South, North agree to create currency to settle inter-Korean trade

The working-level meeting on inter-Korean economic cooperation currently underway in Pyongyang began to produce visible results Friday. In particular, it was reported that the North showed an aggressive attitude in the economic talks, contrasting its lukewarm stance in meetings on other issues. The agreement on the creation of a special currency to be used exclusively for inter-Korean trade settlements is expected to greatly contribute to the activation of South-North economic cooperation. Currently, inter-Korean trade is settled mainly in the dollar, but this method is considered very cumbersome as the currencies of both sides must be recalculated based on the dollar before settlements are finalized.

Bae Young-Shik, director of the Ministry of Finance and Economy¡¯s Economic Cooperation Bureau, said that the envisaged new currency of the South and North will be used only for inter-Korean trade settlements and its exchange rate will be set directly. Bae predicted that the currency would promote inter-Korean trade.

The new currency is expected to be modeled after VE, a settlement unit adopted by Germany when East and West Germany were integrated. The currency will not be used to settle other general transactions.

It is also considered significant that the North allowed the Southern delegation to monitor the distribution of food aid in Sohung-dong, Pyongyang, for the first time and made public a document on food distribution.

Conscious of the South Korean public¡¯s demands for the guarantee of transparency in food aid to the North, members of the delegation have strongly asked the North to allow them to make field inspections since Nov. 9. The North initially reacted negatively to their request, saying that it was unprecedented. But the following day, the North dramatically shifted its position and permitted the visit. Government authorities assumed that the North was greatly concerned about the Southern delegation¡¯s position and expected that the event would positively affect the process to adopt an agreement on economic cooperation in the future.

Meanwhile, that day, the North also unveiled a document on how food aid from the South has been distributed to North Korean residents. According to the document, the North Korean government received 148,687 tons of rice and corn from the South from Oct. 5 until Nov. 9 and distributed the food to households through an organization called the ¡°food distribution agency.¡±

At the meeting, the North complained that the South is too slow to offer food aid and some of the food shipped to the North was in a rotten and inedible state, calling for measures to solve the problems. The North opened the scene of the distribution of food aid to the Southern delegation in a dramatic manner and allowed them to have contacts with some North Korean residents. However, the act apparently falls far short of completely removing Southerners¡¯ concerns about the food aid¡¯s distribution. There is no need to downplay the North¡¯s friendly gesture, but it is also possible that the North opened the site in a strategic attempt to get more from the South.