North Korea  

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North Korea


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Area (


22,224,195 (July 2002 est.)


North Korean won (KPW)

Kim Jong-il

Update No: 040 - (29/08/06)

Are nukes next?
If missiles come, can nukes be far behind? After the ructions caused by North Korea's test of seven missiles on July 5, August's most worrying news was a report that spy satellites, which observed missile preparations some weeks before the launch, were now seeing what might be preparations for a nuclear test. While the story soon died down, analysts do not rule out such a possibility - even though it would isolate Kim Jong-il's regime still further.

Meanwhile the DPRK's interlocutors strove to adjust to its new attitude of defiance after the missile tests. There were indications that China was showing its annoyance in practical ways, such as tightening border controls. South Korea moved in the other direction, using severe floods in the North as a basis to partially reverse its post-missile suspension of food aid - which always looked untenable. Meanwhile the US campaign to squeeze Kim Jong-il's finances chalked up new successes, with Vietnam reportedly closing DPRK accounts.

For its part Pyongyang denounced routine US-ROK war games as the real thing, warning of its right to a pre-emptive strike. Such extravagant rhetoric is routine, but the new climate of uncertainty since the missile tests understandably created a certain nervousness.

Next, a nuke test?
One of North Korea's many mysteries is that, though claiming since last year to possess a nuclear deterrent, it has yet to test a nuclear device. (It is rumoured that Pakistan's rogue scientisr Dr AQ Khan may have helped in that regard.) On August 17 ABC News in the US quoted an unnamed senior official as saying spy satellites had observed suspicious vehicle movements and other signs, including unloading large reels of cable, near Punggye-yok, a suspected nuclear test site in northeastern North Korea. The source stated: "It is the view of the intelligence community that a test is a real possibility." South Korea's foreign ministry confirmed next day that both capitals were on high alert, and President Bush warned North Korea not to do it. Others were more sceptical, noting that such reports arise regularly; and that leaks calculated to shape the debate, mainly by hawks, are routine in Washington.

Some analysts, however, reckon that the same logic by which Kim Jong-il defied the world to launch seven missiles on July 5 may impel him to go the whole hog; the reasoning being that only a test can confirm North Korea as a nuclear power and force the US to deal with it more respectfully and seriously. The story soon died down, but could flare up again on the precedent of the missile launch, whose preparations were watched and debated for several weeks - with some sceptical that Kim Jong-il would go ahead - before the actual event. For now, we can only watch and wait. Our own view is that Kim would be very foolish to take this extreme step right now; but then, nor did we expect him to actually fire the missiles.

Southern U-turn on aid
As we did predict, South Korea's peculiar riposte to July's missile tests - suspending food aid, while maintaining business cooperation - proved unsustainable in the wake of serious flood damage in the North in July from typhoon Ewiniar. The scale of this remains unclear. Whereas the UN put casualties at 154 dead and 127 missing, the Seoul-based NGO Good Friends alleges a disaster "of biblical proportions", as Time put it: with 54,700 dead (many due to landslides); 2.5 million - over 10% of the population - rendered homeless; and wide destruction of crops in major rice-growing regions. Even if those figures are exaggerated, this is a severe blow to a country already barely and minimally coping as regards food; yet which this year has spurned aid, expelling foreign NGOs and forcing the UN World Food Programme (WFP) to curtail its operations - which once fed up to 6 million North Koreans.

Facing pressure at home from public opinion to help their Northern brethren, the ROK first on August 11 allocated US$10.5 million to support local NGOs which had already stepped into the breach. Then on August 20 Seoul announced much larger-scale official support, to be channelled via the Red Cross: 100,000 tons of rice and the same weight of cement, along with iron rods, excavators and trucks, plus blankets and medical kits. All this is worth over US$200 million; it would cost less than half that if foreign rice were bought, but - as the ROK unification ministry (MOU) frankly admitted - because of a local rice surplus South Korea will send its own rice, at five times the price. As in the US, food aid is in practice inseparable from the political economy of farm support. 

Even with this aid, MOU reckons North Korea faces a grain shortfall of 1.5 million tons this year. Much of this deficit is chronic, but missile tests and flooding have worsened it. Given that, and the South's own rice glut, Seoul will come under pressure to reinstate the 500,000 tons of rice aid that it normally sends each year. The South will hope to link any such retreat to concessions by the North.

Washington tightens the noose
The financial squeeze which the US has pursued since last autumn appears to be both biting and spreading, with Vietnam its latest focus. According to the Financial Times on August 23, a visit to Hanoi in July by Stuart Levey, who as US under-secretary for terrorism and financial intelligence is overseeing this drive, led to the closing of several DPRK accounts there. A leaked Japanese joint intelligence report, cited by Bloomberg, claims that since US pressure forced the Macau-based Banco Delta Asia to freeze all DPRK accounts a year ago, North Korea has established new links with 23 banks in 10 coutries - including Mongolia and Russia, said to be among the few nations left where North Korea can still bank.

