North Korea on Google Earth v.18

June 25th, 2009

North Korea Uncovered version 18 is available.  This Google Earth overlay maps North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks.

This project has now been downloaded over 140,000 times since launching in April 2007 and received much media attention last month following a Wall Street Journal article highlighting the work.

Note: Kimchaek City is now in high resolution for the first time.  Information on this city is pretty scarce.  Contributions welcome.

Additions to this version include: New image overlays in Nampo (infrastructure update), Haeju (infrastructure update, apricot trees), Kanggye (infrastructure update, wood processing factory), Kimchaek (infrastructure update). Also, river dredges (h/t Christopher Del Riesgo), the Handure Plain, Musudan update, Nuclear Test Site revamp (h/t Ogle Earth), The International School of Berne (Kim Jong un school), Ongjin Shallow Sea Farms, Monument to  “Horizon of the Handure Plain”, Unhung Youth Power Station, Hwangnyong Fortress Wall, Kim Ung so House, Tomb of Kim Ung so, Chungnyol Shrine, Onchon Public Library, Onchon Public bathhouse, Anbyon Youth Power Stations.

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Posted in Agriculture, Alcohol, Architecture, Art, Automobiles, Aviation, Banking, Coal, Communications, Construction, Dams/hydro, Education, Electricity, Energy, Environmental protection, Film, Football (soccer), Forestry, Gambling, Gasoline, General markets (FMR: Farmers Market), Golf, Google Earth, Health care, Hoteling, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Intranet, Kaesong Industrial Complex (KIC), Mass games, Mt. Kumgang Tourist Special Zone, Nuclear, Oil, Pyongyang Metro, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Religion, Restaurants, Sea shipping, Sports, Tourism, Transportation, Wind | 4 Comments »

FDI and JVCs in the DPRK…

June 25th, 2009

The General Association of Koreans in Japan (Chongryun) have made a video about foreign direct investment and joint venture companies in the DPRK.  I have posted links to the video below.  It features the PyongSu pharmaceutical factory among other things.  It is in Korean and Japanese (with Japanese subtitles), so if there are any readers who care to translate, please let me know if there is any interesting information in the videos:

Part 1:
chongryn-pyongsuvideo1.JPG

Part 2:
chongryun-pyogsu2.JPG

Part 3:
chongryun-pyogsu3.JPG

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Posted in Chongryun, European Business Association, Health care, Japan, Manufacturing, Pharmaceuticals, Pyongyang International Trade Fair, Railways, Transportation | 4 Comments »

DPRK tech sector update

June 23rd, 2009

Time offers a short update on the DPRK’s technology sector.  According to the article:

The country’s Dear Leader has quietly launched an educational offensive to ramp up his country’s computing skills and build an internationally competitive IT industry, moves that experts say have been strongly encouraged by Kim’s oldest son, Jong Nam, who directs the Korea Computer Center. Grade-school kids are now drilled in Pascal and other computer languages, while gifted students are channeled into science and technology programs at Kim Il Sung University and Kim Chaek University, which some have dubbed the MIT of North Korea. Although currently stalled because of troubled bilateral relations with South Korea, another technical university, Pyongyang University of Science and Technology (PUST), is scheduled to open soon; foreign professors are supposed to eventually teach there, in English.

“They understand IT is critical for their development,” says Frederick Carriere, executive director of the New York–based Korea Society, who plays a pivotal role in bilateral programs with both halves of the Korean peninsula. This includes helping to broker a seven-year-long academic exchange between Syracuse University and Kim Chaek, which recently was able to open the country’s first digital library, using open-source software.

“I’d like to see more incentives for the DPRK to participate in this kind of standards-based [open-source] work, because through that participation, you get investment in the world of the sort that presumably reduces the likelihood of certain types of conflict,” argues Stuart Thorson, an IT and governance expert at Syracuse who oversees the program with Kim Chaek, which he says has been hampered by ineffectual U.S. export controls.

Those export controls, of course, are just a symptom of the growing international tensions between Pyongyang and the West. Whether it’s the country’s recent nuclear tests and heated rhetoric directed toward its southern neighbor or the standoff over its jailing of two U.S. reporters, the unstable relations make it more difficult for Kim to deliver on his IT promises.

Even more problematic are the regime’s overriding security preoccupations. Key power and telecom transmissions are buried underground, which complicates much needed maintenance and upgrades. More communications also means eroded state control, which is a vital regime concern. There are currently only a little more than 1 million domestic phone lines — about 5 per 100 inhabitants — although just 10% belong to individuals or households. Unauthorized international calls abroad can lead to fines and arrest and in one case reportedly led to the public execution of a plant manager in October 2007, according to Good Friends, a Seoul-based aid organization. The same fears of the outside world will mean a very cautious and slow opening of the Internet, which is now reserved for trusted government officials and foreigners.

“It would be nice to think that a new high-tech day is dawning over North Korea, but that would be a mistake,” argues David J. Smith, chief operating officer and director of the North Korea Project at the National Institute for Public Policy, a U.S. foreign policy think tank. “North Korea’s high-tech ventures will fail to save its economy without a systemic overhaul, of which the regime is incapable.”

