South and North Korea held working-level military talks at a jointly controlled area on a western part of the Military Demarcation Line on Monday, attended by lieutenant colonel-grade officials from each side. Unfortunately, there was no tangible outcome at the talks, during which delegates from the two sides stood on opposite sides of the military demarcation line. But the meeting is still significant because it helped reopen inter-Korean dialogue, which has been closed since the inauguration of the conservative government in South Korea. Even though it was a low-level inter-Korean meeting, it also heightened hopes for a diplomatic solution to pending issues. Here’s Yonhap News Agency reporter Jang Yong-hun to explain what the two sides discussed during Monday’s talks.

According to South Korea’s Defense Ministry, North Korea pointed out that the spread of anti-Pyongyang propaganda leaflets to the North is becoming increasingly rampant, urging the South to take necessary measures to stop the practice. The North said that such leaflets might hurt inter-Korean economic cooperation at the Gaeseong industrial park and block the passage of South Korean nationals across the military demarcation line. Pyongyang also warned that it could deny permission for South Korean visitors to stay in Gaeseong or Mt. Geumgang. Regarding the leaflet distribution, the North said the situation is very serious. In addition, the North requested the supply of communication equipment and materials to repair inter-Korean military hotlines, as agreed upon last year.

During the recent military talks, the North took issue with the leaflet problem, which is now emerging as a major variable in inter-Korean ties. At military talks earlier this month, North Korea voiced a strong protest against the spreading of anti-communist flyers and asked Seoul to take countermeasures. According to an official of the Defense Ministry, North Korea sees this problem as very serious, calling it a, ‘grave situation.’ So, why has the North become increasingly sensitive about the propaganda pamphlets?

North Korea strictly controls its society to maintain its communist regime. The nation is extremely passive in opening up its society for fear of social laxity. The reclusive country is worried that its people may know what’s happening in the outside world. Anti-North leaflets sent from South Korea are designed to inform North Korean residents of various irregularities inside their country and what’s going on outside the country. So the North Korean authorities are on high alert against possible social agitation triggered by anti-communist flyers.

Propaganda leaflets, called ‘bbira’ in Korean, were once widespread in the divided Koreas. The Japanese pronounced the English word, ‘bill,’ meaning a handbill or a poster, as ‘bira,’ and it was called ‘bbira’ in Korea. This ‘paper bomb’ from the Cold War era was used as psychological warfare during the Korean War. The two sides floated 2.5 billion such leaflets at the time. South and North continued to send propaganda pamphlets to the other side after the war. But during a military meeting in June of 2004, the two countries agreed to stop all propaganda activities near the military demarcation line. Afterward, local civic groups of North Korean defectors began to distribute their own anti-North leaflets.

South Korean civic groups, such as Fighters for Free North Korea and the Coalition of North Korean Defectors Groups, are sending propaganda pamphlets to the North. And families of South Koreans abducted by North Korea have recently joined leaflet distribution efforts. Their goal is to let North Korean citizens know about the outside world and perceive their own society correctly. They’re also trying to help the North Koreans resist their government and defect from their country. Moreover, the groups seek to stir the North Korean regime, expecting local people to rise up against the dictatorship.

Usually, the groups send big balloons containing leaflets to the North. Controllers are attached inside the balloons, which have a thousand flyers each. And tens of thousands of such leaflets, or even hundreds of thousands of them are released in different regions all at once. The leaflets contain messages criticizing the North Korean leadership, so Pyongyang authorities have every reason to be sensitive to the leaflet distribution. But the South Korean government has simply been asking the civic groups to stop such activities because there is no legal basis to ban the groups from floating propaganda leaflets over the border.

Since the 2004 inter-Korean agreement to halt borderline propaganda activities, leaflets from North Korea have almost disappeared. But South Korean civic groups still remain committed to their distribution which is making North Korea increasingly tense. Pyongyang has broached this issue many times, even during the rule of the previous Roh Moo-hyun administration, which took a softer line toward the North. As a matter of fact, the Seoul government has no legal means to stop the distribution by civic groups, so it only asks them to refrain from the practice.

In the meantime, the Association of Companies at Gaeseong Industrial Park has made an urgent appeal. Pointing out that the already strained inter-Korean ties are worsening due to the spread of leaflets by South Korean groups, the association said companies and investors are restricted from entering the Gaeseong industrial complex and increasing cancellations of orders are threatening to put the manufacturers out of business.

