[Marxism] N. Korea's Asia trade boom a problem for US

Fred Feldman ffeldman at bellatlantic.net
Fri May 13 01:08:26 MDT 2005

The Washington Post - May 12, 2005

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

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

"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

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

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

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

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.

C 2005 The Washington Post Company

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