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Myanmar – DPRK relationship grows

Friday, July 10th, 2009

According to Aung Zaw in the Wall Street Journal Aisa:

A government report leaked by a Burmese official last month shed new light on these ties. It described a Memorandum of Understanding between Burma and North Korea signed during a secret visit by Burmese officials to Pyongyang in November 2008. The visit was the culmination of years of work. Diplomatic relations between the two countries were cut in 1983 following a failed assassination attempt by North Korean agents on the life of South Korean President Chun Doo Hwan while he was visiting Rangoon. The attack cost 17 Korean lives and Burma cut off ties.

One of the first signs of warming relations was a barter agreement between the two countries that lasted from 2000 to 2006 and saw Burma receive between 12 and 16 M-46 field guns and as many as 20 million rounds of 7.62 mm ammunition from North Korea, according to defense analyst Andrew Selth of Griffith University in Australia. In exchange, Burma bartered food and rice.

The two countries formally re-established diplomatic relations in April 2007. After that, the North Korean ship the Kang Nam — the same ship that recently turned away from Burma after being followed by the U.S. navy — made a trip to Burma’s Thilawa port. Western defense analysts concluded that the ship carried conventional weapons and missiles to Burma.

This laid the ground for the MoU signed in November, when Shwe Mann, the regime’s third-most powerful figure, made a secret visit to North Korea, according to the leaked report. Shwe Mann is the chief of staff of the army, navy and air force, and the coordinator of Special Operations. He spent seven days in Pyongyang, traveling via China. His 17-member delegation received a tour around Pyongyang and Myohyang, where secret tunnels have been built into mountains to shelter aircraft, missiles, tanks and nuclear and chemical weapons.

The MoU he signed formalizes the military cooperation between the two countries. According to the terms of the document, North Korea will build or supervise the construction of special Burmese military facilities, including tunnels and caves in which missiles, aircraft and even naval ships could be hidden. Burma will also receive expert training for its special forces, air defense training, plus a language training program between personnel in the two armed forces.

Shwe Mann’s delegation also visited a surface-to-surface missile factory, partially housed in tunnels, on the outskirts of Pyongyang to observe missile production. The Burmese were particularly interested in short-range 107 mm and 240 mm multirocket launchers — a multipurpose, defensive missile system used in case of a foreign invasion. Also of great interest was the latest in antitank, laser-guided missile technology.

Previous Myanmar – DPRK posts here.

Read the full story below:
Burma and North Korea, Brothers in Arms
Wall Street Journal Asia
Aung Zaw
7/10/2009

Posted in Arms shipment, Illicit activities, International trade, Military, Myanmar | 3 Comments »

The Political Economy of North Korea: Implications for Denuclearization and Proliferation

Tuesday, June 16th, 2009

Stephan Haggard and Marcus Noland
East-West Center Working Papers
Economics Series, No. 104
Download paper here (PDF)

Abstract:
Despite North Korea’s turn away from economic reform and the constraints of the second nuclear crisis, the country has in fact become more economically open. But it has emphasized closer economic relations with China and other trading partners that show little interest in political quid-pro-quos, let alone sanctions. Yet the U.S. can still exercise economic leverage by going aggressively after third-party financial intermediaries. This particular form of sanction does not require multilateral coordination, since foreign banking institutions that conduct significant business in the United States have a strong interest in avoiding institutions that the United States Treasury has identified as money laundering or proliferation concerns.

There is some evidence that North Korea moderated its missile proliferation activities during periods when rapprochement with the United States, and to a lesser extent Japan, was a priority, but in the absence of such interest and as legitimate trade, investment, and aid dry up, the incentives to intensify proliferation activities increase.

The internal organization of the North Korean economy has important implications for any policy seeking transformation via engagement. The economy is structured in such a way that outside economic ties are still largely monopolized by stateowned enterprises and other gatekeepers, such as the military. Under such circumstances, the precise design of engagement policies requires very close scrutiny. Even nominally commercial relations can be exploited if the North Korean counterparties believe that they are ultimately political in nature, subsidized and thus vulnerable to blackmail. If economic ties are truly commercial in nature, those choosing to trade and invest with North Korea do so at their own risk. Under these circumstances, private actors will make economic decisions fully factoring in political risk, and North Korea will bear the costs if it chooses to renege on commitments or fails to provide a supportive policy environment.

Paper prepared for the conference on “North Korean Nuclear Politics: Constructing a New Northeast Asian Order in the 21st Century,” University of Washington, June 4-5, 2009. We would like to thank the Smith Richardson, MacArthur, and Korea Foundations for financial support and Jennifer Lee for research assistance.

UPDATE: A shorter version of this paper can be found here.

Posted in 2002 Economic reforms, Arms shipment, Banking, China, Economic reform, Finance, Fiscal & monetary policy, Foreign direct investment, Illicit activities, Military | Comments Closed

DPRK not about to collapse

Sunday, May 31st, 2009

Newsweek has an interesting article which makes the case that the DPRK economy is not as bad as the public tends to think. According to the article:

…North Korea isn’t broke—and its economy has been moving away from collapse in recent years-. The Hermit Kingdom may not be getting rich—the CIA estimates its GDP at roughly $40 billion, ranking 96th in the world. But it’s not failing either, and for the past decade, its economy has grown at an average rate of about 1.5 percent a year, according to South Korean statistics. While Seoul estimates that the North’s GDP shrank by 2.3 percent last year, some analysts say it actually expanded, arguing that South Korea’s recent figures on the North are deflated for political purposes.

