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DPRK bans goods from markets

Sunday, March 22nd, 2009

Institute for Far Easter Studies (IFES)
NK Brief No. 09-3-20-1
2009-03-20

According to the North Korea Intellectuals Solidarity group, North Korean authorities released a list of goods banned from markets across the country on March 15. The ban goes into effect on April 1. The official list is said to include almost all wares currently being sold in the North’s markets, effectively banning market operations and practically outlawing private trade.

It was also reported that notices posted in the Hyesan and Wei Yan markets, in Yanggang Province, included not only a list of over 200 goods banned from sale, but also dictated the price at which allowable goods were to be sold.

Any goods from the United States or South Korea are specifically banned, as well as goods manufactured through inter-Korean projects such as joint ventures or from within the Kaesong Industrial Complex. Medicines and other supplies provided by the United Nations or other international organizations are also banned. Prices on foodstuffs were set, with Chinese millet to be sold at 1800 won, foxtail millet at 1700 won, and adzuki beans at 2100 won. Prices for privately harvested grains, eggs, tofu, poultry, pork, soybean oil, and other goods were also announced.

This measure appears to be in line with ongoing efforts underway since last year to close the North’s markets. While its effectiveness remains to be seen, if authorities succeed in shutting down markets, it could further exacerbate the North’s critical food shortages. In October of last year, North Korean authorities from regional commerce management offices throughout the country announced a ban on the sale of Chinese and South Korean goods, industrial products, and rice, corn and other grains, but this policy was never enforced.

Posted in Agriculture, Black markets, Economic reform, Food, General markets (FMR: Farmers Market), Institute for Far Eastern Studies | Comments Closed

IFES February 2009 recap

Thursday, March 5th, 2009

Institute for Far Eastern Studies (IFES)
(NK Brief No. 09-3-3-1)
3/3/2009

INTER-KOREAN RELATIONS
As February began, North Korea continued to publicly warn that the two Koreas were on a path toward war, stating on February 1 that downward spiraling relations between the two Koreas were brought on by ROK President Lee Myung-bak The (North) Korean Central News Agency (KCNA) printed that Lee’s policies toward the North were “the very source of military conflicts and war between the North and the South,” and warned that tensions on the peninsula “may lead to an uncontrollable and unavoidable military conflict and war.”

Poll results released by the Korea Economic Research Institute on February 2 indicated that 68.4 percent of South Koreans support President Lee Myung-bak’s aid-for-denuclearization policy toward the North, and a separate poll by Gallup Korea showed on February 23 that 62 percent of South Koreans blame North Korea for strained inter-Korean relations.

A South Korean official stated on February 4 that 3,000 tones of steel plates that were to be sent to North Korea as part of the energy aid-for-denuclearization deal reached in 2007 would be delayed due to the North’s recent saber-rattling. According to the official, “It is hard to predict when we will send the steel plates. For now, we are not even seriously considering the timing…North Korea should first change its attitude.”

The South Korean government has shot down a project by an ROK journalist organization that would allow the exchange of news with North Korea. It was reported on February 4 that a Unification Ministry Spokesman Kim Ho-nyoun stated, “There are concerns that the exchange of news articles may undermine national security, public order and the interests of the general public.”

On February 16, it was reported the ROK Defense Minister Lee Sang-hee has mandated field commanding officers in all branches of the South Korean military to immediately respond to any North Korean provocation without first seeking permission from superiors. This has further heightened concerns over the possibility of a naval confrontation in the Yellow Sea around the disputed Northern Limit Line.

On February 19, North Korean media warned, “Now that the political and military confrontation between the North and the South has gone into extremes, a physical clash may break out at any moment,” and, “North-South relations have reached such a pass that there is no way to improve them or bring them under control.”

INTER-KOREAN TOURISM
Hyundai Asan, the South Korean company running the Kumgang Mountain tourist resort and the Kaesong City tours in North Korea is on the brink of bankruptcy. A Hyundai representative stated on February 4, “We are reaching a critical situation…unless the tours resume by April, it will be difficult for us to stay afloat.” Hyundai Asan brought in 255.5 trillion Won, or approximately 170.3 million USD, through tour sales in 2007, but in 2008, the company sold only 228.8 billion Won, or 152.5 million USD-worth of tours in 2008. The company employed 1,084 workers when tours were in operation, but has cut back to 479 employees. Of those, approximately 20 percent are receiving only 70 percent of their wages while they work from home. The tours have been on hold since a South Korean tourist was shot and killed at the Kumgang resort last summer.

ROK lawmaker Song Hun-suk stated on February 22, “Since the suspension of the [tourism] program, dozens of South Korean businesses and approximately 1,000 travel agents that offered organized trips to the North have gone to the brink of bankruptcy,” and he reported that approximately 30,000 North and South Koreans were on the verge of unemployment due to the travel ban, with 80 percent of shops and restaurants in South Korea’s Gosung, Gangwon Province, which is near the border, have been forced to close due to the absence of tourists passing through.

