor sounds less than happy about its role in funding companies at the North Korean complex.

Last month, the Finance Ministry said the government would give loan guarantees of up to 10 billion won ($11 million) per company to help South Korean companies who have set up plants there.

Several of the big banks here will join the group visiting the complex ― they include representatives from Kookmin, Shinhan and Hana ― and say they are looking for business. “This visit is a step in our preparations for possible financial dealings with the companies there,” said an official at one of the banks who asked not to be identified.

But a credit guarantee fund spokesman seemed to hope that won’t happen under the present ground rules. “We feel the companies at Kaesong present enough financial risk that without special funding from the government, it would be difficult to guarantee all the loans on our own,” he said.

Seoul estimates that about 1.2 trillion won in aggregate will have to be made available to companies operating at the complex; most of them are smaller manufacturers. The program announced by the government on June 16 said the loan guarantees would extend for as long as seven years. So while from the lenders’ point of view any loans would be nearly free of risk, the credit guarantee fund has a different perspective.

“We will do what the government tells us to do,” the fund’s spokesman sighed, “but the government should be responsible [for our losses].”

Seoul has about 7 trillion won available in its Inter-Korean Cooperation Fund, but those funds are spread across many programs, including tourism at Mount Kumgang and funding of both North and South Korean visitors at conferences and festivals.

Fifteen companies have set up plants in Kaesong; 24 more have reserved sites, and Seoul’s ambitious plans call for about 800 manufacturers to set up shop by 2012.

 

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Posted in Banking, Insurance, Kaesong Industrial Complex (KIC), South Korea | Comments Closed

DPRK-China realtions a little bumpy

Thursday, July 20th, 2006

From the Joong Ang Daily:

The United States is blocking all possible ways of transferring money to North Korea. Along with a United Nations resolution, Washington is putting pressure on companies and banks of all countries that have business transactions with North Korea to cut the relations. Japan has blocked money transfers to North Korea, banned a North Korean ferry from entering its ports, frozen North Korea’s assets and banned companies from having transactions with North Korea.

The hardest blow on North Korea was China’s approval of the UN resolution. As the only ally to North Korea, China has provided it with more than half the food and energy the North needs. It is North Korea itself that has made China change its stance.

North Korea-China relations these days are the worst since in June 1995. Back then, North Korea’s leader Kim Jong-il released a statement in the Rodong Sinmun, or Newspaper of the Workers that China had betrayed the spirit of socialist revolution by introducing a market economy. Although the head of North Korea depends heavily on China for the survival of his country, he recently told an American delegate that China was unreliable.

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Macao bank contained personal accounts of DPRK elites

Thursday, July 20th, 2006

From the Korea Times:

US Ties Macau Bank to Kim Jong-il

WASHINGTON (Yonhap) _ The U.S. government has figured out most of North Korea’s transactions in a Macau bank and believes they were mostly personal dealings involving Pyongyang’s leadership, a diplomatic source said Wednesday.

Washington has studied North Korea’s transaction records with the Banco Delta Asia, where about $24 million in cash was deposited by North Korea, but frozen by U.S. sanctions.

The bank in the Chinese territory froze about 40 North Korean accounts last year after it came to the brink of bankruptcy as U.S. banks stopped their transactions with it in response to Washington’s claim that Pyongyang was laundering its illicitly earned money there.

The U.S. found that the bank has produced handwritten transaction data regarding North Korea in addition to official computer records, the source said on condition of anonymity. The bank seemed to have used written records of the North Korean transactions as a way to hide them from official view, the source said.

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ROK allows its citizens to see Arirang this summer

Thursday, July 20th, 2006

From the Joong Ang Daily:

Seoul gives its blessing to view North’s festival

July 21, 2006-The Roh administration said yesterday it would allow a private delegation to participate in North Korea’s celebration of Liberation Day, the August 15 anniversary of Japan’s surrender in 1945. It will also allow South Koreans to attend the annual Arirang Festival that begins the same day and runs for two months.

