NORTH KOREA NEWSLETTER NO. 68 (August 20, 2009)

*** TOPIC OF THE WEEK (Part 2)

N. Korea, Hyundai Agree to Resume Inter-Korean Business Projects

SEOUL (Yonhap) -- North Korea and South Korea's Hyundai Group have agreed to
resume inter-Korean tourism projects and facilitate operation of the joint
industrial park in the North's border town of Kaesong, the North's official
Korean Central News Agency (KCNA) said Aug. 17.

The agreement came after a
meeting between North Korean leader Kim Jong-il and Hyundai Chairwoman Hyun
Jeong-eun on Aug. 16. The two sides also agreed to resuscitate reunions of
families separated by the 1950-53 Korean War.
In a joint press release by South Korea's Hyundai Group and the North's
Asia-Pacific Peace Committee, which handles inter-Korean business ties, the sides
also "decided to provide the reunions of separated families and relatives from
the North and the South in Mt. Kumgang on the day of Chuseok, a folk holiday of
the Korean nation, this year."
The agreement is construed as another gesture of rapprochement between the North
and the outside world after Kim Jong-il's meeting with former U.S. President Bill
Clinton in Pyongyang earlier this month. Two U.S. female journalists, who had
been detained in the North for months, were freed and returned home with Clinton.
The South Korean government suspended Hyundai's major tour program to the scenic
Mt. Kumgang on the North's east coast last summer, when North Korea shot and
killed a female South Korean tourist at the Kumgang resort when she reportedly
strayed into a military zone. A separate Hyundai tour program to the medieval
capital city of Kaesong was shut down by North Korea in December of last year in
retaliation against the South's hard-line posture.
"It was decided to resume the suspended tours to Mt. Kumgang as soon as possible
and launch the tour of Pirobong, the highest peak on the mountain," the release
said. "It was also decided to resume tours of Kaesong soon and to energize the
operations of the Kaesong Industrial Zone as the land passage through the MDL
(Military Demarcation Line) is put on a normal basis."
The release also noted the possible launch of another tour project to the North's
Mt. Paektu, the highest peak on the Korean Peninsula, "in accordance with the
progress of its (Hyundai's) preparations."
To facilitate operations of the tour and the industrial park projects, the North
agreed to "restore land passage of the south side's personnel through the
Military Demarcation Line and their stay in the north side's area as they were
according to the spirit of the historic October 4 Declaration."
The October agreement was signed in 2007 between the two Koreas during the
administration of then President Roh Moo-hyun to foster inter-Korean cooperation.
It followed an earlier June 15 Joint Declaration signed in 2000 between the North
and Roh's predecessor, Kim Dae-jung.
"Both sides expressed willingness to improve north-south relations and further
develop cooperation for the common prosperity of the nation under the historic
June 15 joint declaration and the October 4 declaration," the release said.
Hyun Jeong-eun embarked on her trip to the North on Aug. 10 for what was expected
to be a three-day mission to win the release of an employee detained there since
March. The Hyundai worker, Yu Seong-jin, was freed and returned home Aug. 13, but
the chairwoman remained in Pyongyang apparently waiting for a meeting with Kim,
who, according to the North's media, was out of town. She extended her stay in
the North five times. But her major ambition, Hyundai officials say, was finding
ways to resuscitate tourism ventures stalled since last year, pushing the group
into deep financial straits.
On her seventh day in North Korea, the reclusive leader finally sat down with
Hyun for a luncheon. Kim talked with her in "an atmosphere of compatriotic
feelings, remembering the predecessors of the Hyundai Group with deep emotion,"
the KCNA said.
Kim Jong-il reportedly has a positive view of Hyundai, which pioneered
cross-border business with North Korea about a decade ago. He met the Hyundai
chief in 2005 and 2007 during her trips to the country.
Hyundai is currently in dire financial shape after its joint tourism ventures in
North Korea hit a snag last year amid worsening political tensions. All Hyundai
business projects in North Korea, except for a joint industrial park in the
North's border city of Kaesong, remain suspended.
The recently released Hyundai worker was detained at the industrial park on March
30 for allegedly slandering the North's political system. His release came days
after former U.S. President Bill Clinton secured the release of two American
journalists after a meeting with the communist leader in Pyongyang.
Seoul suspended Hyundai's Mt. Kumgang tour last year after a North Korean soldier
shot and killed a South Korean tourist who strayed into a military zone in the
area.
Hyundai's last remaining joint venture, the industrial park, also faces
uncertainty as North Korea is demanding hefty hikes in wages and rent. The
industrial park is a cash cow for the impoverished North that is currently under
U.N. sanctions for its second nuclear test in May. More than $26 million was paid
in wages alone last year.
Hyundai Group's business unit, Hyundai Asan Corp., suffered 150 billion won
(US$121 million) in losses from the suspension and was forced to cut its
workforce to about 400 from more than 1,000 this year. Seoul has not yet shown
any sign of lifting the ban.
Seoul officials denied Hyun carried any message from President Lee Myung-bak or
that she would play a role as a presidential envoy. In an anniversary speech
marking Liberation Day on Saturday, Lee reiterated his hardline policy on North
Korea's nuclear weapons program, making denuclearization a condition to economic
aid.
Yang Moo-jin, a professor at the University of North Korea Studies in Seoul, said
North Korea tossed the ball into the Lee government's court by demonstrating its
willingness to continue joint projects. "Hyundai and North Korea likely agreed
that inter-Korean economic cooperation should continue, and that there should be
a role to be played by the Lee Myung-bak government," he said.
Hyundai Group has so far invested $1.2 billion in North Korea. Its late founder
Chung Ju-yung, a native of what is now North Korea, drove 500 head of cattle
across the border into North Korea in 1998 in a symbolic gesture to open up
business relations.
His son, who succeeded him in the group, Chung Mong-hun, took his own life in
2003 amid mounting deficits from the North Korea projects and an investigation
into an alleged payment to North Korea. Taking over her husband's position, Hyun
vowed to continue North Korea ventures despite their uncertainties.
Responding to the agreement between the two sides, Seoul officials said Hyundai
Group's agreements with Pyongyang to resume joint ventures were a positive sign,
but they cannot be implemented until the two governments officially endorse them.

