Russia to trade DPRK electricity for natural resources

July 4th, 2006

In the old days, the DPRK nurtured its independence by alternating its allegiance between China and Russia, playing the big boys off each other.  Today, China clearly holds more influence in the DPRK in terms of trade and direct political influence.  In fact, China and the DPRK are involved in several hydro-power projects on the Yalu river.  Perhaps energy subsidies are a way for Russia to regain a foothold in the DPRK and protect its direct link to Pyongyang and potential land links to Seoul. 

On an economic note, this kind of behavior is typically called “dumping” in the west and it is not allowed under WTO rules.  But both parties are clearly better off if the deal goes through.  This should tell us something about our Anti-dumping trade rules in the west as well. 

But this is all just silly speculation on my part.  Here is the article from the Joong Ang:

July 04, 2006
KHABAROVSK, Russia ― Russia has been in discussions with North Korea to supply it with surplus electricity, Russian officials at a state-owned electric power company recently told the JoongAng Ilbo. In return, North Korea would provide Russia with natural resources.

“We have been discussing exporting surplus electricity from the far eastern district of the country to North Korea,” Victor Minakov, president of Vostokenergo, the far eastern branch of the United Energy System of Russia, said in an interview last week in Khabarovsk.

“The fastest and most efficient way to resolve North Korea’s electricity problem is to supply electricity from Russia,” Mr. Minakov said.

According to Mr. Minakov, negotiations have been delayed because Russia initially asked North Korea to pay cash for the electricity, and then asked it to cover the expenses for building power transmission lines, neither of which the North could afford.

However, the negotiations resumed after Pyongyang offered to pay for the electricity with natural mineral resources. “Representatives from the Russian energy company will visit Pyongyang at the end of this month for further discussions on detailed matters,” Mr. Minakov said.

The far eastern area of Russia, reportedly has around 300,000 kilowatts of surplus electricity, and the government plans to further improve productivity there by building more power plants. Russia and North Korea has been negotiating on the supply of electricity since 2001.

Russia plans to build a 370-kilometer (229-mile) power transmission line between Vladivostok, Russia, and Chongjin, North Korea, to supply 300,000 to 500,000 kilowatts of electricity. Building power transmission lines and converters would take three years, and cost at least $200 million.

“It costs much less to supply electricity from Russia to North Korea than from South Korea to the North or through the programs of the Korean Peninsula Energy Development Organization,” Pavel Korovko, vice president of Vostokenergo, said on June 27 at a seminar in Khabarovsk.

The Korean Peninsula Energy Development Organization was dissolved recently after failing to build light water reactors in North Korea under the terms of a 1994 agreement between North Korea and the United States.

Share

Posted in Electricity, Energy, Foreign direct investment, International trade, Russia | 1 Comment »

Kaesong reporting regulations eased

July 4th, 2006

Yonhap
7/4/2006

South Korean companies will be able to make remittances to their operations in an industrial complex in North Korea without having to make a prior report to the authorities in Seoul, the Finance Ministry said Tuesday.

The ministry said it has amended regulations governing remittances to North Korea to help South Korean companies operating in the inter-Korean industrial complex in Kaesong, just north of the heavily-armed demilitarized zone that divides the two Koreas.

Financial remittances to North Korea had previously needed to be reported to the Bank of Korea, South Korea’s central bank.

According to the ministry, a branch of South Korean lender Woori Bank that is located in the industrial complex will serve as the intermediary bank.

A total 13 South Korean companies are currently operating in the industrial complex, a key product of the 2000 summit between the leaders of the Koreas that boosted reconciliation and cooperation programs involving the two countries.

The number of South Korean companies in Kaesong is expected to reach 300 when the first phase of construction is completed next year. Seoul believes the industrial city will be able to house as many as 2,000 South Korean firms by 2012 when the complex is fully developed.

Share

Posted in Banking, Economic reform, Finance, Kaesong Industrial Complex (KIC) | Comments Closed

North Korean export list

July 2nd, 2006

Its not free, but it is published.

Check it out here

Share

Posted in International trade | Comments Closed

UNESCO naming world heritage sites in DPRK

July 1st, 2006

UNESCO has listed a series of Koguryo burial sites on the world heritage list.