The festival is widely seen by critics as an extended paean of praise to Kim Il Sung, North Korea’s founder and leader until his death in 1994.

Lee Jong-seok, the unification minister, told a news conference yesterday that non-governmental exchanges such as those for the holiday and the festival would go ahead “according to procedures.” He said no decision had yet been made on whether Seoul would send an official delegation to participate in the North’s Liberation Day rites.

After the press conference, a Unification Ministry official said permission to travel to North Korea would be given to all comers except for those barred by law from traveling there. The latter group once included those convicted of National Security Law violations or those under investigation for alleged violations of that anti-communist statute; now, only those involved in a current criminal investigation of any kind are barred.

Tensions in the region escalated rapidly after North Korea test-fired seven missiles on July 5. Ministerial talks a week later collapsed after Seoul refused to continue providing material aid, and the latest sign of tension came yesterday when Pyong-yang, following through on an earlier threat, told Hyundai Asan to repatriate 150 workers from the construction site at Mount Kumgang for a separated family reunion center.

The work, funded by Seoul, was scheduled to be completed in June 2007 at a cost of 50 billion won ($53 million). North Korea’s Red Cross told its counterpart in the South earlier this week that if rice and fertilizer stopped flowing north, the family reunions could not be held.

The decision to allow civilians to travel for the festivities is in line with Seoul’s expressed intention to keep channels with the North open, but critics said darkly that North Korea was certain to abuse that good will.

At the failed inter-Korean talks last week, Pyongyang demanded that Seoul end its restrictions on where South Koreans in the North can travel. It wanted those visitors to be able to visit what it called “holy places and landmarks,” a reference not to religion but to the cult surrounding Kim Il Sung and his son Kim Jong-il, his father’s successor as the country’s leader. Those “holy places” include Kumususan Memorial Palace, where Kim Il Sung’s mausoleum is located.

Critics also saw a train wreck, in their view, in North Korea’s contention at the recent Busan ministerial meeting that South Koreans are being protected by North Korea’s “military-first” policy. The Arirang Festival performances in recent years have been heavy in praising that policy, and some of those allegedly “protected,” they say, will be in attendance.

by Lee Young-jong, Ser Myo-ja 

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Posted in Mass games, South Korea, Tourism | Comments Closed

Japan prepares to bar remittances to DPRK

Wednesday, July 19th, 2006

from the BBC:

Japan’s government says it has begun work on its own set of sanctions on North Korea, in addition to those agreed by the UN Security Council. 

Chief Cabinet Secretary Shinzo Abe says he has instructed officials to put in place procedures to ban cash remittances to the impoverished North.

After days of talks the UN Security Council unanimously passed a resolution on Saturday which condemned the tests.

But it was a milder document than Japan’s original draft.

The resolution was tabled in response to North Korea’s decision to test-fire seven missiles earlier this month, including a long-range Taepodong-2, which is believed capable of reaching Alaska.

In the immediate aftermath of the test-firings, Japan imposed limited sanctions against North Korea, including a decision to ban a North Korean trade ferry from Japanese ports and a moratorium on charter flights from Pyongyang.

But now Chief Cabinet Secretary Shinzo Abe has asked for an investigation into possible further sanctions.

“We have started preparations to properly achieve necessary steps involving financial restrictions,” Mr Abe told a news conference on Tuesday, although he added that Japan would consult with other nations before making a final decision.

He said he had instructed officials to start procedures to ban cash remittances by Koreans living in Japan who are sympathetic towards Kim Jong-il’s government – an important source of foreign currency for North Koreans.

Indications that Tokyo was about to take further steps against Pyongyang were reported in Japanese media on Monday, but now Mr Abe has made his intentions official in a press conference.

Japan could also place bans on bilateral trade and freeze North Korean assets, according to the newspaper reports.

Japan is one of North Korea’s most vehement critics – and takes a more hardline stance on Pyongyang’s activities than other countries in the region.

