DPRK defector discussed financial flows

July 3rd, 2009

Last week we mentioned the curious case of Kim Kwang Jin, a high-ranking defector who helped raise money for the North Korean government who is spending a year here in DC at the Committee for Human Rights in North Korea.  This week he spoke to Fox News and painted a broad picture of the DPRK’s financial strategy:

Trim and sharply dressed, his bushy head of hair dyed jet black, the 42-year-old Kim, once an English professor at a computer college in Pyongyang, speaks polite and fluent English, albeit in a halting style and with a heavy accent.

An interview with FOX News in late June marked Kim’s first with an American TV news channel. Kim recounted his extraordinary experiences working for the Northeast Asia Bank and Korea National Insurance Corporation, where he handled accounts worth hundreds of million of dollars.

He described two economies in North Korea: one administered by the North Korean Cabinet and nominally oriented toward serving the needs of the people; and a “Royal Court economy,” financed by illicit enterprises worldwide and providing the stream of hard currency that keeps Kim Jong Il, and his cronies, ensconsed in power and luxury.

“Kim [Jong Il] himself enjoys a lavish lifestyle,” said Kim Kwang Jin. “He is giving gifts to his associates: the Mercedes-Benz[es] and whiskeys, first-class room and [air]fare from Japan. Everything’s provided to his aides….Kim Jong Il himself is now ruling the country with [the] dollar, hard currency….Without hard currency they cannot rule the country.” 

Kim Kwang Jin described a society in which bankers demand bribes from clients, doctors from patients, professors and teachers from students. 

“Everybody tries to make use of their position, their authority…to survive,” Kim said.

The former banker said the regime’s largest source of hard currency comes from the clandestine manufacture and sale of weapons of mass destruction. After that comes the regime’s multibillion-dollar insurance fraud business, in which the authorities stage arson and bogus accidents to collect multimillion-dollar payouts from international banks and insurers. 

“The state — Kim Jong Il himself — controls all these funds,” said Kim Kwang Jin. “It is funneled to him. And then he’s using all these revenues according to his regime’s priorities, which are now the missile program and nuclear weapons development.”

Kim Kwang Jin believes the North Korean government has never negotiated in good faith with the United States and its allies at the Six-Party nuclear disarmament talks. 

“The North Koreans are coming to the table not for negotiation; they are there for winning, for implementing their strategy,” he said. To grant meaningful concessions at such negotiations, or to enact meaningful internal reforms toward democratization, would, Kim says, be tantamount to “suicide to the regime.”

Yet Kim also believes financial sanctions can compel better behavior from Pyongyang, and cites as an example the Treasury Department’s targeting from 2005 to 2008 of Banco Delta Asia: a bank in Macau, also known as “BDA,” through which the North Korean regime once transferred large sums. It was during this period, when Banco Delta Asia faced international restrictions, that the North made its most far-reaching concessions in the Six-Party Talks, only to renege on them once the sanctions were lifted.

“The BDA case was a frightening thing to the regime,” Kim said. “It was a blow to [Kim Jong Il’s] personal funding, to the economic sector which is now supporting the regime. And even the national economy, the people’s economy run by [the] Cabinet, is influenced by this BDA case. 

Here is his interview on Fox News via YouTube. 

Read the full story here:
North Korean Defector Describes Inner Workings of Isolated Regime
Fox News
James Rosen
7/2/2009

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Posted in Banking, Finance, Insurance, Korea National Insurance Corporation | 1 Comment »

Tadonggang Beer commercial

July 3rd, 2009

taedonggangbeeradvert.JPG

Click on image to see advert

The BBC offers what is hailed as the first Taedonggang Beer commercial. According to the article:

In a rare nod to commercial motives in the resolutely communist nation, the TV advert features a thirsty worker holding a mug of frothy beer.

Young women in traditional Korean dress are shown serving trays of beer to men in Western suits.

Billed as the “Pride of Pyongyang”, the advert promises drinkers that the beer will help ease stress.

“It represents the new look of Pyongyang,” the two-and-a-half minute advert says. “It will be a familiar part of our lives.”

Taedonggang Beer Factory has been making the brew since buying a British brewery and shipping it lock, stock and barrel from the UK in 2002.

The beer has been occasionally available in South Korea and is said to be of high quality.

North Korean leader Kim Jong-il, said to have a fondness for fine wines and brandy, has taken a personal interest in the brewery.