Given a chance, though, North Koreans’ native intelligence does flourish. Two years after first entering a team in the IBM-sponsored Computer Olympics (the International Collegiate Programming Contest), the North Koreans made it into the finals. “They are capable of handling very complicated software, and the results are extremely good,” says Paul Tjia, a Dutchman whose GPI Consultancy has arranged for several European clients to outsource work to North Korean programmers. At Seoul’s Unification Ministry, IT expert Lee Duk Haeng says Samsung and Korean Telecom are among a handful of South Korean firms currently using North Korean engineers.

There are already hundreds of North Korean software engineers working in China, in border cities and elsewhere, according to Heejin Lee, a professor at Yonsei University, who has conducted fieldwork in the region. Most work as subcontractors for South Korean, Japanese or Chinese firms — sometimes in joint ventures — and Lee says there are numerous clandestine firms. The North Koreans earn high marks for their scientific and mathematical skills and come substantially cheaper than their Chinese counterparts — $300-$500 a month, one-third the cost of a Chinese engineer, or half the price of an Indian one, he says.

UPDATE: The first joint venture software company in the DPRK (which handles a number of outsourced projects) is Nosotek.  Here is an interview with the vice president Ju Jong Chol and German president Volker Eloesser.

Read the full article here:
North Korea Tries to Ramp Up Tech Infrastructure
Time
Ken Stier
6/22/2009

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Posted in Computing/IT, GPI Consultancy | Comments Closed

Legea sponsors DPRK men’s 2010 and women’s 2011 World Cup teams

June 21st, 2009

UPDATE 5 (2011-3-28): Radio Free Asia updates us on the Legea deal.  According to the article:

Officials of North Korea’s team and Legea met last week at the company’s headquarters in the Italian city of Pompeii and discussed details of a new jersey design under a four-year sponsorship agreement initiated at the end of the last World Cup tournament.

Two “key stakeholders” from the North Korean team discussed new designs for the team uniform and an expansion of their successful partnership during the 2010 World Cup in South Africa, according to Lorenzo Grimaldi, the company’s marketing and sponsorship manager.

“Two core members of the North Korean soccer team met with company officials over the course of the two days mostly to discuss new [uniform] collections,” resulting in a decision to move forward, Grimaldi told RFA.

During the meetings, the two sides are believed to have exchanged ideas about Legea’s newly-launched Saga soccer uniform line and related supplies, as well as what support would be provided for the North Korean team.

Specific details of the arrangement were also discussed ahead of the North Korean women’s national soccer team’s participation in the 2011 Women’s World Cup in Germany. Legea will be sponsoring the women’s team for the tournament.

Originally, North Korean national soccer team officials and Legea had scheduled the meetings in February, but Grimaldi said they were rescheduled due to visa approval and flight delay issues.

Key sponsor

Legea has sponsored the North Korean national soccer team since the 2010 FIFA World Cup and has agreed to continue as a key sponsor for the next four years. The sponsorship for the period was valued at U.S. $4.9 million, including products for the national women’s and youth teams.

Last year, Legea sold a substantial amount of North Korean team replica jerseys, team-related merchandise and other apparel from a selection of more than 2,000 items, and Grimaldi said continued sanctions on the country have only increased the popularity of the merchandise.

He said Legea confirmed a global interest in the North Korean soccer team through its surprisingly high sales of replica jerseys last year, despite the team’s early exit from the World Cup.

Legea said the soccer team’s sportswear was popular in countries including the U.K., Spain, the U.S., and South Korea.

In Spain, Legea recorded sales of nearly 1 million Euros (U.S. $1.35 million).

Itagoal, a Legea product retailer in New York, confirmed high numbers of sales in the U.S. last year.

A representative of Itagoal said the company is eagerly awaiting a new shipment of North Korean team products from Italy.

Here (2008 Olympics), and here (2010 FIFA) are past stories on sponsorship of North Korean athletic teams.

UPDATE 4 (2010-6-2): According to Bloomberg/Busiessweek:

North Korea is returning to the World Cup after 44 years, and venturing into the sports marketing industry that evolved in its absence.

Ahead of the June 11 start of the tournament, the soccer team of Kim Jong Il’s regime has snared a 4 million-euro ($4.9 million) jersey contract over four years, according to Daniele Nastro, marketing director of Pompeii, Italy-based sports apparel maker Legea s.r.l. North Korean soccer association assistant general secretary Ri Kang Hong confirmed the deal with Legea, without giving financial details.

“Perhaps it’s a sign of incipient capitalism,” Jim Hoare, a retired British diplomat who served in Pyongyang, said from London. Although western sports leagues aren’t covered by the media in North Korea, officials “would be aware of the value of sports sponsorship,” Hoare said.

The deal is timely as North Korea faces trade restrictions. South Korea halted business last month after blaming the communist nation for a torpedo attack on a warship that killed 46 sailors in March. Japan has tightened controls on sending money to the North, which was already under United Nations sanctions for nuclear testing.

Kim’s regime is “hungry” for foreign cash, according to Scott Snyder, director of the Center for U.S.-Korea Policy at The Asia Foundation in Washington. “The economy is in a very difficult situation,” he added.

