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Title NK Brief, March 8, 2018 Date 2018.03.13
Attach 180308_NK Brief_No3-2_(Inter-Korean relations, foreign ministry, NK economy).pdf
□ Two Koreas discussed peace and unification of the Korean peninsula
The situation on the Korean peninsula is entering a period of turbulence.

Upon returning from a visit to Pyongyang, the South Korean presidential envoys released a press statement, which included the following six points:
• The Two Koreas have agreed to hold a third inter-Korean summit at the Peace House in    the Panmunjom truce village in late April.
• The two Koreas have agreed to establish a “hotline” communication channel between the two Korean heads of state.
• North Korea has expressed its commitment to the denuclearization of the Korean peninsula should the safety of its regime be guaranteed.
• North Korea has expressed its willingness to have a dialogue with the United States for discussing the issue of denuclearization and the normalization of US-North Korea relations
• North Korea has agreed to refrain from conducting nuclear and missile tests while engaging in dialogue with the United States.
• North Korea has invited a South Korean Taekwondo exhibition team and art troupe to Pyongyang.

While all the agreements are meaningful, what is especially important is that the inter-Korean summit and dialogue between the United States and North Korea have now become possible.

This set of agreements reminds us of the June 15 joint declaration between the two Koreas in 2000 and the October 12 joint communique between North Korea and the United States. It looks as if it is a combination of the two. At the time, North Korea tried to resolve the issue of Korean unification through the former and the issue of peace through the latter.

Now, the Trump administration is likely to accept North Korea’s offer, because Pyongyang said it is even willing to discuss the issue of denuclearization beyond the nuclear and missile moratorium.

What is most surprising is the change in North Korea’s attitude which enabled such agreements.

This implies that North Korea has changed its traditional position that it would limit the topic of discussion with the South to the issue of national unification, while negotiation the issues of peace and denuclearization only with the United States.

North Korea has surely expressed its willingness to discuss with the South the issue of peace on the Korean peninsula along the issue of national unification, displaying its intention to promote a high level of cooperation between the two Koreas in dealing with the issues concerning the entire Korean peninsula.

Moreover, North Korea demonstrated an aspect of its pursuit of practicality by agreeing to hold the inter-Korean summit at the Peace House in the South Korean sector of Panmunjom.

The last two rounds of inter-Korean summit were held in Pyongyang. However, because it is a little difficult for the North Korean leader to visit Seoul under the current circumstances, the North suggested Panmunjom, a neutral ground, as the venue for the proposed summit.

Clearly, one of the main factors that have brought such a change in North Korean attitude is President Moon Jae-in’s consistent message to North Korea. Moon’s commitment to peace has finally paid off.

Last year, when a rumor about the possible breakout of a crisis on the Korean peninsula in August was spreading, the president, in his National Independence Day speech, declared to the United States that he would “risk all to stop the war.”

He also obstinately urged the North to participate in the Winter Olympic Games to make the PyeongChang Olympics into a peaceful Olympic event. To make it happen, he postponed the US-ROK joint military exercises, demonstrating South Korea’s willingness to bring peace to the Korean peninsula.

Consequently, in a friendly reply to South Korea’s positive gestures, the North has included in the high-level agreement the nuclear issue, which lies at the core of building peace on the peninsula, yet has been kept out of the talks with the South up to now. This has paved the path for the two Koreas to further discuss the issue in earnest at the upcoming inter-Korean summit.

□ Choe Son-hui becomes a new vice minister
Choe Son-hui, director of the North American department of North Korea’s foreign ministry, has recently been promoted to a vice-ministerial position.

According to the Yonhap News report on March 8, the North Korean foreign ministry announced on its website that “Comrade Choe Son-hui, vice minister of the foreign ministry, has met with Anton Khlopkov, director of the Russian Center for Energy and Security Studies, at the People’s Palace of Culture in Pyongyang on March 5.” On its Facebook, the Russian embassy in Pyongyang said on March 5 that Ambassador Alexander Matzegora had a meeting with North Korean vice foreign minister Choe Son-hui.

The North Korean foreign ministry is reported to have seven vice ministers under the first vice minister, each responsible for a corresponding global region or international organization.

Now it seems a favorable condition for dialogue between Washington and Pyongyang has been created through the visit to the North by South Korean president Moon’s special envoys. It will be interesting to see whether Choe ends up leading the North Korean delegation in the bilateral dialogue.

Choe has mostly been in charge of North Korea’s relations with the United States. For example, in Norway in May 2017 she had a closed-door meeting with Joseph Yun, then the head of the US delegation to the Six-Party Talks and, concurrently, the Special Representative for North Korea Policy of the US State Department.

A foster daughter of former North Korean prime minister, Choe Yong-rim, Choe has been involved in the Six-Party Talks and US-North Korea dialogue since the early 2000s.

□ A Chinese ban on North Korean imports damages the North Korean economy
The North Korean economy is expected to face serious difficulties due to China’s ban on imports from North Korea. Having analyzed China’s sanctions against North Korea, KOTRA’s Korea Trade Center in Shenyang recently suggested that while North Korea depends overwhelming on China for its export, its exports are expected to plummet due to China’s measures.

After Pyongyang made its fifth nuclear test on February 18, 2017, China joined the sanctions imposed by United Nations Security Council (UNSC) Resolution 2321 and halted its import of North Korean coal until December that year.

Consequently, China’s import of North Korean coal was reduced by 60 percent compared to the same period in the previous year.

Furthermore, China imposed a complete ban on the import of coal, iron ore, lead and fishery products from North Korea, in accordance with the sanctions by UNSC 2371 adopted in response to North Korea’s IBCM launch on August 14, 2017.

Moreover, in response to North Korea’s sixth nuclear test on September 22 and the launch of an ICBM on January 5, 2018, China put a restriction on the export of refined oil, crude oil and refined petroleum products to North Korea.

The restriction on the export of refined petroleum products is expected to be a serious blow to the North Korean industry. Keeping China’s exports below 10 percent of total North Korean demand for the products, the new sanction will hit the North Korean economy across the board, ranging from industry, transportation, cargo transportation and power supply.

In addition, North Korean households, which have lower priority in power supply, would face increasing difficulties in getting electricity and heating. In the meantime, North Koreans may not suffer greatly from the shortage of oil because China has limited its export of crude oil to North Korea to its annual level of supply.

North Korea’s foreign exchange shortage is also expected to be aggravated following the shutdown of North Korean businesses in China and the repatriation of North Korean workers, both of which have been main sources of funds for the North Korean leader.

On September 28, 2017, the Chinese Ministry of Commerce announced that all existing North Korean businesses and joint ventures in China, including those managed solely by North Korean companies and individuals, should be closed by January 9, 2018.

In accordance with the notification of closure, the Shenyang Municipal Bureau of Industry and Commerce Administration issued a letter of notification to North Korean businesses and joint ventures in the city, leading to the shutdown of the Chilbosan Hotel and several North Korean restaurants.

In addition, North Koreans currently employed in China are allowed to remain while they have a valid visa, but have been asked to return to North Korea upon expiration of their visa.

Although the Chinese Ministry of Commerce completely prohibited the import of North Korean textile products on September 22, 2017, the import ban has created little export-ban effects to date, because cargo that has not completed the customs clearance procedure is excluded from the ban.