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Shaw @ 2007-10-05 19:53



BRiNGING his own food, and accompanied by 300 business, political and cultural figures—but excluding the international press—President Roh Moo-hyun of South Korea drove to Pyongyang on October 2nd to call upon North Korea’s Kim Jong Il. At the heavily-armed border, which Bill Clinton once described as “the world’s scariest place”, Mr Roh got out of his limousine to cross on foot—a step, he wanted everyone to know, that symbolised a desire for peace and reconciliation between the two estranged sides of a bloody civil war that remains unresolved more than 50 years after it ground to a halt.

It was only the second-ever meeting between leaders of the two countries, and Mr Roh’s gambit was aimed at the history books. He wanted to salvage an ineffectual presidency, which ends in December, by asking Mr Kim to reduce tensions on the peninsula in return for economy-transforming aid and investment. Mr Roh’s approach has led to divisions even among his own advisers. Some, such as the unification minister, Lee Jae-joung—described by one Western diplomat as an “unguided missile”—are gung-ho for reconciliation and are prepared to overlook a lot of Mr Kim’s unpleasantness.

Others despise the repressive regime of Mr Kim, and know that behind him lies a trail of broken promises. To offer too much now might also undermine the multilateral “six-party” process taking place in parallel, in which North Korea is being offered measured aid in return for clear steps towards dismantling its nuclear capabilities.

Though this summit drew the opaque Mr Kim out from the shadows somewhat, he remains hard to read. During the first summit, in 2000, when he met Mr Roh’s predecessor, Kim Dae-jung, Mr Kim was all bear-hugs and smiles. That meeting generated mass euphoria in North and South, but little of substance came of it—not even Mr Kim’s promised return visit to Seoul. It later turned out that 0m had been paid to Mr Kim just for the audience.

This week the befuddled looks of farmers as Mr Roh’s presidential cavalcade swept up the highway to Pyongyang suggested that Mr Kim had not let all his compatriots in on the historic moment, one for which Mr Roh has begged for years. Though a handpicked crowd in the capital gave a joyous reception, waving artificial bunches of Kimjongilia, a strain of begonia that is a national flower, Mr Kim himself was stiff and tight-lipped. To many of his countrymen, he will have looked on television like an emperor receiving tribute. But many outsiders once again wondered about the health of the pallid, pot-bellied 65-year-old. Mr Kim is known to have had heart problems, and some intelligence analysts recently have claimed to see the early signs of senile dementia—though this is mere conjecture.

From what can be gleaned of their substance, talks between the two leaders on October 3rd only emphasised the distance still to travel. Mr Kim may be willing to squeeze the outside world for aid—but on his terms. So Mr Roh’s offer of what amounted to a Marshall Plan to transform North Korea’s economy in pursuit of Chinese-style liberalisation met with blank dismissal. Mr Kim does not even like a showcase industrial park at Kaesong, where South Korean manufacturers employ cheap North Korean labour, to be described as a model of successful “reform”. Once again, Mr Kim showed how he puts his own survival over that of the North Koreans he brutalises.

Yet a joint agreement was announced on October 4th, something Mr Roh will be able to take home with relief. Gone were his hopes for great involvement in the North, but there was agreement to allow freight trains into Kaesong. There was a recommitment to help families divided by the civil war to meet (though a word from Mr Kim is all it would take to solve that sad problem). Talks will be sought with America and China to put a formal end to the civil war (though peace on the peninsula, these countries are likely to argue, can only come after its denuclearisation). Steps were promised (as, fruitlessly, they were at the 2000 summit) to reduce military tensions: defence ministers would meet, while a disputed western maritime area would see its fisheries jointly mined.

Promising as all this sounds, much of it merely repeats earlier promises. In the long run, Mr Kim has never really seen his interests as best served by closer relations with the South. They might lead, eventually, to reunification and hence to his dynasty’s extinction. China, Japan, Russia and America, the other parties in the six-party talks, may loathe his regime, but they are in effect helping to prop it up.

As Mr Roh struggled to secure his piece of paper in Pyongyang, the Chinese government this week declared a breakthrough in those talks as well. Almost a year after North Korea exploded a nuclear bomb, the Chinese said the country had agreed to disable its main nuclear reactor and reprocessing plant at Yongbyon by the year’s end (this, the main source of the North’s bomb-grade plutonium, has been shut since July). North Korea has also promised to give a full account of all its nuclear activities by then. If it sticks to this pledge—and American-led inspection teams are to oversee the disablement, starting, said negotiators, as early as this month—then the North will get about 0m in aid. Meanwhile, America says it will drop the North from its list of states that sponsor terrorism, a central North Korean demand.



 
Shaw @ 2007-09-03 10:34


Bilateral talks between the US and North Korea in Geneva ended on Sunday with an agreement that Pyongyang would declare and disable all its nuclear facilities by the end of this year.

