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Security agents raise money from defector families

Thursday, January 27th, 2011

Pictured above: Ontan Worker’s District, Onsong (Google Earth)

According ot the Daily NK:

In advance of next week’s lunar New Year’s Day holiday, National Security Agency agents are concentrating on getting together things for the holiday from households of those whose family members have crossed into China or South Korea.

Exploitation by the NSA or other powerful state apparatus is exceedingly common, of course, and the obtainment of necessities for holidays such as Kim Il Sung and Kim Jong Il’s birthdays, the Korean thanksgiving day (Chuseok) and lunar New Year’s Day are often covered via exploitation of the people. The difference this time, however, is that the specific targets are the families of defectors.

A source from North Hamkyung Province told The Daily NK today, “NSA agents in charge of northern border regions including Onsung have been engrossed in preparations for the holidays and generating private benefits, targeting smugglers and households with family members who have crossed into China or South Korea.”

The source explained, “Modes of exploitation by agents of the NSA and People’s Safety Ministry and cadres of the Party or prosecutors have been varied of late. They win houses which have problems over to their side and then get them to give certain things.”

The source said that as the lunar New Year’s Day comes closer, these moves have become more active and transparent. “NSA agents visit all of these houses and force them, or sometimes beg for things. They are no different from thieves, just without a knife.”

According to the source, the Conspiracy Research Office of the NSC in Onsung, North Hamkyung Province, which employs 25 agents, has allotted each agent items to get from their district.

There are two sets of items: one set is ten bottles of liquor, 5kg of pork, 20 packs of expensive cigarettes called “Yeomyung,” and the other set contains 20kg of gasoline, a certain amount of fruit and candy, and bottles of oil. Each agent has to select one set.

According to Onsung Jangmadang standards, a bottle of liquor can be bought for 4,000 won, 1kg of pork for 5,000 won, a pack of “Yeomyung” for 6,000 won, 1kg of gasoline 3,000 won, and a bottle of oil for 5,000 won.

In Ontan workers-district within Onsung, there are three agents. The goods assigned to them are also unaffordable, but only defector families have to provide them, the source said.

The source explained, “When an agent visits one’s home, they won’t leave until the host has set up a table of drinks for him. After drinking some, the agent coaxes them, ‘Have you got some news from the South?’ ‘Are you getting money well?’ or ‘When you get a call next time, you should grumble that the situation is hard, so that they will send more money.’”

Sometimes, agents call for bribes for their own family events, too. The source said, “While talking, agents hint furtively that there will be a family event and call for something for that, saying, ‘There will be nothing bad for you if you help out.’”

“Agents say openly that, ‘If more money is delivered, we can live well; it’s is a good thing, and a way to maintain socialism.’ They only need so much as to smell money and they come running,” the source complained.

Due to possible revenge from agents, people cannot complain about the situation and have to provide them with the things they demand, according to the source, who added, “However, the effect works only at that moment when they get the goods. When a problem occurs for these defector families, they are nowhere to be seen.”

Read the full story here:
Defector Families Are Moneybags for NSA Agents
Daily NK
Im Jeong Jin
1/27/2011

Posted in Finance, General markets (FMR: Farmers Market), Ministry of State Security (MPSS, NSA, SSD), Political economy, Price liberalization | Comments Closed

DPRK military spending estimated at US$8.7b, but rumors of problems grow

Tuesday, January 18th, 2011

According to the Korea Herald (via Yonhap):

North Korea’s actual military spending is believed to be about 15 times the announced amount in 2009 as the communist regime continues to build up its military capacity despite the country’s moribund economy, a South Korean defense research institute said Tuesday.

The North said it spent US$570 million on its military in 2009, but the real expenditure, calculated on an exchange rate based on purchasing power parity terms, was $8.77 billion, the state-run Korea Institute of Defense Analyses (KIDA) said in a report.

“In spite of its economy shrinking since the mid-2000s, North Korea has gradually increased its military spending,” the report said.

North Korea maintains the world’s fifth-largest army with an active duty military force of 1.19 million, compared to about 655,000 in the South.

