Business Ties

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A South Korean entrepreneur thinks the era of détente will be lucrative

Is there money to be made from reconciliation? Chung Young Chul hopes so. The 55-year-old businessman, who fled the North during the war as a young boy, recently set up Union Community, a company that hopes to profit by helping South Koreans locate their relatives in the North and remit cash to them. It's an unprecedented venture that violates current South Korean law. But Chung is optimistic. Pyongyang, he says, supports his business, while Seoul is expected to write new laws to allow such transactions. Solving the problem of separated families, says Chung, is the start of solving the problem of reunification.

The idea behind Union Community is simple. South Korean families pay the company the equivalent of $1,200 for an initial search in the North, carried out by North Korean officials. Pyongyang gets a $500 cut for handling the paperwork. For each remittance, Union Community will charge $250. Pyongyang will get a $50 piece of this, too:since the communist country doesn't have retail banks with branches around the country, government employees will have to deliver the money personally to families outside big cities. In less than a month, Chung's company has signed up more than 120 people to search for long-lost relatives.

Before Union Community came along, South Koreans seeking to send money across the border had to go through ethnic Korean brokers near China's border with the North. Many still use that route, at their peril. Brokers often can't locate the sought-after relative or simply walk off with the money. Korean-Americans have found that sending the funds through the North Korean government isn't much more reliable. It is difficult for Americans to remit money directly to the North, so they have often gone through intermediaries in China and Seoul, who negotiate unofficially with North Korean cadres. Sometimes not all of the money reaches the relatives. Chung believes his operation will succeed because it is in Pyongyang's interest. North Korea badly needs the hard currency and knows it has to play by the rules to make this work, he says.

It's a good deal for Pyongyang, which takes its cut in U.S. dollars while paying the families in the local currency at the official rate of 2.2 won to the dollar, far below the market rate. Chung says he set up the venture in part to honor his father, who also fled the North during the war. As he lay dying in 1994, he presented his son with a list of relatives left behind and asked him to search for them one day. Now maybe I can locate my uncles, aunts, cousins and nephews as my father wished, says Chung. For many South Koreans, that would be worth almost any price.

With reporting by Stella Kim/Seoul