Korean Peninsula Today, 27 - 29 June 2009

G8 Issues Strong Condemnation of North Korea (AFP – North European Service)

TRIESTE, Italy -- G8 foreign ministers on Friday [ 26 June] strongly condemned North Korea for its nuclear test and long-range rocket launch, saying in a draft statement that the actions threatened regional peace.

Group of Eight member Japan had pushed for strong wording condemning Pyongyang for the nuclear test in May and the rocket-firing in April that led to a UN Security Council decision to impose sanctions.

"We condemn in the strongest terms the nuclear test conducted on May 25 in violation of UN Security Council resolution 1718 and the rocket launch of April 5 which constitute a threat to regional peace and stability," said the draft statement obtained by AFP.

The North reacted defiantly to a UN Security Council decision on June 12 to impose new sanctions, which tighten a ban on arms shipments among other measures.

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N. Korea Yet to Show Signs of Change Despite Pressure: U.S. Official (Yonhap)

SEOUL -- A senior U.S. defense official said Friday she has yet to see "any definitive signs of change" in North Korean behavior despite pressure on the communist state to change course on its nuclear and missile programs.

"Their actions have been very provocative. Their rhetoric has been very provocative. We have not yet seen any definitive signs of change," Michele Flournoy, undersecretary of defense for policy, said.

Flournoy's visit to South Korea -- part of her Asia trip that also took her to China and Japan this week -- came as a U.S. Navy destroyer was tracking a North Korean ship suspected of carrying weapons banned under a U.N. Security Council resolution.

The resolution was adopted after North Korea conducted its second nuclear test on May 25. Flournoy said she met earlier Friday with South Korea's top diplomatic and security officials on ways to implement the resolution that has tightened sanctions on North Korea.

"The more the international community remains unified and firm in calling for North Korea to denuclearize and change its course," the likelier it is to change, she told reporters in Seoul.

Flournoy said she had "a good exchange of views" with officials during her visit to China -- a North Korean ally considered to hold the key to the successful implementation of the resolution.

But she said her country and China have yet to reach an agreement on a common avenue to tackle North Korea, which also appears to be preparing to test-fire a long-range ballistic missile.

"We had a good exchange of views on how best to deal with that threat, but those conversations have yet to yield a common strategy. So we have to keep working on that," she said.

Flournoy noted that the U.S. still has "incentives and disincentives that will get North Korea to change course."

"Everything remains on the table, but we're focused on implementing the resolution fully, responsibly and with our international partners," she said.

Flournoy ruled out the possibility of using military force to inspect the North Korean ship, Kang Nam, which is believed to be traveling along the Chinese coast.

"The U.N. resolution lays out a regime that has a very clear set of steps," she said. "I want to be very clear ... This is not a resolution that sponsors, that authorizes use of force for interdiction."

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China Unwilling to Impose Sanctions on N. Korea (Chosun Ilbo)

China will not impose sanctions on North Korea independently of a UN resolution. The North depends on China for most of its energy and food.

Chinese Foreign Ministry spokesman Qin Gang on Thursday said, "Measures related to North Korea should affect neither North Korean people's livelihood nor their normal economic and trading activities." He was answering views that the North would return to nuclear disarmament talks only if China suspends aid to the Stalinist country.

"Even the UN Security Council resolution against North Korea carries a provision stipulating that no UN sanctions should affect the North Korean people's livelihood, economic or trading exchanges, or humanitarian aid,” Qin added.

The remarks amount to a polite rejection of U.S. requests for China to take direct actions against the North to make sanctions more effective. "China thinks it necessary to find a solution to the North Korean nuclear issue through dialogue and peaceful means,” the spokesman said.

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Top NK Official Defected to China (Korea Times)

A top North Korean official was believed to have fled the country, now likely in China, RFA reported Friday.

Suh Kyung-suk, first secretary of Ryanggang-do region of the Kim Il-sung Socialist Youth League, the youth wing of the Workers Party, has disappeared since May 19, it said.

His disappearance sparked "emergency search" by the North's security apparatus, according to a North Korean who lives in South Korea and has been maintaining contact with him.

Given the serious nature of the incident, he said, North Korean agents have even went into China, looking for him.

Since Suh's disappearance, North Korea has also enhanced mobile phone surveillance, it said. North Korean defection is normally coordinated by groups in China that use Chinese mobile phone signals that reach the North's cities along the Chinese borders.

Suh's defection is motivated by his corruption, which was reported to the higher authorities, prompting him to escape before they could come to arrest him, according to Daily NK, an Internet Web site run by North Korean defectors in South Korea.

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Possible Defection by Cho'ng-nam Faction Defense Minister (AERA – original in Japanese)

The Dear General's medical condition is very bad. Pyongyang faces circumstances which are unpredictable relative to potential developments. Meanwhile, the US Obama administration has assumed a posture of imposing financial restrictions via the application of its measure of last resort.

It appears that Kim Jong Il [Kim Cho'ng-il] has finally reached a terminal stage.

"A very significant issue now exists relative to General Secretary Kim's medical condition, and he has now fallen victim to a fairly serious situation. As a result, General Secretary Kim appears to have hastily acted to designate his third son, Cho'ng-un, as his successor.

"All telephone calls in Pyongyang are clandestinely monitored, and diplomats stationed in North Korea travel to Beijing when they submit reports to their parent government."

Reporting on an anomalous development in Pyongyang quoted above as a story narrated by an unnamed ambassador was the Chinese global issues specialty newspaper Huanqiu Shibao [Global Times] of 18 June. The newspaper is a sister publication of the Communist Party of China [CPC] organ newspaper Renmin Ribao [Peoples Daily]. It was unusual for a newspaper under the control of the CPC which maintains longtime friendly relations [with North Korea] to report on the worsening medical condition of the general secretary which North Korea has failed to acknowledge and on the successor, Cho'ng-un, who has not made any public appearances.

