S. Korean biz leaders to inaugurate body for inter-Korean economic cooperation

November 1st, 2007

Yonhap
11/1/2007

South Korean business leaders are set to inaugurate a forum next week to facilitate economic cooperation between the two Koreas’ private sectors, a South Korean business body said Thursday.

The Korea Chamber of Commerce and Industry (KCCI), which has spearheaded the the forum’s establishment, said about 70 business and financial figures, including KCCI chief Sohn Kyung-shik, and Unification Minister Lee Jae-joung, will get together on Monday to launch the private forum for inter-Korean economic cooperation.

Sohn will take the helm of the 60-member forum that will include representatives of the South’s leading conglomerates that have taken part in inter-Korean economic projects — Samsung Electronics Co., Hyundai Motor Co. and Hyundai Asan Corp.

The forum’s inauguration comes on the heels of the Oct. 2-4 inter-Korean summit. At the close of the summit, South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il issued a joint declaration calling for massive investment from the South in the North’s key industrial sectors, including shipbuilding and tourism.

The forum plans to serve as a mediator for exchanges and cooperation between the two Koreas’ private firms. After receiving information and feedback from South Korean firms on their investments in the North, the forum also plans to make recommendations to the two governments on inter-Korean economic projects.

In addition, the forum envisions the dispatch of a delegation to the North, which will examine the investment climate in the communist country and establish a dialogue channel for inter-Korean economic cooperation in the private sector.

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Posted in Economic reform, Foreign direct investment, South Korea, South-North Korean Economic Cooperation Forum | Comments Closed

Number of participants in Mt. Geumgang tours hits new monthly high

November 1st, 2007

Yonhap
Nam Kwang-sik
11/1/2007

Hyundai Asan Co., an affiliate of South Korean conglomerate Hyundai Group, said Thursday that the number of visitors to a mountain resort that it operates in North Korea hit a monthly high in October.

A total of 64,447 people took its tours of the Mt. Geumgang resort on the east coast of the North in October, the company said in a statement, adding that it was the highest monthly figure since Hyundai Asan started the program in November 1998.

The previous monthly record was 43,000 in August 2005. In terms of one-year periods, the tours had the highest number of participants in 2005, when 301,822 people travelled from South Korea to the mountain.

“The rise in the number of tourists was attributable to the second summit between the South and North Korean leaders and growing hopes for the resolution of the North Korean nuclear issue,” a company official said.

The two Koreas held the summit in Pyongyang in early October, with the six-party talks on the North’s denuclearization making tangible progress.

Between 1998 and 2006, about 1.4 million people, including 8,000 foreigners, visited the resort, according to data by Hyundai Asan.

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What They’ll find in North Korea

November 1st, 2007

Center for Strategic and International Studies
(Hat tip to the Marmot)
Jon B. Wolfsthal
10/17/2007

North Korea has pledged to disable its nuclear facilities by the end of the year, and the United States is sending a team of technical experts to Yongbyon to begin the process of putting Pyongyang’s bomb machine to sleep.

The more lengthy process of dismantling the full complex will come later.

Few Americans have been to the remote and heavily guarded complex. I was one of a group of Department of Energy employees that served as on-site monitors at Yongbyon. And far from the advanced complex depicted in so many James Bond thrillers, what we found were are a collection of crumbling cement structures with inadequate heat and power. The water and electricity work only sporadically. There are no lasers or modern computer complexes with flashing lights; the site is frozen in the 1950s and more closely resembles a junk yard than an evil regime’s nuclear nerve center.

Top on the disablement list is the North’s 5 megawatt nuclear reactor.

Built in the 1980s, the plant is capable of producing up to one bomb’s worth of plutonium every year. The U.S. team will find antiquated computer control equipment scavenged from the international market and cobbled together from so many spare parts. Rusting parts and broken windows dominate the outside view. While safe to visit for short periods, the levels of radiation on the site would force its closure in any state in America. U.S. experts will have to wear nuclear detection equipment, known as dosimeters, at all times for their safety.

The U.S. teams also have to de-activate the fuel reprocessing center where North Korea extracted plutonium from spent nuclear fuel for its nuclear weapons, as well as the fresh fuel production site. The condition of the reprocessing facility is not well known. However, reprocessing spent fuel is among the most radioactive activities there is and levels of radiation are likely to be very high. Only short periods of exposure will be permitted by the U.S. or Korean health physicists tasked with ensuring the health of those working in radioactive environments.