To understand how the Dear Leader has managed this, you must first drop a few of the myths surrounding his country. First, the North Koreans haven’t been living in caves for the past two decades, nor is their economy de-industrializing, as is sometimes reported. Instead, with help from Beijing, Pyongyang has revamped its outdated infrastructure in recent years and repaired the mining facilities that were battered by massive floods during the mid-’90s. It now aims to shift from recovery to growth, with a focus on steel production, mining and light-industrial manufacturing.

Second, the North doesn’t have to rely on the black market to support itself. True, Pyongyang has sold missiles to Iran, Syria and Pakistan, and annual revenue from such exports is roughly $100 million, but analysts say that other illicit activities like drug trafficking and counterfeiting add very little to that sum. According to a former U.S. diplomat in East Asia who asked not to be named discussing sensitive intelligence, during the Bush years Washington investigated the oft-heard counterfeiting accusations, and found that the notes in question had actually been produced privately by former Chinese military officials, in China. “The Treasury Department couldn’t find a single shred of hard evidence pointing to North Korean production of counterfeit money,” the American says.

The biggest myth is that North Korea remains isolated. Despite supposedly comprehensive sanctions, Pyongyang today has diplomatic and commercial relations with more than 150 countries, including most European Union members. North Korea trades its abundant gold reserves—estimated at 1,000 to 2,000 tons—in cities like London, Zurich and Hong Kong, and buys and sells shares on the New York Stock Exchange via a legitimate London-based brokerage firm it essentially owns. While there are no figures on the volume of such transactions, the former U.S. diplomat says that such activities are “a substantial source of hard currency for North Korea.” In recent years, European firms have also begun eyeing investment opportunities there; In 2004, the London-based energy firm Aminex signed a 20-year deal with Pyongyang for exclusive rights to explore on- and offshore oil-and-gas deposits. Other companies are looking for ways to exploit the North’s cheap labor supply, and while most of these deals have yet to take off for technical and political reasons, ties to the outside world are expanding. In 2008, the country’s overall trade rose 30 percent from the previous year, reaching a record $3.8 billion, including imports of $2.7 billion, according to Seoul’s Korea Trade-Investment Promotion Agency.

North Korea has proved adept at avoiding restrictions: when Tokyo slapped it with sanctions five years ago, Pyongyang simply reshuffled its deals, turning to the BRIC economies as well as South Korea and Singapore. Meanwhile, China now accounts for nearly three quarters of North Korea’s total trade, sending it crude oil, petroleum and manufactured goods in exchange for coal, steel and rare metals like tungsten and magnesite. The North’s natural resources have become a major growth engine: the Musan mine in the country’s northwest is now said to be one of the largest iron-ore fields in Asia, and could eventually yield 10 million tons of ore a year.

Finally, there’s the southern connection. Despite deteriorating relations between Seoul and Pyongyang, factories at the joint Kaesong Industrial Complex are still operating at full gear, earning the North about $35 million annually—enough for eight or nine No-dong missiles. And that figure was projected (before the current crisis hit) to jump to $100 million by next year, says Lim Eul Chul of Seoul’s Kyungnam University.

I should point out that the CIA estimate of the DPRK’s GDP is among the highest. Most other estimates are below $30 billion for 2008.

Read the full article here:
How Kim Affords His Nukes: The myth of a failing economy.
Newsweek
5/30/2009

Posted in 2002 Economic reforms, Aminex, Arms shipment, Counterfeiting, Drug smuggling, Economic reform, GDP statistics, Illicit activities, International trade, Statistics, Trade Statistics | 2 Comments »

The end of six party talks or playing hard to get?

Tuesday, April 14th, 2009

UPDATE 2: Financial markets do not seem to care. According to Reuters:

Financial markets in Seoul and Tokyo were not affected by North Korea’s announcement, with investors seeing it as more of the sabre-rattling they have come to expect from Pyongyang.

UPDATE 1: According to the Wall Street Journal, the DPRK has ordered nuclear inspectors to leave the country (again):

North Korea ordered International Atomic Energy Agency inspectors out of the country Tuesday. The decision ends international monitoring of a research reactor at Yongbyon and in theory could allow reprocessing of fuel rods to produce plutonium. The IAEA is expected to announce the eviction in the next hour.

The on-again, off-again inspections at the 5-megawatt Experimental Nuclear Reactor Plant and the Nuclear Fuel Fabrication Plant at Yongbyon resumed in October, soon after the U.S. announced it would remove North Korea from the State Department list of countries that sponsor terrorism.

The IAEA issued a press statement here.

ORIGINAL POST:
The UN Security Council has published its presidential statement condemning th DPRK’s missile launch (read the full text of the statement here), and the media is widely reporting on the contents:

The United Nations Security Council has condemned North Korea’s April 5th rocket launch and demanded that Pyongyang not conduct further tests, saying that it would expand sanctions against North Korea.

—

The Security Council’s presidential statement is a level below a resolution — which has the power of force to back it up. But several ambassadors, including U.S. envoy Susan Rice, said the statement is legally binding, nonetheless. “The United States views presidential statements, broadly speaking, as binding. In this instance, it is more than binding in that it adds to an existing Chapter 7 sanctions regime. So in our view, there is no doubt that the measures that will be imposed as a consequence of this presidential statement by the 24th or 30th of April will occur and will be binding,” he said.

—

Monday’s statement goes further, saying there will be additional strengthening of measures in resolution 1718 and activates the dormant sanctions committee set up under that resolution.