1,000-to-1 Chance

Ranked No. 105 in the world, North Korea takes on the Nike Inc.-clad Brazil, the record five-time world champion, in its opening game on June 15 in Johannesburg. Ladbrokes Plc, a U.K. oddsmaker, rates North Korea a 16-to-1 chance to defeat Brazil, meaning a $1 bet would yield $16 in profit.

The communist state is given a 1,000-to-1 chance of winning the tournament, according to Ladbrokes.

At the 1966 World Cup in England, when brand names were absent from even European team uniforms, North Korea wore plain red shirts when it upset Italy 1-0 to reach the quarterfinals and won the affection of the English, who “probably felt sorry for them,” Hoare said. England now commands about 34 million euros a year from Nike Inc.’s Umbro brand, making it the top earner of the 32 teams that will play at the World Cup in South Africa, according to Sport + Markt AG.

No Apparel Market

North Korea’s team is getting an amount similar to what might be paid to a low-ranking team in the English Premier League, the world’s richest soccer league, according to Simon Chadwick, a sports business professor at the U.K.’s Coventry University. Ri, in an interview in Tokyo last week, said it was hard to find a jersey sponsor as there’s “no market” for sports apparel in North Korea.

“If it doesn’t result in sales, there’s no point” for some sporting-goods companies, Ri said.

Legea will provide North Korea with branded World Cup jerseys and training gear, Nastro said. That will help raise the Italian brand’s international profile, although the marketing bet could backfire, Chadwick said.

Legea “will be working overtime to put clear blue water between the team and the regime,” Chadwick said. “It could get to the stage when people stop buying the brand if they’re being seen as propping up a dictatorship.”

While not breaking trade sanctions, Legea is “swimming against the tide” with its sponsorship because of the perception of North Korea, Snyder said. “It’s a bit like sponsoring Tiger Woods at the moment,” he said.

Nastro said he isn’t worried. “In the World Cup, politics will be out,” he said by telephone from Pompeii.

Rival Chinese Bid

North Korea received other bids. It declined an offer by China Hongxing Sports Ltd., the Singapore-listed company that provided its jerseys for qualifying games, according to Kelvin Yeung, chief financial officer of the Chinese company.

European brands might have bid more, Yeung said, without saying how much China Hongxing offered. Ri said the agreement with the Quanzhou, China-based company had expired and declined to comment on why it wasn’t renewed.

North Korea rejected Legea’s first design for its shirts as too modern, frowning upon a white line across a red shirt, Nastro said.

“As a people, we don’t like flashy designs,” Ri said. “For home games, the jerseys are white, which we regard as noble, and it reflects our spirit. For away games, we go with red, which is used in our national flag. It also symbolizes our passion and heart. A simple design expresses that more purely.”

As part of the shirt deal agreed in March, there is a kicker for North Korea: it will get a 10 million euro bonus if it wins the World Cup, Nastro said.

“That’s probably not going to happen,” he added.

UPDATE 3 (Date N/A): You can see the DPRK men’s 2010 football kit here.

UPDATE 2(2010-6-3): Apprarently Italian sports apparel firm Legea snagged the DPRK men’s and women’s football contracts. According to the Economist:

Bloomberg reports that North Korea has signed a four year – 4 million-euro Legea kit deal, according to Daniele Nastro, marketing director of Pompeii, Italy-based sports apparel maker Legea.

North Korean football association assistant general secretary Ri Kang Hong confirmed the deal with Legea, without giving financial details.

North Korea received other bids. It declined an offer by China Hongxing Sports Ltd., the Singapore-listed company that provided its jerseys for qualifying games, according to Kelvin Yeung, chief financial officer of the Chinese company.

European brands might have bid more, Yeung said, without saying how much China Hongxing offered. Ri said the agreement with the Quanzhou, China-based company had expired and declined to comment on why it wasn’t renewed.

North Korea rejected Legea’s first design for its shirts as too modern, frowning upon a white line across a red shirt, Nastro said.

“As a people, we don’t like flashy designs,” Ri said. “For home games, the jerseys are white, which we regard as noble, and it reflects our spirit. For away games, we go with red, which is used in our national flag. It also symbolizes our passion and heart. A simple design expresses that more purely.”

It should be pointed out that Italy is a World Cup football rival with both Koreas following the DPRK’s victory over Itlay in 1966 and the ROK’s victory over Italy in 2002.

UPDATE 1 (2009-6-21): The Western media has picked up on this story and added a few details.  According to the Los Angeles Times:

Since sponsorship for North Korean teams began, Hongxing’s domestic presence has grown to nearly 3,800 retail outlets across China from about 100 in 2000. And with the World Cup qualification, Erke is confident its investment in an overseas market versus competing for domestic sponsorships with Adidas and Nike will pay off.

“Football is one of the areas which we feel have a lot of potential for development and we hope to be able to raise our brand visibility … in major events, such as the World Cup,” Yeo said.

In 2008, the company expanded its scope of international sponsorships to include the International Table Tennis Federation Pro Tour and its tournaments in Qatar, Austria, Germany and France.

