N. Korea Picks Hyundai as Partner for Kaesong Tour-Not

January 24th, 2007

Well it seems that reports of the deal were premature–Hyundai Asan is not a shoe in.  the updated report is below.  The original story in the Korea Times is posted belw it.

N.K. denies report it will keep Hyundai Asan as partnerfor Kaesong tour
Yonhap
1/24/2007

North Korea on Wednesday denied reports that it withdrew plans to change its partner for tours of Kaesong, a border town, and collaborate with Hyundai Asan Corp., the operator of tours to the North’s Mount Geumgang, the North’s official media reported.

According to the Korean Central News Agency, a spokesman for the Korean Asia-Pacific Peace Committee (KAPPC) said it “has no formal agreement with the Hyundai side over the issue of tour of Kaesong and, moreover, there was no agreement with the latter in this regard in recent days.”

“The KAPPC’s stand (on the Kaesong tour project) is consistent and it feels no need to examine or consider any change,” it added.

Korea Times
1/21/2007
Lee Jin-woo

North Korea has hinted that it is willing to start the long-delayed Kaesong tourism project with Hyundai Asan instead of Lotte, a Unification Ministry official said on Sunday.

“When former Unification Minister Lee Jong-seok visited the Kaesong industrial complex on Dec. 8, North Korean officials said they have finalized their decision to carry out the project with Hyundai,” said the official on condition of anonymity due to the sensitivity of the issue.

The former minister stepped down from the post on Dec. 11. His successor, Lee Jae-joung, has not made any specific comment on the issue.

The official also said North Korea’s Asia Pacific Peace Committee has given a positive signal to Hyundai Asan Chairman Yoon Man-jun during Yoon’s visit to a joint inter-Korean tourist site at Mt. Kumgang in North Korea.

Pyongyang has not issued any official document to confirm the verbal promise of the committee, according to the ministry and Hyundai.

Pyongyang has asked Seoul several times to accept Lotte Tour, a subsidiary of Lotte Group, in place of Hyundai Asan, the North Korea-related business arm of Hyundai Group.

The South Korean government, however, has rejected the request, saying, “The contract signed between the North and Hyundai is still effective and legally binding unless the two sides agree to nullify the deal.”

On June 30, the former unification minister met with Lotte Tour Chairman Kim Ki-byung, asking the chairman not to get involved in the inter-Korean business.

Experts said the North and Hyundai are expected to have a tug-of-war over the Stalinist state’s request for a payment of $150 per tourist to Kaesong, the capital of the Koryo Kingdom (918-1392).

Pyongyang has set the higher admission fee, nearly 20 times more than the $20 Hyundai pays to North Korea for every South Korean traveler to Mt. Kumgang. Hyundai has claimed the demand is outrageous.

Since July 1, the North has banned South Korean visitors to the Kaesong inter-Korean 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 Kaesong during their visit to the industrial complex.

The Stalinist state also stirred much controversy by signing an overlapping contract with a small South Korean company, Unico, in 2005 despite its initial contract with Hyundai Asan to develop golf courses at the Kaesong Industrial Complex.

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

Hyundai plans to develop a total of 66 million square meters of land by 2012, including information-technology complexes and residential districts at the industrial complex. The project commenced at an historic inter-Korean summit in June 2000.

Share

Posted in Asia-Pacific Peace Committee, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Special Economic Zones (Established before 2013), Tourism | Comments Closed

Citizens Exploited As the Nation Cannot Produce Its Own Income

January 24th, 2007

Daliy NK
Yang Jung A
1/24/2007

North Korean authorities are requesting “implied” voluntary offerings to be made to the army, placing a greater burden on the North Korean citizens who are battling a tough winter due to the bitter cold and dire food crisis.

The first journalist to report about North Korea Lee Joon said that at a people’s unit meeting held in the rural district of Dancheon, North Hamkyung from January 7th to the 13th, orders were made from the central committee indicating a “severe food crisis amidst the people’s army,” reported Japan’s Asia Press on the 22nd.

Lee Joon is the first underground journalist to work in North Korea and has exposed the daily lives of North Korean citizens through video footages, collections of still life photos and voice recordings both nationally and worldwide.

At the people’s unit, an order was made “The food shortage in the people’s army is severe. With a devoted heart to the nation, every family must voluntarily offer food to the army.” Though the orders imply donations as a voluntary act, it is in fact forced upon the citizens or as it implies otherwise, suffer the consequences.

Lee informed “The exact amount of donations were not specified, though citizens are being pressured to increase their offerings as one person was said to have offered 600kg and another even up to 1tn.”

