Digital camera use spreading

June 8th, 2006

From the Daily NK:

As digital cameras spread throughout North Korea, photo printing companies are also being created. A stand-shop with a computer and a photo printer appeared during the Pyongyang International Goods Exhibition at the 3rd Revolution Pavilion on May 17. The advertisement stated ‘Fast computer photos, collect in 15min.’ ‘Price 500won.’

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North Korea’s Military-First Policy: A Curse or a Blessing

June 8th, 2006

Nautilus Institute
Alexander V. Vorontsov
6/8/2006

The “Songun Chongch’i” or military-first politics mantra adopted by North Korean leader Kim Jong-il as a guideline for domestic governance and foreign policy has elicited mostly negative responses from Korea-watchers. Many view songun as the final phase in the deterioration of North Korea and a serious threat to neighboring states saying that an impoverished country of 24 million inhabitants supporting a military of more than 1 million soldiers is incapable of modernization and economic reform. They argue that greater military participation in politics creates a dual-pronged threat: the army may appropriate a greater share of already-dwindling state funds to increase its readiness and effectiveness; and the generals, supposedly the most militant sector of the policy-making structure, will have a louder voice in foreign policy formulation, which could lead to hostile rhetoric towards South Korea.

A less alarmist interpretation of military-first politics is that Kim Jong-il is trying to maintain the existing order, to strengthen his regime based on personal authority, and consolidate control of military forces with the goal of preventing an overthrow of the state.

So, is military authority a curse or a blessing? The lessons from history are ambiguous, as states ruled by the military have experienced both prosperity and hardship. But some argue that South Korea represents a relatively positive example in which it has experienced a national revival because of a period of military rule.

In 1961, Park Chung-hee, a colonel in the ROK army, seized authority South Korea in a bloodless coup and established a rigid dictatorship with his military comrades. Though politics became more repressive, the national economy grew exponentially and General Park is remembered by many as the “father of the South Korean economic miracle.” Few dispute that this economic growth planted the seeds for the ensuing process of democratization. So it is hardly accidental that, in recent years, Kim Jong-il has started to speak favorably of General Park and his role in the modernization of the Republic of Korea.

The implementation of songun in the mid-1990s increased the role of the Korean People’s Army (KPA) in daily life. The army began to participate even more in social and economic decision-making, from large-scale infrastructure development to providing its own food. While military personnel are required to serve for ten years, they spend most of their service participating in different areas of the country’s socio-economic life. Thus, the army is now not as heavy economic burden, and is serves as an important resource and catalyst for developing the national economy.

The movement to the military-first policy has accompanied a gradual transformation of North Korea’s planned economy to the direction of a mixed economy. The result may eventually be a network of large, less state-controlled corporations that share close ties with government agencies, similar to the “chaebol” that Park Chung-hee created in South Korea. Because of this, the North Korean military is now involved in different spheres of economic activity, including foreign economic ties and trade operations, and will likely play a key role in this ongoing process of privatization.

With songun also come changes in ideology. This change and its underlying goal of building a powerful and prosperous state – “kangsong taeguk,” are justified by flexible and creative interpretations of the bedrock ideal of self-reliance – “juche,” a nationalist ideology developed by revolutionary leader Kim Il-sung. The songun concept replaces the proletariat and the vanguard Communist Party with the army as the driving force in society. This innovation is significant because the army is typically a less ideological and more pragmatic institution than the Party.

The army’s role in society is not the only example of Kim Jong-il’s liberation from orthodox ideologies. Since the early 1990s, North Korea has shifted its emphasis from socialist ideals to historical and spiritual values. This is reflected in the use of Confucian norms in public policy and everyday life, and legitimizing the state through reference ancient Korean kingdoms. Again, the parallels with Park Chung-hee are very strong. Kim Jong-il has also sought to reduce the prevalence of the personality cult. From early 2004, for example, there could be only one portrait of Kim Il-sung in public places. Similarly, Kim Jong-il is to be described only by his official positions, rather than the use of laudatory epithets such as “Dear Leader.”

Songun should not be automatically dismissed as an ideological dead-end. As the experience of South Korea under Park Chung-hee demonstrates, military rule can have positive effects on society under certain conditions.

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Joint railway tests still on the agenda…

June 7th, 2006

From the Joong Ang Daily:

South Korean delegates at the inter-Korean economic talks here won a victory of sorts early yesterday morning; North Korea agreed to Seoul’s linkage of the completion of test runs of the newly reconnected railroads across the Demilitarized Zone to its offer of raw materials for the North’s light industries.

