Chinese imports of North Korean coal down since February ban, data says

May 23rd, 2017

By Benjamin Katzeff Silberstein

Reuters reported today on the most recent figures on China-North Korean trade. They show that coal imports have declined, to the lowest level in three years, according to Reuters. It must be remembered that coal trade (in volume terms, not necessarily in USD-numbers) has climbed for several years in a row since 2010, so a relative decline does not mean catastrophically low levels. Also, of course, Chinese customs data should be taken with a huge grain of salt.

Reuters:

The world’s second-largest economy bought goods worth $99.3 million in April from North Korea, the lowest monthly tally since at least June 2014, according to Chinese customs data. Previous data was not available.

That compares with $114.6 million in March and $167.7 million a year earlier.

A fifth of the April total was iron ore imports, which hit 285,000 tonnes, their highest since August 2014. That was up 10 percent from a month earlier and 2-1/2 times higher than a year earlier.

[…]

Cho Bong-hyun, who heads research on North Korea’s economy at IBK Bank in Seoul, said China’s imports from North Korea were likely to continue to decline due to Pyongyang’s repeated missile tests and the suspension of coal shipments to China.

“This won’t be disastrous for North Korea, but it will obviously hurt North Korea because it tends to export goods to China worth around $3 billion per year,” he said.

The value of imports from North Korea has fallen month-on-month since December, the data showed.

CHINESE SALES DOWN AS WELL

China’s exports to North Korea eased to $288.2 million in April, down 12 percent from March. Exports for the first four months of the year were up 32 percent at $1 billion.

Diesel shipments to North Korea in April more than halved from March to 2,606 tonnes and gasoline sales dropped 6 percent to 13,496 tonnes. North Korea gets most of its oil needs from China.

Crude oil exports from China to North Korea have not been disclosed by customs for several years, but sources have put it at about 520,000 tonnes a year.

Cutting off oil to North Korea for an extended period would be a crippling measure that analysts have said they don’t expect China would take.

[…]

Data released later on Tuesday showed China did not take any North Korean coal in April for a second straight month, after Beijing’s ban of such imports following repeated missile tests by Pyongyang.

China imported 1.53 million tonnes of coal worth $72.3 million from North Korea in April 2016.

Full article:
China’s imports from North Korea sink as coal ban bites
Josephine Mason
Reuters
2017-03-23

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Ten million live in food insecurity in North Korea, UN says. But what does that really mean?

May 16th, 2017

By Benjamin Katzeff Silberstein

A new report published by World Food Program and other UN institutions (Food Insecurity Information Network), detailing food insecurity in the world in 2016 as a whole, says the following about the situation in North Korea:

  • 4.4 million (or 17 percent of the North Korean population as a whole) is in “crisis, emergency and [or?] famine”.
  • 5.6 million (or 22 percent of the population) lives in a “stressed” situation when it comes to food.
  • This brings the entirety of the population living in food insecurity to ten million.

North Korea is the only country in all of East Asia with food insecurity, the report says.

It is unclear where the data comes from. According to the report, it could either have come from government sources in North Korean or from the World Food Program, but the report itself does not specify this.

A few things are worth noting. First and most importantly, particularly at a time when news reports abound about the rising middle classes and the new consumption habits of the wealthy, it is crucial to remember that a significant proportion of the North Korean population still live lives far away from the relative luxury of Pyongyang.

Second, though there is no reason whatsoever to doubt that a significant part of the North Korean population lives in severe hardship, harvests do not appear to be declining. On the contrary. According to the WFP’s 2017 needs assessment for North Korea,

“[w]hile official Government harvest data for 2016 has not yet been released, FAO estimates that rice production in 2016 increased by 23 per cent compared to the previous year when there was drought, but remains below the previous three-year average.”

Third, the World Food Program’s methodology for estimating these figures is rather unclear and problematic. For example, in the above-mentioned assessment of North Korean needs and priorities for 2017, released earlier this year, the WFP classifies all those depending on the Public Distribution System (PDS) as “suffering from food insecurity and undernutrition, as well as a lack of access to basic services.”