Read the additional stories here:
North Korean Soccer Unfazed by Sanctions
Radio Free Asia
Borah Jung
3/28/2011

North Korea Profits From Brazil World Cup Game With Jersey Deal
Bloomberg/Businessweek
Alex Duff and Makiko Kitamura
6/2/2010

North Korean soccer brings success to Chinese apparel company
Los Angeles Times
Chi-Chi Zha
6/19/2008

ORIGINAL POST (2010-4-4): Chinese sportswear firm to sponsor DPRK team at football World Cup, by Michael Rank

The Chinese sporting goods company Hongxing, which sponsored the North Korean Olympics team in Beijing (here and here), will do the same for the North Korean squad at the football World Cup in South Africa in June, a Chinese website reported.

The Singapore-listed company, which markets its products under the brand Erke , sponsored the North Koreans to the tune of $3 million at the Olympics, which resulted in “very good publicity results”, the website added. The company has over 3,000 shops in China, it said.

The firm will kit the team out in clothes, boots and luggage as well as providing training, but the report did not give a value for the World Cup sponsorship.

A company official was quoted as saying: “Ever since [North] Korea qualified for the World Cup in South Africa, the fame of the brand on the Chinese mainland has gradually reached a peak. We expect the publicity results of the [North] Korean team will help promote a rise in sales.”

The Wall Street Journal reported in 2008 that the North Koreans refused to wear Erke’s logo at the Olympic Opening Ceremonies for fear it would compete with their country’s flag.

It quoted Wu Rongzhao, deputy chief executive of China Hongxing Sports, as saying sponsorship of the North Korean team was “a very painful process.” Erke had to scrub plans for a marketing event timed to the Games’ opening because of red tape and bureaucracy. For instance, Pyongyang’s Olympic officials would communicate only by email, not by phone, the paper added.

Wu said sponsorship of the North Korean team was aimed at the domestic Chinese market. It “will allow us to capture a bigger share of the growing PRC sporting goods market in the run-up to the Beijing 2008 Olympics.”

Asked to comment on the latest report, an Erke spokesman told North Korean Economy Watch in an email that “we are unable to confirm the content from the link provided by you at this moment. Please check our official press release regarding all sponsorship issues.” Hongxing is based in the coastal city of Quanzhou in Fujian province.

Apart from sponsoring the North Korean Olympics team, Hongxing also sponsored the country’s women’s football team in the FIFA Women’s World Cup held in China in 2007. North Korea were knocked out in the quarterfinals to Germany, who went on the win the tournament.

North Korea will be making their second-ever appearance at the World Cup this summer, after unexpectedly making it into the tournament in Britain in 1966, when it shocked the world by defeating Italy en route to the quarterfinals.

Drawn in a fearsome-looking Group G in South Africa alongside five-time world champions Brazil, European heavyweights Portugal and African powerhouses Côte d’Ivoire, the North Korean Chollima  squad kick off their campaign against Brazil on 15 June in Johannesburg.

Assistant coach Jo Tong-Sop said in January after winning the International Friendship Football Tournament in Qatar: “Given the teams we’ve been drawn against, we face a difficult task at South Africa 2010, though I hope that this win will boost our confidence.”

“Our group will be very tough as it includes some of the highest-ranked teams in the world. They have some fantastic individual players, not to mention their teamwork and tactical ability, all of which will make life very hard for us in South Africa,” Jo told FIFA.com.

There’s a North Korea World Cup blog here and football kit fetishists may enjoy the discussion of the North Korean World Cup shirts here .

North Korea’s chances in the World Cup seem slim and it is a footballing minnow compared with the South. South Korea is the only Asian team to have qualified for the World Cup for seven times consecutively and currently holds the best FIFA World Cup record in Asia, according to Wikipedia.

South Korea and Japan co-hosted the World Cup in 2002, the first time the championships had been held in Asia and the first time the tournament had been hosted by more than one country.

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Posted in Football (soccer), Sports | 2 Comments »

DPRK reinsurance update

June 21st, 2009

In December 2008 this blog discussed how the DPRK’s Korea National Insurance Corporation (KNIC) received USD$58 million from several European reinsurance companies in a legal settlement.

Well, the Washington Post offers an update on how the money is being moved and even highlights the story of a defector who claims to be involved in the DPRK’s insurance racket:

For Kim Jong Il’s birthday, North Korean insurance managers prepared a special gift.

In Singapore, they stuffed $20 million in cash into two heavy-duty bags and sent them, via Beijing, to their leader in Pyongyang, said Kim Kwang Jin, who worked as a manager for Korea National Insurance Corp., a state-owned monopoly.

Kim said he helped arrange the shipment and watched in February 2003 as the cash was packed. After the money arrived, Kim Jong Il sent a letter of thanks to the managers and arranged for some of them to receive gifts that included oranges, apples, DVD players and blankets, Kim said.

“It was a great celebration,” he said.

The $20 million birthday present and the gratitude of its recipient, who is known as the Dear Leader, were annual highlights of a sophisticated global insurance fraud that North Korea has concocted to provide its communist leadership with hard currency, said Kim, who spent five years as an executive of the state insurance company in Pyongyang and worked for a year at its banking subsidiary in Singapore before defecting to South Korea.

