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  A KBC publication   May/June 2009  
 



COVER
- Peninsula Shocks
- "Kaesong Zone in Turmoil"
- DPRK Wants to Be Respected
- "UNDP to Resume DPRK Operations"
- All-out effort for peace


ECONOMY
- DPRK Starts 150-Day Drive to Raise Production
- "China to Strengthen DPRK Trade Ties"
- UN Slaps Sanctions on 3 DPRK Firms
- DPRK Trade Hits Record US$3.8 Billion
- "Economic Revival in Tumen Area"
- Mobile Phone Internet Service Available in DPRK


INTER KOREAN
- Seoul Closes DPRK Aid Bureau
- ROK Lawmaker Visits DPRK
- "N,S Korea Should Cooperate in Solar Energy"


CULTURE & SPORTS
- US Christian Bands Perform in Pyongyang　
- DPRK, China to Build Tour Rail Route
- Italian Restaurant Opens in Pyongyang


KOREA COMPASS
- Koreans in Japan
- Korean Proverb
Korea Business Consultants Copyright 2009 © All Rights Reserved
 
Editor's Comment

Three profound shocks have hit the Korean peninsula over the past month: The virtual closure of the Kaesong Industrial Zone, the suicide of the ROK's ex-president Roh Moo-hyun, and the DPRK's latest nuclear test.

The Kaesong zone opened in 2004, as a pilot project for economic integration between the two halves of the divided peninsula. Using skilled and disciplined North Korean workers, about 100 ROK companies set up there, manufacturing goods for export. For South Korean business, access to the North's labor and mineral resources is the lifeline which will see it through the difficulties of the world economy. The ROK depends upon exports for 85% of its GDP, and has to import most of the materials to make its export goods (paid for in hard currency). In addition, its own labor costs are much higher than the US$75 a month the Kaesong firms pay their 39,000 North Korean workers -- a fact that has had outside media complaining of exploitation.

The Pyongyang government's demands for higher wages and its tearing up of the Kaesong contracts has panicked the ROK business community, which is demanding compensation from the South's Lee Myong-bak government and that Lee halt the sending of propaganda balloons into the North. One can't escape the conclusion that this is a calculated move on Pyongyang's part to put pressure on Lee via the ROK business community to abandon his hardline policies toward the North. (cont. on p.2)

Since President Lee Myung-bak took charge of the ROK the situation on the Korean peninsula has gone from reduced tension, with the symbolic start of denuclearization (photo - above left), to all-out missile confrontation.
With the death of the ROK's ex-president Roh Moo-hyun (center) came the death of the "Sunshine Policy" of Roh and his predecessor Kim Dae-jung.

South Korea's point man for North Korea said May 18 that the joint industrial enclave at Kaesong, just across the DMZ in the North, is "in turmoil" after the DPRK voided contracts governing the facility the same day, sending shares in firms that operate there tumbling. The KOSPI fell by 0.44 percent upon receipt of the news. Reuters reported that the DPRK had announced that it was tearing up deals on labor, rent and taxes at the Kaesong Industrial Park, the last major economic project between the rivals, where South Korean firms use cheap North Korean labor and land to make goods for export. (cont. on p.2)
 

(Kaesong Zone in Turmoil, continued from p.1)
"Today, the Kaesong industrial zone is in crisis," Unification Minister Hyun In-taek told an academic seminar. The Seoul government and South Korean businesses have invested US$583 million in the venture since construction began in 2002.More than 38,000 North Koreans work at the South Korean companies, producing items including garments, kitchenware and watches.

Analysts said the North wants to raise rents and wages, which start at US$70 a month per worker to levels that are still cheaper than those in China or Vietnam.

Shares in companies that have production units in Kaesong, located about 70 km (45 miles) northwest of Seoul, sank in early trading on fears that the plants could shut down, with watchmaker Romanson shedding more than 5 percent and garment maker Shinwon Corp losing nearly 3 percent.

Complicating the issue is the North's detention of a ROK worker at the park for about two months. The man is accused of denigrating the DPRK system and trying to lure a local worker to defect to the South.


