South Korea is to phase out its main import from North Korea, delivering a heavy blow to an impoverished regime already reeling economically from confiscated arms shipments and bungled currency reforms.
Sand was the biggest export to South Korea from the north in 2008, earning Pyongyang $73m (£47m). That represents about twice as much as it gains annually from wages at factories in Kaesong, a cross-border industrial zone for South Korean companies. South Korean officials told the Financial Times that Seoul would phase out sand exports when existing contracts with its northern neighbour expired.
"Once those companies receive their sand, for which they have already paid,
that will be the end," a senior South Korean security official said.
It could have a profound political impact - but South Korean officials insist the decision was taken because Seoul increasingly dredges its own sand domestically.
Officials admit that South Korea has long worried that money paid for sand goes to the military, but they say increased dredging and the imminent conclusion of numerous outstanding contracts have given it the opportunity to end the trade.
Arms exports and counterfeit cigarettes are reckoned to be worth hundreds of millions of dollars to the Communist dictatorship of the north, led by Kim Jong-il (pictured). Economic instability and lack of funds in North Korea poses risks for Seoul, which is keenly aware of the dangers of economic implosion in the north.
To lose the sand trade would compound economic woes for Pyongyang. Already reeling from arms seizures, it is also suffering the fallout from a bungled currency revaluation that has led to food shortages and inflation.
North Korea is trying to compensate for South Korea's decision by seeking alternative sand markets in Russian construction projects.
Russia's Itar-Tass news agency reported late last year that North Korea would shipsand to Vladivostock for use in building projects for the Asia-Pacific Economic Cooperation summit in 2012.
Sand shipments to South Korea started in 2002 amid inter-Korean rapprochement - butwere suspended last March while North Korea prepared to fire a long-range missile over Japan.
Pressed by construction companies that have been affected by the import ban, Seoulresumed imports from North Korea in November. The current flow, however, is less thanone-fifth of previous levels.
In an effort to salvage the trade with South Korea, Pyongyang has offered to provide sand to South Korean companies in exchange for other building materials and fuel. But the South Korean unification ministry said domestic companies were not interested
http://www.ft.com/cms/s/0db3a864-32f6-11df-bf5f-00144feabdc0,dwp_uuid=ebe33f66-57aa-11dc-8c65-0000779fd2ac,print=yes.html Page 1 of 2
No comments:
Post a Comment