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NORTH KOREA NEWSLETTER NO. 219 (July 19, 2012)
*** INTER-KOREAN RELATIONS

N. Korea's Silence on Debt Gives S. Korea Right to Declare It's Default

SEOUL (Yonhap) -- North Korea missed the deadline on July 15 for notifying South Korea of how it will repay millions of dollars in loans provided in the form of food in 2000, resulting in Seoul having the right to declare Pyongyang has defaulted on its debt, an official said.

   South Korea sent the North a message on June 15 that the socialist nation was supposed to have paid back US$5.83 million in the first installment of a 2000 food loan worth $88.36 million by June 7. The North was required to respond to the message in 30 days.

   That deadline passed on Sunday with the North remaining silent, giving South Korea the right to declare the North has defaulted on the debt, according to a government official in Seoul.

   But South Korea is unlikely to go ahead with the declaration any time soon as it would have little effect on the North. The socialist nation remains largely outside of the international financial system and the prospect of national default is unlikely to force it to repay its debt.

   Officials said they are considering sending Pyongyang a message again calling for debt repayment.

   Widespread views are that it won't be easy for the North, which is still struggling with food shortages, to pay back its debt, but officials said the country could repay the debt in kind as it did before. In 2007 and 2008, the North repaid some debt with $2.4 million worth of zinc ores.

   After the two Koreas held their first-ever summit in 2000, South Korea provided the North with a total of US$720 million in loans of rice and corn until 2007. Including interest accrued on the loans, the North is required to repay some US$875 million by 2037.

   Such aid has been cut off after the South's President Lee Myung-bak took office with a pledge to link any assistance to the North to progress in international efforts to end Pyongyang's nuclear weapons programs.

  
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South Korea Denies North Korea's Terrorist Dispatch Accusation

SEOUL (Yonhap) -- South Korea on July 16 denied Pyongyang's claim that it had arrested a group of "terrorists" recruited by Seoul and Washington to attack the socialist regime.

   The government said the accusation is propaganda unworthy of a response, denying the claim that South Korea and the United States ordered terrorists to destroy key communist statues and monuments in the North.

   The government's denial comes after the North's Committee for the Peaceful Reunification of Korea (CPRK), which campaigns against the South, released a statement via the (North) Korean Central News Agency (KCNA).

   "According to reports by a related organization, those who infiltrated and tried to destroy statues and monuments at the command of the South and the U.S. governments were spotted and arrested a few days ago," the CPRK said.

   The committee claimed those caught were North Korean traitors, including defectors to the South, who confessed to taking part in terrorist attacks after being paid by Seoul and Washington.

   Branding the alleged attempts as an "out-sized terrorist case" and a "rude violation of international law," the committee said "those who attempt to insult or lay a hand on our highest dignity will not avoid terrible punishment."

   If the U.S. and the South continued to support such attacks, the North would be forced to respond severely, the committee warned, accusing the two allies of arranging attacks presumed to have been aimed at statues of the Kim family.

   An official of a group that supports North Korean defectors in the South said the alleged attempted attacks and arrests were possible. "I heard a few North Korean soldiers-turned-defectors have been planning the demolition of a Kim Il-sung statue," he said, and it was likely some could have been arrested.

   Meanwhile, the South Korean government interpreted the North's accusation as driven by internal instability within the socialist regime.

   "It seems to be aiming at shifting the attention to the South's hostility in a bid to solidify the regime's unity when the country is in a state of seeming instability," a Unification Ministry official said, referring to a surprise announcement in the morning of the North's dismissal of the army's Chief of General Staff Ri Yong-ho.

   In an unexpected decision, North Korea relieved the key military figure of all his top military titles, drawing experts' speculation over a possible power struggle in the country that is ruled by an untested young leader.

  
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S. Korean President Lee Myung-bak Donates to 'Unification Fund'

  
SEOUL (Yonhap) -- South Korean President Lee Myung-bak donated on July 16 to a government campaign to raise funds to finance what are expected to be massive costs South Korea will shoulder in the event of unification with North Korea.

