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Update No: 045 - (25/01/07)

New year, old and new issues
In the endless ups and downs of sentiment over the on-off six-party nuclear talks, as of late January the mood seemed relatively optimistic - even though the actual talks, when they reconvened in December after a hiatus of over a year, got nowhere. But in January, an unexpected bilateral US-DPRK meeting in Berlin reportedly went well. If and when the full six-party talks resume in February, we shall see if a way forward has been found on the nuclear and other cruxes, including US financial sanctions.

Bilateral in all but name
The absurdity on all counts of the Bush administration's abjuring purely bilateral talks with the DPRK was never clearer than in mid-January, when it emerged that the US (while denying it) was doing precisely that - and to good effect. Christopher Hill, the US assistant secretary of state and chief delegate to the six-party talks, met in Berlin over three days (January 16-18) with his North Korean opposite number, vice foreign minister Kim Kye-gwan. Both sounded upbeat. Indeed the official Korean Central News Agency (KCNA) even quoted the DPRK foreign ministry as saying "a certain agreement was reached" and praising the talks' "positive and sincere atmosphere".

A deal?
Such rare public praise from KCNA is a two-edged sword for Hill; it will not please Washington's hawks. Still, this is a positive turn. No details were revealed, but press reports in Seoul said the two sides came close to agreeing to refreeze North Korea's nuclear reactor under international monitoring, in exchange for an aid package. 

If true, that is far more progress than seemed possible when what was technically (if rather absurdly) regarded as the recessed fifth round of the six-party nuclear talks, at last reconvened in Beijing on December 18, after a gap (some recess!) of over a year. After less than a week the meeting recessed again, sine die, with nothing resolved. 

Six-party talks reconvene, but without result
While no one expected an instant breakthrough, especially in the new situation since the nuclear test, the complete lack of progress disappointed - and also surprised, since much effort had gone into preparations so that these talks would be more than a mere formality. In particular, the ever energetic Christopher Hill hinted in advance that a way had been found to resolve the financial sanctions issue, the main roadblock.

North Korea is unyielding
In the event the financial issue was indeed discussed in a separate channel, but there was no progress. Contrary to earlier speculation that North Korea would admit to counterfeiting US currency in the same way as it did to kidnapping Japanese, i.e. by blaming rogue elements, Kim Kye-gwan took a maximalist stance: not merely denying counterfeiting, but demanding that all financial sanctions be lifted upfront before anything nuclear could be discussed. As Kim Jong-il must know this is unacceptable to the US (and indeed other parties), some feared that, at least for now, the dear leader has no interest in negotiating away his nuclear deterrent. But then the Berlin talks suggest a chink of light and movement behind the scenes. We shall see.

Birthday blues
On past form mid-February should be marked by celebrations across North Korea for Kim Jong-il's birthday on February 16. 5- and 10-year dates are especially auspicious, and this year the dear leader officially turns 65 - although he may really be 66. 

For most people that would be retiring age, but Kim is reported to have said recently that he can and will carry on till he is 90. He has also reportedly banned all discussion of the succession; even though with none in place, North Korea's long-term future - or indeed immediate, were he to drop dead tomorrow - is very much open to question.

This is in sharp contrast to his own 20-year grooming as crown prince to his father, North Korea's founding leader Kim Il-sung, who died in 1994. As noted here before, a tangled marital history leaves Kim Jong-il facing invidious choices between at least three sons, plus other contenders. Yet doing nothing and putting the subject off limits, will not make the problem go away.

In this context, there are rumours that Kim has ordered that his birthday should not be celebrated this year. That would indeed mark a change, if the hundreds of Kimjongilia flowers (begonias) being expensively reared with precious winter fuel in greenhouses across the land were for once not to go on display. North Korea could always join the South and China in marking the oriental New Year, which falls around the same time.

Dying off
Kim Jong-il must also ponder as mortality's relentless march thins the ranks of his top cadres. Latest to go was foreign minister Paek Nam-sun, who died of lung cancer on Jauary 2. In post since 1998, his role was mainly but not wholly ceremonial: a week-long visit to China last June looked substantive. Paek's Warholian 15 minutes of fame came in August 2002, when he took coffee at the ASEAN Regional Forum (ARF) in Brunei with his rather better known US opposite number at the time, Colin Powell.