Locking down the fuel fabrication site may be the easiest task due to its poor condition, but will pose some of the greatest health challenges. It is likely that the damage to the site, as well as the standards of safety at the plant, has led to the dispersal of uranium at the site making day to day work difficult and dangerous.

In all three sites, US personnel will have to wear protective clothes, including overalls, masks, surgeon hats, and gloves. Dressing and undressing and being checked for radiation at every entry will take time and will get frustrating very quickly. Just ensuring there are enough sets of protective wear is a major logistics exercise, as most of the equipment needed by the American teams will have to be flown in from outside of the country. There are no Home Depots in North Korea. Ensuring they have the reliable electricity and heat, as well as necessary equipment to carry out their jobs, will take months to arrange and endless hours of haggling with North Korean engineers who will not be enthusiastic about helping the U.S. take apart the nuclear complex they spent their lives building. Even getting basic tools to complete their work will be a challenge.

Aside from the work at hand, the teams will have to face some of the most isolating and demoralizing work conditions anywhere. U.S. teams will literally be behind enemy lines, as the United States and North Korea remain technically in a state of war with each other. U.S. teams will sleep at a guest house guarded by AK-47–toting guards (for their own protection, they will be told). Driven over dirt roads, each morning and evening they will pass through no less than four police and army check points, manned with machine gun nests and humorless North Korean officers. This winter the temperature will reach 20 degrees below zero every night.

Staying warm will be among the first of the challenges the technical teams face. Not losing their minds to boredom will be another. No outside T.V. or communication is possible, as North Korea will likely ban the use of satellite phones for communication with the outside world. Perhaps some of the hundreds of paper back books left by the U.S. government teams who worked there in the 1990s are still on site, but forms of entertainment for their resting hours will be few and far between.

In short, the U.S. experts heading to North Korea are going to a place unlike anywhere else on earth. Rugged and strangely compelling, the high mountains and dirt roads that surround Yongbyon will reinforce a sense of isolation hard to overcome. Only by concentrating on and remembering the importance of the difficult tasks at hand will they be able to maintain their morale and confidence. Any success they achieve will aid the process of disarmament on the Korean peninsula, but their time in country will likely go unnoticed and unappreciated by most. A shame, for their work could not be more important and deserves thanks.

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‘Bad apples’ sour relief in North Korea

November 1st, 2007

Asia Times
Sunny Lee
11/1/2007

The people in Dandong in China’s northeast Liaoning province know more about North Korea than any other people on the planet. They see it every day – literally. Dandong neighbors North Korea just across the Amnok River (Yalu River in Chinese). Even on a foggy day, one is able to see North Korean fishermen at work.

This city of 2.4 million people is, once in a while, highlighted in the international media because it is the major land route where China’s aid to North Korea – both food and fuel – is shipped. It also becomes a major destination for foreign journalists when a rumor of an imminent visit by the secretive North Korean leader Kim Jong-il to China smokes up. Dandong is a place where Kim’s train has to pass through when he visits China.

Given its special geographical proximity to North Korea, naturally this is also a key outpost to which many non-governmental organizations (NGOs) involved in North Korean refugees are paying keen attention.

In Dandong, the name “NGO” is almost a synonym for “groups working on North Korean refugees”. Unfortunately, it often carries a negative overtone. This may sound odd, but that’s how things are here. “If you really know what NGOs actually do, you will feel quite turned off,” said a local resident.

He said many of these NGOs are commercial brokers in disguise. That is, they help North Korean refugees to flee from China. But they do it, really, for money. They charge money and even take advantage of the refugees’ vulnerability. He indignantly said he knows an NGO representative who slept with North Korean female refugees in his care.

That’s just one of the examples that he shared. In fact, he said he had seen so many depraved NGOs that it now gives him goose-bumps when he hears the word “NGO”.

Stories about bad NGOs are also coming out from those who are in the know – journalists. But they seldom write about it because doing so makes them unpopular among some interest groups or even backfire. For example, a writer could be accused of maligning the good work that most NGOs do, and worse, being a “pro-North Korea” figure who closes his eyes to the human-rights tragedy of North Korean refugees. That is a very powerful argument.

