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North Korea diplomats on hush-hush tour of Washington

Friday, October 5th, 2007

AP
10/5/2007

A group of North Korean diplomats got a secret tour of Washington last month, seeing the White House and driving past the Pentagon, the Chicago Tribune reported on its website Friday.

But the 16 North Korean diplomats and their families posted to the United Nations and normally not allowed to travel outside New York were not all that impressed on their September 8 visit, which the Tribune called “unprecedented.”

“They were like, ‘Is that all?’ when they stopped at the White House, Fred Carriere, executive director of the Korea Society and one of the group’s tour escorts, told the newspaper.

The visit came as Washington begun acknowledging Pyongyang’s progress on meeting its commitments to move toward nuclear disarmament.

The Tribune said the North Koreans came to Washington with the approval of Christopher Hill, the senior US diplomat in charge of negotiating the North Korean nuclear disarmament deal under the six-party framework.

Because the two countries do not have diplomatic relations and have remained technically at war since the 1950-53 Korean War, Pyongyang’s diplomats are normally confined to a 40 kilometer (25 mile) radius from Manhattan, where the United Nations is located.

Carriere told the Tribune that the North Koreans also visited the Lincoln Memorial landmark in central Washington, where they demonstrated their knowledge of US history.

One pointed to the Lincoln quote inscribed on the memorial wall asserting that all men are created equal and said: “But we understand he had slaves,” Carriere said.

The Tribune reported that in another sign of warming relations, representatives of the New York Philharmonic were to travel to Pyongyang this week to arrange a visit there by the United States’ most prominent orchestra.

Posted in Political economy, South Korea | Comments Closed

IFES MONTHLY RECAP: SEPTEMBER 2007

Tuesday, October 2nd, 2007

Institute for Far Eastern Studies
NK Brief No. 07-10-2-1

DPRK-U.S. RELATIONS
North Korean and U.S. officials kicked off the month of September with meetings held in Geneva on the 1st~2nd. The bilateral talks focused on how to implement the February 13 agreement. After two days of talks, U.S. Assistant Secretary of State Christopher Hill stated he is “convinced” the North will disable nuclear programs by year’s end, a timeline offered by the DPRK negotiators. North Korean press reported that the DPRK would be removed from the U.S. terrorism roster and sanctions imposed under the Trading with the Enemy Act would be lifted in return.

On September 7, Hill announced that North Korea had invited nuclear experts from the United States, Russia, and China to the DPRK in order to survey nuclear facilities and recommend dismantlement plans. The experts examined North Korean nuclear sites from September 11 to September 16.

On the same day, U.S. President Bush stated Washington would consider a peace treaty with North Korea in return for the North’s abandonment of nuclear arms.

On September 17 it was reported that North Korea had admitted that it had earlier procured materials needed to build uranium enrichment centrifuges. The admission regarded the import of 150 tons of hard aluminum pipes, enough for 2,600 centrifugal separators.

On September 20, the DPRK was removed from Washington’s list of countries producing illegal drugs. The North was added to the list in 2003.

On September 28, U.S. President Bush authorized 25 million USD worth of energy aid for North Korea. These funds could be used to provide the DPRK 50,000 metric tons of heavy fuel oil, equal to the amounts provided by China and South Korea as part of the February 13 agreement.

DPRK-JAPAN RELATIONS
Two days of talks between North Korean and Japanese diplomats began on September 5 in Mongolia, with both sides expressing confidence that there would be progress. Wartime compensation issues were discussed, although Japan continued to link normalization of relations with kidnapping issues.

Following the talks, North Korea stated that kidnapping issues were resolved with Japan, while Japan stated that both sides reiterated existing positions. On the same day, Japan rejected a DPRK request to allow North Korean ships to dock in Japan in order to pick up aid for flood victims.

On September 30, Chief Cabinet Secretary Nobutaka Machimura said Japanese economic sanctions on North Korea would be extended for another six months due to “basically no progress” on abduction issues.