“It is not extending the number of sanctions. It is not doing that. What it is doing is broadening the base of sanctions under the existing resolution. That is what we have agreed to do in principle and we have agreed to do it in a tight timeline by end of this month. So we are tightening the sanction screw a notch against North Korea,” said British Ambassador, John Sawers.

The statement calls for the designation of entities that would be subject to asset freezes and the prohibition of the transfer of some goods into or out of North Korea.

Turkish Ambassador Baki Ilkin, chairman of the sanction committee, said no countries have officially submitted their list yet. But several ambassadors said they are putting them together. (Voice of America)

This morning, the DPRK annonced it will withdrawl from 6 party talks:

Fuming at the U.N. Security Council for condemning its recent missile launch, North Korea said Tuesday it will restart its plutonium factory, junk all its disarmament agreements and “never participate” again in six-country nuclear negotiations.

It called the Security Council’s statement a “brigandish,” “wanton” and “unjust” infringement of its sovereignty. It said that six-party nuclear talks with the United States, South Korea, Japan, Russia and, even its closest ally, China, had “turned into a platform” for forcing the North to disarm itself and for bringing down its system of government.

“We have no choice but to further strengthen our nuclear deterrent to cope with additional military threats by hostile forces,” North Korea’s Foreign Ministry said in a statement released by its state news agency.

If it follows through on Tuesday’s bluster, North Korea will walk away from six years of slow, fitful but sometimes productive negotiations that have led to substantial disablement of the North’s main nuclear reactor and partial disclosure of the scale of its weapons program.

—

“We will actively consider building our own light-water nuclear reactor, will revive nuclear facilities and reprocess used nuclear fuel rods,” the ministry said. Experts have said the North does not have the equipment or skills to make an advanced light-water reactor.

China, host of the six-party talks, called for restraint and calm on Tuesday, asking all countries to return to the discussions, even after North Korea announced it would never do so.

“We hope the relevant parties could proceed from the perspective of the overall interest of the region, so as to work together to safeguard the progress of the six-party talks,” Chinese foreign ministry’s spokeswoman Jiang Yu said at a news briefing.

Japan also urged North Korea to return to the talks and the Russia government said it regretted Pyongyang’s decision.

—

Analysts in Seoul said that North Korea, with its threat to pull out of the six-party talks, appeared to be up to its familiar tactics of brinkmanship — creating a crisis in order to be rewarded for helping to solve it.

“North Korea can use today’s walkout as a negotiating chip with the United States in the future,” said Koh Yu-whan, a profession of North Korean studies at Dongguk University in Seoul.

“North Koreans have learned from past experience that when they create worst-case scenarios they get closer to solving their problems,” said Chun Hyun-joon, a North Korea specialist at the Korea Institute for National Unification. (Washington Post)

Here is the full KCNA comment:

DPRK Foreign Ministry Vehemently Refutes UNSC’s “Presidential Statement”

Pyongyang, April 14 (KCNA) — The DPRK Foreign Ministry issued a statement Tuesday flatly rejecting the brigandish “presidential statement” which the U.S. and its followers finally released by abusing the UNSC to condemn the DPRK’s launch of satellite for peaceful purposes.

Saying that throughout history the UNSC has never taken issue with satellite launches, the statement continues:

First, the DPRK resolutely rejects the unjust action taken by the UNSC wantonly infringing upon the sovereignty of the DPRK and seriously hurting the dignity of the Korean people.

Second, there would be no need to hold six-party talks which the DPRK has attended.

Now that the six-party talks have turned into a platform for infringing upon the sovereignty of the DPRK and seeking to force the DPRK to disarm itself and bring down the system in it the DPRK will never participate in the talks any longer nor it will be bound to any agreement of the six-party talks.

Third, the DPRK will bolster its nuclear deterrent for self-defence in every way.

It will take the measure for restoring to their original state the nuclear facilities which had been disabled under the agreement of the six-party talks and putting their operation on a normal track and fully reprocess the spent fuel rods churned out from the pilot atomic power plant as part of it.

Read the full stories here:
North Korea orders UN nuclear inspectors to leave
Reuters
Jon Herskovitz
4/14/2009
North Korea Expels Nuclear Inspectors After Leaving Six-Party Talks
Wall Street Journal
David Crawford, Evan Ramstad
4/14/2009

Security Council condemns DPR Korea’s recent launch
UN Security Council Press Release
4/13/2009

UN Condemns North Korea Rocket Launch
Voice of America
Margaret Besheer
4/13/2009

N. Korea Says It Will Boycott Nuclear Talks, Restart Weapons Plant
Washington Post
Blaine Harden
Washington Post Foreign Service
4/14/2009

Posted in Arms shipment, Illicit activities, International Aid, International trade, UN | Comments Closed

DPRK’s shipping infrastructure

Friday, March 6th, 2009

This week, Paul Eckert of Reuters informs us of an interesting study by Hazel Smith, titled, North Korean Shipping: A Potential for WMD Proliferation?.

According to the Reuters article:

British North Korea expert Hazel Smith said her detailed study of North Korean merchant shipping showed a fleet of only 242 aging vessels faces too much scrutiny in the world’s ports to be a significant conduit for weapons of mass destruction.

“We can’t really find very much hard evidence of North Korean ships involved in smuggling WMD or components of WMD,” Smith, of Cranfield University, told a Washington meeting of think tank East-West Center.

