Thursday, May 12, 2005
So why is it we need to spend time, money and energy on the South Koreans?
Despite U.S. Attempts, N. Korea Anything but Isolated
Country's Regional Trade Boom Hints At Split Between Administration, E. Asia
By Anthony Faiola Washington Post Foreign Service Thursday, May 12, 2005; A18
SEOUL -- Some people may be worrying about a possible North Korean nuclear test, but Lee Ju Hong, a well-coiffed retail manager for South Korea's largest department store, is preoccupied with his latest sales event -- a North Korean kitchenware fair.
North Korean housewares are the rage these days. The Lotte department store sold out its first shipment of North Korean pots and pans last December and followed up with a bigger sale in January, when another 7,000 pieces of cookware were carted off by eager shoppers. Lee, 39, is now working on the store's largest North Korean venture yet: New lines of cutlery and frying pans go on sale within the next two weeks.
The cookware is manufactured at the new Kaesong Industrial Park just north of the heavily mined border by South Korean companies backed by a multimillion-dollar government investment, some of which has been used to employ 2,000 North Korean workers. South Korean officials hope the growing economic development across the border will promote political and social reforms in the North. But the burgeoning business relationship has also become a symbol of the divide between South Korea and the United States on how to handle North Korea's leader, Kim Jong Il.
"We want to help our brothers in North Korea," Lee said. "We will continue to do so unless the government tells us to stop selling these goods. Right now, we don't expect that to happen."
The Bush administration, meanwhile, has sought to isolate North Korea since late 2002, when the latest crisis over the North's nuclear weapons program developed. At that time, the Pyongyang government expelled international weapons inspectors and declared that it had begun reprocessing spent fuel rods into material that can be used for weapons. Now, U.S. officials and arms control specialists, citing intelligence reports and satellite imagery, are concerned about a possible North Korean underground nuclear test.
Despite U.S. efforts to persuade allies to limit economic ties with North Korea, it is enjoying booming trade abroad.
South Korea, China and Russia have increased their trade with the North, boosting its tattered economy. Fueled by imports of energy and manufactured goods, and exports of minerals, seafood and agricultural products, North Korea's foreign trade increased 22 percent in two years, from $2.9 billion in 2002 to $3.55 billion in 2004; these levels are the highest since 1991, according to KOTRA, a South Korean government organization that monitors North Korean trade.
Flourishing business between North Korea and its neighbors has strained attempts to build a consensus among the six nations involved in talks on disarming the North. Without the support of North Korea's two largest trading partners, China and South Korea, any attempt by the Bush administration to impose economic sanctions would have little effect.
Analysts say North Korea may be calculating that if the United States increases pressure, Pyongyang's other benefactors in Asia may be willing to mend fences, even after a nuclear test.
As recently as Tuesday, China rejected economic sanctions and said it hoped for a negotiated settlement on North Korea's nuclear program.
"The fact is, South Korea and China are providing North Korea with a considerable amount of unconditioned economic support," said Marcus Noland, a Korea expert at the Institute for International Economics in Washington. "As long as that support is forthcoming, North Korea will not feel as much of a need to address the nuclear issue, and attempts to isolate the North economically will have less and less credibility and effect."
South Korean trade with the North increased by 58 percent in the first three months of this year to $170 million, compared to the same period last year, according to South Korea's Unification Ministry. Economic relations with the North are also driven by a policy of detente and hopes for long-term reunification.
The boom largely stemmed from increased North-South cooperation at Kaesong, where three South Korean companies have begun operation during the past six months. Twelve other companies are scheduled to start up by the end of the year. South Korea, which is North Korea's second-largest trading partner, is also pressing ahead with agreements for new road and rail links to help boost trade over the heavily fortified border.
North Korea's economic ties are particularly hot with China, its largest trading partner and long-time political benefactor. Bilateral trade nearly doubled between 2002 and 2004 to $1.39 billion, according to KOTRA.
North Korea's trade with Russia grew faster over the same period, from $80.7 million to $218.4 million. Among North Korea's top trading partners, only Japan, siding with the United States, has scaled back economic ties.
Supporters of engagement with North Korea argue that the Bush administration might have avoided the growing political crisis had it been willing to compromise with the Pyongyang government, either by providing more explicit security guarantees or by outlining more fully what the United States is prepared to offer the North in exchange for disarmament.