(Peninsula Shocks, continued from p.1)
The death of Roh Moo-hyun also underscores the counterproductiveness of Lee Myong-bak's hard line. It reflects the utter despair of a man who saw all his work to reduce tensions on the peninsula (including a summit with Kim Jong Il in 2007) and promote North-South economic cooperation reversed by Lee, who wanted to ingratiate himself with the hardline Bush administration.

The North's nuclear test further isolates Lee Myong-bak, both from his own people and from his US allies. Pyongyang's quest for nuclear weapons has two objectives. The first is to make US military action against it impossible, a lesson it learned from the invasion of Iraq. Incidentally, by making itself invulnerable, it extends a shield over south Korea too, as a nuclear response to a US attack would devastate the whole peninsula, including the US bases there. The second involves the question of nuclear electricity generators. As the DPRK has not enough foreign currency to buy fuel from abroad, as a result of the 60-odd-year US embargo on its foreign trade, it needs nuclear plants to supply the electricity to power its economy. Since talks started in 1994, the US has consistently put obstacles in the way by warning that North Korea might use the reactors to make nuclear weapons. Now, this excuse is no longer valid: The DPRK already has a nuclear defense, and suppliers of nuclear energy technology can't be accused of supporting a weapons program.


DPRK Wants to Be Respected

[The following is an edited version of an article by Rudiger Frank Chair of East Asian Economy and Society at the University of Vienna. The whole article may be viewed on Nautilus.NAPSNET.com.]

The DPRK has recently announced that it would restart the reprocessing of spent nuclear fuel rods, conduct more nuclear tests, and launch more ICBMs. Is this a response to the UNSC resolution, or the reflection of a policy change towards a harsher line in Pyongyang?

I would suggest answering "no". The DPRK has been known for its long-term strategy based on a high level of leadership continuity, which makes it actually much more predictable than our democracies with their frequently changing administrations. To assume that a major decision such as conducting a second nuclear test would be ad hoc and based on a UNSC resolution would not properly consider the nature of the DPRKs system. Decisions like this are part of a long-term strategy. So what else has compelled the DPRK to take these measures?

Ironically, it might have been us. Pyongyang seems to do what the West is telling them. After the first nuclear test in 2006, our side was quick to announce that the blast was a minor one, a flash in the pan, a failure. The message to the DPRK was: This one does not count. But it was conducted for a number of reasons, which, as most analysts believe, includes deterrence and rising to the status of a nuclear power, both being key means to achieve objectives such as regime security, stability and economic aid. Rodong Sinmun was full of articles quoting foreigners whose statements were interpreted as acceptance of the nuclear power status. By belittling and downplaying the test, a number of critical objectives were to be achieved, no doubt. However, one effect was that the DPRK heard the message: Conduct another one, so that we can be sure.

The same story is happening to the ICBM issue. Even before the launch, failure was expected. The first news after the launch mentioned that only stage one worked. This was corrected later, since obviously stage two had worked, too, but we all know that the first news counts. So the message to Pyongyang was: Please launch another missile, until the third stage works, too, so that we can be sure.

The next issue is the spent fuel rods. Our side declared that the DPRK possesses about 50 kg of plutonium, and we started speculating how useful this would be. The bottom line was: That’s not enough to be a real threat. Pyongyang hears: Please reprocess more, so that we can be really afraid.

Last but not least, the warhead. Yes, we said, they indeed conducted kind of a nuclear test, so they have mastered the technology in principle. But oh, what a far cry this is from miniaturizing and creating a device that would function under the conditions of an ICBM launch. And this is what the leadership in Pyongyang hears: If you want us to take you seriously, please go ahead and produce a real warhead.

The DPRK feels surrounded by enemies. It is under severe economic stress, and there are speculations about leadership succession and domestic political stability. We could of course again play the risky game of forcing the "other side" to spend all their money on the unproductive military sector in a suffocating arms race. This worked during the Cold War. But I still believe that the world was just lucky. Such a game could take a while and produce unexpected results. Maybe we should think out of the box and give them what they want.

The DPRK is bent on becoming a nuclear power anyway; let's not force them to do so at a level of development of related technology that would be really threatening. The DPRK does not want to be loved; it wants to be respected. With some luck, Pyongyang might be satisfied and stop (mis)investing its scarce resources to achieve something it already has. Calling the bluff is not always the best idea, even if it works. The humiliated player will learn that next time he really needs a good hand. This can't be in our interest.
 