“Watching good quality beer coming out in an uninterrupted flow for a long while, he noted with great pleasure that it has now become possible to supply more fresh beer to people in all seasons,” North Korea’s state news agency, KCNA, said after he visited the brewery in 2002.

The DPRK did allow a ten minute “infomercial” to be made about Taedonggang Beer (probably by the Chongryun).  You can see it here:

taedonggangbeeradvert2.JPG

Click on image to see video

Here is a previous post on the beer.

Here is the location of the Taedongggang Brewery.

The full article can be found here:
North Korea launches beer advert
BBC
4/3/2009

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Posted in Advertising, Alcohol, Light Industry, Manufacturing | 4 Comments »

DPRK admits to enriching uranium

July 2nd, 2009

For the last several years there has been intense debate among “North Korea watchers” over whether the DPRK was enriching uranium.  Strong cases were made on both sides of the debate, but if we are to believe the North Koreans, the debate is over.  According to the Associated Press:

After repudiating negotiations on dismantling its plutonium-based nuclear program, North Korea admitted this month to having an even more worrying way to make bombs.

Following nearly seven years of adamant denials, North Korea announced it can enrich uranium – a simpler method of building nuclear weapons than reprocessing plutonium. Uranium can be enriched in relatively inconspicuous factories that can better evade spy-satellite detection, and uranium bombs may work without test explosions.

The admission – made in a threatening response to a June 12 U.N. Security Council resolution punishing Pyongyang for an underground plutonium bomb test last month – poses a new challenge to the U.S., China, South Korea, Russia and Japan as they seek to stem the reclusive country’s atomic ambitions.

Read more here:
Uranium gives NKorea second way to make bombs
Associated Press (via the Washington Post)
Kwang-tae Kim
6/28/2009

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Posted in Energy, Military, Nuclear | 4 Comments »

UN World Food Program worried about DPRK

July 2nd, 2009

According to Reuters:

Countries appear even less willing to give following North Korea’s second nuclear test in May, Torben Due, the U.N. World Food Programme representative in North Korea, told a news conference in Beijing.

“It’s a very sensitive area. I understand to a certain extent why donors are questioning,” he said. “But my angle is as a humanitarian. Being a humanitarian organisation you should look at the needs of the people. WFP does not engage in the political part of it.”

Due said no new donations had been received following that second test.

An appeal for more than $500 million in food aid has been just 15 percent met, meaning a planned relief operation to reach 6.2 million people has been scaled back to target 2 million.

Due, who lives in Pyongyang and was passing through the Chinese capital, told of the human toll of the state’s struggling economy and international seclusion, with mothers and children stunted by starvation.

“We are now in the middle of the lean season in North Korea, where food supplies are low and it’s a very difficult situation for many people in the country,” he said.

“But more importantly it should be noted that we have a situation where a very large part of the population has been undernourished for 15 or 20 years.”

In some parts of North Korea, some women weigh just 45 kg (99 lb) when they give birth, he added, citing a medical survey.

“The children that survive these conditions will be born with compromised immune systems … and that will contribute to their stunting,” Due said. “It’s a problem which goes from one generation to the next.”

Given the DPRK’s prerogatives, however, the US is not inclined to send food aid.  According to the Associated Press:

The United States said Wednesday it is “very concerned” about the North Korean people but cannot send needed food aid without assurances from their Stalinist government that it will reach them.

“We currently have no plans to provide additional food aid to North Korea and any additional food would have to have assurances that it would be appropriately used,” Kelly told reporters.

“We remain very concerned about the well-being of the North Korean people,” the spokesman said.

“But we are very concerned because we need to have an adequate program management in place, monitoring and access provisions and we don’t have that right now,” he added.

He recalled that in March North Korea expelled non-governmental organization (NGO) monitors in line with its decision to reject US food aid.

“At that time we had about 22,000 metric tonnes in storage there. We’ve learned that the DPRK (North Korean) has distributed this food,” Kelly said. 

I have not seen any food prices from North Korean markets in a while.  If anyone has come across any, please send them to me. 

Recent defectors offer a more nuanced account:

The food supply in the North may have improved slightly in the past two years due to better weather, but Jo said food still is hard to come by. “Even last year, we had a campaign in Kangwon province of getting by with two meals a day. Soldiers sometimes would just get three potatoes a day.”