The weapons of mass destruction trade North Korea conducts, such as missile sales to Iran or Pakistan, is more likely moved by aircraft or allied vessels than on highly suspect North Korean-owned or -flagged ships, her report said.

Her findings, based on tracking ship movements using Lloyds Shipping Register and other insurance databases, call into question the efficacy of the Proliferation Security Initiative, a U.S.-led network of countries launched in 2003 to stop illicit weapons of mass destruction shipments because that effort focuses on shipping, she said.

Anti-proliferation efforts should instead focus on strengthening port controls and negotiating North Korean entry into international arms control treaties as part of a broader disarmament diplomacy with Pyongyang, Smith said.

HIGHLY SUSPECT SHIPS

North Korea’s fragmented merchant shipping industry has only a handful of directly state- or provincial-owned vessels, with most run by small owner operators, who lost state subsidies in the early 1990s, said the study.

With underpaid seamen, dilapidated vessels and dire cash and food shortages in North Korea, “it wouldn’t be surprising if crew and management would grasp opportunities to earn cash on the side from port calls,” Smith told the East-West Center, which published her report.

But even countries friendly toward North Korea such as China, Russia and Vietnam impose strict inspections on North Korean merchant ships, which are frequently stopped and even detained for serious safety violations, said the report.

In four publicly known cases between 1992-2003 in which North Korean vessels were stopped on suspicion of shipping WMD components or chemicals, none were prosecuted because the cargo was either undetermined, legal or “dual-use,” with legal applications Smith said.

You can download a PDF version of Prof. Smith’s paper here. Below is the abstract:

The possibility that North Korean ships may be smuggling weapons of mass destruction is a matter of intense concern in the Asia Pacific region and beyond. The few reported incidents of North Korean ships involved in WMD transport are ambiguous; some ships have been engaged in legal weapons trade and some carried “dual-use” goods suitable for use in nonmilitary applications, like agriculture. Ownership of the North Korean merchant fleet is largely private and highly fragmented; most of its ships are small, old, and in poor repair, and are often subject to rigorous scrutiny in foreign ports. The inability of the government to effectively regulate the low-cost, substandard shipping industry creates the risk and incentives to smuggle goods, including WMD. Anti-proliferation efforts should abandon the divisive and unsuccessful Proliferation Security Initiative and concentrate on negotiating North Korea’s entry into international arms control treaties, maintain stringent port controls, and negotiate technical assistance to reduce the vulnerability of the North Korean shipping industry.

You can listen to an interview with Hazel Smith here.

Read the full article here:
N.Korea ships smuggle goods, but not WMDs: report
Reuters (Via Washington Post)
Paul Eckert
3/5/2009

Posted in Arms shipment, Illicit activities, Sea shipping, Transportation | 2 Comments »

Nuclear declaration and US Sanctions

Friday, June 27th, 2008

UPDATE 3: Executive Order: Continuing Certain Restrictions with Respect to North Korea and North Korean Nationals

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), and section 301 of title 3, United States Code,

I, GEORGE W. BUSH, President of the United States of America, find that the current existence and risk of the proliferation of weapons-usable fissile material on the Korean Peninsula constitute an unusual and extraordinary threat to the national security and foreign policy of the United States, and I hereby declare a national emergency to deal with that threat. I further find that, as we deal with that threat through multilateral diplomacy, it is necessary to continue certain restrictions with respect to North Korea that would otherwise be lifted pursuant to a forthcoming proclamation that will terminate the exercise of authorities under the Trading With the Enemy Act (50 U.S.C. App. 1 et seq.) (TWEA) with respect to North Korea.

Accordingly, I hereby order:

Section 1. Except to the extent provided in statutes or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order, the following are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

all property and interests in property of North Korea or a North Korean national that, pursuant to the President’s authorities under the TWEA, the exercise of which has been continued in accordance with section 101(b) of Public Law 95-223 (91 Stat. 1625; 50 U.S.C. App. 5(b) note), were blocked as of June 16, 2000, and remained blocked immediately prior to the date of this order.

Sec. 2. Except to the extent provided in statutes or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order, United States persons may not register a vessel in North Korea, obtain authorization for a vessel to fly the North Korean flag, or own, lease, operate, or insure any vessel flagged by North Korea.

Sec. 3. (a) Any transaction by a United States person or within the United States that evades or avoids, has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in this order is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.

Sec. 4. For the purposes of this order:

(a) the term “person” means an individual or entity;

(b) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization; and

(c) the term “United States person” means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.

Sec. 5. The Secretary of the Treasury, after consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government consistent with applicable law. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order.

Sec. 6. The Secretary of the Treasury, after consultation with the Secretary of State, is hereby authorized to submit the recurring and final reports to the Congress on the national emergency declared in this order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)).

Sec. 7. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, instrumentalities, or entities, its officers or employees, or any other person.

GEORGE W. BUSH

THE WHITE HOUSE,

June 26, 2008.

UPDATE 2: How much plutonium does the DPRK have?

From the Daily Times (Pakistan):

But there may be problems ahead with the declaration. Japan’s Asahi Shimbun newspaper reported an informed source as saying the North declared it produced around 30 kg (66 lbs) of plutonium, while US officials have said they think it is closer to 50 kg. Sung Kim, a State Department envoy who witnessed the cooling tower blast, told reporters in Seoul on Saturday that there might not be enough time to complete the North’s denuclearisation before President George W Bush leaves office in January 2009.

