North Korean Economy Watch

Korea Times
Park Hyong-ki
3/7/2007

The outlook for inter-Korean trade this year seems bright, as North Korea agreed to dismantle its nuclear weapons programs at the six-party talks in Beijing last month.

According to a survey conducted by the Korea International Trade Association (KITA), about 45 percent of South Korean companies doing business with North Korea were optimistic that the volume of inter-Korean trade will grow this year. The survey was conducted on 150 firms in February.

Some 35 percent believe that the bilateral trade will remain the same as last year’s, while only 15 percent showed negative responses toward this year’s trade, saying that the volume will “drastically” decrease.

Only two companies said they will pull out of North Korea this year, while five companies were undecided.

Last year, inter-Korean trade amounted to about $1.3 billion, up 28 percent from 2005. Key trading commodities were agricultural, chemical and textile products.

Despite North Korea’s nuclear and missile tests as well as chilly inter-Korean relations last year, South Korean companies operating in the Kaesong Industrial Complex saw their sales grow 69 percent to $298 million.

The Kaesong site is one of the major cross-border projects symbolizing economic ties between the two Koreas, which utilize North Korea’s cheap labor and South Korea’s technological skills.

The Ministry of Unification is hoping to attract about 2,000 manufacturers to Kaesong by 2012. Currently, there are 55 South Korean firms operating in the joint economic zone, which account for 22 percent of overall South-North business, according to the trade association.

The other joint business _ the Mt. Kumgang tour managed by Hyundai Asan _ suffered from the aftermath of North Korea’s nuclear weapon test. The tourism project recorded only $57 million in sales, down 35 percent from the year before.

Specifically, a total of 477 South Korean companies participated in inter-Korean trade last year, down from 523 firms in 2005, due to heightened risks following Pyongyang’s nuclear test.

About 44 percent of those surveyed said that the test had negatively affected their business with the North. The report showed that only 39 percent reaped a “little” profit last year while doing business with North Korea.

Half of firms upbeat for North trade
Joong Ang Daily
3/8/2007

Almost half of South Korean companies doing business with North Korea said they have a bright outlook for inter-Korean trade this year due to expectations for better ties with the North, a poll said yesterday.

According to a survey of 67 companies conducted by the Korea International Trade Association, 45 percent of the respondents said inter-Korean trade will likely increase this year. Thirty-five percent expected trade to remain at the same level as last year while 15 percent said it will likely decline.

The poll also said 75 percent of local companies operating in the industrial park in the North’s border city of Kaesong had an optimistic outlook for trade. The industrial complex, mainly for smaller South Korean firms, is considered a model for reconciliation and cooperation between the two Koreas. Currently, 21 garment and other labor-intensive South Korean plants are operating there, employing about 11,000 low-paid North Korean workers.

The survey said among the firms that forecast inter-Korean trade to rise, 17 percent said their continued trust in North Korean firms was the reason for their upbeat outlook, while 16 percent and 14 percent said it was a rise in new orders and expectations for inter-Korean reconciliation. The survey was conducted before a deal on dismantling North Korea’s nuclear program was reached, reflecting that local firms have maintained a positive view toward inter-Korean trade. The agreement calls for Pyongyang to shut down and disable its main nuclear reactor and dismantle its atomic weapons program.

Daily NK
Kim Min Se
3/5/2007

North Korea customs at Shinuiju is under strict control by Central Committee of North Korea Workers Party.

An inside source from Shinuiju said on the 4th, “Authorities are currently undergoing investigations at Shinuiju customs, looking for tax evasions and illicit acts. The parties subject to these crimes include customs officers at Shinuiju customs and merchants engaging in North Korea-China trade.”

The source added that the investigations had virtually terminated North Korea-China trade between Shinuju and Dandong.

Shinuiju customs is critically important for North Korea as 80% of food and daily necessary goods between North Korea and China are imported and exported from here.

According to Kim Young Hee (pseudonym), a North Korea-China tradeswoman in Shinuiju, “Trade merchants have given up on trade and are in a state of panic because of authorities making investigations at Shinuiju.”

Kim said “At times like this, keeping is a low profile is the way to survive” and expressed her concern, “They have made orders to arrest at least 10 people. Who knows, anyone could be unlucky and caught.” She said “Like there is any trade merchant who does not engage in some sort of illegal act” and retorted “Simply obtaining a permit from authorities is generating money.”

“Prior to authority investigations, on average 50~100 cars would pass through Shinuiju-Dandong, per day. Now the figures have drastically reduced with only 5~10 cars passing through” she said.