With increasing international attention on North Korean human-rights conditions and widely circulated harrowing stories of North Korean refugees in the news media, NGOs working on this field usually receive strong moral support from the mainstream media that provide them with legitimacy, which in turn helps NGOs receive financial support from sympathetic supporters.

Critics, however say that as NGOs rely on donations, when they are cash-strapped they sometimes resort to publicity stunts to raise their profile, and more importantly, to raise money.

Some NGOs even go as far as to deliberately put the refugees in danger to draw international attention, critics argue. One of the most controversial cases was a January 2003 incident in which a group of as many as 78 North Korean defectors was caught by Chinese police while they were attempting to escape on boats from China’s east coast shores to South Korea and Japan respectively.

A South Korean reporter later trailed the same route and deplored: “It’s a place you don’t want to choose. The Chinese North Sea Navy Fleet of the People’s Liberation Army base is just around the corner. How would anyone in his sane mind choose this place as an escape route unless you wanted to get caught?” he fumed.

The Durihana Mission, probably the most well-known group in Seoul that helps North Korean refugees to come to South Korea, is also alluded to in that criticism. The group’s founder, Cheon Gi-won, is dubbed as the “Godfather of Refugees”. He has reportedly brought more than 500 North Korean refugees to the South.

Cheon himself was once arrested by Chinese police and served a 220-day prison term. His incarceration, however, also helped him to become known internationally. After this year’s recipient for Nobel Peace Prize was announced, for example, the Asian Wall Street Journal ran an article mentioning Cheon as someone who deserved the prize for his work on North Korean refugees.

Cheon pioneered the so-called “Mongolian route”. That is, his team takes North Korean refugees in China to the Sino-Mongolian border and helps them to escape to Mongolia, from where they go to another country, usually South Korea.

“There was a case where his team took a group of North Korean refugees to near the Mongolian border from China. But instead of taking them safely to the border and making sure they crossed it, they simply dropped the North Korean refugees in the middle of nowhere near the border on a dark night and just drove away,” said a person who has knowledge of the incident. They reportedly didn’t even give them a flashlight or anything that could help them orient their direction in the dark.

Confused and fearful, the North Koreans tried to find their own way to freedom. But their panic drew attention from Chinese border patrols. Some got shot, the rest were arrested.

“They then made an all-out media stunt, letting the world know the atrocity and how China mistreats North Korean refugees. We also used to run articles on it. But after we got an idea of how the thing had played out, we stopped writing about it,” a South Korean journalist said.

With the dropping of media coverage in South Korea, he said Cheon has recently turned to the Western media and is now actively working in the US, where he set up a branch office last year.

Cheon was not available for comment. But Lee Chung-hee of Durihana, who answers inquires during Cheon’s absence, said: “That doesn’t even make the slightest sense.”

“It’s very difficult to engage in a constructive dialogue with such critics. Think about it from a common sense point of view The consequence of a failed escape would mean death for North Koreans. If there was any deliberate intention, it would be beneath human dignity to do so,” Lee said. Those who follow this logic believe that NGOs simply didn’t plan the escape well enough.

In Dandong, Cheon is a well-established name. People who know Cheon said that even though the allegations might be true, Cheon himself is not likely to be involved. One pointed out that as Cheon has become internationally known, there are people who become jealous and want to undermine him.

A former official with a major South Korean NGO said that he strongly doubts whether Cheon himself was part of any alleged incidents. But he pointed out that some NGOs act without considering how their irresponsible acts harm others who are sincerely helping North Korean refugees.

Critics point out that NGOs’ media stunts and big-scale, organized escapes also draw the Chinese authorities’ attention to the many North Korean refugees who are hiding in China.

Some view that it’s unfair to blur the big picture of the good work that most NGOs do. They also point out that most NGOs are victims of some “bad apples” or commercial brokers who pose as NGOs or even as missionaries.

A good number of commercial brokers are former North Korean refugees. As many NGOs were arrested or deported from China in recent years, North Korean refugees who have settled in South Korea began to take the job. The reason they take up this risky business for themselves, and even are willing to walk again the same route that they themselves had escaped from, is because of the economic difficulties and job discrimination they face in South Korea.

Some of these commercial “pay-for-escape” brokers demand as much as one third of the “settlement money” that North Korean refugees expect to receive once they arrive in South Korea. Unfortunately, things have started to have a chain effect. Looking at some “NGOs” making money, now even those NGOs which otherwise do the same work non-profit, have started to charge a minimum of US$2,000 to $3,000 as a “logistical fee”.

