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Seoul Wants 6 Nations to Shoulder Burden for Energy Aid to NK

Sunday, February 11th, 2007

Korea Times
Park Song-wu
2/11/2007

South Korea is thinking of chairing a working group for energy aid to North Korea as the United States is trying to differentiate this round of the six-party talks from a 1994 process, a Seoul official said on Sunday.

But Seoul has a firm position that all parties should jointly pay the “tax” for peace, he said.

“Denuclearization will benefit all parties, so the burdens should be shared jointly,” he said. “But we are thinking of taking the lead in the working group for energy aid, considering the circumstances of the other parties.”

He did not elaborate. But Tokyo is not expected to raise its hand to chair the working group, considering the Japanese anger over the North’s abduction of its nationals in the past.

Russia prefers forgiving the North’s debts instead of providing it with energy.

China, host of the multilateral dialogue, is already playing the most important role of chairing the six-party meeting.

What the United States apparently has in mind, and consented to by all parties, is the necessity to differentiate the result of these on-going negotiations from the 1994 Agreed Framework.

Since it was signed by Robert Gallucci and Kang Sok-ju in Geneva on October 21, 1994, Washington provided 500,000 tons of heavy oil annually to Pyongyang over the following seven years.

But the North’s promise to freeze its graphite-moderated reactors in return for two light-water reactors was not obeyed, causing the Bush administration to criticize the deal as a diplomatic failure of his predecessor, Bill Clinton. After that, U.S. diplomats even avoided meeting their North Korean counterparts bilaterally.

The U.S. policy, however, has recently reached a turning point.

“The Bush administration may have been driven to greater negotiating flexibility by a need to achieve a foreign policy victory to compensate for declining public support for the Iraq war and the loss of the Republican leadership of Congress,” Bruce Klingner, a senior research fellow for the Heritage Foundation said in a recent article.

But one thing that has not changed is the U.S. hope of not repeating the “mistake” it made with the Geneva agreement.

From 1994 to 2002, Pyongyang received 3.56 million tons of heavy oil, equivalent to $500 million, from the now-defunct Korean Peninsula Energy Development Organization (KEDO), and the United States shouldered the largest share of $347 million.

To shake off that bad memory, Washington wants to use the term “shut down” instead of “freezing” and even wants to avoid providing fuel oil to the North, reportedly citing the possibility that it can be used for military purposes.

So the talks have dragged on. And, to make things worse, the North Koreans are demanding a lot.

Japan’s Kyodo news agency reported that North Korea had demanded 2 million tons of heavy oil or 2 million kilowatts of electricity in exchange for taking the initial steps towards denuclearization.

Christopher Hill, the top U.S. envoy, expressed hope on Sunday that such technical issues could be discussed at working group meetings. On the same day, the Seoul official hinted that South Korea will chair the working group.

Posted in China, Electricity, Energy, Foreign aid statistics, International Aid, Japan, Nuclear, Oil, Russia, South Korea, USA | Comments Closed

Food aid key to N Korea talks

Thursday, February 8th, 2007

BBC
2/7/2007

As six-party talks on North Korea’s nuclear programme resume in Beijing, the BBC’s Penny Spiller considers whether food shortages in the secretive communist state may have an impact on progress.

Negotiators for the US, North Korea, China, Japan, South Korea and Russia are meeting in Beijing amid signs of a willingness to compromise.

While the last round of talks in December ended in deadlock, bilateral meetings since then have brought unusually positive responses from both North Korea and the US.

Such upbeat noises were unexpected, coming four months after North Korea shocked the world by testing a nuclear bomb.

The test brought international condemnation and UN sanctions, as well as a significant drop in crucial food aid.

South Korea suspended a shipment of 500,000 tonnes of food supplies, while China’s food exports last year were sharply down.

The World Food Programme has struggled to raise even 20% of the funds it requires to feed 1.9 million people it has identified as in immediate need of help.