Chapter Seven dropped

The UN resolution passed over the weekend demands that North Korea suspend its ballistic missile programme, and bars all UN member states from supplying Pyongyang with material related to missiles.

It was passed unanimously by the Security Council after being revised to drop any mention of Chapter Seven of the UN Charter, which is legally binding and can authorise military action. The changes were made to appease China and Russia, which took a softer line than Japan and the US. China had threatened to veto the resolution in its original form.

As soon as the resolution was passed, North Korea’s ambassador to the UN rejected it and left the chamber.

A day later Pyongyang angrily denounced the resolution in a foreign ministry statement, and said it would continue to build up its military arsenal.

The statement described the resolution as the product of a hostile American policy and said Pyongyang would not be bound by it, and would “bolster its war deterrent” in every way.

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American tourists permitted in DPRK for Arirang

Wednesday, July 19th, 2006

Assuming the US does not impose tourist restrictions!

In August-October 2005, the DPRK permitted American tourists to enter the country to see the spectacular Arirang performance.  I saw this performance, and Kim Jong Il, and it is not to be missed.  From the DPRK perspective, the experiment must have been a success so it is being repeated again this summer.  If you are interested in going, and I recomend you do, there are several operators that can take you:

Koryo Tours has been running tours for a long time.  Based out of Beijing, but run by two great English chaps, Simon and Nick, Koryo has great access to the country.  I have personally seen them in action and marveled at how efficiently they handled the multiple requests of their customers.  Nick and Simon have worked on two documentaries in the DPRK, the Game of Their Lives and A State of Mind.  They are currently finishing up their third, Crossing the Line.

Today I got an email from Walter L. Keats at Asia Pacific Travel.  He tells me, “We are the only U.S. company to be directly authorized by the Korea International Travel Company (KITC) to bring American and other tourists to the DPRK during the Arirang period. You can see a copy of our letter of authorization on our website as well as a background sheet on our involvement with North Korea since 1995.”  (I am really surprised an American company could pull this off).

I have visited the DPRK twice with the Korean Friendship Association.  KFA trips are something else altogether.  The KFA is sponsored by a different DPRK ministry than the other tour companies and the agenda, aside from not being released until you are in Pyongyang, contains come political-ish activities that might make all but the hardiest of travellers blush.  And don’t expect to run for Congress when you get back home.  Still I had a great time and learned a lot.  The price is generally much cheaper, but more often than not, you will be staying in the isolated Sosan hotel.

If you visit the DPRK with any of these groups this summer, please let me know how it went and what you learned.  Don’t forget to tell them I sent you!

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US could reimpose pre-1999 sanctions

Wednesday, July 19th, 2006

Joong Ang Daily
7/19/2007

The Bush administration is weighing the reinstatement of trade sanctions on North Korea that were lifted during the Clinton administration. A visiting U.S. Treasury Department official, Stuart Levey, described Washington’s policy direction to Korean government policymakers during a visit here from Sunday through Tuesday. Yesterday, a government official described those discussions to journalists, and the Treasury posted a cautious statement by Mr. Levey on its Web site.

The Treasury’s undersecretary for terrorism and financial intelligence had planned his visit before the July 5 North Korean missile tests, but the incident added urgency to the consultations. Giving no details of the content of the discussions, Mr. Levey said in his statement he and Korean officials had discussed issues 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.”

Mr. Levey is also stopping in Tokyo, Hanoi and Singapore on his swing through Asia. Seoul was his first stop. The trip came at a time when Japan is planning its own sanctions, perhaps including a ban on cash remittances to the North.

A government official said yesterday that the undersecretary met with Vice Foreign Minister Yu Myung- hwan and officials from the Ministry of Finance and the Blue House. The official stressed that the meeting was not a consultation on policy toward the North. He said the topics included many international financial issues, but did not touch in any detail on Seoul’s participation in the Kaesong Industrial Complex and tourist trips to Mount Kumgang, both of which are revenue sources for North Korea.

Another official said Mr. Levey responded only with a nod to explanations of the purposes and justifications for those inter-Korean projects.