The British court ruled the way it did [NKeconWatch: this might be an error as the court did not rule on the case–it was settled] because the reinsurance companies contractually agreed to be bound by the North Korean court system (which to nobody’s surprise systematically rules in favor of domestic agencies and firms).  Since the western reinsurance firms could not prove that the DPRK was committing fraud, they had to pay up.

And how does this program work?

While working for North Korea’s insurance monopoly, Kim Kwang Jin said, he and other managers had a tightly focused mission: to find reinsurance companies and brokers in different parts of the world who would accept high premiums to reinsure KNIC’s policies.

Those policies, he said, usually covered losses from common North Korean disasters such as mining accidents, industrial fires, transportation crashes and crop losses due to floods.

“The major point of the reinsurance operation is that they are banking on disaster,” he said. “Whenever there is a disaster, it becomes a source of hard currency.”

According to Kim, KNIC would target a different potential disaster and a different reinsurance company each year. “We pass it around,” he said. “One year, it might be Lloyd’s; the next year, it might be Swiss Re; and the next, Munich Re.”

In London, the expert on the insurance industry familiar with the helicopter case echoed Kim’s assessment of how KNIC operated. He spoke on the condition of anonymity because he was not authorized by reinsurers to talk about the case.

“They pay good premiums, and they are very sophisticated, very clever,” he said. “They would divvy business up into very small bites and use different brokers in different places. The division of losses was such that it would never be apparent to a prospective reinsurer just how bad the business was.”

The North Koreans were known in the reinsurance industry for their capacity to prepare meticulously documented claims, speed them through puppet courts in Pyongyang and demand quick payment from international reinsurers. The North sometimes restricts the ability of reinsurers to dispatch investigators to verify claims.

The North Korean insurance monopoly sometimes took advantage of the geographical and political ignorance of brokers and reinsurers, according to the London-based insurance expert. Some brokers and companies, he said, thought they were dealing with a company from South Korea, while others were unaware that North Korea is a secretive totalitarian state with one of the world’s worst human rights records.

…

When he worked at KNIC, Kim said, annual revenue from North Korea’s reinsurance claims was about $50 million to $60 million. Most of that money, he said, was used to scout out potential disasters inside North Korea, to buy more reinsurance on the global market and to pay premiums.

“The remaining hard currency should have been used to help people recover from disasters and accidents, but it was not used that way,” Kim said. “It is just going into the pocket of Kim Jong Il.”

He said cash shipments of $20 million arrived yearly in Pyongyang, usually in the week before Feb. 16, which is Kim Jong Il’s birthday and a national holiday. In his six years at KNIC, Kim said, bags of cash arrived in Pyongyang from Singapore, Switzerland, France and Austria.

The money, he added, was delivered to an entity called Bureau 39 of the Korean Workers’ Party Central Committee. It was created by Kim Jong Il in the 1970s to collect hard currency and give him an independent power base, according to defectors, Seoul-based analysts and published reports. These sources agree that Bureau 39 spends foreign currency on luxury goods for the North Korean elite, components for missiles and other weapons programs.

With Bureau 39 skimming off hard-currency earnings returned to North Korea by KNIC’s global operation, Kim said, claims to disaster victims had to be paid in won, North Korea’s currency.

“That money is nearly worthless at present, because the economy has collapsed,” he said. “This means that little is done to help people recover from fires or whatever.”

But Kim Jong Il has been pleased with the state insurance company, Kim said.

“It brings him large amounts of hard currency,” Kim said. “Working in insurance is one of the best professions in North Korea. Many people want to do it.”

Mr. Kim is working in the Washington DC area this year with the Committee for Human Rights in North Korea.

Read the full artocle here:
Global Insurance Fraud By North Korea Outlined
Washington Post 
Blane Harden
6/18/2009

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Posted in Bureau 39, Finance, Insurance, Korea National Insurance Corporation, Minjok Insurance General Company | 5 Comments »

Inter-Korean exchange, investment reduced as relations crumble

June 19th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-6-16-1
6/16/2009

The amount of inter-Korean exchange has shrunk considerably this year, as tensions between the North and South continue to mount. According to the ROK Customs Administration’s inter-Korean trade office, cross-border transactions between January and April of this year fell 24.8 percent from 2008; trade amounted to 426.35 million USD, down from 566.92 million USD during the same period last year. South Korean imports were down only 9.5 percent, at 260.19 million USD, but exports to the North amounted to a mere 59.4 percent of the amount sent last year, recording 166.17 million USD. 54.9 percent of these goods (by value) traveled across the border by passing through Dorasan Station; 32.8 percent went through Incheon Harbor; 6.4 percent through Busan Harbor, 1.6 percent through Sokcho Harbor; and 1.1 percent passing through Goseong.

In April, with the North’s launch of a long-range missile in spite of the opposition of the international community, inter-Korean trade dropped to 69.2 percent of last year’s level, falling to 105.53 million USD. In fact, inter-Korean trade fell relative to the same month in the previous year eight months straight, beginning in September of last year.

With last month’s sudden nuclear test and South Korea’s subsequent joining of PSI, inter-Korean trade is expected to continue to wither in the latter half of the year. The amount of trade seen from January to April of this year is equivalent to 23.4 percent of the total trade for last year (1.82078 billion USD), and even if the current level of trade is maintained for the rest of the year, it is expected to amount to a mere 70 percent of what was traded in 2008.

