The Party Cell

May 18th, 2009

Daily NK
Yoo Gwan Hee
5/18/2009

In North Korea, the Korean Workers’ Party (KWP) cell is the lowest ranked organizational unit. The KWP is composed of the Central Committee, provincial committees, city and county committees, primary party committees, sectional party committees, and the party cell at the lowest level. The party cell, as the fundamental unit, carries out the Party’s aims and implements its decisions.

Every member of the Party is officially affiliated with a party cell. In principle, even the “Great Leader” Kim Il Sung and the “General” Kim Jong Il are included in the party cell structure and must carry out their roles and responsibilities such as reporting to the party cell secretary, undergoing reeducation sessions, and strictly adhering to party rules.

The rules and regulations of the KWP stipulate, “The party cell is the basis of life in the Party and, as such, concentrates the masses on the Party and is the combat unit of the Party which directly implements the party line and policies.”

The party cell has between 5 and 30 members; units with 31 or more members form a primary party committee with further cells beneath.

General meetings of the cells, as the leading organization of the Party, must be held at least once a month. The party cell secretary is an unpaid official.

The rules and regulations also delineate the duties of party cells as follows: ▲ establish the one-ideology system among the party members and the working masses; ▲ expand the lower ranks; ▲ enhance the party involvement of the members; ▲ strengthen the ideological education of both newly-admitted and candidate members and working masses; ▲ accept the requests of the working masses and combat counterrevolutionary elements; ▲ strengthen the societal organization of the working masses; ▲ embody the Cheongsan-ri spirit and the mindset of anti-Japanese guerillas in all business activities; ▲ toughen the Worker and Peasant Red Guard and prepare for mobilization; and ▲ report the party expenditures of the members and the candidate members to the party committees.

For the purpose of strengthening the party cells, the first party cell secretaries competition was held in the Pyongyang Gymnasium in March 1994. The second such competition was held 13 years later over a two-day period on October 27 and October 28, 2007 at the April 25 Cultural Hall.

In 1990, after the Chosun Central News Agency’s (KCNA) No. 5 Bureau No. 2 Cell members sent a letter pledging their utmost devotion to Kim Jong Il, the “Party Cell of Loyalty” concept was launched.

To stimulate the “Party Cell of Loyalty” idea, meetings, recitals of official speeches, decisions and decrees and research discussions were emphasized upon.

In this year’s New Year’s Editorial, the party cell was designated as the advance offensive vanguard unit and it was demanded that party members and workers collectively stir up reform.

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Posted in Central Committee, Political economy, Worker's Party | Comments Closed

DPRK 2008 trade hits record USD $3.8billion

May 18th, 2009

According to Yonhap:

North Korean trade with the outside world, excluding South Korea, hit a record US$3.8 billion last year, a report said Monday, despite rising tensions on the Korean Peninsula.

Trade jumped 29.7 percent compared with 2007, the Korea Trade-Investment Promotion Agency, a South Korean trade agency, said in the report.

Last year, North Korea’s exports rose 23 percent to $1.13 billion with imports climbing 32.7 percent to $2.69 billion, the report said. The country still posted a trade deficit of $1.56 billion for the year.

The report also showed that China’s influence on North Korea’s moribund economy is rising quickly.

The communist nation exported $750 million worth of goods to China and imported $2.03 billion last year.

“North Korea’s trade with China hit a record last year and keeps growing,” the report said.

“In the face of the global economic slump and the North’s rocket launch, North Korea’s external trade is expected to shrink this year. But, China’s influence on the North Korean economy is likely to grow further,” it noted.

According to the CIA World Fact Book, South Korea’s 2008 exports totaled $419 billion.

Read the full article here:
N. Korea’s 2008 trade hits record US$3.8 bln: report
Yonhap
5/18/2009

UPDATE: DPRK trade deficit hits record high in 2008
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-5-27-1
2009-05-27

North Korea’s overseas trade (excluding inter-Korean exchanges) continues to grow, in particular with China, and last year recorded the highest amount of trade since 1990.

