N.K. opens up toward China, Russia

Cash-strapped from international sanctions and starved with the worst food shortage in over a decade, North Korea has increasingly leaned on China for economic aid, stirring speculation about Kim Jong-il`s imminent visit to Beijing.

In the past couple years, Pyongyang lost South Korean tourists and arms export deals -- its main source of cash -- suffered famines and made the detrimental policy choice of clamping down on markets and redenominating its currency, which resulted in inflation and worse food shortages.

In efforts to undo mistakes and misfortune without losing its grip on its people, North Korea began opening up more trade and investment opportunities for China.

North Korea, for instance, gave China the right to use its Rajin seaport for the next 10 years, opening a trade route to the Pacific Ocean for China`s most underdeveloped northeastern provinces.

Sun Zhengcai, provincial party secretary of Jilin, had reportedly introduced a regional development project to Kim Yong-il, chief of the international department under the North Korean Workers` Party, during his visit to the region late last month, saying that "It has opened a new opportunity for cooperation between the two countries in construction of roads and basic infrastructure."



In addition to making Jilin`s coal exports more accessible, the Rajin port could also serve as an export path for Siberian crude oil and natural gas to neighboring countries.

North Korea is also planning to fully open the city of Raseon, formerly known as Rajin-Seonbong, to foreign businesses in six months, Japanese newspaper Sankei Shimbun said yesterday.

Chang Song-thaek, chief of administration at the Workers` Party, declared the plan during a recent trip to Raseon, the newspaper said citing a human rights group called RENK. Chang is Kim Jong-il`s brother-in-law and the country`s second most powerful man.

North Korea upgraded Raseon`s status to a "special municipality" and approved the establishment of an inter-Korean joint venture there for the first time shortly after Kim visited the region in December and stressed the need to expand overseas trade.

Designated as the country`s first free trade zone in 1991, Raseon has failed to attract much investment due to restraints on foreign corporate activity.

North Korea also reportedly plans to develop eight cities including Raseon and Pyongyang into special economic zones and rejoin to the Tumen River area development project, supported by the United Nations Development Program, which it quit last November.

The North unveiled through its official media last week a 10-year economic development plan to build infrastructure from foreign investment, which will be carried out by a state development bank and an agency named the Taepung International Investment Group.

Domestically, North Korea is struggling to stabilize food production by offering incentives to those joining the farming workforce.

The Workers` Party said last month that it would provide cash and 120 kilograms of food for families of party staff members volunteering to work on farms, according to a group of North Korean defectors here called the N.K. Intellectuals Solidarity.

North Korea`s food production will fall short of its annual demand by at least 1.2 million tons if it does not receive foreign assistance this year, a South Korean think-tank said.

The state-run Korea Rural Economic Institute said in a report that the North`s food grain output is forecast to reach 3.8-4 million tons this year, larger than the 3.52 million tons estimated by the U.N. Food and Agriculture Organization. The total, however, falls far short of the 5.23 million tons the country needs to feed its population and livestock.

"The size of the shortfall is based on conservative figures, since it assumes the total population stands at 24.3 million and people eat less than the recommended daily intake of food," KREI said.

The latest assessment on demand is based on an average North Korean consuming 1,600 kilocalories of food per day, or 167 kilograms for the entire year, compared to the 2,130 kcal recommended by the World Food Program.

(sophie@heraldm.com)





By Kim So-hyun