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Diplomats: North Korea seeks hike in embassy rent

North Korea has demanded a hike in rental fees for embassies and international organizations in Pyongyang, diplomats said today, 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, a diplomat, who has knowledge of the matter, told The Associated Press.

The rent increases were being opposed by the missions.

"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.


Another diplomat, in Pyongyang, said the North cited rising oil prices as the reason for the increase, but all diplomatic missions and international organizations protested the hike, the first in about 20 years.

The second diplomat, who also asked not to be identified due to the issue's sensitivity, said that the increase also covered other costs such as vehicle rentals and salaries for North Korean staff from office assistants to gardeners.

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

South Korea's Unification Ministry, which handles North Korean affairs, said that there are 24 embassies in the North Korean capital.

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, re-denominated 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.


Associated Press writer Anita Chang in Beijing contributed to this report.

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