The South Korean government of President Moon Jae-in looked for ways to start tourism-related businesses in North Korea while circumventing international sanctions, according to a new report from a domestic magazine. The plan included 23 trillion won ($20.5 billion) worth of projects aimed at boosting the tourism industry in North Korea.
The Monthly Chosun magazine recently acquired multiple research reports conducted by a private law firm and a group of experts at the request of the Korea Tourism Organization (KTO), a government institution under the Ministry of Culture and Tourism.
The first research report was prepared by one of South Korea’s major law firms. The project began on June 7, 2018, and it was finalized on June 30, 2018. The 74-page report described legal issues surrounding the inter-Korean tourism projects and ways to resolve them. One part of the report is as follows:
“Regarding the Mt. Geumgang tourism project, the most efficient way to avoid U.S. sanctions against North Korea is to have domestic entrepreneurs, who do not have assets that will be frozen in the United States, take major roles in this and pay them in cash.”
The report specifically pointed out the element of U.S. unilateral sanctions against North Korea that prohibits “all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any U.S. person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” That section of the sanctions bill prohibits people from being involving in transactions involving armaments or related materials, luxury goods, bulk cash smuggling, and many other categories. The report’s recommendation was for people who have no assets in the United States, or non-U.S. persons, be involved in the inter-Korean tourism project.
The timing of the proposal for the service report is very important. President Moon and Kim Jong-un signed the so-called Panmunjom Declaration on April 27, 2018, and Article 1, Section 7, of it states that “the two sides agreed to actively promote the projects agreed upon in the October 4 declaration in order to achieve the balanced development and co-prosperity of the nation’s economy, and to take practical measures to relink and modernize railways and roads on the eastern and western coasts on a priority basis for their active use.”
The KTO’s top position was vacant at the time of the first summit between Moon and Kim. Ahn Young-bae, the former deputy head of the South Korean Government Information Agency, was appointed the new president of the state-run KTO on May 17, 2018, a few weeks after the first summit. Ahn worked as the editor-in-chief of Media Today, a left-leaning online news outlet in Korea, and worked as public relations secretary during the leftist Roh Moo-hyun administration. Ahn’s appointment was criticized, as he lacks a background in tourism.
The research project between the KTO and the law firm was signed through a private contract. The total cost of the project was 22 million won. The research paper was finalized within a month of the contract being signed. “This kind of service project takes at least three months to be completed, but this took less than a month,” a source at the National Assembly told the Monthly Chosun. “The purpose of this project was to come up with ways to support North Korean tourism by circumventing international sanctions, and there is a high possibility that this reflected President Moon’s strong will.”
Moon Jae-in visited North Korea in September 2018 and announced the Pyongyang Joint Declaration. Article 2, Section 2, of the declaration states that “the two sides agreed, as conditions ripen, to first normalize the Gaeseong industrial complex and the Mt. Geumgang Tourism Project, and to discuss the issue of forming a west coast joint special economic zone and an east coast joint special tourism zone.”
In April 2019, the KTO proposed another report to a private firm. The amount of the project was 183 million won, and the final report was released on November 15, 2019. The report came up with “plans for peaceful tourism in the Korean peninsula” by dividing the peninsula into four big regions. The report suggested that it will cost about 23 trillion won to conduct these tourism projects. The plan included modernizing Pyongyang and establishing and remodeling high-end resort complexes in various regions, including the one near Mt. Baekdu.
One of the problems discussed in the report was how to attract the vast amount of funds needed for the projects. The report suggested that official development assistance (ODA) funding from the international community would surge if North Korea’s denuclearization becomes a more realistic or feasible goal. The report said that the government can attract investment from domestic companies such as Daewoo, SK, and Hyundai, and other international non-government organizations like the Bill and Melinda Gates Foundation, Wellcome Trust, and the Ford Foundation.
When asked about alternatives if the procurement of funding fails due to international sanctions, the KTO told the Monthly Chosun that “it didn’t consider that situation yet.” The KTO gave the same answer to the magazine’s question about what the South Korean government is going to do if they profit from inter-Korean tourism projects.
Many international experts repeatedly expressed concern about North Korea acquiring funds for its tourism industry and using the profits for military purposes.
“There is suspicion that the South Korean government is planning to carry out a 23 trillion-won project for North Korea, and this government is the (Moon Jae-in) government that allegedly already considered building a nuclear power plant worth around 5 trillion won in North Korea,” argued the Monthly Chosun article. “One of the biggest problems is that the tourism industry is a niche market for North Korea in which it can easily earn foreign currency. This means that Kim Jong-un can make money without having to do anything if South Korea does it all for them.”
