Tue, Nov 26, 2002 - Page 1 News List

Oil cutoff spurs N Korea to outlaw use of US dollar

AFP , SEOUL

North Korea has reportedly ban-ned the use of US dollars in what experts in Seoul speculated yesterday was retaliation against Washington's suspension of fuel oil supplies to Pyongyang.

The Stalinist country has adopted euros as an alternative international payment, China's Xinhua news agency reported.

Quoting a letter sent from the state-run Korean Trade Bank, Xinhua said foreigners and North Koreans were advised to convert US-dollar accounts into euros or other currencies this month.

The dollar ban was imposed on North Koreans Nov. 18. Foreign residents are required to convert their dollars by Sunday, the bank's letter said.

Come next month, the greenback will no longer be accepted in hotels, foreign-related shops or as payment for services in North Korea, a Korean Trade Bank official told Xinhua.

South Korea's Unification Ministry said yesterday it had yet to verify the news report, while North Korea's media remained silent.

Dong Yong-sueng, chief researcher at Samsung Economic Research Institute in Seoul, said Pyongyang's reported move reflected anger with a US-led decision to suspend fuel oil shipments to North Korea over its suspected nuclear program.

"I see more of a political motive than an economic one behind the North's decision because US dollars are preferred to euros in international trade," Dong told the English-language Korea Herald.

Under a 1994 accord with the US, North Korea agreed to freeze its nuclear activities in return for the US-led provision of two light-water nuclear reactors and 500,000 tonnes of heavy oil a year.

But the deal has all-but foundered since the US revealed last month that Pyongyang had admitted developing nuclear weapons in violation of the Agreed Framework.

The suspension of oil supplies precedes by just weeks the harsh winter months normally faced by North Korea.

"The present grave situation is pushing the DPRK [North Korea] to the phase where it cannot respect the Agreed Framework any longer," Rodong Sinmun, the North's ruling communist party newspaper, said in a commentary yesterday.

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