[Cankor] Cankor # 269

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************************************************* 
CANADA-KOREA ELECTRONIC INFORMATION SERVICE 

CanKor # 269 

Friday, 29 December 2006
************************************************* 

The latest country director of the World Food Programme in Pyongyang is
Canadian Jean-Pierre de Margerie from Sherbrooke, Quebec. He says
dealing with the DPRK government is "probably one of the most difficult,
if not the most difficult, of any country where the WFP works." 

The Korean Peninsula Energy Development Organization (KEDO) signs a
final agreement to liquidate its 10-year project to build two
light-water reactors in the DPRK. 

Six-Party Talks end inconclusively in late December, with the DPRK
promising to bolster its nuclear deterrent until the USA lifts financial
sanctions, and the USA accusing the DPRK of stalling by raising issues
that are not relevant to the subject of the talks. ROK chief delegate
Chun Yung-woo says the USA offered to remove the DPRK from Washington's
list of states sponsoring terrorism if the DPRK dismantles its nuclear
weapons programme.
This was only one of numerous incentives on offer, including security
guarantees, a peace treaty and normalization of relations. In response,
according to Chun, DPRK chief delegate Kim Gye Gwan promised to study
the proposals and bring a response to the next round of negotiations. 

According to reports, the DPRK sold 1.3 tons of gold to Thailand shortly
before UN sanctions went into effect in October. The DPRK is also
planning to sell gold through the London Bullion Market Association.
************************************************* 

Contents: 

1. CANADIAN FIGHTS TO FEED NORTH KOREA'S HUNGRY
http://www.theglobeandmail.com/servlet/story/RTGAM.20061209.wxkorea09/BNStory/International/home 

2. KEDO CLOSES DEAL ON LIQUIDATION OF REACTOR PROJECT
http://english.yonhapnews.co.kr/Engnews/20061214/630000000020061214160518E2.html 

3. NUKE TALKS END WITHOUT DEAL
http://www.guardian.co.uk/worldlatest/story/0,,-6297599,00.html 

4. DPRK TO CLOSELY WATCH US ATTITUDE
http://www.kcna.co.jp/item/2006/200612/news12/25.htm#3 

5. NORTH LINKS ASSET FREEZE TO NUKES
http://english.donga.com/srv/service.php3?bicode=050000&biid=2006122521558 

6. USA MADE DPRK AN OFFER: ROK NUCLEAR ENVOY
http://www.mercurynews.com/mld/mercurynews/news/world/16324076.htm 

7. DPRK SOLD GOLD TO THAILAND BEFORE SANCTIONS
http://www.nytimes.com/reuters/world/international-korea-north-thailand-gold.html 

8. DPRK LOOKS TO LONDON TO CIRCUMVENT SANCTIONS
http://business.timesonline.co.uk/article/0,,9072-2522294,00.html
************************************************* 

1. CANADIAN FIGHTS TO FEED NORTH KOREA'S HUNGRY by Geoffrey York, Globe
and Mail, 9 December 2006 

In his years as a relief worker, Jean-Pierre de Margerie has survived
the Rwandan genocide and the violence of Baghdad. But he has never felt
anything like the isolation and psychological pressure of North Korea. 

"It's almost like being on another planet," said the 43-year-old
Canadian, who heads the biggest aid program in Pyongyang. "Everything is
controlled.
There's an obsession with security. You have to put in requests if you
want to go out. The pressure is constant. Nobody will talk to you on the
streets.
Day after day after day, it really runs you down." 

Despite the suffocating controls, Mr. de Margerie is beginning to
understand how to get things done in Pyongyang. And at a time when the
world is anxiously watching North Korea's nuclear-weapons program, this
little-known man from Sherbrooke is probably the most influential
foreigner in the country. Mr. de Margerie, a veteran of 13 years at the
United Nations, is head of the North Korean operations of the UN's World
Food Program. It puts him in charge of the largest foreign organization
in North Korea, with 40 staff and a mandate to feed almost 10 per cent
of the population. It makes him a man with clout and access in a
secretive country. More than perhaps any other outsider, he has
opportunities to talk to senior North Korean officials and visit remote
corners of the country, and he witnesses the harsh sacrifices that the
regime is forcing its population to endure to pay for nuclear weapons. 

