NORTH KOREA

European Union - North Korea Relations
(Summary of a conference held in Seoul on March 27, 2003)

The European Union and the Korean Peninsulaz
- European aid programs at work in the DPRK
- European investment in the DPRK
- Business relationships between EU Companies and the DPRK
- The European Commission's Assistance Programs in the DPRK

3 May 2003

The EU and the Korean Peninsula

Percy Westerlund

Director, External Relations

The European Commission

To understand the European Unions involvement in the DPRK, one has to keep in mind how the EU relationship with the Republic of Korea has evolved in recent years. In fact, the EU relationship with Seoul has been significantly strengthened, both politically and economically, during the past decade. President Kim Dae-jungs bold efforts to reform the Korean economy in the aftermath of the Asian Financial Crisis were greatly admired in Europe and also helped to significantly boost European investment into South Korea. President Kim also made a bold effort to break the political stalemate in inter-Korean relations by introducing the so-called "sunshine policy," which has now been succeeded by the "Policy for Peace and Prosperity." President Kim thought that containment and isolation had not been useful in dealing with the DPRK and he therefore proposed the opposite; to try to bring North Korea into the community of nations through dialogue, trade and engagement. He also appealed to South Koreas friends and allies, including the EU and its member states, to join in the process of engagement. This plea was heard and the EU has responded in a way which must be described as very positive, particularly in light of the distance between the two regions and the absence of strong historical ties.

The European Unions relations with North Korea were quite limited during the Cold War period. That began to change in 1995, when the EU responded to calls from the DPRK for humanitarian and food assistance against the background of growing economic difficulties and natural disasters. Perhaps even more important politically was the Unions participation in the Korean Peninsula Energy Development Organization (KEDO). It was back in 1995 that Sir Leon Brittan, Vice President of the European Commission, proposed to the EU member states that the EU as such should participate in the newly established KEDO, which was part of the Agreed Framework between the US and the DPRK to check nuclear proliferation on the Korean Peninsula. In 1997, the EU joined KEDO and also became a board member along with the US, ROK and Japan. This decision by the EU was of great symbolic significance. It indicated clearly C and for the first time - that it was committed to follow through on an important non-proliferation issue far away from Europe. Thus far, the EUs cumulative contribution to KEDO stands at 115 million.

The strongest impulse to EU involvement on the Korean Peninsula came with President Kims "sunshine policy;" a policy that not only profoundly impressed Europeans, but to which they could easily relate, given the recent success in ending a prolonged division of Europe through engagement and exposure of the Soviet bloc to Western European values and system.

The first ad hoc round of political dialogue between the EU troika (at the director level) and the DPRK was held in December 1998 and has continued annually since then. The first Council Conclusions on the Korean Peninsula were adopted by EU foreign ministers in July 1999, endorsing President Kims economic and foreign policy and setting out the concerns that had to be addressed before EU-DPRK ties could be developed further.

In early 2000, negotiations with Pyongyang on a bilateral food security program were held. The EUs first emergency food aid programs were subsequently converted into a more structural food security package aimed at increasing production and rehabilitation in the agricultural sector, mainly through the provision of fertilizers, agricultural products and technical assistance. Humanitarian assistance has mainly concerned medicines, winter clothing, water, sanitation and hygiene support for the most vulnerable; food aid (worth a total of 222 million since 1997) was initially channeled through the World Food Program; emergency humanitarian assistance (worth a total of 62 million since 1995) has grown over the years and the European Union has become a substantial donor, contributing altogether over 300 million. Member states contributed some 100 million worth of assistance in the same period.

The historic Pyongyang summit in June 2000 clearly raised expectations around the world and gave further momentum to the engagement policy. By late 2000, after the ASEM Summit in Seoul, most EU member states had decided to establish diplomatic relations with the DPRK. In the Council Conclusions of October and November 2000, the ongoing provision of humanitarian and food related assistance was confirmed and certain supplementary measures were endorsed, namely the opening a line of technical assistance, essentially training and capacity building in the economic and energy sectors and increasing the quotas for imports of textiles from the DPRK.