Such reports diametrically contradict photographs disseminated daily of a seemingly energetic General Secretary Kim.

Such developments may be a manifestation of Beijing's frustration with Pyongyang, which since the nuclear-weapon test in May has proceeded with preparations for a new long-range ballistic missile test and nuclear-weapons development via uranium enrichment along with [another] nuclear weapon test. North Korea is now openly condemning China for its refusal to veto United Nations Security Council sanctions against North Korea.

In Beijing on 13 June

Amidst such developments, an astounding bit of unbelievable news has arrived.

Supposedly, General Secretary Kim's highly trusted aid, Minister of People's Armed Forces (Minister of Defense) Kim Yong Chun [Kim Yo'ng-ch'un] has defected.

"The minister of defense departed from Pyongyang in a group of eight inclusive of his wife, arrived at Beijing Airport, and flew to Europe. The group's destination was Britain. The purpose was for treatment of liver and kidney problems, but he himself has no plans to return to Pyongyang. Supposedly, his three children have already been relocated to Beijing."

The above information was made available by a North Korean source in Beijing.

Minister of Defense Kim Yong Chun turned 73 in 2009. He is a member of the elite class who spent his childhood days at Mankyo'ngtae Revolutionary Institute attended by orphans of heroes of the motherland who died in combat during the Korean War. When he assumed duties as chief of staff of the Korean People's Army in 1994 he was appointed as a general of the army, under a system wherein only General Secretary Kim carries the title of general of the armies. Supposedly, he was awarded the promotion in recognition of his achievements in resolving an anti-establishment uprising in the military ranks. When General Secretary Kim failed to appear and reports circulated globally about Kim Jong Il succumbing to illness on 9 September 2008, Kim Yong Chun appeared during the National Foundation Day ceremonies as the key role player. He was appointed minister of defense in February 2009. He also serves as vice chairman of the National Defense Commission, the country's highest agency.

I recall that several years ago, this writer was astonished in Beijing when shown a photograph portraying a uniformed male identical to Defense Minister Kim Yong Chun standing next to a slender middle-aged female and being told by a Chinese public-security official: "The female is a Japanese abduction victim not acknowledged by the Japanese government."

It is difficult for me to suddenly believe that an individual of his stature would have defected, but there is no mistaking that the minister of defense had appeared at the Beijing Airport on 13 June. According to a South Korean newspaper, supposedly, a South Korean diplomat who happened to be at the airport witnessed the defense minister's arrival in Beijing from Pyongyang and his departure from the airport as he was escorted by sedan into Beijing City. And, even the Chinese government has acknowledged the defense minister's visit to China during a press conference.

Absent from Pyongyang Rally

"He might have met with President Hu Jintao as a special emissary for General Secretary Kim Jong Il."

"He may have stopped over in Beijing for medical treatment."

A variety of rumors circulated, but the real facts are unknown. On the 15th, Pyongyang became the scene of a 100,000-person rally to condemn the Security Council sanctions resolution whereby Vice Minister of Defense Pak Chae-kyo'ng shouted, "We of the Korean People's Army view the Security Council resolution as a declaration of war and shall undertake a military response!" However, the minister of defense was nowhere to be seen.

The defense minister has been closely associated with eldest son Cho'ng-nam for some time and supposedly was assuming a wait-and-see stance after Cho'ng-un surfaced in connection with the successor issue. The possibility exists that he has been branded as an anti-Cho'ng-un element and faces the possibility of dismissal. And, even if the defector rumors are not factual, the circulation of such stories is depictive of behind-the-scenes turmoil eyeing Kim Jong Il's X-Day.

North Korea has challenged sanction resolutions via military escalation, but the US Obama administration has already initiated a clamp down.

"The US Treasury Department has concluded that massive counterfeit US dollar notes were printed in North Korea."

On 4 June, South Korean newspaper Tonga Ilbo reported that a determination has been made that 9,904 $100 notes found in a hotel located in Pusan in November 2008 were of ultra-high quality originating in North Korea and commonly known as Supernotes. Police have arrested four individuals involved and are investigating the source of the notes.

On the day the foregoing release was issued, present in Seoul was Deputy US Treasury Secretary Libby who supervises financial sanctions against North Korea.

Supernote "DB"

On 2 June, a US newspaper reported that National Defense Commission Vice Chairman O Kuk Ryol [O Ku'k-yo'l], close aide of General Secretary Kim, was in charge of printing and circulating Supernotes. North Korea violently reacted to such developments by fiercely condemning the Obama administration by asserting, "They are attempting to subdue us via fabrications."

The Supernotes uncovered in Pusan carried serial numbers beginning with "DB" and appear to be fake dollar notes commonly referred to as "DB notes." According to Tokyo-based Counterfeit Currency Measures Research Institute Director Tomohiko Endo, "Supernotes were initially uncovered around 1988. Thereafter, counterfeiting precision improved with each new edition," while he adds, "Technology exceeds that of authentic issuances." DB notes began to surface widely in 2003.

"Supernotes are not printed exclusively via technology peculiar to North Korea. They import technology and raw materials from overseas sources. Twenty years ago, I heard from a US Treasury Department secret-service agent in charge of the counterfeit note investigative team that two sculptors involved in the fabrication of US dollar note printing plates and of master-craftsman class disappeared. That happened just when the first Supernotes began circulating," comments Endo.

On the 18th, the US Treasury Department recommended that all US domestic financial institutions boost surveillance of illegal financial transactions involving North Korea. This was one measure taken as North Korea commenced withdrawal of funds from its accounts held in Macao.

