Kim Jong il makes 83 public appearances, 36% to economically significant sites

August 4th, 2009

Institute for Far Eastern Studies (IFES)
NK Berif no.09-8-3-1
2009-08-03

On July 28, Kim Jong Il made his 83rd public appearance for this year. He has been seen in public considerably more this year than in previous years. Of his 83 public visits, 28 have been to military facilities, 30 have been related to the economy, and 2 dealt with foreign relations. As Kim Jong Il has made these visits, he has frequently been accompanied by Kim Ki Nam (57 times), Jang Sung Taek (50 times), Hyun Chul Hae and Bak Nam Ki (40 times each). Jang Sung Taek and Bak Nam Ki’s recent appointments during the April session of the Supreme People’s Committee indicate that they will continue to work closely with Kim Jong Il.

Rhee Myeong Su, Kim Jeong Kak, Kim Myeong Kook, Kim Yeong Chun and other members of the military elite were also seen with Kim Jong Il as he traveled. North Korean official press has covered 83 public appearances by Kim Jong Il between the beginning of January and July 18. This is nearly the number of public visits Kim has made within 12-month periods previously. These public outings appear to be in support of the 150-day battle to boost the economy and the goal of creating a Strong and Prosperous Nation by 2012.

In 2009, 36 percent of on-site visits by Kim have been related to economic campaigns, surpassing the number of visits to military facilities and growing in comparison to previous years. Of the visits to economically significant sites, at least 40 percent have been to machinery or mechanization facilities, as the North promotes new technology and modernization of its industries. Kim has also paid visits to newly opened or under-construction electrical power plants in order to underscore the importance of boosting production.

In addition, Kim Jong Il has visited at least 8 mining facilities. The North’s mines were heavily damaged during floods in the 1990s, and have struggled to recover since then. Kim’s visits have been linked to efforts to restore iron ore and magnetite mining.

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Posted in Economic reform, Military, Political economy | Comments Closed

The Politics of South Korean aid to the DPRK

August 4th, 2009

According to Yohap:

South Korea authorized state funding for 10 North Korea aid organizations Monday, resuming humanitarian operations that had been frozen since the North conducted nuclear and rocket tests.

But the rare softening move toward Pyongyang drew mixed reactions among aid organizations in Seoul, as 3.57 billion won (US$2.92 million) worth of funding will go to less than a quarter of 47 applicants. Some called the selection “arbitrary” and vowed to boycott it.

“The government selected projects that are aimed at helping disadvantaged groups like toddlers and infants, mothers and the disabled on grounds that they contribute to the people’s livelihoods, their urgency and effects,” the Unification Ministry said in a statement.

The funding shrank considerably from last year, when the ministry spent more than 10 billion won for 40 aid groups. Spending cuts in other North Korea projects were also evident, as South Korea executed only 2.8 percent of its yearly budget for economic and humanitarian aid to North Korea during the first half of this year, or 42.42 billion won out of 1.5 trillion won. Seoul officials cite international sanctions over North Korea’s nuclear and missile activity and the protracted stalemate in inter-Korean relations as reasons for the hardening aid policy.

An umbrella group of 56 Seoul-based aid organizations, the Korea NGO Council for Cooperation with North Korea, called an emergency meeting and vowed not to accept the funding unless its selection criteria is fully explained. Secretive selection only fuels internal rifts and rivalry, it said.

“This decision will only drive our aid projects, which continued cooperatively for nearly 10 years, to division and competition. I wonder if this arbitrary selection is a way of taming non-governmental organizations,” Park Hyun-seok from Rose Club Korea, a Christian group focused on medical aid, said in an emergency meeting between aid groups. Rose Club lost its bid for funding.

But signs of a rift emerged among the aid organizations, as some cited the urgency of their stalled missions in the North. Kang Young-shik of the Korean Sharing Movement, which emerged as one of the major beneficiaries with 540 million won in funding, said his organization will accept the money, as the umbrella organization has no binding force over its members.

“It is for each organization to decide. And we believe this fund should be released if there isn’t more expected anytime soon,” Kang said.

In a unanimous call, the aid groups urged the government to lift a ban on humanitarian aid shipments and to stop monitoring trips to North Korea, actions put in place after the North’s nuclear test in May. The restrictions have prevented not only aid from state coffers, but also private donations, from reaching North Koreans.