Aid agencies warned at the time of a humanitarian disaster within months, as the North cannot produce enough food itself to supply its population. It also lost an estimated 100,000 tonnes-worth of crops because of floods in July.

‘Queues for rations’

Kathi Zellweger, of the Swiss Agency for Development and Cooperation in Pyongyang, said the present food situation in the country was unclear.

No figures are yet available for last year’s harvest, and it was difficult to assess what impact the lack of food aid was having on supplies, she said.

However, the UN’s Food and Agriculture Organisation estimated the country was short of one million tonnes of food – a fifth of the annual requirement to feed its 23 million people.

South Korea-based Father Jerry Hammond said there were signs of shortages – not only in food but also in fuel – when he visited the North with the Catholic charity Caritas in December.

He described seeing long queues for rations, and ordinary people selling goods in the street for money to buy the basics.

“You do expect to see more shortages during the winter time,” the US-born priest, who has visited North Korea dozens of times in the past decade, said.

“But I did see a noticeable difference this time.”

High malnutrition rates

Paul Risley, of the World Food Programme, said people in North Korea may still be cushioned by the November harvest and the pinch will be felt in the coming months.

“We have great concerns,” he said, pointing out that North Korea was now in its second year of food shortages.

He says “stabilising food security” in the country will be very relevant to the talks in Beijing.

“It is certainly the hope of all who are observing the situation in [North Korea] that imports of food can be resumed and returned to prior levels,” he said.

“Malnutrition rates are still the highest in Asia, and we certainly don’t want to see those rates rise any further.”

Father Hammond thinks Pyongyang may be persuaded to consider compromises in Beijing, but is unlikely to do so as a result of any pressure from the people of North Korea.

“People are very cut off from the outside world, and there is constant propaganda about national survival. Even if they go hungry, it will be considered patriotic,” he said.

There have been signs of possible compromise from both sides in the run up to the talks.

Washington has reportedly hinted at flexibility over its offer of aid and security guarantees, as well as showing a willingness to sit down and discuss North Korea’s demands to lift financial sanctions.

Meanwhile, North Korea reportedly recently told visiting US officials it would take the first steps to disband its nuclear programme in return for 500,000 tonnes of fuel oil and other benefits.

And South Korea is keen to resume its shipments of rice and fertiliser aid – if Pyongyang agrees to freeze its nuclear programme, the Choson Ilbo newspaper has reported.

As the nuclear talks resume, all sides will be looking to translate such pressures into progress.

Posted in Agriculture, Agriculture statistics, Arduous March, China, Foreign aid statistics, International Aid, International trade, Japan, Russia, South Korea, Switzerland, UN, UN Food and Agriculture Organization, UN World Food Program | Comments Closed

N. Korean Defectors to Get More Job Incentives

Thursday, February 8th, 2007

Korea Times
Lee Jin-woo
2/8/2007

The government has decided to slash the amount of cash provided to North Korean defectors who come to South Korea and to focus more on helping them find jobs here, the Ministry of Unification said Thursday.

According to the plan, the subsidy provided in cash for the settlement of North Korean defectors will be cut from the current 10 million won ($9,500) to 6 million won. The amount is based on a one-person family and varies according to the number of people in the family.

Those who have come to Seoul since Jan. 1 this year will be subject to the new regulations, the ministry said.

The ministry, which deals with inter-Korean affairs, said it would almost double incentives to encourage North Korean defectors to find workplaces in the South.

Regardless of their annual income, a North Korean employee will get up to 15 million won for three years.

Some 4.5 million won would be provided after the first year of labor, which will increase by 500,000 won per year up to 5.5 million won for the third year.

Previously, the labor incentive was 9 million won over three years.

The new measure will be effective retroactively to defectors who have arrived from the beginning Jan. 1 of last year.

Despite the cut, the total amount of subsidies will be slightly lower than now, as the ministry decided to provide 13 million won, up from 10 million, for each one-man family to help find housing in the South, the ministry said.

Those who are handicapped or suffer from a serious disease will get up to 15.4 million won, it said.

