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NORTH KOREA NEWSLETTER NO. 97 (March 11, 2010)

N. Korea Threatens to Scrap Suspended Mountain Tour Program

SEOUL (Yonhap) -- North Korea on March 11 claimed that the Seoul government is effectively blocking South Koreans from visiting its tourist attractions and warned it could revoke all deals covering inter-Korean tours.

   The North's Asia-Pacific Peace Committee statement carried by the (North) Korean Central News Agency (KCNA) follows a fresh round of talks held in February that failed to reach a compromise on restarting tourism to the scenic Mt. Kumgang on the east coast and Kaesong, the ancient capital of the Koryo Dynasty (A.D. 918-1392).

   At the meeting, Seoul demanded an official apology for the shooting death of a female South Korean tourist in July 2008 and a pledge that such an incident will not occur in the future.

   The South has said a formal investigation must be carried out to determine why the shooting occurred.

   All tours to the famed mountain were suspended right after the shooting, while visits to Kaesong were stopped in December of the same year.

   "If the South Korean government continues to block the travel routes while making false accusations, we will be left with no choice but to take extreme measures," an unidentified spokesman for the committee said.

   The spokesman said such measures will include the nullification of contracts with South Korea's Hyundai Asan, which has organized the tours, and freezing real estate and other assets. He did not go into further detail.

   The official also claimed that there is growing demand from within the country and abroad to open Mt. Kumgang and Kaesong to tourists.

   "Kaesong will be open to tourists starting this month, while tours to Mt. Kumgang will be permitted from April," the spokesman said, adding that South Korean tourists who visit the two areas will be afforded complete safety and offered every convenience.

   In addition, he stressed that whether or not South Korean tours to the two locations will restart or not will depend entirely on South Korean authorities, who will have to bear full responsibility if the cross-border exchange does not take place.

   The Asia-Pacific Peace Committee official emphasized that Pyongyang has said on numerous occasions in talks with Hyundai Asan executives that every effort will be taken to ensure the safety of South Korean tourists in the future.

   He pointed out that the North already explained in detail that the death of the female tourist was caused by her crossing into a "no entry" zone in violation of set rules.

   Despite the latest threat, South Korea made clear that the resumption of tours to Kaesong and Mt. Kumgang depends entirely on Pyongyang providing firm assurances that the safety of tourists will be protected.

   "There is no change in the government's stance that concrete measures must be taken to ensure the safety of tourists," said Unification Ministry spokesperson Chun Hae-sung. He said that all outstanding issues related to the tours must be handled through dialogue.


N. Korea Spurns S. Korean Demand to Resolve Nuclear Issue Together

SEOUL (Yonhap) -- North Korea on March 4 dismissed intensifying pressure from South Korea to allow the communist country's nuclear arms programs to become a main topic in discussions between the two sides.

   South Korea maintains it will not consider providing full-scale assistance to its impoverished neighbor unless the North agrees to discuss its nuclear arms development in bilateral talks.

   Rodong Sinmun, the official newspaper of the North's ruling Workers' Party, said the South Korean stance merely amounts to "a ploy to whip up a wanton campaign against the North."

   "As we have made clear repeatedly, the nuclear issue has nothing to do with inter-Korean relations," the paper said in an editorial, released through the official (North) Korean Central News Agency (KCNA).

   South Korean President Lee Myung-bak and other senior officials have said Seoul is willing to hold a summit with Pyongyang but only if the meeting with North Korean leader Kim Jong-il can lead to progress in the North's nuclear dismantlement.

   The North argued in the paper that it began to develop nuclear arms to deter foreign hostility -- an apparent reference to the United States -- and that the South, therefore, should step away from the issue.

   The paper said the series of inter-Korean discussions this year on cross-border ventures remain "deadlocked" and ridiculed South Korean Unification Minister Hyun In-taek for what it said was his wrong perception of the countries' current relations.

   Hyun said in recent speeches that he believes frozen inter-Korean relations have begun to thaw and that Pyongyang is acceding to Seoul's two-year-old policy of linking aid to the nuclear issue.

   "Hyun is talking rubbish" when he says inter-Korean relations are improving, the paper said, accusing the official of trying to drive relations toward ruin.


North Korea Slams Defector Group for Food Looting Claim

SEOUL (Yonhap) -- A North Korean agency on March 4 slammed a Seoul-based group of defectors from the North for reporting that hungry residents had fought with soldiers guarding a food-transporting train on the birthday of its leader Kim Jong-il in February.

   The North Korea Intellectuals Solidarity (NKIS), a group of North Korean defectors that promotes reunification of Korea in Seoul, reported a day earlier that a North Korean was shot dead in a fight after he, along with several other hungry residents, attempted to rob food items by jumping on a train in North Hamgyong Province.

   "The claim is a trumped-up sham," said a spokesman for the Committee for the Peaceful Reunification of the Fatherland, an organ that handles inter-Korean affairs. "Those who resort to shams will have to pay the price for their actions."

   The NKIS maintained the train shipping imported foods from China was passing through Buryong County in the province which borders the northeastern part of China, when the hijack attempt occurred on Feb. 16, the 68th birthday of the North Korean leader.

   In an interview with the (North) Korean Central News Agency, monitored in Seoul, the unnamed spokesman alleged that "no train carrying food had passed through the region and there had been no food looting case."