Sunny Lee is a writer/journalist based in Beijing, where he has lived for five years. A native of South Korea, Lee is a graduate of Harvard University and Beijing Foreign Studies University.

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Freed N. Korean vessel opens new window for U.S.-N. Korea ties

October 31st, 2007

Yonhap
Byun Duk-kun
10/31/2007

A U.S. Navy destroyer helped a North Korean cargo ship escape a hijacking by pirates off the coast of Somalia on Tuesday, an incident which may bode well for the growing detente between the two nations, as sentiments remain upbeat over ongoing talks on the North’s denuclearization.

Officials here noted the incident will work positively in efforts to denuclearize the communist North, as it came just one day before the chief nuclear negotiators of the U.S. and North Korea were to meet for discussions on denuclearization, normalization of ties between the former Cold War foes and other issues.

It was early Tuesday when the USS James E. Williams, operating near Somalia, received a request from the International Maritime Bureau to investigate a North Korea-flagged ship reportedly hijacked by pirates.

The U.S. destroyer reacted with little hesitation, dispatching a helicopter to investigate the reported hijacking and then sailing at full speed to arrive at the site at midday to lend assistance, the U.S. Navy said in a press release.

The 22 crew members of the North Korean freighter eventually regained control of the ship after a firefight with the pirates, while the Williams demanded by radio that the pirates give up their weapons.

Two pirates were reportedly killed in the deadly gunfight, while five others were captured in the tense standoff.

After the hijacking situation was resolved, three injured crew members of the North Korean ship who may have received relatively serious wounds were brought onboard the U.S. destroyer for medical treatment, and were then sent back to their ship in stable condition, a message sent by the U.S. Navy to Yonhap News Agency said. It said the injuries sustained by the three merchant sailors were not life-threatening.

Besides giving first aid, the U.S. warship did not receive any further requests for assistance from the North Korean vessel, the message said.

Washington tried not to brag, saying piracy was a “scourge” in Somalia’s waters and that U.S. vessels were available to intercede when necessary.

“When we get a distress call, we help,” Lydia Robertson, commander of the U.S. Fifth Fleet, was quoted as saying by the AP.

South Korean officials agreed, saying the U.S. would have acted the same way had the incident taken place a year ago. They, however, noted the U.S. would not have acted so swiftly or as willingly had the incident happened before Feb. 13, when Pyongyang agreed to shut down and later disable its key nuclear facilities.

“Piracy is a crime that does not choose its victims by their nationality,” a ministry official said, asking that he remain unidentified.

“The U.S. and NATO forces have long operated missions in the (Somali) area to intercept pirates, so I don’t think the U.S. would have acted any differently had the incident happened a year ago,” said the official, whose job mainly deals with U.S. affairs.

Other officials said the incident demonstrates the changed mood between the former enemies as multilateral talks aimed at denuclearizing the communist North maintain an upbeat mood.

Washington and Pyongyang have held two rounds of working-level talks this year under a six-nation accord signed in February, which binds North Korea to shut down and disable its key nuclear facilities and declare all its nuclear programs.

In return, the communist nation will receive 1 million tons of heavy fuel oil or equivalent assistance, as well as other political benefits such as its removal from the U.S. list of terrorism sponsoring states and the normalization of its diplomatic relations with the U.S. and Japan.

North Korea has already shut down all its key nuclear facilities at Yongbyon and promised earlier this month to disable the Yongbyon complex and submit a full list of its nuclear programs by the end of the year.

Christopher Hill, the top U.S. envoy in six-way talks on ending North Korea’s nuclear ambition, was expected to hold bilateral talks with his North Korean counterpart Kim Kye-gwan in Beijing later Wednesday to discuss various issues including the normalization of ties between their nations, according to officials here.

“The incident will have a positive impact as a result of the efforts by both the U.S. and North Korea to normalize their diplomatic ties,” a ministry official said, asking to remain anonymous.

North Korea has yet to officially acknowledge the U.S. assistance in regaining the freedom of its vessel and treating the ship’s wounded North Korean crew members.

Crew wins deadly pirate battle off Somalia
CNN
10/30/2007

The crew members of a North Korean freighter regained control of their ship from pirates who hijacked the vessel off Somalia, but not without a deadly fight, the U.S. Navy reported Tuesday.