Inter-Korean trade had previously been recording significant growth; in 1999, during Kim Dae Jung’s ‘People’s Government’, inter-Korean trade was worth only 328.65 million USD, but began to climb, growing more than five-fold by 2008, topping out at 1.82078 billion USD last year. However, after the launch of the current government, the amount of goods imported by the North from the South began to fall; exports to North Korea in 2008 were worth 883.41 USD, 145.15 million less than in 2007.

North Korean companies involved in processing-on-demand, agriculture and fisheries work have been part of Pyongyang’s trade ambitions, and these companies have also been hurt by the freeze in inter-Korean relations, with dozens of businesses facing closure, and many more severely hit by the North’s shrinking trade.

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Posted in Economic reform, Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), South Korea, Special Economic Zones (Established before 2013), Statistics, Trade Statistics | Comments Closed

North Korean art makes a show in Vietnam

June 19th, 2009

UPDATE: From Timeout (Vietnamese English publication):

The largest collection of paintings from the Democratic People’s Republic of Korea (North Korea) ever shown in Southeast Asia was put on display at the Nha Trang Sea festival last week.

The paintings were produced by more than two dozen artists with recognized artists – so-called Merited artists – and emerging talents all contributing.

The exhibition included a series of beautiful paintings in a variety of styles and materials – prints, watercolour, oil, pencil drawings and “jewel-powdered paintings”, a Korean specialty art.
 
With little exposure to the outside world, North Korean art is considered very pure. North Korean artists are loyal to their country and adhere to the country’s political philosophy.

In the absence of influences by contemporary art trends from the rest of the world the painters have, in a unique manner, developed their own techniques and the use of colors in an original style.

The displayed paintings include, among other things, a variety of beautiful sceneries of nature and of North Korean daily life. These pieces of artwork give a rare insight into the lives and thoughts of the people of this country.

Some of the most impressive pieces are the products of the veteran artist Han Gyong Bo and the emerging artist Han Song Il, a precocious 24-year old who has won many top prizes at national and international exhibitions.

Han Gyong  Bo is famous for his watercolour paintings of wistful and fanciful landscapes created in strong, deep and bold brush strokes. Meanwhile Han Song Il bewitches viewers with his romantic yearnings and smooth style. With refined and flowery strokes, Il’s paintings express the beauties of his country’s natural landscapes.

The painting collection belongs to Swiss businessman Felix Abt and his Hanoi-born wife Doan Lan Huong, who lived and worked in Pyongyang for seven years, where they got to know and love North Korean arts.

At present Abt and his family mostly stay in Nha Trang, Vietnam where they manage their own website Pyongyang-painters.com, one of the very few on-line galleries outside North Korea permitted to sell art and to represent the country’s leading artists as well as new talents.

“Much to our surprise we noticed that (artistic) talents are identified very early in a person’s life and systematically fostered thereafter. As a consequence a high number end up as painters with extraordinary skills. Unfortunately this is largely ignored by the outside world,” says Felix Abt.

Together with the Korea Paekho Fine Arts Company in Pyongyang, Felix and his wife prepared last year the systematic launch and promotion of North Korean paintings on the world wide web and through other marketing measures.

Famous painters from North Korea as well as promising new talents, including young female painters, are now being introduced to a wider public. Abt’s website has been up and running since the beginning of this year and orders are coming from all over the world.

During his time in Pyongyang, Abt and his wife Huong had the opportunity to get acquainted not only with the country’s institutions involved in fine arts but also with numerous artists across the country.

“We learnt that the Koreans were not merely transmitting Chinese culture but also assimilating and adapting it and creating a unique culture of their own while also influencing neighbouring cultures for thousands of years,” says Abt.

But Abt knows that a good website alone is not sufficient to introduce North Korean paintings to a larger public. The paintings need to be physically closer to potential buyers.

“The Sea Festival in Nha Trang, where both Vietnamese and foreigners spend holidays and may want to shop in a relaxed atmosphere was a good opportunity for us to ‘test the market’ in Vietnam,” says Abt.

“In addition, since Nha Trang is a beautiful place with a highly promising potential for tourism, we intend to operate this business out of Nha Trang for both the domestic and international arts markets.”

Talking about their future galleries in Hanoi and Ho Chi Minh City, Abt shares that making beautiful North Korean paintings available in these cities is a good idea since there are certainly a sufficient number of people in both cities who would love to have such paintings and can also afford them.

But instead of setting up their own galleries they would prefer to build up a close partnership with a couple of existing galleries in these cities that meet their expectations. Moreover, “this business model which we start in Vietnam could then be applied to other major cities in the region such as Singapore, Kuala Lumpur and Bangkok.”

Read the Press Release below:

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

June 16th, 2009

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

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

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

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

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

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

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

Confusion over UK-North Korea travel ban cleared up

June 16th, 2009

UPDATE 4: from a reliable source

The situation was caused by a mistranslation. Following the nuclear test and rocket launch earlier in 2009, the FCO suspended funding (and therefore visas) for FCO FUNDED DPRK PROJECTS IN THE UK for three months. This, unfortunately, was mistranslated into “suspending visas for DPRK citizens”, thus the cerfuffle.

