North Korea  

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22,224,195 (July 2002 est.)


North Korean won (KPW)

Kim Jong-il

Update No: 037 - (30/05/06)

Looking south?
May was an active month for inter-Korean ties, with military, economic and transport talks among others. The first ceremonial test runs of cross-border trains were due to roll - but not very far - on May 25. June may prove busier still, if as expected the former South Korean president Kim Dae-jung goes to Pyongyang to meet Kim Jong-il, as he famously did six years ago in the first (and so far only) inter-Korean summit talks. By contrast, the six-party nuclear talks remain stalled, despite rumours that the US is considering an offer to negotiate a formal peace treaty: a longstanding North Korean demand.

Many meetings
It is a measure of how far inter-Korean relations have progressed since that first summit that hardly a day passed in May without a North-South meeting somewhere. Not that all was, or is ever, plain sailing. A fourth round of talks between generals, held at Panmunjom in the Demilitarized Zone (DMZ) on May 16-18, failed to narrow differences evident when they last met in March. A military agreement is needed to create a joint fishing zone in the West (Yellow) Sea, where the crab fishing season saw fatal border naval clashes in 1999 and 2002. Yet North Korea insists on first renegotiating the Northern Limit Line (NLL): the de facto marine border for over half a century since the Korean War ended in 1953. South Korea will not open up that can of worms, but a hotline should keep the peace at sea.

Military consent is also needed if cross-border railways are ever to see any trains run. The relinked track in two trans-DMZ corridors has been ready for some time. Roads in the same two corridors are in regular if one-way use: taking Southern tourists to the Mt Kumgang resort on the east coast, and managers to the Kaesong industrial zone (KIZ) north of Seoul where 11 ROK firms (so far) employ 6,700 DPRK workers making export goods.

Yet North Korea continues to drag its feet on using the new railways. In May it agreed to hold short ceremonial test runs on May 25 in both the Kyongui (west) and Donghae (east) corridors, originally expected last October. When regular services will begin is anyone's guess. The view in Seoul is that the Korean People's Army (KPA) is fighting a rearguard action. Already the new corridors and cross-border road traffic have reportedly forced the KPA to move its large and offensively deployed forces several miles further back. 

Peace through business?
For precisely that reason, South Korean advocates of the 'sunshine' policy firmly believe that projects such as the KIZ are the surest route to peace and prosperity on the peninsula. Some even dream of a Korean equivalent to China's Shenzhen, adjacent to Hong Kong. 

Hence their sharp reaction when Jay Lefkowitz, President Bush's special envoy on North Korean human rights (not a topic emphasized in Seoul), criticized labour conditions at Kaesong (inter alia) in an op-ed in the Wall Street Journal last month. The ROK ministry of unification (MOU) dismissed his comments as distorted and narrow-minded - but invited him to come see the zone for himself, as unification minister Lee Jong-seok did on May 10.

Kaesong was also the venue for inter-Korean economic talks on May 18-19. There is some frustration in Seoul that the North, having proposed all manner of cooperation last year, has since proved elusive in firming this up. But MOU reported a narrowing of differences over planned joint ventures in mining and light industry. It hopes that a concrete agreement will be signed at the next full-dress economic talks, due to be held in the South by early June.

Still another set of talks, this time at Mt Kumgang, were to arrange Kim Dae-jung's return to Pyongyang. Here too there is a rail connection, or hopefully. Cannily, the elder statesman asked to make the trip by train this time. As of late May this had not been agreed; probably the most he will be allowed is to take the train to Kaesong, and then continue by car.

A summit - but at what price?
Transport apart, much is riding on this meeting. Analogies are already being made with the visit by Jimmy Carter in June 1994, when he met the then Northern leader Kim Il-sung (just a month before his death) and defused an earlier nuclear crisis. The hope is that his son Kim Jong-il may be prevailed upon to take some similarly bold step towards peace and opening.

Sceptics, however, fear that the main aim will be to arrange a second summit - probably in Pyongyang again, though the dear leader has yet to reciprocate by coming South - to revive the flagging political fortunes of the South Korea's current lame duck president, Roh Moo-hyun. And since the June 2000 summit was preceded by a covert, indeed illicit payment of at least half a billion dollars to Pyongyang, for which key aides of Kim Dae-jung were later jailed, the worry is that Kim Jong-il will again be showered with inducements. Speaking on a visit to Mongolia on May 9, Roh reinforced that impression by saying that "we intend to make many concessions" so as to overcome deep-rooted inter-Korean mistrust.