‘Emotionally attached’: Kim said North Koreans engineers appeared to have formed an “emotional attachment” to their atomic programme that has become apparent during international efforts to dismantle it. Kim told reporters that he saw emotion in Ri Yong-ho, head of the Yongbyon nuclear reactor, and his colleagues when they all witnessed Friday’s demolition of the plant’s cooling tower. “I think I detected a sense of sadness when the tower came down but I thought he put it well when he was asked what this all meant for him and he said that he just hoped this would contribute to peace and stability,” said Ri.

UPDATE 1:
“US Treasury says N.Korea sanctions remain in place”
Reuters via Guardian
David Lawder
6/26/2008

U.S. Treasury financial sanctions aimed at ending North Korean money laundering, illicit financing activities and weapons proliferation remain in effect despite the easing of other sanctions against Pyongyang, a Treasury spokesman said on Thursday.

The move by the Bush administration to lift some sanctions after North Korea delivered a long-delayed account of its nuclear activities will not restore the country’s access to the international banking system, Treasury spokesman John Rankin said.

North Korea was largely cut off from the international banking system in 2005 when the Treasury named Banco Delta Asia, a small bank in the Chinese gambling enclave of Macau, as a primary money laundering concern.

The Treasury accused the bank of circulating counterfeit U.S. currency produced by North Korea, and of knowingly handling transactions by North Korean entities involved in illicit activities, including the narcotics trade and sales of counterfeit cigarettes and other goods.

Both North Korea and Banco Delta Asia have denied the Treasury’s allegations.

Although about $25 million in frozen North Korean funds in Banco Delta Asia was released last year, the sanctions against the bank, which prohibit transactions with U.S. banks, remain in effect, Rankin said. International banks have largely shunned Banco Delta Asia as well.

As recently as April, Treasury officials said so called “supernotes” — high quality counterfeit $100 bills produced by North Korea, were still surfacing.

“The lifting of sanctions associated with the Trading with the Enemy Act, and removing North Korea from the list of state sponsors of terrorism does not represent North Korea’s re-integration into the international financial system,” he said.

Sanctions that prohibit U.S. companies from owning, leasing, operating, insuring North Korean-flagged shipping vessels, as well as registering vessels in North Korea, remain in place.

ORIGINAL POST: Today North Korean made the nuclear declaration required by the February 2007 six-party agreement. This web site does not focus on the nuclear issue, but this turn of events represents a significant US policy shift with economic implications for the DPRK. The coverage has been overwhelming, so below are media excerpts that cover most of the angles:

“Pyongyang Submits Nuclear Declaration”
Wall Street Journal
Evan Ramstad
6/26/2008

After keeping the U.S. and other countries waiting for 15 months, North Korea delivered a description of its efforts to develop nuclear weapons, setting up the next – and more difficult – stage in an international effort to disarm and reshape the isolated, authoritarian country.

North Korean diplomats gave a declaration of its nuclear-weapons program to Chinese counterparts in Beijing who have been coordinating the six-nation talks. In return, U.S. President George W. Bush announced the lifting of some trade sanctions and beginning of the process of removing North Korea from its list of state sponsors of terror. (Read the text of the White House statement here).

Under the February 2007 deal, North Korea also agreed to disable a nuclear plant that provided fuel for its nuclear weapons, a step that’s also nearly complete. On Friday, it plans to blow up the cooling tower at the nuclear plant and invited TV crews from several countries, including the U.S. and South Korea, to record the event.

The contents of North Korea’s declaration weren’t immediately disclosed. In recent weeks, U.S. diplomats have said they didn’t expect it to include a key piece of data – how many nuclear weapons the country has built. The document also is believed to be limited to North Korea’s efforts to develop plutonium as a nuclear fuel, but doesn’t mention suspected research into highly-enriched uranium as a fuel nor its suspected proliferation efforts to Syria.

“North Korea removed from US ‘axis of evil'”
London Times
Jeremy Page and Richard Lloyd Parry
6/26/008

The US move, which will also see a lifting of long-running sanctions, would mark the most significant thaw in relations between Washington and Pyongyang since the 1950-53 Korean War. Mr Bush said that it was intended to reward and encourage North Korean co-operation and accelerate the tangled negotiations on the country’s nuclear disarmament.

In the first instance, America will exempt North Korea from sanctions under the Trading with the Enemy Act, a piece of First World War legislation that was employed during the Korean War, and which restricts trade with Pyongyang by US companies and citizens. The only other country subject to its provisions is Cuba.

It also gave notice that it would start the 45-day process of removing North Korea from its list of state sponsors of terrorism, where it stands alongside Cuba, Iran, Sudan and Syria. Sanctions against them include a ban on arms sales, economic assistance, and an obligation on the US Government to oppose loans to listed countries by such international institutions as the World Bank.

“Diplomacy Is Working on North Korea”
Wall Street Journal
Condoleeza Rice
6/26/2008; Page A15

In its declaration, North Korea will state how much plutonium it possesses. We will not accept that statement on faith. We will insist on verification. North Korea has already turned over nearly 19,000 pages of production records from its Yongbyon reactor and associated facilities. With additional information we expect to receive – access to other documents, relevant sites, key personnel and the reactor itself – these records will help to verify the accuracy and completeness of Pyongyang’s declaration. North Korea’s plutonium program has been by far its largest nuclear effort over many decades, and we believe our policy could verifiably get the regime out of the plutonium-making business.

Getting a handle on North Korea’s uranium-enrichment program is harder, because we simply do not know its full scale or what it yielded. And yet, because of our current policy, we now know more about North Korea’s uranium-enrichment efforts than before, and we are learning more still – much of it troubling. North Korea acknowledges our concerns about its uranium-enrichment program, and we will insist on getting to the bottom of this issue.

