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North Korea's rocket launches cost $1.3 billion

By Ramy Inocencio, for CNN
updated 7:54 AM EST, Wed December 12, 2012
  • South Korea: Cost of Pyongyang's two rocket launches estimated at $1.3 billion
  • North Korea appears to have successfully launched a rocket after a failed April mission
  • Official: Cost of 2012 rocket program could feed North Koreans for "four to five years"
  • Analyst: main audience for Wednesday's rocket launch is North Korea's own citizens

Hong Kong (CNN) -- While only the highest echelons of North Korea's opaque leadership will know the full financial cost of Wednesday's launch, South Korea's government estimates Pyongyang spent $1.3 billion on its rocket program this year.

The two rockets launched this year -- this week's mission and a failed attempt in April -- cost $600 million, while the launch site itself is estimated at $400 million. Other related facilities add another $300 million, according to an official from South Korea's Ministry of Unification. "This is equivalent to acquiring 4.6 million tons of corn," the official said. "If this was used for solving the food shortage issue, North Koreans would not have to worry about food for four to five years."

Whatever the cost, what is known is that North Korea is one of the poorest countries in Asia, with an economy worth just $40 billion, according to the CIA World Factbook.

Read: Why launch the rocket now?

But the price of North Korea's rocket launches might be lower than government estimates because North Korean workers earn much less than their southern neighbors, says Cheong Wook-Sik, Director of South Korea's Peace Network in Seoul.

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The Kaesong industrial complex, on the border with South Korea, has some of the country's highest wage earners at about $100 per month, says Cheong, 14-year chief of the South Korean non-governmental organization.

"This is very high compared to the rest of North Korea. If you're not working in Kaesong, the average worker salary drops to an average of perhaps $50 per month."

Read: Launch driven by political pressures

Prior to Wednesday's launch, South Korea threatened tougher sanctions on North Korea in the footsteps of a 2007 freeze on North Korean funds held at Banco Delta Asia in the Chinese territory of Macau. Cheong says some $25 million are still frozen there -- illicit funds from money laundering and drug trafficking by the North Korean regime.

"But in order to impose further sanctions, China's involvement is necessary" because Beijing is Pyongyang's closest ally in the world, Cheong said. "I don't think financial sanctions against North Korea are the best course of action because that can make the situation out of control."

But the financial cost and any risk of further sanctions may be a tradeoff for internal political gain as leader Kim Jong-Un tries to solidify his grip on power, as Wednesday's launch comes near the first-year death anniversary of his father, Kim Jong-Il, on December 17.

Read more: What does North Korea's planned rocket launch mean?

Indeed, Cheong believes the main audience for Wednesday's rocket launch is North Korea's own citizens -- not the rest of the world.

"If North Korea succeeds in launching a satellite, North Korea propaganda may spin this by saying the country has become a prosperous and strong nation. That will help Kim Jong-Un both consolidate his power and help maintain the legacy of his father."

If there is a message to the international community, adds Cheong, it may be that North Korea is implying "our satellite launch means we have nuclear weapons, we have a delivery system."

Timeline: North Korea's rocket-fueled obsession

CNN's KJ Kwon contributed to this report from Seoul

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