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Egypt’s Orascon Telecom Links North Korea and Egypt to Each Other

Wednesday, June 29th, 2011
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Egypt and North Korea have long and historical ties. Around the time Hosni Mubarak was taking over, Egypt and North Korea began dealing in missiles – though Egypt was seen by Washington as a “good” Arab state and North Korea, then as now, as the incarnation of evil. Mubarak, when he commanded the Egyptian air force, got North Korea to send pilots to train Egyptians before the fourth Mideast war with Israel in 1973.

Egypt began importing Soviet era Scud-B missiles from North Korea around the time Mubarak became president, and North Korean technicians over the years have taught the Egyptians to produce them on their own.

A routine New Year’s greeting from Kim Jong-il to Mubarak testified to the strong relationship formed between Kim Il-sung and Mubarak. The relationship intensified in an era in which the United States and Egypt were also developing close ties after the signing of the Egypt-Israel peace treaty. Egypt was seen as a firm friend of the United States even as Mubarak visited Pyongyang four times in the 1980s and 1990s in search of military and commercial deals. It was against this background that Orascom Telecom, the biggest mobile phone company in the Middle East and the centerpiece in Egypt’s biggest business group, formed Koryolink as a telecommunications joint venture in which Orascom owns 75 per cent of the equity and a North Korean state company has the rest.

“Naguib Sawiris is the biggest foreign investor in North Korea,” said Ha Tae-keung, president of Seoul-based NK Open Radio, which picks up news from North Korea by surreptitious cell phone contacts linked not to Koryolink but to Chinese networks. “He is very sensitive to politics.” In that spirit, Orascom Telecom has provided mobile phone service in troubled countries from Tunisia to Iraq to Pakistan. At the same time, Orascom Construction landed contracts for building U.S. military facilities from Egypt to Afghanistan while keeping close relations with both the U.S. and North Korea.

Mubarak and Kim Jong-il, however, had more in common than strictly business. Like Kim Jong-il, Mubarak was a long-term dictator with visions of passing on power to one of his sons, Gamal. Although Mubarak in the midst of protests said his son would not succeed him, said Ha Tae-keung, “The idea of succession came from Kim Jong-il,” suffering from a stroke that has paralyzed his right arm and madly grooming his youngest son, Kim Jong-eun, to succeed him.

Incredibly, in the face of all the evidence, the strength of U.S. ties to Mubarak during the presidencies of Ronald Reagan and George H.W. Bush was clear in remarks by the former US vice president, Dick Cheney, before Mubarak’s fall. “President Mubarak needs to be treated as he has deserved over the years,” said Cheney. “He has been a good friend.” Cheney should have known better. “Cairo is the hub of North Korea’s missile exports,” said Choi Jin-wook, who follows North Korean affairs as senior fellow at the Korea Institute of National Unification. North Korea’s embassy in Cairo is headquarters for the North’s Middle East military sales network and ranks as the North’s “most important embassy” after its embassy in Beijing.

One way or another, Choi believes the deal with Orascom calls for North Korea to pay for the telecom network in hard currency from the sale of missiles and technology to clients including Iran and Syria. North Korea may not run its sales to nonArab Iran via Cairo, but that’s another story. The U.S. from 1979 on was setting up Egypt as the counterpoise to Iran after the fall of the U.S.-backed Shah. Iran in the 1980s was fighting a war with an Arab state, Saddam Hussein’s Iraq, a struggle that lasted eight years. North Korea made plenty off that war, selling US$3 billion in equipment to Iran, including missiles, while embarking on a program in nuclear cooperation.

The paradox of Egypt’s relations with North Korea and U.S. relations with Egypt and Israel suggests a riddle that seems to have escaped the notice of U.S. policy-makers, as anxious to preserve “stability” in Egypt as they are on the Korean peninsula. If the enemy of your enemy is your friend, then how did Washington’s long favorite friend in the Arab world, namely Egypt, get so cozy with one of America’s bitterest enemies, North Korea? And if your friend is providing a base of operations for sales of missiles and other stuff to all your foes in the Middle East, then how come that’s your friend?

All of which points to this puzzle: why has the United States, since Jimmy Carter as U.S. president engineered the Camp David accords in 1978 and the Egypt-Israel peace treaty the next year, showered billions of dollars in aid on Egypt while it was doubledealing in North Korean missiles, technology and advice? The answer seems to be that American politicos and diplomats, in a long-running saga of diplomatic incompetence, preferred to downplay if not ignore Egypt’s ever-tightening ties to North Korea in the overriding interests of guaranteeing a shaky peace in the Middle East.