As a UN worker, he remains strictly neutral on political questions, and
he cannot get involved in the nuclear issue. But he sees how it
jeopardizes the lives of ordinary people, including malnourished
children, who are facing one of their hungriest winters since the famine
of the mid-1990s. 

"I hate to see a political crisis that affects kids," he said in an
interview during a brief visit to Beijing. "We are targeting mainly kids
and women, and they are not the ones who are doing politics. It would be
naive to say that the political situation isn't affecting us. It makes
fundraising more difficult for us. The pipeline is drying up." 

The UN has asked the international community to donate $102-million (US)
to reduce hunger among North Korea's neediest groups, but, so far, only
12 per cent of the target has been raised. Canada, which usually
contributes to the UN food program in North Korea, is among the many
traditional donors that have so far refused to donate to the latest
campaign. By the first quarter of next year, most of the UN food
supplies in North Korea will have disappeared, and there is nothing to
replace the shortfall if the fundraising efforts continue to fail. 

The last UN survey in 2004 found that 37 per cent of North Korean
children were malnourished. (That figure is probably rising, although
Pyongyang has refused to allow another survey this year). A growing
number of families will be forced to rely on emergency methods of
survival: foraging for wild fruit and plants, selling their meagre
household belongings, or trying to coax a crop from steep hillsides
where the soil can be washed away by a single rain. Many families will
simply go hungry or starve. 

If the shortage continues, some parts of North Korea could face a
famine, Mr. de Margerie says. "The food situation is very fragile, very
precarious.
Our big concern is that there is nothing in the pipeline." 

The food shortages are compounded by the stubbornness of a Stalinist
regime that imposes severe limits on relief workers. The UN is permitted
to visit only 29 of the 213 regions in the country. It cannot enter the
homes of ordinary people, or visit markets without permission. It cannot
conduct a national survey to assess the needs of the people. Most
requests are rejected with a vague phrase about "security concerns",
apparently because the powerful military is unwilling to allow
foreigners to travel freely. 

"Dealing with this government is probably one of the most difficult, if
not the most difficult, of any country where the WFP works," Mr. de
Margerie said. "It's difficult because the regime is extremely stiff and
extremely tough in negotiations. There is very little room for
compromise. Everything needs to be negotiated all the time, from the
smallest little issue to the biggest strategic one." 

Since the beginning of his career, Mr. de Margerie has been battling
these kinds of challenges in some of the world's most gruelling places -
including the war zones of Nepal and East Timor. The son of a Sherbrooke
doctor, he did graduate studies in international affairs at Carleton
University in Ottawa and worked as an intern at the Canadian
International Development Agency before joining the UN in 1993. His
trial by fire was in Rwanda, his first assignment, where he found
himself amid the genocide of 1994. One of his first tasks was to rescue
the seven children of the murdered prime minister, saving them from
slaughter at the last minute. 

"It was quite traumatizing and eye-opening. It was an incredible
experience.
It made me realize that I can make a difference. That's why most of us
are in this work." 

His later assignments included East Timor during the militia bloodshed,
Baghdad after the US invasion, Indonesia after the tsunami and Nepal
during its civil war. Through it all, he has felt an obligation to give
back something to the world after an upbringing in comfortable
surroundings in Quebec. 

"There is this incredible inequality in the world, based on where you
are born and the colour of your skin. I had a really cushy upbringing,
and maybe that's why I've tried to find something more disturbing and
dramatic. Often it's in these situations where you're challenged that
you discover who you are."
************************************************* 

2. KEDO CLOSES DEAL ON LIQUIDATION OF REACTOR PROJECT Yonhap, 14
December 2006 

An international energy consortium this week signed its final agreement
with a South Korean firm to liquidate its 10-year project to build two
light-water reactors in communist North Korea, a South Korean official
said Thursday."In a Dec. 8 meeting in New York, the executive board of
the Korean Peninsula Energy Development Organization (KEDO) approved a
deal with the Korea Electric Power Corporation (KEPCO)," Moon Dae-keun,
an official from the Unification Ministry, told reporters. 