Lee said “Though the army declares a shortage in food, the cost of rice and corn at the markets has not risen in comparison to late November and early December” and commented “There does not seem to be a great shortage in supply as merchants at the markets sell rice imported from China.”

Contrastingly, Lee explained “From a national perspective, it seems that the supply of food had been considered low as international aid was terminated and crop output minimal.”

In addition to this “As the nation does not have any funds, an order was made for each family to invest their money into banks” and again “Though the exact amount was not specified, this order was indisputably forced” upon the citizens, Lee said.

Lee continued “Even 3 years ago, as a 10 years redemption national loan, the people had to support the nation with their funds” and “As there were many complaints from the people, the idea was changed to a look like a savings account. I believe that forcibly collecting money is no different to the national loan.”

At present, as there are many cases where North Korean banks cannot pay interest or capital from investments, any person that does invest in banks is called as a fool. Even though the government enforces a directive, it is unlikely that the people will invest their money in banks.

Lee said “Each person must gather 2.5tn’s of provisions and offer it to the local farms because a task was assigned to increase the output of fertilizer.” and remarked “It’s something that happens often, but it did come earlier than expected.”

“The poor collect excrement from their homes or public places whereas the rich slip through the cracks by either buying goods from the markets or offering bribes” Lee explained.

Complaints are rising against the government’s frequent tasks of offering goods, though “with feelings of discontent (resulting from international sanctions) the government exploits the people as they cannot make any money” Lee said.

In particular, “There is a general consensus amongst the people who now believe that the government is not trying to change the economy (through openness and reform) but only making their lives more difficult” revealed Lee.

Share

Posted in Agriculture, Banking, Central Miltary Committee, Civil society, Finance, Military, Worker's Party | Comments Closed

A dismal year at Kumgang, but tour firm still hopeful

January 23rd, 2007

Joong Ang Daily
Seo Ji-eun
1/22/2007

Last year was a nightmare for Hyundai Asan Co., the sole domestic operator of inter-Korean businesses. But the Hyundai Group affiliate sees brighter days ahead for its tourism program at Mount Kumgang, a scenic North Korean resort, this year, and is stepping up marketing efforts.

Earlier this month the company launched a radio ad campaign featuring a decades-old Korean children¡’s song including the lyric, “Let¡’s go to Mount Kumgang.” The commercial does not identify Hyundai Asan as the tour operator, and Hyundai Asan said the broadcast was aimed at promoting the destination among tourists.

The company is also offering discounts of 25 percent for people born in the year of pig, which falls this year and every 12th year, and students who took college entrance exams late last year. One parent per student can also receive the discount, which will last until late next month.

Perhaps helped by those events, a Hyundai Asan spokesman said the number of reservations for January has passed 10,000, which is around the monthly average.

“When tour programs to the inner part of Mount Kumgang launch this spring and the golf resort opens in October after starting trials in June,” the spokesman said, “we definitely expect more tourists unless unexpected political factors erupt.”

Hyundai Asan earlier in the month said it aims to attract 400,000 tourists to the North Korean mountain this year. It set the same goal last year but fell far short with 240,000 tourists when reservations plummeted after North Korea’s missile launch in July, severe floods during the summer and the North¡’s nuclear test in October. Immediately after the nuke test, 65 percent of customers began to cancel their reservations, and a large portion of travelers who would have crowded the resort to see the autumn foliage didn’t come.

More than 300,000 people, a record-breaking figure, visited Mount Kumgang in 2005.

Meanwhile, a government source close to North Korea said yesterday that North Korea would start a tourism project at Kaesong, a joint inter-Korean business site in the North, with Hyundai Asan instead of Lotte Tours, the company North Korea wanted to work with instead. Neither the Unification Ministry nor Hyundai Asan released an official statement regarding that issue.

Share

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

Female Ratio in KPA Now More Than 10%

January 23rd, 2007

Daily NK
Kim Min Se
1/23/2007

What is the gender ratio in Korean People’s Army?

A 28-year old recent defector Kim and a 38-year old former KPA Air Force engineer Choi said that female members of KPA could take up to ten percent of the total armed forces from administrative positions to front battalions.

Kim testified “Most of small-caliber anti-aircraft guns are operated by women and there are even all-female independent brigades and regiments.”

“North Korean authorities encourage women to be enlisted in coastal artillery by advertising ‘recruiting songs.’”

Kim also said that virtually all of the North Korean train tunnels and bridges were guarded by women forces armed with 14.5mm machine gunnery.

Korean People’s Army, according to the South Korean Ministry of Defense’s White Paper, boasts 1.17 million soldiers, and the government in North Korea has increasingly enlisted women since the population shrank in mid-90s.

