The German government still cannot find a way to shut down the City Hostel in the center of Berlin, even though the building is leased from the North Korean Embassy next door.

According to a report earlier this week by Süddeutsche Zeitung, along with public broadcasters NDR and WDR, the embassy appears to be stalling attempts to cancel the lease contract with the German management company EGI GmbH, by failing to pay the necessary court fees.

Newly uncovered information shows that the embassy, under pressure from the German Foreign Ministry, cancelled the contract with EGI in February 2018 and then filed an eviction notice at Berlin's state court.

But it then failed to provide the required advance on the court fees, which means that the large hostel, with some 435 beds in around 100 rooms, remains open for tourists hoping to see the German capital on a budget.

The ministry's pressure came in the wake of a United Nations resolution in November 2016, which banned member states from allowing North Korea from using embassy property for anything other than diplomatic activities.

A European Union directive from 2017 also forbids renting property from the North Korean state, a directive that was written into German law. But the last time the case of the City Hostel Berlin went to court, in May 2018, courtesy of charges brought by the German customs authority, it was thrown out by a Berlin administrative court on the grounds there was not enough evidence the rent was actually going to the North Korean government. The local district of Mitte in Berlin has since also filed an injunction against the hostel, pending court proceedings.

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Money from tourists

Closing the hostel would potentially cut off a useful revenue stream for the North Korean Embassy, which has rented out parts of its building to various German companies for decades. According to an official information request made by Berlin parliamentarian Tom Schreiber, EGI is paying €38,000 ($42,000) a month for the hostel.

Though neither EGI nor the embassy responded to DW requests for comment, EGI has said in the past that it pays the rent into a blocked bank account, so it is not violating sanctions.

At a regular government press conference this week, Foreign Ministry spokeswoman Maria Adebahr reiterated that Germany was committed to shutting down the hostel.

"We as the Foreign Ministry stand behind this and are applying pressure to ensure that the correct legal situation is implemented," she told reporters. "Unfortunately an eviction notice can only be applied if the appropriate court fees have been paid. And that is not the case." She declined to offer any details on what pressure exactly the German government was applying.

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The mystery of the bank account

Schreiber, of the Social Democratic Party (SPD), has determined to get to the bottom of the issue, not least because the embassy appears to owe over €1 million in taxes to the Berlin state over the hostel.

"It's possible, and this is very speculative, that there was a secret agreement [between the embassy and the company] not to pay the court fees so that this process would be delayed," he told DW. 

Schreiber said it was unclear who had access to the blocked bank account where the rent is paid every month, or how much money was in it. "But it is certainly very noticeable that the landlord and the renter don't want to find a solution," he said.

He added that it wasn't helping that three levels of the German government (federal, state, and local council) were all trying to deal with the issue. "I know that there is some foreign policy involved in this," he said, but added that "communication hadn't always been optimal." 

Judging by comments on online tourist portals like TripAdvisor, few of the guests at the City Hostel Berlin appear to be aware that their money could potentially be funding the North Korean nuclear weapons program. But then again, it doesn't seem to be very much money: few other hotels in Berlin offer cheaper rooms in such a prime location.

The embassy was opened under the communist East German government in the 1970s, shut down in the aftermath of German reunification, and then reopened in 2001, when Germany restarted minimal diplomatic relations.

Indeed, the fact that relations between the two countries are still so chilled also offers the opportunity to open the hostel in the first place: what else should the North Korean government do with all that space?

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