“North Koreans should no longer sit idle in South Korean society,’’ Kim Joong-tae, acting chief of the ministry’s social and cultural exchange bureau, told reporters. “The incentive is aimed at increasing support for North Korean defectors who are trying to adapt to South Korean society.’’

Life is getting more challenging for North Koreans arriving in the South. As the number has surged, the government subsidy for each defector has plummeted.

Many North Korean defectors have complained that the government’s decision lacks an understanding of the harsh reality that they face in Korean society.

“Officials are ignoring the fact that the majority of North Korean defectors who come here after years of hardship in China and other Southeast Asian countries are not able to work normally for a certain period of time,’’ Lee Hae-young, an official of an association of North Korean defectors in Seoul, told The Korea Times.

Lee said it takes about five years for defectors adjust to a completely different market society.

“I think only about three out of 10 defectors who arrive in the South are healthy enough to work,’’ Lee said.

The total number of North Korean defectors to the South since the end of the 1950-53 Korean War is presumed to have surpassed 10,000 early this year, according to the ministry.

Posted in Emigration, South Korea | Comments Closed

China eyes Mt. Pektu VI

Friday, February 2nd, 2007

Seoul Cautious Over Rift With China
Korea Times
Lee Jin-woo
2/2/2007

South Korea tried Friday to downplay its short track skaters’ action over Korea’s historical claim to a mountain on the border between North Korea and China during the ongoing Winter Asian Games.

On Wednesday, five South Korean female short track skaters held up seven placards with the message “Mount Paektu is our territory” during the awards ceremony following their silver medal win in the 5,000-meter relay.

A high-ranking South Korean official said the young skaters’ behavior was impromptu and should not be interpreted to have political significance.

“We have stressed that both Seoul and Beijing should deal with this issue calmly,” a government official said on condition of anonymity because of the sensitivity of the issue. “We delivered the message yesterday and today to our Chinese counterpart.”

The organizing committee of the Changchun Asian Games expressed regret Thursday and asked that similar incidents to be prevented in a letter to Kim Jung-kil, head of the Korea Olympic Committee. The games will end tomorrow.

The Chinese officials defined South Korean players’ act as a political activity, which is banned under the charter of the International Olympic Committee and the Olympic Council of Asia.

China’s foreign ministry also called on a senior South Korean diplomat in Beijing on Thursday afternoon and expressed regret over the issue.

South Korean skaters’ surprising move at the award ceremony came after the Chinese government made efforts to promote Mt. Paektu as “Changbai Mountain” during the games.

China has reportedly renamed schools after the mountain and has also ordered a dozen hotels run by ethnic Koreans near the mountain to halt business.

On Sept. 6, the organizing committee lit a torch at the top of the mountain, angering many South Koreans. The mayor of Changchun, the host city, said the mountain was chosen as the torch site on Sept. 6 because three rivers _ Tuman, Amrok and Songhua _ originate there. Tuman and Amrok rivers are known as Tumen and Yalu in China.

Many South Koreans believe the efforts are part of the Northeast Project, a Chinese academic project to reexamine the ancient history of the region.

They view the project as an attempt to distort ancient Korean history in the northeastern territory of what is now China, including the Koguryo Kingdom (37 B.C.-A.D. 668) and the Palhae Kingdom (698-926).

Beijing has disclosed plans to list the mountain as a UNESCO Natural World Heritage site, and plans to host the 2018 Winter Olympics there.

Unlike the angry South Korean public and news media, the South Korean government has remained calm over China’s actions to avoid stirring up a diplomatic dispute.

Under an agreement struck in 1962, China and North Korea, two sovereign states and U.N. members, agreed to share the mountain. The North has claim to 54.5 percent of the mountain, while China claims the remaining 45.5 percent.

Posted in China, South Korea | Comments Closed

N. Korea steps up efforts to prevent spread of S. Korean pop culture

Thursday, February 1st, 2007

Yonhap
2/1/2007

North Korea has intensified efforts to stem the spread of South Korean pop culture in the communist state, even as South Korean movies and TV dramas gain popularity there, informed sources said Thursday.

