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2009/09/10 10:58 KST
NORTH KOREA NEWSLETTER NO.71 (September 10, 2009)

  
*** FOREIGN TIPS

S. Korea 'Resolute' on N. Korea Stance: Vice Unification Minister

SEOUL (Yonhap) -- The government will maintain its "resolute" stance toward North Korea despite signs the socialist country may have adopted a more conciliatory policy, a senior policymaker here said on Sept. 4.

   Speaking in a workshop on North Korean defectors who have settled in the South, Vice Unification Minister Hong Yang-ho said Seoul's aim is to get Pyongyang to come to talks designed to end the nuclear standoff and ease tension.

   North Korea earlier this year tested its second nuclear device and launched a long-range rocket, triggering international sanctions and further exacerbating inter-Korean relations that have been souring since early 2008.

   However, the North softened its rhetoric in recent months by offering to talk directly with the United States. It has released detained American and South Korean nationals and agreed to lift restrictions imposed late last year that have hurt businesses operating in the Kaesong industrial complex.

  North Korea also sent a delegation to the funeral of former South Korean President Kim Dae-jung last month in Seoul, and the chief delegate met current President Lee Myung-bak.

   "There have been conciliatory gestures by the North that can be viewed as a good sign, but since the country has declined to come back to the six-party talks or give up its nuclear weapons, we cannot see the changes as being fundamental," he said.

   Hong stressed that such a move could reflect a "tactical shift" and not a change in overall strategy.

   "Under such circumstances, Seoul will not make any hasty decision or assessments, but stay faithful to its long-held principles," the official said.

  
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North Korea Boosts Incentives for Foreign Investors

SEOUL (Yonhap) -- North Korea has taken steps to attract more overseas investors by scrapping extra land use fees and introducing selective import rules that can help foreign-owned companies maintain a market share, a Chinese newspaper said on Sept. 4.

   According to the Jilin Newspaper, the official daily of China's Jilin Province, a North Korean official promoted the new foreign-investor friendly measures during a recent trade exposition held in the city of Changchun.

   "We revised pertinent laws and regulations so as to relegate land use fees, which have been paid annually by foreign-invested companies to their (North) Korean partners that loan the land," Yun Yong-sok, a senior official at the international investment department of the North's Ministry of Foreign Trade, was quoted by the paper as saying at the expo. North Korea's Radio Pyongyang reported a delegation's trip to the Chinese expo on Aug. 26.

   Foreign investors have so far paid annual land use fees to the North Korean government in addition to a one-off lease payment, which will be still levied after the revisions.

   The measures come as North Korea faces tightening international sanctions over its May nuclear test. The U.N. sanctions ban North Korea's arms trade, a major source of income for the impoverished country, and closely scrutinize cash flows to the North.

   North Korea also introduced "state support measures," such as banning imports of goods that are already produced in adequate quantities within the North by foreign companies to ensure investors' profits, Yun was quoted as saying.

   Foreign companies that invest in science and technology in the North will get additional tax incentives, but those who take North Korean minerals, timber or fish abroad will be levied a new "resource tax" to protect the country's natural resources, Yun added.

   Hong Ihk-pyo, an analyst with the state-run Korea Institute for International Economic Policy in Seoul, said North Korea's investor-friendly measures "transform its commerce system to correspond with the market economy."

   North Korea aims to build a "great, prosperous and powerful nation" by 2012, the centennial of the birth of the country's founder, Kim Il-sung, and the 70th birth anniversary of the current leader.

   In 2008, North Korea's economy grew for the first time in three years, recording 3.7 percent, but its gross national income still accounted for less than 3 percent of South Korea's, or US$24.8 billion compared to $934.7 billion.

  
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U.S. Will only Talk to N.K. within Six-party Framework: Bosworth

SEOUL (Yonhap) -- The U.S. special envoy on North Korea said on Sept. 6 his country will only talk with the North within a multilateral framework, reaffirming that Washington's firm position has not changed.

   Stephen Bosworth, who was visiting Seoul when he made the comment, called the North's recent claim that it has entered the final stage of uranium enrichment "a subject of concern" but added it was not surprising.

   "We are prepared to engage bilaterally as well with the North Koreans but only within the context of six-party talks," Bosworth said after holding three days of consultations with South Korean officials.

   In a letter to the U.N. Security Council on Sept. 4, North Korea said its uranium enrichment program -- a second route to nuclear weapons development, alongside plutonium enrichment -- has entered into its "completion phase." The North also said it was weaponizing plutonium by reprocessing spent fuel rods.

   The letter came in response to the U.N. council's inquiry about sanctions it had imposed over the North's May nuclear test. Those measures limited cash flows into the country and banned cargo shipments related to its nuclear and missile programs.

   "Any indication of the nuclear program on the part of North Korea whether it's HEU (highly enriched uranium) or anything else is a subject of concern, and one which we have to address," Bosworth said.

   But the Sept. 4 North Korean statement "is not the first we've heard of HEU and may not be the last," he added.

   Despite North Korea's recent conciliatory gestures toward the international community, the U.S. sees no fundamental change in the prolonged standoff over the North's nuclear drive, Bosworth said.

   In August, North Korea freed detained American and South Korean citizens, lifted inter-Korean traffic restrictions and restored sagging joint business ventures.

   "No, I don't think there's been any fundamental change," Bosworth said.