INTER-KOREAN TRADE
On February 3, the Korea International Trade Association (KITA) launched a new website, “Inter-Korean Economic Cooperation Information Center”, at http://interkoreatrade.kita.net. The website is designed to provide information and education on North Korean investment and inter-Korean cooperation

On February 8, South Korea’s Unification Ministry released statistics for 2008 regarding the Kaesong Industrial Complex. According to the ministry, production in the complex was up 36 percent over the previous year, reaching a value of 251.42 million USD. The total value of goods produced in the complex since it began operations in 2005 comes to 524.84 million USD.

The Economic Times ran an article on February 15 titled, “Ever heard of Gaesung? Gear up for its products,” in which it reports that the India-South Korea Comprehensive Economic Partnership Agreement (CEPA) soon to be signed will mean that India recognizes goods produced in the Kaesong Industrial Complex as South Korean goods.

ROK UNIFICATION MINISTER
On February 12, Korea University Professor of Political Science Hyun In-taek was sworn in as the new South Korean minister of unification. At his inauguration, Hyun stated that he is willing to meet with North Korean counterparts “at any time, at any place” in order to repair inter-Korean relations. Hyun has been criticized as being a hardliner, and an architect of the Lee Myung-bak administration’s “Vision 3000: Denuclearization and Openness” policy. Hyun was a key advisor during Lee’s presidential campaign, at which time Lee introduced the Vision policy, and was also a member of Lee’s presidential transition team, which at one point had advocated the shuttering of the Ministry of Unification.

U.S.-DPRK RELATIONS
A group of high-ranking former U.S. officials now advising the Obama administration on the DPRK visited North Korea during the first week of February. The group included Stephen Bosworth, Jonathan Pollack, Morton Avramowitz, and Leon Sigal. The delegation reported that North Korea does not appear to be rushed, and that they had taken a “wait and see” attitude in Pyongyang. Bosworth stated that “[North Korean officials] understand the Obama administration will need some time to sort itself through the policy review and the expressed patience, there is no sense of alarm or urgency.” He also noted that the officials were willing to move forward with denuclearization talks.

Leon Sigal stated on February 1, just prior to his visit to the North, “the Obama administration should promptly send a high-level emissary, perhaps former President Bill Clinton or former Secretary of State Henry Kissinger, to Pyongyang.” Sigal also wrote in an online opinion piece that Obama should “hold a summit meeting with Kim Jong-il in return for North Korea disposing some of its plutonium.”

On February 2, the U.S. State Department announced that it would impose sanctions on three North Korean companies for missile export violations. In accordance with the Arms Export Control Act, the Export Administration Act of 1979, the International Emergency Economic Powers Act, the National Emergencies Act, Executive Order 12851 of June 11, 1993, Executive Order 12938 of November 14, 1994, the Korea Mining and Development Corporation, the Mokong Trading Corporation, and Sino-Ki are subject to Nonproliferation Measures and Category II missile sanctions.

U.S. Secretary of State Hillary Clinton stated on February 13 that the Obama administration would be willing to normalize bilateral relations with North Korea if the North is genuinely prepared to completely and verifiably eliminate its nuclear weapons program. She stated that the U.S. would have a “great openness” to North Korea, and added, “It’s not only on the diplomatic front,” but that Washington had a “willingness to help the people of North Korea, not just in narrow ways with food and fuel but with energy assistance.” Two days later, North Korea’s head of state Kim Yong Nam reaffirmed that North Korea would “develop relations with countries that are friendly toward us.”

On February 17, Clinton reiterated the U.S. offer of a peace treaty officially ending the Korean War, normalization of relations, and aid, but stated, “The decision as to whether North Korea will cooperate in the six-party talks, end provocative language and actions, is up to them,” and , “If North Korea abides by the obligations it has already entered into and verifiably and completely eliminates its nuclear program, then there will be a reciprocal response,” indicating that North Korea will have to make the next move.

During a trip to South Korea, Clinton stated that North Korea was “badly miscalculating” if it thinks it can “drive a wedge” between Washington an Seoul, and that “North Korea is not going to get a different relationship with the United States while insulting and refusing dialogue with the Republic of Korea.”

U.S. SPECIAL ENVOY TO NORTH KOREA
Following his return from a trip to North Korea at the beginning of the month, former U.S. Ambassador to South Korea Steven Bosworth was named by Secretary of State Clinton as the Obama administration’s special representative for North Korea. He will remain dean of the Fletcher School of Law and Diplomacy at Tufts University, but will now be responsible for coordinating U.S. policy regarding the DPRK. Special Envoy Sung Kim is responsible for ‘day-to-day’ negotiations with Pyongyang.

UK-DPRK RELATIONS
A British parliamentary delegation arrived in North Korea on February 3, coinciding with a visit to London by a DPRK Workers’ Party of Korea delegation. EU Parliament member Glyn Ford stated that he hoped to reopen dialog that was broken off in 2005 on human rights, and denuclearization, hinting that restarting dialog could lead to the transfer of renewable energy technology to the North.

