North Korea Research

NORTH KOREA – TRAVEL, TRADE, U.S. RELATIONS,
RUSSIAN RELATIONS
October 27, 2008


Current Relations between U.S. and North Korea:

The relationship between the United States and North Korea has been a strained one. On October 7 President Bush’s announced that North Korea has been removed from the list of State Sponsors of Terrorism in a bid to salvage a fragile nuclear deal. The announcement was made after North Korea resumed disabling a plutonium plant and agree to allow some inspections to verify that they had halted it’s nuclear program as promised. There has been a strong desire to stop North Korea from gaining nuclear abilities ever since October 9, 2006, when North Korea announced the successful test of a nuclear explosive device. This was verified by the United States on October 11. In response, the United Nations Security Council, citing Chapter VII of the UN Charter, unanimously passed Resolution 1718, condemning North Korea and imposing sanctions on certain luxury goods and trade of military units, WMD and missile-related parts, and technology transfers.
Senator McCain has expressed concern, as North Korea has yet to adequately demonstrate its commitment to halting the nuclear program. Barack Obama views the deal as a modest step forward.

The verification plan allows United States inspectors access to its main declared nuclear compound, at Yongbyon. According the The New York Times, “international inspectors have worked at the site on and off for years. But the deal puts off decisions on the thorniest verification issue: what would happen if international experts suspected the North was hiding other nuclear weapons facilities, particularly those related to uranium enrichment.”

U.S. Consular support for U.S. Citizens traveling in North Korea:

The United States has no diplomatic or consular presence in the DPRK. Americans traveling in the DPRK may receive limited consular services from the Swedish Embassy in Pyongyang. The U.S.- DPRK Interim Consular Agreement provides that North Korea will notify the Swedish Embassy within four days of an arrest or detention of an American citizen and will allow consular visits within two days after a request is made by the Swedish Embassy. However, consular access has not been readily granted in cases where American citizens have been reported as being detained or held against their will by DPRK officials. Moreover, delegations with ethnic Korean individuals, or delegations representing Korean-affiliated organizations in the U.S., are handled by DPRK structures that are well beyond the reach of diplomatic missions in Pyongyang. Hence, in case of a situation requiring consular assistance, the Embassy’s access is even more limited.

U.S. citizens are encouraged to carry photocopies of their passport data and photo pages with them at all times so that, if questioned by DPRK officials, evidence of their U.S. citizenship is readily available. . North Korean security personnel may view unescorted travel inside North Korea by Americans who do not have explicit official authorization as espionage, especially when the U.S. citizens are originally from South Korea or are thought to understand the Korean language. Security personnel may also view any attempt to engage in unauthorized conversations with a North Korean citizen as espionage. Foreigners are subject to fines or arrest for unauthorized currency transactions or for shopping at stores not designated for foreigners. It is a criminal act in North Korea to show disrespect to the country's current and former leaders, Kim Jong-Il and Kim Il-Sung, respectively. Foreign journalists have been threatened when questioning the policies or public statements of the DPRK or the actions of the current leadership.

Britain, Germany and other Western governments also have official relationships with North Korea.


Doing Business in North Korea:


The United States imposed a near total economic embargo on North Korea in June 1950 when North Korea attacked the South. Sanctions were eased in stages beginning in 1989 and again in 1994. In June 2000, a new series of regulations authorized most transactions between U.S. and North Korean persons. Among other things, these regulations allowed most products, other than those specifically controlled for military, non-proliferation, or anti-terrorism purposes, to be exported to North Korea without an export license (although the export licensing requirement was subsequently reimposed in order to comply with UN Security Council Resolution 1718).
Restrictions on U.S. investments in North Korea and travel of U.S. citizens to North Korea were also eased, and U.S. ships and aircraft were allowed to call at North Korean ports. On June 26, 2008, the President announced the termination of the application of the Trading with the Enemy Act with respect to the D.P.R.K. To date, however, U.S. economic interaction with North Korea remains minimal, and North Korean assets frozen since 1950 remained frozen.
In January 2007, pursuant to UN Security Council Resolution 1718, the U.S. Department of Commerce issued new regulations prohibiting the export of luxury goods to North Korea. Many statutory sanctions on North Korea, including those affecting trade in military, dual-use, and missile-related items and those based on multilateral arrangements, remain in place. Most forms of U.S. economic assistance, other than purely humanitarian assistance, are prohibited. North Korea does not enjoy "Normal Trade Relations" with the United States, so any goods manufactured in North Korea are subject to a higher tariff upon entry to the United States.
Western companies do do business in North Korea, although China represents the largest business community and is the main source of trade and aid. South Korea accounts for most of the North’s foreign investment.
The Europeans’ chamber of commerce in Pyongyang, launched in 2005, has 12 members including DHL Express, an Italian law firm and a German venture founded to provide Internet access to foreign businesses in Pyongyang. Western banks have been leery about doing business in North Korea but Daedong Credit Bank has been created and is North Korea’s first foreign-owned financial institution.
Credit Suisse and Nokia both operate in the country and Fila and Heineken have sponsored events.
North Korea has also been looking to Western investors in hopes of developing oil resources and reducing its near-total dependence on China for fuel. It awarded a 20-year exploration concession in 2005 to Aminex plc (http://www.aminex-plc.com/), a London firm. Its Korea-focused subsidiary Korex Ltd., signed a nine-year production-sharing agreement to explore and develop 66,000 square kilometers (25,000 square miles) of North Korean territory. The agreement covers areas in the Yellow Sea’s West Korea Bay and in the Sea of Japan as well as onshore.
While North Korea lacks proven petroleum reserves, according to the U.S. Energy Information Agency, the West Korea Bay in particular may contain hydrocarbon reserves, as it’s considered to be a geological extension of China’s oil-rich Bohai Bay.
To do business in North Korea high contacts are essential. You generally have to go above a minister to a cabinet member. You don’t need to know the cabinet member but you should know someone who can influence the cabinet member. It is very important to get the favor of Kim Il Jong, the “Dear Leader.”