Society for Worldwide Interbank Financial Telecommunications [SWIFT] Provides Complete Transparency

The US Government's measure of last resort is SWIFT.

SWIFT is based in Belgium and is a cooperative linking 8,700 global financial institutions. Roughly speaking, the majority of financial transactions between foreign banks are handled via the cooperative's computer systems. In other words, the hard disks of the institution's computer system store massive amounts of electronic transaction data. Access to such records enables acquisition of data on any suspicious global financial transactions.

When then-Bush administration -- which was desperately engaged in the discovery of terrorists in connection with the 2001 US simultaneous terrorist attacks -- became aware of the hard disks treated with confidentiality relative to third parties, it demanded access to SWIFT. The result was a major contribution in identifying terrorists. A 2006 New York Times scoop revealed the existence of such records.

In September 2005, the US Treasury Department banned US banks from dealing with Macao's Banco Delta Asia for the latter's involvement in laundering North Korean funds. The result was that the Macao bank could not settle transactions in dollars. Other banks also moved to freeze deposits dealing a major blow on North Korea. It is easy to visualize the availability of SWIFT data in connection with the deposit investigations.

The earlier-mentioned US Deputy Treasury Secretary Libby directed [investigation of] the Banco Delta Asia case.

In 2000, when former South Korean President Kim Tae-chung quietly remitted about $500 million as an interview fee to compensate General Secretary Kim Jong Il for his participation in the South-North Summit, the funds were deposited with Banco Delta Asia. The secret remittance surfaced in the latter half of 2002. Visible here again is SWIFT as the source of the information.

On the 18th, US media reported that the US military was chasing a North Korean vessel suspected of carrying illegal weapons and materiel by air as the ship sailed in the high seas near China. The Pyongyang situation is assuming an ominous pace both domestically and externally.

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N. Korean Economy Grows 3.7 Pct in 2008: BOK (Yonhap)

SEOUL -- North Korea's gross domestic product (GDP) expanded 3.7 percent in 2008 from a year earlier, due mainly to one-off factors, posting the first yearly growth in three years, South Korea's central bank estimated Sunday.

The communist country's GDP, the broadest measure of economic performance, rebounded into positive territory after posting two years of negative growth, the Bank of Korea (BOK) said in a report. Its economy shrunk 2.3 percent in 2007, after declining 1.1 percent the previous year.

In 2008, the South Korean economy grew 2.2 percent. It was the first time in a decade that the North's economy grew faster than South Korea's GDP.

"North Korea's growth last year came as a favorable climate conditions increased crop production and foreign countries granted energy aid to Pyongyang. It does not seem that the North's economic momentum has improved," the central bank said in the report.

The BOK published the economic growth estimate of the North based on data provided by the National Intelligence Agency, South Korea's spy agency, and other institutes specializing in North Korean studies.

The North's agricultural sector expanded 8.2 percent annually in 2008, following a contraction of 9.4 percent for 2007, according to the BOK.

Due to increasing exports by the North, the gap between the two Korea's economies narrowed last year.

North Korea's nominal gross national income (GNI) stood at 27.3 trillion won (US$21.31 billion) in 2008, 2.7 percent of South Korea's GNI of 1,030.6 trillion won. In 2007, the GNI of the North stood at 2.5 percent of the South, which is Asia's fourth-largest economy.

Exports by the North climbed 22.8 percent on-year to US$1.13 billion in 2008 while its imports jumped 33.2 percent to $2.69 billion, according to the BOK.

Inter-Korean trade gained 1.2 percent on-year to $1.8 billion, although South Korean shipments to the North slumped 14 percent to $888.1 million due to a cuts in government aid and private assistance to Pyongyang.

The value of North Korean products shipped to the South reached $932.3 million, up 21.8 percent from the previous year, thanks mainly to goods made at the Kaesong [Kaeso'ng] Industrial Complex.

The factory park, located just north of the demilitarized zone that separates the two Koreas, is home to about 100 South Korean companies. It has recently been thrown into turmoil by unilateral wage and rent demands from North Korea.

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NK Threatens to Nuke S. Korea (Dong-A Ilbo)

North Korea yesterday said it could launch a nuclear attack South Korea and blasted South Korean President Lee Myung-bak as a pawn of the U.S.

The Rodong Shinmun, the official daily of the North Korean Workers’ Party, said in a commentary that President Lee is a “hunting” and “faithful” dog of the U.S.

On U.S. President Barack Obama’s assurance of “expanded deterrence” against the North in his summit with President Lee June 16, the commentary said, “The move helps us further justify our ownership of nuclear deterrence and could result in a disastrous situation of nuclear revenge against the South in the event of war.”

The article marked the North’s first specific threat of a nuclear attack against the South on the 59th anniversary of the outbreak of the Korean War.

The newspaper criticized item by item the declaration of a joint vision following the Seoul-Washington summit and blasted the South in the article “Disgusting Kiss between Ruler and Follower (Critique on Renegade Lee Myung-bak’s U.S. moves) held at the Rose Garden in the White House.”

Pyongyang blasted President Lee as a “faithful dog that bites the Korean people by taking the lead in the implementation of the U.S. policy of aggression against Korea and nuclear confrontation against our republic (North Korea).”

The North had insisted that its nuclear weapons development was a defensive measure against U.S. attacks, but has recently changed its stance to describe it as an “offensive strategy.”

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N. Korea Vows Nuke Attack If Provoked by Us (Mainichi Shimbun)

SEOUL -- Punching their fists into the air and shouting "Let's crush them!" some 100,000 North Koreans packed Pyongyang's main square Thursday for an anti-U.S. rally as the communist regime promised a "fire shower of nuclear retaliation" for any American-led attack.