When the battle aboard the Dai Hong Dan was over, two pirates were dead and five were captured, the Navy said.

Three wounded crew members from the cargo ship were being treated aboard the guided-missile destroyer USS James E. Williams.

The captured pirates were being held aboard the North Korean vessel, the Navy said.

The bandits had seized the ship’s bridge, while the crew kept control of the steering gear and engines, the Navy said.

The Koreans moved against the attackers after the Williams — responding to reports of the hijacking — ordered the pirates to give up their weapons, according to the Navy.

When the crew members stormed the bridge, the deadly battle began. After the crew regained control, Navy sailors boarded the Dai Hong Dan to help with the injured.

North Korea and the United States have no diplomatic relations.

The incident took place about 70 miles northeast of the Somali capital, Mogadishu, the Navy said.

It is the second incident of piracy reported in recent days. A second U.S. Navy destroyer was searching waters off Somalia for pirates who hijacked a Japanese-owned ship, military officials said.

Over the weekend, gunmen aboard two skiffs hijacked the Panamanian-flagged Golden Nori off the Socotra archipelago near the Horn of Africa, said Andrew Mwangura, a spokesman for the Kenyan-based Seafarers’ Assistance Program.

The guided-missile destroyer USS Arleigh Burke has been pursuing the pirates after entering Somali waters with the permission of the troubled transitional government in Mogadishu, U.S. officials said Monday. In recent years, warships have stayed outside the 12-mile limit when chasing pirates.

Two military officials familiar with the details confirmed the ongoing operation.

The Navy’s pursuit of the pirates began Sunday night when the Golden Nori radioed for help. The Burke’s sister ship, the USS Porter, opened fire and sank the pirate skiffs tied to the Golden Nori’s stern before the Burke took over shadowing the hijacked vessel.

When the shots were fired, it was not known the ship was filled with highly flammable benzene. U.S. military officials indicate there is a great deal of concern about the cargo because it is so sensitive.

Benzene, which U.S. authorities have declared a known human carcinogen, is used as a solvent and to make plastics and synthetic fabrics.

Four other ships in the region remain in pirate hands, the Navy said.

U.S. and NATO warships have been patrolling off the Horn of Africa for years in an effort to crack down on piracy off Somalia, where a U.N.-backed transitional government is struggling to restore order after 15 years of near-anarchy.

On Monday, the head of the transitional government resigned as his administration — backed by Ethiopian troops — battled insurgents from the Islamic movement that seized control of Mogadishu in 2006.

Hospital officials reported 30 dead in three days of clashes on the city’s south side.

In June, the ship USS Carter Hall fired warning shots in an attempt to stop a hijacked Danish cargo ship off Somalia, but the American vessel turned away when the pirated ship entered Somali waters.

In May, a U.S. Navy advisory warned merchant ships to stay at least 200 miles off the Somali coast. But the U.S. Maritime Administration said pirates sometimes issue false distress calls to lure ships closer to shore.

The pirates often are armed with automatic rifles and shoulder-fired rockets, according to a recent warning from the agency.

“To date, vessels that increase speed and take evasive maneuvers avoid boarding, while those that slow down are boarded, taken to the Somali coastline and released after successful ransom payment, often after protracted negotiations of as much as 11 weeks,” the warning advised.

The agency issued a new warning to sailors in the Gulf of Aden, between Somalia and Yemen, after Sunday’s hijacking.

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Korea allows aid group to reach flood victims directly: RFA

October 31st, 2007

Yonahp
Sam Kim
10/31/2007

North Korea has allowed an international relief group to bring supplies directly to the North’s southeastern region hit hard by recent floods, Radio Free Asia (RFA) has reported.

The U.S.-funded broadcasting station cited Tom Henderson of England-based civic group, Shelter Box, Tuesday as saying that North Korean authorities made the rare decision, allowing aid officials to deliver food and other supplies to flood victims in the region southeast of capital Pyongyang.

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Inter-Korean trade climbs 12.7 pct to US$1.23 bln in January-September period

October 31st, 2007

Yonhap
10/31/2007

South Korean trade with North Korea rose 12.7 percent from a year earlier to US$1.23 billion for the first nine months of this year, a report said Wednesday, amid progress in talks on the North’s nuclear programs.

During the January-September period, South Korea exported $700 million worth of goods to North Korea and imported $530 million, the Korea International Trade Association said in the report.