DPRK-SYRIA ARMS COOPERATION
Reports began coming out of Israel in early September that reconnaissance flights over Syria had taken pictures of North Korean nuclear supplies and materials. Following Israeli air strikes, it was reported that Special Forces had entered Syria and confiscated material that appeared to be of DPRK origin. Conflicting reports stated that the facilities struck were missile storage facilities, rather than of a nuclear nature. North Korea has denied any nuclear cooperation with Syria.

DPRK-UAE RELATIONS
North Korea established ambassador-level diplomatic ties with the United Arab Emirates on September 18. A joint statement said the two countries aim to “enhance understanding and boost the links of friendship and cooperation between their two peoples.” Ties with such an oil-rich nation on friendly terms with Washington could be significant as the North moves to dismantle nuclear facilities.

ROK-DPRK ECONOMIC COOPERATION
It was reported on September 4 that stock prices of South Korean companies engaging in inter-Korean economic cooperation have shot up on news that the DPRK will dismantle nuclear programs. This includes not only those companies operating in the Kaesong Industrial Complex, but also firms involved in providing electricity and other projects planned in exchange for the North’s denuclearization.

On September 20 it was announced that the ROK government plans to request a 50 percent increase for inter-Korean cooperative projects in next year’s budget. The Ministry of Planning and Budget will request 822 million USD for cross-border projects, as well as 580 million USD for humanitarian assistance.

On September 27, it was reported that the ROK government was reviewing a proposal to jointly develop Nampo, Haeju, Najin, Sunbong, Wonsan, and Shinuiju. The North has requested development of heavy industries, while South Korea seeks cooperation on light industrial projects.

SIX-PARTY TALKS
The latest round of six-party talks opened in Beijing on September 27, with both the U.S. and DPRK negotiators promising progress. On September 30, talks were ended to allow delegates to return to their home countries to work on a ‘nuts and bolts’ joint statement. U.S. delegate Hill stated the delegates were close to agreeing on a definition of facilities, and that the proposed joint statement was very detailed. Before returning to Pyongyang, Kim Kye-gwan was quoted as saying that the North can report nuclear programs, but will not declare nuclear weapons by the end of the year. An ROK official stated that the North’s position was acceptable to Seoul. Negotiators are also thought to have agreed to begin removal of ten core devices from three nuclear facilities beginning in November. The joint statement is scheduled for release on October 2.

DPRK FLOODING
Acting UN Coordinator to the DPRK Jean-Pierre de Margerie stated on September 3, “The level of damage to infrastructure, to communications, to crops, to farmland and to households, is considerable,” but also pointed out, “The [DPRK] government has improved its level of cooperation by giving us unprecedented access to the field to conduct our assessments of the damage.”

ESPIONAGE IN THE DPRK
Li Su-Gil, spokesman for the DPRK National Security Service, reported on September 5 that several foreigners had been arrested along with a number of DPRK citizens accused of spying for a foreign country; Specifically, for having “collected official documents and information on the DPRK’s important military facilities, and spread the idea of so-called democracy and freedom to the people.” The identities and nationalities of those arrested were not revealed.

Posted in Institute for Far Eastern Studies, Japan, South Korea, Syria, UAE, USA | 1 Comment »

US Geological Survey 2006 Minerals Yearbook

Wednesday, September 26th, 2007

Summary: For the next 4 to 5 years, the North Korean mining sector is likely to continue to be dominated by the production of coal, iron ore, limestone, magnesite, and zinc. Because of growing demand for minerals by China and the Republic of Korea, their investment in North Korea’s mining sector is expected to increase and to extend beyond their current investments in apatite, coal, copper, and iron ore into other minerals, such as gold, magnesite, molybdenum, nickel, and zinc. North Korea’s real GDP is expected to grow at between 1% and 2% during the next 2 years.