In early May of 2001, the EU took a high-profile initiative by sending a special mission to DPRK, led by the Swedish Prime Minister, Mr. G?ran Persson, in his capacity as President of the European Council, and including Mr. Patten, European Commissioner responsible for external relations and High Representative Solana. President Kim, who had asked PM Persson to take this initiative during the Swedish presidency in order to help maintain momentum for the "sunshine policy" during the political transition period in the United States, had triggered the mission. This mission allowed for a very interesting and useful five-hour dialogue with Chairman Kim Jong-il, and provided an opportunity to raise issues of concern to the EU and the international community, including non-proliferation and human rights. Chairman Kim committed North Korea to a moratorium on missile launches until 2003 and promised to visit his counterpart in Seoul while the latter was still in office. Unfortunately this visit never happened and another window of opportunity was lost by the DPRK.

Kim Jong-il demonstrated his understanding for the need to reform the North Korean economic system. Upon invitation by the EU, the DPRK sent a high-level economic delegation to the EU in March 2002 in order to better understand the mechanisms of a market economy. The parties furthermore agreed to make human rights a more important element in their political dialogue. While not exaggerating the effectiveness of such a dialogue, it does provide a useful opportunity to raise concerns and to underline the importance the EU attaches to human rights.

Shortly after the EU mission, the European Community established diplomatic relations with the DPRK. The Commission Delegation in Seoul is accredited to Pyongyang and the DPRK Embassy in Berlin to the Commission, although the respective Heads of Mission have not yet been able to present their letters of credentials due to the current political context.

The EU high-level mission was in many respects successful, but unfortunately the DPRK Government remained very guarded to the outside world as a result of its deep suspicion of the Bush administration. There were some encouraging developments last summer, such as a set of tentative economic reforms, the inter-Korean ministerial in August 2002 which enhanced economic cooperation and family contacts, and PM Koizumis historic one-day visit to Pyongyang in September to resuscitate normalization talks between North Korea and Japan. The ensuing cautious optimism, however, turned quickly negative following U.S. Assistant Secretary Kellys visit to Pyongyang last September.

The EU has expressed its deep disappointment and concern over the clandestine uranium enrichment program, and urged North Korea to dismantle the program in a verifiable manner and to come into compliance with its international obligations in the nuclear non-proliferation field, including its return to the Non-Proliferation Treaty.

The EU, while playing only a modest role in the current crisis, recognizing that the main burden falls upon the major regional partners, is nevertheless closely consulting with its partners to explore potential avenues of assistance. In principle, the EU stands ready to send another high-level delegation to Pyongyang, but will only do so if and when it is reasonably convinced about the useful role of such a mission. The key objective now should be to provide a forum for dialogue amongst the countries most concerned. In recent contacts with North Korean authorities, the EU has stressed the need to take a pragmatic approach and tried to persuade North Korea of the merits of a multilateral forum, which would also provide ample opportunities for bilateral dialogue.

The EU abstains from using humanitarian aid as a political weapon, and has continued to deliver humanitarian aid to the DPRK. A package of emergency food aid of 47.000 tons of wheat for children and nursery women (worth 9.5 million) was delivered in January, despite North Koreas withdrawal from the NPT.

Despite the current difficulties, the process towards peace and reconciliation on the Korean peninsula should and will be sustained over time. After all, the achievements so far are remarkable in the light of the history of the last half-century. The DPRK will obviously need to comply with its international nuclear commitments, which ought to be achieved through a concerted effort of dialogue and diplomacy. The international community, it is hoped, will be able to persuade the DPRK leadership that it has nothing to gain from escalating the current conflict and that it has much to gain from transparency and verified compliance. Once the current crisis is resolved, the EU stands ready, together with the ROK and other key partners, to further develop relations and cooperation with the DPRK. It is only through such cooperation that the DPRK can overcome the many hardships now afflicting its people.

EU policies on the Korean peninsula are strongly guided by South Korean leadership. We wholeheartedly support President Rohs efforts to sustain the inter-Korean dialogue and cooperation, even under these difficult circumstances. President Roh has kindly commented that the EU experience of integration could be a model for a "community of peace" in North East Asia. While there are of course important differences between Europe and Asia, there nevertheless also is an important common thread. President Kim Dae-jungs vision to achieve peace through economic and political engagement and respect of human rights, which is also the vision of President Roh, is indeed at the core of the European experience. It is a concept that has transformed Europe from a war-torn and divided continent into a prosperous and harmonious Union of free nations. It is this shared vision that makes the EU relationship with the two Koreas special and a source of inspiration.