Similarly, we know that North Korea proliferated nuclear technology to Syria, but we do not know whether that is the end of the story. Rather than just trying to address this threat unilaterally, we will be more effective in learning about North Korean proliferation and preventing its continuation through a cooperative effort with Japan, South Korea, China and Russia.

And in return for these steps, what have we given thus far? No significant economic assistance. No trade or investment cooperation. No security guarantees or normalized relations. And our many sanctions on North Korea, both bilateral and multilateral, remain in place.

“‘Good start’ to UN’s Syria probe”
BBC
6/25/2008

The head of a UN team investigating allegations that Syria has been working on a secret nuclear weapons programme says their work is off to a good start.

The IAEA official, Olli Heinonen, said inspectors had taken samples at the al-Kibar site in the Syrian desert.

“It was a good start, but there’s still work that remains to be done,” he said.

“For this trip we did what we agreed to. We achieved what we wanted on this first trip. We took samples which we wanted to take. Now it’s time to analyse them.”

Mr Heinonen also said he was generally satisfied with the level of co-operation by Syria.

Additional information:

To read a hawk perspective, see Josh’s post at One Free Korea. Also, the Telegraph (UK) reports that Vice President Cheney tried to block the deal.

David Kang spoke to NPR’s Market Place.

US move reduces Japan’s negotiation leverage over DPRK.

Posted in Arms shipment, Banking, Counterfeiting, Energy, Finance, Fiscal & monetary policy, Illicit activities, International Aid, International trade, Military, Nuclear, Political economy, Sea shipping, USA | 3 Comments »

U.S. senator demands conditions to removing N.K. from terrorism list

Tuesday, December 11th, 2007

Yonhap
12/11/2007

(NKeconWatch: Joshua over at OFK also has a contribution to this)

A senior U.S. senator introduced a resolution setting conditions for removing North Korea from the U.S. list of terrorism-sponsoring nations, one of the key incentives offered for Pyongyang’s denuclearization.

Sen. Sam Brownback (R-Kansas) submitted Resolution 399 on Monday and so far has three co-sponsors.

The resolution urges the administration not to lift the designation until it can be demonstrated that North Korea is no longer engaged in proliferation of weapons of mass destruction and no longer counterfeiting American currency.

It also demands proof that a North Korean ruling party bureau, believed to be running illicit financial activities including drug trafficking and counterfeiting, has been made inoperable.

The senator also demands that the terrorist-nation designation remain until all U.S. overseas missions have been instructed to facilitate asylum applications by North Koreans seeking protection as refugees.

North Korea was put on the list in January 1988, soon after its agents blew up a South Korean civilian aircraft. Brownback’s resolution demands North Korea’s accounting of Japanese nationals abducted by the North as well as of surviving South Korean prisoners of war.

“If the United States takes the step of removing North Korea from the terrorism list, let’s at least make clear the conditions for such a removal,” Brownback said, adding, “I question the merits of the State Department’s decision to remove North Korea from its terrorist list.”

“It is important that the United States sends a loud and clear message to the North Korean regime that we will remain vigilant,” he said.

Delisting North Korea is one of the key benefits the U.S. offered in return for Pyongyang’s disablement of its core nuclear facilities and full disclosure of its atomic programs, the steps toward full dismantlement agreed on by six nations — South and North Korea, the U.S., China, Russia and Japan.

Getting off the list would free North Korea from a number of restrictions prohibiting meaningful economic and political assistance and exchange from the U.S. and the international community.

In Seoul, a Foreign Ministry official expressed concerns the resolution, if passed, could undermine progress in the nuclear disarmament talks, but said it did not pose any immediate threats to the six-nation deal on the denuclearization of the North.

“Delisting North Korea does not depend on the resolution, but whether the North fully discloses its nuclear programs,” the official, who is deeply involved with the nuclear talks, said, asking not to be identified. “Obviously, nothing has been changed so far. The U.S. administration can still delist the North if and whenever it chooses to.”

Posted in Arms shipment, Counterfeiting, Illicit activities, International Aid, International trade, Political economy, USA | Comments Closed

Odd couple: The royal and the Red

Wednesday, October 31st, 2007

Asia Times
Bertil Lintner
10/31/2007

North Korean Premier Kim Yong-il is scheduled to pay a four-day visit to Cambodia in early November, underscoring the curious close relationship between one of the world’s last communist dictatorships and one of Asia’s most ancient monarchies.

Kim Yong-il, who should not be confused with the North Korean supremo, “Dear Leader” Kim Jong-il or any of his relatives, will hold talks with Cambodia’s retired king Norodom Sihanouk, the Cambodian Foreign Ministry said in a statement posted on its website.

The North Korean premier will also hold “official talks” with his Cambodian counterpart Hun Sen, and “pay courtesy calls” on Senate president Chea Sim, and the president of the National Assembly, Heng Samrin, according to the statement.

Cambodia has long served as a link between North Korea and Southeast Asia and beyond, so it is plausible to assume that trade and related issues will be on the agenda. For years the two countries ran a joint shipping company, and before the China-led six party talks, Cambodia had offered to mediate over Pyongyang’s contentious nuclear program.

Kim Yong-il’s visit to Cambodia is not the first by a North Korean dignitary in recent years. Kim Yong-nam, president of North Korea’s rubber-stamp parliament, the Supreme People’s Assembly, also visited the country in 2001 at the invitation of Sihanouk, who had then not yet abdicated in favor of his son, Norodom Sihamoni, the current serving monarch.

