Q+A: Why is North Korea reaching out to its foes?

Fri Aug 28, 2009 8:42am EDT

By Jon Herskovitz

SEOUL (Reuters) - The rival Koreas were expected to finish talks on Friday about resuming reunions of families torn apart by the 1950-53 Korean War, in a rare meeting as the isolated North reaches out to its foes.

North Korean leader Kim Jong-il has made a number of conciliatory gestures this month, including calls to restore business ties with the South, after his state stoked tensions with a nuclear test in May, missile launches and threats to attack its capitalist neighbor.

Following are some questions and answers about the moves:

WHY IS NORTH KOREA OPENING UP TO THE SOUTH?

The most obvious reason is money.

Impoverished North Korea's economy, already broken by years of mismanagement and global sanctions, has taken further hits this year from heavy rains that hurt its farm sector and the loss of aid from the South, which once totaled about $1 billion a year.

WHY DOES THE NORTH NEED THE MONEY?

North Korea uses foreign currency to buy items abroad needed for its military and nuclear programs as well as to purchase perks for its ruling elite and the military. Leader Kim, 67, has moved forward with his succession plans after he apparently suffered a stroke a year ago and needs the backing of powerful military and communist party figures to secure a smooth path to power for his designated heir, his youngest son, analysts said.

North Korea may also be looking to rebuild its main nuclear plant that had been disabled under a six-way nuclear deal.

WHY IS THE NORTH REACHING OUT TO THE UNITED STATES?

North Korea may be hoping to have direct nuclear talks with the United States and to decrease Washington's push to implement U.N. sanctions.

President Barack Obama's administration has indicated that it will not bend on either of these points, but would allow for bilateral talks on the sidelines of the six-way format.

IF U.S. PUSH WON'T WORK, WHY DOES THE NORTH BOTHER?

The North's conciliatory tone may sit well with neighbor China, the closest Pyongyang can claim as a major ally, and more importantly, the country that has the greatest influence on how well U.N. sanctions are enforced.

It particular, it wants to ease the impact of sanctions on one of cash-starved North Korea's important sources of foreign currency with estimates saying they are worth about 6 percent of its $17 billion a year GDP.

WILL THE MOVES HAVE ANY IMPACT ON STALLED NUCLEAR TALKS?

Analysts do not expect any breakthrough in the talks among the two Koreas, China, Japan, Russia and the United States. Pyongyang has repeatedly said it sees that process as dead and signaled it wants to talk directly with Washington.

But Pyongyang could agree to a token resumption of the talks, which would please China, the host of the often-stalled discussions. Or, there might be a deal leading to three-way nuclear talks among China, the United States and North Korea, which would also please Beijing.

HOW MUCH COULD NORTH KOREA EARN FROM THE SOUTH?

By allowing tourism to resume at the Mount Kumgang resort, located in North Korea and run by a Hyundai affiliate, Pyongyang can receive tens of millions of dollars by the end of the year.

By improving ties with South Korea, the North may be hoping for a resumption of food and fertilizer aid. The South used to send about 400,000 to 500,000 tons of rice and about 300,000 tons of fertilizer to the North each year but that has been halted since President Lee Myung-bak took office in February 2008 and took a harder line toward his impoverished neighbor.

(Additional reporting by Christine Kim, editing by Jonathan Thatcher and Sanjeev Miglani)