‘Chosun’: North Korea offers to halt ICBM program

In Photo: The view of Pyongyang, the capital of North Korea, is seen from the viewing deck of Namsan Tower or N. Seoul Tower in Seoul, South Korea.

North Korea has promised to halt the development of intercontinental ballistic missiles (ICBM), but said the pledge was dependent on “US attitude,” South Korea’s Chosun Ilbo newspaper reported on Thursday.

During their meeting with Kim Jong Un this week, South Korean President Moon Jae-in’s special envoys persuaded the North Korean leader to suspend and gradually discard its missile program, as well as release three United States citizens detained in the country, the paper said, citing multiple South Korean government sources.

Chosun, without citing anyone, said that conditions for pausing North Korea’s ICBM program include the establishment of US diplomatic relations and suspension of Washington’s deployment of strategic military assets in South Korea.

Pyongyang has not yet confirmed South Korean special envoy’s account that Kim is willing to give up its nuclear weapons if the safety of his regime is guaranteed.

Moon on Wednesday tried to tamp down expectations for his planned summit with Kim Jong Un next month, even as US President Donald J. Trump said he’s open to talks.

Moon’s envoys are traveling to Washington on Thursday morning to brief the Trump administration on their talks in Pyongyang.

The US and North Korea have been at loggerheads since the Korean War ended without a peace treaty almost 65 years ago, and Kim’s government has repeatedly said nuclear weapons were necessary to deter any US-led military action.

Over the years, Kim’s father and grandfather have raised the prospect of abandoning its nuclear-weapons program if the US gave up its hostile policies.

Kim’s currency reserves shrink

Kim’s enthusiasm for talks on North Korea’s nuclear program coincides with a sharp drop in his nation’s foreign currency reserves.

Sanctions that hurt North Korea’s economy by limiting exports in 2017 will this year drain its cash hoard enough to crimp imports of essential products, according to analysts in South Korea.

An additional risk for the regime in Pyongyang is a spike in inflation, the Korea Institute for International Economic Policy, based in Sejong south of Seoul, said in a report last month.

Another research group in Sejong, the Korea Development Institute, warned of an economic downturn in North Korea.

The isolated nation has a history of dangling the prospect of a negotiated settlement on its nuclear arsenal, and then walking away after getting concessions.

This time Kim has agreed to meet South Korean President Moon Jae-in for talks in the border village of Panmunjom, and Trump has signaled he’s open to discussions.

“If estimates on North Korea’s foreign-currency reserves are accurate, imports will drop in 2018 and lead to a decline in activity at private markets and in industrial production from the second half,” wrote Choi Jang-ho, a researcher at the Korea Institute for International Economic Policy.

“The disruption to imports of raw materials and crude oil will mean changes are inevitable for Kim Jong Un’s industrial policies.”

North Korea’s exports to China—its biggest trading partner—plunged 37 percent in 2017 while imports edged up by 4 percent, leaving a goods trade deficit of $1.7 billion, data compiled by South Korean agencies show.

Choi estimates that North Korea’s foreign currency reserves are only about $4 billion to $5 billion, compared with the South’s $395 billion.

While measures of Pyongyang’s reserves are sketchy, its dollar holdings could dry up by around October if international sanctions continue, Kang Seok-ho, the chairman of South Korea’s parliamentary intelligence committee, said last month.

The relative stability of North Korea’s won and prices for goods at markets in the nation could change this year, according to Choi. Up until now, a flow of dollars held by the private sector flowed into the markets, he wrote.

North Korea is reported to offer halt to ICBM program.

Kim Byung-yeon, an economics professor at Seoul National University and author of Unveiling the North Korean Economy, estimates that foreign currencies held by North Korean authorities could be anywhere from $3 billion to $7 billion. He expects the holdings to be somewhere in the middle of the range.

“North Korea’s economy probably contracted 2 percent last year as economic sanctions took effect,” Kim said. “The drop in foreign-exchange reserves will continue this year, although not as much as in 2017 as imports may decline along with exports.”

“North Korean authorities may have been able to control prices for a short term, but they can’t do that forever, and prices of products affected by sanctions will start to move upward,” said Lim Kang-taeg, a researcher at another think tank, the Korea Institute for National Unification. “Concerns over a military strike by the US and the pressure from economic sanctions are likely to be behind North Korea’s change of attitude.”


Image Credits: Bloomberg

Turning Points 2018
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