North Korea-Russian Relations:
The relationship between North Korea and Russia has been rocky. Expectations have been high and disappointments frequent but common interests have prevented them from falling apart. The Democratic People’s Republic of Korea (DPRK) was created with help and support by the Soviets. The Soviets were soon forced out in favor of relations with the Chinese and Kim Il Sung played the Russian and Soviet leaders against each other in order to extract concessions, including nuclear equipment and technology.
Putin visited Pyongyang in 2000 but relations have been strained with Putin unable to assert himself as a prominent player in the area. For it’s part North Korea has not received the unalloyed political support nor the economic backing it seeks. Russia has more influence now but opportunities for economic cooperation have been limited, partly because of Pyongyang’s refusal to open its economy and partly due to overambitious schemes, oil and gas pipelines and Trans-Korean and Trans-Siberian railway junctions, that may take decades to realize.
Russia has played a minor roll in the six-party nuclear talks with North Korea and conservative in its political dealings. North Korea would like to balance China’s growing influence but recognizes that Moscow will never provide the level of support it once did.
On May 2007, Russian President Vladimir Putin signed a presidential decree prohibiting Russian state and government agencies, industrial, commercial, financial and transport companies, and enterprises, firms and banks from exporting or transiting military hardware, equipment, materials, or know-how which could be used in North Korea's nuclear or non-nuclear weapons programs.
Major Russian exports to the DPRK include mineral fuels, wood and pulp, fertilizers, ships/boats, and iron/steel. The large increase in 2003 came mostly in refined oil (total exports of mineral fuel oil jumped from $20 million in 2002 to $96 million in 2003). Pyongyang had to turn to Russia for petroleum, as supplies of fuel oil from the United States, Japan, and South Korea were curtailed as the six-party talks bogged down.
Major Russian imports from North Korea include machinery, electrical machinery, tools/cutlery, and railroad equipment.
North Korea exports labor to Russia. This dates to the Soviet era, when prisoners were used in logging compounds that were run entirely by North Korean security forces. In 1995 the North Korean and Russian governments renewed the treaty that had lapsed in 1993 under which North Korea would supply 15,000–20,000 loggers to work off Soviet-era debts. A variety of other North Korean enterprises have subsequently entered the business of providing contract labor in logging and the construction sector in Vladivostok.[4]
In 2004, the Russia Federal Immigration Service issued in 14,000 licenses for the employment of North Korean laborers in Russia.



SUPPLAMENTARY MATERIAL



WASHINGTON POST
Western Firms Doing Business in N. Korea
By JOE McDONALD
The Associated Press
Sunday, November 5, 2006; 6:15 PM