On May 18, results of analysis by the Korea Trade & Investment Promotion Agency (KOTRA) of overseas trade statistics provided to the Korea Business Center in countries around the world revealed that last year’s exports grew by 23 percent (1.13 billion USD), while imports shot up 32.7 percent (2.69 billion USD). The North registered a 1.56 billion dollar deficit, but the overall volume of trade (3.82 million USD) was the highest since the North’s trade amounted to 4.17 million USD 18 years prior.

Business with China, traditionally North Korea’s largest trading partner, totaled 750 million USD-worth of exports and 2.03 billion USD-worth of imports, as the North’s dependence on trade with its neighbor continues to grow. In 2003, trade with China accounted for 32.7 percent of the North’s overseas trade, but that grew to 48.5 percent in 2004, made up more than half (52.6 percent) in 2005, and rocketed up to 73 percent last year.

KOTRA reported that the North’s imports from China have grown by 46 percent over the last decade, and that in 2008, both trade with China and trade deficit with China hit record highs. At the recent Pyongyang Spring Trade Exhibition (May 11-14), 167 companies from 17 countries, including vendors from China, Russia, Germany, Malaysia, Syria, Sweden, Singapore, Vietnam and Thailand showed their wares, but China’s overwhelming presence was felt, with over 100 of the companies present were from the PRC.

Business with Pyongyang’s second-largest trading partner, Singapore, accounted for a mere 3.1 percent (123.6 million USD) of overall trade, although that showed a 116.1 percent increase over 2007. Trade with India and Brazil, the North’s no. 3 and 4 trade partners was relatively stable.

With sanctions in effect by the United States and Japan, the North’s exports to these countries were practically nonexistent, although imports registered 52.1 million USD and 7.7 million USD, respectively.

According to KOTRA, “it appears that, aside from China, North Korea’s overseas trade with other countries showed no significant change,” and, “with negative issues such as the global economic slump and North Korea’s rocket launce, this year North Korea’s overseas trade is expected to contract slightly, while reliance on China will grow as China’s economic influence on the North expands further.”

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Posted in International trade, Pyongyang International Trade Fair, Statistics, Trade Statistics | 3 Comments »

South Korea wants EBRD to finance DPRK economic transition

May 18th, 2009

No doubt the potential costs of North Korea’s economic transition occasionally keep South Korea’s finance minister awake at night…particularly when the international credit rating agencies review South Korea’s sovereign debt rating.  So it is only rational that South Korea would seek to spread these potential costs as widely as they can. 

Last week South Korea made a small pitch to the European Bank for Reconstruction and Development to facilitate the DPRK’s transition :

“I strongly recommend North Korea as a next candidate to become a recipient country, once it decides to transform itself into a market economy,” Young Geol Lee, vice minister of strategy and finance, said in a speech. “Please bear in mind that North Korea has great potentials as a future client of the EBRD.”

Read more here.

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On the North Korean legal system

May 18th, 2009

From Slate (regarding the upcoming trial of Euna Lee and Laura Ling):

We do have some basic understanding about how the North Korean justice system is organized. The journalists will be tried by the Central Court, the nation’s highest judicial body. Usually, the Central Court only hears appeals cases from the lower, provincial courts, but for grievous cases against the state, it has initial jurisdiction. The Central Court is staffed by judges elected by the Supreme People’s Assembly, North Korea’s one-party parliament. The North Korean Constitution stipulates that each trial is to be conducted by one judge and two “people’s assessors”—i.e., lay judges—though special cases may be heard by a three-judge panel. (Appeals cases usually get the panel.) Legal education or experience is not an official prerequisite for becoming a judge, and rulings from the Central Court are not subject to appeal.

North Korean law does recognize the right of the accused to defend herself and to be represented by an attorney. According to the country’s penal code, either the defendant, her family, or her “organizational representatives” may select the defense attorney. As the two arrested journalists were not allowed access to any counsel during pretrial investigation, however, there are doubts that they will actually be allowed to select their own counsel. According to the U.S. State Department, there is “no indication that independent, nongovernmental defense lawyers [exist]” in North Korea in the first place.

The proceedings will be conducted in Korean, but the North Korean Constitution does grant foreign citizens the right to use their own languages during court proceedings. Trials are supposed to be open to the public, unless they might expose state secrets or otherwise have a negative effect on society. According to testimony from North Korean defectors, though, trials are often closed in practice. Announcements of the court’s findings and executions of sentences are often carried out in public as a means of educating the citizenry.