Kim continued “There is not an article that falls through the cracks of authority officers. All goods approved by customs, whether it be minerals to seafood is confirmed by authorities… All things are left up to the hands of authority officials.”

On the other hand, the source also informed that despite recent investigations placing trade between North Korea and China in a state of lull, apparently counteracting effects such as dramatic rises in Shinuiju markets have not yet occurred.

Kim Jong Il’s Word
A U.N. agency yanks its cash and people from North Korea.
Wall Street Journal (Hat Tip One Free Korea)
3/5/2007

North Korean officials arrived in New York over the weekend for discussions on normalizing relations with the U.S. as part of the nuclear disarmament accord struck last month. Chief U.S. negotiator Christopher Hill is scheduled to meet today and tomorrow with his counterpart, Vice Foreign Minister Kim Kye Gwan.

May we suggest that, before he sits down, Mr. Hill take a look at the brief statement issued quietly Thursday by the United Nations Development Program (UNDP). There is no better guide to Kim Jong Il’s negotiating style, nor to the North Korean dictator’s habit of breaking his word. Nuclear negotiators, beware.

The agency announced, in an item on its Web site, that it is suspending all operations in North Korea because the “necessary conditions set out by the Executive Board on 25 January 2007 have not been met.” The UNDP’s 20 or so projects will be shut down, we’re told, and its eight international staffers will be pulled out of the country. The U.N. isn’t known for its tough love, and no one we’ve talked to can recall another example of the UNDP suspending operations in a country that refused to comply with the regulations.

The “necessary conditions” were imposed at the last board meeting in response to an outcry over the UNDP’s lack of oversight over its programs in North Korea. U.N. documents, produced reluctantly after prodding by the U.S. mission to the U.N., showed numerous irregularities dating back into the late 1990s. Tens of millions of dollars for programs that were supposed to help the poor appear instead to have been handed over to Kim’s dictatorship.

As the March 1 deadline for compliance approached, North Korea decided to throw a tantrum to see if it could get excused from its obligations. It deemed the conditions politically motivated–especially the one that limits aid to programs that directly help the people and bans assistance that could aid the government–and demanded a renegotiation.

Never mind that North Korea sits on the Executive Board and had agreed to abide by the terms thrashed out in January. To its credit, the UNDP refused to be bullied into extending the deadline and is holding Pyongyang to its commitments. The suspension applies to all existing projects; the board had already suspended new projects until an audit could be completed and better oversight provided.

The U.N. has another deadline fast approaching in North Korea. At the end of January, Secretary General Ban Ki Moon ordered a full investigation of all U.N. programs in North Korea, to be completed within three months. Those include Unicef, the World Food Program and the U.N. Population Fund. As the end-of-April deadline for that audit comes closer, it will be instructive to watch Pyongyang’s degree of cooperation.

Meanwhile, the talks on North Korea’s nuclear program are moving ahead, with the U.S., South Korea and Japan all holding bilateral meetings with Pyongyang this month toward the goal of normalizing relations. At the top of Japan’s agenda is the whereabouts of its citizens who were kidnapped by North Korean agents in the late 1970s and 1980s and forced to train North Korean spies. Negotiations with Pyongyang have so far yielded the return of only five abductees along with preposterous explanations for how the rest have supposedly died.

The preference in some diplomatic circles, including the U.S. State Department and perhaps now in the White House, is to dismiss the U.N. corruption in North Korea as well as the abductee and other human-rights violations as side-issues to the more vital objective of getting Kim to give up his nuclear program.

We’d argue that international focus on these issues is an essential part of keeping up the pressure on Kim’s regime. But even if you buy the argument that these are ancillary issues, there’s still an important lesson here: If Kim won’t abide by the pledges he made regarding UNDP aid to his country, how can he be expected to keep his promises on nuclear disarmament?

Former U.S. Ambassador to the U.N. John Bolton lays out the troubling case of changing American intelligence judgments toward North Korea in The Wall Street Journal today (article available here). His point about the need for an intrusive inspection and verification regime is especially important. Under the six-party agreement announced on February 13, North Korea has 60 days to account for all of its nuclear programs. If it doesn’t, or if Kim attempts to renegotiate the terms at the last minute, we’d like to think the U.S. would show at least as much fortitude as the United Nations, and tell Kim to take a hike.

