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N. Korea, Switzerland try new bank program to help N.K.’s farmers

Monday, April 30th, 2007

Yonhap
4/30/2007

Years of efforts to cultivate North Korea’s mountainous farmland is beginning to yield results, and Swiss and Korean officials are testing a bank credit program for the farmers in the Asian country, a Swiss aid office said on Sunday.

North Korea is showing “many promising signs of changes in progress,” including the emergence of consumer markets that are now established as part of the country’s economic system, Adrian Schlapfer, assistant director-general of the Swiss Agency for Development and Cooperation (SDC), said on the agency’s Web site.

Schlapfer was comparing the current situation to that during his previous visit to Pyongyang four years ago.

“The farming land in which the starving people started to work back then is now recognized as providing scope for agricultural initiative,” he wrote.

“The SDC, together with North Korea’s Central Bank, is therefore in the process of testing a micro-credit program to encourage farmers to base their investment decisions on economic feasibility considerations — an innovation for North Korea,” he said.

But North Korea still suffers from food scarcity, and aid is still essential, he said.

The SDC, an agency of the Swiss Foreign Ministry, has maintained an office in Pyongyang since 1997, focusing on agricultural programs to improve food production and on supporting domestic reform. The Swiss government started providing humanitarian assistance to North Korea in 1995.

Schlapfer described North Korea as the most little-known and enigmatic partner of the SDC, and acknowledged there are constant doubts on whether Swiss engagement there will yield results.

“Are there any meaningful approaches for long-term development partnership in this country with its planned economy, backwardness and secretiveness? Given the context, is it at all possible to initiate change?” he asked.

Pyongyang is “not an easy partner,” he said. “The key values, priorities and methods of Switzerland’s development cooperation have to be repeatedly insisted upon.”

“However, the projects implemented over the past 12 years are encouraging,” Schlapfer added.

Posted in Agriculture, Banking, Central Bank, Finance, Switzerland | Comments Closed

S. Korea’s asset management company may take over BDA: sources

Friday, April 27th, 2007

Yonhap
4/27/2007

South Korea’s state debt-restructuring agency may take over Banco Delta Asia (BDA), which is now virtually facing bankruptcy over accusations of engaging in money laundering for North Korea, diplomatic sources here said Friday.

Last month, the U.S. Treasury Department ordered all U.S. banks and companies to sever ties with the BDA, putting the Macao-based lender at risk of closing its business as global banks and companies are reluctant to do financial transactions with it.

“It is difficult for the U.S. to lift the sanctions on the BDA….so an option to let South Korea’s state-run agency take over the lender is now being reviewed,” a diplomatic source said.

According to the source, a way for the Korea Asset Management Corp. (KAMCO) — which buys bad debts from financial companies and turns them around — to purchase bad loans from the BDA is being studied, thus preventing the lender from going bankrupt.

KAMCO has been seeking to make inroads into overseas countries by taking over bad debts from troubled financial institutions.

North Korean funds frozen at the BDA, estimated at US$25 million, have not been transferred to the communist state so far, holding up progress in a landmark agreement over the North’s denuclearization.

Pyongyang said it will not implement the first 60-day denuclearization measures unless the funds are transferred to another bank, so the North can confirm the free transfer of its funds in the international financial system, upon which the U.S. Treasury Department has a strong influence.

North Korea has said that it will take the first steps toward nuclear dismantlement as soon as it confirms the release of its funds, which have been frozen at Banco Delta Asia since September 2005.

Under the Feb. 13 agreement, North Korea pledged to shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, North Korea would receive aid equal to 50,000 tons of heavy fuel oil from South Korea.

Posted in Banking, Finance | Comments Closed

32 Out of 52 BDA Account Holders Revealed

Friday, April 27th, 2007

Daily NK
Nangung Min
4/27/2007

While the transfer of BDA’s North Korea’s accounts continues to linger on, a defector once a high authority in North Korea, recently revealed the names of 32 account holders used in North Korea.

A list of 32 account holders (out of the 52 BDA North Korea accounts) were released on the internet site of “Chogaje.com” on the 26th, in which the defector claims to be well acquainted or have conducted direct transactions with while working in foreign trade in North Korea.

This list recorded financial ministries including the No. 39 Department for Kim Jong Il’s personal funds, the People’s Military Department, National Security Agency and Safety Agency.