Other highlights:

North Korea ranked third in production of magnesiate in the world. Its value-added product–magnesia clinker, which is used as a refractory metal–was marketed world wide.
According to Corporate social Responsibility Asia (CSR Asia), North Kroea ranked virtually last in environmental sustainability in the world, despite the country’s enactment of major laws for environmental protection, such as the Land Law of 1977, the Environmental Protection Law of 1986, the Forrestry Law in 1982, and the Law on Protection of Useful Animals in 1998.
On the basis of North Korea’s industrial structure in 2004 (the last year in which data is available), the mining sector accounted for about 8.7% of North Korea’s gross domestic product.
Recoverable coal reserves in North Korea were estimated to total about 8 billion metric tons in 2006. Coal production reportedly dropped to about 23 Mt/yr in 2006 from 37.5 Mt/yr in 1985 mainly because of outdated mining equipment and technology.

Download the full version here: USGS.pdf

Posted in Agriculture, Coal, Copper, Economic reform, Energy, Environmental protection, Foreign direct investment, Gold, Graphite, Iron Ore, Mining/Minerals, Sand, South Korea | Comments Closed

What Are N. Koreans Up to?

Friday, September 21st, 2007

Korea Times
Marcus Noland, Stephan Haggard
9/21/2007

Last summer North Korea conducted provocative missile and nuclear tests. Yet only four months later, Pyongyang signed on to a roadmap that included a return of international inspectors, a full declaration of contested nuclear activities, closing down existing facilities and ultimately disabling them.

American negotiator Christopher Hill predicted this last step could take place as early as the end of the year.

What are the North Koreans up to?

The cynical, some would say realistic, view in the United States _ advanced by departed Bush administration hawks such as John Bolton _ is that Kim Jong-il is raising false hopes.

The appearance of cooperation has several tactical advantages. Sanctions and ongoing uncertainty have had substantial economic costs. The February agreement was preceded by secret meetings in Berlin to resolve the Banco Delta Asia issue.

In return, the North Koreans closed their nuclear facilities, but they have not firmly committed to the difficult aspects of the agreement _ providing a full accounting of their programs, disabling their programs, and giving up actual stores of fissile material and weapons.

Cooperation also drives wedges between the U.S., South Korea and China. If North Korea appears to be making concessions, it is easier for South Korea and China to continue diplomatic and financial support.

Next month, President Roh Moo-hyun will travel to Pyongyang for a summit with Kim Jong-il. Expect him to come bearing gifts to cement his legacy as a peacemaker.

Other politicians in the presidential race have also offered extraordinarily ambitious and generous programs of support for the North as well.

Recent studies we have done on North Korea’s changing external economic relations are consistent with some of this cynical picture, but also suggest a sliver of hope for more substantial change.

To understand why, requires a brief tour of the miserable history of North Korea over the last two decades. Following the collapse of the Soviet Union, the North Korean economy went into a steep decline ending in full-blown famine.

By our estimates, as many as one million people _ five percent of the entire population _ perished in the mid-1990s. Out of the human ashes of this tragedy, however, the North Korean economy began to undergo a profound transformation.

As households and work units scrambled for food, they engaged in barter, trade and new economic activities.

The desperation of the famine also saw an upturn in illicit activities, from missile sales to drugs and the counterfeiting of U.S. currency. But trade and investment also started to flow across the Chinese border.

Chinese companies, small-scale traders and North Korean firms pursued business opportunities, from large-scale mining operations to the import of South Korean videos.

The regime was always hesitant about the emergence of the market. In July 2002, the government initiated economic policy changes that decriminalized some private activities. But reforms have taken a zig-zag path, always subject to reversal.

Sanctions and closer scrutiny have limited the country’s arms sales and illicit activities.
With these sources of revenue increasingly foreclosed, North Korea has two alternatives _ open the economy and increase normal commercial activities or cooperate primarily to obtain aid. In terms of internal change, these two options may actually push North Korea in opposite directions.