According to figures released by North Korea, its military spending rose to $570 million in 2009 from $540 million in 2008, $510 million in 2007 and $470 million in 2006, the KIDA said.

As of 2009, North Korea’s gross national income stood at 28.6 trillion won ($25 billion), compared with the South’s 1,068 trillion won, the KIDA said.

Despite this chunk of change, rumors are leaking into the media that the DPRK military is suffering some sever problems:

1. People ordered to donate food to the military

2. Shortage of clothing provisions

3. Shortage of heating and increased propaganda training.

The usual caveats apply.

(h/t Joshua)

Read the full story here:
N. Korea’s actual military spending estimated at US$8.77 bln in 2009
Korea Herald
1/18/2011

Posted in Finance, Fiscal & monetary policy, GDP statistics, Military | Comments Closed

Did Iran pay DPRK for arms via Seoul bank branch?

Tuesday, January 18th, 2011

The Choson Ilbo reports:

The [Wikileaks] cables say that North Korea received the arms payments through the Seoul branch of Iran’s Bank Mellat and that the U.S. government urged the South Korean government to investigate the matter. According to a cable dated March 24, 2008, a company in Iran called Hong Kong Electronics wired $2.5 million in three separate payments from Parsian Bank in Iran to the Seoul branch of Bank Mellat in November of 2007. Hong Kong Electronics is a paper company owned by North Korea’s Tanchon Commercial Bank. The money was wired entirely in euros, and $1.5 million worth of the payment was then wired to accounts in China and Russia.

Following a U.S. request to investigate, the South Korean government probed the Bank Mellat branch in December 2008 but did not take any punitive measures. Washington then demanded that the branch’s assets be frozen, according to a cable dated May 12, 2009.

The Iranians deny the accusations. According to the Joongang Ilbo:

Iranian Foreign Ministry Spokesman Ramin Mehmanparast rejected allegations that Iran transferred a large sum of money via the Seoul branch of Iran’s Bank Mellat to buy North Korean arms.

In an exclusive interview with the JoongAng Ilbo on Friday at the Iranian Embassy in Seoul, Mehmanparast stressed that Bank Mellat’s Seoul office ran its business “under the supervision of South Korean financial authorities.”

Iran’s new ambassador to South Korea, Ahmad Masoumifar, sat in on the interview.

Mehmanparast was in Seoul with seven Iranian journalists to improve relations with the Korean Ministry of Foreign Affairs and Trade.

The South Korean government in September slapped tough sanctions on Iran for its nuclear program, with penalties including the suspension of virtually all financial activities at the Seoul branch of Iran’s Bank Mellat.

The South Korean government said its actions complied with United Nations Security Council resolutions.

Q. Cables released by WikiLeaks suggested that North Korea likely received payment for weapons sold to Iran through Bank Mellat’s Seoul Branch.

A. I think there’s someone behind the allegations in regard to Wikileaks’ information on Iran. Bank Mellat operates abiding South Korean law. There’s nothing wrong with the bank. We do maintain diplomatic ties with the North Korean government. But Iran doesn’t damage (diplomatic) relations with one country for the sake of relations with another country.

Q. What about allegations that Iran and North Korea are cooperating on nuclear technology?

A. Iran and North Korea aren’t in a military alliance. Frankly speaking, when it comes to nuclear weapons, Iran doesn’t need other countries’ assistance.

Iran’s young scientists are in the process of successfully developing technology to use nuclear power in a peaceful manner.

Q. What’s Iran’s official position on North Korea’s attacks on the South Korean warship Cheonan and Yeonpyeong Island?

A. It was heartbreaking when I heard the news about the Yeonpyeong attack. I hope peace is maintained in Asia. I want to again stress peace through dialogue.

Q. Iran is an oil rich country. Why does it need nuclear power?

A. The Western media also questions why Iran needs nuclear power. But when you look at the world’s latest economic trends, nuclear power is (increasingly important) when used in a peaceful way. Even the United Arab Emirates began nuclear cooperation with the South Korean government.