Thursday’s announcement from North Korea’s news agency did not specify what crime the two journalists are being charged with, though Pyongyang has previously accused them of “hostile acts” and illegal entry into the country. If they were prosecuted under a law regarding foreigners who “abuse” or “provoke national difficulty in order to antagonize” the North Korean people, they would face five to 10 years of “re-education” in a labor camp. Illegal entry carries a sentence of two to three years.

Previously, prisoners could be sentenced to death for a number of vague crimes, such as “ideological divergence” or “opposing socialism.” But subsequent to the enactment of a new penal code in 2004, the death penalty is reserved for four crimes: participating in a coup or a plot to overthrow the state, terrorism, treason, or “suppressing the people’s movement for national liberation.” In practice these four crimes seem to cover a wide range of activities, including, in one reported case from 2007, the making of international phone calls. Judicial proceedings are apparently not required for executions to be carried out.

As supplemental material, I have posted numerous DPRK statutes on this web page.  To see the full list, scroll down the menu to “DPRK policies,” under which you can see them all.  Of course, the DPRK is not a “rule of law” country, so the statutes themselves and even the constitution are not worth that much in terms of defining the “rules of the game” or defining/predicting the scope of “legitimate” government activity. 

There have been several foreign law firms that have attempted to set up shop in the DPRK.  Currently the only firms with legal offices or a periodic presence are: Hay, Kalb, and Associates, Kelvin Chia Partnership, and Chiomenti  of Italy (formerly Birindelli e Associati ).

Read the full article below:
Objection, Dear Leader!
Slate.com
Nina Shen Rastogi
5/14/2009

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Posted in DPRK Policies, Supreme Court, Uncategorized | Comments Closed

DPRK cancels Kaesong contracts

May 16th, 2009

In what is certainly not good news for foreign investors, the North Korean government has announced that it is unilaterally canceling agreements with the South Koreans regarding the Kaesong Industrial Zone.

According to the Korea Times:

North Korea announced Friday the nullification of all contracts on rent, salaries and taxes at the Gaeseong Industrial Complex, asking the South to empty the industrial estate unless it honors the North’s wishes to amend related laws and rules.

The notification came about five hours after the two Koreas were unable to set a date for talks due to their wrangling over the release of a Southern worker detained by the North.

The North continued, “We are nullifying contracts and benefits on rent, salaries and taxes that we have offered in the Gaeseong complex in accordance with the June 15 Joint Declaration.”

The report added that the North will begin to adjust laws and rules to meet with the current situation.

“South Korean companies and officials must accept the notification, if not, they can evacuate from the complex,” it said.

In the article, Andrei Lonkov makes the following comment:

“North Koreans are clearly looking for some leverage over the South, and it they come to see the park as a hostage project, they will it use to put forward escalating demands,” he said.

He predicted, “If the South Korean government bows to the pressure and makes concessions, there is no doubt that in weeks or months Pyongyang manipulators will make new demands, probably more outrageous.”

“One can hope that the project will survive. Nonetheless, it will become dangerous if Seoul, in trying to save this important project, starts to succumb to Pyongyang’s blackmail. So, the project should be supported, at a cost to South Korean taxpayers, but not at the cost of unprincipled political concessions,” he added.

This has been a rough year for the Kaesong Zone.  I have kept a running timeline of events in the zone which you can see here.

UPDATES:

1. According to the Choson Ilbo: “North Korea earns some US$33.52 million a year from the Kaesong Industrial Complex, making the inter-Korean joint venture a significant cash cow for the impoverished country.”

2. According to Reuters:

News late on Friday that North Korea was cancelling all wage, rent and tax agreements with South Korea on the joint Kaesong factory park just north of their heavily armed border weighed on stocks in companies that have production units in the factory park, but had a limited impact on the broader market.

“Seoul market participants have become quite immune to North Korea-related news and tend not to react sensitively unless the development has a scale of impact that may affect South Korea’s sovereign rating,” Lee said.

3. NK pointman on South Korea, Choe Sung Chol, allegedly executed.  According to Bloomberg:

North Korea executed a former official in charge of inter-Korean relations, accusing him of allowing the population to develop a favorable image of South Korea, Yonhap News reported.