Consider the aid tack. Given the regime’s concerns about internal stability, aid could provide a lifeline, allowing the regime to sustain a modicum of current consumption while forgoing deeper reforms. Under this option, North Korea trades away its nuclear program for assistance precisely to maintain the political and economic status quo.

Alternatively, North Korea could use the resolution of diplomatic tensions to deepen the economic reform process.

The military has been engaged in commercial activities and could potentially benefit from such a course. But real reform will reshuffle power and influence within North Korea in ways that are unpredictable and risky.

So what can we expect from Pyongyang? The nuclear program is the regime’s one major asset and we should not expect them to bargain it away easily.

Rather we should expect prolonged and difficult negotiations as they try to extract tribute for their “Dear Leader.”

In the end, we may eliminate North Korea’s capacity for making additional nuclear weapons, but this will not necessarily be accompanied by economic or political reforms.

An important lesson learned elsewhere in the developing world is that aid is not a substitute for reform.

Ambitious schemes for infrastructure and other investment in North Korea will only generate large economic pay-offs if they are accompanied by genuine opening and a more aggressive embrace of the market.

The key issue, therefore, is how tightly South Korea will link its offer of aid to progress in the resolution of the nuclear issue. Properly conditioned, South Korean aid could be a powerful carrot in the nuclear negotiations, whether it ultimately encourages internal reforms or not.

But if the South Korean offers at the summit are large, unconditional and open-ended, they could permit the regime in Pyongyang to stall the nuclear negotiations while actually discouraging deeper reform.

Posted in 1990s Famine, Arduous March, Black markets, China, Economic reform, General markets (FMR: Farmers Market), International Aid, Mining/Minerals, Political economy, South Korea, USA | Comments Closed

Kim Jong-il Plays Democratic Politics

Friday, September 21st, 2007

Korea Times
David Kang
9/21/2007

There has been widespread speculation as to why, after repeated calls for a summit by South Korean President Roh Moo-hyun, Kim Jong-il decided to meet at this time.

Some have argued that Kim is only meeting because of improved U.S.-North Korean relations. Others feel that Kim hopes to gain further aid and trade from South Korea.

Although we do not know the exact reasons, one possibility is that Kim sees two major elections looming on the horizon: the South Korean and U.S. presidential elections.

A summit provides Kim the opportunity to influence these elections. Were Kim to wait until there were new presidents in both countries, his influence on the new presidents’ goals and strategies would be minimized.

As to South Korea, it is quite likely that Kim Jong-il hopes be an influence by presenting a moderate and reasonable image of himself.

Indeed, if Kim can speak the right rhetoric and portray himself as flexible, make a few token concessions to increased economic or social exchanges with South Korea, and repeats rhetoric about “uri minjok ggiri (we, Koreans, by ourselves),” there is a good chance that many South Koreans will feel reassured and sentiment favoring engagement may solidify.

This would be a good chance of binding the next South Korean administration into continuing its engagement with the North, regardless of who actually wins the presidency.

As for the United States, Kim has less ability to influence the election, simply because Americans pay far less attention to North Korea than they do to other foreign policy issues, such as the continuing troubles in the Middle East.

However, if Kim can present a moderate face, and also help forge a solid consensus in South Korea about the best way to solve the North Korean problem, Kim may be hoping to bind any new U.S. president to a path of reconciliation, as well.

Indeed, many observers think that Kim has already won, simply by agreeing to a summit meeting with Roh. Especially with Roh so clearly hoping to cement his place in history with this summit, they fear that there is little that Kim can do that would harm his image in South Korea.

However, if Kim hopes to be an influence on the presidential election in the south, this presents a genuine opportunity to further expose Kim to pressures and influences of the outside world, which is a move in the right direction.

For decades, the North Korean leadership had only concerned itself with internal regime politics, and even ignored the voices and needs of its own citizens.

If Kim realizes that his image among the South Korean public will have a direct effect on his own rule, this may affect his actions and policies.