There is a thriving market economy in North Korea at the local level where the average person buys food staples and consumer goods often made in China. Private plots of land are increasingly used for providing food for one’s family, said Cho Myungchul, a researcher who was an economist in the North before defecting to the South 15 years ago. (Reuters)

Read more here:
U.N. says North Korea food aid has dried up
Reuters
Ben Blanchard
7/1/2009

US cannot send food aid to NKorea despites its concerns
AFP
6/1/2009

Life in North Korea: lies, potatoes and cable TV
Reuters
Jack Kim
7/1/2009

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Posted in Agriculture, Food, General markets (FMR: Farmers Market), UN, UN Food and Agriculture Organization, UN World Food Program, USA | 2 Comments »

UN, US, ROK, sanction DPRK arms companies–and partners

June 30th, 2009

On January 21, the day after the Obama administration took office, the White House approved certain trade sanctions–initiated by the Bush administration–to be printed in the Federal Register.  These sanctions targeted specific Chinese, Iranian, and North Korean companies that the US believes were/are violating arms export regulations governing missile technology and other proliferation activities.  [Read more, including Federal Register text, here]

After North Korea conducted a long-range missile test in April, the US pushed the UN Security Council to adopt a presidential statement which blacklists several additional North Korean firms. [Read more here].

After North Korea conducted a second nuclear test, in violation of UNSC resolution, the UNSC adopted a resolution which tightened sanctions on the DPRK. [Read more here]

In June, the South Korean government imposed sanctions on these DPRK companies for the first time [Read more here]

The US followed up the UNSC resolution by announcing an inter-agency team that will focus exclusively on enforcing DPRK sanctions [Read more here] 

Today, the US Treasury Department announced it was targeting Hong Kong Electronics (Kish Island, Iran) [from where a former FBI agent is still missing] for supporting the balcklisted North Korean organizations.  According to Market Watch:

The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

What does this mean? It means that any bank accounts or other financial assets found in the United States belonging to the company must be frozen. Americans also are forbidden from doing business with the firm. This probably does not amount to much economically, but is probably intended to discourage banks outside of the US from doing business with these firms.

UPDATE 1: It looks like the State Departmet is also going after a North Korean company believe to be involved in weapons proliferation today.  According to a statement by the Treasury Department:

The U.S. Department of the Treasury today targeted North Korea’s missile proliferation network by designating Hong Kong Electronics under Executive Order 13382.  E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them, thereby isolating them from the U.S. financial and commercial systems.  Hong Kong Electronics, located in Kish Island, Iran, has been designated for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID).

Tanchon and KOMID have also been designated by the United States under E.O. 13382 and the UN Security Council under Resolution 1718. The Department of State also today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG), a North Korean nuclear-related company in Pyongyang, under E.O. 13382. 

“North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions,” said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world.”

Since 2007, Hong Kong Electronics has transferred millions of dollars of proliferation- related funds on behalf of Tanchon and KOMID. Hong Kong Electronics has also facilitated the movement of money from Iran to North Korea on behalf of KOMID. Tanchon, a commercial bank based in Pyongyang, North Korea, is the financial arm for KOMID – North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

Tanchon plays a key role in financing the sales of ballistic missiles for KOMID. Tanchon has also been involved in financing ballistic missile sales from KOMID to Iran’s Shahid Hemmat Industrial Group (SHIG), which is the Iranian organization responsible for developing liquid-fueled missiles. SHIG has been designated under E.O. 13382 and sanctioned by the United Nations under UN Security Council Resolution (UNSCR) 1737. Since 2005, Tanchon has maintained an active relationship with various branches of Iran’s Bank Sepah, an entity designated under E.O. 13382 and sanctioned by the United Nations under UNSCR 1747, for providing financial services to Iran’s missile program. The U.S. has reason to believe that the Tanchon-Bank Sepah relationship has been used for North Korea-Iran proliferation-related transactions.

Here is the press release by the State Department:

The U.S. Department of State today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG) under Executive Order 13382. E.O. 13382 is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Entities designated under E.O. 13382 are prohibited from engaging in all transactions with any U.S. person and are subject to a U.S. asset freeze.

NCG is a North Korean nuclear-related company in Pyongyang. It has been involved in the purchase of aluminum tubes and other equipment specifically suitable for a uranium enrichment program since the late 1990s.

The Department of the Treasury also today designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID). Tanchon and KOMID were designated by the United States under E.O. 13382 on June 28, 2005 and the UN Security Council under Resolution 1718 on April 24, 2009.

North Korea’s April 5, 2009 launch of a Taepo Dong-2 (TD-2) missile and May 25, 2009 nuclear test demonstrate a need for continued vigilance with respect to North Korea’s activities of proliferation concern. The designations add to continuing U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them.