Kim Yong-nam now functions as de facto head of state, as Kim Jong-il’s father, “Great Leader” Kim Il-sung was elevated to the position of “eternal president” before his death in 1994, making North Korea not a monarchy, but rather the world’s only necrocracy.

As incongruous as it may seem, Cambodia is North Korea’s oldest ally in Southeast Asia. It all began when Sihanouk met Kim Il-sung in 1961 at a Non-Aligned Movement meeting in Belgrade and a personal friendship developed between the two leaders. When Sihanouk was ousted in a coup in 1970, Kim Il-sung not only offered him sanctuary in North Korea but also had a new home built for him about an hour’s drive north of Pyongyang.

A battalion of North Korean troops worked full-time on it for almost a year, and when it was finished, only specially selected guards were allowed anywhere near the 60-room palatial residence. Overlooking the scenic Chhang Sou On Lake and surrounded by mountains, the Korean-style building even had its own indoor movie theater. Like the Great Leader’s son, Kim Jong-il, Sihanouk loves movies.

Sihanouk has both directed and acted in his own romantic feature movies and a few more were made in North Korea, with Cambodian actors strutting their stuff against the backdrop of Korea’s snow-capped mountains.

French wines and gourmet food were flown in via China, and Sihanouk and his entourage were treated as royals would have been in any country that respects monarchy – as North Korea evidently does.

By contrast, North Korea has maintained less cordial relations with neighboring communist Vietnam, which still exerts behind-the-scenes pressure on Cambodia. Kim Yong-il will nonetheless also visit Hanoi during his diplomatic tour of Southeast Asia.

Throughout the Vietnamese occupation of Cambodia, North Korea refused to recognize the regime that Hanoi installed in Phnom Penh in January 1979 – and that despite immense pressure at the time put on Pyongyang from Moscow. During a meeting between Kim Il-sung and Sihanouk seven years later on April 10, 1986, in Pyongyang, the Great Leader reassured the then prince that North Korea would continue to regard him as Cambodia’s legitimate head of state.

When Sihanouk returned to Phnom Penh in September 1993, after United Nations-led mediation to end Cambodia’s civil conflict, he arrived with 35 North Korean bodyguards, commanded by a general from Kim Il-sung’s presidential guards. They are still there, now guarding Sihanouk as well as the new king, Sihanomi, who is not as close to North Korea as his father, but has paid at least one visit to Pyongyang.

Sailing buddies
Sihanouk and the Cambodian royals showed their gratitude to the North Koreans when in the late 1990s they set up a privately-owned shipping registry, the Cambodia Shipping Corporation (CSC). The flag of convenience was used by the North Koreans, and it enjoyed royal protection as it was headed by Khek Vandy, the husband of Sihanouk’s eldest daughter, Boupha Devi.

CSC was also partly owned by a Phnom Penh-based North Korean diplomat and for a few years aggressively marketed itself as a cheap and efficient “flag of convenience” service for international shippers. A series of embarrassing maritime incidents, including the interception in June 2002 of a Cambodian-registered – though not North Korean owned – ship by the French navy, in a joint operation with US, Greek and Spanish authorities, of a massive haul of cocaine off the West African coast prompted Hun Sen’s government to cancel CSC’s concession and reportedly give it to a South Korean company, the Cosmos Group.

At the time, International Transport Federation general secretary David Cockroft told the Cambodia-based fortnightly newspaper the Phnom Penh Post that “they’ll need to be able to walk on water, because nothing short of a miracle will clean up the name of Cambodian shipping”. Indeed, little appeared to change, including North Korea’s use of Cambodia’s flag of convenience for controversial shipments.

In December 2002, a Cambodian-registered, North Korean-owned ship named So San was intercepted by Spanish marines, working on a US tip, in the Arabian Sea. It was found to be carrying 15 Scud-type missiles, 15 conventional warheads, 23 tanks of nitric acid rocket propellant and 85 drums of unidentified chemicals under a cargo of cement bags.

The destination of the weaponry was said to be Yemen, and following protests from both Yemen and North Korea – and intervention by the US, which apparently did not want to antagonize Yemen, a supposed ally in Washington’s “war on terror” – the ship was allowed to continue to Yemen. Later revelations indicated that the cargo was ultimately delivered to Libya, which caused considerable embarrassment in Washington.

Premier Kim Yong-il is likely to be quite familiar with the CSC, as he served as minister for land and marine transport from 1994 until the Supreme People’s Assembly appointed him to the premiership in April this year. But since the scandal-ridden CSC was reorganized five years ago, Cambodia’s economic importance to Pyongyang would appear to have waned, and North Korea’s only known activity in the country today is in the restaurant business, including eateries in Phnom Penh and Siem Reap.

Yet as a diplomatic link to the wider region, Cambodia is still important to North Korea. In April 2003, the Cambodian government, at the urging of Sihanouk, had plans to send an envoy to Pyongyang in a bid to persuade the North Korean leadership to be more flexible about talks on its nuclear program, which at that time had stalled.

The mission never materialized, but North Korea no doubt remembers that its trusted ally Cambodia tried first to mediate – and that Phnom Penh in future could still serve as a gateway for improved contacts with the outside world. It remains to be seen what message Kim Yong-il will bring to Phnom Penh, but it is reasonable to assume that his visit will, despite the official announcements, be confined merely to “courtesy calls” and royal audiences.