Ruediger Frank
Asian Perspective, Vol. 30, No.3, 2006 pp. 536

PDF Here: DPRK sanctions.pdf

Abstract:
This article explores sanctions as a policy tool to coerce North Korea’s behavior, such as by discontinuing its nuclear weapons program. It discusses the characteristics of sanctions as well as the practical experience with these restrictions on North Korea. It becomes clear that the concrete goals of coercion through sanctions and the relative power of the sending country to a large extent determine the outcome. Nevertheless, the general limitations of sanctions also apply, including the detrimental effects of unilateral and prolonged restrictions. It appears that the imposition of sanctions against the DPRK is unlikely to succeed. As an alternative way of changing the operating environment for North Korea, assistance deserves consideration. Despite many weaknesses, this instrument is relatively low in cost and risk, and can be applied continuously and flexibly.

Highlights below the fold:
(more…)

washington Post
3/3/2007

South Korea on Friday added pressure on North Korea to comply with an international disarmament agreement, refusing the impoverished nation’s demand to restore full aid shipments until after its main nuclear reactor is shut down.

At the first high-level talks between the two Koreas since the North’s underground nuclear test in October, the communist nation “agreed to make joint efforts for a smooth implementation” of its pledge last month to take initial steps toward dismantling its atomic program, according to a final statement.

The North and South also agreed to resume family reunions of relatives split by their border and planned test runs of railway lines between the countries.

North Korea and the International Atomic Energy Agency have agreed on March 13 as the starting date for a two-day visit by the agency’s chief, Mohamed ElBaradei, U.N. officials said Friday. The officials asked for anonymity because they were not authorized to reveal specifics of the trip, which is expected to help alleviate some misgivings that the unpredictable regime might renege on its agreement to shut down its nuclear facilities.

This week’s meetings in Pyongyang were part of the historic reconciliation launched between the Koreas since their leaders met in their first and only summit in 2000. The countries remain technically at war because the cease-fire that ended the 1950-53 Korean War has never been replaced by a peace treaty.

But attempts to bring the countries together have been complicated since 2002, when Washington accused North Korea of secret uranium enrichment efforts that the Bush administration said violated an earlier disarmament deal.

The situation deteriorated further last July when North Korea test-launched a series of missiles, prompting South Korea, one of the North’s main sources of aid such as rice and fertilizer, to put the shipments on hold.

Relations worsened after North Korea’s Oct. 9 nuclear test. But a breakthrough came last month after a revival of six-nation nuclear negotiations — including China, Japan, Russia, the United States and the two Koreas — in which the North pledged to make moves toward abandoning its nuclear program.

Two Koreas agree on fertilizer aid, reunions
Joong Ang Daily
Ser Myo-ja
3/3/2007

A May reunion of some family members separated since the Korean War and the resumption of fertilizer aid to North Korea are among the agreements the two Koreas announced yesterday in Pyongyang.

Video conference calls will take place March 27 to 29, and the face-to-face reunions will happen in early May at the Mount Kumgang resort in North Korea, according to Unification Minister Lee Jae-joung and his North Korean counterpart, Kwon Ho-ung.

The two released a joint statement yesterday wrapping up their four-day meeting. The reunions will be the 15th held; the last round took place in June of last year.

In the talks, which had been stalled since North Korea tested a missile in July, the two Koreas also agreed to quickly resume a project to build a permanent reunion center. Working-level Red Cross officials from both countries will meet Friday at Mount Kumgang to discuss it.

More Red Cross talks are scheduled April 10 to 12 at the same venue to address issues associated with “those who have gone missing since the Korean War.” The term refers to the South Korean war prisoners and kidnap victims still alive in the North.

Although there was no specific mention of rice and fertilizer aid in the statement, Mr. Lee said Seoul will provide them as it has done in the past. Speaking to journalists after wrapping up the talks, Mr. Lee said, “The North will fax its request for fertilizer aid, and the South will provide it accordingly.” He added that “spring is coming fast, so we probably need to hurry.” Seoul has been providing an average of 150,000 tons of fertilizer, used in spring farming, per year. It will provide 300,000 tons this time.

According to the pool report from North Korea, Mr. Lee also said “the matter about rice will be discussed at the economic talks in April and an official decision will be made there.”

The two ministers agreed to expand economic cooperation ― including finalizing of 400,000 tons of rice aid ― during economic talks April 18 to 21 in Pyongyang.

“Since we agreed to meet in Pyongyang in April for economic talks, we will be able to discuss rice aid, taking into account how far the North implemented the Feb. 13 nuclear agreement,” a South Korean official said on the condition of anonymity.

He was referring to the agreement reached last month at the six-nation nuclear talks, in which Pyongyang promised to shut down its main nuclear facility within 60 days in return for aid and economic assistance from other countries.

The two Koreas also agreed to conduct test-runs of inter-Korean railroads before the end of June, as soon as both sides’ military arms are comfortable with the safety measures in place. On March 14 and 15, economic committee representatives will meet in Kaesong to address the plan. The military guarantee is the key for the trains to cross the demilitarized zone between the two Koreas.