Several demonstrators held up a placard depicting a pair of hands smashing a missile with "U.S." written on it, according to footage taken by APTN in Pyongyang on the anniversary of the day North Korean troops charged southward, sparking the three-year Korean War in 1950.

North Korean troops will respond to any sanctions or U.S. provocations with "an annihilating blow," one senior official vowed -- a pointed threat as an American destroyer shadowed a North Korean freighter sailing off China's coast, possibly with banned goods on board.

A new U.N. Security Council resolution passed recently to punish North Korea for conducting an underground nuclear test in May requires U.N. member states to request inspections of ships suspected of carrying arms or nuclear weapons-related material.

In response to the sanctions, the North pulled out of nuclear talks and has ramped up already strident anti-American rhetoric. And the isolated regime may now be moving to openly flout the resolution by dispatching a ship suspected of carrying arms to Myanmar.

While it was not clear what was on board the North Korean-flagged Kang Nam 1, officials have mentioned artillery and other conventional weaponry. One intelligence expert suspected missiles.

The U.S. and its allies have made no decision on whether to request inspection of the ship, Pentagon press secretary Geoff Morrell said Wednesday in Washington, but North Korea has said it would consider any interception an act of war.

If permission for inspection is refused, the ship must dock at a port of its choosing so local authorities can check its cargo. Vessels suspected of carrying banned goods must not be offered bunkering services at port, such as fuel, the resolution says.

A senior U.S. defense official said the ship had cleared the Taiwan Strait. He said he didn't know whether or when the Kang Nam may need to stop in some port to refuel, but that the Kang Nam has in the past stopped in Hong Kong's port.

Another U.S. defense official said he tended to doubt reports that the Kang Nam was carrying nuclear-related equipment, saying information seems to indicate the cargo is banned conventional munitions. Both officials spoke on condition of anonymity in order to talk about intelligence.

North Korea is suspected to have transported banned goods to Myanmar before on the Kang Nam, said Bertil Lintner, a Bangkok-based North Korea expert who has written a book about leader Kim Jong Il.

Pyongyang also has been helping the junta in Yangon build up its weapons arsenal, a South Korean intelligence expert said. He spoke on condition of anonymity because of the sensitivity of the issue.

The two countries have not always been on good terms. Ties were severed in 1983 after a fatal bombing during the South Korean president's visit to Myanmar blamed on North Korean commandoes.

They held secret talks in Bangkok in the 1990s to discuss the lone survivor among the three North Korean commandos involved in the bombing, and since have forged close relations.

The two regimes, among Asia's most repressive, restored diplomatic ties in 2007. Not long after that, in April 2007, the Kang Nam docked at Thilawa port saying it needed shelter from bad weather.

But one expert said reports show the weather was clear then, and two local journalists working for a foreign news agency who went to write about the unusual docking were arrested.

"The Kang Nam unloaded a lot of heavy equipment in 2007," Lintner said. "Obviously, the ship was carrying something very sensitive at that time as well."

North Korea has also helped Myanmar dig tunnels in recent years, said Lintner, adding that the cash-strapped North may have received rice, rubber and minerals in return for its military and other assistance.

"North Korea appears to have exported conventional weapons to Myanmar in exchange for food," another expert said.

Pyongyang is believed to have transported digging equipment to Myanmar, which is seeking to make its new capital a fortress with vast underground facilities, he said, speaking on condition of anonymity to discuss intelligence.

North Korea has been locked in a tense standoff with Washington and other regional powers over its nuclear program. In April, the regime launched a rocket widely seen as a cover for a test of long-range missile technology -- a move that drew U.N. Security Council condemnation.

The North responded by abandoning six-nation disarmament talks and threatening to carry out nuclear tests and fire intercontinental ballistic missiles. The North is believed to be developing a long-range missile designed to strike the U.S. but experts say it has not figured out how to mount a bomb onto the missile.

On Thursday, Pyongyang vowed to enlarge its atomic arsenal and warned of a "fire shower of nuclear retaliation" if provoked by the U.S.

North Korea's "armed forces will deal an annihilating blow that is unpredictable and unavoidable, to any 'sanctions' or provocations by the US," Pak Pyong Jong, first vice chairman of the Pyongyang City People's Committee, told the crowd gathered for the Korean War anniversary rally.

In Seoul, some 5,000 people -- mostly American and South Korean veterans and war widows -- also commemorated the anniversary at a ceremony.

South Korean President Lee Myung-bak said the nation is prepared to counter any type of threat or provocation.

"The South Korean government is firmly determined to defend the lives and wealth of its people and will do its utmost to find the remains of troops killed in the Korean War," he said at the ceremony.

The two Koreas technically remain in a state of war because the conflict ended in a truce, not a peace treaty.

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N. Korean Cargo Ship 'Approaching Moment of Truth' (Chosun Ilbo)

The North Korean cargo ship Kangnam that is being tracked by a U.S. destroyer due to suspicions that it carries weapons is steaming toward the moment of truth. "The moment is approaching when the North Korea sanctions framework led by the U.S. and North Korean provocations collide," a government official said Thursday. Chances are the moment will come when the ship pulls into port, he added.

The U.S. has been monitoring the 2,080-ton Kangnam with KH-12 reconnaissance satellite and P-3C patrol plane mobilized since it left Nampo Port on June 17. Since June 21, the ship has been tracked by Aegis destroyer USS John S. McCain. It will reach the South China Sea on Friday sailing through the Taiwan Straits. "Washington believes that the ship is headed for Burma via Singapore," said an intelligence officer.

Whether the U.S. will board the ship to inspect it remains to be seen. If a ship with the size of the Kangnam is to navigate over 6,660 km from Nampo to Burma, it needs to refuel in Singapore or a Vietnamese port. The Pentagon said Thursday a decision has yet to be made whether to inspect the Kangnam. But government officials here said chances are that the ship will sail into a port sooner or later.