Choe Sung Chol, who was the point man on South Korea during the Roh Moo Hyun administration that ended in February 2008, was killed last year, the news agency reported last night, citing an unidentified person familiar with North Korean affairs.

While Choe was officially charged with bribery, he was executed for ignoring opponents and pressing ahead with closer ties with South Korea that threatened to make the communist state too dependant on its richer neighbor, Yonhap reported.  

4. The Choson Ilbo reports on the productivity of Kaesong’s Northern workers:

The basic monthly salary of North Korean workers at the complex is US$63.4, consisting of $55.1 in wages and $8.3 in social insurance. In addition, overtime work pay amounts to between $11 to 18.3 a month, and a welfare package subsidizing lunches, snacks and transport costs is provided at a range of between $36.6 and 47.9 per month. In total, the monthly salary of a North Korean worker ranges from $110 to 130, which, the companies argue, is comparable to that earned by workers in China and Vietnam.

A survey of some 40 firms operating at the complex was carried out after the first round of talks on April 25 to discover why these firms were having difficulty accepting North Korea’s demands. According to the survey, the productivity of an individual North Korean worker is just 33 percent that of a South Korean worker. In comparison, the productivity of Chinese and Vietnamese workers is 96 and 85 percent that of South Korean workers, respectively.

The companies also argue that it is difficult to accept North Korea’s demand to pay land use fees from next year, considering the fee they paid for building factories there. The fee for building factories in the Kaesong industrial park was $394 per one sq. m of land, compared to $122 in China and $65 in Vietnam.

5. According to the Korea Business Consultants newsletter (May/June 2009):

South Korea’s point man for North Korea said May 18 that the joint industrial enclave at Kaesong, just across the DMZ in the North, is “in turmoil” after the DPRK voided contracts governing the facility the same day, sending shares in firms that operate there tumbling. The KOSPI fell by 0.44 percent upon receipt of the news.

Read more below:
N. Korea Scraps Gaeseong Contracts
Korea Times
Kim Sue-young
5/15/2009

N. Korea declares inter-Korean contracts on Kaesong venture invalid
Yonhap
5/15/2009

N. Korea scraps contracts with South on joint venture amid tension
Yonhap
Kim Hyun
5/15/2009

Cabinet reshuffle
NKeconWatch.com

N.Korean Kaesong Workers’ Productivity Lags Far Behind S.Korean Workers
Choson Ilbo
5/19/2009

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Posted in Economic reform, Foreign direct investment, Kaesong Industrial Complex (KIC), Korea Business Consultants, Special Economic Zones (Established before 2013) | 2 Comments »

North Korean footballers in Europe

May 16th, 2009

(Big hat tip to Werner who located this information)  For some time now now, DPRK football players have been earning hard currency and training with European pro-football teams.
 
– Choe Myong Ho (in Russian: Tsoi Min Ho) is playing for the Russian Premier League’s team Krylia Sovetov Samara–which has a player from both North and South Korea (read more here)
 
– Hong Yong Jo is playing for Russia’s Rostov:

Hong plays his club football at FC Rostov in the Russian First Division, following a short spell with Serbian outfit FK Bezanija. Unlike those days at his first club April 25 of Pyongyang, for whom he scored 41 goals in four seasons, Hong has had to fight for his place in the European leagues while frequently flying back home to join the national team for their South Africa 2010 qualifiers. The time change and distance has to cover is considerably greater than those of team-mates An Yong Hak or Jong Tae Se, who ply their trade in Korea Republic and Japan respectively.

There has, in fact, been signs of fatigue: Hong was uncharacteristically unimpressive during the UAE game and he was replaced in the 71st minute. His substitute Kim Kum Il made an instant impact with a neat through ball that resulted in Korea DPR’s opening goal. But it took only four days for Hong to redeem himself, winning and converting a crucial penalty against Korea Republic (FIFA.com).

– Pak Chol Ryong and Kim Kuk Jin are playing for FC Concordia Basel (2nd Swiss division).  Read more in German here.
 
Additionally, two DPRK women football players are training with the FFC Turbine Potsdam (a leading German women’s team from Potsdam). The players, Jon Myong Hwa and Kim Un Hyang, are both from the 2008 FIFA women’s championship team.  The managers of the German football club said that they did not actively seek out the North Korean players, but rather they were approached by a North Korean who has been living in Cologne for several years who asked Potsdam to invite the women players to train with them. (Read more in German here).
 
