Diplomat: North Korea demands 20 percent hike in rent for foreign embassies

Diplomat: North Korea seeks hike in embassy rent

SEOUL, South Korea — North Korea has demanded a hike in rental fees for foreign diplomatic missions and international organizations in Pyongyang, a diplomat said Friday, in what could be a move to raise foreign currency amid tightened international sanctions.

The United Nations slapped new restrictions on North Korea following its second nuclear test last year. They ban the country from exporting arms and call on international financial institutions to halt grants, aid or loans except for humanitarian, development and denuclearization programs.

North Korea informed embassies and international organizations last year that it would raise rental fees for their offices and living accommodation by 20 percent beginning in January, the diplomat, who has knowledge of the matter, told The Associated Press.

The rent increases were being opposed by the embassies and international organizations.

“It’s under dispute at the moment,” the diplomat said, speaking on condition of anonymity due to the sensitivity of the issue and because it remains unresolved.

The rent increase was reported Friday by South Korea’s JoongAng Ilbo newspaper.

South Korea’s Unification Ministry, which handles North Korean affairs, declined to comment.

The North’s move appears to be “a desperate attempt to obtain much-needed hard currency because it has become difficult for the North to get foreign currency due to tightened sanctions,” said Koh Yu-hwan, a North Korea expert at Seoul’s Dongguk University.

The move came as North Korea’s government was seeking to ease public frustration over a botched currency reform and improve the living conditions of its 24 million people.

Last year, the North ordered citizens to turn in a limited number of old bills in exchange for a new, redenominated currency in an apparent bid to reassert its control over a growing market economy.

However, the measure triggered frustration among many people left with worthless bills, while inflation surged because state-run shops could not keep up with demand.

North Korea has relied on outside food handouts since the mid-1990s, when the economy collapsed due to natural disasters and mismanagement, and aid from the former Soviet Union dried up after its collapse.