Here is a link to the list approved in 2004 (with coordinates for Google Earth):
http://whc.unesco.org/en/list/1091/multiple=1&unique_number=1269

Here is a list of accepted and “wait-listed” projects:
http://whc.unesco.org/en/statesparties/kp

Here is a nice video of the sites on the UNESCO web page:
mms://stream.unesco.org/culture/nhk/north_korea.wmv

Here is a story in the BBC about North Korea’s additions to the World Heritage List.

Here is another great resource about the history of the move in the Korea Foundation Newsletter.

Apparently the job of overseeing these tombs is in the hands of the Management Bureau for Cultural Property Conservation (MBCPC) in the Korean Cultural Preservation Agency (KCPA)

Share

Posted in Korean Cultural Preservation Agency, UNESCO | Comments Closed

Korea Business Consultants

June 30th, 2006

Their web page is here, but it looks like they have not updated it in a while.

According to their website,

[KBC is]  among the first to identify the opportunities that North Korea could offer to enterprising companies. As a result, KBC clients benefit from our considerable experience and well-established contacts with this hard-working and largely industrial nation which finds itself on the threshold of fuller integration with the world economy. We believe the significant economic changes that have started to unfold will create major business opportunities for foreign companies with the right strategy.

In the DPRK market, we work with (and for) our customers to secure business and investment opportunities, manage relations, provide effective business solutions and oversee the process of entering the North Korean market.

Specifically, they offer a newsletter.  The sample issue they have displayed is quite old, so I am not sure if it is still published.

They also promote business delegations (with golf) and trade exhibitions, such as the Pyongyang International Trade Fair (PITF),  and the International Technology and Infrastructure Exhibition in Pyongyang

And on the implementation side, Korea Business Consultants offers a full range of financial, legal and transportation services, including:

  • Project finance, legal advice and analysis of tax and investment laws of the DPRK.
    Investment seminars to attract inward investment: planned for 2002 – with DPRK support and involvement.
  • Participation in DPRK’s expanding and regular Trade Fairs and Exhibitions.
    Trading partners to facilitate the trade of commodities/metals and a full range of other DPRK goods.
  • Network of partners in London, Luxembourg, Hong Kong, Seoul, Shanghai, Singapore, Switzerland, Seattle and Toronto.
Share

Posted in Foreign direct investment, International trade, Korea Business Consultants | Comments Closed

DPRK defectors release CD in ROK

June 29th, 2006

From the Korea Times:

Wild Rocambole Band _ Tallae Umakdan in Korean _ an all-female band of six North Korean defectors will release their first album here this August. Most studied at music schools in North Korea, or performed with state-run troupes.

Included on the album is “Hong Kong Lady,’’ one of the most beloved trot songs in South Korea along with several songs they learned in North Korea.

Leader Han Ok-jung, 28, who escaped the North in June 1998 is good at singing and Chinese while dancer Heo Su-hyang, 22, who fled in 2001, is well-versed in apparatus gymnastics and singing.

Kang Yoo-eun from Pyongyang, and Lim Yoo-kyung from North Hamkyong Province, both 19, sing and play the accordion.

To protect their families who remain in the North, two of the members, who are now South Korean citizens, use false names.

Share

Posted in Music, South Korea | Comments Closed

ROK to promote knowledge sharing with DPRK

June 29th, 2006

From the Korea Times:

Seoul to Promote Knowledge Sharing With N. Korea
By Kim Sung-jin
Staff Reporter

The government Thursday said it will continue to promote various projects to exchange economic knowledge with the reclusive North Korea.

Vice Finance and Economy Minister Bahk Byong-won said Thursday that private economic cooperation between the South and the North has become brisker than ever with the Kaesong Industrial Complex and North Korean tourism projects getting into full swing, but inter-government cooperation is still very limited.

“What we need more than anything else to further advance the cooperative inter-Korean economic relations is an extension of knowledge-sharing programs with the North,” Bahk said. He made the remarks at a conference on knowledge sharing for the economic development of North Korea at the Westin Chosun Hotel in downtown Seoul.

Participants in the conference included the Asia Foundation’s country representative in Korea Edward Reed, head of political section of the Delegation of the European Commission to Korea Maria Castillo Fernandez, former Swiss Agency for Development and Cooperation’s (SDC) North Korean office resident director Rudolf Strasser and Korea Institute for International Economic Policy (KIEP) president Lee Kyung-tae.