BEIJING -- In the midst of tensions over North Korea's nuclear program, a Western company is there searching for oil. Another just bought a bank.
"North Korea is hungry for business," said Roger Barrett, the British founder of Beijing-based Korea Business Consultants, who recently took 11 Asian and European clients to Pyongyang to play golf and make contacts.
A small group of Westerners are taking on the challenge of doing business in the isolated North, hoping to get in on the ground floor as its communist rulers experiment with economic reform.
The obstacles are daunting. A Stalinist dictatorship, bureaucracy and language barriers. Foreign sanctions that block most financial transfers, making it hard to get paid and to get supplies. And now worries that United Nations sanctions imposed after North Korea's Oct. 9 nuclear test could be expanded to a general clampdown on trade.
But the Westerners talk positively about the North as a business environment, with skilled workers and leaders who they say welcome foreign investment.
"They are very skillful and hardworking," said Felix Abt, a Swiss businessman who oversees two ventures in Pyongyang, one that makes business and game software for sale in Europe and another that makes antibiotics and painkillers for the domestic market. "It's sometimes faster to get licenses and necessary approvals here than it is in China or Vietnam."
Barrett said that even as the U.N. Security Council debated the latest sanctions on the North, he got inquiries from investors interested in its rich mineral resources and low-cost manufacturing work force.
"Investors are rushing into China, but labor costs there are escalating, and companies are looking for an alternative," Barrett said. North Korea "has absolutely the capabilities to take off like South Korea."
So far the largest foreign business community in North Korea is from China, its main source of trade and aid.
South Korea accounts for most of the North's foreign investment, with stakes totaling $620 million in an export-manufacturing zone and a resort for foreigners. China's investments total just $31 million, according to the Chinese Commerce Ministry.
U.S. regulations allow American companies to trade with North Korea under limited conditions, though tensions between the governments and lack of diplomatic relations raises the risk of doing business. Britain, Germany, Sweden and other Western governments, meanwhile, have official relations with Pyongyang.
North Korea's foreign trade has risen sharply, though the total was less than $4 billion last year, according to South Korean and Chinese government figures. Trade with the South soared by more than 50 percent in 2005 to just over $1 billion.
Most trade is carried out by North Korean state companies, not private entrepreneurs. And some partners are shying away. Trade with Japan, once the North's No. 1 trading partner, tumbled from $1.3 billion in 2001 to just $200 million last year amid tensions with Tokyo over North Korea's abduction of Japanese nationals in the 1970s and '80s.
The Europeans' chamber of commerce in Pyongyang had 12 members when it was launched last year. They include delivery company DHL Express, an Italian law firm and a German venture founded in 2003 to provide Internet access to foreign businesses in Pyongyang.
This tentative foothold follows the slow pace of economic reform in North Korea. Only in 2002 did North Korean leader Kim Jong Il allow limited free enterprise to revive a decrepit economy, which teetered in the 1990s following the loss of Soviet aid and then collapsed amid widespread food shortages. Still, foreign observers say officials are reluctant to give up control, despite prodding from Beijing, which wants faster reforms to reduce its ally's dependence on aid.
Abt, the Swiss businessman, moved to Pyongyang in 2002 after seven years working in Vietnam, another Asian communist economy in the throes of reform.
"I heard that some economic reforms were in the pipeline, and I was quite thrilled to experience the beginning," said Abt.
Now his Vietnamese wife takes their 14-month-old daughter to play at an international school. After work, he goes out to sing karaoke with North Korean co-workers.
But Abt has felt the bite of efforts to pressure the North.
Foreign banks have been leery since Washington last year sanctioned Macau's Banco Delta Asia, which the U.S. said helped the North launder money. China told its banks this month to curtail financial transfers to or from the North.
"It's getting difficult to make bank transfers to suppliers or to get money from customers," Abt said.
He worries that the factory might have to shut down if U.N. sanctions block imports of required chemicals on the grounds that they also could have military uses.
Barrett said his clients have lost access to $11 million in Banco Delta Asia accounts that were frozen by the U.S. sanctions.
Colin McAskill, a British businessman who has done business with the North since the 1970s, is lobbying Washington to fine-tune its sanctions so the bank's customers can withdraw money that was made legally.
McAskill is chairman of Hong Kong-based Koryo Asia Ltd., which said in September it was buying a 70 percent controlling stake in Daedong Credit Bank, North Korea's first foreign-owned financial institution. The bank, which is 30 percent owned by a North Korean bank, serves foreign companies and has accounts at Banco Delta Asia.
North Korea also has turned to Western investors in hopes of developing oil resources and reducing its near-total reliance on China for fuel. It awarded a 20-year exploration concession last year to Aminex plc, a London firm.
Aminex is helping the North Korean government deal with other foreign companies, and in exchange gets to pick where it will drill for oil, its chief executive, Brian Hall, said by phone from London.
Aminex hasn't felt any effects from the nuclear tumult, Hall said.
"We have good relations and no problems with the agreements but are closely watching the political situation," he said.
___
On the 'Net:
European Business Association: http://www.eba-pyongyang.org/
Korea Business Consultants: http://www.kbc-global.com/
© 2006 The Associated Press