Food for thought
While this loss-leader approach was understandable initially, after eight years many now feel a shift to conditionality and reciprocity would not go amiss. Otherwise Kim Jong-il, buoyed up by aid from Seoul and Beijing, has no incentive to end his nuclear defiance or make any other substantial concessions. A case in point is food aid. On May 11 the UN World Food Programme (WFP), after months of negotiation, announced a $102 million programme to supply 75,000 tons of grain and other foods to 1.9 million of North Korea's 23 million people: far below its former 500,000 tons and 6.5 million beneficiaries. WFP will operate henceforth in only four instead of seven provinces, with an international staff cut from 40 to 10. Although Pyongyang claims to want to avoid creating a dependency culture, the reason that it is able thus to curtail the WFP, which insists on inspecting where its aid ends up, is because China and South Korea are supplying food bilaterally with little or no monitoring.

In Washington above all, such support of Kim Jong-il is deplored. Yet President Bush has only himself to blame, for blowing hot and cold for five years rather than pursuing a clear, consistent policy, be it hawk or dove. Hence the US has lost the initiative, if it ever had it. No less a figure than Henry Kissinger recently weighed in, with a Washington Post op-ed on May 16 which called for urgent, serious nuclear negotiations with North Korea - and pointed out that this is incompatible with seeking regime change, or appearing to do so.

A new US overture, maybe
In a bid to regain some steer and kick-start the stalled six-party process, a New York Times journalist often used for official leaks, David Sanger, reported on May 17 that the US is considering a new initiative on North Korea. It is said to be ready to offer talks on a formal peace treaty - a longstanding Pyongyang demand - if North Korea returns to nuclear talks. 
On May 22 assistant secretary of state Christopher Hill, who heads the US delegation to the talks, denied any policy shift. But his recent visit to Seoul and Beijing is seen by some as intended to present the new plan and coordinate approaches. Other Washington observers, however, suggest that a peace treaty is just one idea being kicked around within the Bush administration; and that it has yet to win the President's firm backing, much less support from the usual foes of engaging Kim Jong-il in the Pentagon and vice-president's office.

The US needs to be seen to be doing something. Otherwise, not only is North Korea free to press ahead with its two suspected nuclear programmes, merrily processing plutonium from the no longer monitored Yongbyon site; but Kim Jong-il's apparent impunity creates a bad example for others, in the context of ongoing efforts to try to curb Iran's nuclear ambitions. 

Mistrust runs deep
Yet the peace treaty idea, even if it is ever formally tabled, might not fly. After five erratic years, Kim Jong-il's mistrust of the Bush administration may be beyond cure; especially if the US continues to impose financial sanctions - whose lifting Pyongyang demands before it will return to nuclear talks - and to emphasize North Korean human rights abuses, as on April 28 when George W. Bush received DPRK defectors in the White House. Afloat on aid from South Korea and China, the dear leader has scant incentive not to sit it out until 2009 and wait for a new US government, hopefully Democrat-led and more amenable.

A further twist is that, unlike the six-party talks, a peace treaty to formally end the Korean War would exclude Japan and Russia, since neither was officially a combatant. (For that matter, South Korea never signed the 1953 Armistice - the then ROK president, Syngman Rhee, refused to - a fact that North Korea has made propaganda hay with in the past.) Both Tokyo and Moscow complained at their exclusion from earlier abortive four-party Korean talks in the late 1990s, and would surely do so again. Russia is sensitive to its diminishing clout on the peninsula; while Japan has its own bones to pick with Pyongyang, above all on the still stalled abduction issue as well as missile and other concerns.