The so-called Termination Agreement made official the tentative
agreement between the two sides in June that the South Korean electric
company would pay the cost of liquidating the US$4.6-billion project in
return for all of KEDO's tangible assets outside of the communist North,
Moon said. 

The agreement comes as probably the last official document to be signed
by the international consortium, which includes South Korea, Japan, the
European Union and the United States, ministry officials said. 

About $1.65 billion has been spent on the now-defunct project, more than
$1.14 billion of which came from South Korea, according to Moon. 

The government earlier estimated the liquidation to cost between $150
million to $200 million, but officials said Thursday that it would take
as long as three years to accurately determine how much it would cost. 

A group of KEDO's subcontractors have filed claims for 37 lost
contracts, worth some $73 million, as of Tuesday, the officials said,
speaking on condition of anonymity. 

The international organization has a total of 101 outstanding contracts,
according to Moon. 

The organization's assets to be taken over by the South Korean electric
company cost some $830 million to acquire or build, according to the
Unification Ministry. No estimates for their current value were
available. 

The light-water reactors were part of a 1994 agreement between the
United States and North Korea, in which the communist state agreed to
freeze its nuclear activities in return for various economic
incentives. 

The 1994 agreement, known as the Agreed Framework, became a dead letter
following North Korea's withdrawal from the nuclear Non-Proliferation
Treaty in early 2003 and its subsequent unloading of spent fuel rods
from a nuclear facility for reprocessing. 

North Korea is believed to have created as much as 40 kilograms of
weapons-grade plutonium through reprocessing, enough to make six to
eight atomic bombs.
************************************************* 

3. NUKE TALKS END WITHOUT DEAL by Mari Yamaguchi & Audra Ang, Associated
Press, 22 December 2006 

The first talks on North Korea's nuclear program since the communist
nation tested an atomic device ended Friday without an agreement to move
ahead on disarmament or schedule further negotiations. During five days
of meetings in Beijing, negotiators said Pyongyang refused to talk about
its nuclear weapons program, and instead stuck to its demand that the
USA remove financial restrictions it has imposed on the regime. 

North Korea's main nuclear envoy said Friday the communist nation would
bolster its atomic arsenal in response to US pressure. 

"The US is taking a tactic of both dialogue and pressure, and carrots
and sticks," Kim Kye Gwan told reporters. "We are responding with
dialogue and a shield, and by a shield we are saying we will further
improve our deterrent." 

Chinese envoy Wu Dawei released a statement saying the sides simply
reaffirmed a September 2005 agreement where the North pledged to disarm
in exchange for security guarantees and aid. The countries -- China,
Japan, Russia, the US and the two Koreas -- agreed to return home and
"reconvene at the earliest opportunity," Wu said. 

Earlier, Japan's top envoy questioned whether the talks would survive as
a forum for dealing with North Korea's weapons if they failed again to
make any progress. Japan's Prime Minister Shinzo Abe said after the
talks ended Friday, however, that he still believes the six-nation
framework is the most effective means of getting a breakthrough. In more
than three years of meetings, the North has only committed in principle
to disarm but taken no concrete steps to do so -- instead going ahead
with its first nuclear test on Oct. 9. 

"There will be opinions questioning the credibility of the six-party
talks,"
Japanese envoy Kenichiro Sasae said, without elaborating. He did not say
what alternative formats would be proposed, if any. 

The US envoy accused North Korea ahead of Friday's meetings of not
addressing the actual issue of its atomic programs. 

"When the DPRK raises problems, one day it's financial issues, another
day it's something they want but they know they can't have, another day
it's something we said about them that hurt their feelings," US
Assistant Secretary of State Christopher Hill said. "What they need to
do is to get serious about the issue that made them such a problem ...
their nuclear activities." 