McClatchy has more here.

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Posted in International trade, Iran, Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Namchongang Trading Corporation, Tanchon Commercial Bank, UN, UN Security Council, USA | 1 Comment »

Bank of Korea releases 2008 DPRK economic stats

June 28th, 2009

North Korea doesn’t release official economic data.  Since 1991, the South Korean central bank has released its own estimates of the North Korean economy to fill the void.  Its figures are derived from information provided by the ROK’s National Intelligence Service and other sources.  The 2008 statistics can be downloaded here.

According to coverage by the Associated Press:

The North’s gross domestic product for last year was estimated at $24.7 billion, a 3.7% increase from 2007, Seoul’s Bank of Korea said in a news release. The impoverished North’s economy shrank 2.3% in 2007 and 1.1% in 2006.

The central bank said the North’s economic growth was mainly because of “temporary factors” such as favorable weather conditions that resulted in an increase in agricultural production, and the arrival of oil shipments under an international disarmament deal on its nuclear program.

The size of North Korea’s economy, however, was still about 2.6% of South Korea’s, the bank said, adding it was “difficult” to determine whether last year’s growth means the country’s internal economic conditions have improved.

The bank said the North’s agricultural production increased 10.9% last year compared with 2007. The production of coal, iron ore and other minerals expanded 2.3% and the manufacturing industry 2.5%.

…and BBC coverage:

Agricultural production rose nearly 11% in 2008 compared with 2007. And coal, iron ore and other mineral production grew 2.3% for the year.

UPDATE from Business Week:

The surprise underscores the tiny size of the North Korean economy, which could be easily swayed by such factors as weather and outside assistance. Just over two-thirds of the 3.7% growth came from the agricultural sector, and that is heavily dictated by weather. North Korea’s agricultural output increased by 10.9% in 2008 after falling by 12.1% in the previous year as it managed to escape from major floods and drought. Its 2008 manufacturing production also grew by 2.5%, compared with a gain of a mere 0.8% in 2007, thanks to heavy oil supplies by the U.S. and its allies as a result of Pyongyang’s agreement last year to begin dismantling its nuclear facilities.

Even as hope builds in South Korea about a recovery, with the U.S. and China showing signs of revival, prospects for North Korea’s economy are looking grimmer. North Korea’s nuclear test in May and the regime’s missile tests this year have led to an end to outside help and economic sanctions by the U.N. This heralds a poor performance in the manufacturing sector, which will almost certainly face an acute shortage of oil and electricity this year.

Pyongyang can’t count on the agricultural industry for any major contribution to economic growth in 2009, either. Even if North Korea manages to maintain the 2008 grain output of 4.3 million tons, which will be difficult to achieve unless last year’s exceptionally good weather is repeated, it won’t help the economy grow as it starts from a high base.

Those factors make North Korea’s economic growth last year an anomaly. “There’s no indication that North Korea’s growth engine has improved in any fundamental way,” says Bank of Korea economist Shin Seung Cheol. Even with last year’s extraordinary growth, North Korea’s gross domestic product was 1/38 of South Korea’s $935 billion and its trade volume was 1/224 of the South’s $857.3 billion in 2008. As long as North Korea’s reclusive leader Kim Jong Il refuses to open up his country, the gap is bound to keep expanding.

I have collected the most commonly referenced North Korean economic statistics here.

Read more here:
South Korea’s Central Bank Says North’s Economy Grew in 2008
Associated Press
6/28/2009

North Korea’s GDP Growth Better Than South Korea’s
Business Week
Moon Ihlwan
6/30/2009

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Posted in Agriculture, Agriculture statistics, Construction, Demographics, Electricity, Energy, Forestry, GDP statistics, Light Industry, Manufacturing, Mining/Minerals, Statistics, Trade Statistics | 1 Comment »

Nick Bonner offers comments on North Korea tourism

June 28th, 2009

From China Business News:

Q: Koryo Tours has built its business by providing tour trips to North Korea. Why did you choose North Korea, and how tricky was it to get the business started?