"UNDP to Resume DPRK Operations"
Yonhap reported that officials of the United Nations Development Program (UNDP) were to visit the DPRK in late May to discuss the reopening of its office there and the resumption of projects suspended two years ago, a ROK government source said. UNDP officials visited Seoul in early May, and discussed the matter with ROK officials, the source said on condition of anonymity.
 
All-out effort for peace
(China Daily)

Millions in the Republic of Korea (ROK) still grieve over the death of their former president Roh Moo-hyun.

The world, too, should mourn his death because, of all the legacy of Roh, the most important is his visit to Pyongyang in October 2007 and signing of the Declaration for Development of North-South Relations and Peace and Prosperity with Kim Jong-il, chairman of the National Defense Commission of the Democratic People's Republic of Korea (DPRK).

The declaration raised so much hope as Roh and his northern counterpart pledged to "realize the advancement of North-South relations, peace on the Korean Peninsula, common prosperity of the Korean people and unification of Korea".

And, the ringing words that come to mind are: The two leaders "agreed to oppose any war on the peninsula and faithfully honor the commitment of non-aggression...".

Unfortunately, the declaration is forgotten now as the DPRK has made a series of moves to demonstrate its possible nuclear capability since it carried out the second underground nuclear test a week ago.

The DPRK even declared that it has turned its back on the Korean War Armistice Agreement, which was co-signed, among others, by Kim Il-song, the then Supreme Commander of the Korean People's Army.

This agreement recognized that the Korean conflict inflicted "great toil, suffering and bloodshed" and sought to "ensure a complete cessation of hostilities and of all acts of armed force" on the Korean Peninsula. And, it is this agreement that has made it possible for the DPRK and ROK to develop politically, socially, economically and even militarily.

By its brazen display of nuclear prowess, the DPRK is not only turning its back on the promises made but also endangering security and peace in the Korean Peninsula, the Asia-Pacific region and the world at large.

But, when we insist that the Korean Peninsula should become denuclearized and express our strong opposition to the DPRK's actions, other countries that are still hostage to the Cold War mindset should also do some soul-searching.

Why has the engagement policy that Kim Dae-jung and Roh helped to develop and maintain been abandoned today? Why is the mutual respect and trust that prevailed between the North and South during the presidencies of Kim and Roh no longer honored?

Why did the war against Iraq occur, giving many countries the dark hint that only the weak countries, such as Iraq, would fall victim to the world's only superpower? Why should the NATO, the military alliance of the Cold War, continue to expand?

Some four decades of Cold War have proven that adversarial military alliances and actions will not root out conflicts.

In the words of Ma Xiaotian, deputy chief of the General Staff of the People's Liberation Army, the countries that sacrifice the security of other countries will not secure their own safety.

Denuclearization on the Korean Peninsula, peace in the region and the world, requires cooperation, dialogue, balance, mutual respect and trust, and mutual benefits more than ever before.

(China Daily 06/02/2009 page8)

http://www.chinadaily.com.cn/opinion/2009-06/02/content_7961765.htm


ECONOMY

DPRK Starts 150-Day Drive to Raise Production

On May 6 the DPRK launched a 150-day campaign to raise production, according to Pyongyang media, to usher in a new term for leader Kim Jong Il. The ruling Workers' Party's official daily Rodong Sinmun said the campaign represents the party's "firm determination and will" to make a breakthrough in building "a great, prosperous and powerful nation" by 2012. The paper urged workers to raise production in the metal, power, coal, machinery, agriculture and construction sectors.


“China to Strengthen DPRK Trade Ties"

Xinhua News agency reported reported that officials from the PRC and DPRK have pledged to further strengthen the trade and economic cooperation between the two countries. PRC companies are interested in investing particularly in processing trade, compensation trade and resources development, Wang Jinzhen, vice-chairman of the China Council for the Promotion of International Trade, said. For his part, the vice-minister of foreign trade of the DPRK, O Ryong Chol, said annual meetings between the official trade bodies of the two sides offered a platform to deepen mutual understanding and bilateral cooperation between the two countries.