If inter-Korean ties were proceeding smoothly, the leaflet problem wouldn’t significantly affect bilateral relations. But in reality, both sides have engaged in a tug-of-war over the implementation of agreements reached at two previous inter-Korean summits since the Lee Myung-bak government took office in South Korea. Relations went from bad to worse following the shooting death of a South Korean tourist at the North’s Mt. Geumgang resort last July. If South Korean groups keep sending anti-North leaflets, it is highly probable that North Korea may take extreme actions to deteriorate inter-Korean ties: The North may forbid South Korean businesspeople to stay in the Gaeseong industrial park. If that happens, they will have to commute between Seoul and Gaeseong. Or, the North may evict South Korean officials working at the Mt. Geumgang resort.

Many diplomatic experts are negative about the result of the recent inter-Korean military talks. But it is still a positive sign that North Korea proposed the meeting in an apparent bid to sound out the South Korean position. Now that the inter-Korean dialogue channel has reopened, albeit slightly, the two sides will hopefully overcome the difficulty and continue to seek in-depth dialogue. 　 [Interview] SBC Helps S. Korean Companies Expand Business into N. Korea
Businesspeople seeking to explore new markets are swarming to the office of the Small and Medium Business Corporation, or SBC. It looks like the South-North Cooperation Team is particularly busy. Team head Dong Myung-han, also called ‘living proof’ of inter-Korean economic cooperation, has been guiding many South Korean small-and mid-sized firms into the North for the past eight years.

North Korea mostly rejects technology instructions from other countries. The Small and Medium Business Corporation is the only organization to give such instructions to the North. Our staff members have been dispatched to factories in Pyongyang 17 times so far to teach local workers necessary skills. We also established 11 joint facilities inside the Gaeseong industrial park. In this way, we’ve applied domestic systems to North Korea-related businesses.

The South-North Cooperation Team was launched in April of 2000 when the government announced a plan to hold the first inter-Korean summit. The team’s purpose was to examine the business feasibility of small and mid-sized firms hoping to advance to North Korea and help them negotiate and sign agreements with the North. Mr. Dong has served as the team head since its inception, and he visits Gaeseong once or twice a month these days for business consultations. Considering profitability, he says small and mid-sized companies will lead inter-Korean economic projects for the time being. So he is making a lot of effort to provide better services to South Korean firms heading for North Korea. He has helped North Korean officials understand market systems, and they have actually created a better investment environment. He says that is the most rewarding aspect for him.

I saw 2,500 North Korean women working on the production line of a shoe factory at the Gaeseong Complex. This is a very rare scene for small and mid-sized factories in South Korea. I realized the Gaeseong industrial complex was a good alternative to develop labor-intensive industries, which have already lost their competitiveness in South Korea. For South Korean companies, North Korea has many merits, including geographical proximity. It is very advantageous to conduct processing-on-commission business in North Korea, thanks to the nation’s cheap and good-quality labor. If the general conditions for bilateral economic exchanges improve, both South and North can utilize rich mineral resources and agricultural and fisheries products in the North. Cooperation in resources development will greatly help rebuild the North Korean economy and create new growth engines for South Korea as well.

Many South Korean small and mid-sized companies have made inroads in China, but the business environment there is changing rapidly. Southeast Asian nations, including Vietnam, are experiencing economic difficulty, too. Korean firms chose China or Southeast Asia because they found it difficult to stay competitive in Korea, but they are now losing ground, even in those countries. As a result, South Korean firms are showing more interest in North Korea these days. Mr. Dong stresses that Gaeseong could be a land of opportunity, and he sincerely hopes that another inter-Korean joint industrial park will be set up in other North Korean regions, such as Nampo and Haeju.

The most difficult part is the fragile inter-Korean relations. Companies doing business in Gaeseong feel uncomfortable whenever North Korea has angry reactions to Seoul. The tense atmosphere affects businesses that have already invested a lot in North Korea or those who have just started business there, so I hope inter-Korean ties will be stabilized soon. I’d like to ask the authorities of both Koreas to be more sincere and open-minded toward the other side. A SBC office will be established at the Gaeseong complex early next year to intensify support for South Korean companies there. I hope many companies will succeed in their North Korea businesses and those involved in inter-Korean economic cooperation will be proud of themselves. I also hope an SBC office will be set up in Pyongyang as well.

Currently, there are 83 companies and 34-thousand North Korean laborers at the Gaeseong Complex. The number of factories is expected to increase to 120 by the year’s end, and some 50-thosuand North Koreans will then work there. Hopefully, as Mr. Dong wishes, the stalled inter-Korean ties will improve quickly so the Gaeseong industrial park business may contribute to the development of the economies of both Koreas.