A: In 1993, Joshua Green and I were approached by a North Korean colleague (that Josh had studied Chinese with at the Beijing Foreign Language University in 1998 and Nick played football with in 1993) who, after returning to Pyongyang had worked in the national travel company. At that time, it was a real fledgling travel industry (they only opened to western tourism in 1987) and less than 50 western tourists visited per year. We started going every month but with very few tourists, mainly driven by fascination, realisation that we had incredible access and the fun of working with some amazing Koreans. During the famine, we worked with aid agencies and continued tourism which brought in a steady amount of work for our Korean colleagues. in the past five years, DPRK tourism have seen growth, and we now take just under 1,000 tourists a year – about half of all western visitors. With my colleagues Simon and Hannah, we make sure that tourists have the best access possible to the country and people. Having specialised in one country for 16 years, it really does mean we are literally the only experts in this destination, and for every tourist we have taken it rates as one of their most amazing experiences.

Q: What effect does North Korea’s aggressive stance on defense have on your business – do people become more or less interested in visiting when it tests a nuclear bomb or fires a missile?

A: Every few weeks, North Korea makes the news for one reason or another, usually a negative reason of course. However, North Korea remains one of the safest and most fascinating countries in the world to visit. For those who are of the opinion that seeing a country for yourself is more valuable than watching the interpretation on the world news, then we provide them that access. In addition, as we accompany the tours, we provide an insight into the country that is difficult for a visitor to interpret. Our clientele are generally very worldly and aware and interested in what is going on, I think the DPRK being in the news for any reason puts it on people’s mental map and thus makes more people visit rather than being scared off.  

Q: North Korea is a pretty ‘left-field’ travel destination. What have been the key approaches to marketing your company, both locally and internationally?  

A: Our reputation has been established because we provide excellent service and we really do make sure that any visitor to Korea will have the time of their lives. We have a company responsibility to engage with the Koreans and much of our work is involved in cultural exchanges, film making and charity projects. I think this aspect of our work comes across to potential clients who see we really are more than a travel agency. We rely heavily on word of mouth and a great deal of our tourists know someone else who has been before, also we get a good number of repeat visitors as we don’t simply run the same tour over and over again. Being honest, doing the best job possible and maintaining good contacts with our previous clients are critical. This is how we keep a good reputation which we see as being the key to selling our product.  

Q:  Are you planning to diversify to other locations beyond North Korea – and if so, how do you choose new destinations?

A: Since 2006, we have been running twice-yearly tours to Turkmenistan, which is a fascinating and amazing place to go. In addition to this, in 2010, we are planning on offering a wider range of tours to places such as Tajikistan (for Persian New Year – when they hold a Buzkashi event), to the Tumen river area including Yanji in China, the North Korean free trade zone of Rajin-Sonbong, and Far Eastern Russia (around Vladivostok), also a tour to the North Western Caspian Sea region including Volgograd (once known as Stalingrad) and the mysterious republics of Kalmykia and Dagestan. All are remarkable, highly-interesting, and unique places that we think our discerning clients will be interested in. North Korea remains the focal point of our company, but these other destinations fit well in the mould of visiting unusual but interesting places.

Although I have never visited the DPRK with Koryo Tours, I did travel to Turkmenistan and I recommend it.  That trip launched my interest in Central Asia, and I quickly followed it up with visits to Iran and Tajikistan.

Read the full story here:
BizTalk Interview: Nick Bonner, Founder of Koryo Group
Gary Bowerman
6/27/2009

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Posted in Economic reform, Foreign direct investment, Koryo Tours, Tourism | Comments Closed

DPRK cigarettes to sell in ROK

June 28th, 2009

According to KBS Global (h/t ROK Drop):

Consumers can buy cigarettes produced by a North Korean firm starting next month.

A South Korean company announced Friday that it will start selling some 175-thousand packs of the “Baeksan” cigarettes from July sixth, with each pack costing two-thousand-300 won, or about one dollar and 80 cents.

It’s not the first time a South Korean company has imported a North Korean tobacco product. In 2000, the South’s Korea Tobacco and Ginseng Corporation imported North Korean cigarettes under a temporary contract.

Here are previous posts on North Korean cigarettes.

Here is a photo of the North Korean cigarattes I purchased on my trips.

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Posted in Uncategorized | Comments Closed

White House forms DPRK sanctions team

June 28th, 2009

According to the Washington Post:

The White House is ramping up its efforts to enforce sanctions against North Korea by forming a new interagency team to coordinate U.S. actions with other nations, senior administration officials said today.

The new team will be led by former ambassador to Bolivia Philip S. Goldberg, who is slated to leave for China in the near future as the U.S seeks concerted action to stop the North Korean regime from developing nuclear weapons.