In this way, Kim is taking more of a gamble by agreeing to a summit than is generally recognized.

If South Korean sentiment turns against Kim after the summit, this will restrict the new South Korean president’s foreign policy options, and it will also make it harder for Kim to delay, obstruct and avoid dealing with nuclear and other issues.

As such, Roh has more leverage than generally believed, if he is adroit in his negotiations.
If Roh goes into the summit determined to come away with some agreement with the North, he will have no bargaining power whatsoever, and Kim will win. But if Kim is seen by the South Koreans as the one obstructing progress, it will make North Korea’s situation more difficult in the future.

Thus, Roh absolutely must go into the summit prepared to return empty-handed. Only when Roh is prepared to walk away, will he have any leverage on Kim.

Roh must be willing to confront Kim on serious issues, such as the nuclear issue, and press Kim to make a public statement that he supports denuclearization. Ironically, Roh’s reputation may even improve if he can show that he met Kim with a flexible and reasonable set of issues and options.

Roh must also pay attention to not only the public opinion of South Koreans but also the U.S, and in particular the policymakers inside Washington.

Roh needs to realize that managing expectations and framing the summit in a positive way is critical for him to be seen in Washington as enhancing, and not obstructing, the nuclear negotiations.

There is little chance that Washington will allow Roh to set the agenda for denuclearization, as revealed in the embarrassing episode at the recent APEC meeting.

If Roh wanders too far from Washington’s stance, he will not have Washington comply, but rather he will merely be left alone.

Thus, it is critical that Roh and Cheong Wa Dae pay as much attention to how the summit is viewed in Washington as how it is viewed in South Korea.

I am in favor of this summit, only because it further exposes Kim to South Korean public sentiment, and increases the leverage the outside world has on this reclusive regime.

I hope that Roh does not squander his opportunity to further draw out the North Korean leadership and expose them to the outside world.

Posted in Political economy, South Korea, USA | Comments Closed

Seoul seeks nearly W1.3 tln for joint projects with N. Korea next year

Thursday, September 20th, 2007

Yonhap
9/20/2007

[excerpt]

The South Korean government plans to ask the National Assembly to significantly increase its budget for inter-Korean cooperation projects and aid programs for North Korea, the Ministry of Planning and Budget said Thursday.

Seoul hopes to increase the fund for its cross-border projects to 750 billion won (US$812 million) next year from 500 billion won this year, according to the ministry.

The amount of money allocated for its humanitarian projects will also increase 14 percent to some 530 billion won, the government said.

“The increased budget for humanitarian programs will go to providing half a million tons of rice and 400,000 tons of fertilizer,” each up 100,000 tons from what Seoul provided this year, a government official said while asking not to be identified.

The requests for budget increase are still subject to approval by the parliament, but observers believe the amount of Seoul’s economic aid or assistance will be significantly increased next year following the upcoming summit of South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il in Pyongyang from Oct. 2 through Oct. 4.

The government was widely expected to promise large assistance and economic cooperation at the summit, only the second of its kind since the two Koreas were divided at the end of 1950-53 Korean War.

Meanwhile, the government also said it would request a total of 895 billion won for its official development assistance next year, up 23.3 percent from some 725 billion won in 2007, as part of efforts to boost its grants and soft loans for developing and under-developed nations to 0.12 percent of its gross national income from 0.08 percent.

Posted in Economic reform, Foreign direct investment, International Aid, South Korea | Comments Closed

Summit Negotiations for Co-Development of Kaema Plateau

Tuesday, September 18th, 2007

Daily NK
Jeong Jae Sung
9/18/2007

North Korea has requested for negotiations to begin at the Inter-Korean Summit Talks on the co-development of the Kaema Plateau, also known as “the roof of Korea.” The request was taken into consideration by the Ministry of Unification.