But in what apparently was a face-saving gesture to the North, the linkage was not made explicit in the joint announcement of the results of the four-day meeting. South Korea agreed to supply a package of raw materials for the North’s shoe, soap and textile industries worth $80 million, which will be delivered “when necessary conditions are met.” The agreement said nothing more about the conditions, but the rail tests, most recently cancelled by North Korea the day before they were to be conducted last month, were clearly the point at issue. Kim Chun-sig, the Seoul delegation’s spokesman, made that explicit. “The trial train runs are linked with the supply of raw materials, and the agreed announcement was issued with that understanding by the North.” He said agreement to the linkage was not easily won from the North; Seoul’s delegates stressed the uproar that would break out here if that condition were not attached.

The aid will be in the form of a loan to be repaid in kind ― North Korean natural resources ― over a 15-year period with an interest rate of 1 percent. The two delegations met the press to announce the agreement, saying they had signed a nine-point agreement and a 10-point supplemental document dealing with the aid package.

In the agreement, the aid is to be delivered in August. Mr. Kim said that meant that the necessary military-to-military agreement on safeguards required before travelers cross the Demilitarized Zone must be in place and the rails tests completed.

The strings attached to the aid package are something of a departure for the Roh administration, which has been tolerant ― far too tolerant, critics in the South contend ― of North Korea’s penchant for accepting aid donations while failing to keep promises it had made in return. Pyongyang’s cancellation of the railroad tests in late May was, apparently, too much for Seoul to stomach politically. The tests were cancelled the day before they were to take place, and the North blamed “political instability” in the South and the lack of a military safeguards agreement that the North itself has blocked.

A Seoul delegate said proudly, “Unlike in the past, we focused on enforcement of the agreement and secured some leverage over North Korea.” The two sides made some modest progress on other issues. They agreed to conduct negotiations on a joint project to mine gravel from the mouth of the Han River inside the Demilitarized Zone. They agreed that military-to-military agreements would be necessary for safety and security reasons. The project had been suggested by Seoul in April, and reflects the dwindling supply of such material here because of South Korea’s 30-year construction boom.

Other agreed meetings will address administrative procedures at the Kaesong Industrial Complex, flood control on cross-DMZ rivers and exchanges of weather data, especially on the yellow dust storms that originate in China’s Gobi Desert.

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Koreas agree on business contracts

June 7th, 2006

From the Korea Herald:

JEJU – The two Koreas yesterday agreed on a set of contracts to stimulate North Korea’s light industries and mining operations, but only when “conditions are met.” South Korean officials say the expression is a diplomatic term being used to describe the North’s obligation to allow the test run of trains on two cross-border rail links.

Economic delegates from Seoul and Pyongyang ended their four-day meeting on Jeju Island early yesterday morning, working out a nine-point agreement on various economic cooperation plans.

The talks were held against a background of hostility in the South following North Korea’s unilateral cancellation of the landmark testing of cross-border railways on May 25.

After marathon talks, the two sides managed to achieve a reluctant consensus on how to describe Pyongyang’s duty to revive the cancelled railway test-runs in return for a package of business cooperation deals.

The two sides resorted to indirectly referring to Pyongyang’s railway obligation by using the term “when conditions are met,” instead of using more direct language. Some observers said the “ambiguous” preconditioning leaves room for Pyongyang to pull out from the agreement later on.

The North apparently faces opposition from the military authorities who are apparently against opening the railways to the South. The North Korean military has demanded the two Koreas first conclude a full military guarantee.

“The implication of the agreement is that if there is no test run for the railways, there will be no economic support,” said Kim Chun-sig, spokesman for the South Korean delegation, during a press briefing.

Underscoring that the agreement is strong enough to encourage North Korea fulfill its part of the bargain, Kim said that the two Koreas would soon begin to discuss the military guarantees.

Based on the agreement, South Korea will provide some $80 million worth of raw materials needed for the destitute state to manufacture garments, shoes and soaps from August this year. North Korea will repay 3 percent of the loans in the form of minerals such as zinc. The interest rate was set at a low 1 percent.

The two Koreas also agreed to jointly develop North Korean mines and designate an organization to take charge of the project within one month from now.

Seoul officials argue that this agreement raises the level of inter-Korean cooperation to a mutual and commercial relationship from one-sided aid from Seoul to Pyongyang.

Other agreements included a joint excavation of aggregates in the Han River estuary that is located along the demarcation line, and to open working-level contacts from June 26-27 to discuss how to prevent the Imjin River from flooding nearby areas.

The two Koreas also saw eye-to-eye on advancing their joint businesses into third countries.

Another working-level meeting on the Gaeseong industrial park will be held from June 20-21.