Sue Kinsler, a Korean-American and head of the Lighthouse Foundation, which helps orphans and the disabled in the North, said the living conditions there have notably deteriorated, with bread factories running short of flour and children wearing the same clothes her organization sent last year.

“We also wanted to bring underwear and some clothes for the children, but we were told those items are not allowed,” Kinsler, who visited North Korea last week with 18 tons of flour, soybeans, sugar and vegetable oil, said. “I saw with my eyes they are experiencing serious food shortages in the midst of the international sanctions.”

Kim Nam-sik, director general of the ministry’s Inter-Korean Exchanges and Cooperation Bureau who attended the aid groups’ meeting, said the government will consider expanding humanitarian aid and cross-border visits, but its efforts are limited by larger international circumstances. While U.N. financial and other sanctions are in place to curb the communist state’s nuclear and missile activity, the government cannot go against the international trend, he said.

Here is a previous post on South Korean aid to the DPRK this year.

Trade between the Koreas has also floundered this year.

Read the full artilce here:
Selective gov’t funding for N. Korea aid groups causes division, discontent
Yonhap
Kim Hyun
8/3/2009

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Posted in International Aid, South Korea | 1 Comment »

NK Embassy in Pakistan Involved in Smuggling

August 3rd, 2009

According to KBS Global (h/t Rokdrop):

Pakistani media have reported on the local North Korean embassy’s alleged involvement in smuggling and illegal exchange of foreign currency.

The Karachi-based Daily Sharafat Karachi said local intelligence authorities reported to Pakistan’s Foreign Ministry that some of North Korean’s embassies and legations abroad were involved in smuggling and illegal foreign exchange transactions.

The intelligence report claimed Pyongyang’s embassy and its economy and trade mission conspired with local smugglers to illegally import liquor and other items from various locations including Dubai.

It said containers disguised as diplomatic pouches for the contraband items and that local customs agents were also involved.

The Pakistani foreign minister has called on the Karachi customs and the intelligence agency for a thorough investigation into the matter.

North Korea’s embassies self-finance their operations on revenues earned in their host countries.  They receive little-to-zero operating funds from Pyongyang.  This incentive structure is interesting from an economic perspective.  Sometimes it generates interesting results like this.  Unfortunately it also generates outcomes like this.  End the end, some diplomats just do not make good businessmen.

Of course, if Pakistan has erected trade and currency laws that make life difficult for honest business persons, which would not surprise me since it ranks just ahead of Yemen in economic freedom, the North Koreans might actually be doing the people of Pakistan a favor by bringing some competition into the market.

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Posted in International trade, Pakistan | 5 Comments »

DPRK eases Kaesong border crossing

August 2nd, 2009

According to the Choson Ilbo:

The South’s Kaesong Industrial Complex Management Committee, which supervises the estate just north of the border, said Sunday visitors would no longer need to provide anything more than ID cards and travel permits.

Responding to complaints about inconvenience, the North agreed to allow the South’s office to process some paperwork on behalf of individuals.

“The extra documents were redundant because they carried exactly the same information as ID cards and travel permits,” the South’s office spokesman told AFP, adding the new rules would take effect from Monday.

Despite the easing of border controls, the fate of Kaesong remains uncertain because of the North’s demand for huge pay and rent increases, along with its holding of a Seoul worker.

Pyongyang detained the South Korean male worker on March 30 for allegedly criticising its political system and trying to incite a female North Korean worker to defect.

Kaesong, which opened in December 2004, is the last remaining large-scale reconciliation project between the communist North and the capitalist South.

Some 40,000 North Koreans work for South Korean firms in Kaesong.

Read previous Kaesong Industrial Zone posts here.

Read the full story here:
N.Korea agrees to streamline border crossing
AFP
8/2/2009

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Posted in Kaesong Industrial Complex (KIC), Labor conditions/wages, Special Economic Zones (Established before 2013) | Comments Closed

US sanctions Hyoksin Trading Corporation

July 30th, 2009

Nearly two weeks ago, the UN Security Council sanctioned five North Korean organizations. One of them was the Hyoksin Trading Corporation.  I believe they even have a web page here.