Mr. Lee and Mr. Kwon agreed the next round of ministerial meetings will take place in Seoul for four days starting May 29.

Associated Press (Hat tip DPRK Studies)
3/3/2007

Three North Koreans ended a rare and discrete visit to Oregon this week after visiting Oregon State university scientists, orcharists in the Hood River area, the Nike campus, Gov. Ted Kulongoski and attending a Trail Blazers basketball game.

Because of sensitive six-way talks on North Korea’s nuclear program, Mercy Corps, which hosted the visit, declined to release the officials’ names.

Portland-based Mercy Corps is among a handful of humanitarian agencies running programs involving North Korea, which has no diplomatic relations with the United States.

Over 12 years, Mercy Corps has supplied fish and fruit trees for farm projects in North Korea, which has chronic food shortages.

The North Koreans, representing Mercy Corps’ main partner organization, the Korean American Private Exchange Society, arrived Tuesday and were to leave Saturday.

Mercy Corps President Nancy Lindborg said the three visited OSU, which has made scientists available to advise on the agricultural projects. On the way back they met with Kulongoski. They visited orchards in the Hood River area Friday.

At Nike headquarters near Beaverton, they met with managers who gave a presentation on e-commerce, an Internet activity with undetermined relevance in a socialist nation with limited Web penetration.

“I don’t have a specific point of view to share on their visit and the possible opportunities North Korea may present,” said Bob Applegate, a Nike spokesman.

The visit was perhaps the 10th in a series of low-profile North Korean delegations here over the years, Lindborg said. In North Korea, she said, “Oregon is very well-known.”

At the Rose Garden on Thursday the visitors watched the Trail Blazers dismantle Charlotte.

“They’re fans,” said Lindborg, who also attended the game. “Two of them actually play basketball.”

Daly NK
Kim Young Jin
3/1/2007

Chairwoman for Hoiryeong City’s North Korean Democratic Women’s Union, Suh Kyung Hee’s husband “K” has been dealing with drugs since the moment he managed his company, Maebong Company. However, as central authorities began to centralize businesses since last year, the company closed its doors and “K” adopted his driver “L” as drug runner and his daughter as the treasurer in charge of distributing illicit drugs to smugglers at wholesale costs to districts such as Musan, Hoiryeong and Onsung.

According to a source in Hoiryeong, K and his driver L had been in confrontation with one another since January. In the past K had procured his drugs from Chongjin and moved them to a base in Hoiryeong. Then, the drugs would be either sold to border smugglers or sold to Chinese tradesmen.

Here is where the conflict surfaced. While, L was in charge of delivering the drugs from Chongjin to Hoiryeong, K became suspicious that L was secretly hoarding the drugs elsewhere. Hence, K conducted an investigation trailing L’s steps at which a disagreement arose.

In early Feb, L voluntarily went to North Hamkyung Security Agency in Chongjin and exposed that Chairwoman Suh’s family had been disclosing in drug dealings. The motive behind L indicting Chairwoman Suh’s family is still unknown.

Some argue that the reason L went straight to the district security office and not the city office in Hoiryeong was because of Chairwoman Suh’s hierarchical position in Hoiryeong city. If L had carelessly reported this case to the city office, it is possible that L would have simply lost his self-dignity.

At present, it seems that rumors about this case are spreading rapidly across Hoiryeong creating unsettling feelings in the city.

People of Hoiryeong city are muttering “High officials must also be shown the seriousness of law,” criticizing Chairwoman Suh’s family for concealing such large amounts of dollars and yuan also Chairwoman Suh, who as the leader of the Women’s Union would advocate severe punishment for female defectors.

100g of North Korean drugs sell for 12,000 yuan

North Korean citizen Park Jong Shim (pseudonym, Sanup-dong, Hoiryeong) who lives in the same suburb as Chairwoman Suh, said in a telephone conversation with a reporter on the 26th “The whole city is raucous because of Chairwoman Suh’s story” and informed “Some people say that the power of law will be enforced properly this time as the district security agency has been involved. On the other hand, some question whether or not those people with so much money and power will be punished according to law, despite the district office being involved.”

Hoiryeong citizen Kang Eun Soon (pseudonym) who defected to China in January said “If I think about the times when Chairwoman Suh would go around making a racket, my teeth rattle.” Like second nature, Chairwoman Suh would prowl around advocating, “With the slightest nudge, Hoiryeong women jump to China, not only defiling their bodies but dishonoring the land where mother Kim Jong Sook (Kim Jong Il’s mother) was born.”

