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N. Korea Gains Aid Despite Arms Standoff
Officials from the two Koreas attended the opening ceremony of the Office of Inter-Korean Economic Cooperation at a South Korean-funded industrial park near Kaesong, North Korea, on Oct. 28.
(By Kim Kyung Hoon -- Reuters)
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Momentum slowed for a time after 2002 when North Korea ejected international weapons inspectors and began reprocessing spent fuel rods into nuclear material. After that, South Korean officials started dragging out completion of economic projects that were previously agreed to.
Now, aided by a burst of investment during the second half of 2005, trade between North and South is set to break $1 billion for the first time, according to the Unification Ministry. In addition, South and North Korea reached a historic agreement in principle this month to field a joint team at the 2008 Olympic Games in Beijing.
North Korea is still negotiating a dispute with its largest South Korean investor, Hyundai Asan Corp., over the dismissal of a company official against the Pyongyang government's wishes. But following the September agreement, several South Korean companies that had invested millions of dollars building factories at the new industrial park in Kaesong saw their stock prices jump as much as 10 percent. Several are now making plans to expand their investments across the border, although analysts have said that few South Korean companies have managed to make such investments profitable.
Nevertheless, Kim Ki Mun, chairman of Romanson Co., a major watch manufacturer, praised the nuclear agreement as a "major breakthrough." His company employs 500 North Koreans at Kaesong and is eager to double production in North Korea next year.
Romanson's North Korean employees earn about $60 a month, about 10 percent of a typical South Korean factory worker. Kim said he will begin raising the salaries for the best North Korean workers, and wants to teach them about capitalism by rewarding talent and hard work.
Kim said the greatest obstacle to expanding business in North Korea is U.S. opposition to rapid engagement with the North, not the nuclear issue.
For example, he cited a case last week in which U.S. officials blocked the installation of a South Korean switchboard system at Kaesong on grounds that the equipment contained components that could have been adapted for military use. As a result, Kim said, the 15 companies operating at Kaesong share a single phone line -- and messages to his staff there must often be hand-delivered across the border.
"We will only win over the North Koreans by engaging them and showing them what kind of benefits are in store for them if they join the world community," Kim said. "I honestly believe it is the only way. Now, we just need the Americans to see that too."
Special correspondent Joohee Cho contributed to this report.