Presumably, this is derived from the fact that PDS distribution (of grains and staple foods, which is basically all it distributes) fluctuates through the year and is fairly unpredictable. But with the growing prevalence of the markets, it is unclear whether even those who the WFP claim “depend” on the PDS, really get the main portion of their food from the system. Over the past few years, public distribution of food has become an increasingly marginal (though certainly not unimportant) part of the food supply, and assuming that 18 million North Koreans experience food insecurity simply because they are beneficiaries of the public distribution system seems questionable at best. Obviously, the only way to understand food security overall would be to look at sources of food overall, not just one channel of supply.

Fourth, one overall problem with data on food security in North Korea remains the involvement of the North Korean government in the data collection. That is not to say that the North Korean government pushes the food production estimates upward to make itself look more successful. On the contrary, at times it probably exaggerates food needs in order to receive more outside assistance. Rather, the political nature of food, markets and the economic system makes it difficult to get trustworthy assessments of the food situation in the country. Only in one paragraph in its short version of North Korea’s needs estimates for 2017 does the World Food Program even allude to the markets:

In addition to the PDS, households are increasingly reliant on markets for their foods, except cereals. Farmers’ markets are distribution channels for a wide range of foods and basic necessities. In addition to swaps and bartering, markets involve large numbers of small transactions, often led by women.
Markets enable households to sell produce from their kitchen gardens; vegetables, maize and potatoes, as well as some small livestock.

Given the extent to which marketization has prevailed in North Korean society for over close to three decades, language like this seems to conflict with an overwhelming body of information about the centrality of the markets in the system today.

And, of course, there is the elephant in the room: North Korea’s economic system itself. As Amartya Sen famously pointed out, famine and food insecurity does not first and foremost stem from a lack of food overall, but from skewed entitlements. In other words, resources exist, but the problem is who gets them. In North Korea, the regime continues to refuse overarching and fundamental reforms of the economic system. As Fyodor Tertitskiy convincingly argued in a recent piece in NK News, the systemic changes in the North Korean economy of the past few years is most likely the work of bureaucrats within the state hierarchy, rather than a push by Kim Jong-un. In short, there are a lot of things the regime could change about the economy, to improve access to food and diminish food insecurity, but which it does not do.

This makes language like this, also from the WFP’s 2017 needs assessment, so problematic (my emphasis):

There are many complex, intertwined reasons for the high rates of undernutrition in DPRK, including challenges in producing sufficient food. The majority of the country is mountainous, only 17 per cent of land is good for cultivation.
Agriculture also remains dependent on traditional farming methods. Food production is hampered by a lack of agricultural inputs, such as quality seeds, proper fertilizer and equipment. In addition, changing weather patterns have left DPRK vulnerable to droughts and floods, which have affected agricultural production.

Mountains and bad weather are not factors unique to North Korea. Geography is not destiny, and there is no shortage in the world of countries that have overcome difficulties in their natural environment through good policy. One has to understand the difficult spot that the WFP and other UN institutions work in, given North Korea’s politically sensitive and tense context. But one can only hope that the WFP is clearer about pointing out systemic deficiencies in the North Korean economy when they talk to officials behind closed doors, than they are in public statements.

All this said, North Korea is an extremely difficult environment to navigate for international aid organizations. The women and men on the ground certainly do their best to accomplish good things, and make accurate measurements in a challenging environment. But it is important to keep these and other methodological issues in mind before drawing any major conclusions about North Korea’s food situation.

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North Korea claims economic successes in April

May 12th, 2017

For all the talk about economic adjustments in the DPRK, particularly in regards to enterprise management, this report sounds pretty “old-school”…

According to the Pyongyang Times (2016-5-6):

April production plans overfulfilled

Different economic sectors have carried out their production plans for April under the banner of self-reliance and self-development.

The Suphung, Jangjingang, Sodusu and other hydropower stations produced more electricity by managing water in a rational way and boosting the output of generators, while the Pyongyang Thermal Power Complex and the Chongchongang and Sunchon thermal power stations generated a great deal of electric power.

The Hwanghae Iron and Steel Complex overfulfilled its monthly pig iron production plan, and the Musan Mining Complex and the Unnyul, Jaeryong and other mines carried out iron ore production assignments of the Ministry of Metallurgical Industry at 112 percent.

