N. Korea cancels talks
with S. Korean aid organization
Yonhap News Agency.
8/27/12
SEOUL, Aug. 28
(Yonhap) -- North Korea on Tuesday unilaterally canceled plans to hold talks
with two South Korean aid organizations that had planned to visit the communist
country to discuss humanitarian assistance for flood victims.
Okedongmu Children in
Korea and Foundation of Inter-Korean Cooperation said they received fax messages
from North Korea's National Reconciliation Council calling off talks set for
Wednesday in Kaesong.
Obama, Romney share common ground on
Korea
The Korea Times.
8/28/12 By Kim Young-jin
Amid a rancorous
campaign, U.S. President Barack Obama and his challenger Mitt Romney may find
common ground on the Korean peninsula, analysts said Tuesday.
But on the two Koreas,
the candidates aren’t likely to outwardly show sharp differences, analysts
said, due to bipartisan support for a tough line on North Korea, sustaining a
robust alliance and an emphasis on Asia.
Mitt Romney
Obama took office in
2009 with a pledge to talk with isolated regimes such as the North. Pyongyang
responded with a nuclear test that year and deadly provocations on the South a
year later that prompted Washington to bolster ties with Seoul, which under
President Lee Myung-bak had implemented a tough reciprocity-based policy.
While tightening
sanctions, Obama reached a food-for-denuclearization deal in February that was
seen as a litmus test of the North’s intentions. That was scuttled by
Pyongyang’s long-range rocket launch in April that significantly diminished any
appetite in Washington for dealing with the regime.
The Romney campaign
says he will institute harsher sanctions on the North including cracking down
on financial institutions involved with illegal activities, while making clear
that “continued advancement of its nuclear program and any aggression will be
punished instead of rewarded,” according to its website.
Romney pledges to lean
harder on China to exert influence over its belligerent ally, even broaching
the delicate issue of possible North Korean collapse. Romney “will reassure
China it will not be alone in dealing with the humanitarian and security issues
that will arise should North Korea disintegrate,” the site said.
Analysts say the U.S.
“pivot” in its security policy toward Asia initiated by Obama and seen as a
way to shape China’s rise has enjoyed support on both sides of the aisle.
Strong ties with allies Seoul and Tokyo are seen a lynchpin to regional
security.
Tough language on the
campaign trail, analysts say, is to be expected as candidates seek to prove
their security credentials. But actual policy could change as the winner shapes
his administration.
“There is a gap
between campaign rhetoric and policy implementation that ends up being filtered
through personnel selections,” Scott Snyder, senior fellow for Korea studies at
the Council on Foreign Relations. In particular, shuffling of top State
Department positions could affect relevant policy.
Analysts add that
changes in other areas could indirectly impact Korea. Alterations in domestic
policy including austerity measures could affect the U.S. economy and possibly
impact bilateral trade, they said.
Either administration
will have to recalibrate to account for a leadership change in Seoul, which
will hold its own election in December. Park Geun-hye, the nominee for the
ruling Saenuri Party, as well as opposition candidates have expressed
willingness to engage the North following public fatigue with Lee’s realpolitik
approach and as China increases influence over its ally.
Los Angeles County
Supervisor Michael Antonovich, delegation visit North Korea
Contra Costa Times.
8/29/12
County Supervisor Michael
Antonovich is in North Korea this week, part of a delegation seeking to
learn more about its government, economy and culture.
Details about the trip
are scarce, but Antonovich's spokesman, Tony Bell, said the supervisor received
an invitation from Dr. Jarrold Green, president of the Pacific
Council on International Policy.
"The supervisor
is very interested in international affairs, foreign policy and trade issues
and this trip provides a unique opportunity to learn more about the North
Korean nation and share his findings upon his return," Bell said.
The council could not
be reached for comment Tuesday, but its website identifies it as a Los
Angeles-based nonpartisan international affairs organization that focuses
on "policy issues of special resonance on and to the West Coast."
It was founded in 1995
and has close ties to the University of Southern California. Former U.S.
Commerce Secretary Mickey Kantor and former U.S. Ambassador to the U.K. Robert
Tuttle sit on its board of directors.
North Korea looks for
APEC role
RT. 8/29/12
North Korea reportedly
wants to participate in the Asia-Pacific Economic Cooperation (APEC) summit in
the Russian city of Vladivostok which kicks off on September 2.
Pyongyang has
reportedly asked Moscow to attend the talks with "guest" status,
and sent an envoy to Russia in mid-July to receive permission from the
authorities, Japan's Yomiuri Shimbun newspaper reported Wednesday, citing an
unnamed source.
North Korea is not
a member of APEC and thus it’s unlikely the country may be granted the
right to attend official meetings at the summit. "But it is still possible
that they will be allowed to attend events held on the sidelines of the summit
talks", the paper quoted its source as saying.