   President Lee put an envelope containing an unspecified amount of money into the "unification jar," a white earthen pot the government had made in a symbolic gesture to raise money to help finance the costs of potential unification with the impoverished North.

   "What matters is not how much will be collected. I hope as many people as possible will take part in this and chip in," Lee said during the donation ceremony at the presidential office.

   Unification Minister Yu Woo-ik told Lee former Japanese Foreign Minister Seiji Maehara had made an impromptu donation after learning of the jar's purpose in a meeting with Yu. Maehara, a ranking lawmaker of Japan's ruling Democratic Party, has been on a three-day visit to Seoul since Sunday.

   The state-run Korea Institute for National Unification has estimated the initial costs for the integration of the two Koreas could range from 55 trillion won (US$47 billion) to 249 trillion won ($216 billion).

   The estimate, which is projected to cover the first year of integration, was based on the assumption the two neighbors could be unified two decades from now, according to the institute.

   Lee has said unification could come at any time and South Korea should be prepared for it.

  
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South Korea, U.S. Step up Monitoring of North Korean Military

SEOUL (Yonhap) -- South Korea and the U.S. have strengthened their joint intelligence gathering on North Korea, following a series of top-level reshuffles in the North's military, military sources in Seoul said on July 18.

   Tensions further rose as North Korean leader Kim Jong-un was granted the title of marshal, days after the shake-up at the highest level of the North's 1.2 million-strong armed forces, one of the world's largest.

   Earlier this week, General Hyon Yong-chol was promoted to vice marshal following the dismissal of Ri Yong-ho as military chief.

   Kim Min-seok, a spokesman of Seoul's defense ministry, told reporters that there is no visible change in North Korea's military activities following the shift in the top military post.

   According to military sources, the South Korea-U.S. Combined Forces Command is maintaining its normal surveillance status, Watchcon 3, while increasing intelligence-gathering activities to detect changes in the North's military.

   "The North Korean military unit near the military demarcation line has yet to show signs of elevated alertness or special activities," the official said.

   On July 17, Gen. Jung Seung-jo, the chairman of the Joint Chiefs of Staff and Gen. James Thurman, head of the Korea-U.S. Combined Forces Command, talked over the phone and agreed to maintain close cooperation in information gathering on the North, the official noted.

   President Lee Myung-bak held a national security meeting earlier in the day to order senior officials to keep close watch on the situation in North Korea and maintain close cooperation with relevant nations.

   Kim, believed to be in his late 20s, has worked to bolster his public image while rebuffing international pressure to abandon the country's nuclear weapons program.

  
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President Lee Holds Security Ministers' Meeting to Discuss N. Korea

SEOUL (Yonhap) -- South Korean President Lee Myung-bak convened a meeting of top security officials to discuss the situation in North Korea, his spokesman said on July 18, amid intensifying speculation surrounding Pyongyang's surprising dismissal of a top general.

   President Lee instructed officials to keep a close watch over North Korea and work closely together with other nations, presidential spokesman Park Jeong-ha said without elaborating. Participants included the foreign, defense and unification ministers as well as the spy agency chief and the national security advisor.

   North Korea announced on July 16 that Ri Yong-ho, the chief of the military's general staff, was removed from all his posts because of unspecified "illness." The announcement came as a surprise as Ri has been considered to have played a key role in new North Korean leader Kim Jong-un taking over the regime after his father Kim Jong-il's death.

   Media outlets have speculated there could be a power struggle in the reclusive nation or the young leader has launched a purging campaign to tighten his grip on power. On Wednesday, the North announced Kim had been given the new title of marshal in a sign he is firmly in charge.

   "We can't make public what was discussed," a senior presidential official said. "But it is unusual for a powerful North Korean military official to fall abruptly. There was a report about internal movements in North Korea's inner circle and military movements."

   Sources said participants decided to strengthen intelligence efforts toward the North.

  (END)
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