“There is a broad consensus about the need to have a focused and engaged effort to see that these sanctions are implemented … and that we’re sharing information with each other,” one official said, speaking on background.

U.S. officials described the new group as a way to focus the administration more squarely on implementation of the latest sanctions, which were approved by the United Nations in the wake of North Korea’s nuclear test last month.

The officials said they are hoping the group — with representatives from the State Department, the White House, the National Security Agency, Treasury and others — will help “shine a spotlight” on the actions of the regime.

“We wanted somebody who woke up every morning and thought about nothing but sanctions implementation,” one official said. “It’s a huge difference when you have somebody who isn’t worried about any of the other aspects of this.”

The White House also announced a renewed effort to use the authority of the U.N. resolution to take financial actions against the North Korean regime in an effort to choke off the money flowing from small arms trade and other activity.

Treasury officials have issued a public memorandum to private financial institutions reminding them of the global condemnation and other risks of doing business with the North Korean regime.

The letter warns that North Korean banks and institutions often use deceptive techniques to engage in financial transactions that could place legitimate financial firms at risk.

“Financial institutions should apply enhanced scrutiny to any such correspondent accounts they maintain, including with respect to transaction monitoring,” the letter states.

One senior official said the U.S. is confident that the financial sanctions will over time help to further isolate North Korea and pressure its leaders to abandon its nuclear program.

“It’s going to take time to have a bite,” he conceded. “But we’re trying to get out of the box quickly.”

The Bush administration also had a sustained effort to implement United Nations sanctions after North Korea first tested a nuclear weapon in 2006.

The Counterproliferation Directorate of the White House National Security Council coordinated the effort, while the State Department and Treasury also co-chaired an interagency effort to examine specific cases that eventually worked their way up the chain for approval.

A team of senior officials, led by the undersecretary of State for arms control, traveled to Asia to work closely with allies. But the effort was dropped after Bush shifted course and decided to pursue diplomacy with North Korea.

Their first stops: China then Malaysia.

Citations:
New North Korea Sanctions Team Formed
Washington Post
Michael D. Shear and Glenn Kessler
6/26/2009

U.S. North Korea sanctions team to visit Malaysia
Reuters UK
7/2/2009

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Posted in Banking, Finance, Fiscal & monetary policy, International trade, Korea Ryongbong General Corp, USA | 1 Comment »

Orascom reports DPRK profits

June 28th, 2009

According to Yonhap:

Egypt-based mobile operator Orascom Telecom earned US$312,000 in first-quarter sales this year from its mobile service in North Korea on surging demand among the communist nation’s upper class, a company press release said Thursday.

More than 19,200 people have signed up for Orascom’s mobile phone service as of March since it began with 5,300 subscribers last December, according to the firm’s report on its first quarter earnings in 2009.

Martyn Williams offers some additional details which could call the venture’s profitability into question:

The network generated modest earnings of US$312,000 for its operators in the first quarter, before accounting for interest payments, taxes, depreciation and amortization. Orascom did not disclose whether the network made a profit or a loss for the period.

Koryolink achieved the EBIDTA (earnings before interest, taxes, depreciation and amortization) results on consolidated sales of US$4.4 million, said Egypt’s Orascom. The company holds a 75 percent stake in the network operator, which is called Cheo Technology but uses the Koryolink brand name. State-owned Korea Post and Telecommunications holds the remaining 25 percent.

Martyn also gives us some Koryolink prices:

The handsets, which are localized versions of Chinese models, cost between US$400 and $600 and the cheapest subscription costs 850 North Korean won per month.

That works out to about US$6 at the official exchange rate, but about 24 cents at the current black market rate used by many citizens and traders. Calls on this tariff are charged at 10.2 won per minute. The most expensive calling package costs 2,550 won per month and call rates are 6.8 won per minute.

Cheo offers service through a single retail shop in Pyongyang but opened a second temporary outlet during a March sales promotion. The promotion, available during the final two weeks of the quarter, offered lower price handsets, cheaper calling packages and free minutes. As a result, sales in March increased by 138 percent over February, said Orascom.

Read previous Orascom posts here. 

On a similar note, Kim Jong il’s English language translator was named ambassador to Egypt.

Read more here:
Egypt’s Orascom reports profit from N. Korean mobile service
Yonhap
Kim Eun-jung
6/25/2009

North Korean 3G network hits 19,000 subscribers
NetworkWorld
Martyn Williams
6/29/2009

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Posted in Cell phones, Communications, Orascom Telecom Holding | Comments Closed

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