South Korea gave North Korea an astronomical US$2.98 billion during the Kim Dae-jung and Roh Moo-hyun administrations from 1998-2008, according to a government tally announced Thursday. That is 1.5 times more than the amount of aid China gave to North Korea over the same period, which totaled $1.9 billion.
The government and private businesses gave North Korea $1.84 billion through commercial trade, $544.23 million for package tours to the Mt. Kumgang resort, $450 million for an inter-Korean summit, $41.31 million in land use fees and wages for North Korean workers at the Kaesong Industrial Complex and $30.03 million as part of various social and cultural exchanges, according to internal documents of the Unification Ministry and other government agencies.
◆ Funds to Develop Nuclear Weapons
"North Korea is believed to have spent $500-600 million to develop long-range missiles and $800-900 million to develop nuclear weapons," a South Korean government source said. "And the cash provided by South Korea could have been used to develop them."
Former government officials during the previous administrations deny this. Lee Jae-joung, a former unification minister, said in a lecture in July last year, "It's frustrating to hear claims that North Korea conducted nuclear tests using money that the Kim Dae-jung and Roh Moo-hyun administrations gave. So far the government offered cash to North Korea only once."
He claims that the government was not responsible for paying North Korea $450 million for the first inter-Korean summit in 2000 as that was provided by private businesses together with the cash for the Mt. Kumgang package tours and the Kaesong Industrial Complex.
However, the whereabouts of the cash payment of $400,000 Lee admits to is also uncertain. That was the money North Korea demanded in April 2007 to build a video-link center for the reunions of families separated by the Korean War. North Korea has yet to start construction. "I think they just extorted the money," a South Korean government official said.
◆ Hungry for Cash
"North Korea demanded money for every event," said one Unification Ministry official who was in charge of humanitarian cooperation projects during the Roh administration. "We got the feeling that North Korea was trying to use the reunions of families separated by the Korean War as a means to make money." The North even demanded that South Korea pay $1,000 for each video clip exchanged by families in addition to all of the filming and editing equipment as part of a project back in 2007 that would allow some separated families to stay in touch via video messages, the official said.
A National Assembly audit in 2006 revealed how North Korea made money off South Korean broadcasters. A key example is the W1 billion (US$1=W1,149) that state-run South Korean broadcaster KBS gave North Korea in 2003 to record a TV show about a singing contest in Pyongyang to mark Liberation Day.
In 2005, SBS gave W700 million in cash and W200 million worth of paint and other goods to North Korea for a concert in the North Korean capital by South Korean singer Cho Yong-pil, while in 2002, MBC paid the North W320 million in cash and provided 5,000 TV sets (worth W734 million) for two concerts in Pyongyang by South Korean singers Lee Mi-ja and Yoon Do-hyun.
North Korea also received sizable amounts from South Korean businesses and civic groups through unofficial channels or backroom deals. "Many business owners in the South had problems managing their companies because North Korea habitually made excessive demands for money," said Cho Bong-hyun, a researcher at the Industrial Bank of Korea's economic research center
This suggests that a considerable amount of bribes were paid. One South Korean owner of a garment company that was based in Pyongyang said, "Bribes South Korean businesses paid in the early stages to prevent any problems later became customary. After North Korean officials got a taste of the money, they ended up asking for bribes first."
A Unification Ministry official said, "It's impossible to estimate how much money was given to North Korea through unofficial channels. We can't even trace the use of official government money given to North Korea, such as the $400,000 for building a video-link center for the family reunions, so there is no way of telling what happened to money handed over under the table."