One might have thought the debacle of the 1973 invasion of Israel would not have been good for either Egypt or Mubarak’s career, but actually it had the opposite effect. So eager was the U.S. to bring about Israeli-Arab reconciliation that Anwar Sadat, as the only Arab leader really ready to go along with recognition of Israel, emerged as a Nobel Prize-winning hero to peace-lovers. Recall that the U.S at the same time was suffering the disaster of total defeat of U.S.backed regimes in Vietnam, Cambodia and Laos in 1975, and the sense of loss in America’s foreign policy adventures cast a pall over the electorate, bringing about Carter’s victory over Gerald Ford the next year.

And then there was Mubarak. Was he in trouble for the defeat of his air force, the embarrassment of the ill-fated fracas of 1973 in which Egypt had sought to recoup the losses of the 1967 war with the Israelis? Not at all. But the story was just beginning. From the outset of his presidency, Mubarak managed to perform a truly magician’s trick in diplomacy. Unlike most leaders who seem more or less aligned with one side or the other, or at best adopt a “neutral” position, Mubarak was firmly on the side of the U.S. in the Arab world – and totally on the side of North Korea in Northeast Asia.

All the while, Mubarak was importing ever more military gear, notably missiles, from North Korea while the North Koreans tutored the Egyptians on how to build their own missiles and other useful items. Egypt was getting far, far more from the U.S., enough to make it the second largest recipient of American largesse after Israel, but Mubarak was grateful enough to have visited North Korea four times from 1983 to 1990. He and Kim Il-sung formed an enduring bond, one that Kim Jong-il enthusiastically maintained after the death of his father in July 1994. The relationship was so close that Mubarak made a solemn pledge to Kim Il-sung; never would Egypt open relations with the North’s very worst enemy, South Korea.

Never mind that South Korea was one of the closest military allies of the U.S., was fast recovering from the horrors of the Korean War and was using much of the same type of equipment that the Americans were showering upon the Egyptians. As far as Mubarak was concerned, he was getting so much from North Korea there was no need to think about Washington’s relations with Seoul. There is no record of American diplomats ever objecting to this strange convolution of Middle East and Northeast Asian power struggles – or, for that matter, U.S. hypocrisy in treating Mubarak as a great friend.

South Korea by the mid-1990s, however, was already far too powerful a state economically for the Egyptians to go on ignoring. Mubarak did agree in 1995 to form relations with South Korea – but that was well after every country in the eastern bloc had gone for a two-Korea diplomatic relationship and after South Korea had formed diplomatic relations with China after finally ceasing to recognize the Nationalist Chinese regime on Taiwan as the true China. By 1995, it was pretty hard for any leader, even the duplicitous Egyptian president, to overlook the arrival of all those motor vehicles, electronic gimmicks and much else arriving from South Korea on South Korean super-sized cargo ships, many of them passing right through his own Suez Canal to markets in Europe.

The Egyptian-North Korean relationship, though, was still blossoming. The military business has had its ups and downs, varying with the needs and finances of Arab clients, but Egypt remains the largest foreign investor in North Korea thanks to the deal engineered by the Orascom group to provide North Korea with its one and only mobile phone network and also to build a whole lot of structures that Kim Jong-il badly wants by the time of the centennial in 2012 of the birth of Kim Il-sung.

Since Orascom set up Koryolink in 2008, more than 300,000 North Koreans, from an upper layer of Workers’ Party members, military officers and government bureaucrats, have cell phones. It’s not possible to place calls outside North Korea via Koryolink, but the transition to basic electronic communications represent a quantum leap for a system that’s as backward as it is repressive. Just to show the importance attached to this Orascom project, North Korea had not reported on a foreign tycoon in Pyongyang in recent memory as was done during Naguib Sawiris’s visit in January. Visits by two South Korean presidents, Kim Daejung in June 2000 and Roh Moo-Hyun in October 2007, don’t count. Nor do visits by top South Korean executives from the Hyundai empire, responsible for building the Mount Kumkang tourist zone above the North-South line on the east coast and then an economic complex at Kaesong, next to the “truce village” of Panmunjom about 40 miles north of Seoul. Those relationships were all between Koreans, and Koreans like to say they’re citizens of “one nation.”

Now it seems Orascom is serving much the same purpose as the Hyundai subsidiary whose chief executive committed suicide in 2003 amid charges that his company had funneled hundreds of millions of dollars into North Korea to promote the sunshine policy of Kim Dae-jung. As Pyongyang’s Korean Central News Agency noted, Orascom’s investment in Koryolink coincided with “successful progress in different fields.” The KCNA report cited “telecommunication,” but the relationship is far more extensive.

We have Pyongyang’s Korean Central News Agency to thank for the summary report of the “success” of Orascom in multiple deals – though KCNA did not report on Orascom Construction’s project to turn the Hotel Ryugyong from a monumental failure on the Pyongyang skyline into a showpiece of success. Nor, for that matter, did KCNA say a word about protests in Cairo – not something North Koreans needed to know about while struggling to stay alive in the harshest winter in years.

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