As Bahk noted, government-level economic exchange programs between the South and the North are still very limited although Seoul and Pyongyang agreed on revising a plan to dispatch economic inspectors across the demilitarized zone (DMZ) at the Inter-Korean Economic Cooperation talks held on Cheju Island between June 3 and 6.

“The Korean government will make consistent efforts to widen knowledge sharing with the North as well as with the international community,” Bahk said.

“We also hope that academia, non-government organizations and international organizations will play a leading role in extending inter-Korean knowledge sharing programs,” he added.

Annual inter-Korean economic transactions, including the transaction of merchandise and services such as tourism, have made a significant improvement over the past five years regardless of the political tension on the Korean Peninsula. They expanded to $1 billion in 2005 from some $200 million prior to the inter-Korean Summit held in 2000.

Meanwhile, the Korea International Trade Association (KITA) said Thursday that inter-Korean economic transaction, or trade, expanded 30 percent in the first five months of this year, thanks to vibrant industrial activity in Kaesong just across the inter-Korean border.

Between January and May, inter-Korean economic transactions amounted to $428.63 million, up 34.4 percent from the same period last year.

In the cited period, North Korea-bound South Korean goods jumped 35.4 percent to $264.97 million, and imports from the North increased 32.9 percent to $163.66 million.

Inter-Korean economic transactions are forecast to expand sharply next year as the number of South Korean manufacturers moving into the Kaesong industrial complex will reach 300 with the completion of the first phase of the industrial park construction project, up from current 15.

Seoul plans to help Kaesong house as many as 2,000 South Korean firms by 2012 when the complex is fully developed.

From Yonhap:

South Korea will intensify efforts in technical assistance and training for North Korea in order to help the communist state’s economy grow further, a government official said Thursday.

“We should help the North to enhance its understanding of economic principles and their operation mechanism, which will guarantee us more substantial and enduring results from economic assistance to North Korea,” Vice Finance Minister Bahk Byong-won said in a speech at a forum titled “Knowledge Sharing for Economic Development of North Korea.”

“Material assistance without economic knowledge and managerial capacity cannot contribute to sustainable economic growth,” he said.

Bahk said excessive transaction costs caused by the lack of adequate knowledge about economic principles, practices and international economy on the North Korean side have posed bigger threats to economic development than anything else.

“Some have suggested that inter-Korean cooperation has proceeded at a slow pace, but despite a rapidly changing environment, inter-Korean economic cooperation has shown remarkable strides,” he said.

Inter-Korean trade volume, which stood at US$2 million-$3 million before the 2000 inter-Korean summit, reached $1 billion last year, making South Korea the second-largest trading partner of North Korea, the official said.

Also, personnel exchanges and movement between South and North Korea have never been more frequent than recently, he said.

Bahk said economic cooperation between the Koreas, which has been regarded as one-sided, has also shifted to the one that is reciprocal and serves mutual interests, he said.

“South Korea, international organizations and nongovernmental organizations should seek to create synergies by exerting concerted efforts through sharing information among ourselves with regard to the knowledge-sharing experience with North Korea,” Bahk said.

The South Korean government will not spare any effort to vitalize knowledge sharing with North Korea for its economic development in close partnership with the international community, he said.

Share

Posted in International trade, Mt. Kumgang Tourist Special Zone, South Korea | Comments Closed

China And North Korea To Build Hydroelectric Dam

June 29th, 2006

From Industry Week:

June 29, 2006 — China and North Korea have signed an agreement to build a hydroelectric dam on the Yalu river which borders the two nations, state media reported June 28.  The deal was signed on Tuesday in Pyongyang between China’s Changchuan Hydroelectric Power Co. Ltd. of Jilin province and North Korea’s electric power and coal industry ministry.

China will fund the 350 million yuan (US$43.75 million) Wenyue Hydroelectric Project, while the infrastructure will be built in North Korea. The dam will have a capacity of 40,000 kilowatts although the electricity will be used in North Korea where power supplies are far more scarce.

Construction on the dam is expected to begin in September and will be completed in three years. The Chinese side will provide equipment for the dam.

