South Korean farmers bartering sugar for North Korean booze to bypass sanctions

A South Korean farmers’ cooperative said on Thursday it has clinched a $150 million deal to barter sugar for North Korean liquor and food products, bypassing sanctions banning cash transfers.

The deal, brokered by a Chinese company, was signed in June with five North Korean trading firms, an official for the cooperative said, though it still needs approval from Seoul’s Unification Ministry, which oversees inter-Korean affairs.

Under the terms, North Korea would swap 240 products -including its signature ginseng and blueberry liquors, crackers, candies, teas and health supplements - for 167 tonnes of sugar from the South, said Oh Hyun-kyung, the cooperative official.

“The North wanted sugar as they were having difficulty importing raw materials due to sanctions and the coronavirus pandemic,” Oh told Reuters, saying shipments could begin later this month.

Oh said Korea Kaesong Koryo Insam Trading Corporation, a North Korean firm specialising in ginseng and health products, was one of the parties in the deal.

Unification Minister Lee In-young had suggested before taking office late last month that bartering South Korean food and medicines for North Korean liquor and mineral water could be a first step toward normalising exchanges.

South Korea is pushing to restart inter-Korean cooperation without breaching international sanctions banning financial transactions with North Korea, imposed over its nuclear and missile programmes.

South Korea on Thursday approved plans to donate $10 million to fund UN World Food Programme (WFP) efforts to aid North Korean children and women.

“The decision would be a starting point for our plans to consistently pursue humanitarian cooperation without linking it to political and military issues,” Lee said.

Seoul has bankrolled various WFP and UN Children’s Fund projects in the North in recent years.