Kim is a former female member of the KPA 4-25 Training Camp (equivalent to a corps) 331st Brigade 6th Mechanized Battalion. She had served since 1997, the peak of starvation period. At that time many North Korean parents sent their daughters to the army for them to avoid hunger.

Female officers have been mass-recruited since 1995 among women NCOs of proven party loyalty and good family background. They were trained for two years and then stationed in each unit.

For the enlisted, both men and women are conscripted at their age of 17 while the female soldiers receive trainings specialized in anti-aircraft guns.

However, some others, as their male compatriots, are more fortunate, due to their superb ancestral or family background, to be stationed in army hospitals or other more comfortable places than coastal artillery.

“In more recent days,” another defector Choi said, “even aircraft pilots of Soviet-built IL-28 Bombers are filled with women.”

North Korean enlisted women usually serve six to seven years, in contrast with ten to thirteen years of men’s service.

Female veterans automatically become KWP member as they are discharged and enjoy higher chance to be selected as junior party official, but not as preferable marriage partner.

Share

Posted in 1990s Famine, Automobiles, Civil society, Military, Railways | Comments Closed

Will Economic Sanctions Have Impact on N. Korea?

January 23rd, 2007

Korea Times
Chang Se-moon
1/23/2007

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Share

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

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

January 22nd, 2007

Yonhap
1/22/2007

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

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

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

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

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

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

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

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

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

Share

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

China allows tour of Mt. Geumgang via S. Korea

January 22nd, 2007

Yonhap
1/22/2007

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

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

Share

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

Family Planning Campaign

January 22nd, 2007

Korea Times
Andrei Lankov
1/22/2007

Old-style Communism had no doubt about the birthrate. Its approach to fertility was simple and straightforward: the higher, the better. There could be no such a thing as too many soldiers or too many workers.

Thus, Communist states went to great lengths to stimulate the birth rate. Of course, material incentives of all kinds were used widely: an additional tax levied on childless people, heavily subsidized kindergartens and creches, long maternity leaves.

Large families enjoyed special access to goods and services, a significant privilege in an economy based on distribution, and plagued by scarcity.

The material incentives were augmented by intense propaganda.

In the USSR from 1944, a mother who raised more than seven children was decorated with a special order and provided with many privileges. The caveat was that it was not enough to just give birth seven times: the decoration could only take place when the youngest of the seven children reached the age of one year.

The same approach was adopted by North Korea in the early stages of its history. Any other policy would be strange: the country suffered huge population losses in 1945-1953, partially due to the war and partially due to the large-scale migration to the South.

The population was believed to be 9.3 million in 1946, but by 1953 it had declined to 8.3 million.

In 1966 the fertility rate in North Korea reached the very high level of 6.5 children per woman. This was higher than the fertility rate in the South where it had already begun to decline, not least due to a government- sponsored campaign.

But then something happened. Around 1970, fertility rates nose-dived in the North, supplying one of the most dramatic reductions in the world’s demographic history. They dropped to 4.5 in 1974 and then to 3.5 in 1976. The crude birth rate, measured in the number of live births per 1000, declined from 35 in 1970 to 18 in 1976, thus halving in merely seven years.

All these figures are quite reliable since demographic statistics are probably the only kind of North Korean statistics decently known to the outside world. We know this through a blunder by the North Korean authorities who, in the early 1990s, invited a group of foreign experts on demographics to the country and provided them with full access to the relevant data. This was done to get their advice on the forthcoming population census.

To make sure that the foreigners would not create any harm, the data was slightly doctored, but the North Korean officials obviously did not realize that demographic data is, by its very nature, remarkably consistent, so an expert can easily reconstruct missing sections. When they understood their mistakes, the authorities tried to prevent the data from being published, but it was too late.

This statistics which became available in the 1990s confirmed what was long suspected: in the early 1970s, North Korea waged a highly intensive and highly successful family planning campaign. The information about this campaign has filtered out through defectors, but few if any experts understood how dramatic and decisive it actually was.

In the early 1970s, abortions were legalized and education about contraceptive procedures became obligatory in all kinds of health centers. Despite increasing difficulties with all kinds of goods, the contraceptive devices were widely manufactured and freely distributed.

The three-child family was proclaimed an ideal, and from 1978 the desirable number of children was further cut to two.

Around the same time, the marriage age was increased dramatically. The legal marriage age remained the same, but the public North Korean laws are not necessarily written to be followed.

The actual life of the country is determined by instructions, of which the instructions by the Great Leader himself are by far most important. And the Great Leader said in 1971, and said in no uncertain terms, that the youth should be sacrificed for the sake of revolution, not for raising families. In his wisdom he said that a good time to marry would be when a woman reached 28 and a man reached 30. Needless to say, a wish of the Great Leader became instantly the law of the land.