European aid programs at work in the DPRK

H.E. Ambassador Paul Beijer

Ambassador of Sweden to the Democratic People's Republic of Korea

It is self-evident that North Korea has great humanitarian needs at the moment. The best evidence for that is really the experience of aid workers in the field in North Korea who are able to observe first-hand conditions in the country. North Koreans are on very short rations; sanitation and provision of fresh water is not a luxury that is enjoyed by more than a limited part of the Korean population; health care conditions are extremely poor. We The present conditions are largely linked to a gradual deterioration of the public infrastructure that was successfully built in North Korea in the aftermath of the Korean War, but which for thirty years has been allowed to gradually deteriorate to a point where the situation in the country now is very serious.

UNICEF and the WFP carried out a nutritional survey at the end of 2002 and found that 21 percent of the children in North Korea C and this study was based on a statistical sample of those children C are underweight; 42 percent are suffering from chronic malnutrition, and 9 percent are suffering from acute malnutrition. This is not just an issue of the provision of food; it is also an issue of the provision of medical care because very often disease and a lack of nutrition go hand in hand. Thus, the humanitarian aid that is provided by the EU, by individual member countries, and other countries C not least South Korea C is very important.

What is the link between EUs humanitarian aid activities and the broader goals of EUs policy toward North Korea? The policy that the EUs is conducting towards North Korea is based on the presumption that isolation should be overcome in the hope that North Korea will become a responsible member of the international community. The DPRK is entirely unique in terms of the rigidity of its political, economic and social structures. It is believed, however, that North Korea is displaying an interest for change, and humanitarian and other forms of aid that are provided to North Korea may actually hasten that change and make it easier.

The task facing aid workers who come to North Korea is very different from those in other trouble spots where humanitarian aid is needed. Very often, the challenge is to overcome the difficulties that are caused by a lack of administrative infrastructure. In North Korea, the opposite applies; there is a very definite and very rigid infrastructure that the aid workers have to try to work with in order to get their projects off the ground and to completion. The difficulties encountered have to do with the restrictions placed on aid workers and with the way in which the North Korean administration works. Project results as such, however, while being very important in humanitarian terms, are not the only benefit of having aid programs in North Korea. The process of working on these projects, in which North Koreans authorities at the central and local levels are confronted with new ways of doing things, new ways of tackling problems, of collaborating, of finding solutions is in itself useful. It provides them with alternatives to their way of doing things. By talking to aid workers, one gets the impression that the work that they do on an everyday basis is having an effect on attitudes and on the way in which aid projects can be carried out. There is a greater degree of flexibility today in North Korea than there was a number of years ago; there is a growing level of comfort among North Korean local authorities with the presence of foreign aid workers, a growing level of trust.

While humanitarian assistance is important in its own right, it also plays an important role in the broader goals that the EU and other countries have to assist North Korea to move forward form its present position

European investment in the DPRK

Tony Michell

Managing Director

KPMG-I.B. Consultancy Ltd.

Europes involvement in the DPRK dates from the 1970s. During the 1970s, North Korea began to order products from a number of European countries, notably Sweden, and for a brief moment North Korea was Volvo cars largest market in Asia. In the later 1970s, there was a moment of opening, and considerable activity between Europe and the DPRK took place. The largest was a syndicated loan of about US$1 billion to which more than 100 European, Australian and other non-U.S. banks subscribed.

North Koreas joint venture foreign investment law dates from 1983. There is no complete list of all the joint ventures from that time, nor at the present is there a full list of foreign companies operating in North Korea. The list of joint ventures made in the 1980s is supposed to be several hundred. Almost all of these were in the form of contractual joint ventures rather than equity joint ventures, most of which were created by Korean-Japanese investors. From Europe, the most successful was the Belgian diamond cutting operation. Most Western activity was confined to trading.

The Belgian Diamond Cutting Operation, a contractual joint venture, seemed in the early 1990s to demonstrate everything which was possible in the DPRK After enormous start-up problems on the expatriate side, the operation was running extremely smoothly. The production was very profitable and produced some of the finest small karat diamonds in the world. By using the piecework formula, the JV could avoid over-pricing by the North Koreans. In 1994-5, the Belgian partner ran into financial difficulties and the local Belgian manager acquired the interest In 1995, after some re-investment, the operation collapsed.

In the early 1990s, there was renewed interest in North Korea, provoked by the creation of the Rajin-Sonbong FETZ, and by a growing interest amongst investors in emerging markets. The S-N talks of 1991-2 encouraged the view that North Korea would become as attractive as other transition economies. The sponsorship by the UNDP of the Tumen River Area Development Program brought further interest in the DPRK market. Few companies were interested in Rajin-Sonbong, but very interested in using the zone as a back door into the rest of the country.