   The NKIS is not only a national traitor instigated by the South Korean puppet regime, but also a group of fugitives, he said, adding that a "variety of canards" concocted by anti-Pyongyang plotters are simply designed to undermine North Korea's military-first politics and its goal of building a powerful and prosperous socialist nation.

   North Korea is reportedly suffering from worsening food conditions since prices for rice and other key food items shot up following its currency reform in November last year.


N. Korea Enacts 'Coal Law,' Signals Will to Lure Foreign Money

SEOUL (Yonhap) -- North Korea has enacted a law on the exploration, supply and use of coal, which the impoverished country claims is the food of the manufacturing industry, it was ascertained on March 7.

   The enactment of the coal law was confirmed as Minju Joson, the organ of the North's cabinet, carried a five-installment series on the coal law between Jan. 20 and Feb. 12.

   North Korea's public-use code of laws, published in August 2004, didn't carry a coal law, while its expanded edition had no such act. Since then, Pyongyang has never announced the enactment of a coal law.

   Earlier in April 1993, North Korea legislated a law on natural resources, while adopting rules on the development and operation of small and mid-size coal mines.

   Analysts said the coal law seems to be aimed at developing its ample reserves of coal more effectively as the isolated country has difficulty in importing oil and other energy sources due to international sanctions.

   The United Nations imposed tough sanctions on North Korea after the "rogue nation" conducted missile and nuclear tests in April and May last year, defying warnings from the international community.

   North Korea is estimated have produced 24 million tons of coal in 2007.

   The law stipulates that the government should not only expand investment in the coal industry, but also boost exchanges and cooperation with other countries and international agencies, which analysts say hints at Pyongyang's bid to attract foreign capital in order to further develop the industry.


New Chinese Ambassador to Pyongyang Offers Credentials

SEOUL (Yonhap) -- Kim Yong-Nam, president of the Presidium of North Korea's Supreme People' Assembly, received credentials from the new Chinese Ambassador to Pyongyang on March 8, the North's official media said.

   The (North) Korean Central News Agency (KCNA) reported that Kim, the North's nominal head of state conversed with Liu Hongcai at the Mansudae Assembly Hall in Pyongyang after receiving the credentials, but it failed to give details of their meeting.

   Liu, 55, is known as an export on North Korea. He joined the Communist Party of China (CPC) and has served as vice minister of the International Liaison Department of the CPC Central Committee since 2003.

   While serving the International Department, Liu visited Pyongyang several times. In 2007, he made a trip to North Korea, leading a delegation of the department. He also visited the North in 2005 and 2008, respectively, accompanying then special envoy Tang Jiaxuan and China's vice president Xi Jinping.

   North Korea watchers say the appointment of Liu, a vice ministerial official, is seen as showing China's intention to put greater emphasis on relations with North Korea. China is North Korea's staunchest ally and its largest benefactor amid international sanctions against Pyongyang for its nuclear and missile tests.

   Meanwhile, North Korea has reportedly downgraded the status of its ambassador to China by appointing an department-head-level official, breaking with its 60-year-old tradition of naming an official of a vice-ministerial level or higher.


North Korea Launches State Bank to Lure Foreign Funds

SEOUL (Yonhap) -- North Korea officially launched a development bank on March 10, state media reported, a move that is seen as aimed at attracting foreign capital to resuscitate its ailing economy.

   The State Development Bank held its inaugural board meeting in Pyongyang to elect top managers and decide on its management scheme and this year's budget, the (North) Korean Central News Agency (KCNA) said, without elaborating.

   Jon Il-chun, representative of the National Defense Commission (NDC), as director-general of the board, and Pak Chol-su, a Korean resident in China, was elected as his deputy, the KCNA said.

   "Having advanced banking rules and a system for transactions with international monetary organizations and commercial banks, the State Development Bank will operate as a comprehensive financial institution making investments in major projects, pursuant to the state policy, and performing the function as a commercial bank," the KCNA added.

   The launch comes after North Korea announced in late January that the NDC, the North's highest political body chaired by its leader Kim Jong-il, had decided to set up the bank.

   According to a March 2 report by Choson Sinbo, a pro-Pyongyang newspaper based in Japan, the state bank and the (North) Korea Taepung International Investment Group, Pyongyang's state investment agency, will push ahead with a 10-year plan to rebuild the country's decrepit infrastructure.

   "Under the 10-year blueprint, development projects dealing with food problems, railways, roads, ports, electricity and energy will be conducted simultaneously, independent of state spending," Park was quoted as saying.

   The official further told Choson Sinbo that the development bank will be initially capitalized at $10 billion and have 25 subsidiaries under its wing, which will be tasked with funding development projects according to a state investment law.

   Analysts said the establishment of the bank agrees with the direction of Pyongyang's annual New Year's joint editorial, which stresses the need for an economic revival and improvement in the living standard of the North Korean people.

   It is also viewed as being in line with the aim of the North's redesignation in early January of Rason city, which was the country's first free trade zone, as a "special city" to boost foreign trade.

   The KCNA reported on Jan. 5 that the Presidium of the North's Supreme People's Assembly designated Rason city as a special city in a decree in an effort to boost foreign investment. In 1991, North Korea designated Rajin and Sonbong, located on the country's northernmost coast, close to both China and Russia, as an economic free trade zone.

   The launch of the state bank comes as the isolated country has been stung by international sanctions, which restrict Pyongyang's weapons exports -- a major source of hard currency -- and its access to international credit.

   The United Nations slapped tough sanctions on the isolated country after it conducted missile and nuclear tests in April and May last year.