U.N. Program Facing New Curbs in N. Korea

UNITED NATIONS, Jan. 25 -- The U.N. Development Program's executive board decided Thursday to stop paying for its local staff and supplies in foreign currency, and to call for the U.N. General Assembly's board of auditors to determine within three months whether the development agency violated its own guidelines by doing so.

The board also decided to delay approval of the program's 2007-2009 budget until the audit is finished.

The action comes just weeks after the United States charged that the U.N. program had been "systematically perverted" by channeling millions of euros in hard currency to North Korean leader Kim Jong Il's repressive government. Alejandro D. Wolff, the acting U.S. ambassador, expressed concern Thursday that the money could be used to finance North Korea's illicit activities, including a nuclear weapons program.

The debate over the United Nations' oversight of its North Korea operations coincides with renewed calls for the Development Program to pull out of North Korea.

Japan said the United Nations should end its development assistance to North Korea, citing the country's defiance of two U.N. Security Council resolutions calling for an end to its nuclear weapons program. The United States -- which has stepped up efforts to cut off hard currency to Pyongyang after its October test of a nuclear device -- said it is considering supporting Japan's position.

"A member state that does not comply with the obligations of the U.N. Charter should not receive funds from [the] United Nations," said Koji Tsuruoka, director general for global affairs in Japan's Foreign Ministry. "Assistance to such a country should be limited to that of a humanitarian nature directly delivered to the people."

North Korea's delegate, Jang Chun Sik, said that the board's decision was "unfair and unacceptable" and that it was designed to further U.S. and Japanese efforts to "isolate and stifle" North Korea's people.

Russia, China and scores of developing countries voiced concern that the board was responding to political pressure from its most influential powers and they insisted that it should not set the stage for audits of other poor countries.

The Development Program is one of four U.N. agencies, including the World Food Program and UNICEF, that carry out development and relief work in North Korea. They are required to hire government-appointed workers and pay salaries through state-controlled offices.

The program's operations in North Korea, which are managed by eight international workers, cost about $3.7 million, according to its figures. Between $1.5 million and $2.5 million of that is spent each year inside North Korea, including hundreds of thousands of dollars to pay for local staff, supplies and accommodation, according to program officials. Last year, it spent more than $1 million in salaries, rent and travel costs, as much as half of which was distributed through government-controlled agencies, according to a spokesman.

Thursday's action will freeze all development operations managed by the North Korean government, including training programs in trade and international finance. It also calls for more extensive monitoring of assistance programs and bans the recruitment of government-selected workers.

Mark D. Wallace, the U.S. representative for U.N. management, said the United States would press the World Food Program, UNICEF and the U.N. Population Fund to follow suit and stop using foreign currency to pay staff and hiring government-selected employees in North Korea.

U.S. officials have privately pressed the Development Program to ask the auditors to hire a private firm to conduct an independent review of its operations. They expressed concern that the auditing board had previously failed to flag problems in the North Korea program.

"We need a fresh set of eyes," Wallace said.