Pyongyang says the USA is waging a campaign to isolate North Korea from
the international financial system and has insisted that it end. The USA
accuses North Korea of involvement in counterfeiting $100 bills and of
money laundering, and has blacklisted a Macau bank that it alleges the
North used to launder money to fund its weapons program. American and
North Korean experts had separate talks on the issue this week in
Beijing, but made no breakthroughs and were tentatively set to meet in
the United States next month. 

"We have requested the US to release the sanctions first and then go
into a discussion on substantive issues for the implementation" of the
September
2005 agreement, Kim said. Even when it takes up the nuclear issue, Kim
said the North wouldn't immediately talk about dismantling the bombs it
has already made. But he promised the North won't launch a nuclear
attack or sell its atomic technology. 

"Since we are already a proud nuclear state, we have already announced
that we will not threaten other countries with nuclear (weapons) and
fully live up to our responsibility of preventing proliferation," Kim
said.
************************************************* 

4. DPRK TO CLOSELY WATCH US ATTITUDE KCNA Correspondent, Beijing, 22
December 2006 

The Democratic People's Republic of Korea will closely watch the US
future attitude, declared Kim Kye Gwan, vice-minister of Foreign Affairs
who headed the DPRK delegation to the six-party talks, when interviewed
by mediapersons in Beijing on Friday. He said: 

"We clarified our will to realize denuclearization at the talks and
participated in them despite sanctions. We, therefore, urged the US to
lift sanctions against the DPRK, to begin with, and start the discussion
on the issue of denuclearization. The US, however, demanded a stop to
our nuclear activities and verification of them without taking any
action for lifting the sanctions. We decisively opposed this and told
the US side to further study our proposal." 

Meanwhile, the chairman's statement was adopted at the six-party talks.
************************************************* 

5. NORTH LINKS ASSET FREEZE TO NUKES Donga Ilbo, 25 December 2006 

On December 23, in an interview with Dong-A Ilbo, North Korea's Vice
Foreign Minister and chief delegate to the six-party talks Kim Gye Gwan
said, "Once US lifts its financial sanctions, we can discuss freezing
nuclear activities, not doing it right away." 

So far, North Korea is said to have suggested that if the USA removed
its financial sanctions against the North, it would then suspend
operation of the 5MW nuclear reactor in Yongbyon and allow inspections
of it. However, Kim completely denied the above matter and stressed that
lifting financial sanctions is no more than a precondition to start
discussing freeze of nuclear facilities. 

While waiting for a flight for Pyongyang at an airport in Beijing, Kim
remarked, "The US wants to see North Korea freezing its nuclear
facilities by lifting its financial sanctions alone, which is
unacceptable." 

Kim further demanded construction of a light-water reactor in exchange
for suspending the operation of its nuclear reactor. Kim said,
"Suspending the operation of a nuclear reactor should be traded off
against building a light-water reactor since a nuclear reactor is used
for both economic and military purposes," and insisted that the North be
given alternative energy aid as building a light-water reactor takes
time. When asked what kind of energy source North Korea wants to receive
during construction of a light-water reactor, Kim replied, "We have to
discuss that." 

In addition, regarding the North-US working-group meeting that consulted
on North Korea's frozen accounts at Banco Delta Asia (BDA) in Macao on
December
19 and 20 in Beijing, Kim noted, "it was just a customary meeting. The
US didn't even offer evidence that North Korea committed illegal
activities [through BDA bank]." 

Kim claimed, "The US wasted time, insisting that the BDA issue is a
legal matter. Sanctions should be resolved through political decision." 

Concerning the US plan to hold a second working-group session on the BDA
issue in New York next January, Kim said, "We have no intention to go to
New York. The two sides should find another place." 

Regarding the scheduling of the next round of six-party talks, Kim
stated, "The sanctions issue should be resolved first," signaling that
North Korea would link resumption of six-party talks with the outcome of
the working-group discussion next January. 

