Seoul mulls suspension of rice aid to N. Korea

With North Korea continuing to stall for time over the shutdown of its nuclear reactor, the South Korean government is torn over whether to go ahead with its planned humanitarian rice aid.

The government is likely to make a decision today whether to go ahead with the inter-Korean economic cooperation talks this week, where the provision of 400,000 tons of rice aid would be discussed.

"We will be deciding whether to hold the inter-Korean economic cooperation talks slated for this Wednesday as scheduled," a Unification Ministry official said on condition of anonymity.

Over the weekend, the South Korean government also discussed whether to cancel its purchase of 50,000 tons of heavy fuel oil that was being stored at Yeocheon. The oil was ready to head to North Korea as part of the incentives in return for the shut down of nuclear facilities.

This undated file photo shows South Korean trucks loaded with rice heading for North Korea. [The Korea Herald]

The dilemma of the South Korean government over whether to separate its resumption of humanitarian aid from the development of the six-party talks is also causing discord within the administration.

Unification Minister Lee Jae-joung and Vice Minister Shin Un-sang have both said earlier this month that rice aid would be delivered regardless of the nuclear dismantlement process.

The Foreign Ministry, however, was more cautious, saying it remained to be seen whether North Korea will follow through the timetable as planned before resuming humanitarian aid.

The entire schedule of implementing the Feb. 13 agreement has been botched due to North Korea's demands over its funds at a bank in Macau.

Although the Macau authorities and the United States agreed to lift the freeze for North Koreans to freely use the funds, Pyongyang is yet to make a move on its pledge to shut down its reactor as part of the six-party talks agreement.

The $25 million worth of North Korean accounts had been frozen at Banco Delta Asia following Washington's sanctions against the bank for North Korean money laundering in 2005.

After failing to meet the 60-day deadline for North Korea to shut down its nuclear facilities last Saturday, the United States and other six-party members agreed to give Pyongyang more time.

South Korea, which had agreed to be the sole provider for the first batch of oil aid to North Korea, is likely to suffer a large financial loss due to the delay.

The government used state budget money to purchase the 50,000 tons of heavy fuel oil, worth 20 billion won ($21.5 million), from GS Caltex about three weeks after the Feb. 13 agreement. The government also chartered three oil vessels from a Chinese company for use between March 24 and April 20. According to the Unification Ministry, it costs about 10 million won a day to maintain the heavy fuel oil currently stored at a factory in Yeocheon, South Jeolla Province.

It also costs 70 million to 80 million won a day for leasing the ships. In total the South Korean government would spend over 3.6 billion won in vain in canceling the purchase and the lease.

Sources said the South Korean government will decide today whether to cancel the four-day economic talks in Pyongyang or exclude the provision of rice from the agenda of the talks.