Also, the DPRK men’s national team is attending a training camp in Switzerland right now. (Read more in German here).  Last week they played a friendly match against FC Concordia Basel (2nd division) and lost (Read more in German here)

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Posted in Civil society, Football (soccer), Sports | Comments Closed

North Korea: Unilateral and Multilateral Economic Sanctions and U.S. Department of Treasury Actions 1955-April 2009

May 14th, 2009

The National Committee on North Korea (NCNK) published a paper by Karin Lee and Julia Choi which presents the history of U.S. and UN sanctions against North Korea.   A brief review of phases in US economic policy toward the DPRK is followed by longer sections tracking the major changes in U.S. and UN sanctions over the past six decades. Next, there is a summary of measures taken by other relevant governments, particularly following the missile test and nuclear test in 2006 and the rocket launch in April 2009.  The paper concludes with a summary of U.S. sanctions against North Korea from 2000-April 2009, a timeline listing major events in U.S.-DPRK relations and the imposition and relaxing of U.S. sanctions, and a matrix of luxury items prohibited for export to the DPRK in compliance with UN Security Council Resolution (UNSCR) 1718 (2006).

You can download the paper in Word format here, or in PDF here.

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Chinese companies in fake North Korea documents scam

May 13th, 2009

by Michael Rank

Chinese traders are using fake documents to export goods to North Korea, the Chinese embassy in Pyongyang warns on its website.

The terse, two-sentence statement dated April 4 gives no details of the forged “[North] Korea export licences” scam, but says the North Korean authorities have confirmed the documents are fake and urges “relevant companies not to be easily deceived.”

Perhaps the biggest surprise is that the Chinese embassy in Pyongyang has a website at all, and a fairly active one at that. It has plenty of links, on Chinese-North Korean economic, cultural and educational ties, speeches by the ambassador and that sort of thing but not a lot of hard news or useful information.

There is no Chinese comment on the recent North Korean missile test, which is perhaps eloquent in itself, though there is a profile of the current ambassador, Liu Xiaoming, who spent much of the 1990s in the Chinese embassy in Washington (he was minister counsellor 1998-2001) and also in the North American section of the Chinese Foreign Ministry.

There’s also a list of all Chinese ambassadors to the DPRK since 1950, with photographs and brief biographies.

The Chinese website is here and there’s even an English version though it hasn’t been updated since February.

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Posted in China, International trade | 1 Comment »

South Korea increasing economic pressure on DPRK

May 13th, 2009

According to Yonhap:

South Korea’s unification ministry on Tuesday closed its bureau on humanitarian aid to North Korea and created a new one to better analyze Pyongyang’s internal politics as part of government restructuring.

The Cabinet approved the ministry’s proposal to shut down its Humanitarian Cooperation Bureau and set up the tentatively-named Political Analysis Bureau, Kim Jung-tae, assistant minister for planning and coordination, said in a press briefing.

Additionally, the South Korean government seems to be laying the political and regulatory groundwork to apply more economic pressure on DPRK.  Again, according to Yonhap:

“The process of monitoring items exported to North Korea has no order of priority, raising concern that there could be a chance of strategic materials going to North Korea,” the audit agency said after an investigation requested by the National Assembly.

Strategic materials refer to equipment or technology used to make nuclear or biological weapons or missiles that are prohibited from being carried into the North. Such materials or items that may fall into that category are sometimes overlooked as the ministry’s checklist, generally used by the tax agency and other government agencies, is too broad, it said.

The ministry failed to spot and investigate packages of black powder, an explosive mixture of sulfur, that were transported into North Korea by a local firm last year, the agency said, though it could not say whether black powder is a strategic material.

The audit agency also found that 270 used computers were exported to North Korea in a possible violation of the law. The computers were initially destined for China, but their owner changed the destination to North Korea without informing the government, it said.

Other computers that were subject to return to the South were not brought back in time, it noted. South Korean law allows citizens to bring computers to North Korea on condition that they bring them back within a year.

The ministry failed to keep track of more than 2,000 computers taken to a joint industrial complex in the North’s border town of Kaesong over the past year by South Korean workers, it said.