PRC-DPRK TRADE
It was reported on February 24 that trade between China and North Korea reached 2.78 billion USD in 2008, a 41.2 percent increase over the previous year. DPRK imports were up 46 percent, at over 2.03 billion USD, while its exports to China grew 29.7 percent, to 750 million USD. Mineral resources made up 54.7 percent of North Korea’s exports to China, and machinery and electronics made up the majority of imports.

DPRK NUCLEAR PROGRAM

(NKeconWatch: Although this is simply a reprint of the IFES report, I have been notified by NTI that this report is inaccurate. According to NTI Communications Director Cathy Gwin:

“I am writing to respond to your post that referred to erroneous reports that the Nuclear Threat Initiative (NTI) is preparing to open an office in Seoul ” in order to help prepare DPRK nuclear scientists for peaceful civilian employment.

The Nuclear Threat Initiative (NTI) has worked in the past to develop ideas on how governments could apply cooperative threat reduction (CTR or “Nunn-Lugar”) approaches as part of a solution to the North Korean nuclear challenge. However, we have no current program to carry out those activities ourselves, nor do we have a program to retrain North Korean scientists. In addition, we have no current plans to open an office in South Korea, and we do not have branch offices in Ukraine or Kazakhstan. We have a main office in Washington, DC and a presence in Moscow.

January 31 was the deadline for North Korea to shut down and seal the Yongbyon nuclear reactor as part of 6-Party negotiations, but it failed to meet the deadline. Christopher Hill stated on February 3 that the U.S. would “hold on for a few more days,” but that “we’re not happy that the DPRK essentially has missed this very important deadline.”

On February 2, it was reported that the Nuclear Threat Initiative (NTI) would open a new office in Seoul in order to help prepare DPRK nuclear scientists for peaceful civilian employment. The NTI is in the process of building a program to retrain the North’s experts, and “is also considering ways to support not only nuclear scientists at Yongbyon, but also farmers near Yongbyon who provide them with rice,” according to Roy Kim, a professor at Drexel University.

The U.S. government criticized Pakistan’s decision on February 6 to release Abdul Qadeer Khan from house arrest. Khan as been under house arrest for the past 5 years, after admitting to selling nuclear weapons technology to North Korea, as well as Iran and Libya. In 2004, A.Q. Khan took full responsibility for selling the nuclear secrets, stating that the military and government were unaware of his actions. He recanted this confession last year, stating that he had been a scapegoat.

DPRK MISSILE LAUNCH PREPARATIONS
Several countries have reported intelligence pointing to a launch by North Korea of a Taepodong-2 long-range missile. The U.S. State Department warned on February 3 that “a ballistic missile launch by North Korea would be unhelpful and, frankly, provocative,” while the ROK Foreign Ministry noted that a missile launce would “constitute a clear breach of the UN resolution” adopted in 2006. Chinese Foreign Ministry Spokeswoman Jiang Yu stated, “We hope all the parties can recognize that maintaining stability is in the common interest of the people of the Korean Peninsula.” Preparations appear to be underway at its Musudan-ri base, near the DPRK-PRC border. A Taepodong-2 is thought to have a range of 6,700 kilometers (4,150 miles).

Amid reports that it was preparing the missile launch, North Korea’s Rodong Sinmun printed, “The DPRK’s policy of advancing to space for peaceful purposes is a justifiable aim that fits the global trend of the times. There is no power in the world that can stop it,” and, “ As long as developing and using space are aimed at peaceful purposes and such efforts contribute to enhancing human beings’ happiness, no one in the world can find fault with them.” North Korea continues to deny preparations for a long-range missile launch, and insists that it is preparing to launch a satellite

According to a researcher at the South Korean Agency for Defense Development, if North Korea were to launch a satellite, “given the size of the rocket, the satellite will likely be a low-orbit device,” and low-orbit devices usually need to be fired toward either the North or South Pole in order to successfully reach orbit. This would mean North Korea would need to use Chinese, Russian, Japanese or South Korean airspace.

JAPANESE FIRM, DPRK MISSILES
On February 26, Japanese police raided Toko Boeki, a Tokyo trading company with ties to the DPRK residents’ association in Japan. The company is suspected of trying to export magnetic measuring instruments that could be used to manufacture missiles to North Korea via a third country.

DPRK MOBILE COMMUNICATIONS
It was reported on February 5 that North Korea’s new 3G cellular network, built by the Egyptian company Orascom Telecom, has been very popular. Orascom Telecom Chairman Naguib Sawiris stated, that in the first two weeks of service, “so far we have about 6,000 applications. The important point is that they are normal citizens, not the privileged or military generals or party higher-ups. For the first time, they have been able to go to a shop and get a mobile phone.”

DPRK SPORTS
North Korea’s soccer squad defeated South Arabia 1-0 as it moved closer to the World Cup finals. The North now has seven points in Group 2, after four games, and is in second place, with only South Korea having more points. North Korea has not been in the World Cup finals since 1966.

KIM JONG IL BIRTHDAY CELEBRATIONS
Kim Jong Il’s 67th birthday was marked on both sides of the DMZ. In the North, ceremonies were held throughout the country on February 16, and special rations were provided to the people of the country, with extra noodles, rice and other grains given out to mark the day.