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Hyundai Motor union leaders visit N. Korea for noodle project

October 31st, 2007

Yonhap
10/31/2007

Union leaders of Hyundai Motor Co., South Korea’s largest carmaker, left for North Korea to attend a ceremony to mark the completion of a corn noodle plant in the North’s capital, union officials said Wednesday.

Hyundai’s 44,000-strong union has donated 500 million won (US$553,800), collected from unionized workers for a mere $13 each, to help a South Korean humanitarian group build the noodle factory in the impoverished North.

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Odd couple: The royal and the Red

October 31st, 2007

Asia Times
Bertil Lintner
10/31/2007

North Korean Premier Kim Yong-il is scheduled to pay a four-day visit to Cambodia in early November, underscoring the curious close relationship between one of the world’s last communist dictatorships and one of Asia’s most ancient monarchies.

Kim Yong-il, who should not be confused with the North Korean supremo, “Dear Leader” Kim Jong-il or any of his relatives, will hold talks with Cambodia’s retired king Norodom Sihanouk, the Cambodian Foreign Ministry said in a statement posted on its website.

The North Korean premier will also hold “official talks” with his Cambodian counterpart Hun Sen, and “pay courtesy calls” on Senate president Chea Sim, and the president of the National Assembly, Heng Samrin, according to the statement.

Cambodia has long served as a link between North Korea and Southeast Asia and beyond, so it is plausible to assume that trade and related issues will be on the agenda. For years the two countries ran a joint shipping company, and before the China-led six party talks, Cambodia had offered to mediate over Pyongyang’s contentious nuclear program.

Kim Yong-il’s visit to Cambodia is not the first by a North Korean dignitary in recent years. Kim Yong-nam, president of North Korea’s rubber-stamp parliament, the Supreme People’s Assembly, also visited the country in 2001 at the invitation of Sihanouk, who had then not yet abdicated in favor of his son, Norodom Sihamoni, the current serving monarch.

Kim Yong-nam now functions as de facto head of state, as Kim Jong-il’s father, “Great Leader” Kim Il-sung was elevated to the position of “eternal president” before his death in 1994, making North Korea not a monarchy, but rather the world’s only necrocracy.

As incongruous as it may seem, Cambodia is North Korea’s oldest ally in Southeast Asia. It all began when Sihanouk met Kim Il-sung in 1961 at a Non-Aligned Movement meeting in Belgrade and a personal friendship developed between the two leaders. When Sihanouk was ousted in a coup in 1970, Kim Il-sung not only offered him sanctuary in North Korea but also had a new home built for him about an hour’s drive north of Pyongyang.

A battalion of North Korean troops worked full-time on it for almost a year, and when it was finished, only specially selected guards were allowed anywhere near the 60-room palatial residence. Overlooking the scenic Chhang Sou On Lake and surrounded by mountains, the Korean-style building even had its own indoor movie theater. Like the Great Leader’s son, Kim Jong-il, Sihanouk loves movies.

Sihanouk has both directed and acted in his own romantic feature movies and a few more were made in North Korea, with Cambodian actors strutting their stuff against the backdrop of Korea’s snow-capped mountains.

French wines and gourmet food were flown in via China, and Sihanouk and his entourage were treated as royals would have been in any country that respects monarchy – as North Korea evidently does.

By contrast, North Korea has maintained less cordial relations with neighboring communist Vietnam, which still exerts behind-the-scenes pressure on Cambodia. Kim Yong-il will nonetheless also visit Hanoi during his diplomatic tour of Southeast Asia.

Throughout the Vietnamese occupation of Cambodia, North Korea refused to recognize the regime that Hanoi installed in Phnom Penh in January 1979 – and that despite immense pressure at the time put on Pyongyang from Moscow. During a meeting between Kim Il-sung and Sihanouk seven years later on April 10, 1986, in Pyongyang, the Great Leader reassured the then prince that North Korea would continue to regard him as Cambodia’s legitimate head of state.

When Sihanouk returned to Phnom Penh in September 1993, after United Nations-led mediation to end Cambodia’s civil conflict, he arrived with 35 North Korean bodyguards, commanded by a general from Kim Il-sung’s presidential guards. They are still there, now guarding Sihanouk as well as the new king, Sihanomi, who is not as close to North Korea as his father, but has paid at least one visit to Pyongyang.