U.S. STATE DEPARTMENT: US Relations with North Korea as of 8/8/08
http://www.state.gov/r/pa/ei/bgn/2792.htm
Excerpts from official State Department page:
U.S. Support for North-South Dialogue and Reunification 
The United States supports the peaceful reunification of Korea on terms acceptable to the Korean people and recognizes that the future of the Korean Peninsula is primarily a matter for them to decide. The United States believes that a constructive and serious dialogue between the authorities of North and South Korea is necessary to resolve outstanding problems, including the North's nuclear program and human rights abuses, and to encourage the North's integration with the rest of the international community.
Denuclearization of the Korean Peninsula 
North Korea joined the Nuclear Non-Proliferation Treaty (NPT) as a non-nuclear weapons state in 1985. North and South Korean talks begun in 1990 resulted in the 1992 Joint Declaration for a Non-Nuclear Korean Peninsula (see, under Foreign Relations, Reunification Efforts Since 1971). However, the international standoff over the North's failure to implement an agreement with the International Atomic Energy Agency for the inspection of the North's nuclear facilities led Pyongyang to announce in March 1993 its intention to withdraw from the NPT. A UN Security Council Resolution in May 1993 urged the D.P.R.K. to cooperate with the IAEA and to implement the 1992 North-South Denuclearization Statement. It also urged all UN Member States to encourage the D.P.R.K. to respond positively to this resolution and to facilitate a solution to the nuclear issue.
The United States opened talks with the D.P.R.K. in June 1993 and eventually reached agreement in October 1994 on a diplomatic roadmap, known as the Agreed Framework, for the denuclearization of the Korean Peninsula. The Agreed Framework called for the following steps:

-1. North Korea agreed to freeze its existing nuclear program and allow monitoring by the IAEA.
-1. Both sides agreed to cooperate to replace the D.P.R.K.'s graphite-moderated reactors with light-water reactor (LWR) power plants, by a target date of 2003, to be financed and supplied by an international consortium (later identified as the Korean Peninsula Energy Development Organization or KEDO).
-1. As an interim measure, the United States agreed to provide North Korea with 500,000 tons of heavy fuel oil annually until the first reactor was built.
-1. The United States and D.P.R.K. agreed to work together to store safely the spent fuel from the five-megawatt reactor and dispose of it in a safe manner that did not involve reprocessing in the D.P.R.K.
-1. The two sides agreed to move toward full normalization of political and economic relations.
-1. The two sides agreed to work together for peace and security on a nuclear-free Korean Peninsula.
-1. The two sides agreed to work together to strengthen the international nuclear non-proliferation regime.
In accordance with the terms of the Agreed Framework, in January 1995 the U.S. Government eased economic sanctions against North Korea in response to North Korea's freezing its graphite-moderated nuclear program under United States and IAEA verification. North Korea agreed to accept the decisions of KEDO, the financier and supplier of the LWRs, with respect to provision of the reactors. KEDO subsequently identified Sinpo as the LWR project site and held a groundbreaking ceremony in August 1997. In December 1999, KEDO and the (South) Korea Electric Power Corporation (KEPCO) signed the Turnkey Contract (TKC), permitting full-scale construction of the LWRs.
In January 1995, as called for in the 1994 Agreed Framework, the United States and D.P.R.K. negotiated a method to store safely the spent fuel from the D.P.R.K.'s five-megawatt nuclear reactor. Under this method, United States and D.P.R.K. operators worked together to can the spent fuel and store the canisters in a spent fuel pond; canning began in 1995. In April 2000, canning of all accessible spent fuel rods and rod fragments was completed.
In 1998, the United States identified an underground site in Kumchang-ni, North Korea, which it suspected of being nuclear-related. In March 1999, after several rounds of negotiations, the United States and D.P.R.K. agreed that the United States would be granted "satisfactory access" to the underground site at Kumchang-ni. In October 2000, during D.P.R.K. Special Envoy Marshal Jo Myong-rok's visit to Washington, and after two visits to the site by teams of U.S. experts, the United States announced in a Joint Communiqué with the D.P.R.K. that U.S. concerns about the site had been resolved.
As called for in former Defense Secretary William Perry's official review of U.S. policy toward North Korea, the United States and the D.P.R.K. launched Agreed Framework Implementation Talks in May 2000. The United States and the D.P.R.K. also began negotiations for a comprehensive missile agreement, pursuant to the Perry recommendations.
In January 2001, the Bush Administration discontinued nuclear and missile talks, specifying that it intended to review the United States' North Korea policy. The Administration announced on June 6, 2001, that it was prepared to resume dialogue with North Korea on a broader agenda of issues--including North Korea's conventional force posture, missile development and export programs, human rights practices, and humanitarian issues.
In October 2002, a U.S. delegation confronted North Korea with the assessment that the D.P.R.K. was pursuing a uranium enrichment program, in violation of North Korea's obligations under the NPT and its commitments in the 1992 North-South Joint Declaration on Denuclearization of the Korean Peninsula and the Agreed Framework. North Korean officials asserted to the U.S. delegation, headed by then-Assistant Secretary of State for East Asian and Pacific Affairs James A. Kelly, the D.P.R.K.'s "right" to a uranium enrichment program and indicated that that it had such a program. The U.S. side stated that North Korea would have to terminate the program before any further progress could be made in U.S.-D.P.R.K. relations. The United States also made clear that if this program were verifiably eliminated, it would be prepared to work with North Korea on the development of a fundamentally new relationship. Subsequently, the D.P.R.K. has denied the existence of a uranium enrichment program. In November 2002, the member countries of KEDO's Executive Board agreed to suspend heavy fuel oil shipments to North Korea pending a resolution of the nuclear dispute.
In late 2002 and early 2003, North Korea terminated the freeze on its existing plutonium-based nuclear facilities at Yongbyon, expelled IAEA inspectors, removed seals and monitoring equipment at Yongbyon, announced its withdrawal from the NPT, and resumed reprocessing of spent nuclear fuel to extract plutonium for weapons purposes. North Korea announced that it was taking these steps to provide itself with a deterrent force in the face of U.S. threats and U.S. "hostile policy." Beginning in mid-2003, the North repeatedly claimed to have completed reprocessing of the spent fuel rods previously frozen at Yongbyon and publicly said that the resulting fissile material would be used to bolster its "nuclear deterrent force." There is no independent confirmation of North Korea's claims. The KEDO Executive Board suspended work on the LWR Project beginning December 1, 2003.
President Bush has made clear that the United States has no intention to invade or attack North Korea. The President has also stressed that the United States seeks a peaceful end to North Korea's nuclear program in cooperation with North Korea's neighbors, who are directly affected by the threat the nuclear program poses to regional stability and security.
In early 2003, the United States proposed multilateral talks on the North Korean nuclear issue. North Korea initially opposed such a process, maintaining that the nuclear dispute was purely a bilateral matter between the United States and the D.P.R.K. However, under pressure from its neighbors and with the active involvement of China, North Korea agreed to three-party talks with China and the United States in Beijing in April 2003 and to Six-Party Talks with the United States, China, R.O.K., Japan, and Russia in August 2003, also in Beijing. During the August 2003 round of Six-Party Talks, North Korea agreed to the eventual elimination of its nuclear programs if the United States were first willing to sign a bilateral "non-aggression treaty" and meet various other conditions, including the provision of substantial amounts of aid and normalization of relations. The North Korean proposal was unacceptable to the United States, which insisted on a multilateral resolution to the issue and opposed provision of benefits before the D.P.R.K.'s complete denuclearization. In October 2003, President Bush said he would consider a multilateral written security guarantee in the context of North Korea's complete, verifiable, and irreversible elimination of its nuclear weapons program.
China hosted a second round of Six-Party Talks in Beijing in February 2004. The United States saw the results as positive, including the announced intention of all parties to hold a third round by the end of June and to form a working group to maintain momentum between plenary sessions.
At the third round of Six-Party Talks in Beijing, in June 2004, the United States tabled a comprehensive and substantive proposal aimed at resolving the nuclear issue. All parties agreed to hold a fourth round of talks by the end of September 2004. Despite its commitment, the D.P.R.K. refused to return to the table, and in the months that followed issued a series of provocative statements. In a February 10, 2005, Foreign Ministry statement, the D.P.R.K. declared that it had "manufactured nuclear weapons" and was "indefinitely suspending" its participation in the Six-Party Talks. In Foreign Ministry statements in March, the D.P.R.K. said it would no longer be bound by its voluntary moratorium on ballistic missile launches, and declared itself a nuclear weapons state.
Following intense diplomatic efforts by the United States and other parties, the fourth round of Six-Party Talks were held in Beijing over a period of 20 days from July-September 2005, with a recess period in August. Discussions resulted in all parties agreeing to a Joint Statement of Principles. In the September 19, 2005 Joint Statement, the six parties unanimously reaffirmed the goal of verifiable denuclearization of the Korean Peninsula in a peaceful manner. The D.P.R.K. for the first time committed to abandon all nuclear weapons and existing nuclear programs and to return, at an early date, to the NPT and to IAEA safeguards. The other parties agreed to provide economic cooperation and energy assistance. The United States and the D.P.R.K. agreed to take steps to normalize relations subject to bilateral policies, which for the United States, includes concerns over North Korea's ballistic missile programs and deplorable human rights conditions. While the Joint Statement provides a vision of the end-point of the Six-Party process, much work lies ahead to implement the elements of the agreement.