Nevertheless, East Asian diplomats who favor closer ties with North Korea say it would be difficult to defend trade and business investment in North Korea if Kim decided to conduct a nuclear test.
South Korea and China have not said how they would react to a North Korean nuclear test.
North Korea's neighbors -- with the exception of Japan -- share a vital strategic interest not shared with the United States. The Bush administration would welcome tough economic sanctions that led to Kim's fall. But a sudden collapse of the government in North Korea is considered potentially catastrophic to its neighbors because millions of destitute North Korean refugees might flood across the borders.
While South Korean military analysts say North Korea's 1-million member army is still the most serious threat, most South Koreans no longer view the North as a dangerous enemy. A public opinion survey in January by Research & Research, one of South Korea's largest pollsters, asked this question: "Which country is the most threatening to South Korea?"
Of the 800 respondents, 39 percent named the United States, which maintains 37,000 troops here. North Korea came in second, at 33 percent.
"We have lots of reasons for wanting to do business in North Korea; the labor costs are lower than in South Korea or China and a North Korean worker pretty much does what he is told," said Oh Jung Min, executive director of El Canto, a shoemaker that became one of the first South Korean companies to cross the border when it invested in a Pyongyang factory in 1997.
"But stronger relations with North Korea is also good for South Korea's future," he said. "The last thing we want is for them to be our enemies."
Meanwhile, North Korea said Wednesday that it had completed the removal of another batch of spent fuel rods from its main Yongbyon nuclear complex in a key step toward building more nuclear weapons.
North Korea's official KCNA news agency quoted a Foreign Ministry official as saying the country had "successfully completed" removal of 8,000 fuel rods from the five-megawatt reactor at the center of its Yongbyon complex, which is located about 60 miles north of Pyongyang.
If cooled for several weeks, the rods can be reprocessed into weapons-grade plutonium -- the step North Korea is believed to have taken with a similar batch of spent fuel rods in 2003. The announcement suggested that the country is prepared to do so again.
Intelligence officials in Washington and Seoul had noted that North Korea's main nuclear facility at Yongbyon had been shut down since last month, raising concerns that the North was extracting the rods.
Despite U.S. Attempts, N. Korea Anything but Isolated
Country's Regional Trade Boom Hints At Split Between Administration, E. Asia
By Anthony Faiola Washington Post Foreign Service Thursday, May 12, 2005; A18
SEOUL -- Some people may be worrying about a possible North Korean nuclear test, but Lee Ju Hong, a well-coiffed retail manager for South Korea's largest department store, is preoccupied with his latest sales event -- a North Korean kitchenware fair.
North Korean housewares are the rage these days. The Lotte department store sold out its first shipment of North Korean pots and pans last December and followed up with a bigger sale in January, when another 7,000 pieces of cookware were carted off by eager shoppers. Lee, 39, is now working on the store's largest North Korean venture yet: New lines of cutlery and frying pans go on sale within the next two weeks.
The cookware is manufactured at the new Kaesong Industrial Park just north of the heavily mined border by South Korean companies backed by a multimillion-dollar government investment, some of which has been used to employ 2,000 North Korean workers. South Korean officials hope the growing economic development across the border will promote political and social reforms in the North. But the burgeoning business relationship has also become a symbol of the divide between South Korea and the United States on how to handle North Korea's leader, Kim Jong Il.
"We want to help our brothers in North Korea," Lee said. "We will continue to do so unless the government tells us to stop selling these goods. Right now, we don't expect that to happen."
The Bush administration, meanwhile, has sought to isolate North Korea since late 2002, when the latest crisis over the North's nuclear weapons program developed. At that time, the Pyongyang government expelled international weapons inspectors and declared that it had begun reprocessing spent fuel rods into material that can be used for weapons. Now, U.S. officials and arms control specialists, citing intelligence reports and satellite imagery, are concerned about a possible North Korean underground nuclear test.
Despite U.S. efforts to persuade allies to limit economic ties with North Korea, it is enjoying booming trade abroad.
South Korea, China and Russia have increased their trade with the North, boosting its tattered economy. Fueled by imports of energy and manufactured goods, and exports of minerals, seafood and agricultural products, North Korea's foreign trade increased 22 percent in two years, from $2.9 billion in 2002 to $3.55 billion in 2004; these levels are the highest since 1991, according to KOTRA, a South Korean government organization that monitors North Korean trade.