The February 8 Vinalon Complex overfulfilled the production plan for vinalon, vinyl chloride and caustic soda. The Namhung Youth Chemical Complex and the Hungnam Fertilizer Complex lowered production cost and brought about good results on a daily basis by introducing valuable technical innovation plans.

The Ministry of Coal Industry fulfilled its monthly production plan at 103 percent.

The Sunchon Area Youth Coal-mining Complex and Tokchon, Pukchang and Tukjang area coal-mining complexes increased the coal output for thermal power stations, and Kaechon, Anju, Kujang and Kangdong area coal-mining complexes supplied more coal to power stations and metallurgical and chemical factories.

The sector of machine-building industry also rounded off the monthly production plan.

The Anju Insulating Material Factory hit the production target for the first half of the year at 153 percent as of April 30. The Taean Heavy Machine Complex, Sungni Motor Complex, Ryongsong Machine Complex, Pyongyang Electric Cable Factory 326, Pyongyang Electric Motor Factory and Songchongang Electrical Appliances Factory produced major custom-built equipment in time as they stepped up the upgrading of production processes.

The Sangnong Mine, Taedonggang Battery Factory, Munphyong Smeltery and other establishments in the sector of the mining industry overfulfilled production plans 1.6 times over the same period of last year.

The Pyongyang Kim Jong Suk

Silk Mill carried out its economic plan for the first half of the year earlier than scheduled, followed by the Pyongyang

Kim Jong Suk Textile

Mill, Pyongyang Cosmetics Factory and Pyongyang Aromatic Oil Factory in the sector of light industry.

Thanks to the effort of agricultural workers, sowing rice seeds in beds has been completed across the country, and the Ministry of Fisheries carries out its fishing plan at 100.7 percent.

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Public executions curtailed in North Korea

May 10th, 2017

By Benjamin Katzeff Silberstein

How does international pressure on its human rights situation impact things on the ground in North Korea? Daily NK reports on one result. Those public executions that have previously been filmed on occasion and seen globally are now moving indoors, they report:

The North Korean authorities have been refraining from the conduct of public trials and executions, which were previously carried out to  maintain control over the residents, following a mandate issued last December.
“Until last year, individuals accused of sowing discontent or creating social disorder by offenses including cutting into electric lines [to steal power] , watching South Korean media, or attempting to defect, underwent public trials and execution by firing squad. But this year, the Ministry of State Security and the Ministry of People’s Security have been laying low,” a source in North Hamgyong Province told Daily NK on May 2.
“For example, a man in his 40s who helped dozens of defectors in Hoeryong was arrested in early March but not put to a public trial. The arrest went quietly, unlike a similar case that preceded it, when the state broadcast the news and conducted a series of executions to send a strong message.”
Kim Jong Un has ruthlessly executed a number of high-ranking executives, including his uncle Jang Song Thaek, in order to consolidate his grip on power. Open trials are conducted on residents to instill fear among the population.
They also cite public sentiment as a reason:
The Institute for National Security Strategy (under the National Intelligence Service) stated in its assessment last December of Kim Jong Un’s five years in power that Kim Jong Un continues to commit crimes against humanity through cycles of purges and executions of high-ranking officials.
However, as public sentiment towards the regime has worsened, law enforcement agencies are said to be becoming marginally softer in their approach. In fact, Kim Jong Un ordered a probe into human rights abuses perpetrated by the Ministry of State Security and banned public trials and executions in December 2016.
“The authorities acknowledge that the residents are going through difficulties, and thus are refraining from open trials and executions. They seem to be aware of the danger of worsening public sentiment,” the source noted.
North Korean authorities curtail public trials and executions
Kim Chae Hwan
Daily NK
2017-05-10
The development stems from a decree issued in December last year. Daily NK reported on it when it was issued:
Kim Jong Un has reportedly issued instructions to government bodies including the Ministry of People’s Security to ban further public executions.
“Kim Jong Un has issued instructions to ‘prohibit public executions’ to judicial and prosecution bodies including the Ministry of People’s Security (police). The instruction containing the orders forbids both public trials and executions,” a source in South Pyongan Province told Daily NK on December 13.
“The instruction is not aimed at reducing or abolishing executions. It just means that capital punishment will be conducted privately in future.”
The North Korean authorities have often been documented carrying out public executions against those who break its draconian laws, including the distribution of South Korean TV shows. Such acts serve as an example to spread fear among residents and deter them from engaging in such activities. Under the Kim Jong Un regime, ruthless executions of high-ranking officials have been conducted for actions running ‘counter to the Party and the revolution.’
South Korea’s National Intelligence Service (NIS) reported in October that the Kim Jong Un regime has resumed purges which were in temporary decline following the execution of Hyon Yong Chol, former defense chief of the People’s Armed Forces (MPAF). The number of people publicly executed by the regime reportedly reached 64 by September, according to the NIS.
Some suspect that Kim Jong Un’s decision to revert to private executions has been influenced by recent momentum built up by the UN and NGOs highlighting North Korea’s human rights violations, even suggesting that the North Korean authorities may be put on trial at the ICC (International Criminal Court).
“(The authorities) have been continuously conducting public executions in order to instill fear among the population, but it seems to have realized the drawbacks of the measure. The regime is presumably becoming sensitive about scenes of public executions escaping to the outside world,” a source in North Pyongan Province explained.

