Aid to North Contingent on Talks

It has been confirmed yesterday that the Korean government has decided to delay the establishment of a South-North Cooperation Office and all-out economic cooperation with the North until plans for the denuclearization of the peninsula are agreed upon at the six-party talks aimed to resolve North Korea’s nuclear development programs.

The reason behind the government’s recent decision is known to be the annulments or downscaling of plans that the Ministry of Unification drafted without consulting the Ministry of Planning and Budget (MPB), due to opposition from the MPB. The MPB is responsible for the development and implementation of national fiscal policies.

The MPB is concerned that the country’s fiscal soundness will be hurt if South Korea spends as much as Germany did on its Eastern counterpart in assistance to the North.

“The Ministry of Unification is reportedly planning to fund some of the South-North Cooperation Fund with government bonds, and is reportedly planning to attract private capital by establishing a South-North Cooperation Office. However, the Ministry of Unification did not discuss such plans with the MPB in advance,” said MPB Minister Byeon Yang-kyoon in a press conference last Friday. “The MOU came up with plans to procure unification costs after seeking advice from experts, including university professors. However, we found many loopholes in the plan at the ministry and asked for the MOU to review it.”

He added, “Germany spends four to five percent of its GDP on unification costs every year. If Korea spends as much as Germany, it will spend 40 trillion won annually, depleting the national treasury.”

While being briefed on the plans for establishment of the establishment of South-North Cooperation Office, President Roh put the brakes on the office establishment process by saying, “We should reconsider establishing the South-North Office immediately. It should be delayed until the nuclear talks show tangible results.”

President Roh is also known to have proposed aligning the pursuit of an all-out comprehensive economic cooperation with resolution of the nuclear issue.

The government views that it will be difficult to attract private and foreign capital for comprehensive economic cooperation with the North if the nuclear issue is not resolved.

Delegates for the fifth round of six nation talks, lead by top South Korean envoy Song Min-soon, will leave for Beijing, where the talks will be held, on Monday, and will hold bilateral talks with representatives of North Korea, US, China, Japan and Russia until the talks resume on Wednesday.