If the ship is searched and illegal weapons are found, "the U.S. will achieve a diplomatic coup and will be able to tighten sanctions against the North. If not, resistance will from China and other countries will grow and international cooperation in punishing Pyongyang will falter," speculated Kim Sung-han, a professor at Korea University. There are fears the ship will dump any weapons into the sea before inspection.

Because the Security Council resolution does not permit forcible searches of North Korean vessels on the high seas, the U.S. military needs consent from Pyongyang, which is out of the question. Even if the Kangnam sails into a particular port, that country has to authorize any search.

A diplomat said, "The effectiveness of North Korea sanctions under U.S. leadership and the prospects for Pyongyang-Washington relations will become clearer depending which port the Kangnam calls on, whether an inspection will take place, and what cargo is carried on the ship."

Given that North Korea has threatened military action against what it calls a "blockade" of its ships, "the Kangnam could act as a detonating fuse," a security ministry official warned.

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U.S. Biding Its Time Over Suspicious N. Korean Ship (Chosun Ilbo)

The United States is apparently watching several North Korean ships apart from the Kangnam now being tracked for suspected violation of UN Security Council Resolution 1874. When questioned on the matter Wednesday, U.S. Defense Department spokesman Geoff Morrell said, "As far as I know, it's the only ship that we have tracked like this. There are other -- there are -- we have had interest in many ships over the years coming out of North Korea."

"The U.S. Navy has been instructed to monitor all ships that leave North Korea for foreign countries," a senior U.S. diplomatic source said. As to whether the Kangnam will be inspected, spokesman Morrell said, "Well, I think that's a decision that will have to be made at some point, and not necessarily just by us or this government. But that is a decision I think we will likely take collectively with our allies and partners... whether we choose to hail and query this particular ship" and if so, when and where.

Radio Free Asia, meanwhile, reported that chances are that the Kangnam is carrying North Korean weapons and will exchange them for food in Burma. The radio quoted a former Burmese intelligence official as saying that Burmese Deputy Foreign Minister Maung Myint visited Pyongyang in May and agreed the deal.

Burmese state TV reported that a North Korean cargo ship is scheduled to arrive in a Burmese port on Saturday, carrying 8,000 tons of rice from Kolkata, India.

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Bill Would Punish Ships for Refusing Inspections (Yomiuri Shimbun)

A draft bill on ship cargo inspections prepared by the government and ruling parties would punish ship captains who reject such checks, government sources said.

The bill would assign the Japan Coast Guard as the main body to conduct ship inspections, while tasking Maritime Self-Defense Force staff mainly with collecting related information and checking cargo items while accompanying JCG officers, according to the sources.

On Friday, the government and ruling coalition approved the bill under U.N. Security Council Resolution 1874, which calls on member states to impose sanctions against North Korea in response to that country's recent nuclear test. The government plans to submit the bill to the Diet by early next month after the bill is finalized by the Cabinet.

The envisaged Ship Inspection Operations Law would permit inspections of ships and aircraft sailing or flying to or from North Korea to check whether they are carrying items embargoed under the U.N. resolution, including arms and items linked to weapons of mass destruction.

The bill stipulates inspections in Japanese territorial waters or on the high seas be conducted by the JCG, and that inspections in domestic ports and airports be carried out mainly by customs officers.

According to the draft, it will be necessary to secure permission for inspections on the high seas from the target ship's captain and flag state government. If the captain refuses to allow inspection, the ship will be ordered to sail to a Japanese port for such checks. The government plans to include rules that would impose punishment on target ships if they refuse to follow the order or to accept port inspections without good reason.

With regard to the possible use of weapons by JCG officials charged with conducting the inspections, the bill would apply the Police Duties Execution Law Article 7, which permits the use of force only for self-defense purposes or during emergency circumstances such as an JCG craft escaping when it is attacked.

Meanwhile, MSDF staff would be in charge of liaising with other nations' military forces, monitoring target ships and reporting related information to the government by utilizing aircraft and destroyers. The MSDF also would be responsible for checking cargo aboard target vessels as part of their missions aboard JCG ships.

The government decided not to assign the MSDF as the sole, direct cargo inspection body, as the law does not grant judicial police authority to Self-Defense Forces personnel, preventing them from conducting investigations when a target ship refuses to accept checks. Under the envisaged law, the JCG and the MSDF would be allowed to act without prior approval from the Diet.

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N. Korea Threatens to Shoot Down Japanese Surveillance Planes (Yonhap)

SEOUL -- North Korea threatened Saturday to shoot down any Japanese aircraft entering its air space, accusing Tokyo of spying on the country earlier this week.

"An E-767 made a long shuttle flight from air above the waters east of Wonsan to the air above the waters east of Musudan after taking off from its base in Japan about 8:30 a.m. on June 25," the North's Korean People's Army (KPA) said in a report carried by the country's Korean Central News Agency.

Musudan was the site used for North Korea's long-range rocket launch in April that it claims was for a satellite but is believed by neighbors to have been a disguise for a ballistic missile test.

The KPA report claimed a Japanese surveillance aircraft had also conducted an aerial espionage mission on Wednesday.

"The air force of the Korean People's Army will not tolerate even a bit the aerial espionage by the warmongers of the Japanese aggression forces but mercilessly shoot down any plane intruding into the territorial air of the DPRK even 0.001 mm," the report said. DPRK stands for the North's official name, the Democratic People's Republic of Korea.

North Korea is believed to be preparing to test launch yet another long-range missile from its east coast following its nuclear test on May 25.

The communist nation has been severely condemned for its rocket and atomic tests by the United Nations, but Pyongyang is continuing to raise tension with threats to reinforce its nuclear arsenal.