Meanwhile, Xinhua reported that a PRC delegation visiting Pyongyang had presented office equipment including computers and printers, worth some USD72,000, as gifts to the DPRK's National Academy of Sciences. The delegation was attending an annual meeting to enhance collaboration in science and technology between the two countries. The next meeting will be held in the latter half of 2010 in Beijing.


UN Slaps Sanctions on Three DPRK Firms

The Washington Post reported that the UN Security Council agreed at the end of April to impose financial sanctions on three DPRK firms: Korea Mining Development Trading Corporation, Tanchon Commercial Bank and Korea Ryongbong General Corporation, which had previously been subjected to sanctions by the United States for allegedly trading missile technology with Iran, Yemen and Pakistan. The Security Council also agreed to reinforce a trade ban on items that the DPRK could potentially use in the development of missiles, including "the latest technology related to ballistic missile technology," the Post quoted Turkey's UN ambassador, Baki Ilkin, who chairs the council's DPRK sanctions committee, as saying.


DPRK Trade Hits Record US$3.8 Billion

The JoongAng Ilbo reported that DPRK trade with the outside world, excluding the ROK, hit a record US$3.8 billion-worth last year despite rising tensions on the Korean Peninsula. Trade jumped 29.7 percent compared with 2007, the Korea Trade-Investment Promotion Agency, a ROK trade agency, said in a report. Last year, the DPRK's exports rose 23 percent to US$1.13 billion-worth, while imports climbed 32.7 percent to US$2.69 billion-worth, the report said. The country still posted a trade deficit of US$1.56 billion for the year.

AFP reported that the PRC accounted for almost three-quarters of the DPRK's total trade last year, and its economic influence over the latter is expected to grow still further. Trade with the PRC accounted for 73% of the DPRK's total, compared to just 33% in 2003. North Korea exported goods worth US$750 million to China, while imports were worth US$2.03 billion.


"Economic Revival in Tumen Area"

The Chosun Ilbo reported that the Tumen River Area Development Program is showing signs of coming back to life, 17 years after it was conceived. The PRC is keen to develop the area as part of economic stimulus measures, and Russia is doing the same, with Vladivostok set to host the APEC meet in 2012. The PRC is the most aggressive in terms of developing the region, forming a Tumen River development task force and producing a blueprint for further development in November 2008. At the crux of the 200-page report is the securing of a route to the East Sea by using DPRK and Russian ports as launching pads to attract businesses in the ROK, Japan, Hong Kong and other countries.


Mobile Phone Internet Service Available in DPRK

The DPRK has begun limited Internet service for mobile phone users, a government website reported, only months after launching an advanced network in cooperation with an Egyptian telecommunications company.

The service allows North Koreans to access a website through their phones to see news reports carried by the country's official Korean Central News Agency as well as news about the capital Pyongyang, according to the government-run Uriminzokkiri Web site.

The Korean-language website, as seen on an ordinary computer screen, also allows viewers to listen to North Korean music, get information about books, art and investment opportunities in North Korea, and even engage in Internet chatting. It is unclear, however, if those services are available on the mobile version.

Uriminzokkiri did not say whether the service is restricted to the capital Pyongyang or available elsewhere.

North Korea introduced an advanced mobile phone network in partnership with Cairo-based Orascom Telecom in December 2008. That marked the first time that North Koreans were allowed to use cell phones since a previous, short-lived mobile service was shut down without explanation in 2004.

Orascom said at the time that the 3G network was initially deployed to cover Pyongyang, which has a population of more than two million, with plans to expand coverage to the entire country over the next few years.

The number of mobile phone users had reached 20,000 by the end of March, including some foreigners, the Tokyo-based Choson Sinbo newspaper said earlier this month. Mobile phones in the DPRK so far do not allow cross-border contact, nor do they connect with the special telephone networks that foreigners are permitted to use inside North Korea.

According to the ROK's Institute for Far Eastern Studies, mobile phones are available to anyone who submits the required information on an application to a service center, along with an application fee of 50 yuan RMB, or approximately one euro or 130 Japanese yen. Currently, the phones are selling for between 110 euros for basic handsets to as much as 240 euros for phones with cameras and other functions.


