Despite U.S. Attempts, N. Korea Anything but Isolated

North Korean workers put together shoes at a factory built in 1997 and funded by a South Korean company.
North Korean workers put together shoes at a factory built in 1997 and funded by a South Korean company. (Courtesy Of El Canto)
By Anthony Faiola
Washington Post Foreign Service
Thursday, May 12, 2005

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 Il.

"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 effect."

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.

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