“This year, North Korean authorities waged what they call ‘psychological warfare’ against ‘exotic lifestyles’ by cracking down on South Korean pop culture,” a senior government official said, asking to remain anonymous because of the sensitive nature of the issue.

According to a survey conducted on recent North Korean defectors to the South, South Korean video tapes and CDs enter North Korea via China. North Koreans having TVs, video players or personal computers at home watch them, and then swap the programs among peers or friends, another source said.

The popularity of South Korean media has been so great that a lead actress’s line in the hit South Korean movie “Sympathy for Lady Vengeance” became a household word in the North, while some North Korean youth are glued to such mega-hit TV dramas as “Fall Fairy Tale” and “Immortal Admiral Yi Sun-shin,” the sources said.

They further explained that the wave of South Korean pop culture does not stop at movies and videos. North Korean youth also enjoy sporting South Korean hairstyles and fashion, preferring tight pants and long front hair.

Since the 1950-53 Korean War, about 9,300 North Koreans have defected to South Korea, including about 1,578 in 2006 alone. The sealed border between the two Koreas has nearly 2 million troops deployed on both sides.

Wave of South Korean Trends in North Korea
Daily NK
Park Hyun Min
2/1/2007

A wave of South Korean actors and trends such as Jang Dong Gun, Bae Yong Joon and Won Bin which has washed throughout China, Japan and Taiwan has finally hit North Korean shores. Consequently, North Korean authorities are racking their brains trying to find a solution to this problem.

This wave of South Korean trends in North Korea comes from an influx of foreign movies and dramas in the form of VCD’s and videos. In particular, the phrase “worry about yourself!” from a Korean movie “Sympathy of Lady Vengeance” has become the latest catchphrase to spread throughout the country.

Regarding this, a South Korean government official said on the 31st “North Korean youths are becoming infatuated with popular South Korean dramas such as “Autumn in my heart” and “General Lee Soon Shin’” and revealed “Defectors say that people who do not watch South Korean dramas are treated as outcasts.”

In fact, according to a survey from Hanawon, an educational training centre for defectors, a growing number of travelers now cross the boarder possessing video tapes and C.D.’s. These goods then circulate amongst families in possession of T.V.’s videos and computers, particularly Pyongyang, where South Korean dramas and music are often heard.

Popular South Korean dramas have gradually infiltrated North Korea since the late 90’s. At the time, dramas such as “The Sandglass” describing the S. Korean Kwangju affair in 1980 and “Asphalt man” gained much popularity and since 2000, dramas such as “Winter Sonata” and “Stairway to heaven” have caught the attention of North Korean youths.

These South Korean movies and dramas do not stop at mere entertainment but rather are influencing the hairstyles and fashion of young North Koreans. Nowadays, many North Korean youth adopt “knife hair,” a hairstyle with thin sharp fringe points and “drainpipe trousers” are also a hit item.

A defector who entered South Korea in 2004 said “If a person is caught circulating any copies of capitalist materials, he or she may be dragged to the political gulags. However, if a person is found to be a viewer, then he or she may receive re-education or sent to the labor training camp or the re-educational camp for 6 months.”

In response to foreign culture which is finding its way into North Korea, authorities are aiming to strengthen public propaganda in order to block foreign ideologies. In particular, North Korean authorities have began considering mobilizing its groups of military youths for rearmament.

North Korea is concerned about the balance of its regime with the demands of the whole society increasingly changing. In preparation for this, it seems that North Korea is actively investing more in the light industry in an effort to stabilize public welfare.

Posted in Art, Civil society, Film, International trade, South Korea, Television | Comments Closed

3 Million NK Refugees Expected in Crisis: BOK

Friday, January 26th, 2007

Korea Times
Na Jeong-ju
1/26/2007

If at least one member of a North Korean household moves to South Korea after reunification, more than 3 million from the North may head south if the two Koreas are reunited, the Bank of Korea (BOK) said Friday.