Flourishing business between North Korea and its neighbors has strained attempts to build a consensus among the six nations involved in talks on disarming the North. Without the support of North Korea's two largest trading partners, China and South Korea, any attempt by the Bush administration to impose economic sanctions would have little effect.
Analysts say North Korea may be calculating that if the United States increases pressure, Pyongyang's other benefactors in Asia may be willing to mend fences, even after a nuclear test.
As recently as Tuesday, China rejected economic sanctions and said it hoped for a negotiated settlement on North Korea's nuclear program.
"The fact is, South Korea and China are providing North Korea with a considerable amount of unconditioned economic support," said Marcus Noland, a Korea expert at the Institute for International Economics in Washington. "As long as that support is forthcoming, North Korea will not feel as much of a need to address the nuclear issue, and attempts to isolate the North economically will have less and less credibility and effect."
South Korean trade with the North increased by 58 percent in the first three months of this year to $170 million, compared to the same period last year, according to South Korea's Unification Ministry. Economic relations with the North are also driven by a policy of detente and hopes for long-term reunification.
The boom largely stemmed from increased North-South cooperation at Kaesong, where three South Korean companies have begun operation during the past six months. Twelve other companies are scheduled to start up by the end of the year. South Korea, which is North Korea's second-largest trading partner, is also pressing ahead with agreements for new road and rail links to help boost trade over the heavily fortified border.
North Korea's economic ties are particularly hot with China, its largest trading partner and long-time political benefactor. Bilateral trade nearly doubled between 2002 and 2004 to $1.39 billion, according to KOTRA.
North Korea's trade with Russia grew faster over the same period, from $80.7 million to $218.4 million. Among North Korea's top trading partners, only Japan, siding with the United States, has scaled back economic ties.
Supporters of engagement with North Korea argue that the Bush administration might have avoided the growing political crisis had it been willing to compromise with the Pyongyang government, either by providing more explicit security guarantees or by outlining more fully what the United States is prepared to offer the North in exchange for disarmament.
Nevertheless, East Asian diplomats who favor closer ties with North Korea say it would be difficult to defend trade and business investment in North Korea if Kim decided to conduct a nuclear test.
South Korea and China have not said how they would react to a North Korean nuclear test.
North Korea's neighbors -- with the exception of Japan -- share a vital strategic interest not shared with the United States. The Bush administration would welcome tough economic sanctions that led to Kim's fall. But a sudden collapse of the government in North Korea is considered potentially catastrophic to its neighbors because millions of destitute North Korean refugees might flood across the borders.
While South Korean military analysts say North Korea's 1-million member army is still the most serious threat, most South Koreans no longer view the North as a dangerous enemy. A public opinion survey in January by Research & Research, one of South Korea's largest pollsters, asked this question: "Which country is the most threatening to South Korea?"
Of the 800 respondents, 39 percent named the United States, which maintains 37,000 troops here. North Korea came in second, at 33 percent.
"We have lots of reasons for wanting to do business in North Korea; the labor costs are lower than in South Korea or China and a North Korean worker pretty much does what he is told," said Oh Jung Min, executive director of El Canto, a shoemaker that became one of the first South Korean companies to cross the border when it invested in a Pyongyang factory in 1997.
"But stronger relations with North Korea is also good for South Korea's future," he said. "The last thing we want is for them to be our enemies."
Meanwhile, North Korea said Wednesday that it had completed the removal of another batch of spent fuel rods from its main Yongbyon nuclear complex in a key step toward building more nuclear weapons.
North Korea's official KCNA news agency quoted a Foreign Ministry official as saying the country had "successfully completed" removal of 8,000 fuel rods from the five-megawatt reactor at the center of its Yongbyon complex, which is located about 60 miles north of Pyongyang.
If cooled for several weeks, the rods can be reprocessed into weapons-grade plutonium -- the step North Korea is believed to have taken with a similar batch of spent fuel rods in 2003. The announcement suggested that the country is prepared to do so again.
Intelligence officials in Washington and Seoul had noted that North Korea's main nuclear facility at Yongbyon had been shut down since last month, raising concerns that the North was extracting the rods.
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