The Korean officials said the U.S. sanctions Mr. Levey mentioned had been lifted in 1999 by President Bill Clinton as U.S.-North Korea tensions eased. They included trade restrictions and licensing requirements and strict limits on the amount of money U.S. travelers to North Korea could spend there.

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DPRK suspends family reunions

Wednesday, July 19th, 2006

Well, since the ROK has suspended further food/fertilizer aid to the DPRK in response to the current missle situation, the DPRK has suspended family reunions.

From the Joong Ang:

In a tit-for-tat reaction to Seoul’s decision to suspend rice and fertilizer aid, Pyongyang yesterday canceled a separated family reunion and said future ones were in jeopardy.

The Korea Central News Agency broadcast a letter from the North Korean Red Cross to its counterpart in Seoul. The letter said Seoul had refused to talk seriously about a family reunion the North had proposed be held during the Chuseok holidays in October. “Furthermore,” the letter continued, “the South refused to ship rice and fertilizer, one of the inter-Korean humanitarian projects that are conducted on the basis of reciprocity.” Pyongyang, the letter went on, sees no reason to continue family reunions.

“We want to make clear that the video conference call reunion, scheduled to mark August 15, and the construction of a reunion venue at Mount Kumgang will be terminated,” the letter concluded. The Japanese surrendered on Aug. 15, 1945, to end World War II. Both Koreas celebrate a Liberation Day holiday on that date. Although reunions have been held frequently at Mount Kumgang, the two Koreas had agreed to build a permanent reunion site there rather than using tourist hotels.

The Unification Ministry said it would do its best to restart the reunions. It said it anticipated that reaction by Pyongyang but regretted it.

And from the BBC:

The North accused the South of “sacrificing” humanitarian co-operation under pressure from Japan and the US.

Seoul announced the suspension of rice and fertiliser deliveries after inter-Korea talks collapsed last week.

The talks followed North Korea’s missile tests on 5 July, which have raised international concern.

Pyongyang test-fired seven missiles, including a long-range Taepodong-2 believed capable of reaching Alaska.

South Korea says it will not discuss further humanitarian aid with its neighbour until progress is made on resolving issues relating to the missile tests and the North’s nuclear ambitions.

After the high-level talks in Busan fell apart last week, the delegation from Pyongyang issued a statement warning of consequences for inter-Korean ties.

In the latest statement, North Korea’s Red Cross head Jang Jae-on accused the South of “abusing the humanitarian issue for meeting its sinister purpose to serve the outsiders”.

“Our side is, therefore, of the view that it has become impossible to hold any discussion related to humanitarian issues, to say nothing of arranging any reunion between separated families and relatives between the two sides,” he said.

A video reunion meeting scheduled for 15 August would not take place and the planned construction of a reunion centre in the North’s Mt Kumgang was “impossible”, he said.

The reunions bring together families divided by the partitioning of the Korean Peninsula in 1953. The policy has been a key part of reconciliation efforts between the two Koreas.

Earlier, South Korean President Roh Moo-hyun told a meeting of security advisers that Pyongyang’s missile tests were “wrong behaviour” that increased regional tensions.

But he warned against overreacting, saying: “An excessive response to North Korea’s missile tests creates unnecessary tensions and confrontation.”

On Tuesday, the Japanese government said it had begun work on its own set of sanctions for North Korea, in addition to those agreed by the UN Security Council.

The council unanimously passed a resolution on Saturday which condemned the missile launches, but it was softer than the draft initially proposed by Japan.

Japan would look into banning cash remittances to the North from Korean residents, Chief Cabinet Secretary Shinzo Abe told reporters.

But on Wednesday, Japanese Prime Minister Junichiro Koizumi said he would not rush to impose more sanctions.

“We should wait and see for a while whether North Korea will seriously respond to the (UN) resolution,” he said.

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Posted in International Aid, Japan, Military, Mt. Kumgang Tourist Special Zone, South Korea | Comments Closed

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