In light of North Korea’s request, the Ministry has recently conducted a survey of North Korean defectors from South Hamkyung, Yangkang and Jagang, where the Kaema Plateau is located, regarding the significant geographical features, the status of current development at the plateau, and the intentions of the North Korean government.

Kim Hyung Seh (pseudonym), a North Korean defector from Yangkang, stated that “I was told by interested parties at the Ministry of Unification that right after the Summit Talks North Korea will deliberate the Kaema Plateau development issue and that they needed my cooperation for a sound investigation.”

According to Kim, the questions asked focused on the North Korean government’s purpose in developing the Kaema Plateau, the potential value of this site as a tourist resort, and wether or not there is enough possibility for tourism given the ever increasing number of visitors from Mongolia.

He asserted that “the Kaema Plateau is a huge forest which has no value as a tourist attraction at the moment. All the particular tourist attractions in North Korea retain villas owned by Kim Il Sung and Kim Jong Il, but there are none at Kaema Plateau, which speaks for itself.”

Kim also added that the affiliates of the Ministry of Unification did not know where the Kaema Plateau was.

“It is difficult for North Korea to develop the area around Kaema Plateau, which is why they followed the shoreline to develop their railways. In order to make this project possible, the basic transportation infrastructure such as airline facilities, roads and railroads must be established first” advised Kim.

The Ministry of Unification has denied every having conducted these surveys. Regarding the interviews with defectors, one affiliate of the Ministery said “We have not held such meetings,” and another said that “We have met [with the defectors], but we never asked about the Kaema Plateau issue.”

Kim Joong Tae, the Director of the Ministry of Unification’s Inter-Korean Economic Cooperation Team, who interviewed Kim, told the DailyNK that “North Korea has never suggested the development of Kaema Plateau. The Ministry merely asked North Korean Defectors about tourism development at Mt. Baekdu.”

The Kaema Plateau is situated across the Middle and Southern region of Yangkang Province, South of Northwest Hamgkyung and East of Jagang. The total area is 14,300 km2 and the height is 1,340m. It is the highest and widest plateau in the entire peninsula, also known as “the roof of Korea.”

Kaema Plateau has abundant forest resources which provide avariety of material lumber. There is also a rich supply of mineral resources, including steel, magnesite, gold, apatite, and copper.

The only source of transportation infrastructure is the military airfields in Pungseo and Jangjin.

It is probable that North Korea’s reason for suggesting the development of Kaema Plateau is to make it tourist site, showcasing various amusment parks and ski resorts. As it is now, this area is completely restricted to civilian traffic. If transportation in the high region is developed, this could be applied for military purposes.

Lee Jin Young (pseudonym), a defector currently residing in South Korea’s Yangcheon district, explained that “the Kaema Plateau is so treacherous that it is only used as a military training field for Special Forces. This was the one area that allied forces could not get control of, even during the Korean War.”

She also added that, “rather than developing Kaema Plateau as a tourist attraction, they should develop the Baekmoo Plateau which includes Mt. Baekdu. The suggestion to develop the Kaema Plateau can only be seen as their intention to construct a better transportation infrastructure.”

Therefore, even if South Korea were to agree to the co-development of Kaema Plateau, there will be huge difficulties regarding the expansion of the social infrastructure and compromising with the military. In particular, the construction of Korean roads, railroads and airfields in the region is sure to cost a lot of money.

Posted in Economic reform, Foreign direct investment, Forestry, Lumber, Mining/Minerals, Political economy, Railways, South Korea, Tourism | Comments Closed

Inter-Korean trade jumps 36.1 percent in January-August period

Thursday, September 6th, 2007

Yonhap
Sohn Suk-joo
9/6/2007

Inter-Korean trade surged 36.1 percent in the first eight months of this year, compared with the same period of a year earlier, the Unification Ministry said Thursday.

The two-way trade volume increased to US$1.05 billion in the January-August period, up from $775.52 million in 2006, thanks to brisk trade of fishery items and light industry products made at a joint industrial complex in the North Korean border city of Kaesong.