Kang said “Usually, Suh would conduct political meetings through her Women’s Union and argue that the reason there was so many public trials for border crossers and illegal acts in Hoiryeong was due to the fact that women could not look after their family. She would say that Hoiryeong women were obsessed over money and would go to any lengths to get this becoming shallow-minded people.”

“Even if a verdict was made stating that Chairwoman Suh was not linked to the drug dealings, she would still not be able to maintain her position because of all the things she has said in the past,” Kang added.

The drug known as “ice” made in North Korea is sold to Korea, Japan and even Macau through the intermediary of China. The drug “ice” as known to defectors, originated from the Heung Nam Pharmaceutical Company.

Though the going rate for “ice” differs according to quality, 100g of high-quality ice is 12,000 yuan, 9,000~10,000 yuan for standard and 7,000 yuan for low-quality ice.

In accordance with North Korea’s legislation Article 218 amended in April 2004, any person found producing or trading drugs is sentenced to a maximum of 5 years time at the Labor Education Camp. If this act has been repeated on numerous occasions or the drug dealings were large scale, a person could be sentenced to 5~10 years at the Labor Education Camp. If the conditions are even more severe, the law clearly states that a person could then be sentenced to more than 10 years time at the Labor Education Camp or sent to the Labor Education Camp for life.

Yonhap
3/1/2007

South Korea’s five-member negotiating team to the ongoing ministerial talks on Thursday paid a courtesy call on Kim Yong-nam, the North’s ceremonial head of state, as the talks went into a third day in Pyongyang.

Lee Jae-joung, South Korea’s point man on North Korea, became the third unification minister to meet Kim, president of the Presidium of the Supreme People’s Assembly, and Lee is to hold a press briefing to explain what they discussed later Thursday, pool reports said. The meeting was hurriedly arranged at the request of the South on Thursday morning.

At the Mansudae Assembly Hall, the North’s No. 2 leader received the South Korean delegation, which consists of Lee, Vice Finance Minister Chin Dong-soo, Vice Culture Minister Park Yang-woo, Lee Kwan-se, the assistant unification minister, and Yoo Hyung-ho, a senior official of the National Intelligence Service.

The meeting came as officials from the divided Koreas were engaged in negotiations on how to resume aid and family reunion events and other topics at their first high-level talks in seven months.

They had lunch together at the renovated Okryukwan, a North Korean restaurant famous for its cold noodle soup. After their one-hour meeting with the North’s titular head of state, the South Korean delegation will visit the North’s national orchestra, the reports said.

Earlier in the day, the South Koreans held a simple 10-minute ceremony to mark the 88th anniversary of the March 1 Independence Movement at the Koryo Hotel. As a gesture of goodwill, the North provided a birthday breakfast for Lee, who turned 63 on Thursday.

The two sides had no official schedule for negotiations for the day, but top negotiators and working-level officials held talks to discuss the topics proposed during a plenary session on Wednesday.

The South gave top priority to resuming face-to-face family reunion events in April and construction of a family reunion center at the Mount Geumgang resort as soon as possible, while the North called for holding economic talks this month and pressed for the South’s resumption of rice and fertilizer aid, the reports said.

“The North raised the issue of humanitarian aid during working-level officials’ meeting on Wednesday. But no direct mention on rice and fertilizer aid was made in a draft joint statement,” a South Korean official said, asking to remain anonymous.

North Korea has proposed to resume inter-Korean humanitarian projects on a full scale immediately, and also offered to hold a meeting to discuss ways of boosting economic ties sometime in March in Pyongyang.

The details for reopening reunion events for families separated by the border are likely to be worked out easily, but Seoul’s rice aid to North Korea might surface as a bone of contention, according to analysts. South Korea also holds the position it prefers to hold the the economic talks in April.

The South hopes to reopen the economic talks next month so as to use rice aid as leverage to make the North take quick steps in complying with a recent agreement over its nuclear disarmament in return for energy aid.

“Unlike previous ministerial talks, these involve the dual tracks of inter-Korean relations and the six-party talks, so difficult negotiations are ahead,” a top South Korean unification ministry official said, asking to remain anonymous because of the sensitivity of the issue.

Kwon Ho-ung, the North’s top negotiator, avoided specifics about humanitarian projects in his keynote speech, but analysts said that the North hopes to link the resumption of emotional family reunions with Seoul’s food and fertilizer assistance to Pyongyang.

Shortly after the North conducted its missile tests in July, the South suspended food and fertilizer aid. After the North’s nuclear weapon test in October, the possible resumption of aid was blocked.