Full article:

North Korea orders ban on public trials and executions
Choi Song Min
Daily NK
2016-12-16
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Prison Camp 15 (Yodok) reduces prisoner housing

April 27th, 2017

In September 2015, Joseph Bermudez and the Committee for Human Rights in North Korea reported that the “Revolutionizing Zone” of Yodok Prison Camp (Camp 15) had been torn down as of October 2014.

The “Revolutioninzing Zone” was for prisoners judged to be worthy of re-education through labor, and thus eligible for release. It is because there were prisoners who were released, and who later defected, that we know so much about the camp.

Based on new Google Earth imagery, it appears that additional housing inside the camp security perimeter has also been torn down sometime between June 2, 2016 and February 19, 2017.

Here is an overview of the areas where housing has been razed:

First let’s look at the housing in the “Total Control Zone” (39.699346°, 126.849473°):

Google Earth: Image date 2016-6-2

Google Earth: Image date 2017-2-19

In the above images, we can see that 38 housing units have been razed, and only seven buildings remain standing. I presume that the remaining buildings still serve an economic or administrative function.

Here is a second site where housing was razed between 2016-6-2 and 2017-2-19 ( 39.686860°, 126.844236°):

Here is a third site where housing was razed between 2016-6-2 and 2017-2-19 ( 39.704151°, 126.872365°):

What does this mean? Using this Google Earth imagery alone, it is still hard to say exactly what is happening in the camp. The new imagery only covers the eastern-half of the camp, so there may be changes on the western-half of the camp (such as the construction of new housing) that may offset the housing losses we have observed here.

Is this good news for the prisoners? I cannot say. If the housing was torn down, and new housing was not built to replace it, it is possible prisoners were executed or transferred into pre-existing housing, leading to cramped, less-sanitary conditions. Some prisoners may have been released, but they could just as easily have been transferred to the new prison camp that was opened up on the site of the closed Camp 18.

Is the camp being closed? This rumor has been floating around for several years. The theory that North Korea desires to close the camp at some date in the future is consistent with the observations we have seen–in that a process of gradual reduction in prisoners and prisoner housing is taking place over time. However, we still do not know if new housing has been built on areas that are not covered by recent satellite imagery, and we do not know if the camp’s closure will lead to an outcome that the prisoners would find welfare-enhancing (Are they being executed, transferred, or released?). As far as I can tell, the administrative portion of the camp, near the southern entrance (and the security perimeter) have seen no substantive changes over this same period.

As always, we need more imagery and more testimony.

This has been reported in Radio Free Asia.

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Chinese imports of North Korean goods down by 35 pct in March 2017

April 26th, 2017

Benjamin Katzeff Silberstein

Yonhap reports a 35 percent drop in Chinese imports from North Korea in March this year, compared to February, citing decreased coal imports after the February ban as a reason:

Imports from North Korea declined to US$114.56 million last month from $176.7 million tallied the previous month, according to Chinese customs data.