If this list is proven to be true, at present the international trades of North Korea’s 4 key financial centers, the Party, the military, the administration and the security agency can be analyzed to be in a frozen state.

In addition to unveiling the list of account holders, the defector informed, “BDA is commonly known as ‘Delta Bank’ amongst the elites in North Korea” and certified, “The North Korean government used this bank to import luxury goods, gifts and undoubtedly nuclear armaments and weapons of mass destruction.”

Furthermore, the defector said that “22% of all North Korea’s transactions were conducted through BDA” and implicated that BDA played a vital role as Kim Jong Il’s personal funds.

The U.S. State Department recently accused BDA of engaging in counterfeit dollars and hence all U.S. transactions with BDA was terminated. Since, the U.S. suspended its transactions with BDA, any official bank has also been placed in a difficult position to transact with BDA.

For now, the Bank of China, Hong Kong’s HSBC and 27 other Macau banks are known to have suspended transacting funds with North Korea.

For the past 2 weeks, North Korea has refused money regarding the 52 accounts. Meanwhile, the U.S. and China are urging that either each of the 52 account holders send the money directly or a third party remits the whole amount and the frozen measures returns to normal. As a result, North Korea’s part in the preliminary implementations of the Feb 13 Agreement continues to be delayed also.

Posted in Banking, Counterfeiting, Finance | Comments Closed

Seoul bid to solve North bank row

Monday, April 23rd, 2007

BBC
4/23/2007

South Korea’s chief nuclear negotiator is travelling to the US to try to resolve a major stumbling block to North Korea’s nuclear disarmament.

Chun Yung-woo said he did not want to see a dispute over North Korean bank accounts scupper progress towards ending the North’s nuclear programme.

Washington has lifted a freeze on the North’s accounts, but Pyongyang appears to be unable to access the money.

On Sunday South Korea agreed to resume food aid shipments to the North.

Following five days of talks in Pyongyang, Seoul said it would begin delivering 400,000 tonnes of rice to its impoverished neighbour.

While no reference was made to the North’s nuclear programme in the final communique at the talks, Seoul has insisted the aid is linked to progress on disarmament.

Unification Minister Lee Jae-joung reiterated the South’s position on Monday, saying the aid was dependent on whether the North fulfilled its pledge to begin the process of dismantling its nuclear programme.

“The rice issue is not just a humanitarian issue, but a very symbolic and essential task for peace,” he told MBC radio.

‘Technical issues’

The North missed a mid-April deadline – agreed on 13 February between the two Koreas, Japan, China, Russia and the US – to “shut down and seal” its Yongbyon reactor in return for aid.

Pyongyang made clear it would only close the reactor if $25m (£13m) of its money frozen in the Macau-based bank Banco Delta Asia (BDA) was returned.

The US has said the accounts are now unfrozen, and insists it does not know why the North has left the funds untouched.

South Korea’s Chun Yung-woo said his talks with US counterpart Christopher Hill in Washington would focus on “technical issues” over the banking dispute.

“We cannot continue putting off the more important denuclearisation issue because of this BDA issue,” he said before leaving Seoul.

He said the North’s demands had “generally been identified”, but more time was needed to fully resolve the issue, Yonhap news agency reports.

“Let us wait and see for a little longer because the parties are working hard for the resolution,” he said.

The nuclear issue, as well as rice aid, was central to intense negotiations between the two Koreas, which went into an unscheduled fifth day on Sunday.

Seoul, a major food donor to its northern neighbour, suspended aid after Pyongyang’s missile tests in July 2006, which was followed by a nuclear test in October.

The BBC’s Charles Scanlon in Seoul says Pyongyang badly needs the aid, because stocks from last year’s harvest are running out.

The first rice shipments are due to begin arriving in the North in May.

Posted in Banking, Finance, Fiscal & monetary policy | Comments Closed

Macau Bank Dealt Gold for N Korea

Wednesday, April 18th, 2007

Associated Press
4/18/2007

Macau Bank at Center of Nuclear Talks Dealt Gold for North Korea

A small Macau bank accused of laundering money for North Korea also dealt gold for the reclusive country, with gold pieces flown in to the Chinese territory then carried to nearby Hong Kong and sold there, a news report said Wednesday.