The next Economic Cooperation and Promotion Committee meeting will be held in September in Pyongyang.

South Korean delegation was headed by Vice Finance Minister Bahk Byong-won and the North Korea team was led by Ju Tong-chan.

By Lee Joo-hee

From Yonhap:

The following is the full text of a joint press statement issued by South and North Korea at the end of their four-day economic cooperation meeting on the southern South Korean island of Jeju, Tuesday.

South and North Korea held the 12th meeting of the Inter-Korean Economic Cooperation Promotion Committee in Jeju Island on June 3-6, 2006.

During the meeting, the two sides discussed the issues to further develop the inter-Korean economic cooperation project in the interest of the Korean people in the spirit of the June 15 joint declaration, and agreed on the followings.

1. South and North Korea agree to adopt an accord on South-North Cooperation in Light Industry and Natural Resource Development and enforce it at the earliest possible time in favorable conditions.

2. South and North Korea agree to discuss and then implement a project to extract sand from the Han River’s estuary as military safety measures are taken.

3. South and North Korea agree to make necessary conditions for making the Kaesong Industrial Park globally competitive. To that end, the two sides will hold the second meeting of working-level officials for Kaesong industrial park construction and discuss ways of introducing an ID system, simplifying customs and passage procedures, securing a stable source of workers and building dormitories and convenient facilities to solve problems stemming from an increase in the number of workers.

4. South and North Korea agree to hold the first working-level meeting in Kaesong on June 26-27 to prevent flooding in shared areas near the Imjin River to review each other’s survey reports, discuss joint survey plans and ways of establishing a flood warning system.

5. South and North Korea agree to cooperate actively in preventing such natural disasters as flood, forest fires and yellow dust storms and discuss concrete issues at a working-level meeting in Kaesong sometime in July.

6. South and North Korea agree to discuss their advance into third countries in the field of natural resource development at a working-level meeting in Kaesong sometime in July.

7. South and North Korea agree to exchange economic observation delegations when an accord on South-North Cooperation in Light Industry and Natural Resource Development takes place.

8. South and North Korea agree to discuss and finalize the schedules of working-level meetings for fishery, science and technology cooperation, as well as a timetable for business arbitration committee talks, visits to Kaesong and Mount Geumgang and exchange of lists and other things, in the form of exchanging documents.

9. The 13th meeting of the Inter-Korean Economic Cooperation Promotion Committee will be held in Pyongyang in September 2006 and the date will be determined after consultation in the form of exchanging documents.

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700 North Koreans Killed in Train Collision: Report

June 6th, 2006

Korea Times
6/6/2006

Nearly 700 North Koreans, including 270 soldiers, were killed in April when two trains collided in the isolated communist country, an Internet news provider reported on Tuesday.

The accident took place in Kowon, South Hamgyong Province, when a freight train collided head-on with a six-car passenger train, the Seoul-based Daily NK said, quoting a North Korean railway official in Chongjin, the administrative seat of the province.

Most railways in North Korea have a single track, which forces all freight trains to wait at the closest station for passenger trains to pass by.

That rule was not observed in Kowon, allowing the two trains to run on the same track and collide head-on, the Daily NK quoted the North Korean railway official as saying.

It said one passenger car carried army conscripts and another carried soldiers who were just discharged from active duty, while four other cars carried civilian passengers.

Daily NK
6/6/2006

The Train collision in April which caused the death of hundreds of soliders originated from chronic problems in North Korea, such as abnormalities in communication and lack of electricity.

It also has been revealed that 270 soldiers and 400 passengers died of the accident.

An official working at locomotive office at the railroad department at Namyang under Department of Railways in Chongjin said in a phone conversation with a reporter at DailyNK on the 4th, that “A delayed departure of a freight train from Kowon station to Buraesan station collided with a passenger train, which caused the accident”.

North Korean railways only have single railroad tracks; all the freight trains must wait at the closest station for the passenger train coming toward them to pass by first. However, the operation of communication between Kowon station and Buraesan station was abnormal, which caused the accident.

The official said, “According to what I heard from the Department of Railways at Chongjin, the passenger train involved in the collision had six passenger cars. Soldiers discharged were in one car, enrolled soldiers were in another car, and the passengers were in four cars”.

He also said, “Since it was a head-on collision, many soldiers in the cars right behind the locomotive died. I heard that 270 soldiers and approximately 400 passengers died”.

He added, “Because of lack of emergency aids and inefficiency in the delivery of victims to the hospital, more people lost their lives. As far as I know, the officials at the railroad office in Kowon lost their jobs and were imprisoned because of the inefficient response”.