Crude oil will be depleted in the future. Nuclear power is an answer to that, and it’s necessary for environmental reasons, too.

Q. Former Iranian Ambassador to Korea Mohammad Reza Bakhtiari said in a previous interview with our paper that Iran won’t sit back and watch if the South Korean government joins international sanctions against Iran.

A. That’s an uncomfortable question to answer. South Korea and Iran have lots in common as Asian nations. I hope for South Korean companies’ prosperity in Iran and I also hope for the success of Iranian companies in South Korea.

I hope short-term political pressures won’t hurt our bilateral relationship.

Read the full stories here:
N.Korean Arms Payments ‘Passed Through Seoul’
Choson Ilbo
1/18/2011

‘Bank Mellat didn’t pay for arms from North Korea’
Joongang Ilbo
Chun Su-jin
1/24/2011

Posted in Arms shipment, Banking, Finance, Illicit activities, Iran | Comments Closed

Daedong Credit Bank press release

Sunday, January 16th, 2011

The Daedong Credit Bank (Based in the Potonggang Hotel in Pyongyang) has issued a press release.

I have made a PDF of it available here.

Here is their web page.

Posted in Banking, Daedong Credit Bank, Finance, Foreign direct investment | Comments Closed

ROK government encouraging DPRK restaurant boycott

Monday, January 10th, 2011

According to the Choson Ilbo:

Siem Reap, Cambodia’s second largest city near the sprawling ruins of the Angkor Wat, has two North Korean restaurants, down from three since North Korea recalled all their expat staff after Kim Jong-il’s stroke in 2008 and returned only the employees of two of them. The restaurants rely on South Korean tourists for business since the town is a popular destination for them.

One of them, called Restaurant Pyongyang, sells the famous cold noodles or naengmyeon for US$7 a dish, while North Korean dancers perform and pour drinks for customers. It used to be a regular stopover for South Korean tourists, with tour agencies charging $30 for a visit and a meal. One tour guide said, “In Cambodia $7 a dish is already pretty expensive, but many tourists go to the restaurant because of its attractions.”

After North Korea’s sinking of the Navy corvette Cheonan in March last year, the South Korean Embassy in Cambodia asked tour agencies and South Korean residents’ association there to avoid sending visitors from the South there, but local sources say the plea fell largely on deaf ears. But the North’s artillery attack on Yeonpyong Island in November last year finally did the trick. The South Korean residents’ association in Siem Reap voluntarily boycotted the North Korean restaurants, and tour agencies also voluntarily took them off their itinerary.

The restaurants are apparently suffering. A member of the South Korean residents’ association said, “Almost all of the customers were South Korean tourists, but it seems that even the performances have stopped now there are no customers.”

Around 120,000 South Koreans a year reportedly visited the two restaurants, contributing to an estimated W200-300 million (US$1=W1,126) in monthly sales. North Korea runs over 100 restaurants in China, Vietnam, Thailand, Laos and Russia, which serve as a source of much-needed hard currency for the regime by sending home $100,000-300,000 a year.

The mood in Siem Reap is now desperate. Last month, a placard outside a South Korean restaurant criticizing North Korea’s attacks were torn down by seven people who appeared to be North Korean agents, in what expats there believe was another small-scale North Korean provocation. Tour agencies are also losing revenues after taking the restaurants off their itineraries. “We used to charge $30 per visit and took 30 percent of the profits, but not any more,” a tour guide said.

South Korean residents’ associations abroad rarely voluntarily boycott North Korean restaurants. The Okryugwan chain of North Korean restaurants in Beijing’s Wangjing district is still accessible to South Koreans. A South Korean Embassy official there said, “We asked residents to avoid the restaurant in November but did not force them.”

Meanwhile, a North Korean restaurant in Kathmandu, Nepal closed down in November after its North Korean manager defected to South Korea.

Read the full story below:
N.Korean Restaurants Abroad Feel the Pinch
Choson Ilbo
1/10/2011

Posted in Cambodia, Finance, Fiscal & monetary policy, International Governments, Restaurants, Trade Statistics | Comments Closed

Australia’s ANL cited in DPRK weapons smuggling

Monday, January 10th, 2011

According to The Australian:

The use of an Australian-owned cargo ship to smuggle weapons from North Korea to Iran has been highlighted in a report to the UN.