In South Korea, the Abductees’ Family Union marked the day by flying 100,000 leaflets with North Korean currency and criticisms of the North’s leader. South Korean authorities announced plans to investigate, as it is illegal for South Koreans to possess North Korean bank notes without permission.

DPRK SUCCESSION
More rumors were heard in February concerning who might succeed Kim Jong Il as leader of the North Korean regime. Kim’s youngest son, Kim Jong-un has reportedly registered as a candidate for the March 8 parliamentary elections, which would launch his political career. In addition, an editorial marking Kim Jong Il’s 67th birthday stressed the “inheritance of bloodline of Mount Paektu,” further stoking rumors that one of Kim’s sons may be next in line.

DPRK CENSUS
Results of a preliminary census by the United Nations Population Fund were released in February. According to the data, there were 24.05 million North Koreans as of October last year, with 11.72 million males and 12.33 million females. South Pyongan Province was the most populous, with 4.05 residents. 3.26 million people reside in the North’s capital, Pyongyang. This census, conducted by the United Nations Population Fund, was the first in 15 years to be conducted in North Korea.

Posted in China, Demographics, Foreign aid statistics, Foreign direct investment, Institute for Far Eastern Studies, International trade, Kaesong Industrial Complex (KIC), South Korea, Statistics, Tourism, Trade Statistics | 4 Comments »

Celebratory rations issued for Kim Jong il’s birthday

Thursday, February 26th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-2-26-1
2/26/2009

It has been reported that 2-3 day’s worth of special rations were issued to parts of North Pyongan and South Hwanghae provinces, including to those North Koreans working in the Kaesong Industrial Complex, to mark the February 16 birthday of Kim Jong Il.

For families with more than four members, 2 kilograms of rice and 2 kilograms of noodles, with corn making up the rest of the rations. Smaller families received a kilogram each of rice and noodles, in addition to corn. Recently, rations have been in very short supply, even on farms, so North Koreans have been very much looking forward to these special rations.

Since last year, the number of guards stationed at farms was increased sharply, along with increasingly more intrusive house searches, as the theft and consumption of food by those living on the farms was banned. Over the past few years, as the state failed to provide steady rations to the farmers and families on the agricultural plots, these farmers began stealing rice from the cooperative farms as a means to maintain their lifestyles.

However, in November and December of last year, inspections were carried out in cities and districts as grain management on farms was strengthened, leading to an increase in theft of foodstuffs. Those caught stealing would be dragged in front of labor authorities and often sentenced to confinement.

The districts receiving these special rations were all specifically chosen by North Korean authorities. Hweryong City, in North Hamgyong Province, is the hometown of Kim Jong Il’s mother, Kim Jong Sook, while the Samjiyon district, in Yanggang Province, is where Kim Jong Il claims to have been born. Kaesong was thought to have been chosen in order to propagandize the rations to the outside world.

One source reported that in 2006, an anti-socialist group emerged in the city of Hweryong, and that leaders of citizen groups were appealing, “It is difficult to live in our mother (Kim Jong Sook)’s hometown…Let’s all flee to China,” and since Kim Jong Il became aware of the uprising, special rations have been given on holidays and other special occasions. That said, currently, Kim Jong Il’s practice of gift giving continues to be aimed at the leading class in the North, with city and district Party secretaries also receiving gifts, along with central Party authorities. Gifts are also provided to state heroes and model laborers.

See previous posts on Kim’s birthday rations here.

See photos of Birthday rations from the Daily NK here.

Posted in Agriculture, Institute for Far Eastern Studies, Kaesong Industrial Complex (KIC), Political economy, Public Distribiution System (PDS), Songbun, Special Economic Zones (Established before 2013) | 2 Comments »

DPRK deepens reliance on China trade

Tuesday, February 24th, 2009

DPRK trade deficit with China nears USD$1.3 billion
Institutue for Far Eastern Studies (IFES)
NK Brief No. 09-3-5-1
2009-03-05

As North Korean dependence on trade with China continues to grow, the amount of overall trade hit a record high in 2008, however its trade deficit rose along with it. According to recent statistics released by China’s Customs Bureau and the Ministry of Commerce, trade between the DPRK and PRC in 2008 was worth a total of 2.78 billion USD, a 41.2 percent increase over the mere 1.97 billion USD recorded in 2007.

DPRK exports to China were worth 750 million USD, a 29.7 percent rise, while imports from China totaled 2.03 billion USD, up 46 percent, which led to a record 1.28 billion USD trade deficit. Mineral resources accounted for more than half (54.7 percent) of North Korea’s exports to China, while the majority of imports were machinery and electronic goods.

The North’s trade deficit with China has continued to grow for the past five years straight. In 2004, the North’s trade deficit was a mere 210 million USD, but this more than doubled, to 580 million USD, in 2005, rose to 760 million USD in 2006, and then hit 810 million USD in 2007. The reason for the sudden jump in the North’s trade deficit appears to be the globally rising cost of raw materials, and therefore Pyongyang’s trade deficit is expected to continue to rise rapidly in the near future.