Sailing buddies
Sihanouk and the Cambodian royals showed their gratitude to the North Koreans when in the late 1990s they set up a privately-owned shipping registry, the Cambodia Shipping Corporation (CSC). The flag of convenience was used by the North Koreans, and it enjoyed royal protection as it was headed by Khek Vandy, the husband of Sihanouk’s eldest daughter, Boupha Devi.

CSC was also partly owned by a Phnom Penh-based North Korean diplomat and for a few years aggressively marketed itself as a cheap and efficient “flag of convenience” service for international shippers. A series of embarrassing maritime incidents, including the interception in June 2002 of a Cambodian-registered – though not North Korean owned – ship by the French navy, in a joint operation with US, Greek and Spanish authorities, of a massive haul of cocaine off the West African coast prompted Hun Sen’s government to cancel CSC’s concession and reportedly give it to a South Korean company, the Cosmos Group.

At the time, International Transport Federation general secretary David Cockroft told the Cambodia-based fortnightly newspaper the Phnom Penh Post that “they’ll need to be able to walk on water, because nothing short of a miracle will clean up the name of Cambodian shipping”. Indeed, little appeared to change, including North Korea’s use of Cambodia’s flag of convenience for controversial shipments.

In December 2002, a Cambodian-registered, North Korean-owned ship named So San was intercepted by Spanish marines, working on a US tip, in the Arabian Sea. It was found to be carrying 15 Scud-type missiles, 15 conventional warheads, 23 tanks of nitric acid rocket propellant and 85 drums of unidentified chemicals under a cargo of cement bags.

The destination of the weaponry was said to be Yemen, and following protests from both Yemen and North Korea – and intervention by the US, which apparently did not want to antagonize Yemen, a supposed ally in Washington’s “war on terror” – the ship was allowed to continue to Yemen. Later revelations indicated that the cargo was ultimately delivered to Libya, which caused considerable embarrassment in Washington.

Premier Kim Yong-il is likely to be quite familiar with the CSC, as he served as minister for land and marine transport from 1994 until the Supreme People’s Assembly appointed him to the premiership in April this year. But since the scandal-ridden CSC was reorganized five years ago, Cambodia’s economic importance to Pyongyang would appear to have waned, and North Korea’s only known activity in the country today is in the restaurant business, including eateries in Phnom Penh and Siem Reap.

Yet as a diplomatic link to the wider region, Cambodia is still important to North Korea. In April 2003, the Cambodian government, at the urging of Sihanouk, had plans to send an envoy to Pyongyang in a bid to persuade the North Korean leadership to be more flexible about talks on its nuclear program, which at that time had stalled.

The mission never materialized, but North Korea no doubt remembers that its trusted ally Cambodia tried first to mediate – and that Phnom Penh in future could still serve as a gateway for improved contacts with the outside world. It remains to be seen what message Kim Yong-il will bring to Phnom Penh, but it is reasonable to assume that his visit will, despite the official announcements, be confined merely to “courtesy calls” and royal audiences.

Bertil Lintner is a former correspondent with the Far Eastern Economic Review and the author of Great Leader, Dear Leader: Demystifying North Korea under the Kim Clan. He is currently a writer with Asia-Pacific Media Services.

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Economic Implications of Summit Agreement

October 30th, 2007

Nautilus Institute
Stephan Haggard and Marcus Noland
10/30/2007

The success of economic cooperation projects depends on the intentions of North Koreans.

The Arabs have a proverb: “He who foretells the future lies.” The recent summit announcement may make many people liars, not the least its authors. The problem with the summit announcement is that its ultimate impact depends on three major unknowns: the attitude and commitment of the next South Korean president; the willingness of the North Koreans to embrace reforms; and progress-or lack thereof-on resolving the North Korean nuclear issue.

The summit and the nuclear controversy are inextricably linked, even if Roh Moo-hyun and Kim Jong-il may have wished to downplay it, and the summit announcement must be evaluated in the context of the nuclear matter. The nuclear issue provides a great opportunity for North-South reconciliation but also sets limits on how fast progress on other fronts can be made.

On the one hand, aid from Seoul may act as inducement for Kim Jong-il to resolve the nuclear issue; this has long been the claim of proengagement politicians. On the other hand, Seoul will receive little support for its diplomacy from the United States, Japan, and other countries if it moves forward aggressively on economic cooperation before the North Korean regime shows a genuine willingness to abandon its nuclear weapons program.