But it was never stated that all these measures were aimed at curbing birth rates. This was the major peculiarity of the entire campaign: in spite of its huge scale, it remained essentially secret. Perhaps, the North was unique in being the world’s only state which was in position to wage an invisible campaign of this kind.

The existence of very efficient and non-transparent channels of influence created such a unique opportunity: orders could be transmitted through party bureaucracy to every family without attracting anybody’s attention, while incentives could be distributed and punishment could be inflicted without much noise.

It is not clear what made Pyongyang undertake such a dramatic reversal of its earlier policies. From the officially published documents of the 1970s it seems that Kim Il-sung began to worry whether grain production was growing fast enough. Perhaps, it was decided to curb population growth because the government was not sure whether it would be able to feed more mouths in the future.

Perhaps, the impact of the intense South Korean family planning campaign was also felt in the North. Unlike lesser beings, North Koreans leaders have always been careful readers of the South Korean press, and they often imitated their adversaries in everything from dress fashions to ideological trends.

Finally, the changing mood of the developing world may have played a role. The early 1970s was the period when developing countries came to see population growth as a problem rather than an opportunity.

At any rate, the program was remarkably successful. Nothing like it could happen these days, when Pyongyang is gradually loosing its ability to monitor and direct all activities of its subjects. The days of Stalinism with North Korean characteristics are long gone.

Share

Posted in Agriculture, Civil society, Health care, Pediatrics | Comments Closed

Under bank sanctions, North Korea looks to gold exports

January 22nd, 2007

Christian Science monitor
Donald Kirk
1/22/2007

More than a century after American mining engineers first opened up North Korea’s gold mines, a fortune in gold and other metals and minerals offers the prospect for North Korea to ease the pressures of financial sanctions.

The question, however, is whether North Korea can navigate around a US Treasury order that forbids institutions doing business in the United States from dealing with Banco Delta Asia in Macao, the main avenue for North Korean financial dealings.

The Treasury ban, first promulgated in 2002, has effectively frozen the North’s efforts to conduct international business. While it doesn’t extend to gold, market experts say that US officials have made it clear that banks should not buy North Korean gold.

“The US has been using coercion, innuendo, and sheer force to intimidate banks from dealing with North Korea,” says Colin McAskill, chairman of Koryo Asia Ltd., which invests in North Korea through the Chosun Development & Investment Fund. “We want to get a breakthrough on the six-party talks by getting the sanctions eased or lifted entirely. We’re at a very delicate stage.”

North Korea, says Mr. McAskill, “wants to move back into legitimate business.” Selling gold on the London market – the world’s largest – “is one way they can prove that,” he adds. “They have a wealth of minerals – gold, silver, zinc, magnesite, copper, uranium, platinum – that needs investment to extract.”

One indication of North Korea’s need to sell gold was its decision to provide information needed by the London Bullion Market Association (LBMA) to list the North’s central bank as a “good deliverer” of gold and silver. Listing with the LBMA is essential for refiners who want to sell their products in London. The bank’s listing was suspended 2-1/2 years ago when it failed to respond to LBMA requests for “proactive monitoring.”

The LBMA said it does not “take into account any political criteria,” and will keep the bank on its rolls for another three years without monitoring.

Despite the listing, market experts say the big banks that are major buyers of gold – and form the LBMA’s core membership – are not likely to flout the spirit of the US Treasury order against Banco Delta Asia, through which North Korea exported gold prior to the ban.

“The fact that they’re on the list does not mean they can deliver to the London market,” says Stewart Murray, the LBMA’s chief executive. “When we have sanctions, none of the facilities will accept delivery from a company or a country that is subject to these sanctions,”

Trying to build momentum for talks

The reluctance of buyers in London to deal in North Korean gold, widely seen as the likeliest legal way to mitigate the impact of the banking ban, adds urgency to another effort at six-party talks on North Korea’s nuclear weapons.

The chief US negotiator, Christopher Hill, has been traveling through northeast Asia, stopping off here, in Tokyo, and in Beijing after talks in Berlin last week with his North Korean counterpart, Kim Kye-Gwan. The Chinese are expected to set a date for renewing the talks, which broke off before Christmas amid North Korean demands for the US to lift the ban on Banco Delta Asia.

North Korea raised hopes for renewed six-party talks, saying “a certain agreement” was reached in Berlin last week. Neither Mr. Kim nor Mr. Hill have provided details, but analysts suspect that the two discussed the financial issue and its relationship to the ultimate purpose of six-party talks: getting North Korea to give up its nuclear weapons.