According to the BOK’s Institute of Finance and Economy, if such an exodus takes place in North Korea after reunification, the South may face serious economic consequences, the report said.

If Koreas adopt a German model, in which West Germany extended financial support to East Germany before and after reunification, South Korea would shoulder a total of $500-$900 billion in reunification costs. If the money is spent appropriately, it will take 22-39 years for North Korea to top $10,000 in gross national income, the report said.

The institute proposed South and North Korea try to reduce economic gap through economic cooperation programs. If the South supports the North through development programs, using its capital and the North’s cheap labor, it can reduce reunification costs considerably, it said.

“It is desirable for the two Koreas to designate special economic zones to reduce their economic gap and conduct programs to develop the North Korean economy,’’ the report said.

With the development programs, the South can spend much less than adopting the German model, the report said. The reunification costs will be cut to $300-500 billion, while the period for North Korea to see a GNI of $10,000 will be shortened to 13-22 years, it added.

Posted in Bank of Korea, Economic reform, Foreign direct investment, South Korea, Special Economic Zones (Established before 2013) | Comments Closed

N. Korea urges implementation of inter-Korean economic accord

Thursday, January 25th, 2007

Yonhap
1/25/2007

North Korea has called upon South Korea to implement an earlier agreement to help revive its light industry in return for tapping into the communist nation’s natural resources, a senior unification official said Thursday.

During Unification Minister Lee Jae-joung’s first visit to the Kaesong Industrial Complex since he took office in December, Ju Dong-chan, head of the North’s Kaesong development agency “asked the minister to honor the agreement, saying it is not an aid, but only swapping of natural resources and raw materials,” the official said anonymously.

In July 2005, South Korea agreed to provide the North with US$80 million worth of raw materials to help it produce clothing, footwear and soap starting in 2006. In return, the North was to provide the South with minerals such as zinc and magnesite, after the mines are developed with South Korean investments, guaranteed by the Pyongyang government.

But the agreement was never carried out as North Korea abruptly cancelled scheduled tests of two cross-border railways in May 2006. North Korea’s subsequent missile and nuclear weapons tests further clouded hopes to implement the accord.

“Lee agreed in principle to honor the accord, but he held the position it is more important to create a favorable environment for carrying out the agreement,” the official told reporters.

Asked about the North’s denial of reports that it scrapped plans to change its partner for tours of Kaesong, the official said it is purely a matter of business, which does not require the intervention of the government.

Just hours after Lee returned to Seoul from Kaesong, an unidentified spokesman for the Korean Asia-Pacific Peace Committee (KAPPC) said the North “has no formal agreement with the Hyundai side over the issue of tour of Kaesong.”

Despite its earlier contract with Hyundai Asan, North Korea requested a new deal with Lotte Tours Co. in 2005. However, the South Korean government said the change can happen only when Hyundai Asan voluntarily concedes or pulls out of the business.

Posted in Asia-Pacific Peace Committee, Copper, Gold, Graphite, International trade, Iron Ore, Kaesong Development Agency, Light Industry, Lumber, Manufacturing, Mining/Minerals, Railways, South Korea, Tourism, Transportation | Comments Closed

Will Economic Sanctions Have Impact on N. Korea?

Tuesday, January 23rd, 2007

Korea Times
Chang Se-moon
1/23/2007

Obviously, it is important to know the correct answer to this question. Sanctions that have no impact on North Korea’s economy will not change the behavior of North Korean leaders. If sanctions do have a significant impact, the possibility that North Korean leaders may be tempted to resolve the pending security issues through negotiations exists.
In answering the question, however, we need to keep in mind what the British economist John Maynard Keynes (1883-1946) said: “The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor draw correct conclusions.’’ In plain English, Keynes stressed an unbiased economic way of thinking that could help us draw correct conclusions. In other words, until we review all the facts with an open mind we should not make up our minds.

This is exactly what we will do by assessing the impacts of economic sanctions on North Korea.

