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(LEAD) Seoul's budget for inter-Korean cooperation remains untapped

All Headlines 13:52 October 07, 2009

(ATTN: UPDATES with ministry spokesman's comments in last two paras, minor edits in paras 7, 8)

SEOUL, Oct. 7 (Yonhap) -- South Korea has so far this year spent less than 5 percent of its annual budget earmarked to promote reconciliation with North Korea, the Unification Ministry's data showed Wednesday.

The meager spending of the inter-Korean cooperation budget mirrored stagnant economic exchanges yet to be enlivened despite a recent thaw in political relations.

The data showed that South Korea has set aside 1.16 trillion won (US$990.94 million) for this year's inter-Korean cooperation budget, which includes 43 billion won transferred from last year, to support joint business projects and provide industrial and humanitarian aid to the North.

The budget spending as of the end of September amounted to 55.9 billion won, 4.8 percent of the total, according to the data.

In a detailed breakdown of expenditures, the ministry spent 10.6 billion won, or 11.3 percent of the 93.8 billion won budget earmarked for the South Korean-run factory park in the North's border town of Kaesong. Planned projects to build a dormitory for North Korean workers and modernize roads there have also not begun. The Kaesong park hosts about 110 South Korean firms with 40,000 employees from the North.

Humanitarian aid was the area in which funds were held back most. Out of the earmarked 819.8 billion won, the ministry has spent a meager 0.9 percent, or 7.7 billion won, so far. Unification Minister Hyun In-taek said in a parliamentary audit Tuesday that Seoul will decide when to resume its rice and fertilizer aid, crucial to food supplies in the North, after "considering the climate of future inter-Korean relations."

The conservative government of President Lee Myung-bak suspended the decade-long rice and fertilizer aid after taking office last year with a tougher stance on the North's nuclear weapons program.

After a long stalemate, political relations now appear to be improving following conciliatory moves by the North. The two sides recently held reunions for families separated by the 1950-53 Korean War, the first such reunions since Lee came to power.

In talks with visiting Chinese Premier Wen Jiabao on Monday, North Korean leader Kim Jong-il suggested his country would return to the six-party talks aimed at ending its nuclear drive. Pyongyang quit the talks earlier this year.

But despite the positive signs, Seoul's unification minister said, "I believe such massive food aid is outside the boundary of what can be seen as minimum humanitarian aid," adding that Seoul "cannot help considering the climate of future inter-Korean relations."

For social and cultural exchanges, the ministry spent 2.2 billion won, or 25.3 percent of the earmarked 8.7 billion won. Loans for inter-Korean cooperation projects amounted to 11.3 percent, or 21 billion won out of 186.6 billion won.

Explaining the withheld spending, ministry spokesman Chun Hae-sung cited North Korea's long-range rocket test in April and its nuclear test the following month that drew punitive U.N. sanctions. South Korea supported the financial and trade sanctions aimed at curbing cash flows that could be diverted towards the North's nuclear and missile programs.

With the nuclear and rocket tests, "inter-Korean relations faced many difficulties in exchange and cooperation projects and many other areas," Chun said in a press briefing. "We believe the budget execution was held at a low rate because cooperation and assistance projects could not be pursued as planned."

hkim@yna.co.kr
(END)

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