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President says N. Korea a 'hurdle' to world peace and security (Yonhap)

Seoul -- South Korean President Lee Myung-bak [Yi Myo'ng-pak] strongly denounced North Korea Friday for threatening the South with its nuclear arsenal and other weapons of mass destruction, saying the communist nation is a threat and "hurdle" to world peace and security.

"North Korea claims to support the spirit of 'By Our Nation Itself' but in reality it is threatening its South Korean brothers and creating a hurdle to peace and security in the world," the president said in a speech, marking the 60th anniversary of the death of renowned independence fighter Kim Koo.

The speech was read by the president's chief secretary for civil affairs, Kang Yoon-goo, on behalf of Lee at a ceremony held at a memorial park in central Seoul.

Tension between the divided Koreas significantly increased after Pyongyang conducted its second nuclear test on May 25 amid international condemnation for its long-range missile test in April.

North Korea is also refusing to attend multilateral negotiations on its denuclearization, forcing South Korea and the United States to seek a five-way dialogue framework involving Japan, China and Russia to discuss ways to lure the communist state back to the negotiating table.

"There are many unfinished tasks in South-North Korea relations and domestic affairs," the president said.

"We have a proud tradition of joining forces to overcome difficulties," Lee said.

North Korea hurled equally biting criticism against the Lee government. Radio Pyongyang described the 1949 assassination of Kim, a pro-unification opposition leader, as "political terror" and compared the case to the May suicide of former South Korean President No Mu-hyo'n [Roh Moo-hyun]. Roh, who left office last year, was long beleaguered by a bribery probe that critics believe was politically motivated.

"Such political terror activities continue through today after 60 years by the hands of the Lee Myung-bak [Yi Myo'ng-pak] group of traitors under the orchestration of the United States," the state run broadcaster claimed.

Political relations between the Koreas rapidly deteriorated after Lee succeeded Roh with a tougher stance on Pyongyang's nuclear program, suspending unconditional humanitarian aid to the impoverished state. North Korea promptly cut dialogue and threatened military clashes in retaliation.

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S. Korean Border Province Offers Relocation Help to Kaesong Firms (Yonhap)

SEOUL -- The governor of South Korea's Gyeonggi Province said Sunday he will help companies operating at a North Korean industrial park to relocate if they are forced to withdraw due to political tensions.

The remarks by Kim Moon-su came as South Korean businesses at the joint park, located in the North Korean border town of Kaesong [Kaeso'ng], faced increasing fiscal and security concerns.

North Korea has demanded the South Korean firms pay wages and land fees that are sharply higher than previously agreed. It is also holding a South Korean worker incommunicado on charges of criticizing its political system.

Twenty four companies formerly based in Gyeonggi Province, which shares a border with North Korea, relocated to Kaesong [Kaeso'ng] after it opened in 2004. Three of them now want to return, the governor said in an interview with Yonhap News Agency.

"If they want, we will give them some space in our industrial parks," he said.

Kim said the central government should bear the foremost responsibility for any pullout from the North Korean park and support withdrawing firms with its inter-Korean cooperation fund, but added his province will "also come up with supportive measures."

More than 100 South Korean firms operate at the joint park, employing about 40,000 North Korean workers. The companies are mostly small-sized firms producing clothing, kitchenware, electronic equipment and other labor-intensive goods.

The industrial park is the last remaining cross-border project, an outcome of the first inter-Korean summit between President Kim Tae-chung [Kim Dae-jung] and North Korean leader Kim Jong Il [Kim Cho'ng-il] in 2000. Other joint ventures including tours to historic North Korean sites were all suspended last year ties between the countries began to fray.

The political tensions have taken a toll on the Kaesong [Kaeso'ng] park. North Korea demanded in a government-level meeting last month that the South Korean firms quadruple monthly wages for employees to US$300 from the current $70-80. It also raised fees for 50-year development rights to $500 million, a massive jump from the 16 million paid in 2004.

Adding to the tensions, a South Korean worker from Hyundai Asan Corp., the developer of the joint park, was detained in March for "slandering" the North's political system and has not been allowed to speak with officials from his government.

The two Koreas are set to hold a third round of talks on the Kaesong [Kaeso'ng] complex on July 2.

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S. Korean Official Says Fate of Kaesong Park Depends on Profitability (Yonhap)

SEOUL -- The fate of a joint industrial park in North Korea will largely depend on whether it is economically sound and profitable for South Korean businesses and their North Korean employees there, a ranking South Korean official said Saturday.

The remarks from Vice Unification Minister Hong Yang-ho come as Seoul and Pyongyang have been in negotiations over North Korea's recent demand for a significant increase in rents and wages for North Korean workers at the industrial park in Kaesong.

"It is important the current issues related to the Kaesong [Kaeso'ng] industrial complex are resolved based on economic principles," Hong said in a speech delivered at the district office of Dangjin, a port city located some 130 kilometers southwest of Seoul.

"The industrial complex must be maintained and developed in a way that both the South and the North can benefit from it and can help each other through the project," Hong added.

In a June 19 meeting held at the North Korean border town, Pyongyang demanded that South Korean firms there more than quadruple monthly wages for their North Korean employees to an average US$300 from the current $70 to $80.

The North also demanded an additional $500 million for a 50-year lease on land at Kaesong, for which it was paid an agreed upon $16 million when the park opened in 2004.

One of some 100 South Korean businesses at Kaesong [Kaeso'ng] has already withdrawn from the complex while the others have rejected the North's demands, citing previous agreements and the low productivity of North Korean workers.

Hong also linked the joint economic project to the North Korean nuclear issue, saying denuclearization of North Korea was a key policy goal of Seoul that can never be compromised.