It was one of several breaches of UN sanctions against Kim Jong-il’s regime detailed in a report to the Security Council.

The report, which was submitted to the council recently after months of obstruction from China, found the North was making $US100 million a year through illegal arms sales to Syria, Iran and Burma.

Pyongyang used shadowy webs of front companies, false manifests and complex routes to try to get around sanctions aimed at stopping its arms proliferation, the investigation found.

The report flags the 2009 interception of the ANL Australia in Sharjah as one of at least four occasions that North Korea was caught out exporting arms or defence equipment.

The report said weapons were seized from the ANL Australia in the United Arab Emirates on July 22, 2009.

The cargo is thought to have included up to 10 containers of arms, including rocket-propelled grenades and trigger mechanisms and propellant, although this is not detailed in the report.

The cargo was packed and sealed in North Korea and shipped to China, where it was loaded aboard the ANL Australia en route to Iran.

The Bahamas-flagged vessel was owned by ANL Container Line at the time.

ANL, once Australia’s national shipping line, was taken over by French company CMA CGM.

Despite the breach of sanctions, an Australian government investigation found ANL was not responsible because the ship was chartered by a foreign company at the time.

“The Australian government’s inquiries into this matter indicated that at all relevant times the vessel was not under the operational control of its owner, but was rather being chartered by a non-Australian company,” a Department of Foreign Affairs and Trade spokesman said.

“No conduct relevant to the shipment can be attributed to an Australian person or body corporate,” he said.

ANL declined to comment.

The report found that while no ballistic missile or nuclear-related materials emanating from North Korea had been intercepted since sanctions were applied, evidence suggested “continuing DPRK (North Korea) involvement in nuclear and ballistic missile-related activities in certain countries, including Iran, Syria and Myanmar (Burma)”.

“To supplement its foreign earnings, the DPRK has long been involved in illicit and questionable international transactions (including) the surreptitious transfer of nuclear and ballistic missile-related equipment, know-how and technology,” it says.

The panel received government reports suggesting North Korea had helped build Syria’s Dair Alzour nuclear facility (destroyed in 2007 by an Israeli attack) along with details of Japan’s arrest in June 2009 of three individuals trying to illegally export a magnetometer, a device with potential missile-related uses, to Burma.

The report cited in the story is the “Panel of Experts” report to the UNSC. You can read (and search) it here (PDF).

Read the full story here:
UN cites ANL in N Korea arms smuggling
The Australian
Rick Wallace
1/10/2011

Posted in Arms shipment, Australia, Finance, Fiscal & monetary policy, Illicit activities, International trade, Iran, Sea shipping, UN Security Council | Comments Closed

Rumor of DPRK plans to focus on light industry

Friday, January 7th, 2011

According to the Choson Ilbo,

The North Korean regime wants to divert some of budget for the all-powerful military to the civilian sector and increase exports of mineral resources to China in its Quixotic quest to become “a powerful and prosperous nation” by 2012.

A senior member of the Workers Party who attended a meeting held in Chongjin, North Hamgyong Province on Monday was quoted by Radio Free Asia as saying, “This year, the party decided to divert some of the budget earmarked for the munitions industry to the people’s economy to develop the light industry.”

“People will undergo a sea change in their lives next year when we reach the goal to become an economic power,” the U.S.-funded broadcaster quoted a senior party official from North Pyongan Province as saying. “There’ll be big investments.”

The North did not even reduce military spending even during the famine of the mid to late 1990s, when more than a million people starved to death, telling people to “tighten belts until the peninsula is reunited.” The regime’s annual military spending is estimated at about US$1.7 billion.

A South Korean security official said the North managed to overcome a food shortage early last year by releasing some rice from its military stockpiles, “but it may not be as easy this year.”

Meanwhile, the regime has been increasing exports of mineral resources to China to earn hard currency.