UPDATE 3: By Michael Rank

Confusion over a reported ban on Britons visiting North Korea and North Koreans coming to Britain seems to have been cleared up.

Koryo Tours said last week that they had been informed by their partner, Korea International Travel Company, that “In connection with the recent measures taken by UK government not to allow DPRK citizens to enter the UK we also will not receive any UK citizens as tourists to the DPRK for the time being.”

After some confusion, a spokesman for the North Korean embassy in London said on Monday that they had been reassured that there was no ban on DPRK citizens visiting Britain and that North Korea was therefore issuing visas to Britons as normal, although as usual it “depends on the case”.  He had “no idea” how the confusion had arisen.

A Foreign and Commonwealth Office spokeswoman confirmed that “we have not introduced any new measures (regarding visas for North Koreans), nor have we refused any visas recently.”

The Home Office recently posted figures showing that in recent years Britain has somewhat surprisingly issued 13-18 North Koreans a year with tourist visas, including a few under-18s. Most of the few North Koreans visiting Britain presumably come as part of official delegations, including a Workers’ Party of Korea group who came last January.

Foreign Secretary David Miliband said on Monday: “No individual [North Korean] officials are currently subject to travel bans or asset freezes. The new UN Security Council Resolution 1874, passed on 12 June 2009 tasks the UN Sanctions Committee to designate further organisations and individuals for travel bans and asset freezes.”

UPDATE 2: Koryo Tours has notified me that the visa restriction has now been lifted.  According to their email:

We have just been informed by our Korean partners that the ban on UK citizens travelling to the DPRK has been lifted and they are now once more accepting visa applications from Brits.

All tours will be running as expected with no restrictions on any nationalities, and all US tours in the summer are expected to also go ahead.

UPDATE 1:  Michael Rank has managed to uncover the number of tourist visas issued by the UK government to North Korean citizens from 2005-2008 (source):

2005 
Over 18: 17
Under 18: 1

2006
Over 18: 13
Under 18: 3
 
2007 
Over 18: 12
Under 18: 1

2008 
Over 18: 15
Under 18: 2

See the origins of the travel ban below:

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Posted in Koryo Tours, Tourism, United Kingdom | 7 Comments »

N. Korea digs tunnels in Myanmar to earn dollars

June 12th, 2009

Korea Herald and Yale Global
Bertil Linter
6/12/2009

burma-tunnels.jpg

Missiles and weapon technology, counterfeiting money and cigarette smuggling, front companies and restaurants in foreign countries, labor export to the Middle East – North Korea has been very innovative when it comes to raising badly needed foreign exchange for the regime in Pyongyang. But there is a less known trade in service that the North Koreans have offered to its foreign clients: expertise in tunneling. A fascinating new glimpse of this business has now been offered in secret photos from Burma obtained by this correspondent.

The photos, taken between 2003 and 2006, show that while the rest of the world is speculating about the outcome of long-awaited elections in Burma, the ruling military junta has been busy digging in for the long haul – literally. North Korean technicians have helped them construct underground facilities where they can survive any threats from their own people as well as the outside world. It is not known if the tunnels are linked to Burma’s reported efforts to develop nuclear technology – in which the North Koreans allegedly are active as well. (See Burma’s Nuclear Temptation by Bertil Lintner, YaleGlobal, Dec. 3, 2008)

The photographs published here show that an extensive network of underground installations was built near Burma’s new, fortified capital Naypyidaw. In November 2005, the military moved its administration from the old capital Rangoon to an entirely new site that was carved out of the wilderness 460 kilometers north of Rangoon.

Meaning the “Abode of Kings,” Naypyidaw is meant to symbolize the power of the military and its desire to build a new state based on the tradition of Burma’s pre-colonial warrior kings. But underground facilities were apparently deemed necessary to secure the military’s grip on power. Additional tunnels and underground meeting halls have been built near Taunggyi, the capital of Burma’s northeastern Shan State and the home of several of the country’s decades-long insurgencies. Some of the pictures, taken in June 2006, show a group of technicians in civilian dress walking out of a government guesthouse in the Naypyidaw area. Asian diplomats have identified those technicians, with features distinct from the Burmese workers around them, as North Koreans.

This is quite a turn around as Burma severed relations with Pyongyang in 1983 after North Korean agents planted a bomb at Rangoon’s Martyrs Mausoleum killing 18 visiting South Korean officials, including the then-deputy prime minister and three other government ministers.

Secret talks between Burmese and North Korean diplomats began in Bangkok in the early 1990s. The two sides had discovered that despite the hostile act in the previous decade they had a lot in common. Both had come under unprecedented international condemnation, especially by the United States, because of their blatant disregard for the most basic human rights and Pyongyang for its nuclear weapons program. Burma also needed more military hardware to suppress an increasingly rebellious urban population as well as ethnic rebels in the frontier areas. North Korea needed food, rubber and other essentials – and was willing to accept barter deals, which suited the cash-strapped Burmese generals. “They have both drawn their wagons in a circle ready to defend themselves,” a Bangkok-based Western diplomat said. “Burma’s generals admire the North Koreans for standing up to the United States and wish they could do the same.”

