North Korea's industries crippled by U.S. cutoff of oil aid

East - Asia Intel Com

10 December 2003

The yearlong suspension of U.S. fuel oil supply to energy-starved North Korea has damaged Pyongyang's main industries and hampered the long-awaited revival of a moribund economy, South Korean officials say.

The North's chronic energy shortage has deepened after the United States stopped an annual shipment of 500,000 tons of fuel oil a year ago. As a result, many factories have shut down, a according to Unification Ministry report issued on Dec. 8.

"Power was frequently going out at industrial factories because of an acute energy shortage in the wake of the suspension of U.S. oil aid," said the report on the North's industrial activities.

As the centrally controlled industries have cut costs and jobs due to the energy shortage, a growing number of factory workers have created a new class of urban poor, a ministry official said.

To cope with its acute electricity shortage, the North has launched "a three-year campaign to resolve the energy problem" beginning this year. It cited the electricity shortage as the biggest obstacle to economic development.

The U.S. and its allies have suspended free oil shipments to the North since December last year in retaliation for Pyongyang's revival of its nuclear weapons program.

Under a 1994 deal, heavy oil and two light-water reactors were rewards from U.S.-led allies in return for Pyongyang's promise to freeze its Soviet-designed weapon-grade plutonium producing graphite-moderated reactors.

The allies also have recently halted construction of two light-water reactors in North Korea, citing concerns over Pyongyang's nuclear weapons ambitions.

In order to make up the loss of fuel oil, the North has imported energy from China, its only remaining communist ally, according to the Korea Trade-Investment Promotion Agency in Seoul.

North Korea imported 10 million kilowatts of electricity from China from January to October this year, a sharp increase from 170,000 kilowatts a year earlier, it says.

A South Korean official said North Korea would hold talks this week with the U.S.-led KEDO consortium that had been building the two light-water reactors.

The North Koreans are expected to call for the resumption of energy aid during the talks scheduled for Dec. 10-11, he said. The talks would be the first contact between North Korea and the consortium since the nuclear dispute flared a year ago.

East-Asia-Intel,, December 9, 2003
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