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20 Gaeseong Firms Seek Compensation (Korea Herald)

Some 20 South Korean companies are preparing lawsuits to seek compensation from Seoul for losses suffered in the inter-Korean industrial park in Gaeseong [Kaeso'ng], blaming state restrictions on visits across the border and delivery of materials, a local daily reported yesterday.

The companies are mostly latecomers to North Korea - those who have recently secured space or have begun factory operations within the joint industrial complex in Gaeseong [Kaeso'ng].

The companies claim that Seoul's recent stipulations which limit South Koreans' visits and transport of materials to the North have resulted in huge losses, according to the newspaper.

A business lobby group that represents South Korean manufacturers of clothing, utensils and watches in Gaeseong [Kaeso'ng] asked the government for 61 billion won in emergency funds two weeks ago.

The South's Unification Ministry said yesterday it was mulling plans to provide companies operating in the inter-Korean industrial park in Gaeseong [Kaeso'ng] with emergency funds to help avoid a pullout.

"(We) are still examining whether we have sufficient revenue," Unification Ministry spokesman Chun Hae-sung said at a daily press briefing.

"We are also reviewing whether it would be fair to offer financial aid to certain companies and whether their management is responsible."

The South Korean government had offered loans to companies that initially entered the industrial complex, but stopped giving out direct loans in 2007. Instead, it has encouraged companies to apply for bank loans, with state-funded insurance as collateral.

"We spent 20 billion won on building a factory in Pyongyang last October but had to cease operations in May due to the ban on border traffic," said the CEO of a South Korean company that runs a production plant in the North Korean capital.

With Pyongyang's April 5 rocket launch, Seoul had initially requested that nongovernmental groups and companies refrain from visiting the North. With the second nuclear test on May 25, Seoul has refused all visits by South Koreans with the exception of officials working in the joint industrial park in the border town of Gaeseong [Kaeso'ng].

Hundreds of South Korean companies are currently operating in other North Korean towns - 399 in trading, 164 in industrial processing and about 50 that run factories.

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Cyber Command To Be Created by 2012 (Korea Herald)

Vigilance against future warfare and increased cooperation in international security - including readiness against North Korea - were the priority goals in a revised set of sweeping defense reforms revealed yesterday.

The Defense Ministry said it planned to establish a cyber command by 2012 to more effectively cope with the increasing threats against its defense database and networks.

Officials said the command also would help fend off possible hacking from North Korea, which has been seeking to upgrade its technological capacity.

Minister Lee Sang-hee [Yi Sang-hu'i] also outlined plans for forming an exclusive 3,000-strong military unit to be deployed to assist peacekeeping operations around the world.

The new unit is to consist of 1,000 special forces personnel, along with 2,000 non-combat or backup troops.

Observers said the peacekeeping unit would address the rising calls from both home and abroad for South Korea to become more active in overseas peacekeeping missions. Hundreds of South Korean soldiers and service members are serving in several overseas places, but there had been criticism that it was inefficient to recruit the troops from several military units at once.

Coping with the North Korean military threat was also taken into consideration, according to the revised reform plans.

Lee said that the Army would be adding more advanced artillery pieces, including multiple rocket launchers, to counter possible North Korean artillery attacks at the border.

Deterring nuclear and missile attacks was also a priority objective for the reforms.

The military said it plans to reinforce its surveillance and reconnaissance abilities, in addition to conducting precision-guided strikes, interception and defense against such aggression.

Such technological reinforcements were at the core of the reforms, which seek to build a slimmer yet more efficient armed forces by 2020.

But since they were first introduced under the former No Mu-hyo'n [Roh Moo-hyun] administration in 2005, the reforms have been criticized for underestimating the military threat posed by North Korea.

As a case in point, security concerns have recently further escalated due to Pyongyang's May 25 nuclear test and its threats to launch a long-range missile.

Yesterday's reforms said the total number of troops would now be reduced to 517,000, reflecting a smaller pace of reduction than in earlier plans. The ministry cited the inter-Korean imbalance in troop numbers as the reason for the adjustment.

South Korea currently has 650,000 troops, 40,000 fewer than in 2005.

The cost of the reforms was another cause for concern.

The costs are now estimated at 599.3 trillion won ($466 billion), down from the originally envisioned 621 trillion won estimated in 2005.

Touching on plans for transferring wartime operational command to Seoul, the reforms confirmed that the two allied militaries would be separated into two command theaters by 2012. Afterwards, the two militaries will operate with the South Korean forces in the leading role, with the United States in supporting.

The ministry said their strategic military channels of dialogue such as the security consultative meeting, would be maintained.

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Military to Operate 'experimental' Unit to Test-drive Restructuring (Yonhap)

SEOUL -- The South Korean military will set up an "experimental" unit to test-drive new policies that aim to build a more streamlined fighting force, a government source said Sunday.

The regiment-size unit will adopt new organization structures, weaponry and tactics ahead of other units, according to the defense ministry official.

Its creation is part of a plan that "will be completed by 2020, and calls for sweeping changes to personnel, weaponry, tactics and budget allocation that need to be tested thoroughly beforehand to reduce complications," said the official, who asked to remain anonymous.

"The new unit will also engage in joint operations with other Army units along with those from the Air Force and Navy to test how well it can act as a cohesive force to deter foreign aggression," the official said.

Under the defense reform plan, Seoul plans to overhaul the number of corps, divisions and brigades and bases scattered around the country.

By the target year, the number of military bases will be slashed from 1,800 at present to around 850, with corps being reduced from 10 to seven. Divisions will also be cut from 47 to 28, although brigades are to be increased to 24 from 16 at present.

The official said the measures will make the country's military more agile and improve its ability respond to modern-day threats.

