South Korea will increase its Inter-Korean Cooperation Fund to more than KRW 1.1 trillion (USD$991 million) for 2019, while reducing annual spending on resettlement funds for defectors and its controversial North Korean Human Rights Foundation.
The changes — announced by the Ministry of Unification (MOU) in a new budget announcement on Tuesday — mark a 14.3 percent increase in cooperation fund spending and respective decreases of 31.6% and 92.6% for resettlement funding to defectors and human rights foundation support.
In particular, Seoul will expand financial support for inter-Korean cooperation projects by KRW138.4 billion ($125 million) next year, a substantial increase.
The MOU said it had compiled its 2019 budget by focusing on areas that would support implementation of inter-Korean agreements as outlined in the Panmunjom Declaration and related policy areas.
Within the budget ear-marked for inter-Korean cooperation, the Moon administration will next year allot KRW429 billion ($386 million) to economic projects, the MOU explained, marking an increase of KRW159 billion ($143 million).
Meanwhile, pro-bono support levels will be increased 24.7% to KRW 309.3 billion ($278 million), while spending on economic cooperation in the shape of loans will rise sharply to 119.7 billion ($108 million), up 498.3 percent.
But the unification ministry said that project expenses related to the connection and modernization of railways/roads and forestry cooperation would only be materialized after further inter-Korean consultations.
“Projects which can be pushed forward under the current situation will proceed in consultation between the South and the North,” the unification ministry said, without providing further details.
“But we plan to push ahead with projects (impacted by) sanctions on North Korea after (favorable) conditions are established in accordance with progress on discussions on the denuclearization of North Korea.”
Until then, the Inter-Korean Cooperation Fund will be able to fund projects including the “New Economic Map Initiative of the Korean Peninsula,” which was unveiled as part of the Moon administration’s policy roadmap in July last year.
The map is composed of three economic belts connecting to so-called “Northern economy” including China and Russia: an energy-resource belt in the eastern coast, an industry-logistics and distribution-transportation belt on the western coast, and an environmental tourism belt on the Demilitarized Zone (DMZ).
“It is expected to build an economic order of peace and prosperity on the Korean peninsula and in Northeast Asia and to create a new growth engine for our economy,” the unification ministry said.
And the MOU said it would augment spending on reunions of separated families, among others, to “promote sustainable development of inter-Korean relations.”
Despite the various changes, the MOU said that it had minimized the overall need to increase Inter-Korean Cooperation Fund support by scaling down on aid projects previously earmarked for the North and making savings in other areas.
The amount of food aid to the DPRK would, for example, be reduced from 300,000 to 100,000 tons when compared to 2017, which would lead to budget reductions of KRW132.1 billion ($119 million).
And the MOU’s overall budget will decrease some 4 percent next year, to KRW218.4 billion ($197 million), due to a sharp decline in spending on the North Korean Human Rights Foundation and in its provision of resettlement funds to defectors.
Allocations for the state-run human rights foundation, in particular, will be decreased from KRW 10.8 billion ($9.72 million) to KRW800 million ($720,072), down 92.6 percent, which is the “minimum budget” for the launch.
While the North Korean Human Rights Act — which was passed in March 2016 — stipulates that the government shall establish the organ, the process has been delayed as political parties have not been able to agree on nominees for the board of the directors, which means the necessary articles of association cannot be passed.
The budget changes follow June seeing the unification ministry closing its human rights foundation offices, citing “unnecessary financial loss(es).” It explained that around KRW63 million (USD$57,000) had been paid monthly for rent, even though the office was empty.
Meanwhile, the budget allocated for resettlement funds for North Korean defectors will be reduced to KRW 39.9 billion ($36 million) annually, down 31.6 percent, as the number of people escaping to South Korea has decreased in recent years.
The number of North Korean defectors arriving in the ROK during the first half of 2018 fell by 17.7% compared to the same period in 2017, according to statistics released by the unification ministry. A total of 1,418 and 1,127 North Korean defectors entered the South respectively in 2016 and 2017.
The Moon administration will submit its budget proposal to the National Assembly in September, and it is expected to be finalized in December.
Edited by Chad O’Carroll
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