A fifth round of talks began in November 2005, but ended inconclusively as the D.P.R.K. began a boycott of the Six-Party Talks, citing the "U.S.' hostile policy" and specifically U.S. law enforcement action that had led in September to a freeze of North Korean accounts in Macau's Banco Delta Asia (BDA). The United States held discussions in Kuala Lumpur (July 2006) and New York in (September 2006) with other Six-Party partners, except North Korea, along with representatives from other regional powers in the Asia-Pacific region, to discuss Northeast Asian security issues, including North Korea. On July 4-5, 2006 (local Korea time), the D.P.R.K. launched seven ballistic missiles, including six short- and medium-range missiles and one of possible intercontinental range. In response, the UN Security Council unanimously adopted Resolution 1695 on July 15, which demands that the D.P.R.K. suspend all activities related to its ballistic missile program and reestablish existing commitments to a moratorium on missile launching. The resolution also requires all UN Member States, in accordance with their national legal authorities and consistent with international law, to exercise vigilance and prevent missile and missile-related items, materials, goods and technology from being transferred to the D.P.R.K.'s missile or weapons of mass destruction (WMD) programs, prevent the procurement of missiles or related items, materials, goods and services from the D.P.R.K., and the transfer of any financial resources in relation to the D.P.R.K.'s missile or WMD programs. The D.P.R.K. immediately rejected the resolution.
On October 9, 2006, North Korea announced the successful test of a nuclear explosive device, verified by the United States on October 11. In response, the United Nations Security Council, citing Chapter VII of the UN Charter, unanimously passed Resolution 1718, condemning North Korea and imposing sanctions on certain luxury goods and trade of military units, WMD and missile-related parts, and technology transfers.
The Six-Party Talks resumed in December 2006 after a 13-month hiatus. Following a bilateral meeting between the United States and D.P.R.K. in Berlin in January 2007, another round of Six-Party Talks was held in February 2007. On February 13, 2007, the parties reached an agreement on "Initial Actions for the Implementation of the Joint Statement" in which North Korea agreed to shut down and seal its Yongbyon nuclear facility, including the reprocessing facility and to invite back IAEA personnel to conduct all necessary monitoring and verification of these actions as agreed between the IAEA and the D.P.R.K. The other five parties agreed to provide emergency energy assistance to North Korea in the amount of 50,000 tons of heavy fuel oil (HFO) in the initial phase and the equivalent of 950,000 tons of HFO in the next phase of North Korea's denuclearization. The six parties also established five working groups to form specific plans for implementing the Joint Statement in the following areas: denuclearization of the Korean Peninsula, normalization of D.P.R.K.-U.S. relations, normalization of D.P.R.K.-Japan relations, economic and energy cooperation, and a Northeast Asia peace and security mechanism. All parties agreed that the working groups would meet within 30 days of the agreement, which they did. The agreement also envisions the directly-related parties negotiating a permanent peace regime on the Korean Peninsula at an appropriate separate forum.
The sixth round of Six-Party Talks took place on March 19-23, 2007. The parties reported on the first meetings of the five working groups. At the invitation of the D.P.R.K., Assistant Secretary of State Christopher Hill visited Pyongyang in June 2007 as part of ongoing consultations with the six parties on implementation of the Initial Actions agreement. In July 2007, the D.P.R.K. shut down the Yongbyon nuclear facility, as well as an uncompleted reactor at Taechon, and IAEA personnel returned to the D.P.R.K. to monitor and verify the shut-down and to seal the facility. Concurrently, the R.O.K. delivered 50,000 metric tons of HFO in August 2007. All five working groups met in August and September to discuss detailed plans for implementation of the next phase of the Initial Actions agreement, and the D.P.R.K. invited a team of experts from the United States, China, and Russia to visit the Yongbyon nuclear facility in September 2007 to discuss specific steps that could be taken to disable the facility.
The subsequent September 27-30 Six-Party plenary meeting resulted in the October 3, 2007 agreement on "Second-Phase Actions for the Implementation of the Joint Statement." Under the terms of the October 3 agreement, the D.P.R.K. agreed to disable all existing nuclear facilities subject to abandonment under the September 2005 Joint Statement and the February 13 agreement. The Parties agreed to complete by December 31, 2007 a set of disablement actions for the three core facilities at Yongbyon -- the 5-MW(e) Experimental Reactor, the Radiochemical Laboratory (Reprocessing Plant), and the Fresh Fuel Fabrication Plant -- with oversight from a team of U.S. experts, The D.P.R.K. also agreed to provide a complete and correct declaration of all its nuclear programs in accordance with the February 13 agreement by December 31, 2007 and reaffirmed its commitment not to transfer nuclear materials, technology, or know-how. The U.S., R.O.K., China, and Russia have continued to provide HFO and HFO-equivalent energy assistance to the D.P.R.K., to fulfill the commitment of one million tons in the initial and second phases, in parallel with the D.P.R.K.'s actions on disablement and declaration.
In November 2007, the D.P.R.K. began to disable the three core facilities at Yongbyon, and U.S. experts have been present at the site to oversee the disablement actions. Assistant Secretary of State Christopher Hill visited Pyongyang again in December 2007 as part of ongoing consultations on the implementation of Second-Phase Actions and carried with him a letter from the President of the United States to Kim Jong-il. While the D.P.R.K. missed the December 31 deadline to provide a complete and correct declaration, it provided its declaration to the Chinese, chair of the Six-Party Talks, on June 26, 2008. The D.P.R.K. also imploded the cooling tower at the Yongbyon facility in late June 2008 before international media. Following the D.P.R.K's progress on disablement and provision of a declaration, President Bush announced the lifting of the application of the Trading with the Enemy Act (TWEA) with respect to the D.P.R.K. and notified Congress of his intent to rescind North Korea's designation as a state sponsor of terrorism. President Bush made clear that the United States needs to have a strong regime in place to verify the D.P.R.K.'s declaration before it removes the D.P.R.K. from the list of state sponsors of terrorism. As of August 2008, the United States continued to work with its Six-Party partners to establish such a verification regime, and remained prepared to move forward with taking the D.P.R.K. off of the state sponsors of terrorism list once a verification regime was in place.
Economic Interaction with the United States 
The United States imposed a near total economic embargo on North Korea in June 1950 when North Korea attacked the South. Sanctions were eased in stages beginning in 1989 and following the Agreed Framework on North Korea's nuclear programs in 1994. In June 2000, a new series of regulations authorized most transactions between U.S. and North Korean persons. Among other things, these regulations allowed most products, other than those specifically controlled for military, non-proliferation, or anti-terrorism purposes, to be exported to North Korea without an export license (although the export licensing requirement was subsequently reimposed in order to comply with UN Security Council Resolution 1718). Restrictions on U.S. investments in North Korea and travel of U.S. citizens to North Korea were also eased, and U.S. ships and aircraft were allowed to call at North Korean ports. On June 26, 2008, the President announced the termination of the application of the Trading with the Enemy Act with respect to the D.P.R.K. To date, however, U.S. economic interaction with North Korea remains minimal, and North Korean assets frozen since 1950 remained frozen. In January 2007, pursuant to UN Security Council Resolution 1718, the U.S. Department of Commerce issued new regulations prohibiting the export of luxury goods to North Korea. Many statutory sanctions on North Korea, including those affecting trade in military, dual-use, and missile-related items and those based on multilateral arrangements, remain in place. Most forms of U.S. economic assistance, other than purely humanitarian assistance, are prohibited. North Korea does not enjoy "Normal Trade Relations" with the United States, so any goods manufactured in North Korea are subject to a higher tariff upon entry to the United States.
Points of Contact for U.S. regulations concerning economic activity with North Korea:

-1. Treasury--Office of Foreign Assets Control, Tel. (202) 622-2490, http://www.treas.gov/offices/enforcement/ofac/;
-1. Commerce--Foreign Policy Controls Division, Bureau of Industry and Security, Tel. (202) 482-0171;
-1. Transportation--Office of the Assistant General Counsel for International Law, Tel. (202) 366-9183.

-1. STATE DEPARTMENT: TRAVEL TO NORTH KOREA

-1. http://travel.state.gov/travel/cis_pa_tw/cis/cis_988.html

Prior to departing the United States, U.S. citizens planning to transit China on their visit to North Korea are encouraged to register on line with the U.S. Embassy in Beijing; U. S. citizens transiting South Korea to take the Mount Kumgang or Kaesong City tours should register with the U.S. Embassy in Seoul. U. S. citizens visiting North Korea should also register with the Swedish Embassy in Pyongyang (U.S. Protective Power). Please see the Registration/Embassy Location section below.
COUNTRY DESCRIPTION: The Democratic People’s Republic of Korea (North Korea or the DPRK) is a highly militaristic Communist state located on the Korean Peninsula between northeast China and the Republic of Korea (South Korea or ROK), with land borders with China, Russia and South Korea. The DPRK is one of the world’s most isolated countries. The continuing dispute over North Korea’s development of nuclear programs and nuclear weapons has resulted in tensions in the region and between the United States and the DPRK. North Korea limits trade and transportation links with other countries and tightly restricts the circumstances under which foreigners may enter the country and interact with local citizens. Telephone and fax communications are unavailable in many areas of the country and foreigners can expect their communications to be monitored by DPRK officials. In the past few years, North Korea has experienced famine, flooding, fuel and electricity shortages, and outbreaks of disease. Many countries, including the United States, have contributed to international relief efforts to assist the people of North Korea.
Foreign tourists are a means for North Korea to earn much needed foreign currency, but an underdeveloped service sector, inadequate infrastructure, and political tensions with surrounding countries have stymied any significant tourist flow. North Korean efforts to expand tourism have focused primarily on group tours from China, as well as from South Korea primarily to the Mount Kumgang tourist area and the city of Kaesong.
-1. The United States does not maintain diplomatic or consular relations with the DPRK. The Swedish Embassy located in Pyongyang acts as the United States’ interim consular protective power and provides basic consular services to U.S. citizens traveling in North Korea. Please refer to Special Circumstances for additional information.

Consular Access: There is no United States diplomatic or consular presence in the DPRK. Americans traveling in the DPRK may receive limited consular services from the Swedish Embassy in Pyongyang. Please see section above on “Medical Insurance” for address and contact information for the Swedish Embassy in Pyongyang. U.S. citizens are encouraged to carry photocopies of their passport data and photo pages with them at all times so that, if questioned by DPRK officials, evidence of their U.S. citizenship is readily available. The U.S.- DPRK Interim Consular Agreement provides that North Korea will notify the Swedish Embassy within four days of an arrest or detention of an American citizen and will allow consular visits within two days after a request is made by the Swedish Embassy. However, consular access has not been readily granted in cases where American citizens have been reported as being detained or held against their will by DPRK officials. Moreover, delegations with ethnic Korean individuals, or delegations representing Korean-affiliated organizations in the U.S., are handled by DPRK structures that are well beyond the reach of diplomatic missions in Pyongyang. Hence, in case of a situation requiring consular assistance, the Embassy’s access is even more limited.