Mr. Choi Gil Yong who is in charge of maintenance of the trains under Hoeryong railway office met with DailyNK at Sanhe in China, and conjectured that the cause of the accident was electricity.

Mr. Choi said, “There is a problem with communication, but the delay of departure because of lack of electricity seems to be the main cause. There is a possibility that the train which departed from Kowon stopped because of lack of electricity, and the passenger train collided into it”.

Mr. Choi turned down flat the rumor about compensation, saying, “There are tens of big and small train accidents every year. It does not make sense for the country to compensate for the accident. It would only be possible when there is a special order from the government”.

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Shutdown: US Financial Allegations Toward North Korea

June 6th, 2006

This was the key-note address By Nigel Cowie from an information meeting hosted by the European Business Association, Pyongyang, May 4th, 2006.

Introduction
My name is Nigel Cowie, I’m GM of DCB, and I’d like to take this opportunity to address with you the recent financial allegations and actions against the DPRK by the US Treasury. Where they have acted against specific companies, I can’t make any comment, except perhaps that we have not seen any evidence of any wrongdoing by them, because I don’t know anything about those cases, but I can tell you what they mean in the case of our bank and the budding legitimate foreign business community in the DPRK which we serve.

May I quickly first say a few words of introduction about me and about Daedong Credit Bank, our customers and their activities, before moving on to the US financial allegations and measures; and then address the use of cash in the DPRK, as this is important with regard to the financial allegations, then address the allegations themselves.

Daedong Credit Bank
Daedong Credit Bank is a majority foreign-owned, and foreign-managed joint venture commercial bank, providing standard, high street banking services in foreign currency to foreign-owned or invested commercial business customers—current accounts, remittances, foreign exchange and lending. Most of our customers are importing goods. These may be the consumer goods on sale in the hard currency shops, or larger scale commodities, mainly food related; also raw materials, in the case of the joint venture companies. A very few are exporting, mainly perishable goods like seafood and agricultural products, where they need to receive payment before goods arrive. However, we are not allowed to operate accounts for state-owned companies, and since these are the ones handling high value exports like minerals, most of our remittance business consists of outward remittances to pay for imports.

Financial Measures
On 15 September last year, the US Treasury announced the designation of Banco Delta Asia, Macau, as a “primary money laundering concern” in connection with transactions for DPRK customers, and proposed steps to deny the bank access to the US financial system. BDA immediately suspended all transactions with its DPRK customers and shortly thereafter voluntarily handed over management to the Macau Monetary Authority. The balances of these customers were transferred into special suspense accounts pending the outcome of various audit and other investigations. These investigations have now been completed, although the results have not been made public, and it is still not clear if and when the balances will be released.

Subsequently, other overseas banks closed the accounts of their DPRK bank customers, after receiving warnings from the US Treasury.

When we asked them, one of our correspondent banks explained that “This was an across-the-board policy decision due to external developments/factors, as you may be aware of, where present or future requirements may preclude us from our ability to service the accounts in an efficient manner.”

However, US Treasury Department Under Secretary Stuart Levey is quoted in Newsweek last week as saying that as more business people and governments learn about the risks of dealing with the DPRK, the campaign will have a “snowballing-avalanche effect.”

In this regard, he would appear to be true. We have heard from foreign customers conducting legitimate business here, who have been told by their bankers overseas to stop receiving remittances from the DPRK, otherwise their accounts will be closed.

Cash—a Key Point
Now, the way most of these customers get paid by local buyers is in cash. They bring the cash to the bank, we check the cash for counterfeits and credit it to their accounts with us. Then at the end of the month or whenever, we remit the funds out to their suppliers overseas. But because they are mainly importing, we tend to accumulate cash here in Pyongyang, and sometimes have to physically deliver it to banks overseas. There is nothing in any way tainted with this cash, and it is not counterfeit, it represents funds from legitimate business activities by legitimate customers, and the only reason it comes in cash is because of the peculiar circumstances in the DPRK.

An expert compares counterfeit and genuine bills
Irrespective of whether or not any illegal activities went on, other banks in the DPRK will have the same problem, whereby they have to make cash deposits overseas.

We have the most updated equipment, as well as highly experienced cashiers, for detecting counterfeit notes. While we do come cross them, they are not that common. And, contrary to many perceptions, it is possible to detect the so-called “supernotes.”

All the banks in the DPRK, so far as I am aware, view counterfeit notes as a nuisance, as, just like anywhere else, people have to have confidence in the cash they are handling. When the “supernotes‚ first appeared, our staff worked closely with those of Daesong bank and the Foreign Trade Bank to find ways of detecting them.