Citing an audit report by the accounting firm Ernst & Young, the South China Morning Post said Banco Delta Asia’s ties to North Korea go back 30 years, and that besides accepting deposits, the bank also handled gold and silver sales for clients from the country worth $120 million.

The Post said six North Korean companies shipped gold pieces stamped with “Central Bank of North Korea” to Macau.

The gold was then moved to Banco Delta Asia’s Hong Kong subsidiary, Delta Asia Credit, by hand, then sold to a German trader, according to the Post.

Hong Kong is an hour by high-speed ferry from gambling enclave Macau.

The report says Banco Delta Asia’s North Korean business accounted for 22 percent its turnover during the 30 years, the Post reported.

The U.S. announced last month the bank would be blacklisted and blocked from doing business with American banks, a potentially crippling blow to most lenders.

The move came after American investigators accused the bank of helping North Korea launder money and handle counterfeit currency.

Macau’s Monetary Authority took control of the bank and froze about $25 million in North Korean funds. That enraged the North Koreans, who for more than a year boycotted the six-nation talks that aim to disarm the North’s nuclear program.

The bank has repeatedly denied knowingly helping in North Korea’s alleged illicit activities and said Monday it filed a challenge against the U.S. ruling.

It said it was a family-owned lender that lacked the sophisticated equipment and procedures to combat money laundering and counterfeiting.

Banco Delta Asia and Ernst & Young’s Macau office didn’t immediately respond to messages from The Associated Press.

Posted in Banking, Finance, Gold | Comments Closed

U.K. banker in Macau to transfer BDA funds

Tuesday, April 17th, 2007

Korea Herald
4/17/2007

London investor Colin McAskill yesterday said he would attempt to transfer $7 million from Macau’s Banco Delta Asia, which the U.S. Treasury has labeled a money launderer, to test if North Korean-linked accounts have access to the international financial system.

The money is part of some $25 million in Banco Delta accounts belonging to North Korean entities and individuals that Macau authorities froze in 2005 after the United States said the bank was laundering money for the communist state. The funds were unfrozen last week as a concession in talks with North Korea to end its nuclear weapons program.

McAskill, who has agreed to buy North Korea’s Daedong Credit Bank and advises a fund that seeks to invest in the country, said legitimate bank transfers of all the deposits are needed to demonstrate the U.S. Treasury is not shutting North Korea out of the international financial system. He declined to name the bank or country he would attempt to move the funds to.

“I am not sending a truck, or queuing outside in a trench coat with a battered old suitcase to bring the money out in cash, and neither should the DPRK,” McAskill said, using the initials for the Democratic People’s Republic of Korea, the formal name of North Korea. “The money should and has to be moved through the international banking system to verify both the efficacy and the integrity of the apparent concession by the United States.”

North Korea on Friday said it will only implement a Feb. 13 accord on ending its nuclear program once it confirms “valid” release of the entire $25 million. It missed an agreed upon deadline on April 14 to begin shutting down its nuclear facilities and allowing inspections by the United Nations’ atomic energy agency.

North Korea should “realize fully its commitments under the Feb. 13 agreement by inviting back the IAEA immediately” and sealing the Yongbyon nuclear reactor, U.S. State Department spokesman Sean McCormack said in a statement posted on the department’s website on Sunday.

Maria de Lurdes Costa, a lawyer and member of Banco Delta Asia’s administration committee, said yesterday that she did not know which if any North Korea-related depositors had been talking with the bank about withdrawing their funds. Even if she knew, “still I wouldn’t tell you,” she said, emphasizing the matters are confidential.

She declined to say if the bank had enough dollar reserves to disburse the full $25 million in U.S. currency. “I would not reply to any of those questions,” she said.

The administrative committee chair, Herculano Jorge de Sousa, received similar queries by fax, a secretary in his office said, but had not had time to respond. The Banking Supervision Department at Banco Delta Asia declined to comment.

The U.S. Treasury ruling that Banco Delta Asia is a “money-laundering concern” becomes final on Wednesday this week, raising the possibility international banks will not do business with the Macao institution. (Bloomberg)

Posted in Banking, Daedong Credit Bank, Finance | Comments Closed

N. Korea to focus on improving livelihoods this year

Thursday, April 12th, 2007

Yonhap
4/12/2007

Saddled with a severe food shortage problem, North Korea is poised to raise people’s standard of living this year by concentrating on agriculture and light industry.