“In 2009, Kim Jong-il banned exports of coal after receiving a report that factories weren’t working due to coal shortage, but the regime sold $300 million worth of coal to China in 2010,” a North Korean source said.

Coal accounted for 30 percent of the North’s total exports to China of about $900 million last year.

A Chinese businessman dealing with the North said in early December last year, a delegation from Resources Development Corporation of the North’s National Defense Commission agreed with the Chinese province of Liaoning on the development of 350 million yuan worth of graphite in the North. He added Chinese officials last November looked around Pyoksong, Yonchon and Haeju in Hwanghae Province, which have abundant graphite deposits.

The regime ordered officials to earn hard currency by selling coal from Pukchang, South Pyongan Province, and iron ore from Unyul, Hwanghae Province, to China, a member of a North Korean defectors organization said.

Read the full story here:
N.Korea Diverts Military Budget to Light Industry
Choson Ilbo
1/7/2011

Posted in Coal, Energy, Finance, Graphite, Light Industry, Manufacturing, Military, Mining/Minerals, National Defense Commission, Songun | 1 Comment »

DPRK restaurant in Dubai

Friday, December 31st, 2010

NPR published a story about a North Korean restaurant in Dubai. According to the article:

The Dubai branch of the Okryu-Gwan restaurant is tucked into the corner of a nondescript business park in Dubai’s Deira neighborhood. In the dining room, the all-female staff is dressed in colorful gowns and robes. Most speak decent English and are happy to guide newcomers to Pyongyang cuisine through the menu.

The signature naengmyon cold noodles are recommended, but the menu is extensive, with varieties of kimchi, the pickled cabbage dish popular on both ends of the Korean peninsula, as well as Korean meat and fish dishes. It’s not quite as spicy as they do it in Seoul, says one waitress pressed for the difference between North and South Korean cooking.

As the food begins to arrive, a synthesizer strikes up a theremin-sounding introduction, and soon the waitresses are onstage, belting out Korean songs and decades-old American pop.

The Okryu-Gwan restaurants are an important source of hard currency for Pyongyang, says Marcus Noland, a North Korea expert with the Peterson Institute for International Economics in Washington, via e-mail.

Since so few North Koreans get to travel, Noland says, being picked to work in the restaurants is a plum assignment.

Potential staff members are thoroughly vetted for political reliability, he added, and pressure may be used against family members to minimize the risk of defection. But as long as the restaurants meet their monthly revenue quotas, the regime tends not to interfere.

Dubai’s Okryu-Gwan is tiny compared with the cavernous original in Pyongyang, which recently celebrated its 50th anniversary. The official North Korean news agency reported that leader Kim Jong Il himself provided “on-site guidance” when the restaurant added a 60,000-square-foot extension.

The foreign branches do have their advantages, however: Unlike the average North Korean, I did not have to endure a lengthy waiting list to purchase a ticket from my work unit to get in.

If any readers can find this restaurant on Google Earth, please let me know.

Read the full story here:
Dubai Restaurant Offers A Taste Of North Korea
NPR
Peter Kenyon
12/31/2010

Posted in Finance, Fiscal & monetary policy, Restaurants | 3 Comments »

Hot 2010 DPRK consumer goods

Tuesday, December 28th, 2010

According to Yonhap:

Skinny jeans, blue crabs, pig-intestine rolls and even human manure were some of the hottest items among North Korean consumers this year, according to a South Korean professor who has interviewed recent defectors from the communist country.

Kim Young-soo, a political science professor at Seoul’s Sogang University, said in a conference on Tuesday that adult movies, television dramas and instant noodle “ramen” made in South Korea are also selling “like hot cakes” in North Korea.

Skinny jeans refer to slim-fit pants that have gained popularity around the world, said Kim who interviewed about 2,000 defectors this year as part of a research project for the government.

He said that skinny jeans are so popular in the North’s capital, Pyongyang, that people there sometimes mistakenly believe Chinese wearing the stylish clothes are roaming their capital.

“These are signs that North Korea is easing its isolation,” Kim said in a telephone interview, noting that such lifestyle changes are conspicuous in Pyongyang and areas near the border with China.