Banco Delta Asia
DPRK banks have, as the Treasury announcement correctly observed, been using Banco Delta Asia for decades. One of the reasons for that is because they were prepared to provide banking services to DPRK customers, but also because they accepted cash transactions.

Mongolia story
One further incident occurred specifically to us, which I would like to relate, and you can draw your own conclusions.

At the end of last year, we opened new accounts with Golomt Bank of Mongolia, in Ulaanbaatar. We discussed in detail with them procedures for handling cash transactions in a legally correct manner, as well as providing them with a copy of our anti-money laundering procedure manual, a manual that, incidentally had been accepted by our other correspondent banks.

On 21 February, our designated couriers transported a cash deposit to Mongolia, consisting of USD1 million and JPY20 million; the couriers were met, as previously agreed, by Golomt Bank officials together with local police at Ulaanbaatar International Airport. However, the couriers were then detained by Mongolian intelligence agents who took them, and the cash, to the Bank of Mongolia (central bank); the couriers were accused of importing counterfeit currency.

DCB’s couriers were detained outside the Bank of Mongolia for most of the night, whilst the intelligence agents claimed to be checking the authenticity of the cash. The next day they alleged that USD61,700 was suspected to be counterfeit; the alleged fakes were sent, together with two additional notes randomly taken from each remaining USD10,000 bundle of cash, for further examination at an unspecified location.

On 22 February the Mongolian press carried false reports, based on a leak, to the effect that “North Korean diplomats had been intercepted smuggling USD1 million and JPY200 million (not JPY20 million) into Mongolia”. These reports were subsequently carried by international news agencies.

Our Treasurer was dispatched to Mongolia, where he was subsequently joined by me, to protest this action and demand the return of the funds.

On 7 March, after holding the cash for 14 days claiming they were still checking it, the intelligence officials in a meeting with us finally conceded that all the notes were genuine; the cash was released. The money was deposited with the Golomt Bank of Mongolia on 9 March, as had originally been intended.

By the way, I would like to add that this is not a complaint against the Mongolian authorities. All the meetings I attended were most cordial, and I had the impression that all the officials I met were just trying to do their job. At the final meeting with Mongolian intelligence, they appeared rather embarrassed that they had been given incorrect information.

Effects of these Moves on DCB
Once again, I can only speak for DCB, and don’t know what Banco Delta Asia was doing with other customers. For our part, we are only conducting legitimate business, but have nonetheless been seriously affected by these measures. A large amount of our, and our customers‚ money—not just in USD, but in all currencies—has effectively been seized, with no indication of when they’ll give it back to us.

This makes it more difficult to manage the bank’s working capital, as well as that of those customers whose money was frozen. It has subsequently resulted in a sharp fall in turnover—more than 50%, I estimate—as customers’ own working capital is tied up, and they are reluctant to continue using the banking system in case something like this happens again.

It has also obliged us to expend great efforts to find new bank accounts, and make our side of the story heard to protect our and our customers‚ business. It has also greatly increased the cost of operations as the banking transactions have become more complicated.

So, there is a clear effect on legitimate business. I can’t speak about the illegitimate business, because we don’t have any, but I would imagine that anyone conducting illegal business could find a way around this, because they don’t have to comply with internally instituted procedures like we do. For example, I was approached by someone overseas offering to take cash deposits of any size we like, and have it re-sent on to wherever we want in consignments of less than $10,000 so that they are not spotted by overseas banks’ money laundering detection procedures. I declined this offer because we are not about that sort of banking.

Which brings me to the point that there is a danger of legitimate businesses being squeezed into routes that are more normally used by real criminals, and the result of these actions against banks doing business with the DPRK being that criminal activities go underground and harder to trace, and legitimate businesses either give up, or end up appearing suspicious by being forced to use clandestine methods.

Suggestion
We and other EBA members are trying to make an infrastructure for normalizing economic relations with outside world, this not helping.

During a March 7 interview with Arms Control Today, Michael Green, until recently President George W. Bush’s National Security Council senior director for Asian affairs, stated that The United States will continue to take action against illegal North Korean activities regardless of the six- party talks’ status. But he added that Washington thinks such measures complement the talks by forcing Pyongyang to turn to legitimate economic activities for revenue.

Our point is that that may be impossible.

The US Treasury department’s full report on Banco Delta Asia, as reproduced in the Federal Register (20 September 2005) states that “It is difficult to determine the extent to which Banco Delta Asia is used for legitimate purposes. Although Banco Delta Asia likely engages in some legitimate activity, the [Treasury] Secretary believes that any legitimate use of Banco Delta Asia is significantly outweighed by its use to promote or facilitate money laundering and other financial crimes.