Some of the more significant investments of this era include:

1. Ciba-Geigy (Unconsummated)
2. Unilever (Axed by Unilever Board)
3. Shell (Frozen in 1999)
4. ING (Closed in 1999)
5. Peregrine (Survivor)
6. NNEAC (Ceased activity in 1998)
7. Emperor Group (Survivor)
8. EABC (Closed in 1997)
9. KPMG-IBC (Survivor)

In general, Europeans turned off their thoughts about investing while the Asian Crisis was going on.

Trade missions and various kinds of trade activity followed the new diplomatic recognitions of 2000-2001; re-awoke interest in the old companies with old diplomatic relations (like Switzerland and Sweden) and generally, raised the level of interest in North Korea, which had never been seen before. When these multinationals came in 2000-2002, they found a country where international aid agencies and NGOs were well established, which they had not been in 1992-93 during the early wave, and where dealing with foreigners has become much more valued than it was at the beginning of the 1990s. This openness was enhanced by the re-establishment of an entity, started in 1993, called Joint Venture Bureau. When it got finally absorbed into the Ministry of Trade and enhanced as the Korea Joint Venture Group, it became a kind of center of expertise in Korea, terminating some of the old rivalries between different North Korean institutions.

Do all the zones C Rajin-Sonbong, Sinuiju, Kumgang Tourism, Kaesong Industrial and Tourist Zone, and the potential future zones of Nampo and Wonsan C really help North Korea? They may help to generate money, but they are not really interesting for most European companies who either want to be in the whole market, or engaged in a very specific project. Thus, in some ways, the North Korean government may actually distract itself with these zones, powerful though the Sinuiju and the Kaesong Zones may well be for Chinese and South Koreans, respectively.

Significant investor activity include:

1. Pyongyang Trade Fair
2. Crocus (Peregrine legacy company) that continues to do a variety of activities, including a shareholding in the Daedong Credit Bank
3. ABB (whose representative office was opened in 2001)
4. Pyonghwa Fiat factory in Mapo
5. Pyongsu, which is a European pharmaceutical consortium of companies that opened the first private pharmaceutical factory
6. KTHDC, which is for Kaesong Tourism and Heritage to bring Kaesong up to UNESCO World Heritage Center standards
7. British American Tobacco (BAT)
8. Philips (Lighting)
9. Tetra Pak (Juice packing)

In all our designs, we have to find something that is so small that it can make money straight away. If you think the total size of North Korean GDP is probably around $15 billion, compared with $400 billion in the South, you are thinking about a market entry strategy something like half of Kangwon province in the South. In general, people who put money into North Korea do so very cautiously and do not expect to get the money back very quickly.

The main international exhibition C as of 2003, there are two annual exhibitions C takes place in the spring. In 2002, it attracted 220 different exhibitors, 165 of whom were from China, 11 from Japan, 11 from Taiwan, and the remaining 33 from Australia, Cuba, France, Germany, Britain, Singapore, Thailand, Italy and Russia.

Most of the business, and most of the money that is made in North Korea, is made by the Chinese. There are Chinese from the three Northern provinces. They know what they are doing; they have been through this experience recently. They have tripled export from North Korea into China in 2001. Indeed, the real interaction is between Chinese and North Koreans, and the evolution of these interactions is likely to be a good indicator and reference point for future trends.

The issues for any European company, or any other company, are stop-go policies. Aid, technical assistance and business are all interwoven; if one part stops, then various other rational activities that private businesses have been making towards developing investment, also fall off a cliff. Money that we might have made next year recedes into the uncertain future. Investment that would have been made this year has to be suspended.

Since October 2002, there has been a general slowdown in a range of technical assistance programs, a delay of American food aid, and so on. All these issues have serious consequence for people that are trying to change Korea; that is to say, the businesses that are really opening up the system. They are trying to defend those market reforms, and give North Korea the resources to become a market economy, but are let down by their governments. Businesses in general see their operations or planned moves retarded by American legislation.

There is currently also a general lack of investment protection treaties. North Koreans expect you to be within six months of your projected timetable, which is part of your business application. If you buy a plot of land in Pyongyang and have not done anything with it within a year, you must likely have lost your right on it. Investment protection is urgently needed.

Issues for European companies operating in the DPRK include the switch from dollar to euro, which has created a kind of foreign exchange inflation.