A missile test?
On that topic, Japanese press sources reported in mid-May that North Korea seemed to be preparing to test-fire a long-range missile. Officials in Tokyo and Seoul confirmed that a Taepodong-2 missile had been moved to a launch site in the northeast, but said they had no credible intelligence that an actual test was imminent. Kim Jong-il is probably playing an old game. To launch a Taepodong would risk angering Beijing and Seoul; but to move one into position on the ground, in plain view of US and Japanese spy satellites, keeps everyone guessing. He made such feints in the summer of 1999, before agreeing a moratorium which has been adhered to on further long-range tests. That was after an unannounced Taepodong test over Japan in 1998, thought to be a failed satellite launch, had rattled Washington (bits fell close to Alaska) and Tokyo alike; this was a key factor in prompting both the US quest for national missile defence (NMD), and Japan's shift to a less pacifist and more actively pro-US security stance. The Clinton administration negotiated on missiles, and was close to a deal which would have taken Bill Clinton to Pyongyang to sign it. But Palestine flared up, the moment passed, time ran out, and the incoming Bush administration broke off talks.

China tightens ties
A steady stream of Chinese visitors in May, mainly economics and business-related, also included relatives of Mao Anying: the son of Mao Zedong, killed in the Korean war and buried in North Korea. This much feted delegation was a gesture of reassurance by Beijing that Kim Jong-il can count on Chinese support when the chips are down; the implicit sub-text being that he should not be afraid or slow to change. On May 23 it was announced that the DPRK foreign minister, Paek Nam-sun, will visit China for a week from May 30; hard on the heels of Christopher Hill. The puzzle here is that Paek's role is mainly ceremonial; he has less clout than his nominal deputies, Kim Kye-gwan and especially Kang Song-ju.

2005 trade figures top $4 billion
Meanwhile, on the economic front we now have 2005 trade figures for North Korea. Not from Pyongyang, where glasnost does not yet extend to publishing numbers; but as usual from Kotra, South Korea's trade and investment promotion agency, which compiles these laboriously from figures released by the DPRK's trade partners.

On this basis, Kotra reported that North Korea's trade last year rose 5% from 2004 to just a fraction over $3 billion, the highest figure since 1991. Imports rose 9.1% to $2.003 billion, while exports fell by 2.1% to $998 million, leaving a record trade deficit of $1.005 billion. However, these figures exclude North Korea's second largest trade partner - namely South Korea; since as Seoul officially, but perversely, classifies inter-Korean trade as domestic for political reasons. Counting this in takes Pyongyang's trade total to $4.06 billion, since last year North-South trade exceeded a billion dollars for the first time. Here again, North Korean exports of $340 million were far from covering imports worth $710 million. The Kaesong zone accounted for $177 million or 17% of the total, on both sides of the ledger. If this expands as planned, it could soon come to dominate North Korea's trade picture.

For now, whereas inter-Korean trade was about a quarter (26%) of the North's total, China retains pole position as Pyongyang's top trade partner with $1.58 billion worth, up 14% from 2004. Other partners, a long way behind, include Thailand, Russia and Japan. The latter used to be the second largest partner and a main source of hard currency, but volumes now - a mere $131 million in exports and $63 million in imports, totalling $194 million - are lower than 20 years ago, owing to worsening relations and tighter Japanese controls.

Fair enough
Also on the business front, the 9th Pyongyang Spring International Trade Fair opened on May 15. A modest affair by global standards, this has 196 exhibiting firms from 12 foreign countries as well as 21 local ones. Though seemingly not mentioned in the DPRK media, for the first time a 72-strong South Korean delegation was invited; including 36 businesses and research institutes and 15 government officials from 9 ministries, plus academics and journalists. Companies represented - but not exhibiting at the fair - included SK, Posco, Kumho Asiana, Hanwha, CJ and TongYang. In its week-long visit the group also visited two universities and four factories, including a Chinese-aided glass plant and a ship-repair dock in the port of Nampo whose manager asked: "Please use our facility to promote inter-Korean economic exchange." That could happen: the visitors found this and other facilities more modern than they expected. They also attended an investor relations session hosted by the DPRK trade ministry, with simultaneous translation into Chinese and English, which promised tax benefits and cheap land leases. It may be that inter-Korean business will go forward more via contacts like this than formal agreements between the two governments.

Slowly, but increasingly surely, North Korea is changing. Another sign was the opening on May 22 by Associated Press Television News (APTN) of an office in Pyongyang, the first Western news organization to do so. That took four years to negotiate; it will be interesting to see how freely they will be able to report, and how soon others may join them.

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