Bloomberg News

North Korea Defies U.S. in Readying Launch as Soon as Tomorrow

April 11, 2012

North Korea moved ahead with plans to fire a long-range rocket as soon as tomorrow in defiance of warnings from the U.S. that doing so would destabilize the region and scuttle a deal for American food assistance.

North Korea has begun fueling the rocket that will put a satellite in orbit sometime between April 12 and 16, Yonhap News cited space agency official Paek Chang Ho as telling a group of foreign journalists in the capital of Pyongyang. The launch, set to mark the 100th anniversary of the birth of state founder Kim Il Sung, is on schedule, Paek was quoted as saying.

The totalitarian regime maintains the event doesn’t violate a February deal to end long-range missile and nuclear tests in return for 240,000 tons of U.S. food. Secretary of State Hillary Clinton yesterday reiterated calls for North Korea to halt the launch plans, which have roiled markets.

“We share a strong interest in stability on the Korean peninsula,” Clinton told reporters after meeting in Washington with Japanese Foreign Minister Koichiro Gemba yesterday. “Strength and security will not come from more provocations but from North Korea living up to its commitments and obligations.”

Concern that the event is a cover for a missile test drew warnings from Gemba, who said the launch “would obviously be a violation of United Nations resolutions.” China and South Korea also have expressed concerns with the plans, which come less than four months after Kim Jong Un succeeded his father Kim Jong Il as leader.

Market Impact

A South Korean intelligence report that warned the regime is preparing to test an atomic device to follow on the heels of its rocket launch contributed to declines in the benchmark Kospi stock index this week.

While markets are closed in South Korea today for National Assembly elections, three-month non-deliverable forwards on the won declined 0.2 percent to 1,151.30 per dollar as of 1:30 p.m. in Hong Kong, according to data compiled Bloomberg. They touched 1,155.83, the weakest level since Jan. 17.

Debate also has centered on the prospect that North Korea may follow any launch with a nuclear test. Activity at North Korea’s Punggye-ri atomic testing site is consistent with preparations for previous detonations in 2006 and 2009, according to the intelligence report obtained April 9 by Bloomberg News.

Speaking to the U.S. Naval Academy in Annapolis, Maryland, after meeting with Gemba, Clinton yesterday said “recent history strongly suggests that additional provocations may follow.”

‘Timing is Impeccable’

Analysts said the totalitarian state may be seeking to sway the outcome of today’s parliamentary elections in South Korea across the demilitarized zone.

“The timing is impeccable,” said Park Young Ho, senior research fellow and director at the Korea Institute for National Unification. “Kim Jong Un is taking advantage of the domestic North Korean celebrations of Kim Il Sung to aggressively influence South Korean elections.”

Polls indicated South Korea President Lee Myung Bak’s party may lose control of the National Assembly to an opposition coalition that has pledged to improve ties with its northern neighbor. Opposition lawmakers accused the government of using the intelligence report to influence the elections.

North Korea’s ruling Workers’ Party meets today and may appoint Kim Jong Un the new party chief in one of the final steps marking his succession after the Dec. 17 death of his father, Kim Jong Il.

‘Serious Violations’

The Obama administration has said firing the rocket would breach the February food deal, which included a North Korean pledge to halt uranium enrichment at its facility in Yongbyon.

“It would be impossible to imagine” the U.S. would follow through on the food aid if North Korea proceeds with the launch, President Barack Obama’s spokesman Jay Carney said yesterday. The rocket “would represent clear and serious violations” of UN resolutions, he told reporters traveling with Obama in Florida.

North Korea’s government says it is putting a “peaceful” satellite into orbit and that it doesn’t violate the deal. Ryu Kum Chol, a North Korean space official, dismissed as “nonsense” assertions that the satellite launch is aimed at developing missile technology, the AP said. Ryu said the communications satellite is fitted with a camera to monitor weather conditions.

Bargaining Chip

Kim’s government may be using the prospect of a follow-up nuclear test as a bargaining chip to keep the food-aid deal from falling apart, analysts including Koh Yu Hwan said.

“The likelihood of a third nuclear test depends on whether the U.S. decides to keep the Feb. 29 food-aid deal following the missile launch,” said Koh, a professor of North Korean Studies at Dongguk University in Seoul. “With the nuclear preparations, North Korea is waving its nuclear card at the U.S. and telling them to make a choice.”

The North Korean rocket is expected to fly south over the Yellow Sea toward the Philippines, South Korea’s transportation ministry said in a March 20 statement on its website. The first stage of the fuselage is expected to fall 180 kilometers (112 miles) away from the South’s western coast and the second stage near the Philippines’ northeastern-most island, the ministry said.

Following the 2009 test, the UN Security Council passed a resolution condemning the move and strengthening sanctions that include letting cargo suspected of containing weapons be inspected. It also ordered the regime to admit International Atomic Energy Agency inspectors, something North Korea agreed to in February.

In November 2010, North Korea showed its Yongbyon facility to visiting U.S. scientists, including Stanford University’s Siegfried S. Hecker, who said he saw more than 1,000 centrifuges. While North Korea claims its nuclear facility is intended to generate electricity, it can be easily converted to produce highly enriched uranium for bombs, Hecker wrote in a report on the university’s website after his North Korea trip.

To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net; Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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