Today, the US imposed financial sanctions on this company.  According to the The Associated Press  (Via the Washington Post):

The Obama administration on Thursday imposed financial sanctions on a North Korean firm accused of involvement in the country’s missile programs.

The Treasury Department’s action covers Korea Hyoksin Trading Corp. It means any bank accounts or other financial assets found in the United States that belong to the company must be frozen. Americans also are prohibited from doing business with the firm.

It is the latest move by the United States to keep pressure on Pyongyang, whose nuclear ambitions have ratcheted up global tensions.

The department alleges that Korea Hyoksin Trading is owned or controlled by another North Korean firm, Korea Ryonbong General Corp., which the United States says is involved in the development of weapons of mass destruction. Korea Ryonbong supports Pyongyang’s sales of military-related items, the department said.

Read the full story here:
US tightens financial noose on North Korea
The Associated Press
Jeannine Aversa
7/30/2009

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Posted in Hyoksin Trading Corporation, Nuclear, Ryonbong General Corporation, UN Security Council, USA | 3 Comments »

China pulls out of DPRK mining deal

July 30th, 2009

According to the Choson Ilbo:

A Chinese investment company developing a copper mine in North Korea with a North Korean company sanctioned by the UN Security Council has reportedly called an abrupt halt to the project.

An industry source in China said the investment firm sent a letter to NHI Shenyang Mining Machinery, the company it had commissioned to build facilities for the mine in Hyesan, North Korea, telling it to stop construction. An estimated 400,000 tons of copper are deposited there.

The Chinese firm had signed an agreement with (North) Korea Mining Development Trading Corporation (KOMID) [NKeconWatch: a.k.a. Korea Mining Development Corporation) to develop the mine in November 2006. But the North Korean partner was blacklisted by the UN Security Council after North Korea carried out its latest nuclear test.

The industry source said, “When Chinese Vice President Xi Jinping visited Pyongyang in June last year, he pledged full support for the development of the Hyesan copper mine so that it could become a model for investment by Chinese business in North Korea. This prompted NHI to hurry construction so that production could start in September this year.”

But he added the Chinese government apparently persuaded the investment firm to stop the project as Beijing takes part in the UN sanctions. “Otherwise, it’s unusual for a project to be stopped at this late stage,” he said. The investment firm reportedly gave NHI no reason for the cancellation.

Looking at Hyesan on Google Earth, this appears to be the only large-scale minig operation in Hyesan.

Read the full article below:
N.Korea Mining Project Buckles Under UN Sanctions
Choson Ilbo
7/31/2009

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Posted in China, Copper, Foreign direct investment, Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Mining/Minerals, UN Security Council | 1 Comment »

Koryolink reaching 48,000 subscribers

July 30th, 2009

According to an article in the Choson Ilbo, Koryolink has attracted nearly 50,000 subscribers since launching.  Most surprisingly, they claim that members of the Worker’s Party are not allowed to use the phones.  (I am not sure if I believe that).

According to the article:

Orascom, the Egyptian telecom firm that runs it, plans to expand the service area from Pyongyang to the whole of North Korea by the end of this year, VOA said. The operator is poised to start HSPA service at the request of foreigners in North Korea who need to use wireless high-speed internet there, the report said.
 
Currently, officials of the North Korean Workers’ Party or the government are reportedly banned from using mobile phones for security reasons. Ordinary North Korean residents, whose monthly pay is about 4,000 North Korean won (around US$30), cannot afford the service due to the high price of handsets, which cost at US$300-500, and the subscription fee.

“We understand that mobile phones are used chiefly by foreigners, wealthy people, and trade functionaries,” a South Korean government official said.

North Korean phone users buy prepaid phone cards and can send text messages. The North started the European-style GSM service in Pyongyang and the Rajin-Sonbong special economic zone in November 2002 but suspended it after an explosion at Ryongchon Railway Station in April 2004.

Further information: 

1. The Economist Intelligence Unit on Orascom (joint venture partner in Koryolink).

2. Here is a very informative older post on Koryolink. Make sure to read the information in the comment section.

3. Regarding the claim that party members are not allowed to purchase Koryolink service: In February, Martyn Williams gave us an interesting update on Koryolink–after only two weeks of sales.  This story notes, “But while Koryolink’s first customers might not have high-profile official jobs, they are among the more wealthy in society and price, particularly of the handsets, stands as an obstacle to greater penetration.”