In retaliation, the communist nation immediately suspended inter-Korean talks and reunions for families separated by the sealed border since the end of the 1950-53 Korean War.

Seoul may offer to ship some of the fertilizer aid to Pyongyang shortly after the talks so that it can be used for rice seedling planting this spring. But the South maintains the position that more fertilizer and rice will be given in accordance with how much progress the North makes in implementing the steps agreed upon during the six-nation talks on its nuclear dismantlement, according to sources.

Not only a date for the resumption of economic talks with Pyongyang as the venue, they will also have to agree on how to cooperate in inter-Korean projects, such as reopening cross-border railways, they said.

The South’s chief negotiator has proposed test runs of reconnected cross-border railways in the first half of this year, and the launch of operations by the end of 2007, according to pool reports.

As a precondition for the operation of cross-border railways, Lee said it is necessary to make headway in the inter-Korea economic project, which involves exchanging raw materials from the South for the North’s minerals.

North Korea abruptly called off scheduled test runs of cross-border railways in May under apparent pressure from the hard-line military. It also led to mothballing an economic accord under which South Korea was supposed to provide raw materials in exchange for the North’s minerals. North Korea’s subsequent missile and nuclear weapons tests further clouded hopes of implementing the accord.

The tracks, one line cutting across the western section of the border and the other crossing through the eastern side, have been completed and were set to undergo test runs. A set of parallel roads have been in use since 2005 for South Koreans traveling to the North.

South Korea has repeatedly called on North Korea to provide a security guarantee for the operation of cross-border railways, but the North has yet to give an answer on the issue.

The reconnection of the severed train lines was one of the tangible inter-Korean rapprochement projects agreed upon following the historic summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

In 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 mines were developed with South Korean investments, guaranteed by the Pyongyang government.

The talks, the 20th since the leaders of the two Koreas held their first-ever summit in Pyongyang in June 2000, come as the world is paying keen attention to whether North Korea will honor its promise to take the first steps toward ending its nuclear weapons program in return for energy aid.

The ministerial talks, the highest-level channel of regular dialogue between the two Koreas, had been suspended amid tension over North Korea’s missile tests in July and its nuclear weapon test in October.

On Feb. 13, North Korea agreed to shut down its nuclear facilities and eventually dismantle them in exchange for energy aid and other benefits, while the U.S. agreed to discuss normalizing relations with the communist nation. Only two days later, Seoul and Pyongyang agreed to resume ministerial dialogue after a seven-month hiatus.

In the deal, North Korea will receive initial aid equal to 50,000 tons of heavy fuel oil for shutting down and sealing its main nuclear reactor and related facilities at Yongbyon, 80 kilometers north of Pyongyang, within 60 days. International Atomic Energy Agency inspectors will determine whether the North carries out the steps properly.

North Korea can eventually receive another 950,000 tons in aid if it disables the reactor irreversibly and declares that it has ended all nuclear programs. The cost of the aid will be equitably distributed among South Korea, the U.S., China, Japan and Russia, according to officials.

Yonhap
2/28/2007

North Korea has proposed to resume inter-Korean humanitarian projects on a full scale immediately as the two Koreas held the first ministerial meeting in seven months, South Korean officials said Wednesday.

North Korea also offered to hold a meeting to discuss ways of boosting economic ties as soon as possible during a plenary session of the meeting held in the North’s capital Pyongyang, according to the officials.

“We have yet to determine the scope of full-scale resumption of humanitarian projects. The details will emerge from working-level, high-level negotiations,” said Lee Kwan-se, spokesman for the South’s five-member negotiating team.

Lee stressed the two sides did not discuss the resumption of Seoul’s food and fertilizer aid to North Korea during the two-hour session but sounded a note of optimism over the upcoming negotiations. “We think that the North’s offer expresses its firm will to resume humanitarian projects.”

In a keynote speech, Kwon Ho-ung, the North’s top negotiator, proposed to resume humanitarian projects on a full scale immediately when the four-day ministerial talks end and resume a meeting for economic cooperation at the earliest possible time in Pyongyang.

Kwon did not specify about humanitarian projects in his keynote speech, but analysts said that the North hopes to link the resumption of emotional family reunion events with Seoul’s food and fertilizer aid to Pyongyang.

Unification Minister Lee Jae-joung, Seoul’s top negotiator, proposed to conduct test runs of reconnected cross-border railways in the first half of this year and launch operations by the end of 2007, according to pool reports.

As a precondition for the operation of cross-border railways, Lee said it is necessary to make headway in the inter-Korea economic project such as exchanging raw materials from the South for the North’s minerals.