The industrial complex is the crowning achievement of a landmark summit between the leaders of the two Koreas in 2000. South Korean businesses use cheap North Korean labor to produce goods in Kaesong where some 26 South Korean factories employ about 15,000 North Korean workers.

“Inter-Korean commercial trade increased 37.1 percent to $809.71 million, while non-commercial trade rose 32.8 percent to $245.41 million during the same time span,” the ministry said in a statement.

Posted in Agriculture, Kaesong Industrial Complex (KIC), Light Industry, Manufacturing, South Korea, Special Economic Zones (Established before 2013), Trade Statistics | Comments Closed

South Korean Products Popular

Tuesday, September 4th, 2007

Daily NK
Han Young Jin
9/4/2007

Distribution with “Korea” Trademark…”Rice Cookers Popular”

In the North Korean jangmadang (market), South Korean products are drawing huge popularity among citizens and are publicly being sold, relayed an internal source on the 30th.

The source said, “In the Pyongyang, Shinuiju, Hamheung, Chungjin, and other large-scale jangmadangs, South Korean products with the “Made in Korea” label is fairly popular among wealthy people.”

In the past, South Korean products were secretly sold in the North Korean market. When selling South Korean products, we sold them after removing the product label, “Made in Korea.” However, recently, only products with the label are recognized as South Korean products of good quality and sold at a high price.

The source added, “‘Made in Korea’ lends credibility to the people. Without this, people do not believe that the product is a Korean-made good. The label has to be there because Chinese products are disguised as South Korean goods.”

The South Korean product which is most sold in North Korea is the electric rice-cooker (Cuckoo), instantaneous water heaters, cosmetics, aromatics, computers, toothpaste, medical goods and a variety of sweets. Also, North Korean citizens have a lot of confidence in South Korean medicine. South Korean-made medicine or sweets are not discarded even after the expiration date.

He said, “Because Chinese-made products are no good, people who have money usually used Japanese products. In the place where Japanese products became rare, Korean-made products are now occupying that place.”

In Dandong, China, Kim Chi Duk (pseudonym), who is engaging in North Korea-Chinese trade met with the reporter and retorted, “Currently in Chosun (North Korea), Japanese-made products are still counted as number 1. Then there are South Korean-made products, then Chinese-made products. Poor people, even when the quality is lower, use Chinese-made products and those with money use South Korean products or Japanese-made products. What is the issue if one is buying with his or her money?”

He said, “Those with some amount of money use at least one or two South Korean products.”

The source relayed, “Currently in the Shinuiju market, South Korean toothpaste is 5,000 won (USD1.85), 1 set of aromatics (machinery and 2 bottles of gas) is 30,000 won (USD11.1), and one pack of Time cigarettes (tax-exempt) 3,000 won.” However, “Time,” a kind of South Korean cigarettes are counterfeit goods made in China, so is offered at a cheaper price than their domestic price.

Mr. Kim said, “Those who trade in North Korea request for South Korean-made goods, but I do not know whether they plan to export them or to use them. The authorities do not allow American-made goods, but is there anyone who doesn’t like the dollar? If it is not a big issue, they use everything.”

Posted in Civil society, Clothing, Computing/IT, Cosmetics, General markets (FMR: Farmers Market), International trade, Price liberalization, South Korea | Comments Closed

1972 Declaration

Thursday, August 30th, 2007

Korea Times
Andrei Lankov
8/30/2007

At 10:00 in the morning of July 4, 1974, Lee Hu-rak, the director of the Korean Central Intelligence Agency (KCIA), convened a special press conference. It was just the place to drop a bombshell. He told the journalists that in May and June, secret high-level exchanges had been conducted between the North and South Korean governments.

Lee himself went to Pyongyang, while Seoul was secretly visited by Kim Yong-ju, the younger brother of then North Korean President Kim Il-sung. In those days Kim Yong-ju was considered as a likely heir to the North Korean dictator (Kim Jong-il was still too young).