This deficit is exacerbated by the North’s isolation from the rest of the international community, leaving it little choice but to continue trading at prices set by the Chinese. With the currently frigid relations between Pyongyang and Seoul, and the deadlock in 6-Party Talks, tensions on the Korean Peninsula make it increasingly difficult for North Korea to trade with other countries, so its dependence on China and Chinese goods is expected to continue to grow.

And according to the Choson Ilbo:

Trade between North Korea and China totaled US$2.78 billion last year, up 41.2 percent from $1.97 billion in the previous year, according to the statistics released on Monday by the China Customs and China’s Ministry of Commerce. North Korea’s imports topped $2.03 billion, up 46 percent from the previous year, but its exports stood at $750 million, up only 29.7 percent.

As a result, North Korea’s trade deficit with China reached a record high of $1.28 billion, up a whopping 57.7 percent from $810 million in 2007. It has been rising steadily from $210 million in 2004.

Mineral resources accounted for 54.7 percent of the North’s exports to China, while machinery and electronic equipment took up the biggest portion of imports.

The figures are attributable to the drastically increased prices of raw materials and the North’s deepening dependency on China. “North Korea’s dependence on China appears to be rising steadily because foreign countries other than China are reluctant to trade with the North because of strained inter-Korean relations and the stalled six-party talks,” said a North Korea export in Beijing diplomatic circles.

Read the full article here:
N.Korea’s Reliance on China Trade Deepens
Choson Ilbo
2/24/2009

Posted in China, Institute for Far Eastern Studies, International trade, Statistics, Trade Statistics | Comments Closed

North Korea’s transformation: A legal perspective

Thursday, February 12th, 2009

The Institute for Far Eastern Studies (IFES) published an interesting paper (with the above title) on legal reform in the DPRK. Below are some highlights. Links to the entire paper at the bottom.

As citizens have been left without state provisions for subsistence since the state did not have the material resources to supply the people through its central rationing system, the vast majority of individuals and organizations had to support themselves. Legitimizing commercial and market activity and expanding the scope of private ownership were a part of this effort. One of the most important laws reflecting this transformation is the Damage Compensation Law (sonhae bosang-beop), which is the North Korean version of a general torts law. This law holds an individual or any legal entity liable for its tort when damage is inflicted. Monetary compensation is the rule, while restoration is allowed when possible.

Under the socialist system, where the state is responsible for the provision of a citizen’s livelihood, tort law was of little use. Even in the case of death, one’s family would not suffer economically since the state provided sustenance rations. However, with the collapse of the public distribution system, the North Korean authorities could no longer maintain their socialist system. Since an individual now has to rely on his or her own devices, the loss of the employment, for example, directly inflicts a financial burden on the individual or family. Therefore, damage to property or person should be compensated for by the responsible party. Therefore, the new damage compensation law acts as a new mechanism for the protection of private property, and strengthens individual responsibility for negligent acts that inflict damage on others.

and…

Relaxation of law and order, along with the laxity of organizational control due to economic difficulties, changed individual attitudes toward government authorities and organizations in which these individuals were members. Individuals became more independent from the state and its organizations, since both the state and more directly engaged organizations lost important means of control over individuals in society due to the lack of resources and the inability to provide basic necessities to the people.

Under these circumstances, individual victims had no appropriate method to seek compensation for damage through an official dispute resolution process. This has led to an environment in which self-remedy has become the rule, rather than the exception. Although new criminal law punishes those who have used force in asserting their rights, there is no effective means of dispute resolution outside of taking advantage of officials willing to look the other way in exchange for favors, or hiring thugs to more directly resolve disagreements. Citizens can buy justice through bribes, and law enforcement officials are especially helpful in these endeavors when their palms are greased. This is much more economical as well as effective than bringing a case to the relevant official agency, which is generally incapable of resolving problems and instead further exploits the situation.

On courts and lawyers…

For example, the most prominent role of the court in North Korea, where other types of lawsuit are very unusual, was to handle divorce settlements, since divorce through simple agreement of the two parties was not allowed. Ordinary citizens went so far as to perceive settlement of divorce to be the most important role of the court. Criminal cases were also unusual. Political crime is handled through a non-judicial process, while many deviances are resolved through unofficial processes within more local organizations. The role of the court in resolving disputes was negligible, aside from divorce. Since the role of law enforcement agencies is to protect the state and secure the socialist system, the most important qualification for them is not legal expertise, but rather, loyalty and devotion to the North Korean ideology and system.

On the other hand, the Lawyer’s Act of 1993 prescribes the required qualifications of a lawyer. Those who are eligible to work as lawyers are those who are certified legal professionals, those who have working experience of no less than 5 years in legal affairs, or those who have a professional license in a certain area and have passed the bar examination after a short-term course in legal education. This qualification for working as a lawyer signifies that the state wants to equip the judicial system with legal professionals. Although there is no explicit professional qualification for a judge or prosecutor, we may assume that legal professionals have been elected or recruited in practice. This trend is likely to be reinforced as these social changes continue to unfold.