In late February, China suspended North Korean coal imports through the end of the year in accordance with the U.N. Security Council resolution adopted in December to punish Pyongyang for its fifth nuclear test in September.

The resolution centers on putting a significant cap on North Korea’s exports of coal — the country’s single biggest export item and source of hard currency. The cap was set at whichever is lower between 7.5 million tons or $400 million.

North Korea heavily relies on coal exports to China for its foreign currency income. China imported $1.19 billion worth of coals from North Korea last year.

Full article:
China’s imports of N. Korean goods fall 35 pct in March
Yonhap News
2017-04-25

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UK freezes KNIC assets

April 24th, 2017

According to The Guardian:

The UK has frozen the assets of a North Korean company based in south-east London after claims it funnelled cash to Pyongyang’s nuclear weapons programme.

The Korea National Insurance Corporation (KNIC) is registered at a property in Blackheath. The EU has already imposed sanctions against the company, which it describes as “generating substantial foreign exchange revenue which is used to support the regime in North Korea”. The move by Brussels followed an UN resolution.

The EU warned: “Those resources could contribute to the DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes.”

The company is registered to a detached property on Kidbrooke Park Road among suburban houses in an affluent part of London. Its entry on Companies House now describes KNIC as “closed” since 6 October 2016. Accounts show that in 2014 it had total assets of 130bn North Korean won, the equivalent of £113m.

According to EU sanctions imposed in July 2015, the KNIC’s headquarters in Pyonyang is linked to Office 39 of the Korean Workers’ party. In 2010 the US Treasury described Office 39 as “a secretive branch of the government of the Democratic People’s Republic of Korea that provides critical support to North Korean leadership in part through engaging in illicit economic activities and managing slush funds and generating revenues for the leadership”.

A spokesman for HM Treasury said: “We cannot comment on individual cases. However, the UK has fully complied and implemented the UN sanctions regime in relation to North Korea and North Korean companies.”

Through the EU regulations, the UK imposes restrictions on a range of goods from entering or leaving North Korea and imposes a travel ban and an asset freeze against people designated as engaging in or providing support for its programmes for weapons of mass destruction and ballistic missiles.

Under the same sanctions, the funds and economic resources have been frozen of four Hamburg-based North Koreans who ran the KNIC branch in Germany and two other regime officials who have since moved back to Pyongyang.

The Sunday Times, which first reported the freeze on the assets of the UK branch, reported that a North Korean man at the Blackheath property told it that the insurer’s main UK director, Ko Su-gil, had left Britain in September.

Read the full story here:
UK freezes assets of North Korean company based in south London
The Guardian
2017-4-23

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Overview of Rason SEZ legislation

April 5th, 2017

Yeobin Yoon and Philipp Kopp at the Hanns Seidel Foundation have put together a brief analysis of different laws that govern the Rason Economic and Trade Zone.

It shows an interesting evolution in the SEZ’s regulations as North Korean policymakers try to make the zone more hospitable to foreign investment.

You can download the PDF of the short report here.

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N. Korea emphasizes corporate profits in economic policies

April 4th, 2017

According to Yonhap:

North Korea appears to stress the importance of increasing corporate profits, an indication of a shift in its economic policies from centralized planning, according to a North Korean university’s newspaper obtained Tuesday by Yonhap News Agency.

The newspaper, published by Kim Il-sung University, North Korea’s top university, on March 5, 2017, carried an article saying, “Net profits gained by individual corporations are fundamental to the establishment of a powerful economy.”

The article, titled “Establishing Way of Economic Management in Our Own Style Leads to Basis of Economic Powerhouse,” apparently lays emphasis on individual corporations’ profits becoming the financial basis for economic development, encouraging the corporate sector to make more profits.

“All corporations should set up scientific strategies and management strategies of their own and ensure they have the maximum effect in their production and management activities so that they could fulfill their duties to provide the state with more profits,” the article said.

This is interpreted as the North Korean economic authorities’ request that corporations focus their management activities on seeking effect and profits rather than relying on centralized planning and guided management.