Speaking after “very good and very substantive talks”, Christopher Hill, US assistant secretary of state, said the timetable would permit full implementation by the end of 2008 of the more extensive six-party September 2005 accord to “denuclearise” the Korean peninsula.

North Korea reportedly told a meeting of the six parties last month in China that it would be “difficult” to meet a year-end target for disabling its facilities. But Mr Hill said on Sunday that, although the details had yet to be worked out, both sides agreed the timescale was “realistic”.

US President George W. Bush last week repeated his hope that North Korea could give up its nuclear weapons programme before he leaves office at the beginning of 2009.

Kim Kye-gwan, head of the North Korean delegation, was quoted by AP news agency as saying: “We made it clear, we showed clear willingness to declare and dismantle all nuclear facilities.” But he did not give a timetable for such a move.

The desire for speedy progress has prompted the Bush administration to tone down its rhetoric on North Korea and make other conciliatory gestures, including holding talks in Pyongyang’s preferred venue of Geneva.

Washington had previously baulked at North Korean suggestions to hold talks in the Swiss city because of its associations with the 1994 Agreed Framework forged during the Clinton administration, an agreement the Bush team ridiculed when it took office but has essentially reworked into this year’s February denuclearisation agreement.

The US Department of State last week said it was prepared to extend a “significant food aid package” to alleviate North Korea’s grain shortage, which has been exacerbated by recent floods. Washington has also hinted that it could remove North Korea from its list of state sponsors of terrorism, a demand by Pyongyang, before all its nuclear programmes are completely dismantled.

But Mr Hill said last week that a condition for removal from that list was resolution of North Korea’s dispute with Japan over the abduction of Japanese citizens in the 1970s and 1980s.

This issue will be central to talks between North Korea and Japan this week in Ulaanbataar, Mongolia, prior to a plenary meeting of all six parties – the US, North and South Korea, China, Russia and Japan – in Beijing later this month.

In July, North Korea shut down and sealed three nuclear facilities at Yongbyon, 90km north of Pyongyang, including a reactor that may already have manufactured enough plutonium for several atom bombs. Two other nuclear plants under construction have also been disabled.

However, Washington believes North Korea also has a uranium enrichment programme that it has never acknowledged or declared. Mr Hill said only that he had had “good discussions” on this issue with Mr Kim, and expected it to be addressed in connection with Pyongyang’s declaration of its nuclear programmes.

(from www.ft.com)




 
Shaw @ 2007-08-14 15:59

Worried about illicit lending, China discovers a big underground bank

JUST over two years after a big unlicensed bank was last found in China, another surfaced this week. Last time the bank was based in Shanghai and operated in a small number of provinces. This time the illegal bank, which is based across the border from Hong Kong in Shenzhen, is on a far grander scale. It did business in every province of the country and its clients included state-owned enterprises and foreign multinationals. It appears to have been operating unnoticed by officials for up to eight years. In the Shenzhen area alone, it was reported to have done 4.3 billion yuan (4m) of unspecified transactions in the year and a half to May.

According to the State Administration of Foreign Exchange, the bank's clients had been borrowing mostly to buy fuel, cover deposits for land-use fees and pay export duties. But, as often happens, most of the lending was really for companies to make speculative investments in property and shares. This is what appears to have led to the bank's downfall. 

The authorities in Beijing, worried about the surge in the stockmarket and property prices in the past two years, have been trying to cool things down. They had suspected that part of the frothiness in the markets was the result of too much illicit lending. Their investigations appear to have uncovered the bank's existence.

Such banks are surprisingly common in China—although this one is a whopper. A government-funded study by the Central University of Finance and Economics cited by the South China Morning Post last year found that they lent as much as 800 billion yuan a year. Some of this goes to legitimate business. Underground banks provide as much as a third of the loans to small and medium-sized enterprises (SMEs) and 55% of the loans to farmers. SMEs and farmers are generally poorly served by the larger state banks and frequently have no option but to turn to these illegal institutions.

The state's efforts to reduce legitimate lending to cool the economy mean that illegal borrowing is likely to have grown. But the success of underground banks is also partly down to the returns they provide. With state banks offering savers paltry rates of interest, the under-the-counter ones simply offer more for deposits.

Of course, they pay better because they earn more. Most of the money these banks lend is for risky investments. As much as 90% of it is used for speculative trades in financial markets.

With stockmarkets around the world jumpy, China's stockmarket bubble continuing and 3-4% of the broad money supply estimated to be flowing underground, it is no wonder the authorities are alarmed. So many unregistered institutions risk the savings of millions being suddenly washed away.
(from www.economist.com)




 
Shaw @ 2007-08-10 21:13




 


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