After an exchange of secret visits, North Korean armaments began to arrive in Burma. The curious relationship between Burma and North Korea was first disclosed in the Hong Kong-based weekly Far Eastern Economic Review on July 10, 2003. A group of 15-20 North Korean technicians were then seen at a government guesthouse near the old capital Rangoon. The report was met with skepticism, especially because of the 1983 Rangoon bombings. But, when North Korean-made field artillery pieces were seen in Burma in the early 2000s, it became clear that North Korea had found a new ally – several years before diplomatic relations between the two countries were restored in April 2007.

“While based on a 1950s Russian design, these weapons (the field guns) were battle-tested and reliable,” Australian Burma scholar Andrew Selth stated in a 2004 working paper for the Australian National University. “They significantly increased Burma’s long-range artillery capabilities, which were then very weak.” Since then, Burma has also taken delivery of North Korean truck-mounted, multiple rocket launchers and possibly also surface-to-air missiles for its Chinese-supplied naval vessels.

Then came the tunneling experts. Most of Pyongyang’s own defense industries, including its chemical and biological-weapons programs, and many other military as well as government installations are underground. This includes known factories at Ganggye and Sakchu, where thousands of technicians and workers labor in a maze of tunnels dug under mountains. The export of such know-how to Burma was first documented in June 2006, when intelligence agencies intercepted a message from Naypyidaw confirming the arrival of a group of North Korean tunneling experts at the site. Today, three years later, the dates on the photos published today confirm the accuracy of this report. By now, the tunnels and underground installations should be completed, as would those near Taunggyi. This well-hidden complex ensures there is no danger of irate civilians storming government buildings, as they did during the massive pro-democracy uprising in August-September 1988. Sources say that the internationally isolated military junta may also consider these deep bunkers as their last repair in case of air strikes of the kind that the Taliban in Afghanistan or Saddam Hussein regime in Iraq endured.

It is not clear how much, or what, Burma has paid for the assistance provided by the North Korean experts, but it could be food – or gold, which is found in riverbeds in northern Burma. Or some other mineral. Burma, of course, is not the only foreign tunneling venture by North Korea.

In southern Lebanon following the 2006 war, Israel’s Defense Forces and the United Nations found several of the underground complexes, which by then had been abandoned by Hezbollah militants. By coincidence or not, these tunnels and underground rooms – some big enough for meetings to be held there – are strikingly similar to those the South Koreans have unearthed under the Demilitarized Zone that separates South from North Korea. Under small, manhole cover-sized entrances hidden under grass and bushes were steel-lined shafts with ladders leading down to big rooms with electricity, ventilation, bathrooms with showers and drainage systems. Some of the tunnels are 40 meters deep and located only 100 meters from the Israeli border. North Korea’s possible involvement in digging these tunnels is however, difficult to ascertain. According to Israeli investigative journalist Ronen Bergman, a senior officer in the Iranian Revolutionary Guards, who had defected to the West, revealed that, “thanks to the presence of hundreds of Iranian engineers and technicians, and experts from North Korea who were brought in by Iranian diplomats ?¶ Hezbollah succeeded in building a 25-kilometer subterranean strip in South Lebanon.”

Beirut sources suggest that it is more likely that Hezbollah has used North Korean designs and blueprints given to them by their Syrian or Iranian allies – both of whom are close to the North Koreans. (Both Iran and Syria have acquired missile technology from North Korea, and what was believed to be a secret nuclear reactor in Syria built with North Korean help was destroyed by the Israeli air force in September 2007.) Either way, North Korean expertise in tunneling has become a valuable commodity for export. And Pyongyang is flexible about the method of payment as long as it helps the international pariah regime.

Bertil Lintner is a Swedish journalist based in Thailand and the author of several works on Asia, including “Blood Brothers: The Criminal Underworld of Asia” and “Great Leader, Dear Leader: Demystifying North Korea under the Kim Clan.” He can be reached at [email protected] – Ed.

UPDATE: Burmese whistle-blowers sentenced to death
BBC
1/7/10

Two Burmese officials have been sentenced to death for leaking details of secret government visits to North Korea and Russia, the BBC has learned.

The officials were also found guilty of leaking information about military tunnels allegedly built in Burma by North Korea, a source in Burma said.

A third person was jailed for 15 years, the source added.

The military rulers in Burma (Myanmar) have so far made no public comments on the case.

The source told BBC Burmese that Win Naing Kyaw, a former army major, and Thura Kyaw, a clerk at the European desk of Burma’s foreign ministry, had been sentenced to death by a court in Rangoon on Thursday.

They were found guilty of leaking information about government visits to North Korea and Russia, which reportedly took place in 2008 and 2006.

The two men were also convicted of leaking details of a network of tunnels reportedly being built in Burma.

It is thought the tunnels were built to house communications systems, possible weapons factories and troops in the event of an invasion.

The third man, Pyan Sein, was given 15 years in prison on Thursday.

Burma still has capital punishment, but it has not carried out executions in recent years.

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Posted in Construction, Military, Myanmar | Comments Closed

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