If North Korea adheres to a negotiation strategy mentioned by Kim, it is
expected that even if the six-party talks are held again, it would be
hard for countries participating in the talks to make practical
progress. In this case, voices stressing the uselessness of the
six-party talks, which are being raised within the US government, could
be more widely spread, and the international claim for strengthening
sanctions against the North could emerge.
************************************************* 

6. USA MADE DPRK AN OFFER: ROK NUCLEAR ENVOY by The Associated Press, 26
December 2006 

The United States offered to remove North Korea from Washington's list
of states sponsoring terrorism if the communist regime dismantles its
atomic weapons program, South Korea's main nuclear envoy said Tuesday.
The proposal was just one of the incentives the USA spelled out last
week at six-nation nuclear disarmament talks with the North, along with
offers of security guarantees, a peace treaty and normalization of
relations, Chun Yung-woo said. 

"The point of the proposal is that everything is possible if North Korea
denuclearizes and nothing is possible if it refuses," Chun told news
cable channel YTN. 

North Korea was not prepared to review the US offer at the talks, but
promised to study it and bring a response to the next round of
negotiations, he said.
US diplomats have declined to discuss specifics of their talks with the
North Koreans, and State Department spokeswoman Amanda Rogers-Harper
would not confirm Chun's report. 

Referring to North Korea's promise more than a year ago to give up
nuclear arms in return for security guarantees and aid, she said: "The
Sept. 19,
2005, joint statement offers North Korea a clear path to a positive
future and concrete benefits in return for carrying out its commitments
to denuclearize." Removal from Washington's list of terrorism-sponsoring
states has long been a key North Korean demand. The listing effectively
blocks a country from getting low-interest loans from international
lending agencies. 

North Korea was first put on the list for its alleged involvement in the
1987 mid-air bombing of a South Korean airliner that killed all 115
people aboard.
The six-nation talks in Beijing -- the first since North Korea's Oct. 9
nuclear test explosion -- produced no breakthrough as the North's
delegation refused to discuss disarmament, demanding Washington first
lift financial sanctions imposed for the North's alleged involvement in
dollar counterfeiting and money laundering. 

A date for a resumption of the talks -- involving China, Japan, the two
Koreas, Russia and the USA -- has not been set. North Korea says the
financial sanctions are evidence of Washington's "hostile policy" and
indicate its intention to overthrow the regime, and the North therefore
needs nuclear weapons for protection. Washington says the restrictions
against a Macau-based bank holding North Korean accounts is a law
enforcement matter unconnected to the nuclear issue. 

The USA and North Korea held separate bilateral talks on the financial
issue on the sidelines of the nuclear negotiations, but failed to narrow
differences. Chun said the USA and the North exchanged views on when and
where to hold the next financial talks, but he declined to elaborate. 

South Korea's new foreign minister, Song Min-soon, went to Tokyo on
Tuesday to discuss the North Korean talks, officials said. Making his
first overseas trip since becoming South Korea's top diplomat in early
December, Song was to meet with Japan's chief Cabinet secretary,
Yasuhisa Shiozaki, on Tuesday and Prime Minister Shinzo Abe and Foreign
Minister Taro Aso on Wednesday, the Foreign Ministry said. 

Song also planned to seek ways to mend South Korea's strained relations
with Japan. Ties have been frayed by territorial disputes and by former
Japanese Prime Minister Junichiro Koizumi's repeated visits to a war
shrine that honors Japan's war dead, including convicted war criminals.
The visits angered many on the Korean peninsula, which Japan ruled as a
colony in
1910-45.
************************************************* 

7. DPRK SOLD GOLD TO THAILAND BEFORE SANCTIONS Reuters, Bangkok, 28
December 2006 

North Korea sold 1.3 tonnes of gold to Thailand a few months before the
United Nations slapped international sanctions on Pyongyang in October,
according to Thai customs data. Thailand paid the reclusive communist
state a total of 1.03 billion baht ($28 million) for 500 kg of gold in
April and
800 kg in May, the Customs Department said on its web site,
www.customs.go.th. 