In a session of its parliament held on Wednesday, North Korea said its major economic goal is “to improve the living standards of people on the basis of the existing foundations of agriculture and light industry.”

In a related move, the North replaced Prime Minister Pak Pong-ju, the control tower of its economy. It named Transport Minister Kim Yong-il as its new premier. Pak is believed to have been in conflict with senior North Korean officials over electricity supplies.

“Kim is in his early 60s, relatively young for North Korean cabinet members, and he has no prestigious political or educational background. He seems to be credited by his track record of economic expertise and achievement,” a senior Unification Ministry said, asking to remain anonymous.

The impoverished country has depended on international handouts to feed a large number of its 23 million people.

In a recent meeting with U.N. World Food Program officials, a North Korean vice agriculture minister acknowledged that the communist country has a shortfall of about 1 million tons of food and called for aid from the outside world.

“The cabinet will concentrate state efforts on agriculture this year, too, considering it as a mainstay, to thoroughly implement the WPK’s policy of agricultural revolution and make a signal advance in the efforts to settle the people’s problem of food,” Vice Premier Kwak Pom-gi said in a report to the delegates at the session. WPK is the acronym for the North’s ruling Workers’ Party of Korea.

To that end, North Korea plans to raise spending on agriculture by 8.5 percent and on light industry by 16.8 percent compared with last year.

North Korean leader Kim Jong-il also attended the meeting of the parliament, the Korean Central News Agency (KCNA) reported.

The North is officially headed by its titular leader Kim Yong-nam, the president of the Presidium of the Supreme People’s Assembly, the country’s parliament.

But Kim Jong-il rules the country with an iron grip. He is officially the chairman of the National Defense Commission and general secretary of the ruling Workers’ Party. He reserves the office of president for his late father as a way of showing filial piety.

The North also said it will kick off a drive to modernize major light industrial factories and reinforce the production of daily necessities, while state efforts will be channeled into the construction of houses in major cities, the KCNA said.

The North earmarked 40.8 percent of the total budget expenditure for the national economy this year, and in particular, spending on the development of science and technology will rise as much as 60.3 percent compared with last year.

Based on the report from the North’s parliament, South Korea’s Unification Ministry estimated the North’s 2007 budget at US$3.09 billion, up 5.9 percent from a year earlier.

Posted in Agriculture, Cabinet, Economic reform, Electricity, Energy, Finance, Fiscal & monetary policy, International Aid, Light Industry, Manufacturing, Political economy, Supreme Peoples Assembly | Comments Closed

40 Trillion Won Needed for North Korea Reform & Development

Wednesday, April 11th, 2007

Yonhap
Park Hyun Min
4/11/2007

An report estimated that it would cost North Korea 39.7 trillion won (approx. US$ 42.7 billions) during the first 14 years of reform and development.

A report released on the 9th by Managing Director Kim Won Bae and fellow associates of the Northeast Asian Regional Development Center for the Korea Research Institute for Human Settlements, analyzed the costs required by North Korea to commence essential reform based on agreements made to the resolution of North Korea’s nuclear issues.

On an optimistic premise that North Korea and foreign diplomatic relations normalize and that proactive reform and development policies are implemented, the report forecasted that the North Korean economy would rapidly grow similar to China and Vietnam. Contrastingly, if reform policies remained passive and the normalization of foreign relations delayed, the report predicted that the country would be unable to escape from the adverse state.

The report estimated that a minimum of 23.7 trillion won and maximum 39.7 trillion won would be needed for investments, if active reform were to take place. Retrospectively, if reform were to take a slow stance, then approximately 11.5~26.4 trillion won would be needed.

For every 1 trillion won North Korea invested in construction, the report claimed that it would gain approximately 2.7 trillion won. If South Korea were to invest 1 trillion won in North Korea, then the affect would be a little less with a profit of 2.5 trillion won.

Furthermore, if North Korea development was based on South-North cooperation, then South Korea would have the burden of supporting North Korea 319~698 billion won annually during the first phase (2007~2011), and then an additional 1.29~1.95 trillion won during the second phase (2012~2020).

If the international community became involved, South Korea would only need to support 336~515 billion won annually in the first phase and 651 billion won to 1.11 trillion won during the second.

The report also claimed that the direction of the development on the Korean Peninsula should be based on cooperation between South and North Korea with the possibility of transferring this support to neighboring countries.