I would far rather get everything out in the open, reporting full details of all our transactions to any monitoring authorities that need to know, that way there is nothing to hide, all parties are satisfied, and everything is legal, open, transparent and respectable.

I am quite sure that the other DPRK banks would be willing to do the same. Indeed, at a meeting on 7 March between US Treasury officials and the DPRK’s deputy Director-General for North America, Mr Li Gun, Mr Li proposed that the DPRK be allowed to open a USD bank account with a US bank—something we also would support.

This is a slightly abbreviated text of the original talk, posted at Japan Focus on May 6, 2006

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Oil in the DPRK’s waters

June 6th, 2006

Hat tip to the Korea Liberator:

China and North Korea announce joint efforts to extract oil from the Yellow Sea. According to Yahoo News:

Tuesday June 6, 12:07 PM
China and North Korea have agreed to explore jointly for oil in the Yellow Sea that borders both countries, the Chinese foreign ministry said.

‘China and North Korea have agreed on the joint development of oil resources in the border sea and signed a joint development agreement between governments,’ ministry spokesman Liu Jianchao told journalists.

Liu gave no further details other than to say the two nations will continue work on the details of the arrangements.

Another foreign ministry official later confirmed the area to be jointly developed will be in the Yellow Sea.

The announcement came as North Korean Foreign Minister Paek Nam-Sun ended an eight-day visit to China today, a trip that Liu described as ‘successful’ while giving away few other details.

According to a report issued in December by the Washington-based Center for International Policy, North Korea has already laid claim to three northernmost Yellow Sea basins thought to hold oil.

The North Koreans had discovered up to 3 bln tons of recoverable oil and gas reserves in the Yellow Sea off its coast, the center said, citing a report by Chinese authors in the Marine Geology Letters journal.

China’s foreign ministry gave few details about Paek’s visit to China, other than to say he met Chinese Premier Wen Jiabao and Foreign Minister Li Zhaoxing.

But how much reserves does the DPRK have?  According to the Center for International Policy’s Asia Program,

One-third of 15 exploratory wells have shown oil, and Pyongyang may be sitting on information about larger deposits.

“North Korea has found on the continental shelf of the West Bay basin an area containing 3bn tonnes (21.9bn barrels) of oil and gas reserves,” Li Yandong and Mo Jie wrote in a 2002 issue of journal Marine Geology Letters.

North Korea says these are recoverable reserves pinpointed by its own scientists, said a Chinese expert with knowledge of the situation, who declined to be named.

Even a more modest estimate of 1.2bn barrels reported by Busuph Park, an expert in North Korea’s offshore efforts, would meet centuries of current consumption, although some academics say the peninsula has almost no commercial oil.

At the North Korean embassy in Beijing, an official dismissed with a laugh reports of up to 9bn tonnes of reserves and said the country was still investigating.

Additionally, the story points out the the British company Aminex has committed to building North Korea’s oil industry.  Chief Executive Brian Hall told Reuters, “We have involved their people and are training them, so we are trying to build ourselves into the framework of things.”

“They can take a very long time to do things, we have quite a high degree of frustration sometimes. You have to be prepared to tough it out… but the prize is worth persevering for.”

UK oil firm strides into N Korea
BBC

9/20/2004

Anglo-Irish oil company Aminex has signed a 20-year deal to develop North Korea’s oil industry.

Aminex said it would provide technical assistance to North Korea. In addition, it will be permitted to explore and drill throughout the secretive country.

Should Aminex strike oil, it will get royalties on any of its own production, as well as being entitled to earnings from wells drilled by other firms.

Aminex believes its prospects of striking oil in North Korea are good.

“We all dream of making a big discovery,” chief executive Brian Hall told BBC News Online. “And if you don’t put yourself in a position where the possibilities are high, you will never do it.”

A number of potential sites are close to some of China’s most productive oil fields, he said. Announcing the contract, Aminex called North Korea as “highly prospective”.

Patience rewarded

The company, which is listed on the London and Dublin stock markets, reckons that a lack of resources has so far restricted progress in prospecting for oil the East Asian country.

North Korea “has an existing petroleum industry and several wells have been drilled onshore and offshore over a 25 year period, resulting in limited discoveries of oil,” Mr Hall.

Aminex has been looking at opportunities in North Korea since its first visit there in 2001.

It signed a deal with North Korean officials on 30 June 2004 in Pyongyang but postponed an announcement “because of a number of outstanding issues that have now been resolved”.

Mr Hall said he hoped that developing the oil industry might help to thaw international relations, which have become frosty in recent months amid concerns about the country’s nuclear programme.

