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Via illegal cellphone call, North Korean brother reaches out to his South Korean sister

Two siblings reconnected when one took a huge risk to ask for financial help. It is estimated that about $10 million flows into South Korea each year as defectors reach out to try to assist their families.

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Its leadership is believed to live a life of luxury - former leader Kim Jong-il's Japanese chef said he had a taste for fresh sushi, caviar and fine French wines and cognac - but a recent United Nations report classified 7.2 million of the 24 million population as "chronic poor" and said one in three children were stunted due to poor nutrition.

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Little appears to have changed under new ruler Kim Jong-un, a heavily built man believed to be in his late 20s who appears to be following his father Kim Jong-il's "military first" policy since he took power last December.

North Korea's 1.2 million strong military chews up a quarter of gross national product, according to U.S. State Department estimates and a recent report by the South Korean central bank estimated gross national income per capita there at just $1,200 a year, five percent of that of the affluent South.

A NEW CLASS

Another defector from the North, surnamed Lee, who is studying Chinese at a university in Seoul as well as working two jobs to pay her way, told Reuters she wired $4,000 last year to help cover her sister's medical bills in the North. She also sends $1,000 once or twice a year to help support her sister's business.

"The economic prosperity my sister enjoys there comes from my money and my remittances. She started a business in a private market thanks to them," said Lee, now in her senior year at college.

Like other defectors, she declined to be more precisely identified for fear of reprisals against her family in a country where entire families are often sent to gulags for crimes against the state.

The North's economy has not recovered from a devastating famine in the 1990s that killed an estimated 800,000 to 1.5 million people or from the collapse of the Soviet Union, a military and economic backer of the Pyongyang regime during the Cold War.

But such is the flow of funds from defectors that it has created a new class in the North, one that is no longer dependent on the Kim family and its clans or on paychecks from the country's moribund state-owned enterprises, which in many cases have stopped.

"They are the new rich. I think those who left North Korea and now live in South Korea outnumber the established wealthy class in the North," a third defector surnamed Im told Reuters.

"They are the invisible rich. Everyone knows who receives money from South Korea but no one openly talks about it," said Im, who also requested to be known by one name so she and her family could not be identified.

She said she sent about 3 million won ($2,600) last year to her parents.

While South Korea requires its citizens to get government permission to visit the North, which is rarely granted, there is little it can do to staunch the money flows.

Some of the money is used to buy off North Korean officials, many of whom are no better off than their civilian counterparts.

"Incoming money from the South is like honey," said An Kyeong-soo, a researcher at the Database Center for North Korean Human Rights, a group in South Korea that studies defectors' remittances.

"When this honey drops into someone's house, it is like a swarm with lots of officials wanting to eat some of it, like hungry ants."

With few signs of change in a country that, according to a 2011 United Nations assessment of its economic prospects, faces a challenge to "restore the economy to the level attained before 1990", North Koreans outside the ruling clique will likely remain dependent on their southern relatives.

"Isn't it good that South Korea's money can help North Koreans? What we are sending goes to its people, not the regime," said Im, who is now married to a South Korean. ($1 = 1143.7250 Korean won) ($1 = 6.3659 Chinese yuan)

Editing by David Chance and Raju Gopalakrishnan.

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