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NORTH KOREA NEWSLETTER NO. 115 (July 15, 2010)
*** INTER-KOREAN RELATIONS

Outlook for Revival of Inter-Korean Tours Dims Amid Ship Sinking, UNSC Sanctions

SEOUL (Yonhap) -- An ongoing deadlock between the two Koreas over a suspended tour program to a mountain resort in the North is expected to be prolonged amid the further deterioration of ties after the sinking of a South Korean Navy ship, which Seoul blames on Pyongyang
The tour program to Mount Kumgang -- once hailed as a symbol of reconciliation between the two Koreas -- began in November 1998, and nearly 2 million South Koreans visited the zone before the program was suspended.

   The tours, once a cash cow for the poverty-ridden socialist country, however, were suspended by the South Korean government in July 2008, when a South Korean tourist was shot dead by a North Korean soldier guarding a restricted area.

   Seoul has demanded a full investigation into the case and safety guarantees for South Korean tourists. The demands have yet to be met. July 12 marks the second anniversary of the suspension.

   In its most recent development, Pyongyang last month seized or froze South Korean assets at the resort in anger over Seoul's refusal to resume cross-border tours.

   The fate of the symbol of reconciliation between the two Koreas has increasingly fallen into jeopardy since March 26, when the South Korean corvette sank near the Yellow Sea border, killing 46 sailors.

   South Korea concluded after an extensive multinational probe that a North Korean submarine torpedoed the 1,200-ton Cheonan, but North Korea has denied any role in the sinking and threatened that any sanctions or punishment would lead to war.

   "It is still unclear at the moment whether inter-Korean ties can be mended, with the North arguing that the probe results were rigged and the South continuing its demand for an official apology" over the tourist shooting, a source privy to the tour program said, asking not be named.

   At the heart of the deadlock lies an unresolved tug of war in which both sides blame the other for the incident. Seoul has demanded three preconditions for its resumption -- a formal apology from the North, security guarantees for South Koreans, and a joint investigation into the shooting incident. North Korea has noted that the incident was unfortunate, but has placed the blame on the tourist in question and the South Korean government.

   The North, in retribution for the South suspending the Kumgang tours, has frozen a separate tour program to Kaesong, a North Korean border town which also houses a cross-border industrial complex.

   Hyundai Asan Corp., the South Korean operator of the tour programs, has seen snowballing losses since the suspension two years ago. The company has suffered some 302 billion won (US$252 million) in sales losses from the ceasing of tours and has slashed 70 percent of its employees in a series of restructurings.

   In an effort to salvage itself, the company is focusing on its construction businesses, logistics operations and other domestic-oriented business models.

   Local businesses in Goseong, a South Korean town on the east coast border that has an inter-Korean land route, have also suffered a sharp decline in profits. The region's lodging establishments and restaurants have suffered damages worth some 58.5 billion won from the suspension.

  
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South Korea Approves New Humanitarian Assistance to North Korea

SEOUL (Yonhap) -- South Korea has approved two shipments of baby food to North Korea in the latest humanitarian aid to the socialist state amid tension over the sinking of a warship, an official said on July 9.

   The powdered milk worth a total of 600 million won (US$490,000) and provided by two civilian relief groups, including the Join Together Society, will be sent to three provinces in the North, Unification Ministry spokesman Chun Hae-sung told reporters.

   South Korea has approved about a dozen shipments of humanitarian aid to North Korea since it condemned the socialist country for sinking one of its warships on March 26, killing 46 sailors.

   Seoul has since cut off trade with North Korea and suspended all humanitarian aid except for assistance benefiting the young and the diseased. The North denies its role in the sinking in the Yellow Sea.

   North Korea is one of the poorest countries in the world, and its children suffer from chronic malnutrition.

  
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Seoul Says It Will Consider Easing Travel Restrictions at Joint Industrial Park

SEOUL (Yonhap) -- The Unification Ministry said on July 12 it will consider easing travel restrictions for South Korean workers at a joint inter-Korean industrial park after repeated pleas by businessmen complaining of financial troubles from the restrictions.

   During a press briefing, ministry spokesman Chun Hae-sung said the ministry is well aware of difficulties faced by South Korean firms at the Kaesong industrial park.

   "We're listening to their concerns and reviewing possibilities" of easing the restrictions, Chun said. "It would be premature for me to say at this point what specific steps will be taken, but let me stress that the government fully understands the companies' problems."

   After a Seoul-led multinational investigation found North Korea responsible for the March 26 torpedo attack that caused the sinking of the South Korean warship Cheonan, the South nearly halved the number of its workers at Kaesong to around 500.

   Seoul cited safety concerns for its citizens staying at the complex located in North Korea's border city, but companies have appealed to the government to ease the limits, saying they have disrupted business operations and caused losses.

   In a meeting with a parliamentary committee, Unification Minister Hyun In-taek was quoted as saying that he would "exercise more flexibility" in applying the limit so that it would not force the firms to cut down their production.

   Hyun also offered to increase the amount of state loans for companies doing trade with North Korea from 50 billion won (US$41.5 million) to 60 billion won, legislators who attended the meeting said. These firms have also been affected by the government's ban on inter-Korean trade as part of Seoul's punitive measures against North Korea following the Cheonan sinking.

   About 120 South Korean companies employ some 42,000 North Korean workers, churning out inexpensive goods using the North's cheap labor. The Kaesong park, which opened in 2004, is a legacy of the first inter-Korean summit held four years earlier.

   The North, despite a series of threats to close down the complex, is keeping the venture that outsiders see as a major source of cash for the economically debilitated regime.

   The travel restriction was among Seoul's punitive steps against Pyongyang, which also included a ban on cross-border trade and resumption of psychological warfare along the border. Chun said these measures will continue to be implemented and that Seoul has no plans to propose dialogue with Pyongyang.

  (END)