Under the agreement the North Korean side will repay the investment on the dam to the Chinese side from proceeds from electricity sales.

Share

Posted in China, Dams/hydro, Foreign direct investment | Comments Closed

What are the origins of reform in the DPRK?

June 28th, 2006

Daily NK
6/28/2006

Would a governmental transition in North Korea be realized bottom-up, or top-down? On the 23rd of last month, a forum addressing North Korean governmental transition was held in the Conference Hall at Sejong Center.

Professor Choi Wan Gyu of the North Korea Graduate School estimated that, “At the end of the 1980’s, witnessing the sudden changes and the collapse of the Soviet Union and other Eastern European communist countries, our government [the ROK] and North Korea experts predicted that North Korea would undergo similar processes relatively soon, although North Korea has not, as of yet, shown any signs of a governmental shift or a collapse”.

Professor Choi pointed out that, “Unlike the Eastern European countries, the North Korean political system is one of hereditary totalitarianism. Because high-ranking officials and government organizations are ceaselessly reconstructed and controlled by one top leader, a self-regulating system cannot exist and therefore a nonviolent governmental shift is not an option”.

Governmental transition will be possible only through bottom-up revolution

He claimed that, “Under the hereditary totalitarian system, a top-down transition would be impossible, and only bottom-up attempts, such as mass demonstrations or protests, will lead to a change in the system”.

Yet, will bottom-up demands for a governmental transition, like those that occured in Romania, East Germany, and the Czech Republic, be possible in the case of North Korea?

According to Professor Choi, the possibility of a bottom-up transition is unlikely. Such a shift, through revolution, would require repetitive and gradually increasing mass demonstrations and protests, which currently are not taking place in North Korea.

He explained that such demonstrations are not occuring in North Korea, even after the dramatic economic crisis of the 1990s, because most North Koreans lack the motivation to induce such a change, and in North Korea there are no telecommunication and information distribution tools with which to gather anti-governmental forces and encourage mass demonstration.

Using the Romanian case as an example, Professor Choi explained that, “Compared to other Eastern European communist countries, the civil society in Romania was not powerful. Romania was able to induce a change with the help of Hungarian TV, Free Europe Radio Broadcasting Network, and the information distribution strategies of numerous international civil rights organizations”.

Top-down reformation following Chinese liberalization is necessary

However, he pointed out that after the 2000 South-North Korea Summit Conference, the South Korean broadcast to North Korea shifted in tone, to one of encouraging conciliatory gestures, cultural exchanges and cooperation towards North Korea, rather than urging the liberalization of North Korea, as in the past.

Professor Choi explained that a bottom-down shift in the North would be impossible because, “North Korea has no experience with capitalism, mass demonstrations against the government, democratization, or any sort of counter culture which would replace communism and the Juche ideology”.

He added that, “The core reason why North Korea has stayed stable in spite of the worst crisis since its establishment is because of the unique social control and monitoring system within the country”.

He concluded that, in order to initiate a change within the North Korean government, we should help North Korea pursue active reformation and liberalization policies, helping to solve the economic crisis and move away from the communist system we, including South Korea, the U.S. and China, should implement policies that enable North Koreans to use information telecommunications networks.

While internal changes will be difficult, pressure from neighbor countries will help

On the other hand, another participant at the forum, Professor Lee Dong Bok of Myung Gi University, refuted Professor Choi’s argument, saying that, “Because North Korea has a strong hereditary, idolatrous system established, the possibility of a bottom-up change is unlikely”.

Professor Lee claimed that with Chinese reformation and liberalization as a model for top-down governmental transition, a strategy which first removed the nation’s top leaders from a position of authority and idolatry, was necessary in order to make the transition possible.

Professor Park Seung Sik, of the Unification graduate program at Dae Jin University pointed out that, “It is unrealistic to assume that provided with information and telecommunications networks, the North Korean people would be encouraged to participate in revolutionary activities within such a completely controlled society”.

Professor Park asserted that, “If a North Korean governmental transition is not possible through ruling class or mass demonstrations, it is necessary that neighbor countries such as South Korea, the U.S, Japan, China and Russia impose pressure on North Korea, encouraging its reformation and liberalization”.