Since the North’s current leader Kim Jong-un came to power in 2012, the North has taken measures to achieve economic reforms aimed at expanding elements of the market economy, including the country’s new economic management system announced in June 2012.

The university’s newspaper also indicated that the North has introduced a set of measures to strengthen corporations’ autonomy to its economy. Under the implementation of the measures, called “the socialist corporate responsible management system,” companies are given more autonomy than ever in their management and take care of economic problems arising from their production and management processes on their own, according to the article.

But the article made sure that the ruling party will not depart from its control on the economy, saying, “In our country’s socialist system, corporations’ independent management activities are to be carried out under the guidance of the party right down the line.

“I understand North Korean corporations currently pay 30 to 40 percent of their profits to the authorities,” said Cho Bong-hyun, a senior analyst at IBK Economic Research Institute. “The more profits corporations earn, the more national finance increases.”

Cho said the North appears to support its finance by spurring corporations into increasing profits amid the implementation of U.N. sanctions aimed at halting Pyongyang’s nuclear and missile development.

Read the full story here:
N. Korea emphasizes corporate profits in economic policies
Yonhap
2017-4-4

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China continues mineral imports from North Korea, despite sanctions

March 30th, 2017

Benjamin Katzeff Silberstein

About that supposed “squeeze”….Yonhap:

China keeps importing from its traditional ally gold, silver, copper and zinc all of which are put on the U.N. sanctions list, with such imports last month alone amounting to US$650,000, Voice of America said, citing data from China’s General Administration of Customs.

Resolutions Nos. 2270 and 2321, which the U.N. Security Council adopted last year to punish the North’s nuclear and missiles tests, also ban U.N. member nations from importing titanium, vanadium and nickel from the communist country. Minerals are a key source of hard currency for the North to maintain its regime and develop weapons of mass destruction.

North Korean vessels presumably carrying minerals were spotted at Chinese ports, the broadcaster said, citing MarineTraffic, which provides live ship tracking intelligence worldwide.

The boats are moored at the ports of Lianyungang, Jiangsu Province, and Penglai and Yantai, Shandong Province, which handle minerals, according to the broadcaster.

As of Tuesday, the North Korean ship Haebangsan was docked at Lianyungang, and several other ships — the Sobaeksan, Rungna No. 1, Haoyu and Hungbong No. 3 — were also waiting for their entry on seas some 20 kilometers off the port, the broadcaster said.

The Uri Star, Jinhung, Kumgansan and Gumdae were staying near Yantai, and the Munsusan and Jonwon No. 67 were spotted on seas off Penglai, it added.

Full article:
China keeps importing U.N.-sanctioned minerals from N.K.
Yonhap News
2017-03-29

Now, it seems unclear whether this formally constitutes a breach of the $400 million cap specifically. Note that UNSC resolution 2321 only mentions coal specifically with regards to the $400 million cap (my emphasis):

Underlining that measures imposed by the resolution were not intended to have adverse humanitarian consequences for the country’s civilian population, the Council decided that the Democratic People’s Republic of Korea should not supply, sell or transfer coal, iron and iron ore, and that all States should prohibit the procurement of those materials from that country, with the exception of total coal exports to all Member States not exceeding $53,495,894 or 1,000,866 metric tons, whichever was lower, between today and 31 December; and $400,870,018 or 7,500,000 metric tons per year, whichever was lower, beginning on 1 January 2017.

Total exports to all Member States of coal originating in the DPRK that in the aggregate do not exceed $53,495,894 or 1,000,866 metric tons, whichever is lower, between the date of adoption of this resolution and 31 December 2016, and total exports to all Member States of coal originating in the DPRK that in the aggregate do not exceed $400,870,018 or 7,500,000 metric tons per year, whichever is lower, beginning January 1, 2017 …

I’m not sure whether China has paid these amounts for minerals other than coal from North Korea in the past. Perhaps it is paying a markup price for other minerals to make up for the decreased imports of coal. It does in any case suggest that abiding by the words and the spirit of UN resolutions on North Korea is far from China’s only or even main priority in these matters.

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