Levey's itinerary also took in Japan, Singapore and South Korea. While Seoul had earlier expressed dismay that this US pressure has stymied the six-party talks, this time the ROK foreign ministry (MOFAT) echoed Washington's stern note, saying it "has serious concerns about North Korea's illicit activities, including counterfeiting," and urging Pyongyang to "take steps to quell such worries in order to become a member of the international society." Even so, Levey's line that "the US continues to encourage financial institutions to carefully assess the risk of holding any North Korea-related accounts" (emphasis added) makes this a very blunt instrument: hitting legitimate trade and joint ventures as much as, indeed maybe more than, the dodgy stuff - which will always find ways of going underground.

China chafes
Although not confirmed by Beijing, China (beyond Macau) is also said to have joined the financial crackdown, with the state-owned Bank of China (BoC) freezing or closing DPRK accounts. Reports from north-eastern China claim that border trade has been curtailed, and that some North Koreans working without permits in China - as distinct from refugees - have been deported. In July, three refugees who had taken sanctuary in the US consulate in Shenyang were allowed to fly direct to the US, most unusually.

Yet while China must protect itself financially, and may vent irritation with Kim Jong-il in small ways, there is no sign of any large-scale sanctions or squeeze. At a time when North Korea's capital needs and partial opening are creating great opportunities for Chinese firms, and thereby also building leverage for Beijing in Pyongyang, it would be self-defeating if China were to over-react to the missile launch. A nuclear test might be a different matter.

Refugee raid in Bangkok
Refugees from North Korea returned to the headlines in August. A police raid in Bangkok on August 22 arrested no fewer than 175, all staying in a two-storey house; their numbers, unsurprisingly, drew attention. 80% were women, as is ever more the trend. Such fugitives must still make a long trek across a hostile China to find sanctuary in a third country; often aided by South Korean missionaries, as here. Despite this raid, Thailand is friendlier than other destinations like Vietnam and Laos, which as communist states are more heedful of their ties with the DPRK. 16 of those arrested already had papers from the United Nations High Commissioner for Refugees (UNHCR), and with two others were swiftly flown to Seoul. It was expected that the rest would follow, after a short spell in jail while UNHCR and the ROK government processed them. 

The numbers are growing, with 400 North Koreans turning up in Thailand alone so far this year. 1,054 reached the South in the first seven months of 2006: 59% more than in the same period last year, whose total was down from 2004. These are still tiny figures compared to the former two Germanys, or indeed most other global refugee flows. All governments, in Beijing and Seoul no less than Pyongyang, are fearful lest this trickle should swell into a mighty flood. North Korea suspended most contacts with the South for almost a year after 468 defectors were flown out of Saigon to Seoul (at Vietnamese insistence) in July 2004, even though the ROK did its best to keep this airlift low-key. This time, post-missiles, the South may prove less deferential to Northern sensitivities.

A new point man needed on the South
Rim Tong-ok, North Korea's point man on the South, died on August 20 aged 70, probably of lung cancer. As director of the United Front Department (UFD) of the ruling Workers' Party of Korea (WPK), and vice-chairman of the Committee for the Peaceful Reunification of the Fatherland (CPRF), Rim oversaw ties with South Korea, his field since the early 1970s. As such he was well known in Seoul, where the government sent condolences to Pyongyang, angering some; "Seoul Condoles N. Korea on Death of Spymaster" was the headline in the right-wing daily Chosun Ilbo. This was the South's second such gesture; the first being on the death last year of the North's ex-premier, Yon Hyong-muk.

Speculation began at once in Seoul on who would succeed Rim. Most money is on one of the UFD's two vice-directors: Ri Jong-hyok, an urbane ex-diplomat, and Choe Sung-chol, a rising star. Also in the frame is CPRF vice-chairman An Kyong-ho, notorious for warning that if the South's opposition Grand National Party (GNP) comes to power - as it may well do in 2008 - Korea will be "enveloped in the flames of war." Or Kim Jong-il may pick one of his own cronies, as is increasingly his wont; some analysts attribute his missile test gaffe to the dear leader being surrounded by yes-men who echo rather than query his judgment. Another name cited is Kim's brother-in-law Jang Song-thaek, purged in 2003 but reinstated earlier this year. None of this may happen quickly; Rim only got the job two years after the death of his predecessor Kim Yong-sun, a former KWP international secretary.

Still shuttling
Shuttle diplomacy among North Korea's interlocutors continues, if now less in hopes of reviving the seemingly moribund six-party nuclear talks than of creating a common front to respond to Pyongyang's provocations. On August 24 the Japanese newsagency Kyodo said that Christopher Hill, who as assistant secretary of state for East Asia is chief US delegate to the talks, will revisit the region in early September. A particular aim according to Kyodo is to beef up cooperation between the US, Japan and South Korea. These used to regularly meet at vice-minister level, but this Trilateral Coordination and Oversight Group (TCOG) has lapsed since 2003. While all unity helps, it seems tactless to exclude China at a time when Beijing is crosser with Kim Jong-il than ever before.

In late August rumours arose that Kim Jong-il may soon visit China for what would be his second visit this year. While there are certainly fences to be mended with Beijing over the missile tests and fears of a nuclear follow-up, this may be too soon. Any such visit would no doubt be nominally secret, as before. By contrast, South Korea's President Roh Moo-hyun announced a visit to China, set for mid-October. No doubt he and Hu Jintao, who both support engaging North Korea, will scratch their heads over how to maintain this when the Dear Leader's defiance makes it so difficult for them. There are no easy answers.

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