Archive for September, 2006

DPRK tunnnels under the DMZ

Sunday, September 3rd, 2006

From the Korea Times:
Andrei Lankov
9/3/2006

In days gone by, underground mining was an important military activity, an essential part of any protracted siege campaign. Military miners, known as sappers, were discreetly digging tunnels under the walls and towers of the enemy castle, in the hope of collapsing them or, in later eras, stuffing the tunnels with explosives and blowing up the walls. The defenders were digging their own tunnels, trying to intercept the attackers and prevent them from completing their works.
Some digging operations took place during fairly recent campaigns, including even the First World War, but by and large sappers have been disappearing for the past few centuries– to be reborn in popularity, of all places, in North Korea during the 1970s.

The late 1960s was when the Pyongyang generals were serious about invading the South. I do not have proof (nobody has), but it feels that until the mid-1960s the North did not view an attack of the South as practical. The same was the situation from the mid-70s onwards. But between 1965 and 1975, the North Korean generals were probably really thinking about starting a Korean War once again.

However, the North Korean generals had to deal with one serious problem: they would have to breach the heavily fortified positions of the enemy who was likely to enjoy considerable air superiority. Hence, somebody came up with a brilliant idea: since we cannot drop our paratroopers behind the Southerners’ line, we can let our soldiers pass beneath the enemy’s position! We do not know whose idea it was – but I think that in due time the person’s name will be known to every student of Korean military history.

Thus, at some point in the late 1960s, the idea of an infiltration tunnel was born. It is believed that the large-scale construction began in 1971 when Kim Il Sung signed a special order authorizing the unusual plan. He is quoted as saying: “one tunnel can be more powerful then ten atomic bombs put together, and the tunnels are the most ideal means of penetrating the South’s fortified front line.”

According to published materials from US/ROK intelligence, each North Korean battle-line division, stationed near the DMZ was ordered to build two infiltration tunnels. As there were 11 divisions along the DMZ in the 1970s and 1980s, there should be 22 tunnels – if the intelligence is correct, that is. Only 4 tunnels have been discovered so far.

Strange noises and frequent explosions began to be heard in some parts of the DMZ from late 1973. Seismic monitoring equipment confirmed that some underground works featuring the heavy use of explosives were taking place. Finally, a North Korean engineer defected and provided information on the approximate locations of two tunnels. This led to intensive searches and, eventually, to the discovery of these impressive underground structures.

The first tunnel was discovered in November 1974, in the western part of the DMZ, some 60 km from Seoul. With an estimated total length of 3.5 kilometers, it extends one kilometer into the southern territory of the Military Demarcation Line that divides the DMZ. The tunnel is 1.2 meters high and 0.9-1.1 meters wide. This is not very large, but it still means that an entire regiment can pass through it every hour.

The next few years was a time of intensive counter-mining operations, as they used to be called in medieval times. Many methods were used to locate the tunnels, but good old ‘counter-mining’ proved to be most useful. First, bore holes were drilled in suspicious areas. Once discovered, a North Korean tunnel was counter-mined by digging an interception tunnel.

The second tunnel was discovered in March 1975. This tunnel was the most remarkable of all known structures of this kind. It is located in the central sector of the DMZ, about 13 kilometers away from Chorwon city, and about 100 km to the north-east of Seoul. The second tunnel is much larger (2.1-2.2 meters wide, 2.0 meters high), and it is the only known tunnel which would allow for the movement of armored vehicles and field artillery. An entire division can pass through it every hour. To facilitate the troop movement, a spacious troop assembly area was carved out inside the tunnel which has three exits.

The third tunnel discovered was slightly smaller, but it was also the closest to Seoul – and located merely 4 km from the truce village of Panmunjom. The tunnel was discovered thanks to a tip from a North Korean defector who had taken part in its construction. After its discovery in October 1978 for two decades no new underground structures were located, and for a while the tunnels appeared to be a thing of the past.