Foreign Ministry spokesman Kitti Wasinondh said importing unwrought or
semi-manufactured gold from North Korea did not violate the UN
sanctions, which included a ban on sales of luxury items to Pyongyang. 

"The deals were done before the sanctions were imposed. Even if we
import them now, it is still legal," Kitti told Reuters. 

The US-led sanctions, approved unanimously by the UN Security Council on
October 14 five days after Pyongyang conducted its first nuclear test,
were intended to persuade the North to resume six-party negotiations on
ending its nuclear ambitions. Despite Pyongyang's return to the table,
the sanctions, which also require all countries to prevent the sale or
transfer of materials related to its unconventional weapons programs,
remain in place. 

Thailand, a major jewelry maker, imported nearly 80 tonnes of gold from
22 countries in the first 11 months of 2006, according to the Customs
Department. But traders say gold purchases from North Korea are rare. 

"These orders might have been just a one-off purchase by one firm," said
an official from the Thai Gold Traders Association. "Thai traders don't
usually import gold from North Korea because it is a communist country
with so many unpredictable factors," said the official who declined to
be named.
************************************************* 

8. DPRK LOOKS TO LONDON TO CIRCUMVENT SANCTIONS by Andrew Salmon & David
Robertson, The Times (UK), 29 December 2006 

Kim Jong Il, the North Korean dictator, is planning to use the London
gold market to circumvent financial sanctions imposed by the
international community. Mr Kim's cash-strapped regime relisted its
central bank with the London Bullion Market Association this year and is
preparing to sell gold through London. 

Gold traders said yesterday that they had seen no sign of the North
Koreans disposing of gold in London since the Chosun Central Bank
regained its status as a "good delivery supplier" this year. However,
North Korea is thought to be preparing to sell gold through London once
it gets a regular supply from its outdated mines. The development of the
mines is expected to be assisted by foreign investment, The Times has
learnt. One of the funds seeking to buy into the North Korean gold
market is the London-based Chosun Development & Investment Fund. 

Attempts by North Korea to gain access to the London gold market could
be a blow to American efforts to limit Mr Kim's ability to pay for
weapons of mass destruction and nuclear materials. The US Treasury gave
warning last year that North Korea was using international banks to
launder the proceeds from currency counterfeiting and drug and weapon
sales. The Government of Macau subsequently froze $24 million held by
the Banco Delta Asia. The UN formalised financial sanctions against
North Korea in October after Mr Kim's regime claimed to have detonated a
nuclear device. However, gold sales would not be covered by the UN
sanctions and Mr Kim again would have access to large quantities of
foreign currency that could be used to fund a nuclear programme. 

It is believed that in the 1980s the North Koreans sold about a tonne of
gold a month -- worth about $24 million (£12.2 million) today -- through
London. 

North Korean goldmining aspirations are being assisted by foreign
investors who see opportunities there. Colin McAskill, the chairman of
Koryo Asia and investment adviser to the Chosun Development & Investment
Fund, which was established last year to invest in North Korea, said:
"One of the priorities of the fund is to redevelop the goldmining and
other mineral industries and bring the product back through London." 

Roger Barrett, who runs the Beijing-based Korea Business Consultants, a
firm that assists foreign enterprises in the North, said that he had
helped to facilitate a goldmining deal between Singaporean investors and
North Korea in 2002. The Chinese are also thought to be considering
investments in the North Korean mining sector. However, gold producers
cannot sell in London without attaining good-delivery status. North
Korea held that distinction from 1976 to the early 1990s, when floods
and mine collapses are thought to have shut down production there.
Having regained the status, the country will be able to sell into the
London market as soon as it can generate a regular supply of metal. 

Yesterday the US Treasury Department declined to comment on the awarding
of good-delivery status to the North Koreans. A spokesman for the North
Korean Embassy in London said: "This world is full of these kinds of
stories. It's all just blah, blah, blah."
************************************************* 

End CanKor # 269 

************************************************* 

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