The visits themselves were a sensation since for the two decades following the end of the 1950-53 Korean War there were virtually no government-level contacts between the two Koreas. These secret talks produced a document which is known as the “July 4 Declaration” to the Koreans, but in English language publications it is usually referred to as the “1972 Declaration.”

The declaration stated that both Korean governments were committed to eventual unification, and that this unification should be reached independently (without the involvement of foreign forces), peacefully and with respect to their political and ideological differences.

Frankly, it was not very precise wording. However, in one regard the document was important indeed: for the first time in decades it stated that both Korean states, at least theoretically, were ready to coexist and negotiate.

The declaration produced much hype in the international media, and was welcomed as a “great breakthrough.” Of course, this was not the case, and all long-time Korea watchers knew only too well that from time to time some events would be presented by the world media as a “great turning point” _ only to be forgotten or made irrelevant in few years.

Still, the 1972 Declaration was surely a sign of new times: grudgingly, each Korea began to accept existence of the other side. Not its right to exist, God forbid, but merely its physical existence as a rather unpleasant but unchangeable fact.

This turn took place just after the worst period of confrontation, when the two Koreas seemed to be on the eve of a second Korean War. In 1968 North Korean commandos stormed (unsuccessfully) the presidential office of Cheong Wa Dae in Seoul, and they waged campaigns in the mountain ranges along the eastern coast of South Korea.

Seemingly influenced by the success of the Vietnamese Communist guerrillas, the North Korean strategists believed that a Communist revolution could be started in the South as well.

However, by 1970 Kim Il-sung and his coterie finally realized that their hopes for a Vietnam-style uprising in the South were unfounded. Perhaps, the news from Germany where the Eastern and the Western states finally recognized each other, also had some impact: Koreans always paid attention to events in Germany, another divided country.

South Korea changed its strategy as well. Since 1948, the South Korean state had not made a secret of its willingness to use all means, including military ones, to achieve unification and the “liberation” of the North from “Communist slavery.” (The North Korean leaders, in their turn, vowed to save Southerners from “Capitalist hell”).

However, on August 15, 1970, President Park Chung-hee said that unification should be achieved peacefully. He addressed the North Korean leaders (the same people who tried to kill him two years earlier) and urged them to engage in peaceful economic competition.

This statement reflected a new confidence in Seoul: throughout the first decade of the dictatorial but efficient rule of Park, South Korea’s economy was booming. The South Korean leaders thought they would win the economic competition. We know now that they were correct in this assumption.

Hence, negotiations made sense, at least as a way to win time. Indeed, for a short period after the 1972 Declaration there were a number of exchanges and contacts. The Red Cross societies of both Koreas were engaged in the negotiations of a painful question: the arrangement of meetings between members of separated families.

For all practical purposes, in those years the Red Cross societies acted as major channels of dialogues, hence both sides staffed these NGO-type bodies with high-level officials. The first rounds of talks led to nothing, but even the fact that both Koreas were willing to talk was seen as a great novelty after 25 years of division, war, and propaganda.

In 1973, the ROK government made it clear that it would tolerate the participation of North Korea in international organizations. Shortly before that, the principle of mutually exclusive international recognition had also been dropped: a foreign country could henceforth have ambassadors stationed both in Seoul and in Pyongyang.

However, the declaration did not change as much as newspaper readers worldwide were led to believe in those July days. Neither side was going to compromise too much. Domestically, both sides continued with their propaganda war, an enterprise, which was quite hysterical in the South and much worse in the North.

The generals planned future military operations, and secret services were conducting their silent war with the same zeal. Nobody was willing to give in, and talks were interrupted in 1973. They resumed only a decade later, and by that time the situation in and around Korea had changed dramatically.

Prof. Andrei Lankov was born in St. Petersburg, Russia, and now teaches at Kookmin University in Seoul.