Lee also expressed regrets over the North’s missile and nuclear weapons tests, which he said led to the earlier-than-scheduled end of the last ministerial meeting and a seven-month hiatus in inter-Korean dialogue.

In this vein, he urged the North to fulfill the promise to dismantle its nuclear weapons program in return for energy aid in a “quick and smooth” manner, saying all the parties concerned are equitably responsible for taking action to achieve denuclearization of the Korean Peninsula on the basis of the principle of “action for action.”

Lee said the construction of a family reunion center at the Mount Geumgang resort should resume immediately and proposed that face-to-face family reunions be held no later than April. The construction has been suspended since the North conducted missile tests in July.

He also proposed to hold the cabinet-level meeting every quarter of the year regardless of the political situation, adding that the two sides should have to make efforts to resolve the issue of South Korean prisoners of war (POWs) and abductees held in the North.

During the meeting, North Korea is widely expected to ask for the immediate resumption of the South’s rice and fertilizer aid, while the South hopes to use it as leverage to make the North take quick steps in complying with the six-party agreement.

In the afternoon, the South Korean delegation is to visit the Kim Won-kyun Pyongyang Music College. North Korea chose the school in the district of Munsu near the Taedong River, defying concern that it may attempt to stage a visit to a politically sensitive place.

On Tuesday, negotiators from both sides attended a gala dinner hosted by North Korean Prime Minister Pak Pong-ju, shortly after the South’s delegation arrived in North Korea.

The talks, the 20th since the leaders of the two Koreas held their first-ever summit in Pyongyang in June 2000, come as the world is paying keen attention to whether North Korea will honor its promise to take the first steps toward ending its nuclear weapons program in return for energy aid.

The ministerial talks, the highest-level channel of regular dialogue between the two Koreas, had been suspended amid tension over North Korea’s missile tests in July and its nuclear weapon test in October.

On Feb. 15, Seoul and Pyongyang agreed to resume ministerial dialogue after a seven-month hiatus, just two days after the North pledged to take action to end its nuclear weapons program in return for economic and diplomatic benefits from South Korea, the United States, China, Japan and Russia.

Shortly after the North conducted missile tests in July, the South suspended food and fertilizer aid. After the North’s nuclear weapon test in October, the possible resumption of aid was blocked.

In retaliation, the communist nation immediately suspended inter-Korean talks and reunions for families separated by the sealed border since the end of the 1950-53 Korean War.

Seoul is expected to ship some of the fertilizer aid to Pyongyang shortly after the Cabinet-level talks so that it can be used for the planting of rice seedlings this spring. The rest will likely be offered according to how much progress the North makes in implementing the steps agreed upon during the six-nation talks on the North’s nuclear dismantlement, according to sources.

“Our aid to North Korea will be within the scope of the amount that can be understood by the public,” a government official said, asking to remain anonymous because of the sensitivity of the issue, suggesting the aid will not exceed 500,000 tons of rice and 350,000 tons of fertilizer this year, the amount given in previous years.

In April, the South offered more economic aid to the North in exchange for finding a resolution to the POW and abductee issue, but the North was reluctant to deal with the humanitarian issue.

Official Seoul government data shows that 485 South Koreans have been abducted to North Korea since the Korean War ended, and that 548 South Korean soldiers were taken prisoner by the North during the three-year conflict.

North Korea abruptly canceled test runs of cross-border railways in May under apparent pressure from the hard-line military. It also led to mothballing an economic accord under which South Korea was supposed to provide raw materails in exchange for the North’s minerals. North Korea’s subsequent missile and nuclear weapons tests further clouded hopes of implementing the accord.

The tracks, one line cutting across the western section of the border and the other crossing through the eastern side, have been completed and were set to undergo test runs. A set of parallel roads have been in use since 2005 for South Koreans traveling to the North. NKeconWatch: (Click here to download the North Korean Railway system onto Google Earth)

South Korea has repeatedly called on North Korea to provide a security guarantee for the operation of cross-border railways, but the North has yet to give an answer on the issue.

The reconnection of the severed train lines was one of the tangible inter-Korean rapprochement projects agreed upon following the historic summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

In 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 were developed with South Korean investments, guaranteed by the Pyongyang government.

On Feb. 13, North Korea agreed to shut down its nuclear facilities and eventually dismantle them in exchange for energy aid and other benefits. The U.S. also agreed to discuss normalizing relations with the communist nation.

In the deal, North Korea will receive initial aid equal to 50,000 tons of heavy fuel oil for shutting down and sealing its main nuclear reactor and related facilities at Yongbyon, 80 kilometers north of Pyongyang, within 60 days. International Atomic Energy Agency inspectors will determine whether the North carries out the steps properly.