Further, basic facilities managed by South-North Korea cooperation would be supervised into three industries and development around the border locations currently separating South and North Korea would be managed by North Korea. This would extend to raw materials and production also.

Mr. Kim who was in charge of the research project said, “Already, cooperation between the South and the North is accurately and effectively taking precedence over the North Korea issue within the international community” and added, “North Korea, the Korean Peninsula, nations interested in understanding North Korea and the international community must join to destroy North Korea’s nuclear development, support the North Korean economy and help solve its issues.”

Posted in Banking, Economic reform, Finance, Foreign direct investment | Comments Closed

Cash delivered to North for video reunions

Sunday, April 8th, 2007

Joong Ang Daily
Lee Young-jong and Ser Myo-ja
4/7/2007

South Korea hand-delivered $400,000 in cash to North Korea yesterday for Pyongyang’s purchase of video communication equipment. The North will spend the money to buy computers and display screens to reunite families separated for more than a half century by the demilitarized zones through video conference calls.

Two South Korean Red Cross officials boarded a cargo ship in Incheon for Nampo of North Korea Thursday morning. They carried a suitcase containing 40 bundles of one hundred, $100-dollar bills. The ship arrived in North Korea yesterday morning.

According to Red Cross officials, the cash was handed over to their North Korean counterparts at the port. “We told the North Koreans to inform us of the specific spending of the money,” an official was quoted as saying, adding that he received a receipt from the North Koreans for the cash.

The two Koreas’ Red Cross societies agreed last year that the South will fund the equipment for high-tech reunions and the promise was reaffirmed in March. South Korea was unable to provide equipment directly to the North because of U.S. regulations banning the export of dual-use goods to the North. Under the U.S. export administration regulations, strategic goods that include more than 10 percent of U.S.-made components or technology are banned for export to state sponsors of terrorism.

The money was from the inter-Korean cooperation fund. The Unification Ministry wired it to the South Korean Red Cross bank account and informed the Bank of Korea about taking the large sum of foreign currency out of the country. The money had to be hand-delivered because North Korea has had trouble accessing the international financial system since its funds were frozen at the Banco Delta Asia.

“It is sad that the North Koreans do not have a proper bank account that we can wire money to,” a Roh administration official said. “It shows the unfortunate reality of North Korea as an outsider of the international community.”

Posted in Banking, Civil society, Finance, International Aid, International/Korean Red Cross, Mt. Kumgang Tourist Special Zone | Comments Closed

Imperialists’ Crafty Method for Domination Blasted

Thursday, April 5th, 2007

KCNA
4/5/2007

A carrot approach being taken by the imperialists serves as a lever to carry out their appeasement strategy. This is a very crafty and wicked plot to create illusion about them by appeasing and deceiving their opponents in a bid to benumb their anti-imperialist spirit and completely disarm them ideologically and morally.

Rodong Sinmun Thursday observes this in a signed article.

It goes on:

The above-said approach may bring consequences as dangerous as open aggression by force of arms.

One should not interpret the above-said approach as a sort of change in the aggressive nature of the imperialists. The carrot approach of the imperialists which is bound to be accompanied by appeasement tactics and smiling diplomacy is designed to do harm to their opponents at a slow pace till they prove ineffective in face of their moves for domination and end up collapsing.

It is the aim sought by the imperialists in the above-said approach to create illusion about them and thus put other countries under the yoke of domination and subjugation and gratify their interests.

The imperialists, while acting an “apostle of peace” by abusing the wish of humankind for a peaceful free world, are craftily working to confuse the spirit of people and cause them to harbor illusion about imperialism.

They are intensifying economic domination and subjugation of other countries by such levers as “aid”, “cooperation” and “loan”.

This is eloquently proved by the reality of those countries which have been put under the yoke of political subjugation after receiving the “aid” and “loan” offered by the imperialists as a “kind gesture.”

There will be disastrous consequences for those countries which abandon their revolutionary principle and meet the imperialists’ demand, taken in by glossy words uttered by them as part of their appeasement policy. Worse still, their wrong behavior may lead to the loss of their sovereignty. All countries should, therefore, be vigilant against the imperialists’ carrot approach and should not be tempted by it under any circumstances.

Posted in Domestic publication, Finance, International Aid | Comments Closed

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