4. The previous mobile network, set up by a Thai subsidiary in 2002, is still in operation.  I know that North Korean VIPs and visiting journalists have been using this network since 2002 (despite the wide media coverage of this system being closed down).

5. If this story is true, it would imply that 1 out of every 60 Pyongyang residents has a phone (assuming pop of 3 million).  Additionally, if Koryolink sold 6,000 units in their first two weeks last February, they would have to sell nearly 9000 new units/month on average to reach a total of 50,000 today.  Does that seem reasonable?  Can anyone track down the original VOA sotry on which the Choson Ilbo story is based?

Read the full Choson Ilbo story here:
Some 50,000 N.Koreans Use Mobile Phones
Choson Ilbo
7/31/2009

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Posted in Cell phones, Communications, Foreign direct investment, Orascom Telecom Holding | 4 Comments »

European Business Association (EBA) founding

July 29th, 2009

The European Business Association has acted as a de facto chamber of commerce in the DPRK since its founding on April 28, 2005.  It was jointly founded by all of the European business representatives who resided in Pyongyang at the time, and according to its press release (posted below in full), it aims to “build bridges” and increase trade between Europe and the DPRK.

Recently, a video of this founding was posted on Youtube.  You can see it here:

eba-founding.JPG

Click on image for video.

The EBA is now run by Nigel Cowie.  Here is their web page.

Here are previous posts about the EBA.

Here is the press release that was issued at the time:

Press Release by the European Business Association (European Chamber of Commerce), Pyongyang, on the occasion of its founding ceremony on April 28, 2005.

All of the foreign business people who are resident in the Democratic People’s Republic of Korea (DPRK) and who represent European enterprises have today jointly founded the European Business Association (EBA). The ten European, one Hong Kong and one Mongolian business managers include the heads of four European invested joint ventures (in banking, overseas shipping, pharmaceuticals production and consumer goods manufacturing) in the DPRK and the representatives of several medium- and large sized European companies.

During a short founding ceremony the EBA-members approved the statute and elected Felix Abt, resident chief representative of a large European manufacturing and trading group, president, Guenter Unterbeck, resident chief representative of the German enterprise that introduced and operates internet in the DPRK and Valentin Dimitrievich Pan, resident chief representative of the Russian railways, vice-presidents.

As a representative of the European embassies to the DPRK the Romanian Charge d’Affaires Eugene Poppa took to the floor to underline the significance of the association designed to lay the ground for both European and North Korean companies to do business with one another more smoothly in the future.

Acting Chairman Kim of the Association for the Promotion of the International Economic and Technological Exchange (APIETE) as well as chairman Jang of one the largest manufacturing and trading groups of the country expressed their welcome on behalf of DPRK enterprises to this new association to substantially further economic ties between European and Korean enterprises.

EBA-president Abt stressed the need for European companies to catch up with Chinese and other Asian companies. In fact, out of the total DPRK foreign trading volume of 3.11 billion USD in 2003 over two third was mainly with China and to a much lesser degree with South Korea and Japan according to the South Korean government. The trade with the EU accounted for less than 10 %. In 2004 foreign trade with China increased by 35,4 %.

Although the European Union increased its exports in the first 6 months of 2004 by 17,2% to 132,0 Mio. USD and its imports by 11,3 % to 17,7 Mio. USD compared to the first semester 2003, Europe’s overall share is further declining.

In its press release EBA says it is pleased to note the sharply increasing interest of Chinese and other Asian companies in investing in and doing business with the DPRK.

It regrets the comparatively weak interest by European companies which is mainly due to a lack of awareness of the promising business and investment potential of the DPRK.

The EBA will therefore contribute to encourage European businesses to invest and do more business in the DPRK. It sees itself as a bridge builder between Europe and the DPRK to substantially increase trade between the two.

The members expressed their hope that the EBA will grow quickly in numbers over the coming years as a consequence of its work aimed at enhancing economic cooperation between Europe and the DPRK.

The event was attended by officials of the DPRK, senior managers of DPRK-companies and ambassadors and other diplomats of the European embassies to the DPRK including the ambassador of the Russian Federation. A visiting Polish business delegation headed by deputy minister Witold Gorski was also present. They mentionned that the first Polish joint venture in the DPRK is operating successfully.