INTER KOREAN

Seoul Closes DPRK Aid Bureau

Yonhap reported that the ROK's Unification Ministry has closed its bureau organizing humanitarian aid to the DPRK as part of the Ministry's restructuring, a move that mirrors frozen political relations. The Humanitarian Cooperation Bureau was established in late 1996, ministry officials said.


ROK Lawmaker Visits DPRK

Yonhap reported that a member of the ROK's opposition Democratic Party arrived in the DPRK May 20 for a week's visit as part of a delegation from a local civic group dedicated to providing the DPRK with humanitarian aid. Rep. Chun Jung-bae was traveling with the seven-member Korean Sharing Movement (KSM) delegation, Kang Young-shik, secretary general of the group, said.


"N,S Korea Should Cooperate in Solar Energy"

The ROK magazine Asia Economy reported that experts have asserted that the two Koreas should consider establishing a "solar energy cluster" in order to help solve the energy and pollution problems on the Korean peninsula. Investigators at the Hyundai Economic Research Institute said in a report titled Search for a New Growth Model: Solar Energy Cluster that the development of solar energy is an ideal way for the two Koreas to combine the ROK's technology with the DPRK's labor.
POLITICAL SCENE

DPRK Foreign Minister At Non-Aligned Meet in Cuba
The DPRK's Foreign Minister Pak Ui Chun arrived in Cuba April 26 to meet with representatives of nations not aligned with Western powers. the ministerial meeting of the Coordination Bureau of the Movement of Non-Aligned Countries, the Korean Central News Agency reported. The meeting was held in Havana for four days, in preparation for a July summit in Egypt of the more than 120 member nations in the non-aligned movement.

The DPRK is interested in strengthening its friendly ties and collaboration with Cuba, said Pak after he laid a floral wreath at the Jose Marti monument situated in the Plaza de la Revolucion, and visited the memorial dedicated to the life and works of the best-known Cuban literary figure.

During his stay, Pak held official talks with his Cuban counterpart, Bruno Rodriguez Parrilla, and with leaders of the Communist Party of Cuba as well as the Cuban government.

Cuba and North Korea established diplomatic ties in 1960. The two countries have maintained friendly ties and conducted bilateral cooperation in various sectors such as energy, agriculture and commerce.


DPRK Foreign Minister In Brazil for Talks

The foreign ministers of North Korea and Brazil met in Brasilia May 12 for discussions on trade, investment and the negotiations on Pyongyang's nuclear program, Brazilian officials said.

"It was a very cordial and open discussion, and each one presented his view," said a Brazilian Foreign Ministry official who declined to be named.

North Korean Foreign Minister Pak Ui Chun met with Brazilian Foreign Minister Celso Amorim as part of a Latin America tour that had already involved talks with the presidents of Cuba and Peru.

The Brazilian official said Brazil expressed its interest in exporting farm machinery to North Korea, which in turn said it was interested in Brazilian investment in mining and deep-water oil recovery.

Trade between the two countries last year was very small, just US$381 million-worth. Exchanges have grown 40 per cent so far this year.

Brasilia and Pyongyang established diplomatic relations in 2001, and Brazil was due to open an embassy in North Korea at the end of May. North Korea opened an embassy in Brasilia in 2005.
Zimbabwe Hopes for Warmer DPRK Ties
Zimbabwe's President Robert Mugabe congratulated North Korea on its rocket launch, and expressed hopes for even warmer ties, KCNA reported.

It said Mr Mugabe made the comment May 18 during a meeting with the DPRK's visiting de facto head of state Kim Yong Nam.
"Congratulating the DPRK on its achievements, including the successful satellite launch, he said that these are giving confidence and courage to the Zimbabweans," KCNA said. "At the talks Mugabe said that he boundlessly reveres President Kim Il Sung, who rendered full support and encouragement to the Zimbabwean people's struggle for national liberation and their building of a new society," the agency reported.

The two sides discussed improving "long-standing relations of friendship and cooperation," the official agency reported.

At a banquet in the Koreans' honour, Kim Yong Nam expressed opposition to all sanctions against Zimbabwe, it added.


CULTURE & SPORTS

US Christian Bands Perform in Pyongyang

The US Christian bands Casting Crowns and the Annie Moses Band participated in North Korea's annual April Spring Friendship Arts Festival April 10-18 in Pyongyang.