   "We are very gratified that young American journalists have been released," he said, "But our primary interest remains the denuclearization of the Korean Peninsula, and we continue to (support) opportunities to reinitiate this process."

   A diplomatic source in Seoul said the U.S. maintains its "tough" stance on North Korea.

   "The major view in Washington is now that Pyongyang's movements have no relation to the nuclear issue," the source said, requesting anonymity.

   Bosworth said he was "very pleased" with the consultations he had with his South Korean partners, including Foreign Minister Yu Myung-hwan and chief nuclear envoy Wi Sung-lac.

   "We are also agreed that because of the nature of this issue, and the regional implications and its global implications, this is a problem that requires multilateral solutions," he said.

   Bosworth came here on the second leg of a three-nation Asian tour that began in Beijing and will take him to Tokyo later in the day. His primary task is discussing ways to resume the six-party talks and the implementation of U.N. Security Council Resolution 1874, imposed after North Korea's nuclear test in May.

  
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U.S. Preparing for N. Korea Collapse Scenario: CSIS Report

WASHINGTON (Yonhap) -- The United States is preparing for the possibility of nuclear war with North Korea and of a regime collapse in the isolated state, a Washington-based think tank said in a recent report.

   In the analysis of an upcoming Defense Department review, the Center for Strategic and International Studies (CSIS) said a government team is examining several scenarios including "regime collapse in North Korea." It also said Washington may plan how to handle a confrontation with the North "that involves a nuclear strike."

   The CSIS report, dated Aug. 27, offered a preview of the 2010 Quadrennial Defense Review, the first to be released under the administration of Barack Obama. The paper is critical in setting defense policy.

   Other contingencies for which the U.S. is preparing include a "loss of control over nuclear weapons in Pakistan" and a clash between China and Taiwan.

   The possibility of regime collapse in North Korea has been a topic of discussion since rumors surfaced last year that leader Kim Jong-il suffered a stroke without a clear heir. In the months that followed, speculation has grown that Kim is grooming his third and youngest son, Jong-un, 26, to succeed him.

   Adm. Timothy Keating, commander of the U.S. Pacific Command, said in July that the U.S. has come up with scenarios to cope with any contingency in North Korea in the event of the senior Kim's death.

   "We are prepared to execute a wide range of options in concert with allies in South Korea and in discussions through (the Department of) State, which would have the lead, with countries in the region, and internationally if necessary," he said.

   "I don't think it is axiomatic that the departure of Kim Jong-il means a national security crisis. We'd hope it wouldn't. But we are going to be prepared if it does mean that."

   U.S. Secretary of State Hillary Clinton in February has also touched on the sensitive issue of North Korea's leadership change.

   "There is an increasing amount of pressure because, if there is succession, even if it is a peaceful succession, that creates even more uncertainty and it also may encourage behaviors that are even more provocative as a way to consolidate power within the society," she said.

  
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U.S. Blacklists Two N.K. Entities for WMD Involvement: State Dept.

  
WASHINGTON (Yonhap) -- The United States on Sept. 8 blacklisted two North Korean entities for their involvement with weapons of mass destruction (WMD), freezing their assets in the U.S. and banning Americans from doing business with them.

   They are the General Bureau of Atomic Energy (GBAE) and Korea Tangun Trading Corp., both of which were sanctioned by the United Nations in July for their involvement in North Korea's WMD programs under Security Council Resolution 1874, adopted after the North's second nuclear test in May, the State Department said in a statement. The North's first nuclear test was conducted in 2006.

   The listing adds to the several North Korean firms already blacklisted by the U.S. in the past months to buttress U.N. resolutions to sanction the North for its nuclear and missile tests.

   "GBAE oversees the DPRK nuclear program and manages operations at the Yongbyon Nuclear Research Center," the statement said. DPRK is North Korea's official name, the Democratic People's Republic of Korea.

   The Yongbyon nuclear center has the North's only operating reactor and was supposed to be dismantled under a six-party deal involving the two Koreas, the U.S., China, Japan and Russia. It produces weapons-grade plutonium.

   The six-party talks are deadlocked over the U.N. sanctions on North Korea after the North's missile and nuclear tests earlier this year. Pyongyang refuses to attend the multilateral talks, insisting instead on bilateral talks with Washington for a breakthrough.

   Washington says it will engage in bilateral talks only within the six-party framework, threatening to continue sanctions until the North returns to the multilateral forum and takes steps toward its denuclearization.

   Stephen Bosworth, U.S. special representative for North Korea policy, recently concluded a round of visits to Asian capitals to discuss how to respond to Pyongyang's request for bilateral meetings.

   In Tokyo, the last leg of his three-nation tour, Bosworth said the U.S. will make a decision on the request within weeks.

   The State Department said Korea Tangun Trading Corp. is "subordinate to North Korea's Second Academy of Natural Sciences and is primarily responsible for the procurement of commodities and technologies to support North Korea's defense research and development programs and procurement, including materials that are controlled under the Missile Technology Control Regime (MTCR) or the Australia Group."

   The designations come under Executive Order 13382, "an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems," the statement said. "As a result of today's action, any assets of the entities designated today that are within U.S. jurisdiction must be frozen. Additionally, U.S. persons are prohibited from conducting any transactions with these entities."

   The sanctions are also in line with U.N. resolutions adopted after North Korea's missile and nuclear tests in 2006 and 2009, the statement said, noting they aim to "prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime's efforts to develop nuclear weapons and the missiles capable of delivering them."

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