North Korea has been renewing its drive to sell gold for the past year since submitting to the LBMA’s monitoring requirements. At the same time, the North has sold relatively small amounts of gold in Thailand, with which it has developed a strong trading relationship in recent years. Last spring, North Korea exported 1.3 tons of gold to Thailand for nearly $30 million while also looking for markets elsewhere in the region.

“Why would you go to the trouble of going to London,” asks Roger Barrett, whose firm, Korea Business Consultants in Beijing, is helping to develop gold mining in North Korea. “They’re totally entitled to sell their gold.”

No reports of exports since July

Yet there have been no reports that North Korea has exported any gold since testing seven long-range missiles in July. Since the North conducted an underground nuclear test in October, which resulted in deeper sanctions from the UN Security Council, dealers have reportedly been even more reluctant to buy North Korean gold.

Estimates of North Korea’s gold reserves range as high as 2,000 tons, but mining has been sporadic since British, American, and then Japanese interests mined for gold beginning in the 19th century. With foreign expertise, North Korean mining may return to the period between 1983 to 1993, when its central bank sold an average of one ton a month on the London market.

“What we’re doing is normal business,” says Mr. Barrett in Beijing, explaining the efforts at reviving the mining industry. “We’re creating jobs for people, in line with the UN basic charter, in line with economic growth.”

Share

Posted in Banking, Central Bank, Economic reform, Finance, Foreign direct investment, Gold, Korea Business Consultants, Koryo Asia Ltd., Mining/Minerals, Thailand, USA | Comments Closed

S. Korea Investigating Aid to North

January 22nd, 2007

Donga (Hat Tip DPRK Studies)
1/22/2007

It is expected that the government’s aid to North Korea will be affected as the international community has decided to investigate the general situation of aid projects using U.N. funding including the United Nations Development Program (UNDP). So far, the government and private groups supporting North Korea have often used international organizations as a means to give humanitarian aid to the North, as such aid through the World Health Organization (WHO), United Nations Children’s Fund (UNICEF), World Food Programme (WFP) and others are less influenced by the inter-Korean relations.

Last year, the government and private organizations didn’t provide previously planned corn aid to the North in the aftermath of North Korea’s missile and nuclear tests. However, they spent 5.912 billion won in malaria preventive measures and infant and child support.

In 2005, they sent products worth 25.773 billion won in food aid and quarantine measures against malaria. Besides, they provided goods worth 2.254 billion won in aid and preventive measures against malaria with the North in 2004, and offered North Korea goods worth 20.303 billion won in corn, malaria preventive measures, and vaccine and immunizing agents in 2003.

The total sum Korea spent on the North in humanitarian assistance over the last 10 years (from 1995 to 2004) amounts to $119.43 million, 7.99 percent of the total U.N. financial aid of $1.49 billion to North Korea. During the period, apart from world organizations, the government gave the North $1.16 billion in financial support.

A government official said, “The government’s support for North Korea through international groups is its obligation as a responsible member of the international community,” and added, “Assistance for North Korea through world organizations is for humanitarian purposes, and as far as I know, there is no possibility for misappropriating funds since the aid is being carried out based on a principle of providing 100 percent goods.”

However, contrary to the above government’s official statement, the government seems rather perplexed at the suspicion that its aid through world organizations was diverted to be used for the North’s nuclear development program. The government has used world organizations as an indirect route for its aid toward North Korea because it was worried about getting embroiled in accusations that it is being too lenient on North Korea.

Unification Minister Lee Jae-Jeong also said in his inaugural speech that even humanitarian aid should be divided into emergency aid, assistance in loan form and aid for development, and that emergency aid should continue under any circumstances in order to emphasize the continuation of government’s support for North Korea through world organizations.

Minister Lee has so far expressed regret to the WFP over the suspension of food aid to the North and emergency relief aid for North Korea’s catastrophic flood damage. Another government official stated, The “UNDP seems to have nothing to do with humanitarian aid since it is aid for the development of North Korea. Still, it will still affect the government’s humanitarian assistance program for the North in the future.”

Meanwhile, it was revealed that the government is investing in the Tumen River Area Development Programme (TRADP) the government has been participating in since 1995 under the auspices of the UNDP. An official at the Ministry of Finance and Economy noted, “This year, the government will pay $181,000 for the operating expenses of the TRADP office.”

Share

Posted in Economic reform, Epidemics, Foreign direct investment, Health care, International Aid, Pediatrics, South Korea, Tumen River Area Development Programme (TRADP), UN World Food Program, UNDP, UNWHO | Comments Closed

« Older Entries
Newer Entries »