N. Korea sells gold for birthday bash: Traders

N. Korea sells gold for birthday bash: Traders

SEOUL (Reuter): Hungry North Korea sold a huge batch of gold to the South last month, not to buy food but to fund a lavish party to mark the birthday of the late "Great Leader" Kim Il- sung, traders said yesterday.

The impoverished country, on the brink of famine, exported gold ingots worth US$19.8 million to its wealthy neighbor during the month, unification ministry figures showed.

That came on top of gold sales by the North worth $9.3 million in March.

"We got many calls from the North in April," said a trader at a Seoul bullion house. "They said they wanted hard currency in exchange for gold to pay for birthday celebrations for the 'Great Leader'."

Pyongyang spared no expense on celebrations marking the 85th anniversary of the birth of the founder of Stalinist North Korea on April 15. Kim Il-sung, whose son Kim Jong-il is now in charge, died in 1994 and is still deeply mourned.

Official North Korean media at the time gave details of feasting, gymnastics displays and a circus. Foreign guests were entertained at an international arts festival.

Although North Korea desperately needs grain to feed its hungry people, there were no reports of any major overseas food purchases by the country last month, grains traders said.

Pyongyang concluded a deal in early April to buy 20,400 tonnes of wheat worth $4 million from U.S. grains giant Cargill Inc. But that was a barter deal in return for 4,000 tons of North Korean zinc.

North Korea extracted a pledge for 51,000 tonnes of food aid from the South's Red Cross during talks in Beijing that ended Monday.

The United Nations estimates that 4.7 million North Koreans, almost one fifth of the population, face starvation this year unless massive food aid gets through.

North Korean gold sales to the South in February were just $820,000 and in January $719,000. In April last year they were $2.7 million, and for the whole of last year $58.8 million, according to the ministry data.

Gold shipments accounted for two thirds of North Korea's total exports to the South last month worth $29.5 million, the figures showed.

South Korea shipped goods to the North worth $7.9 million during the month, but this figure included Red Cross food aid and heavy oil donated by an international consortium led by South Korea, the United States and Japan.

Total cross-border transactions in April of $37.4 million set a monthly record. The figure for the same month last year was $15.9 million.

Traders said North Korean bullion was particularly attractive because inter-Korean trade was not subject to any import tax.

Currently, South Korea imposed a three percent tax on imported gold.

The two Koreas have been technically at war since their 1950- 53 conflict ended in a truce.