North Korea can eventually receive another 950,000 tons in aid if it disables the reactor irreversibly and declares that it has ended all nuclear programs. The cost of the aid will be equitably distributed among the five other countries.

N. Korea Wants More Aid
Korea Times
Lee Jin-woo
2/28/2007

North Korea on Wednesday urged South Korea to resume inter-Korean humanitarian aid immediately.

On the second day of the inter-Korean Cabinet talks, which resumed after a seven-month hiatus, Kwon Ho-ung, chief Cabinet councillor of the North, also proposed that the two Koreas hold a meeting to discuss economic cooperation in its capital at an early date. The two Koreas discussed the details of aid shipments, especially rice and fertilizer, during the economic cooperation meeting.

Seoul seemed somewhat reluctant to accept Pyongyang’s requests before the Stalinist state shows that it will keep its promise to take the first steps to shut down and seal its primary nuclear reactor and resume the reunion of separated families.

Unification Minister Lee Jae-joung said in a keynote speech that the North should fulfill its promise to dismantle its nuclear weapons program in return for energy aid, which was agreed upon in the six-party talks in Beijing on Feb. 13.

Lee also suggested that the construction of a family reunion center at Mount Kumgang in North Korea be resumed immediately and that family reunions resume no later than April.

Last July, Pyongyang notified Seoul that it would stop constructing the reunion center, which was scheduled to be completed this year. The North also suspended inter-Korean family reunions scheduled for Aug. 15 last year.

The North abstained from specifying whether its request for humanitarian aid meant the shipment of rice and fertilizer from Seoul to Pyongyang.

During the four-day talks here, Seoul is expected to offer the shipment of some 500,000 tons of rice and 350,000 tons of fertilizer to Pyongyang.

The North, however, wants the South to include an additional 500,000 tons of rice and 100,000 tons of fertilizer, shipments that were postponed after the North’s test-firing of seven missiles on July 5, sources said.

“We’re doing the best we can. It remains to be seen what kind of results we can produce until the two Koreas release a joint press release on Friday,’’ Lee was quoted as saying after the meeting.

Later in the day, the South Korean delegation visited the Kim Won-kyun Pyongyang Music College. North Korea chose the college near the Taedong River for the visit, defying predictions that it would attempt to arrange a visit to a politically sensitive venue such as national cemeteries where North Koreans who sacrificed themselves during or after the 1950-53 Korean War were buried.

The ministerial talks, the highest-level channel of regular dialogue between the two Koreas, were suspended amid tension over North Korea’s missile tests in July and its nuclear test in October.

On Feb. 13, North Korea agreed to shut down its nuclear facilities and eventually dismantle them in exchange for energy aid and other benefits. The United States also agreed to discuss normalizing relations with the communist nation.

North Korea is supposed to receive initial aid equal to 50,000 tons of heavy fuel oil for shutting down and sealing its main nuclear reactor and related facilities at Yongbyon, 80 kilometers north of Pyongyang, within 60 days. International Atomic Energy Agency inspectors will determine whether the North carries out the steps properly.

North Korea can eventually receive the remaining 950,000 tons in aid if it disables the reactor irreversibly and declares that it has ended all nuclear programs.

Korea Times
Kim Yon-se
2/26/2007

Hyundai Asan is considering building three golf courses in Kaesong, North Korea, by 2012 as its first round of development projects at the Kaesong Industrial Complex have almost been completed.

According to sources, the inter-Korean tourism operator of Hyundai Group is in talks with the North to build an 18-hole golf course in the North Korean city by 2010 and two more by 2012.

A Hyundai Group official said the proposed golf course would be the second of its kind. One golf course has already been developed near Mount Kumgang and is scheduled to open to South Korean tourists later this year.

In a statement, however, Hyundai Asan predicted that it will take some time before the plan is realized as the North’s stance has yet to decided.

The company said talks between the two countries for the second development project would be possible after the first project is completed.

North Korea has stirred controversy by negotiating with a small South Korean company, Unico, to build a golf course despite its initial contract with Hyundai Asan to develop golf courses around the Kaesong Industrial Complex.

Since last July, the North has banned South Korean visitors to the industrial complex from visiting the city’s downtown area including historic sites.

Hundreds of South Koreans, mostly businesspeople and government officials, had been allowed to make an excursion to the city of Kaesong during their visit to the industrial complex.

Hyundai had signed a memorandum of understanding (MOU) with Emerson Pacific Group, which has been constructing golf courses at the scenic resort area at Mount Kumgang, for the project in Kaesong.