NORTH KOREA NEWSLETTER NO. 58 (June 11, 2009)

North Korea-weekly review-4



*** INTER-KOREAN RELATIONS

Officials from Two Koreas Meet to Discuss Kaesong Industrial Complex

SEOUL (Yonhap) -- Officials from South and North Korea plan to meet on June 11 at
the Kaesong industrial park in the North to discuss thorny issues involving the
future of the troubled South Korean-run industrial zone. But prospects of a
breakthrough seem uncertain as the rival Koreas appear unready to narrow
differences.
Pyongyang is likely to demand wage hikes and land use payments from South Korean
firms, while Seoul wants to discuss the detained South Korean worker first. South
Korea will raise the issue of a detained worker in upcoming talks with North
Korea, a Seoul official said, although expectations for a breakthrough remained
low as tension mounted on the peninsula.
The inter-Korean talks come as the U.N. Security Council, with the support of
South Korea and Japan, is finalizing a resolution to punish North Korea for its
May 25 nuclear test.
"For our government, the prolonged detention is an important agenda item that
should be discussed at the talks," Seoul's Unification Ministry spokeswoman Lee
Jong-joo said in a briefing.
North Korea has refused to discuss the fate of the Hyundai Asan Corp. employee,
identified only by his family name Yu, who was detained at the joint complex in
March on charges of "maliciously slandering" the North's political system. Seoul
officials have not been able to locate Yu, amid rumors that he was transferred
out of the border town for tougher questioning.
The rare meeting convenes at the request of North Korea on June 5, when it sent a
document proposing working-level talks. The North Korean letter did not set an
agenda, however, except to say the meeting will be regarding the Kaesong
Industrial Zone.
The inter-Korean dialogue offer comes as South Korea's military is on heightened
alert along the inter-Korean border. North Korea has warned of military clashes
along their western sea border, the site of two bloody skirmishes in 1999 and
2002, in response to South Korea's participation in a U.S.-led anti-proliferation
campaign.
The Seoul ministry's 14-member delegation, headed by Kim Young-tak who is in
charge of inter-Korean talks, is scheduled to start the negotiations at 10 a.m.
They will meet with five North Korean officials, led by Pak Chol-su, vice chief
of the Special District General Bureau, Pyongyang's agency overseeing the joint
park.
Previous inter-Korean talks in April -- the first in more than a year -- ended
bitterly in less than half an hour, as the two sides could not narrow differences
on the agenda.
During that meeting, Pyongyang demanded wage hikes and land use payments from
South Korean firms at the joint park and refused to discuss the detained worker.
In a follow-up statement last month, the North unilaterally declared all
contracts regarding the joint park "null and void," saying it will revise them.
It told South Korean firms that could not accept the new terms to leave.
Observers say North Korea will use this round of talks to lay out its revisions.
On June 19, South Korean fur coat maker Skin Net said it was closing its factory
at the North Korean park, prompting concerns a greater exodus may follow due to
the political tensions.
South Korean companies in the complex have been hit hard since the North
restricted the border crossing of South Koreans and vehicles on Dec. 1 last year.
The joint venture, just an hour's drive from Seoul, is the last remaining
inter-Korean economic project to come out of the historic summit between then
South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.
With low wages -- between approximately US$70-$80 a month -- and free land use
initially guaranteed until 2014, the park has continued to grow in size and
currently hosts 106 South Korean small manufacturers.

------------------------

Seoul Slaps Sanctions on N. Korean Firms for Rocket Launch

SEOUL (Yonhap) -- South Korea has imposed financial sanctions on three North
Korean companies for a long-range rocket launch that Pyongyang conducted in April
in defiance of repeated warnings by the international community, Seoul officials
said June 9.
Under the sanctions, enforced as of June 1, the three North Korean firms are
prohibited from doing any kind of business with South Korean companies and their
assets here can be frozen, according to the Ministry of Strategy and Finance.
The three are the Korea Mining Development Trading Corporation, Tanchon
Commercial Bank and Korea Ryongbong General Corporation, all of whom are
suspected of having ties with the North's missile and nuclear programs.
The move is meant as a follow-up measure to similar sanctions brought against
those firms by the United Nations on April 24, in the wake of Pyongyang's
long-range rocket launch on April 5. North Korea insists the launch sent a
satellite into orbit, but its neighbors say it was cover for a missile test.
No South Korean companies currently maintain business relations with any of the
three North Korean firms. None of the North Korean firms hold any assets in the
South either, the ministry said.
"We decided to follow suit from June after the United Nations Security Council
imposed sanctions on the North Korean firms in April," a finance ministry
official said. "There are no assets of theirs here and no South Korean firms
doing business with them but we took the action as a precautionary measure."
This is the first time that South Korea has imposed financial sanctions on a
North Korean company in relation to Pyongyang's ballistic activity, the ministry
said.
The ministry said that it will consider taking additional measures if the U.N.
comes up with separate actions against the North for conducting its second
nuclear test on May 25.
Last week, South Korean Vice Finance Minister Hur Kyung-wook and Stewart Levey,
Washington's under secretary of Treasury in charge of issues of terrorism and
financing terrorism movements, met in Seoul and promised to cooperate and share
information in tackling money laundering activities.

------------------------

Inter-Korean Trade Tumbles amid Growing Tensions

SEOUL (Yonhap) -- Trade between South and North Korea plunged nearly 25 percent
in the first four months of this year amid growing tension on the Korean
Peninsula, a report showed June 9.
Inter-Korean trade amounted to US$426.35 million during the January-April period,
down 24.8 percent from $566.92 million a year earlier, according to the report by
the Korea Customs Service.
The decline comes as tension mounted after North Korea fired a rocket on April 5,
prompting the U.N. Security Council to unanimously condemn the move. The North
responded by kicking out outside nuclear inspectors and quitting six-party
denuclearization talks.
The missile test further aggravated already soured relations between the two
Koreas since the Seoul government of President Lee Myung-bak took office in early
2008, pledging to get tough on the North's regime.
Trade between the two Koreas, which amounted to $328.65 million in 1999, surged
more than five-fold to $1.79 billion in 2007 when leaders from the two sides met
for the second time. Last year, trade inched up to $1.82 billion.
Experts say that trade is expected to fall further in months to come as tensions
are still running high after the North conducted its second nuclear test last
month in defiance of repeated warnings by the international community and
recently sentenced two U.S. journalists to 12 years in a labor camp for illegally
entering the country.
(END)