But a fourth tunnel was discovered in 1990, showing that tunnel building had continued into recent times. The US/ROK military insist that there are 18 undiscovered tunnels, probably now completed, along the DMZ.

There are some people who believe that some of these undiscovered tunnels have penetrated much deeper into the South, almost reaching Seoul. They even conduct searches for these tunnels, using private donations and the efforts of volunteers. Well, what should I say? Their pet idea does not appear very likely, of course, but there are always people who want to believe in something improbable. The story of the search for tigers in the DMZ is yet another confirmation of this.

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DPRK moves accounts to Russia

Sunday, September 3rd, 2006

From AFX News on Yahoo:
9/3/2006
NKorea opens bank accounts in Russia to dodge US sanctions – report

TOKYO (XFN-ASIA) – North Korea has opened about 10 bank accounts at Russian financial institutions in an effort to secure fund flows now blocked by US financial sanctions, the Sankei Shimbun here reported at the weekend.

The newspaper, quoting sources who it described as being close to North Korean affairs, said senior North Korean officials were transferring their funds through the accounts.

Thi is part of Pyongyang’s efforts to escape pressure from the US, which has moved to freeze North Korean funds it claims are the profits of drug trafficking, money laundering and other illegal activities.

Washington is aware of North Korea’s money flows through the Russian banks and it may step up pressure on the Russian authorities to abandon such support for North Korea, the newspaper said.

North Korea has warned the United States it will take ‘all necessary counter-measures’ against Washington for increasing the the pressure on North Korea through financial sanctions.

In November, Pyongyang walked out of six-way talks on its nuclear ambitions after Washington accused a Macau-based bank of helping Pyongyang launder earnings from fake US currency, and told US financial institutions to stop dealing with the bank.

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North Korean Civil-Military Trends:

Friday, September 1st, 2006

“Military First” Politics to a Point
Ken E. Gause
Strategic Studies Institute
9/1/2006

Download PDF here:  Civil-Military.pdf

Summary
Unlike the study of other authoritarian regimes, first the Soviet Union and more recently China, which have given rise to a cottage industry of analysis on all aspects of things military, the same cannot be said of the Korean People’s Army (KPA), the armed forces of the Democratic People’s Republic of Korea (DPRK). In the small world of Pyongyang watchers, articles and books devoted to the KPA are few and in most cases deal with the armed forces themselves (order of battle) rather than the high command that oversees the machinery.

This monograph examines the role of the KPA within the power structure of North Korea. The author describes the landscape of military and security institutions that ensure the regime’s security and the perpetuation of the Kim dynasty. He also highlights the influential power brokers, both civilian and military, and describes how they fit into the leadership structure. Finally, he considers the role of the KPA in regime politics, especially as it relates to the upcoming succession and economic reform.

An understanding of the North Korean leadership does not mean only recognizing the personalities who occupy the top political positions within the regime. In his landmark book, Shield of the Great Leader, Joseph Bermudez noted that over its 50-year history, the DPRK has developed into one of the most militarized countries in the world, with the KPA existing alongside the Korean Worker’s Party (KWP) as the two cornerstones of the regime. During this time, the role of the high command and its ties to the leadership and decisionmaking have changed.

The KPA was founded on February 8, 1948, approximately 7 months before the founding of the DPRK. As Kim Il Sung struggled to consolidate his power over the regime, his old comrades-in-arms, with whom he had fought against the Japanese, helped him purge the factional groupings and their leaders. After he had secured his power, Kim Il Sung relied on the KWP to rule the country. The high command played its role within the decisionmaking bodies of the state, but it paid its loyalty to the party and the Great Leader.

When Kim Jong Il succeeded his father as the supreme leader in 1994, he faced a regime divided among numerous factions, many of which did not owe allegiance to him. As a consequence, he embarked on a campaign of reshuffling briefs, purging the more dangerous elements of the regime, and making way for a new generation of leaders who would coexist and then slowly replace their elders. At the same time, he began to move more authority from the KWP and to place it within the purview of the military. This transformation of authority culminated in 1998 at the 10th Supreme People’s Assembly, when the National Defense Commission eclipsed the Politburo as the supreme national decisionmaking body. In the years since, the term “military-first politics” (son’gun chongch’i) has been used to signify the privileged status the KPA holds throughout North Korean society and to stress that the regime’s sovereignty rests upon the military’s shoulders.