New provisions were also introduced to reinforce the judicial system. For example, interference with a law enforcement official’s performance of duties is now a punishable offence ; Threatening a witness or exacting revenge has been criminalized ; Non-execution of judgment will now be punished. Although the introduction of these provisions was an expression of the government’s effort to bring in a more effective judicial system, it would not be an easy task under the vague status of transformation. The state is very cautious and reluctant to undertake bold or fundamental changes due to concerns about political instability. Therefore, it takes time for various coherent mechanisms to fully support a market system.

You can download the entire paper in PDF format here.

You can read it on the IFES web page here.

Posted in 2002 Economic reforms, Automobiles, Aviation, Black markets, Damage Compensation Law, DPRK Policies, Economic reform, Finance, Foreign direct investment, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, Insurance, International trade, Joint Ventures, Lawyers Act, Light Industry, Manufacturing, Price liberalization, Private property, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Real estate, Sea shipping, Special Economic Zones (Established before 2013), Transportation | 2 Comments »

Kim Jong il nominated to run for SPA

Friday, February 6th, 2009

UPDATE: From the Institute for Far Eastern Studies:

The 12th election of representatives for the North Korean Supreme People’s Assembly, scheduled for March 8, and the opening of the session of the 12th SPA, expected to occur in late March or early April, will mark the launch of the third government under Kim Jong Il

Kim Jong Il was elected to his current position of NDC chairman by 10th SPA in 1998, and was reelected in 2003 by the 12th SPA. In those cases, as well, the Constituency No. 333 announced his nomination. It is expected that all other election constituencies across the country will begin holding celebratory events for Kim soon in order to disseminate propaganda portraying Kim as the representative for all the North Korean people.

Over at One Free Korea, Joshua points out KCNA’s gushing coverage of Kim Jong il’s nomination as a candidate in the upcoming elections for the Supreme People’s Assembly :

Pyongyang, February 4 (KCNA) — Upon hearing the news that General Secretary Kim Jong Il was nominated as a candidate for deputy to the 12th Supreme People’s Assembly at Constituency No. 333, the entire army and people are full of great happiness and pride of having the peerlessly great man as the leader of the nation.

Anti-Japanese revolutionary fighter Hwang Sun Hui said that the anti-Japanese revolutionary fighters were very happy to hear the news. She went on:

A few days ago the officers and men of the People’s Army nominated Kim Jong Il as a candidate for deputy to the SPA with boundless reverence. This is the unanimous will and ardent desire of the entire people.

On receiving this happy news with the February 16, the greatest holiday of the nation, ahead, I can hardly repress the swelling emotion.

We anti-Japanese revolutionary fighters will uphold the leader’s plan of building a great, prosperous and powerful nation in the van of the people.

Vice-premier of the DPRK Cabinet Thae Jong Su, noting that having nominated Kim Jong Il as a candidate for deputy to the SPA this time again is the unanimous will of the entire army and people and a great auspicious event of the nation, said:

Kim Jong Il has been leading the Party and the revolution along one road of victory for scores of years, thus performing great feats which will remain immortal in the history of the country.

He is the peerlessly great man who has defended firmly and developed in depth President Kim Il Sung’s Juche-oriented idea and line on state building and demonstrated the dignity and might of the DPRK all over the world with his original Songun politics.

All the officers and men of the People’s Army and the people came to have as a firm faith through life that he is the destiny and future of our country and nation and the symbol of all the victories.

Needless to say, the coverage from Singapore is far more sober and satisfying:

NORTH Korean leader Kim Jong-Il was Sunday nominated to run in next month’s parliamentary elections, a requirement if he to stay on as supreme army commander, a South Korean official said.

Elections for the rubber-stamp Supreme People’s Assembly should have been held last year, but did not go ahead amid reports that the 66-year-old Mr Kim suffered a stroke in August. They are now set for March 8.

He is legally required to be a lawmaker in order to be eligible to serve as chairman of the powerful National Defence Commission, which runs North Korea’s 1.1-million-strong army. It is in this capacity that Kim rules the country.

South Korean unification ministry spokesman Kim Ho-Nyoun told AFP that the North’s state television reported that Kim had been nominated to run in the 333th district for the polls.

Candidates are picked by either the government or the ruling communist party, and it is common for only one candidate to run for each electoral seat.

In the last elections in 2003, the North Korean media boasted a 99.9-percent voter turnout and 100-percent support for every candidate.

A new assembly usually reaffirms his chairmanship of the National Defence Commission, and brings a reshuffle of the cabinet and military leadership, the officials say.

Some analysts in Seoul have forecast the elections also may bring changes to North Korea’s leadership, in preparation for a post-Kim era.