For serious business, however, two of his nominal deputies did the honours: Kang Sok-ju, who negotiated the 1994 Agreed Framework with the US; and Kim Kye-gwan, chief delegate to the six-party nuclear talks. In that sense Paek's death is not as untimely as might be feared, since he was not in the policy loop at the highest level; whereas both Kang and Kim are said to report directly to Kim Jong-il.

What's in a name?
Earlier, Paek had been active in the first inter-Korean talks which began in the 1970s. He was then known as Paek Nam-jun. Several North Korean figures have thus subtly altered their names during their careers; no one seems quite sure what this signifies.

Extreme gerontocracy
Barely a month earlier, on November 23, lung cancer also took Kye Ung-tae: a full Politburo member of the nominally ruling Worker's Party of Korea (WPK), who as party secretary for national security had far more clout than Paek. Kye was 81, and unusually KCNA described him as having retired. Normally Pyongyang elites only leave office feet first. With no fresh blood since Kim Il-sung died, the Politburo - which the dear leader ignores in any case - is down to just six full members. One, the anti-Japanese guerilla veteran and honorary vice president Pak Song-chol, passed 93 last September. Three others are over 80, and Kim Yong-nam, who as Presidium chair 
of the Supreme People's Assembly is North Korea's titular head of state, turns 79 on February 4. So in this company, at 65 Kim Jong-il is a mere lad by comparison.

UNDP allegedly lax
A new row in January threw a rare spotlight on the UN Development Programme and its activities in North Korea. The US deputy ambassador to the UN, Mark Wallace, alleged that UNDP's aid programme in the DPRK had been run for years "in blatant violation of UN rules", allowing Pyongyang to siphon off funds for "its own illicit purposes." He specifically claimed that UNDP local staff are dominated by DPRK officials, who run the agency's operation and finances in ways that break UNDP rules.

Violations alleged include the government's insistence that UNDP pay cash to North Korean government suppliers, and UNDP's failure to oversee projects it funds in the country or to audit its programmes. UNDP denied this, claiming it is "doing its best in very difficult circumstances", and welcomed an external audit announced on January 22 by the new UN Secretary-General Ban Ki-moon, himself from South Korea.

A hostile flag
UNDP was the first UN agency to open an office in Pyongyang, circa 1980. At first it was not allowed to fly the UN flag, under which during the 1950-53 Korean War a US-led international force had repelled Kim Il-sung's invasion of South Korea - and briefly occupied much of the North. Neither Korean state formally joined the UN until 1991: the North bizarrely insisted they should occupy a single seat, and could still rely then on the USSR and China to veto South Korea's joining. But from the 1970s both Koreas had begun to participate in specialized UN agencies, like WHO and Unesco.

Modestly useful
UNDP's activities in North Korea have always been modest. In the past decade it has spent some US$3 million annually, plus US$600,000 for office costs. By definition then its projects are small-scale, focusing on farming and food production, the environment and economic management. In the past it has organized English and French language training - the former in Denmark, since the UK did not then recognize the DPRK - and technical assistance to North Korea's then fledgling computer industry; although at least one head of mission tried to persuade the DPRK, long before its dire famine in the mid 1990s, to focus mainly on agricultural rehabilitation and improvement.

Political storm in a teacup?
As an aid agency by definition, UNDP is in the business of giving money to the DPRK - where everything is government-run, and working conditions are very tough. So any financial looseness will at worst be small beer: hardly on a scale to fund Kim Jong-il's nuclear arsenal, as some press accounts implied.

As with US targeting of DPRK finances in Macau's Banco Delta Asia (BDA) since September 2005, one can only wonder at Washington's timing and coordination. The BDA intervention looked suspiciously like a bid by hawks to sink the six-party talks; just when at last they were getting somewhere, this gave Pyongyang an excuse to take its bat home for over a year. Is history now repeating itself? One can only hope not.