This monograph tracks the rise of the military inside the North Korean leadership and presents the backgrounds of key figures within the high command and the formal and informal connections that bind this institution to Kim Jong Il. As the first generation has passed from the scene, Kim has consolidated his grip on the military slowly by promoting loyalists to key positions throughout the apparatus. He has promoted more than 1,200 general-grade officers on 15 occasions prior to April 2006. This has not only secured Kim’s power, many have argued it has enhanced the military’s influence over him, especially when compared with its influence over his father.

The question facing many North Korea watchers is the extent to which the military figures into decisionmaking. This report argues that, while the military has grown in stature and influence over the last decade, it remains one of many players within the North Korean policymaking process. The lines of authority and information within the regime are complex, consisting of formal and informal channels. The military has numerous avenues into the Kim apparatus, and on many issues have what amounts to a veto authority. This apparently was made clear recently by North Korea’s decision to cancel the test run for train services between North and South. But this does not mean that the military is the primary decisionmaker; that role still belongs to Kim Jong Il, even though he must weigh seriously military thinking on issues that reach far beyond the national security realm.

This monograph also argues that the KPA is not a monolith, but is made up of a range of views, some more hard line than others. Some senior figures within the high command are rumored to have pushed for reforms both internally and in terms of foreign policy, while many younger field commanders are believed to hold some of the hardest of the hard line views. But one area where there seems to be wide agreement throughout the military leadership is the need to fund the armed forces adequately because it is on their back that the nation’s security depends.

In the next few years, the North Korean leadership will face the implications of the “military-first policy” in very stark terms. If Kim Jong Il is to begin to bring the civilian economy out of the dark ages, the military will have to share some of the burden. But whether the high command will be willing to trade some of its “weapons for ploughshares” is not certain, given the current tensions on the peninsula. In the mix of what is already a contentious argument over guns versus butter is an unfolding succession struggle as Kim seeks to name his heir apparent. As in any totalitarian regime, the succession issue is huge and impacts decisionmaking across the board.

There is a note of caution when reading this report. The subject matter deals with information that is unfolding and will continue to shift in the coming months and years. The author has made every effort to validate through numerous sources the information contained on the various personalities, but in some cases it is still opaque. The reason for this is simple. Information on North Korean leadership issues is a closely held secret inside the Hermit Kingdom. The actions and activity of individual leaders are more often rumor than subject to check and verification.

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Koryo Asia to Buy U.S.-Sanctioned North Korean Bank (Update2)

Friday, September 1st, 2006

Bloomberg
Bradley K. Martin

Koryo Asia Ltd., a London-based financial adviser, said it will buy North Korea’s Daedong Credit Bank for an undisclosed amount and lobby the U.S. to lift sanctions on the foreign-run bank.

Daedong Credit is among North Korean banks whose accounts in Macau’s Banco Delta Asia SARL have been frozen since September 2005 after the U.S. Treasury Department alleged Banco Delta laundered money from North Korea and worked with front companies trafficking drugs for the communist state. The Macau government has taken control of the bank.

The value of Daedong Credit “would be enhanced if we can resolve the sanctions issue with the U.S.,” Koryo Asia chairman Colin McAskill said in an e-mail interview. Koryo Asia is adviser to London-based Chosun Development & Investment Fund LP, which aims to raise $50 million for investments in North Korea.

North Korea has demanded removal of the financial sanctions before it will return to six-nation talks to prevent the country from developing nuclear weapons. The U.S. and China urged North Korea to resume the talks that include South Korea, Russia and Japan, after the country in July tested a missile that may have the capability to reach the U.S.