"In early December 2008 we received an official invitation from the DPRK government to perform at the Spring Friendship Arts Festival," AMB lead vocalist and violinist Annie Wolaver told The Christian Post before leaving for the festival.

Two years ago, Casting Crowns was invited to perform at the 25th Annual April Spring Arts Festival with help from Global Resource Services (GRS), which has worked in the DPRK for more than a decade.

The theme of the Spring Arts Festival is the promotion of artistic exchanges, and peace and goodwill.

According to GRS, Casting Crowns was well received and even drew praise from the vice-chairman of the festival, Jang Chol Sun, who expressed his hope that groups like GRS and Casting Crowns, and the people of North Korea can work together to bring unity and peace.

"We have been given an opportunity that few people in the world ever receive, and we are expectant to see what is in store," Wolaver said. "Perhaps it is a cliché, but music is a powerful medium. The fact that we are going as a family presents a picture, not just of what it means to be artistic, but what it means to be a family, an American and a Christian," she added.


DPRK, China to Build Tour Rail Route

The DPRK and China have signed an agreement to set up a rail route between the two countries to encourage tourism, the latest sign of lively cross-border trade between the two neighbors.

The line will run between Tumen City in China's Jilin Province and North Hamgyong Province in North Korea, Chinese state media reported. The cooperation agreement was signed between the government of Tumen City, and the North Hamgyong Tourism Bureau, Tumen River International Travel Service and Chongjin Railway Bureau.

Under the agreement, the tourist train route from the Tumen-Nanyang border crossing to Chongjin and Qibaoshan in North Korea, will be operated jointly by two travel agencies from China and North Korea, respectively.

It is reported that North Korea will set up an office to deal with problems during the operations. The route was expected to open in late May.

Italian Restaurant Opens in Pyongyang
North Korea has opened its first "authentic" Italian restaurant, a pro-Pyongyang newspaper published in Japan reported.

The Chosun Sinbo said the restaurant had proved to be a major hit after its initial operation in the capital Pyongyang in December. "I've learned through TV and books that pizza and spaghetti are among the world's famous dishes, but this is the first time that I've tasted them," Jung Un Suk, 42, told a reporter.
The newspaper said that the DPRK buys wheat flour, butter and cheese from Italy for the restaurant. The restaurant's manager said that DPRK leader Kim Jong Il had also sent its cooks to Naples and Rome for training after they committed "errors" in their efforts to reproduce authentic Italian cuisine.

"General Kim Jong Il said that the (North Korean) people should be allowed access to the world's famous dishes," the newspaper quoted manager Kim Sang Soon as saying. "He then called for the establishment of a restaurant specializing in Italian food," the manager said.


KOREA COMPASS

Koreans in Japan

Koreans form Japan's biggest minority, a legacy of the latter's colonial rule over Korea (1910-1945). A 2007 census put the number at 593,489. Until 1945 Koreans were full Japanese citizens, but the division of the peninsula in 1945 and the emergence of two Korean states left the Koreans in Japan virtually stateless. Paralleling the political division of the peninsula is the existence of two organizations in Japan claiming the allegiance of the Koreans there: Roughly half are loyal to Chongryon (The General Association of Koreans in Japan), which is pro-Pyongyang, with the other half clinging to Mindan, which is pro-Seoul.

Most Korean residents in Japan were born there -- and some are even third- or fourth-generation -- but few are Japanese citizens. From the late 1950s into the 1980s, 94,000 Korean families (including some Japanese spouses) emigrated from Japan to the DPRK. Incidentally, this fact casts doubt on the claim that the dozen or so Japanese who were kidnapped to the DPRK in that era were needed to teach the Japanese language and customs to North Korean spies: They already had tens of thousands of experts in these fields who were only too willing to cooperate. In addition, the North's Mangyongbong-92 ferry regularly plies between the Japanese port of Niigata and the DPRK port of Wonsan. Among others, it carries Chongryon-affiliated students to summer schools in the DPRK. Chongryon operates 218 schools and one university in Japan.

A good English-language source of news about North Korea is a newspaper called The People's Korea (www.korea-np.co.jp/pk/). Its reporters get access to people and places that other outside media can't; at the same time, it is free from the restrictions on the NK media, which is entirely state-run.