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Posted in International trade | 2 Comments »

China seizes steel-hardening metal bound for DPRK

July 28th, 2009

According to the Associated Press (via San Fancisco Examiner):

Chinese customs authorities have seized a stash of vanadium, a strategic metal used to strengthen steel, hidden in fruit boxes on a truck bound for North Korea, an official said Tuesday.

Vanadium has defense and nuclear applications — alloys with vanadium are used in missile casings — but it was not clear what the stash would be used for.

The seizure comes as the United States has been rallying international support for strict enforcement of a new U.N. resolution adopted to punish North Korea for its nuclear test on May 25. The sanctions seek to deprive the North of financing and material for its weapons program, and allows inspections of suspect cargo in ports and on the high seas.

The metal was found during a routine check of vehicles at the China-North Korea border on Monday, said a duty officer at the customs department of Dandong city in northeastern Liaoning province.

The officer, who would only give his surname, Chang, said the stash was worth about 200,000 yuan ($29,300).

He refused to provide further details, but the Dandong News Web site posted a photograph of border agents inspecting the seizure, contained in 68 bottles in cardboard boxes. The stash weighed 154 pounds (70 kilograms). The metal appeared to be in granular form.

Read the full story here:
China seizes steel-hardening metal hidden in truck bound for North Korea
Associated Press
Gillian Wong
7/28/2009

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Posted in China, International trade, Military, UN Security Council | 3 Comments »

CRS report on DPRK counterfeiting

July 27th, 2009

The US Congressional Research Service has updated their report on the DPRK’s alleged counterfeiting operations. You may download the report here.

Here is the summary:

The United States has accused the Democratic People’s Republic of Korea (DPRK or North Korea) of counterfeiting U.S. $100 Federal Reserve notes (Supernotes) and passing them off in various countries, although there is some doubt by observers and other governments that the DPRK is capable of creating Supernotes of the quality found. What has been confirmed is that the DPRK has passed off such bills in various countries and that the counterfeit bills circulate both within North Korea and around its border with China. Defectors from North Korea also have provided information on Pyongyang’s counterfeiting operation, although those statements have not been corroborated. Whether the DPRK is responsible for the actual production or not, trafficking in counterfeit has been one of several illicit activities by North Korea apparently done to generate foreign exchange that is used to purchase imports or finance government activities abroad.

Although Pyongyang denies complicity in any counterfeiting operation, at least $45 million in such Supernotes thought to be of North Korean origin have been detected in circulation, and estimates are that the country has earned from $15 to $25 million per year over several years from counterfeiting. The illegal nature of any counterfeiting activity makes open-source information on the scope and scale of DPRK counterfeiting and distribution operations incomplete. South Korean intelligence has corroborated information on North Korean production of forged currency prior to 1998, and certain individuals have been indicted in U.S. courts for distributing such forged currency. Media reports in January 2006 state that Chinese investigators had independently confirmed allegations of DPRK counterfeiting. In June 2009, press reports claimed that the DPRK produced counterfeit U.S. bills even after 2007.

For the United States, the alleged North Korean counterfeiting represents a direct attack on a protected U.S. national asset and may provide a rationale to impose financial sanctions on the DPRK. The earnings from counterfeiting and related activities also could be important to Pyongyang’s finances. Profits from any counterfeiting also may be laundered through banks or other financial institutions.

U.S. policy toward the alleged counterfeiting is split between law enforcement efforts and political and diplomatic pressures. On the law enforcement side, individuals have been  indicted and the Banco Delta Asia (BDA) bank in Macao (a territory of China) was named as a primary money laundering concern under the Patriot Act. In June 2007, the BDA issue was resolved and the Six-Party Talks resumed. At the time, Pyongyang promised that it would punish the counterfeiters and destroy their equipment. The law enforcement effort has become entwined with diplomatic efforts and pressures to resolve the North Korean nuclear and missile issues. Following North Korea’s second nuclear test and several missile launches in May 2009, the United States reportedly has been considering further financial sanctions on the DPRK based partly on its alleged counterfeiting.

This report as well as many other CRS reports on the DPRK can be found here.

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Posted in Banking, Counterfeiting, Finance, Fiscal & monetary policy, Illicit activities | Comments Closed

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