"The government views Hyundai Group's joint statement with North Korea
positively, but it was a non-governmental deal," Unification Ministry spokesman
Chun Hae-sung said. "For this accord to take effect, the governments of South and
North Koreas need to reach a concrete agreement through dialogue."
With resuming family reunions its top priority, Seoul will try to set up
inter-Korean Red Cross talks, the spokesman said. Chun said it would be
appropriate for Seoul to decide whether to propose a dialogue after a thorough
review of the discussions between Hyundai and the North. "If the South and North
reach an agreement at the Red Cross talks, holding the family reunions on Chuseok
would be possible," he said.
Back in Seoul, Hyundai chairwoman Hyun said Aug. 17 she met with Kim Jong-il for
four hours over lunch. Regarding the shooting death of a South Korean tourist
last year in Mt. Kumgang, the North Korean leader promised "that such incidents
would never happen again," Hyun said upon arrival at the South's immigration
office.
Hyun told reporters that Kim Jong-il said he wished to see talks between
officials of each side on the North's recent seizure of a South Korean fishing
boat. As for the extension of her stay in the North Korean capital, Hyun
explained that Kim's schedule had been set in advance and that the North had told
her to come during the weekend.
South Korean officials, however, seemed to have been caught off guard by the
surprise announcement, saying that Seoul hadn't been consulted prior to the
agreement between the private company and North Korea. "The government has not
been consulted on this issue. The government has to review the agreement and its
position will be announced by the Unification Ministry," a senior government
official said, requesting anonymity.
The main gist of South Korea's policy toward North Korea remains unchanged,
despite a civilian-led breakthrough in stalled inter-Korean economic projects,
Seoul's foreign ministry said Aug. 17. "There is no change in the keynote of our
government's policy in dealing with North Korea," ministry spokesman Moon
Tae-young said at a press briefing. "A change in the future situation will depend
on North Korea's attitude and position."
He was responding to a question about whether the agreement between North Korea
and Hyundai Group will affect global efforts to implement the U.N. Security
Council Resolution 1874, which aims to curb inflow of money to the North that may
be diverted to its missile and nuclear program.
The resolution, adopted after Pyongyang's nuclear test in May, imposes a
wide-ranging set of financial and trade sanctions on the socialist nation. "The
government will review the issue after getting the details of the agreement,"
Moon said.
But a foreign ministry official said the agreement between Hyundai and North
Korea appears not to violate U.N. Resolution 1874. He said, however, that the
final position will be decided when Seoul and Washington coordinate the North's
latest overtures on inter-Korean relations, when Amb. Philip Goldberg, senior
U.S. envoy overseeing Washington's sanctions on the communist regime, visits
Seoul on Aug. 23.
(END)