CRIMINAL PENALTIES: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States. Local laws also may not afford the protections available to U.S. citizens under U.S. law. Penalties for breaking local laws can be more severe than those in the United States for similar offenses. Persons violating the law, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession of, use of, or trafficking in illegal drugs are strict, and convicted offenders often face long jail sentences and heavy fines. North Korean security personnel may view unescorted travel inside North Korea by Americans who do not have explicit official authorization as espionage, especially when the U.S. citizens are originally from South Korea or are thought to understand the Korean language. Security personnel may also view any attempt to engage in unauthorized conversations with a North Korean citizen as espionage. Foreigners are subject to fines or arrest for unauthorized currency transactions or for shopping at stores not designated for foreigners. It is a criminal act in North Korea to show disrespect to the country's current and former leaders, Kim Jong-Il and Kim Il-Sung, respectively. Foreign journalists have been threatened when questioning the policies or public statements of the DPRK or the actions of the current leadership.





INTERNATIONAL CRISIS GROUP
North Korea-Russia Relations: A Strained Friendship
Asia Briefing N°71 
4 December 2007
http://www.crisisgroup.org/home/index.cfm?l=1&id=5198
This briefing is also available in Russian.
OVERVIEW
North Korea’s relations with Russia have been marked by unrealistic expectations and frequent disappointments but common interests have prevented a rupture. The neighbours’ history as dissatisfied allies goes back to the founding of the Democratic People's Republic of Korea (DPRK) with Soviet support and the Red Army’s installation of Kim Il-sung as leader. However, the Soviets were soon written out of the North’s official ideology. The Sino-Soviet split established a pattern of Kim playing Russian and Chinese leaders off against each other to extract concessions, including the nuclear equipment and technology at the heart of the current crisis. Since Vladimir Putin visited Pyongyang in 2000, diplomatic initiatives have come undone and grandiose economic projects have faltered. Russia is arguably the least effective participant in the six-party nuclear talks.
The relationship between Putin’s Russia and Kim Jong-il’s North Korea has disappointed both sides. Putin has mostly been unable to assert himself as a prominent player in North East Asia, and North Korea has received neither the unalloyed political support nor the economic backing it seeks. Russia has more influence in the region than it did in the 1990s but not enough to change the equation on the Korean peninsula. Opportunities for economic cooperation have been limited, mostly by Pyongyang’s refusal to open its economy but also by Russia’s fixation on overly ambitious schemes that at best may take decades to realise. China’s more nimble investors have moved in much faster than Russia’s state-owned behemoths.
Moscow has been conservative in its political dealings with Pyongyang, playing a minor but thus far positive role at the six-party talks consistent with its concerns about proliferation and the risks of DPRK collapse. It regards the denuclearisation of the peninsula as in its interests, has relatively few commercial opportunities in the North and considers its relations with the other nations in the exercise more important in every way than its ties to Pyongyang.
While Russia has shown interest in building energy and transport links through the North, little progress has been made. Rebuilding railways on the peninsula will cost enormous sums, and overcoming the many obstacles will require years of negotiation. Investments have been hindered by the North’s unreliability and history of default on loans. Russia may eventually have to forgive billions of dollars of debt the North cannot repay. Energy is a major mutual interest but pipelines across the North are unlikely to be built soon; Japan and China are expected to be the main markets for Russian energy, while South Korea is reluctant to become dependent on the North for its supply.
Pyongyang wants Russia to balance China’s growing influence but appears to recognise that Moscow will never provide the level of support it once did. The North has been keen to discuss economic cooperation but has lacked the political will to reform its economy sufficiently for foreign investment, even from a country as inured to corruption and government interference as Russia. It is equally interested in technical and scientific aid. Russian technology, equipment, and “know-how” have featured prominently in the history of both Koreas, and Pyongyang still seeks to resolve its economic problems by scientific and technical solutions. But there is unlikely to be much growth in bilateral cooperation unless the nuclear crisis is resolved peacefully, and the North opens its economy.
This briefing completes Crisis Group’s series on the relationships between North Korea and those of its neighbours – China, South Korea, Japan and Russia – involved in the six-party nuclear talks. It examines Russia’s aims and ambitions in the region, as well as the responses from North Korea and is based on both interviews in Russia, Central Asia and South Korea and analysis of Russian and North Korean statements.


PHOTOS
European Business Association Pyongyang International Spring Trade Fair:
http://www.eba-pyongyang.org/index.php?id=21,0,0,1,0,0

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