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S. Korea to Bolster Capabilities to Head Off N.K. Nuclear, Missile Attacks (Yonhap)

SEOUL -- South Korea on Friday unveiled a set of defense policy guidelines that would enable it to scrutinize every North Korean nuclear and missile base independently by 2020 and strike it if necessary.

The guidelines, effective between fiscal 2009 and 2020, were announced as tension heightened on the Korean Peninsula following the second nuclear test by North Korea on May 25.

"National Defense Reform 2020" was first introduced in 2005, a year before North Korea conducted its first underground nuclear explosion and test-fired a long-range ballistic missile.

The reform plan came under scrutiny early last year, when President Lee Myung-bak [Yi Myo'ng-pak] took office in Seoul with a pledge to press harder for the nuclear disarmament of North Korea.

The relations between the Koreas have since hit one of their lowest points in modern history. The two remain technically at war across a heavily armed border after their 1950-53 Korean War ended in a truce.

Following the latest atomic test, North Korea test-fired a series of short-range missiles and declared the armistice void. It is also believed to be making preparations to test-fire a long-range ballistic missile that can theoretically hit Alaska.

"Following the second nuclear test and missile tests by North Korea, we have re-assessed the North Korean threats and our capabilities to respond," South Korean Defense Minister Lee Sang-hee [Yi Sang-hu'i] said in a briefing.

Approved Friday by President Lee, Reform 2020 prioritizes the expansion of high-tech military assets capable of monitoring and hitting North Korean nuclear and missile sites wherever they are.

South Korea's ability to scrutinize North Korean bases north of Pyongyang has been limited because of its lack of advanced intelligence equipment, according to South Korean defense sources.

The reform plan is aimed at redressing the shortfall and therefore reduce the reliance on U.S. intelligence by 2020 through the acquisition of drones and a satellite, according to officials.

The South Korean military "should reinforce its capacity to perform surveillance and reconnaissance, conduct precision-guided strikes and make interceptions," the reform plan said.

The reinforcement is aimed at "stemming and eliminating to a maximum degree" what the Ministry of National Defense described as the North's "asymmetrical threats" -- nuclear and missile programs.

"If it becomes clear that North Korea is moving to hit us with its nuclear and missile arsenal, we will hit its bases as quickly as possible to prevent launches no matter where they are," a senior official, who took part in creating the guidelines, said.

"But we don't by any means have any intention to consider a preemptive strike on North Korean bases when there is no clear evidence of an imminent attack," the official said, speaking on condition of anonymity because he is not allowed to reveal his identity to the public.

The reform plan, which estimated about 599.3 trillion won (US$466 billion) will be needed to meet the goals, said North Korea's special forces and its long-range artillery deployed along the border represented the other areas where the South remained under-strength.

"A fierce and large-scale engagement between ground troops is inevitable upon the start of a war," the document said, noting that U.S. and South Korean air forces would have difficulties navigating the rugged topography to provide close air support in war.

The U.S. has 28,500 troops and about 80 non-rotational fighter aircraft stationed here as a deterrent against North Korea.

The reform plan stipulated that the number of South Korean troops will be reduced from 655,000 to 517,000 by 2020.

"The reform is based on a plan that seeks not to reduce troops but to streamline the army and enable it to dominate the battlefield," Defense Minister Lee said.

The number of army divisions will be reduced from 47 to 28 as part of the streamlining push, accordi ng to the reform plan, which suggests that South Korea should increase its naval missile interceptors.

Refurbishment of defense facilities against electromagnetic pulses emitted from a nuclear explosion is also one of the reforms the document proposed. The pulses, weapons experts say, can paralyze defense systems outside the range of a blast.

The reform plan also calls for the establishment of an independent cyber warfare command by 2012 to deal with the increasing threat of North Korean hacking into its defense networks.

According to South Korean defense officials, North Korea operates a cyber warfare unit that specializes in hacking South Korean and U.S. military networks.

Reform 2020 also mandated the creation of a 3,000-strong military unit that can readily be deployed to assist peacekeeping operations around the world.

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S. Korea to Acquire New Missiles For Aegis Destroyer (Yonhap)

SEOUL -- South Korea plans to acquire 40 new surface-to-air missiles within the month for its Aegis destroyer, a military source said Sunday.

The government source, who declined to be identified, said all of the U.S.-made Standard Missile-2s (SM-2) will be loaded on to the 7,600-ton King Sejong the Great destroyer.

The 166-meter-long ship, equipped with a phased array SPY-1D radar, can track up to a thousand targets simultaneously at a range of 500km and intercept threats from up to 150 km away. It has been used to detect long-range ballistic missiles fired by North Korea that were 1,000 km away.

The destroyer is currently the largest surface combat vessel in the South Korean Navy and can carry up to 80 SM-2s in vertical launch systems. It is also armed with locally made anti-ship missiles, a 127mm cannon, 30mm Goalkeeper close-in-weapons systems and lightweight, rolling airframe missiles.

The 40 SM-2s, which will arrive by the end of June, are extended-range models and can hit targets up to 160km away. They will allow the South Korean ship to fully use its advanced detection, tracking and attack capabilities, the source said.

The missiles are the main anti-aircraft munitions used by the U.S. Navy and have evolved over the years to deal with threats coming from various altitudes and those equipped with advanced electronic counter measures. They may also be used against ballistic missiles.

Related to the missile purchase, the U.S. government in May notified lawmakers that it has authorized the sale of 46 SM-2 Block IIIA and 35 Block IIIB missiles to South Korea under the foreign military sales arrangement.

The military source said that Seoul is looking to acquire next-generation Extended Range Active Missiles, also known as the SM-6 system, from Washington along with Patriot-3 (PAC-3) missiles by 2014. The PAC-3s can be deployed at sea and are designed to intercept ballistic missiles.