Contract for food loan to N. Korea concluded

The Export-Import Bank of South Korea and the North Korean Trade Bank signed a contract on the South Korean loan of 300,000 tons of rice and 200,000 tons of corn to the North at the liaison office in the truce village of Panmunjeom Wednesday afternoon.

Under the contract, the first delivery of 22,000 tons of corn will be shipped at China's Dailan port and will arrive at North Korea's Nampo port Thursday.

Ten thousand tons of Thai rice were known to have been shipped from Bangkok.

According to the contract, the food loan will be repaid over 20 years after a 10-year grace period that begins with the arrival of the final delivery, and the interest rate was set at 1 percent per year. But the South will allow the North to repay the loan in kind or through other means in the case of an agreement between the authorities of the two Koreas.

In particular, regarding transparency in the distribution of the grain, the contract stipulates that the food supplied to the North shall not be used to hamper improvements in inter-Korean reconciliation and cooperation or the promotion of mutual trust.

Yet the two sides failed to agree on concrete ways of confirming on the spot how the food is distributed, leaving the possibility that disputes may arise over the transparency of its distribution.

Ha Tae-Won scooop@donga.com