“At present, relations between North Korea and the outside world are strained but the important relationship with South Korea appears to be improving and commercial co-operation is on the increase,” said Mr Hall.

“An expanding energy industry may possibly help to build bridges between North Korea and the outside world.”

Tough environment

North Korea is one of the world’s most secretive countries, and among the poorest.

Millions of are thought to have died during the famine of the late 1990s. More recently, North Korean officials have made tentative steps towards economic reforms similar to those implemented by China, one of its few allies. But tensions over the country’s nuclear programme remain a stumbling block to investment.

Aminex has existing operations in the US, Russia and Tanzania.

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It’s official, KEDO is finished

June 2nd, 2006

Korea Herald 
Lee Joo-hee
6/2/2006

An international consortium yesterday announced the termination of a technically defunct nuclear reactor project in North Korea.

The Korean Peninsula Energy Development Organization said it will also seek compensation from Pyongyang for the dissolution of the costly light-water reactor project in Geumpo.

“KEDO requires payment from the DPRK for financial losses in connection with the light-water reactor project, and any issues between KEDO and the DPRK in this regard should be settled in accordance with KEDO’s agreement with the DPRK,” the statement said. DPRK stands for Democratic People’s Republic of Korea, North Korea’s official name.

South Korea, the United States, Japan and the European Union created KEDO in 1994 after an agreement between Washington and Pyongyang to build a light-water reactor in the energy-stricken state in return for the North’s suspension of any nuclear activities. The construction began in Aug. 1997.

But the project was halted in 2002 when the United States accused North Korea of a clandestine nuclear weapons program using uranium.

The participating countries, most of which now belong to the current six-party talks, agreed last year that the KEDO project was defunct.

All the materials that were being built outside North Korea for the reactor will be handed over to South Korea’s Korea Electric Power Corporation, the main contractor for the project.

The materials, including a nuclear reactor, turbine generator and other supporting tools, are reportedly worth 830 million won.

KEPCO will in turn bear some 150 million to 200 million won in compensation that must be given out to other smaller contractors involved with the project, the Unification Ministry here said.

KEPCO will also be liberated from any other legal or political responsibilities that could follow the termination of KEDO by bearing the compensation costs, it said.

North Korea, in the meantime, will be required to return all the other assets related to the light-water reactor.

The entire termination will likely take about a year, the ministry said.

South Korea has been taking the initiative in the $1.56 billion project. Seoul put up nearly $1.14 billion, while Japan provided $407 million and the EU $18 million. The United States was in charge of providing heavy fuel oil.

All the South Korean and American workers who were staying in the construction site for maintenance returned home in January this year.

After the invalidation of the 1994 agreement between Washington and Pyongyang, multilateral negotiations convened in 2003 under Chinese mediation.

After years of deadlock, the six nations finally agreed on the joint statement of principles last September.

Based on the new agreement, five of the six members are to give unspecified aid to the North in return for a complete dismantlement of nuclear programs.

The implementation of the agreement, however, faces many hurdles as North Korea has since refused to join the next round of negotiations, citing the United States’ hostile policies.

Joong Ang Daily
6/2/2006

The death knell sounded on Wednesday in New York for a once-ambitious project to build two nuclear power plants in North Korea.

The board of the Korean Peninsula Energy Development Organization officially abandoned the project, citing a lack of cooperation by North Korea.

A statement from the organization complained of a “continued and extended failure” by Pyongyang to cooperate in international efforts to end its nuclear weapons programs.

In Seoul, a Unification Ministry official said that the board of the organization, an international consortium overseen by the governments of Korea, Japan, the United States and the European Union, had also agreed to formulas on how to liquidate the assets of the organization. Because Seoul committed to shoulder the bulk of the costs of the nuclear power project, its termination, government officials fear, could leave it open to criticism for a waste of taxpayer money.

To try to head off that criticism, the ministry official emphasized that even though Korea would shoulder the remaining outstanding costs of winding up the project, it would also take title to all the equipment that had been manufactured for the project but not yet shipped to the North. He said the value of that equipment was estimated at about $800 million. In total, he added, the Korean government has paid $1.1 billion of the $1.5 billion that has been spent on the project throughout its life; its remaining obligation in wind-up costs, he said, would be about $200 million.

The project was conceived in 1994 as an effort to cool tensions between the United States and North Korea over the latter’s nuclear programs, which Washington believed were focused on developing nuclear weapons. Pyongyang agreed to freeze those programs in return for two power reactors and a supply of fuel oil that would continue until the reactors came on line. The agreement began to unravel in late 2002, when Washington accused Pyongyang of secretly developing a nuclear weapons program using uranium.Work on the project was suspended in November 2003, and North Korea ordered a KEDO caretaker force out of the site last January.