Share

Posted in Economic reform | Comments Closed

China’s interest in the future of the DPRK

June 28th, 2006

from the Joong Ang:

Chinese specialists on Korean affairs have revealed greater concerns about the political stability in North Korea than at any other time since the height of the North Korean food crisis in 1996-97.

Chinese concerns do not necessarily mean that the political leadership in Pyongyang is near a collapse, but they reveal that China’s crisis is primarily about North Korea’s economic and political stability, not its nuclear weapons.

Chinese analysts are preoccupied with a fundamental dilemma in pursuing stability in North Korea: unless North Korea pursues reform and opens up, it cannot survive, but reform and openness could lead to political instability in North Korea, to the detriment of China’s own interests.

China’s primary objective is to prevent instability while simultaneously encouraging North Korea’s economic reform ― not to denuclearize North Korea as the United States desires or to promote South Korea’s unification aims. The exchange of summits in recent months between Hu Jintao and Kim Jong-il has strengthened China’s political influence in North Korea. Chinese investments in North Korea’s energy and other sectors and the widespread availability of Chinese products in North Korean markets have raised anxieties in Seoul that China is making North Korea into China’s “fourth northeastern province.”

China’s economic rise has given it new tools for promoting the stability of weak states on its periphery. Chinese government-led investments and cheap products are providing China with the decisive political influence to stabilize weak or failing state structures in neighboring countries such as Pakistan, Laos and Myanmar, as well as North Korea.

Chinese specialists recall their own experience with opening and reform, and fret that North Korea cannot claim a “peaceful environment” in which to pursue reform as long as there is nuclear confrontation with the United States. The Chinese want the United States to lessen tension and promote an environment conducive to North Korean economic reform.

North Korean leaders focus on the security threat from the United States, but the greatest enemy of the North Korean system is the penetration of external goods and information and the development of self-interest and individual choice as real options for the North Korean people. These bottom-up changes are eroding North Korea’s corporatist, leader-centered ideological controls and transforming the relationship between the individual and the state.

The rapid emergence of legal and illicit cross-border market interactions that have mushroomed outside state-level political controls in China or North Korea are the real threat to the North’s political stability. The seeds of North Korea’s demise, ironically, are likely to be “made in China,” not the United States.

Certainly, China prefers a Korean Peninsula that is friendly to China, or alternatively the maintenance of North Korea as a strategic buffer. Chinese analysts remain suspicious of American intentions. They believe a U.S.-North Korea confrontation is in America’s interest and that President Bush’s hopes for a peaceful, unified, free and democratic Korean Peninsula must be resisted.

Chinese analysts know that change in North Korea is inevitable, but they claim that there is no alternative to Kim Jong-il’s leadership, in which they have made a significant political investment. Despite North Korean efforts to restore political controls, disaffection with the top leadership that was almost unknown a decade ago is gradually spreading with the flood of external cultural influences that has invaded Pyongyang. This development is most worrisome to Chinese analysts concerned about North Korea’s stability.

It is no accident that Chinese military forces moved closer to the border with North Korea in recent years.

Military analysts admit that Chinese contingency plans are in place to intervene for “environmental control” to secure nuclear weapons and fissile materials in the event of regime instability, but the primary objective would be to protect China from the spillover effects of chaos in North Korea. Likewise, the United States surely has its own plans to secure North Korean “loose nukes” in the event of political instability, regardless of possible political or legal obstacles to such an intervention.

Given the low level of U.S.-Chinese military-to-military relations and high level of strategic distrust over the future of North Korea, there is no effective mechanism for official dialogue between the United States and China to mitigate the possibility of accidental conflict in the event that more than one state tries to secure “loose nukes” during political instability in North Korea.

The 2001 crisis involving an American intelligence aircraft brought down on Hainan Island revealed the risks that derive from poor channels of communication.

Regardless of whether or not North Korea’s regime is likely to fail or become unstable, there is a need to address such contingencies and clarify proper courses of action.

Advance discussions among the three countries might minimize the prospect of a conflict between special operations forces from the United States, China, and/or South Korea in any race to secure North Korea’s “loose nukes” during a period of regime crisis in the North. 

Share

Posted in China, Economic reform | Comments Closed

« Older Entries
Newer Entries »