Read the full story here:
NKorea’s Kim to run in polls
AFP via Stratits Times
2/1/2009

Posted in Cabinet, Institute for Far Eastern Studies, National Defense Commission, Political economy, Supreme Peoples Assembly | 4 Comments »

DPRK bans South Korean, overseas goods from Markets

Thursday, January 22nd, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-1-20-1
1/20/2009

It was revealed by Open Radio for North Korea on January 19 that DPRK authorities had handed down a decree to begin enforcing a ban the sale of imported goods in markets across the country on January 20. On January 3, North Korean authorities announced a measure to the Sinuiju Citizen Association and in the Chaeha Market banning the sale of imported goods, telling traders in the market to get rid of imported goods they had with them.

According to the report, the market management office in Sinuiju (operated under the control of the City People’s Committee) posted the decree at the entrance to the Chaeha Market, emphasizing that goods manufactured overseas were banned, while goods made domestically with imported materials were allowed to be sold. The report added that among goods banned from sale, those made in South Korea would be cracked down on especially hard.

Authorities are clamping down not only on markets in the city, but are also strengthening crackdowns on homeless vagrants, known as kotjebi, or literally, ‘flower swallows’. The report stated, “The Party, security office, trade association, youth association, and other organizations in Sinuiju are at the forefront of a coordinated crackdown on Kotjebi,” and, “As the crackdown is currently underway, between 20 and 30 vagrants, on average, are caught each day…those captured vagrants at the jail are sentenced to around 6 hours of forced labor in quarries or farms outside of the city, and must work hard before being given food.”

This same source reported that due to the Beijing Olympics last August, security on the border between North Korea and China had been tightened, and as winter rolled around and the river froze, this security was further strengthened, and, “recently, due to strengthened blockade of the border, the price of bribes to cross the river have more than doubled.”

In October 2008, the number of guards along the border near Hyesan was increased, and the distance between guardposts was halved from 200 to 100 meters. In addition, not only were military border patrols dispatched to the area, civilian patrols were also set up, increasing surveillance. This led to the cost (bribe) of a river crossing to jump from 1,000-2,000 Yuan (150-300 USD) in 2008 to as much as 4000-5000 Yuan (approx. 600-800 USD) this winter.

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Some immediate thoughts:

1. This is the kind of information that should be posted on the leaflets South Koreans are sending across the DMZ.

2. The Daily NK recently posted the “Top Nine” most popular goods list in the North Korean markets. Many of these are imported.

3. Lets hope that these restrictions are as difficult to enforce as the previous directives. As we all know, banning a product does not make it go away—even in North Korea. It raises the price to the final consumer and enriches smugglers at the expense of the state and party organs (though individual party members and security personnel benefit as smugglers).

4. These trade restrictions, if enforceable, effectively amount to an import substitution policy….a policy that has pretty much been thoroughly discredited.

5. According to this IFES article, markets are controlled by a local “Market Management Office” which is in turn subordinate to each “City People’s Committee.” According to the Worker’s Party organizational chart (view here), Each City People’s Committee is subordinate to a Provincial People’s Committee (PPC). All PPCs are subordinate to the Central Committee of the Workers Party. I am skeptical, however, that this is the only channel of authority. Are the DPRK’s markets part of any ministry’s portfolio?

Posted in Central Committee, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, International trade, Worker's Party | 3 Comments »

DPRK won exchange rate continues to climb

Thursday, January 15th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-1-15-1
2009-01-15

The exchange rate for the North Korean won shot up approximately 13-15 percent at the end of last year, and has maintained this high rate into January, according to an article in the on-line newsletter, “Open News for North Korea,” on January 12.

According to the inaugural edition of the newsletter, the exchange rate last year was around 3,200 won per USD, or 460 won per Yuan, with only slight fluctuations, but shot up to 3,630 won per USD and 530 won per Yuan in December. In the first weeks of the new year, it has fallen only slightly, to 3,540 won per USD, and 530 won per Yuan.

According to traders who import and export between North Korea and China, “The sudden rise in the exchange rate appears to be related to trade regulations on goods imported from the North,” and they stressed, “After North Korea protested to China about inferior Chinese goods leading to accidents around the country, China decided to set an example, and unilaterally imposed [trade] restrictions.”

Because business with China makes up almost 50 percent of North Korea’s trade, if DPRK-PRC trade, and in particular, North Korea’s exports to China, are restricted, this would cause a large shock to the foreign currency market,” and, “China’s regulatory measures were eased as January come around,” but, “this year, North Korea is strengthening crackdowns on domestic markets, making it difficult to expect the exchange rate to return” to last year’s lower numbers. According to the article, “There is a foreign currency crisis in North Korea, as well, the scale of which is so great it can’t even be compared to what is happening in the South.”

The black market price for U.S. dollars has shot up from a low of 200 won, in July 2002, to 3,200 won in July of last year, and has continued to rise, peaking at 3.500 won currently. This is a sixteen-fold increase in just over six years. The newsletter put this in perspective by explaining, “North Korea has experienced a foreign currency crisis like that seen in South Korea in 1998 every year since 2002.”

North Korea’s haphazard currency distribution and chronic trade deficit has led to a reduction in the country’s foreign currency reserves, while the failure of the authorities’ currency stabilization policies combined with the growing demand for U.S. dollars by North Korean residents seeking imported goods have led to the sharp growth in the exchange rate.

