- The Washington Times - Monday, June 26, 2000

North Korea's "Dear Leader" wanted some contact with the outside world, and his top officials, after a year of negotiations, settled on a Bethesda-based telecommunications company to help him do it.

The Stalinist honcho of North Korea, Kim Jong-il, was looking for a simple telecommunications hookup that would plug the nation's aging Korea Post and Telephone Company (KPTC) into the digital world.

Bethesda's Startec Global Operating Company, a niche-oriented telecommunications firm, turned out to be the right match, but only after a prolonged courtship that ended in May. The successful deal owed as much to Washington-style networking as it did to the relentless march of information technology around the globe.

The United States last week lifted its long-standing trade embargo on North Korea in the wake of an ice-breaking summit between the leaders of the divided peninsula. And Startec's deal, consummated before that meeting, is likely to prove typical of the trade that will take place in the coming years with the impoverished North Korea.

"You will have niche market firms going in, but it is extremely difficult to envision any rush into North Korea," said Gordon Flake, a former Mormon missionary to South Korea and now a scholar of Korean affairs at the D.C.-based Mansfield Center.

Startec's intermediary to North Korea was Admiral Zumwalt & Consultants, Inc., a Reston-based consulting firm started by Elmo Zumwalt, Jr., the chief of naval operations from 1970 to 1974 who died in January. The retired admiral and his son, Jim, traveled to the North Korean capital, Pyongyang, in April 1994 at the invitation of a group closely associated with South Korean religious leader the Rev. Sun Myung Moon.

The occasion was the 82nd birthday of Kim Il-sung, the father of North Korea's current leader, and the Zumwalts even met the elder Mr. Kim, who died in 1998. This and other visits reinforced Jim Zumwalt's conviction, hardened by the experience of the U.S. war in Vietnam, that business could build bridges between the United States and its enemies.

"I came to see that there had to be another way to deal with differences among nations," said Mr. Zumwalt, a 26-year veteran of the Marine Corps and a former State Department official. "I hope the same attitudes take hold in North Korea," he added.

Mr. Zumwalt during the next five years made 10 trips to North Korea with representatives of U.S. businesses. In January 1995, the Clinton administration lifted some sanctions on North Korea as part of a deal to close down the communist country's nuclear weapons program. One area that became ripe for commerce was telecommunications, and that brought Startec into the picture.

Startec specializes in Internet infrastructure and content for niche markets that the major players had overlooked. It had deals to wire the Palestinian territories, Syria and Uganda, and sites with material in Arabic, Chinese, Persian and Turkish. And it had a number of staff members who spoke Korean, a harbinger of things to come.

"North Korea is definitely the most dramatic partnership agreement we have ever had," said Tony Das, Startec's chief operating officer for on-line services. "I have been in many countries before, and this was different than any other."

Mr. Zumwalt introduced Mr. Das to the number two official at KPTC in May 1999, but that trip, full of formalities and stiff introductions, ended without any firm indication on the part of the North Koreans that they were looking for a deal. Mr. Das' experience as a public affairs officer at the State Department would come in handy as the North Koreans demonstrated that business, like diplomacy, demands patience.

"There was one delay after another, and three months ago, I thought it was dead," Mr. Zumwalt said. "Then the North Koreans called me and said they wanted a deal."

Mr. Das ultimately negotiated an agreement that would plug the North Korean system into the world's telecommunications network via a technology known as the "voice over Internet protocol," an enabling software that allows data and voice transmissions. It is several cuts above the typical telephone switching technology that most networks rely on, and a quantum leap ahead of North Korea's current system.

But KPTC was not looking for a full-fledged line to the digital world that could bring every aspect of the Internet into North Korea. It wanted a partnership of equals, Mr. Das said, and that is what Startec provided.

"Their initial interest was in pacing their link to their own needs," Mr. Das said.

Startec and North Korean officials inked the final agreement in Beijing on May 11 after a negotiation that left Mr. Zumwalt startled for its brevity. The Americans gave the North Koreans a draft offer, which was returned with some minor changes, and they closed the deal.

"In six years of dealing with North Korea, I had never seen them work that fast," Mr. Zumwalt said.

Startec will spend roughly $70,000 up front for the equipment necessary to tie KPTC to the outside world, Mr. Das said. After that, it will cost $15,000 per month to maintain. Revenue from the deal, both to Startec and KPTC, will then depend on the volume of traffic coming across the link, which Mr. Das said is very difficult to estimate given that North Korea is such a closed society.

Mr. Das now hopes that, having jumped into the North Korean market ahead of the pack, Startec can benefit from the thaw in North-South relations that appears to be in the offing after the summit meeting between Kim Jong-il and South Korean President Kim Dae-jung.

For example, the two leaders reached their own agreement to improve communications between families who were split up when the Korean peninsula fell into permanent division after the Korean War. But with direct links between the two Koreas banned under South Korean law, firms in the south are looking for a telecommunications firm that can route calls to the North.

"Since that happened," Mr. Das said, "my phone has been ringing off the hook."

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