”More than any of his
predecessors, Kim Jong Un needs economic development and success for his
legitimacy. This includes reaching out for technology, investment, capital and
export markets. The almost monopolistic role of China as North Korea's main
foreign economic partner is a source of concern for Pyongyang,” Rudiger
Frank Professor of East Asian Economy and Society, at the University of Vienna
told RT. “By establishing connections with APEC, Kim Jong Un will kill two
birds with one stone: diversification of his economic partners, and getting a
step closer to the USA which holds the key to an internationalization of North
Korea's economy.”
South Korean NGOs to
assist children and flood victims in North Korea
The Hankyoreh.
8/29/12 By Kim Kyu-won
Members of the Korea NGO Council for Cooperation with North Korea (KNCCK) and Korean Council for Reconciliation and Cooperation (KCRC) have began a one-month drive to provide 3000 tons of wheat flour for children and flood victims in North Korea. KNCCK is an umbrella organization that represents 53 NGOs that provide aid to North Korea.
The two organizations held a joint press conference on August 28 at the Korea Press Center in Seoul to ask people to help “gather love so that a meal of warm rice can be delivered to the children in the North.” In addition, they asked the South Korean government to lift sanctions on North Korea, which are obstacles to providing humanitarian aid.
The 3000 tons that the organizations are hoping to provide for North Korea will cost between 1.6 billion to 1.8 billion won (about US$1.4 million). Of the 3000 tons, 500 tons have already been prepared by World Vision and the two organizations will try to bring together 1000 tons. The rest will need to come from donations.
Ministry of Unification spokesperson Kim Hyung-seok said, “The government has allowed humanitarian aid to North Korea from the NGO’s and if necessary we are also in the position to provide assistance.”
Members of the Korea NGO Council for Cooperation with North Korea (KNCCK) and Korean Council for Reconciliation and Cooperation (KCRC) have began a one-month drive to provide 3000 tons of wheat flour for children and flood victims in North Korea. KNCCK is an umbrella organization that represents 53 NGOs that provide aid to North Korea.
The two organizations held a joint press conference on August 28 at the Korea Press Center in Seoul to ask people to help “gather love so that a meal of warm rice can be delivered to the children in the North.” In addition, they asked the South Korean government to lift sanctions on North Korea, which are obstacles to providing humanitarian aid.
The 3000 tons that the organizations are hoping to provide for North Korea will cost between 1.6 billion to 1.8 billion won (about US$1.4 million). Of the 3000 tons, 500 tons have already been prepared by World Vision and the two organizations will try to bring together 1000 tons. The rest will need to come from donations.
Ministry of Unification spokesperson Kim Hyung-seok said, “The government has allowed humanitarian aid to North Korea from the NGO’s and if necessary we are also in the position to provide assistance.”
North Korea’s Six
Trillion Dollar Question
The Diplomat. 8/29/12
By Scott Thomas Bruce
Rare earth metals can
be a game changing bonanza for North Korea, but, without reform, their claim is
likely to pinch out. In the end, the North Korean government must determine if
the minerals will be a lever to shift political relations in the region, or if
it will continue to sell its most valuable asset at a discount.
If North Korea is
willing to create conditions for investment, its supply of rare earth metals
and its rich mineral sector have tremendous transformative potential. As Leonid
Petrov notes, rare earth metals are highly attractive to Taiwan and Japan, and
could override some of the political issues blocking the development of
relations between the states. This could change the regional power dynamic in
Northeast Asia as North Korea becomes a hub for investment from China, Japan,
South Korea and elsewhere. However, for this to happen, the value of the
resources, including the cost of extracting the minerals from North Korea, must
outweigh the risks of doing business there.
The value of rare
earth metals and their relatively limited supply would seem to work in North
Korea’s favor. Rare earth metals are used in the construction of everything
from IPods to precision guided missiles. China currently produces more than 95%
of the world’s output of these metals. China’s control over these minerals has
regional implications for Northeast Asia. For example, in 2010 Japan alleged
that China suspended its export of the minerals to Tokyo in response to a
territorial dispute between the two countries. The EU, U.S., and Japan also
recently brought a case against China at the WTO for unfairly inflating the
prices of these minerals.
Amidst these disputes,
the South Korean government believes that North Korea may have as much as $6
trillion USD in rare earth elements.
Beyond the metals, North Korea is known to be a rich source of many
minerals including gold, zinc, magnesite, and others. North Korea is dependent
on these minerals to support its economy; in previous years as much as 58% of
North Korea’s exports were from the mineral sector. The North is particularly
interested in selling these minerals as they have limited domestic utility.
North Korea needs to carefully balance the amount of anthracite coal it exports
for foreign currency with the amount it needs to keep its factories
functioning, but it is not dependent on gold for any domestic development goal.
Although these
resources represent significant potential export wealth, North Korea’s mineral
sector is underdeveloped, and what is produced is sold at a discount. It is
estimated that, on average, North Korean mines operate at less than 30% of
their capacity. Many mines need to be rehabilitated and lack a reliable power
supply. Much of the equipment dates back to the cold war, and is no longer
made, let alone used, outside of the North. Other mines were damaged during the
environmental collapse of the 1990, and have not yet been reclaimed. North
Korea lacks the resources to redevelop these mines domestically; it is
dependent on foreign investment to increase mineral production.