The first question that comes to mind is which sanctions are we talking about. If we review U.S. sanctions on North Korea since the outbreak of the Korean War in 1950, there would be too many sanctions imposed on North Korea to be practical. There are three important sanctions that are still in effect, however. One is the U.S. denial of a Most Favored Nation (MFN) trade status on North Korea’s exports.

This sanction was imposed on North Korea’s exports to the United States on September 1, 1951, following the outbreak of the Korean War. MFN tariffs are the lowest tariffs that are levied on imports to the U.S. Over 99 percent of imports to the United States qualify for the MFN tariffs. Without MFN status, tariffs on North Korean exports to the United States are so high that North Korea simply cannot even imagine exporting anything to the United States.

The second of the three important sanctions stemmed from the bombing of Korean Air 858 by North Korean agents on November 29, 1987. The explosion killed 115 innocent passengers and crew members. On January 20, 1988, North Korea was placed on the list of countries that supported international terrorism according to the U.S. Export Administration Act of 1979.

The importance of this sanction is that placement on the list has made it impossible for North Korea to borrow money from international financial institutions including the World Bank and the International Monetary Fund. Like the denial of MFN status, the placement of North Korea on the list of countries supporting international terrorism continues to this date.

The third of these three key sanctions relates to tightening of North Korea’s illegal financial transactions, which culminated in Banco Delta Asia’s termination of business dealings with North Korea as of February 16, 2006. You may know that Banco Delta Asia had long been suspected of handling North Korea’s illicit activities overseas such as laundering of counterfeit U.S. dollars and sales of illegal drugs

Banco Delta Asia is located in Macao, which is a Special Administrative District of China. Tightening of North Korean financial transactions was extended to North Korean trade during 2006. This added pressure on North Korea originated from U.N. Resolution 1540 following North Korea’s test-launching of long-range missiles on July 5, 2006, as well as from U.N. Resolution 1718 which followed North Korea’s nuclear test on October 9, 2006.

Are these sanctions having an impact on North Korea’s economy? Perhaps, a more accurate question is whether these sanctions are placing enough pressure on North Korean leaders to reconsider the possibility of returning to the negotiation table?

One aspect is the status of North Korea’s trade deficit. As you probably know, North Korea buys from other countries much more than it sells to other countries. When the amount of imports exceeds the amount of exports it’s called a trade deficit. North Korea’s annual trade deficit averaged about $800 million from 2003 to 2005. This figure does not include North Korea’s trade deficit against South Korea, since South Korea appears to consider any financial support to the North as a long-term investment rather than a trade deficit.

How has North Korea been paying for the trade deficit? The ways have been unique. Almost the entire deficit appears to have been financed by weapons sales, illicit activities, and funds flowing from South Korea through joint projects.

In fact, a study by the Korean Institute for Defense Analysis indicates that full implementation of U.N. Resolution 1718 would cause North Korea to lose just about the same amount ($700 million to $1 billion) by stopping exports of weapons and illegal drugs and counterfeit money.

The Economist Intelligence Unit is quoted to have estimated in 2003 that “North Korea earned as much as $100 million a year from counterfeit money, while in 2005, a U.S. task force estimated that “$45 million to $60 million in Pyongyang’s counterfeit currency (primarily in U.S. $100 bills) is in circulation,’’ reportedly, including some in Seoul’s Namdaemun Market.

Assuming that recently added sanctions will cause North Korea to lose about $800 million that it has been earning overseas each year, the next interesting question is how North Korea will pay for the annual trade deficit of $800 million in the future? If North Korea does not pay for its imports, other countries will refuse to sell products to North Korea and the North Korean economy will suffer.

North Korea cannot borrow from world financial institutions because of the 1988 U.S. sanctions that branded North Korea as one of countries supporting international terrorism. They cannot use the money from foreign direct investment because China and Korea are the only two countries that have been willing to invest in North Korea, but the combined amount is not even close to paying for the annual trade deficit.