KEDO wants its money back
It was reported on January 16 that the Korean Peninsula Energy Development Organization (KEDO) consortium is claiming compensation of US$1.9 billion for its now defunct programme to build two light water reactors (LWRs) in North Korea. Set up under the October 1994 US-DPRK Agreed Framework (AF), for almost a decade KEDO seemed a model of how multilateral cooperation with Pyongyang could work; even though its core board members - the US, South Korea and Japan - were all the DPRK's traditional enemies, so at first there was much suspicion and hard bargaining.

But from late 2002 a second, ongoing North Korean nuclear crisis undercut its work. The $4.6 billion LWR project was officially scrapped last year, with construction well advanced. $1.56 billion had been spent, mostly by South Korea. Needless to say there is zero chance of Pyongyang paying up, or even releasing the considerable amount of construction equipment left behind at the LWR site at Kumho on the northeast coast. 
Indeed North Korea for its part has demanded compensation from KEDO for failing to deliver. Each side claims the other broke the AF. This is a sad end to what once looked a promising way forward. KEDO itself may be formally wound up ere long.

The South's unification ministry keeps score
On January 5 South Korea's unification ministry (MOU) published its annual tally of North-South visits, trade and the like. In 2006 inter-Korean visits (excluding tourists to the North's Mount Kumgang resort) passed 100,000 for the first time; reaching 101,708, up 15% from 2005. MOU credited most of this to economic cooperation. Daily and weekly commuting by Southern managers from Seoul across the once impenetrable Demilitarized Zone (DMZ) to the Kaesong industrial park, where about 15 Southern firms (so far) employ 11,000 North Korean workers to make export goods worth $6 million monthly, doubtless bumped up the figures. 

One-way visits
Yet as MOU noted, this flow remains highly unbalanced: a mere 870 or less than 1% were North Koreans coming South. Over a million person-journeys were made using the two relinked cross-border roads, the vast majority being tourists to Kumgang. By contrast the parallel railway lines still languish unused, with no sign of progress even before the North's missile and nuclear tests cast their pall in the latter half of 2006.

Inter-Korean trade rises 28%, and more is real trade
Despite the tests inter-Korean trade also had a record year, rising 28% to US$1.35bn. While in the past much so-called trade has really been Southern aid, MOU noted that in 2006 the truly commercial proportion rose by over a third (34.6%) to US$928m. 

Is Northen poverty really the problem?
On inter-Korean relations the new year brought contrasting assessments. On January 2 South Korea's dovish new unification minister Lee Jae-joung, an ordained Anglican priest, called for more aid to the North if it abandons its nuclear ambitions; saying that "unless we fundamentally solve the problem of poverty in North Korea, security on the Korean Peninsula will always be in danger." The conservative opposition Grand National Party (GNP) riposted that the problem is nuclear weapons, not poverty, and accused president Roh Moo-hyun of "begging" for a second inter-Korean summit. On present form the GNP, which the North detests, looks set to take power next year.

North calls for the South to unite - behind Kim Jong-il
For its part, North Korea in its usual new year joint editorial of three daily papers - those of the party, army and youth - called on all Koreans, north and south, to unite for independent reunification. It added that they should "staunchly support Songun [military-first] politics", i.e. Kim Jong-il's policy line: so their idea of unity is for South Koreans to march to a Northern drum. Just sometimes North Korea is crystal clear - even if they seem to neither know nor care how this will go down in the South. 

Samsung's Lee is gloomy
Meanwhile a top Southern tycoon sounded a gloomy note. Samsung group chairman Lee Kun-hee, cautiously re-entering the limelight after a bad patch in which Korea's biggest business and brand had been mired in scandal, in his new year message cited the North Korean nuclear issue as one of three reasons - the others being high oil prices and the appreciating won - why "this year, the future for us isn't that bright."

The North's nuclear deterrent deters the chaebol too
Like every other chaebol bar Hyundai, Samsung has shown almost no interest in a North Korea which it deems not yet seriously open for business. (The contrast with Taiwanese firms' rush into China is telling.) Neither Kim Jong-il's mistreatment of Hyundai nor his nuclear defiance are encouraging. Indeed his nuclear deterrent is just that: a deterrent to investment and prosperity as much as to peace on the peninsula. Perhaps the next six-party talks will show that the penny has finally dropped on this connection in Pyongyang, but on past form optimism would be premature.

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