Indeed, the risk is that aid from the South could reduce economic incentives on the North to cooperate and undercut the negotiations. Pyongyang’s celebration of the first anniversary of its nuclear test underscores that achieving this goal could prove an arduous march of its own.

Yet there are signs of hope. The summit document did make a reference, however brief, to resolving the nuclear question and in the context of the six-party talks the North Koreans have-almost simultaneously-agreed to a timetable for the dismantlement of existing nuclear facilities. The summit agreement also contains some important confidence building measures, including most notably a commitment to address conflicts over the disputed boundary in the West Sea that has led to military engagements in the past.

However, all parties have to date studiously avoided mention of what will be done with North Korea’s stocks of nuclear weapons and fissile material. And talk of a final peace settlement to replace the armistice puts the cart before the horse; in the absence of a resolution to the nuclear question it would make little sense to negotiate a broader peace agreement.

If these issues can be resolved the next hurdle is North Korea’s willingness to embrace economic reform. The summit document lays out a number of economic cooperation projects that could be beneficial to both North and South Korea: reestablishment of trans-Korean transportation links; expansion of the Gaeseong Industrial Complex and its replication in other locations; and cooperation in specific industries such as shipbuilding where complementarities would seem to exist between North and South Korean capabilities. All of these are positives.

Yet the projects, while desirable, will have a limited impact as long as North Korea avoids the challenge of broader opening and reform. North-South discussions appear to have avoided the basic building blocks of a market economy-operation of markets, enterprise management, agricultural reform-which would allow the North Koreans to make the most of the aid that they will receive. The long history of aid to other developing countries suggests that aid can be futile, even counterproductive, in the absence of complementary reforms.

Moreover, South Korea’s engagement-in contrast to China’s-remains bottled up in physically and economically delimited projects such as Gaeseong and the Mount Geumgang tourism venture. This situation is regrettable because it is only by broadening contacts with profit-oriented South Korean firms that their North Korean counterparts will learn about the operation of a market economy. Pyongyang continues to resist broader opening, presumably due to concerns that more contact with South Korea could be politically destabilizing.

South Korean analysts are already calculating the costs and benefits of the program outlined in the summit announcement, with one press account describing the costs as “astronomical.” Even the high-end estimates, on the order of $11 billion and more, are a mere drop in the bucket compared to the ultimate costs of rehabilitating the North Korean economy and providing a stable basis for eventual unification. If nothing else, such analyses should stimulate a serious discussion in South Korea of the long-term costs and benefits of different contingencies on the peninsula including the possibility of regime collapse, a discussion that, regrettably, has largely been avoided.

The resolution of outstanding security issues on the peninsula is an important precondition for broader reforms to really work. It is unlikely that foreign investors from the United States, Japan, or Western Europe are going to take a serious interest in the country in the absence of a resolution of the nuclear question. The summit announcement is unlikely to have much of an impact on the passage of the Korea-US free trade agreement (KORUS FTA) in the US Congress. But if North and South Korea push forward with the phase II expansion of the Gaeseong complex in the absence of resolution of the nuclear issue, it would make passage of the KORUS FTA agreement in the US Congress more difficult.

Ultimately, these issues will be laid at the doorstep of the next South Korean president. One contender, Lee Myung-bak, has already expressed reservations about the open-ended nature of South Korean commitments. But whoever enters the Blue House in February 2008, the president-elect will have to make their own decisions on how to approach the North and may not be bound by a document negotiated by an unpopular lame duck president. The 2007 summit announcement may end up like the 1991 North-South Denuclearization Accord, amounting to little more than a statement of good intentions rather than a map for subsequent policy.

The two agreements differ in one significant respect, however. The big budget projects of the summit announcement may create constituencies in South Korea in favor of expanded engagement for purely self-interested reasons. The next South Korean president may confront South Korean corporations lobbying for expansion of contact for the contracts or subsidies they bring regardless of the broader political or diplomatic ramifications.

Ultimately the success of the program sketched out in the summit announcement will depend on the intentions of the North Koreans. Pyongyang could use the assistance offered by the Seoul to leverage its own reform program. However, it could take the aid and simply retreat into its shell, avoiding real reform and a verifiable resolution to the nuclear issue. Only time will tell.

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Posted in Economic reform, Foreign direct investment, Inter-Korean summit, International trade, Political economy | Comments Closed

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