A bid by Seoul to divide the termination costs among other KEDO members apparently failed. Seoul had tried to keep the project alive for as long as possible in hopes that the infrastructure at the nuclear site could be used in some sort of new arrangements with North Korea.

The statement by the KEDO board also reportedly demanded – certainly without any expectation of success – that North Korea compensate the organization for its financial losses.

As the KEDO nuclear project shriveled, a new effort to strip North Korea of its nuclear weapons emerged, the “six-party talks” among the Koreas, China, Japan, Russia and the United States, to try to find a formula to end the North’s nuclear ambitions. Those talks have also floundered. Yesterday, Pyongyang invited Christopher Hill, the U.S. negotiator at those talks, to visit Pyongyang to discuss efforts to revive them, saying his visit would be a sign of Washington’s political will to implement an agreement in principle last September that Pyongyang would abandon its nuclear efforts in return for development aid and diplomatic recognition.

A senior Korean official said he doubted Mr. Hill would go, adding that Pyongyang would have to make some sort of gesture of its serious intent in order to tempt Washington into agreeing to such bilateral contacts.

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South Korean dramas “permitted” in Sinuiju

June 2nd, 2006

From the Daily NK:

In North Korea, South Korean dramas are confidentially distributed through VCDs(‘Flat eggs’, as the Cds are known).  Previously, North Koreans were only allowed to watch films from the DPRK, China and USSR.  Posessing VCDs was also illegal.

According to Mr. Lee, a Chinese-North Korean who often visits Shinuiju, “Recently, Kim Jong Il has allowed North Koreans to see films only on the flat eggs(CDs) produced by Hana Electronic [the state-owned production monopoly]”. He added “Hana Electronics VCDs are all North Korean movies, Chinese movies featuring fighting with Japanese soldiers, and the Soviet Union movies”.

However, North Koreans are enthusiastic about South Korean dramas such as Love Song in Winter and Autumn Story and obsolete Western movies Rambo and ‘Bruce Lee’.

Mr. Lee said that “Recently South Korean dramas have been distributed widely, and because North Koreans see religious activities and adult materials through the flat eggs(CDs), the North Korean government dispatched an extensive censors group to crack down them”.

In North Korea, every kind of VCD was prohibited. However, realizing that North Koreans took pleasure in secretly watching the widely distributed VCDs, the North Korean government changed its policy and “partially” allowed its people to watch.

Mr. Lee said that, “These days, the punishment for [watching videos] has lightened, so watching VCDs except religious materials is just fined or orally warned”, adding, “The government does not take violators to political prison camps, but maybe Nodon Danryeondae (Labor facility), or Gyohwaso (long-term labor camp)”. Subsequently, he said that, “Because all officials of the National Security Agency and officials of the People’s Safety Agency see the dramas, the government can not unconditionally prevent from watching like the past”.

He said that, “Recently, the numbers of religious people have increased, and because of it, some people were caught watching religious films”, and “It is hard to survive in the religious cases”.

Meanwhile, shortwave radios are illegally traded at around 2,000 won($0.67) at Jangmadangs. Until 3 or 4 years ago, the government had carried out the reporting system about the illegal trades, but after the news that South Korea and the U.S sent radios, the trades at Jangmadangs were officially inhibited.

Now it was known that the small radios sold in secret are carried in through smuggling vessels generally in Jagangdo province, North Korea.  financial problems are resolved, a broker is introduced and guidance to an exile route is given.

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US accepting more DPRK immigrants

June 2nd, 2006

From the Daily NK, Pastor Chun Ki Won, who was imprisoned in China briefly for aiding DPRK defectors, gives an update on the second group of defectors (who climbed the wall between the South Korean and American Embassies in Beijing) and a third group, which is new:

  • Refugee status has already been granted to the seven in the US compound.
  • The pastor wants the refugees to remain unpoliticized and simply allowed to resettle in the US among the large network of Korean immigrants that are eager to help them.
  • Apparently, getting refugee status for the second and third group was much easier than for the first.
  • From the interview: In what ways are defectors selected to try exile to the U.S? There are cases where defectors send personal requests seeking help through the internet, and cases where we get contacts through missionaries. In the 1st round of exiles, three people were from facilities under our care, whereas the others were selected by email. Requirements in the selection ruling basically include people with financial difficulties, women experiencing hardship from having been sold, and children are given preference. Also, if in the case financial problems are resolved, a broker is introduced and guidance to an exile route is given.

 

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