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| April 19, 2000 | atimes.com | ||
|  | The Koreas PYONGYANG WATCH: Raring to go By Bradley Martin Various business deals between North and South Korea have been hatched over the last decade or so, but from the South's standpoint they've all been unofficial. Private southern organizations have dealt with supposedly non-official counterpart organizations in the North. (Never mind the fact that no truly unofficial organizations are permitted to exist in the North.) But there's a strong southern tradition of state guidance of the economy - to the extent that it would be an understatement to say the South Korean government has been itching to get more deeply involved in North-South exchange. And now last week's announcement that South Korean President Kim Dae-jung and North Korean Great Leader Kim Jong-il will meet in Pyongyang June 12-14 seems to have opened the floodgates. Proposals on how government-to-government cooperation can accelerate the North's development - and benefit the South - are pouring out of Seoul. The expected preeminence of economics among summit topics can be seen in the planning office the South Korean government is setting up, which includes representation from the Unification Ministry, of course, but also from the ministries of commerce, industry/energy, construction/transportation and agriculture/forestry. A priority of the North Korean regime is restoring its all-but-ruined energy system. The ''agreed framework'' that ended the 1994 nuclear standoff included plans for concerned countries including South Korea to band together and provide modern nuclear power plants of a sort from which little weapons-grade plutonium could be derived. That project is years behind schedule and North Korea is demanding ''compensation'' for the delay. Even if the new plants were ready tomorrow the North Korean power grid is in such poor shape that much of the power generated would be lost in transmission. The South is preparing to be asked to provide various interim energy measures. The Ministry of Construction and Transportation was ready the day after the summit was announced to talk about a study it has funded to look into the possibility of a land bridge route for containers, which would be hauled by rail from the South Korean port of Pusan through South and North Korea, China and Russia to Germany. The agency performing the study is the Bangkok-based United Nations Economic and Social Commission for Asia and the Pacific. The Ministry of Information and Communication doesn't want to be left out, and is looking ahead to a time when the two Koreas will be connected by both mobile and wired telephones - not just the current hotline between the two regimes. The South's government will be deeply involved in helping to fund North-South cooperation projects, even if that help is largely confined to acting as guarantor against risk on behalf of private entities that remit actual funds to the North. (Guarantees are important, as North Korea has had something close to a zero credit rating since its default on huge loans it took out in the 1970s.) Officials are now looking into methods, which include use of an existing, $474 million Inter-Korean Economic Cooperation Fund and, if necessary, the not specifically North Korea-focused Economic Development Cooperation Fund and funds of the Korea International Cooperation Agency. Issuing ''national unification bonds'' is reported to be a possibility in the long run. Benefits that South Korea sees possibly accruing to it include an improvement in its own sovereign credit rating, to the extent that increased stability results from the summit and whatever follows it. Rating agency Fitch IBCA as recently as March 30, when it upgraded the South from BBB to BBB+, mentioned North Korean country risk as a factor keeping the rating from being higher still. The Bank of Korea wants to see agreement on the details of a trade-settlement system, which the two sides originally envisioned in a 1972 agreement. In the absence of agreement on the details of such a system, South Korean companies trading with the North now have to pay commissions to foreign banks in Hong Kong or Singapore to handle their payments. The South Korean government will also be looking for an investment guarantee agreement from the North, a pact to avoid dual taxation, agreement on tariff-free exchanges and export-insurance regulations. These issues are to be raised through a North-South joint economic committee that the two sides agreed in 1991 to establish. ''We cannot expect any development in investment in North Korea without an investment guarantee agreement assuring companies of returns and easy withdrawals from the country,'' an official of the Ministry of Finance and Economy told Yonhap news agency last week. (Special to Asia Times Online) | |||||||||
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