The lack of a reconstruction bank. Without World Bank, without ADB, without being beyond the boundary of the European Bank for Reconstruction and Development, it is really hard to find money or guarantees or any kind of security for projects that make sense. ABB has probably 20 good projects for renovation of mines or factories that would export. The payback would be in dollars, but no bank is prepared to lend to North Korea because of the unpaid debt. No international funding institution exists. These are profitable projects, but the legacy of the past C whether of the Korean War or of the unpaid debt in the 1980s and 1990s C lies heavily on the DPRK. And that acts as the biggest break for business.

Business relationships between EU Companies and the DPRK

The EU Chamber of Commerce in Korea and the DPRK

Joseph Day

Entry Management Services Co., Ltd.

Chairman, EUCCK Pharmaceuticals Committee

In 1994, the EUCCK started its first ever North Korea activity by organizing a Seminar in Seoul on the Rajin-Sonbong Economic Zone with the participation of UNDP officials, then based in Washington and Pyongyang and various Korean and Foreign experts. (Tony Michell was among them). For this event the Chamber invited North Korean representatives from the Administration in charge of the Zone but unfortunately they failed to obtain their South Korean visas, as this was definitely before the implementation of the Sunshine policy.

As a follow up EUCCK set up a fact-finding mission by chartering a helicopter from Pyongyang to tour the Zone, with a group of European businessmen based in South Korea. A few months later, with the interest in North Korea rising sharply among the European business community, the Chamber set up a " North Korea Committee" in line with its other sectoral committees. This started our regular activities on North Korea.

The sensitivity of this Committee at that time was well recognized and the Chamber drafted a Committee Charter that stressed its non-political character and described the Committee as a "Forum where members exchange information on the developments in North Korea as far as they may have an influence on the development of business opportunities."

The activities of the Committee are confined to:

1. Exchange of information within the members
2. Updating the members on specific topics by inviting outside speakers
3. Organization of fact-finding missions and participation in the DPRK trade fairs as requested by members

Since its creation the Chambers North Korea committee has sent to DPRK more than 110 European businessmen, most of whom were based in South Korea or neighboring countries, some focusing on particular industry sectors.

The expectation of these missions has not been to strike deals on the spot but rather to give the opportunity to European businessmen to gather first-hand information on the country and to start building connections with potential counterparts there. Obviously, each enterprise must decide its own strategy towards North Korea and develop the extent and style of follow-up visits.

More recently, the EUCCK has been heavily involved in the promotion toward European industry of the first ever (really) International Exhibition in the DPRK, which has been organized by Messe Mnchen and takes place in September later this year. More than 60 European companies will be represented.

Earlier this year at the end of January the Chamber organized the first-ever European business mission to visit the Sinuiju Special Administrative Region since the Zone was promulgated.

Recognizing that most of our interlocutors in Pyongyang are currently extremely eager to learn about international practices, the Chamber has decided that during each mission two- to three-hour long information seminar will be organized in a particular field by one of the European participants for their relevant North Korean counterparts. The seminars will be hosted within the facilities of the DPRK Red Cross. As an example, the EUCCK's next mission in April will deliver a presentation on "International Customs Practices and Modern Logistics" to customs officials, transportation companies and relevant ministries officials in Pyongyang. On that occasion, data on European and South Korean customs laws will be distributed together with other related materials.

Since the implementation of the Sunshine Policy and the beginning of diplomatic relations between thee DPRK and the European Commission, the Chamber has noticed a sharp increase of interest from the European business side to develop more regular and professional ties with North Korea.

Currently the EUCCK is limited in its ability to assist companies in developing their activities in the North, as it does not have a permanent establishment there that could handle requests from members. The reasons are purely financial, since without external support such an additional permanent structure constitutes a heavy burden for a National Chamber of Commerce. Still, the Chamber is currently discussing with the relevant DPRK authorities the establishment of a "Business and Information Exchange Center" in Pyongyang jointly managed by the Chamber and a very reliable North Korean counterpart.

This Center, scheduled to officially open this year, will be able to provide basic services to European companies such as advice on the rent of office space, the provision of in depth studies and various logistic assistance such as the organizing of meetings, visit schedules, staffing, visa support and other regular consulting activities that will help finance the Center.

Furthermore, the Center will act as a one step patent and trademarks registration office for European companies wishing to protect their brands and know-how in DPRK. The Center will also develop training schemes for European companies wishing to train DPRK specialists so that they can become efficient and reliable counterparts when back in their own country.

Already the EUCCK plans to send to Europe this year a small number of North Korean students to study in various universities that have already agreed to sponsor North Korean students.