The professor said many of the defectors he has interviewed had stayed in China no longer than a month before they came to South Korea, allowing him to have a relatively up-to-date glimpse of the latest culture in the communist country.

Kim said defectors told him pine mushrooms were also a “hit” among North Koreans this year because exports to South Korea had been diverted into the domestic market since cross-border tensions soared over the deadly March sinking of a South Korean warship.

After a multinational investigation in May found North Korea responsible for the sinking that killed 46 sailors, Seoul banned cross-border trade as part of its punitive measures.

Kim said blue crabs have met the same fate as pine mushrooms, allowing North Koreans to enjoy what was once a rarity for them. The professor even told of a shop in which human manure could be traded to be used as an alternative to chemical fertilizer, an item on which the North had heavily depended from the South for years.

“Soondae,” or sausage rolls stuffed with ingredients such as noodles and vegetables and wrapped in pig intestine films, has also made inroads into the market as a staple after the military stopped collecting pork and other food items from civilians, Kim said.

“These changes may not necessarily lead to greater ones in society, but they do bear a meaning,” he said.

Read the full sotry here:
Skinny jeans, pig-intestine rolls among “hit items” in North Korea this year: survey
Yonhap
Sam Kim
12/28/2010

Posted in Clothing, Finance, Food, General markets (FMR: Farmers Market), International trade | Comments Closed

DPRK elevates status of national resource development office

Tuesday, December 28th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-12-22
12/22/2010

On December 1, the North Korean Supreme People’s Assembly Standing Committee announced an order to elevate the position of the National Resource Development Office, which is overseen by the Cabinet’s Ministry of Extractive Industry, to the Ministry of National Resource Development. According to the Korea Central News Agency, this measure is aimed at increasing development and export of underground resources as international sanctions against the North further limit Pyongyang’s access to foreign capital.

The regime’s focus on increasing earnings can be seen in Kim Jong Il’s on-site guidance trips, as well. The KCNA reported on December 3 that Kim had recently visited Danchon, South Hamgyong Province, touring the Danchon Magnesia Factory, the Danchon Mining Equipment Factory, and the Danchon Port facilities. During his visit to the magnesia factory, Kim Jong Il emphasized the need for increasing the production of quality asphalt. In addition, after receiving a report on the status of implementation of CNC in the Danchon Mining Equipment Factory, he stated, “The factory needs to normalize at a high level of mass production to turn out the necessary numbers of mining and processing equipment.” Upon reviewing the Danchon Port facilities, Kim Jong Il urged staff to work towards ensuring a loud chorus of boat whistles in the port for the upcoming 100th anniversary of the birth of Kim Il Sung in 2012.

U.S. financial sanctions levied against the North have made it difficult for Pyongyang to collect export earnings from its mining efforts, one of its key earners of foreign capital. In May of last year, when sanctions were strengthened in response to North Korea’s second nuclear test, European and even Chinese banks froze money transfers to North Korea. The [North] Korea Magnesia Clinker Manufacturing Group could not collect 4.6 million USD in earnings from the export of zinc to Europe. It appears that the North has tried to compensate for these losses by increasing the export of iron ore from Musan. Exports to China passing through the Musan customs office have more than doubled, rising from 1200 to 2500 tons per day.

The mines of Musan, holding more than seven billion tons of iron ore, are the North’s primary vehicle for earning foreign capital. In 2004, China’s Tonghua Steel and Iron Group signed a contract with North Korean authorities granting the group 50-year development rights at some key North Korean mines, and is planning to invest seven billion Yuan in developing the sites. Beijing plans to use the access to North Korean mines to meet some of the expected 80 million ton shortfall of iron ore in 2010. However, there are rumors that North Korea has canceled the contract with no explanation, causing much speculation about the direction of Pyongyang’s export strategy.

Posted in Finance, Fiscal & monetary policy, Institute for Far Eastern Studies, International trade, Iron Ore, Mining/Minerals, Ministry of Extractive Industries, Ministry of National Resource Development, National Resources Development Council, Supreme Peoples Assembly | Comments Closed

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