By Kim Yoo-chul
Staff Reporter
Seoul has renewed its call for the establishment of a regional bank aimed at financing economic development in North East Asian countries, including North Korea.
The call is significant as Finance and Economy Minister Kwon O-kyu floated the idea for a second time after the two Koreas announced a summit meeting between the leaders of their countries from Aug. 28-30.
But the initiative will be put on the backburner until the United States and North Korea establish diplomatic ties after Pyongyang completely dismantles its nuclear weapons program, many diplomats here said.
Even if Washington-Pyongyang ties are restored, the projected regional body, named the Northeast Asian Development Bank, faces many hurdles. The projected institution will overlap with the Asian Development Bank, the IMF and the World Bank, which are not so accommodative to the creation of a new bank, a source well versed in these organizations said.
However, Seoul officials said the bank is necessary to help such countries as China, Mongolia, eastern Russia and North Korea.
The idea was floated first when then Deputy Prime Minister and Finance-Economy Minister Han Duck-soo delivered a keynote speech at an APEC meeting last year that the international community should review the establishment of the bank that would be initially be capitalized at $20 billion to $30 billion.
`` Seoul wants to reduce its financial burden and secure cash sources by setting up an international organization because the government has limits in raising funds to help North Korea finance its public infrastructure, `` said a Ministry of Finance and Economy official.
Last week Rep. Yim Tae-hee of the main opposition Grand National Party made public a report by the state-run Korea Development Bank, which projects that the South needs at least 60 trillion won for North Korea’s economic reconstruction over the next 10 years. The report said only half of the money, some 30 trillion won, will be collected through additional taxes and increased issuance of government bonds, with the other half to be financed from borrowing and investment from international banks.
State-funded think tanks raised the need to form an international consortium to help North Korea, including a plan to set up the Northeast Asian Development Bank. Officials say the new bank would be a reasonable means to cover shortages in financing.
yckim@koreatimes.co.kr