Daedong Credit’s general manager Nigel Cowie confirmed the sale and that he would stay on. He declined further comment. Cowie said in an interview last year that the bank’s assets –including those frozen in Macau — totaled around $10 million.

A former HSBC Holding Plc banker, Cowie was hired in the mid- 1990s by Peregrine Investment Holdings Ltd. to start the bank. Following Peregrine’s 1998 collapse, Cowie and three other investors bought the 70 percent foreign stake from the liquidator in 2000.

Transparent

Koryo Asia signed an agreement to buy the majority share in Daedong through a wholly owned subsidiary that McAskill, 65, did not name. The majority shareholders had approached Koryo Asia to propose the sale, he said.

McAskill said he won’t take a direct management role in the bank, instead serving as a consultant to persuade U.S. officials to release as much as $7 million of Daedong’s and its customers’ assets in Macau. The total of frozen North Korean bank assets in Macau is about $24 million.

McAskill’s argument that Daedong Credit Bank serves only foreign, not North Korean, customers and that its transactions are legal and transparent may not win an audience at the U.S. Treasury Department.

“Given the regime’s counterfeiting of U.S. currency, narcotics trafficking and use of accounts worldwide to conduct proliferation-related transactions, the line between illicit and licit North Korean money is nearly invisible,” Stuart Levey, Treasury’s undersecretary for terrorism and financial intelligence, said last month.

Asked if the purchase of Daedong Credit Bank is a big gamble, McAskill said, “Not a gamble — a gambit.”

He said his strategy is to demonstrate that Levey’s blanket condemnation of all North Korea-related finance is counter to U.S. interests.

Exempting Daedong on its merits from the sanctions would bring a potentially big payoff, he said, “an atmosphere in which Kim Jong-il can consider a return to the six-party talks.”

Anselmo Teng, chairman of the Macau Monetary Authority, didn’t immediately return a phone call and e-mail to his office seeking comment on the sale and any impact the ownership change may have on the status of Daedong’s Banco Delta Asia accounts.

Korean Investment

McAskill said the Chosun Development & Investment Fund LP aims to raise funds for “transaction-based” investments, such as procuring mining equipment and receiving mine output in return.

“We believe we will fully subscribe the fund from investors in Europe, Asia, the People’s Republic of China and possibly South Korea,” he said. “Global investor interest in this potential emerging market was not affected by the missile launches in July,” he said, without giving details.

Taking over the bank “gives us a legitimate foothold and provides a conduit for investment in the country, whether through Chosun Fund or other sources,” McAskill said. “In the long term, the goal is to facilitate the resuscitation of the legitimate economy.”

Chosun Fund, managed by London-based Anglo-Sino Capital Partners Limited, is denominated in U.S. dollars. If the sanctions issue cannot be resolved, the fund has the option to switch to denomination in euros or pounds sterling, McAskill said.

“There’s no point in taking in U.S. funds if the United States is going to try and block them,” he said.

Room 39

The minority owner of Daedong Credit is Korea Daesong Bank, a unit of North Korea’s Daesong Group.

A 1995 U.S. government study cited close ties between Daesong and Room 39, an office of the ruling North Korean Workers’ Party said to handle foreign exchange-gathering projects for the country’s leader.

McAskill said the minority owner does not run the bank. Daedong is “not only majority foreign-owned and foreign- controlled but also foreign-managed,” he said, adding he was given access to all of Daedong’s activities and concluded it’s a legitimate business.

Only North Korean-owned banks can do business with state enterprises and North Korean individuals, Cowie said last year, so Daedong’s customers are all foreign — mostly Chinese, Japanese and Western individuals and institutions.

As of Aug. 17, that had not convinced Levey at the U.S. Treasury.

“The U.S. continues to encourage financial institutions to carefully assess the risk of holding any North Korea-related accounts,” he said.

The undersecretary traveled in Asia in July to push that line, which resulted in the closure of some North Korean banks’ accounts in Vietnam.

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