Think of it this way. If you borrow money every year, and lenders believe that your ability to pay off the debt is rapidly declining, will lenders continue to lend you money? Not likely. With sanctions adversely affecting North Korea’s ability to pay for imports, North Korea will find it increasingly difficult to buy what it needs. The breaking point may not be imminent, but the future is predictable.

This is what I think will happen. North Korea will ask China to increase its foreign direct investment in North Korea by giving China more incentives for such investment. These incentives may include low taxes and free land. North Korea will ask South Korea to send more money.

For instance, as of July 1, 2004, Hyundai Asan and North Korea set the entrance fee to Mt. Kumkang at $10 for a day trip, $25 for a two-day trip and $50 for a three-day trip. On May 1, 2005, these fees were raised to $15, $35, and $70. On July 1, 2006, these fees were raised again to $30, $48, and $80. This is just one way.

North Korea may also ask South Korea to lend it a large sum of money with an empty promise of paying it back. This explains in part why it is so important for North Korea to have leaders of the South Korean government who are friendly to North Korea.

These desperate acts are likely to be very short of paying for the majority of the annual trade deficit. If sanctions continue to be effective, the likelihood of North Korea returning to the negotiation table increases. Economics is rarely boring, especially when it deals with real problems.

Posted in Arms shipment, Banking, China, Counterfeiting, Drug smuggling, Economic reform, Finance, Fiscal & monetary policy, Foreign direct investment, Illicit activities, Insurance, International Aid, International Organizaitons, International trade, South Korea, USA | Comments Closed

N. Korea to focus on inter-Korean economic projects in 2007: think tank

Monday, January 22nd, 2007

Yonhap
1/22/2007

North Korea will put strong emphasis on inter-Korean economic projects this year as the communist state insinuated that it is suffering from economic difficulties, a state-run think tank said Monday.

In its new year commentary, Pyongyang partially admitted that its economy is in bad shape and said its highest priority for 2007 is boosting the sagging economy, the Korea Development Institute (KDI) said in a report.

“Unlike in previous years, when the North placed political ideology, the military and the economic sector, in that order, as its three key areas of importance, North Korea set the economic sector ahead of those two other sectors in the commentary this year,” the KDI said.

“The North also skipped over commenting on a series of economic achievements, except for saying that it has secured a foothold for a new leap. … In addition, it said that it has gone through the ‘worst adverse situation’ in the past 10 years, showing that the economy was still suffering from difficulty in 2006.”

To boost the economy, the North may actively push for inter-Korean economic projects and depend on the South for increased economic support as its economic cooperation with other nations such as the United States and Japan has come to a near halt, the institute said.

In the commentary, the North also used a slogan, “put an importance on the Korean people,” a comment indicating increased inter-Korean cooperation, the KDI said.

Every Jan. 1, the communist nation releases its new year commentary on three state dailies, including the Rodong Sinmun, one of the only sources of information on the country’s economic policy plans.

Under the title, “Create a prosperous era of the Songun (military-first) Choseon,” the North urged its people to make concerted efforts to solve the economic problems in 2007 and make the country an economic power as a socialist nation.

According to many analysts, the North’s annual economic growth may have fallen below 1 percent last year, down from an estimated 1 percent growth in 2005 and 2.2 percent in 2004. A variety of global economic sanctions against Pyongyang could have contributed to the slower growth in 2006, the institute said.

Posted in Economic reform, Foreign direct investment, Songun, South Korea, Special Economic Zones (Established before 2013) | Comments Closed

China allows tour of Mt. Geumgang via S. Korea

Monday, January 22nd, 2007

Yonhap
1/22/2007

China has issued a permit to allow its citizens to take a tour of the North Korean Mount Geumgang, via South Korea, tourism officials said Monday.

Hyundai Asan Corp., the operator of the tourism business at the scenic mountain, signed an exclusive contract with a travel agency affiliated with China’s communist youth organ, they said.

Posted in China, Mt. Kumgang Tourist Special Zone, South Korea, Tourism | Comments Closed

North Korean Economy Watch