The Korea Herald


[Editorial] Barter deal

Moon government’s latest initiative for inter-Korean ties comes to a halt

By Korea Herald

Published : Aug. 27, 2020 - 05:30

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Since taking office last month, Unification Minister Lee In-young, a student activist-turned-lawmaker known for his accommodating approach to North Korea, has been eager to make a breakthrough in stalled inter-Korean relations.

He has pitched, in particular, small-scale trade with the North as a “creative” way to enhance inter-Korean exchanges and cooperation while avoiding violating international sanctions imposed on the recalcitrant regime for its nuclear and ballistic missile tests. He has argued barter transactions between the two Koreas might not breach sanctions as they do not involve sending bulk cash to the North.

Along with some aides to President Moon Jae-in and ruling party lawmakers, he has also called for changing the functions of a joint working group with the US in the direction of facilitating the development of inter-Korean ties and progress in the peninsula peace process initiated by the Moon administration. The consultative mechanism was set up in 2018 to coordinate Seoul and Washington’s approaches to North Korean denuclearization, sanctions against the totalitarian state and inter-Korean projects.

In a meeting with US Ambassador Harry Harris last week, Lee said there was criticism that the working group has served as a hindrance to inter-Korean relations. His remarks were seen as affirming that the Moon administration, which is preoccupied with reconciliation with Pyongyang, is ready to push for some selected cross-border projects independently of the consultative framework.

A recent abortion of an envisioned barter deal should remind Lee that it is not so easy and simple to put his idea into practice.

During a closed-door session of the parliamentary intelligence committee Monday, the Unification Ministry acknowledged that it had scrapped a plan to permit barter transactions with a North Korean trading company after one of the firms involved was found to be subject to international sanctions, according to lawmakers on the committee.

The ministry had been considering approving the 150 million-won ($126,450) deal between a South Korean farmers’ group and the North’s Kaesong Koryo Insam Trading to bring in North Korean liquor in return for South Korean sugar.

The company is linked to a distributor presumed to be a front for Bureau 39 of the North Korean Workers’ Party, which is known to be handling secret funds of the communist state’s ruling family.

The ministry seems to have neglected the background check on the firm from the outset, as it was overly eager to arrange for what might have been the first case of the small-trade initiative.

It would have been a clear violation of UN sanctions, which are equivalent to international law, if South Korean sugar had been actually shipped to the North.

Later Monday, the Unification Ministry denied it has dropped the deal, saying that it is still in discussion with the farmers’ organization in the South to keep the project alive.

What should be noted is that the North has shown little interest in small-trade deals with the South despite its severe economic difficulties.

In a report to the parliament Tuesday, the Unification Ministry said that North Korea’s economy appears to be continuing to slow down in the face of a “triple whammy,” -- global sanctions, coronavirus pandemic and damage from recent heavy rains.

The North saw its trade with China, which accounts for nearly all of the impoverished state’s external commerce, plunge 67.2 percent on-year during the first half of this year due to tight border controls put in place to ward off the coronavirus, the report said.

With unusual candor, North Korean leader Kim Jong-un last week conceded that his five-year economic development plan failed to achieve its intended goals, pledging to unveil a new plan in a party congress to be held in January.

The Kim regime is certain to continue to rebuff any “creative” proposals from the Moon administration, unless they bring large amounts of cash like the inter-Korean industrial complex did before it was shut down in 2016.

It is attempting to draw sanctions relief and other significant concessions without dismantling its nuclear arsenal. Pyongyang has demanded Washington get closer to its terms to resume denuclearization talks, which have stalled since a no-deal summit between US President Donald Trump and Kim in Hanoi last year.

North Korea’s deteriorating economic conditions should lead the Moon administration to focus on strengthening cooperation with the US in forging an environment to compel Pyongyang to discard its nuclear weapons, rather than pushing for cross-border projects.