Posted in Banking, China, Finance, Fiscal & monetary policy, Institute for Far Eastern Studies, International trade, Trade Statistics | Comments Closed

DPRK establishing yearly economic development plans

Monday, January 12th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-1-9-1
1/9/2009

The Jochongryeon mouthpiece, Chosun Sinbo, reported on January 5 that North Korea is working to boost economic production by establishing “concrete attainment goals” in each sector in a “yearly, phased plan” from last year until 2012 in order to reach the goal of establishing a “Strong and Prosperous Nation” by the 100th anniversary of the birth of Kim Il Sung. The paper reported that the North had not made an official announcement regarding this plan, but that it was currently in the process of implementing a 5-year economic development plan

In the textile industry, North Korea is focusing efforts on upgrading equipment in five weaving factories, including major sites in Pyongyang and Sariwon, with the goal of increasing cloth production 400 percent by 2012. The newspaper also reported that North Korea is aiming to increase coal production over the next few years, with the goal of reaching 1980s-levels of production. Coal production peaked in 1989 at 43 million metric tons, and it is estimated that North Korea has over 20 billion metric tons of coal reserves, but the Bank of (South) Korea estimates that in 2007, the North mined a mere 24.1 million metric tons of coal due to a lack of electricity and spare parts. Many of North Korea’s coal reserves are below the waterline, and require constant electricity in order for pumps to maintain an environment in which mining can take place. Last year, in order to boost coal production, North Korea increased budget allocations for energy, coal and metal industries by nearly 50 percent.

This year’s New Year’s Joint Editorial placed heavy emphasis on the metals industry, and emphasized that efforts last year to modernize equipment and improve technology increased 2008 steel production by 150 percent at the Chollima Steel Complex and the Kim Chaek Iron and Steel Complex. The newspaper stressed that these plans were not merely wishful thinking, but that they were “the basis for meaningful achievements,” pointing out that last year, the North Korean cabinet increased investment into both basic industries and vanguard enterprises 49.8 percent. In 2008, North Korea either refurbished or newly constructed over 140 new production facilities, and, “in particular, actively promoted metal, instrument, science, and light industrial sectors.”

According to the newspaper, North Korea would continue to promote economic development in the new year, as well, citing the current global economic crisis and the need to build an independent economic foundation not reliant on South Korea.

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Chollima Steel Kombinat, Chongryun, Domestic publication, Institute for Far Eastern Studies, Japan, Kim's New Year Address (Joint editorials), Light Industry, Manufacturing | 1 Comment »

Inter-Korean economic cooperation office closes after 3 years; cross-border cooperation withering

Friday, December 19th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-12-19-1
12/19/2008

On October 28, 2005, an office housing the Inter-Korean Council for Economic Cooperation was established in order to create a channel for routine dialog between North and South Korean authorities and to assist with direct business deals between the two countries. Now, three years later and as inter-Korean relations have stalled, the office has completely closed its doors, causing economic cooperation to wither.

For over three years, the office served as a window fro North and South Korean businesses and workers, assisting with agreements between businesses, passing on documents, delivering samples, and more. In particular, it facilitated a total of 1,269 consultations and deliberations, with a mere 43 in 2005, growing by more than one thousand percent to 446 in 2006 and continuing to grow to 510 in 2007, while only 270 were held this year, bringing together a total of 4070 South Koreans with 3634 North Koreans, for a total of 7704 people making use of the services this office had to offer.

The office also served as a go-between for 10,539 documents sent from the South and 10,656 documents drafted by the North, and mediated the drafting of 668 new regulations for enterprises in the complex. This includes company proposals and promotions, delivery of samples, letters of recommendation, notarization of authentication, and other documents related to economic cooperation.

Of the 1354 samples that passed through the office, 560 were from the South, while 794 were from the North. There were eleven officials from the Ministry of Unification, Ministry of Finance, and other related South Korean government bureaus in the office, as well as another ten officials from the South Korean Trade Council, KOTRA, the Export-Import Bank, the Small and Medium Business Corporation, and the North Korean National Economic Cooperation Federation.

However, on March 24 of this year, North Korea ordered all South Koreans to evacuate the office after Unification Minister Kim Ha-joong stated that “it would be difficult to expand the Kaesong Industrial Complex if the North Korean nuclear issue is not resolved,” and three days later, all eleven government officials were ordered out, leaving only three officials, from KOTRA, the Export-Import Bank, and the Small and Medium Business Corporation behind, along with two employees to manage the facilities.

Now, with North Korean measures restricting land crossings over the military demarcation line, the full closure of the Inter-Korean Economic Cooperation Office, and the expulsion of South Korean workers implemented on the 24th of last month, all South Korean workers in the office had to return to South Korea on the 28th. This is causing considerable difficulties for small and medium businesses that could previously trade with or invest in North Korea at lower costs through the office.

Posted in Institute for Far Eastern Studies, Inter-Korean Economic Cooperation Committee | Comments Closed

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