Bertil Lintner is a former correspondent with the Far Eastern Economic Review and the author of Great Leader, Dear Leader: Demystifying North Korea under the Kim Clan. He is currently a writer with Asia-Pacific Media Services.

Posted in Arms shipment, Cambodia, Illicit activities, International trade, Military, Political economy, Sea shipping, Supreme Peoples Assembly, Transportation, Vietnam | Comments Closed

North Korea: Illegal Exporting of Weapons to Sri Lanka Guerilla Groups

Thursday, September 27th, 2007

Daily NK
Namgung Min
9/27/2007

The Sankei Shimbun reported on the 26th that a smuggling vessel containing North Korean weapons have been caught on their way to illegally entering Sri Lanka.

According to the Sankei, the Sri Lanka navy arrested the vessel containing the 68 automatic rifles manufactured by the Munitions Industry Department (No. 99 Department) of the Worker’s Party that was leaving from Chonjin to Sri Lanka.

The Sankei announced that when the Sri Lanka navy tried to capture the smuggling vessel on October in 2006 and February this year, the smuggling vessel opened fire so the Sri Lankan navy shot them down. On March in 2007, the Sri Lankan navy took the North Korean vessel near the shore and confiscated the North Korean weapons and arrested the captains.

Furthermore, the newspaper revealed that there was no sign implying the nationality but it was identified as North Korean due to the confiscated weapons which were identified by the former North Korean military men who defected to South Korea.

It was announced that the North Korean machine guns and antitank guns were planned to be passed over to the Anti-government guerrilla groups named the Liberation Tigers of Tamil Eelam (LTTE) in Sri Lanka.

The U.S. appointed LTTE as a foreign terrorist group in 1997 and the EU also appointed the LTTE as a terrorist organization in April, 2007.

According to the newspaper, the Sri Lankan government conducted investigation and came to a conclusion that a Chinese weaponry company probably acted as an intermediary to smuggle the North Korean weapons to the anti-government guerrillas in Sri Lanka.

In regards to this incident, the Sri Lankan government raised complaints to the North Korean ambassador located in India and the Chinese government, but the both representatives are denying their relations to the illegal smuggling of the weaponry.

Posted in Arms shipment, Illicit activities, Sri Lanka | Comments Closed

US to Announce More Sanctions on NK Entities

Wednesday, September 26th, 2007

Korea Times
Jung Sung-ki
9/26/2007

(UPDATE: On Oct. 23, [2008] the State Department blacklisted two North Korean companies, Korea Mining Development Corp. and Korea Taesong Trading Co., for violating U.S. bans on the sale of equipment used in building missiles or other weapons of mass destruction to Iran and Syria. Citation: “North Korean Plane Was Grounded at U.S. Request “, Wall Street Journal, Jay Solomon, 11/1/2008 )

The U.S. State Department is expected to announce additional sanctions on North Korean entities connected to missile proliferation, Yonhap News reported Wednesday.

Some of the entities are believed to be linked to the Korea Mining Development Corporation (KOMID), which was designated in June 2005 in an executive order for supporting weapons of mass destruction proliferation, it said.

The measure would come at an awkward moment as envoys from six nations _ South and North Korea, the U.S., China, Russia and Japan _ gather in Beijing from Wednesday for a fresh round of negotiations aimed at disabling and eventually dismantling Pyongyang’s nuclear weapons and programs.

The U.S. Treasury had frozen some $25 million in North Korea-related money held in a Macau bank in late 2005, a punitive measure imposed as the six countries were signing an agreement toward denuclearization. That led to more than a year’s suspension in negotiations with the North.

The new round of six-party talks is already on shaky ground with suspicions that Pyongyang may have transferred nuclear-related material to Syria, prompting the unexplained Israeli air incursion into Syria earlier this month.

Tom Casey, a State Department spokesman, said Tuesday the new sanctions are related to missile technology transfers and downplayed possible negative repercussions on this week’s talks.

“The company that was sanctioned has been sanctioned previously for the same thing. So the net effect of this is really pretty minimal,” he said. “I don’t see…any reason why this should impact on the six-party talks.”

North Korea accused the United States of defending Israel’s recent airstrike against Syria, calling the strike a grave crime that undermines regional peace and stability.

The North’s main Rodong Sinmun newspaper said, “Israeli warplanes’ intrusion into the territorial airspace of Syria and bomb-dropping are an outright violation of Syria’s sovereignty and a grave crime that destroys regional peace and security,” according to Yonhap.

The North’s comments came days after high-level talks between North Korea and Syria. The two countries, which deny the allegation of a secret nuclear connection, did not provide details of Pyongyang talks.

Andrew Semmel, acting U.S. deputy assistant secretary of state for nuclear nonproliferation policy, said earlier this month that North Koreans were in Syria, and that Syria might have had contacts with “secret suppliers” to obtain nuclear equipment.

Semmel did not identify the suppliers. However, he said he could not exclude the possibility that a nuclear black-market network, run by the disgraced Pakistani nuclear scientist A.Q. Khan, might have been involved.

Semmel’s comments raised speculation that an alleged Sept. 6 Israeli incursion into Syrian airspace was a strike targeting a nuclear installation. U.S. officials have said Israeli warplanes struck a target. One U.S. military officer said the strike was aimed at weapons being shipped to Hezbollah militants in Lebanon.

Posted in Arms shipment, Illicit activities, International trade, Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Mining/Minerals, USA | 1 Comment »

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