As the Centre has been conceived under the idea of exchange, the Chamber will also provide information on European practices in a wide number of fields and will organize regular information seminars as explained earlier, so it can become a tool for exposing the widest possible range of policy makers, civil servants and technicians to international and European practices.

The European Commission's Assistance Programs in the DPRK

Maria Castillo-Fernandez

Desk Officer for Korea

External Relations Directorate, European Commission

The presentation focuses on the wide range of activities that the Commission has implemented and is currently implementing in North Korea. The overall European Commission assistance reaches nearly 400 million. The main activities have been focused on humanitarian assistance and food aid. The aim is to shift now more into development cooperation or technical assistance activities. KEDO has also been a significant part of overall European engagement on the Korea peninsula.

European Commission activities in North Korea generally can be broken down into three phases:

1. Starting point (1995): Korea made a plea to the international community for food aid
2. Further Opening (2000): The moment of the inter-Korean summit, and the reaction from the EU to be more open towards the North
3. Current situation (2003): Future activities will depend on the political situation, and resolution of the nuclear crisis

The European Commission started its operations in 1995, mainly with humanitarian aid. The emergency aid packages in 1995-96 were mostly medicine-related. In 1997, operations were dramatically increased. The Commission sent a first independent evaluation mission to the DPRK to assess the overall humanitarian situation. As a result of that mission, a coordinated strategy was set up, focusing on two main components: food aid packages, and humanitarian emergency assistance programs. The Commission also agreed to open a Technical Assistance Office in Pyongyang, which would be in charge of following the implementation and monitoring of all food and humanitarian aid.

The humanitarian assistance program is worth a total of 62.3 million since 1995. It has provided the DPRK mainly with medicines, winter clothes, water, sanitation and hygiene in support to the most vulnerable. The food aid/food security program, worth 272 million since 1997, was initially a program providing food through the WFP and EU NGOs. It has been increasingly oriented towards agricultural rehabilitation and production, with a view to a more sustainable approach towards increased food security. Since 2000, the Commission continues to provide a food aid package via WFP ( 4-5 million per year). But, the main pillars of the food security activities are now fertilizers, complemented with agricultural rehabilitation projects. The agricultural rehabilitation projects cover various actions, rehabilitation of polders, of the network of drinkable water and the irrigation system, basic repair and maintenance of farm machinery, farm management training, etc.

Around 2000, the donor community in Pyongyang felt a need now to combine emergency aid with long-term development cooperation to allow the DPRK to take steps towards structural reform and economic development. In October 2000, the Council allowed the Commission to start preparations of technical assistance projects in the DPRK.

The Commission started preparation for a development cooperation program for North Korea in February 2001, sending an expert mission to the DPRK to assess the DPRKs needs in terms of technical assistance. Based on the results of that mission, the Commission, in agreement with the DPRK, prepared the Country Strategy Paper for 2001-2004, which was adopted in February 2002 and outlines the strategic framework and objectives for development cooperation activities in the DPRK. These objectives include:

1. Institutional support and capacity building for economic development
2. Sustainable management and use of natural resources, including access to sustainable energy services
3. Reliable and sustainable development actions in the transports and rural sectors

The Commission also started the preparation of two technical assistance pilot projects in the fields of capacity building and training in market economic principles and improving the efficiency of the DPRKs energy sector ( 1million each). Projects preparation is almost complete and implementation could start soon.

Following the objectives set up in the CSP, we have also adopted in July 2002 a National Indicative programme for 2002-2004, were three concrete follow up actions are foreseen, subject to the implementation of the pilot projects and if political conditions allow:

1. Institutional building and training programme (7M): to strengthen the capacity of key institutions to define the necessary economic development policies and to adapt to international economic practices
2. Efficient management of the energy sector (3 million) to transfer basic management skills for the rational use of energy sector, improve energy efficiency and savings
3. Sustainable rural development actions in support to the rehabilitation of the agricultural sector (5 million)

For the moment and because of the current political situation on the Korean Peninsula, the implementation of these actions has not yet started. The Commission will, however, continue to deliver humanitarian assistance and food aid as agreed by our Foreign Ministers on the 19 November 2002.Member States have also developed technical assistance activities for the DPRK, even if these are on a smaller scale than those of the Commission: Germany has some trainees in agriculture, architecture and IT; France has North Korean stagiaires in architecture, administration and social sciences as well as language training; Sweden organizes training courses on human rights and market economy; and the UK has capacity building projects in the economic sector, some human rights training and language training.