The Unification Ministry said in a statement that some of the items noted by the customs agency were not strategic materials, but added it will “prepare a manual to effectively control” such items.

Inter-Korean trade volume reached US$1.82 billion last year, the audit agency said. More than 186,000 South Koreans, not counting over 303,000 who toured North Korean resorts, visited North Korea for business and aid projects during the period, up 18 percent from the previous year, it said.

Read the full stories here:
Unification ministry closes N. Korea aid unit, bolsters intelligence
Yonhap
Kim Hyun
5/12/2009

Audit agency questions lax monitoring of North Korea trade
Yonhap
5/13/2009

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Posted in International trade, South Korea, Statistics, Trade Statistics | Comments Closed

DPRK government continues to prove price controls ineffective

May 13th, 2009

According to Radio Free Asia:

Government price controls are now being imposed on non-food items in the markets, with frequent spot checks by state security police to monitor sales of sought-after household goods such as spoons, toothbrushes, and candles.

Price tags for more than 35 items were posted at farmers’ markets in Hweryong , Onsung, and Moosan cities in northern Hamgyong province, where North Korea’s poorest people go to buy the hard-to-find necessities of life.

“Market administrators and security agents take turns asking repeatedly about the price of various items,” a North Korean who recently defected to the South said in an interview.

“According to the government-imposed price tags, a toothbrush costs 200 won, a spoon 150 won, and 10 candles 1,000 won.”

This compares with unregulated prices of 250 won for a toothbrush, 200 won for a spoon, and 1,300-1500 won for a bundle of 10 candles.

An average monthly salary for a worker in North Korea is about 2,500 won.

“If someone asks the price, the vendors will be sure to give you the price dictated by the authorities, but they will not actually sell anything for that price,” the defector said.

Another South Korean-based defector agreed.

“When the inspectors come by, they see the official price on the tag, but when buyers come by, the vendors never sell for that price, but for a higher one,” the defector said.

“If buyers ask the vendor to sell for the government-imposed price, the vendors simply tell them to try to purchase for that price from somebody else.”

To avoid the watchful eye of the authorities, some vendors simply avoid going to farmers’ markets, and instead set up small bazaars elsewhere to sell manufactured goods.

The North Korean government has attempted to regulate the markets in numerous ways in the last few years (More history and commentary here).  So far the implementation of new rules has proven haphazard, unpredictable, and largely ineffective since the black market is well developed and the levels of bureaucracy involved in the operations are numerous and subject to local manipulation. 

The non-uniformity of these market regulations can be seen in the following IFES report:

North Koreans subject to harsher market controls
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-5-6-1
2009-05-06  

Good Friends, a non-profit organization working for human rights in North Korea, reported recently that North Korean residents are becoming increasingly discontent due to the government’s strengthening of restrictions on markets.

The group’s online newsletter, “North Korea Today,” reported in its most recent issue (no. 275) that a new list of banned items, presented as the “February 17th policy”, was issued by authorities to women selling goods in the market in Chungjin, North Hamgyong Province on April 10th.

According to a Good Friends source, Party propaganda officials were dispatched to markets in broadcasting trucks in order to announce the new measure, blaring that the selling of goods on the list of banned items would be considered “anti-socialist” activity, and would be punished accordingly.

Other sources report that the ban has resulted in an increase of door-to-door sales, and that those in the market are still willing to take individual orders for goods on the banned list, and then meet outside of the market to complete the deal.

In Hyeryong, North Hamgyong Province and Hyesan, Ryanggang Province, the “February 17 policy” was posted around markets, but the details of the policy were not explained. In the city of Hamheung, market hours were also restricted, with sellers only allowed to operate from 1~6 pm.

The goods restricted were mostly imported wares, with as much as 90 percent of foreign goods banned, and absolutely all South Korean products blocked. Those caught selling restricted items can expect to have their goods confiscated, with additional punishment not unheard of.

So the good news is that these rules make little difference to the actual distribution of goods and services in the DPRK.  Of course the bad news is that the North Korean government keeps trying.

The whole story can be obtained here:
Radio Free Asia
Jung Young
5/6/2009

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Posted in Economic reform, General markets (FMR: Farmers Market), Price liberalization | Comments Closed

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