China is currently the
biggest player in the North Korean mineral market, and the costs it pays for
these resources reflect this lack of competition. Most of this investment comes
from small and medium sized enterprises in China’s Northeast that are looking
to maximize their economic position by investing in North Korea. This
investment would be almost impossible without the special relationship between
China and North Korea, and the role of Korean speaking Chinese middle-men that
have connections on both sides of the Yalu River, and who can make the
arrangements necessary for these business deals.
It is important to
note that China pays far less for mineral imports from North Korea than it
does, on average, from other states. Exports from China to North Korea,
likewise, are priced much higher thanChinese exports elsewhere. These costs
reflect the true cost of doing business in North Korea given the necessary
investments into mine rehabilitation and transportation infrastructure, as well
as the risk that comes with dealing with North Korea. In short, this is a
surprisingly market-oriented trade between two ostensibly communist
states.
From the South Korean
perspective, however, the Chinese are buying up a resource that belongs to the
Korean people at far less than it is worth. South Korea’s mines are largely
depleted and it would greatly benefit from access to the North’s mineral
sector, particularly the rare earth metals. As an editorial in the Korea Times
recently noted, the “near subordination [by China] is also economically disadvantageous
[to North Korea], as seen by reports that China has already preempted nearly
half of North Korea’s mineral resources worth $6 trillion, which should have
gone to South Korea.” There were several inter-Korean mineral development
projects during the Kim Dae-Jung and Roh Moo-hyun governments, but those
projects died with the collapse of the sunshine policy and subsequent implosion
of inter-Korean relations. As Kim Shin-jong, President of KORES, the Korea
Resources Corporation, has noted, “We invested a lot of money, and now we
cannot even find out the present status [of those projects].” To those in the
ROK with an eye on the North Korean mineral market, China is making off with a
Korean asset while the two Koreas bicker.
Other companies have attempted
to enter the North Korean mineral market, often at their own peril. Mineral
development is generally a multi-generational undertaking. Companies invest
with a plan to develop a site, work it for many years, and then close down
operations. This means that companies looking to invest in the North Korean
mineral sector are wagering that the North Korean state will remain committed
to that investment for the lifetime of the project, something that is far from
certain given North Korea’s historical ambivalence toward foreign investments.
There is also a risk that companies that partner with North Korea will find
themselves subject to UN or state-level sanctions. One of the three companies
sanctioned by the UN in May 2012, for instance, was Green Pine Associated
Corporation, which, among other things, was involved in mineral development
projects.
North Korea has a
track record of demanding to renegotiate a contract repeatedly as it suits the
regime. Although it may not be typical, the recent experience of the Xiyang
Group shows that not even Chinese firms are immune from this treatment. The
Xiyang Group’s experience also demonstrates the level of corruption and
intimidation that an investor could possibly encounter when doing business with
North Korea.
Investors will also
have to deal with little to no transparency in the joint mineral development
operation. In most cases investors will be working through North Korean
intermediaries and access to the site will be limited. This raises concerns
over the treatment of labor. North Korea is known to use prison labor from
re-education camps in its mineral development operations. Just as Unocal was
sued for human rights abuses related to its operations in Burma, a company
investing in the North could be vulnerable to a lawsuit over the use of forced
labor in North Korea.
Finally, if a company
should invest in North Korean mining, it should expect to have to fund major
infrastructure upgrades to make that development possible. Roads or rail tracks
have to be rebuilt, diesel generations have to be imported to power mines,
transport equipment needs to be provided, and the mines may have to be
rehabilitated. Additionally, in the case of rare earth metals, as Marcus Noland
notes, these elements will have to be shipped abroad to be processed, since
North Korea lacks the equipment to do so. Although the North built a processing
plant for these metals many years ago, energy shortages have prevented it from
operating.
Although companies may
find the North Korean mineral sector too risky to invest in, NGOs and aid
organizations may take this as an opportunity for engagement. Sustainable
development of the mineral sector and environmentally safe mining techniques
are training opportunities to build scientific and technical collaboration with
North Korea and lay the groundwork for positive outcomes in the future.
Furthermore, training can play a role in acclimating the North Koreans to the
expectations that foreign investors will have.
All of this is to say
that unless North Korea addresses it governance issues, there is unlikely to be
a rush of foreign investment into its mineral sector. Furthermore, unless it
reforms its economy, the benefit of these projects is not likely to go to the
North Korean population and be used to develop the state. It is not the
availability of resources that determines a country's prosperity; it is its
ability to effectively leverage those resources in the international
marketplace that is essential for economic success.
Short of this sort of
opening, it is likely that the North Korean economy will continue to stagnate,
and North Korea will sell the few resources it can extract at a discount to the
Chinese for foreign currency. In short, unless it reforms its economy, North
Korea will sell off its most prized asset on the cheap in an attempt to tread
water and avoid reforming its economic and political system.
As it is now, North
Korea is sacrificing an opportunity to build a stronger and more prosperous
future for immediate access to foreign currency.
