Archive for January, 2008

Price of Flour Goes Up, So Difficult to Sell Dumplings

Thursday, January 31st, 2008

Daily NK
Yang Jung A

Due to the food export restraint imposed by China, the price of food items have been rising significantly recently, revealed Good Friends, a nongovernmental organization for North Korea, through a newsletter released on the 30th.

The newsletter relayed, “The price of rice, flour, corn, and grains has been continuously rising due to a systematic adjustment in trade exchange with China. With the Beijing Olympics ahead, the duties on food items have gone up 5% for rice, 20% for corn, and 20~25% for flour.

The newsletter also divulged that “China demands an export permit for grains. Rice and corn are flowing into North Korea because the export permits issued last year still remain in effect. However, China has not yet demanded any export permits for flour, and therefore flour cannot be exported to North Korea.”

“As a result, the price of flour has been increasing rapidly within just a month. In December of last year, the price of flour remained at 1,000 won per unit for the most part, but since the new year, it rose to 1,700 won per unit. People who have been selling bread, dumplings, and snacks have not been able to do business due to the shortage of flour.”

The source relayed, “The North Korean custom house has been requesting a quality verification report on par with international standards at the time of the importing of Chinese food products, but a majority of merchants with whom food is traded has not been able to follow the new standard yet, saying such documents are hard to provide.”

“So, the food items have not been imported into the market, which has caused the price to continuously rise due to the lack of provisions. Nowadays, even if people tried to buy a 1 kg of rice for over 1,400 won, they are unable. Chinese companies who have been dealing with North Korea have predicted that the cease in trading with Chosun (North Korea) will give rise to a food shortage.

The Ministry of Commerce of the People’s Republic of China announced the process of registration and 2008 conditions for registration for milled farming export quarter on the 19th and has implemented a method for the provisional food export of rice, corn, and flour starting January of this year. Related parties of North Korea-Chinese trade forecasted that food exports to North Korea will be reduced significantly as a result of the stringent food export conditions imposed by the Chinese government.


Orascom Telecom Receives First Mobile License in DPRK

Thursday, January 31st, 2008

Orascom Telecom
(Hat tip to Werner)

Orascom Telecom Holding S.A.E. (“OTH” or “Orascom Telecom”) announced today that it has been granted the first commercial license to provide mobile telephony services in the Democratic People’s Republic of Korea (“DPRK”) using WCDMA (3G) technology.

The license was granted to OTH’s subsidiary CHEO Technology JV Company (“CHEO”) which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation. The terms of the license allows CHEO to offer services to its customer throughout the country, the duration of the license is 25 years with an exclusivity period of four years. Orascom Telecom intends to invest up to US$400 million in network infrastructure and license fee over the first three years in order to rapidly deploy a high quality network and offer voice, data and value added services at accessible prices to the Korean people. OTH intends to cover Pyongyang and most of the major cities during the first 12 months of operations.

The DPRK has a population of approximately 23 million of which 67% is between the age of 15 and 64 years, moreover, there is currently no mobile services in the country. The operation in the DPRK will complement OTH’s existing operations in Asia and will further enhance OTH’s position as the leading GSM operator in the emerging markets.

Naguib Sawiris, Chairman & CEO, Orascom Telecom, stated “We are continuing to head in the right strategic direction; our Greenfield license in the DPRK is in line with our strategy to penetrate countries with high population and low penetration by providing the first mobile telephony services. OTH has consistently proved its ability to successfully roll out mobile services into countries where no other operator has. OTH will continue to increase shareholder value and maintain its leadership in the markets it operates in.”

About Orascom Telecom
Orascom Telecom is a leading international telecommunications company operating GSM networks in six high growth markets in the Middle East, Africa and South Asia, having a total population under license of approximately 430 million with an average mobile telephony penetration of approximately 37% as at September 30th 2007. Orascom Telecom operates GSM networks in Algeria (“OTA”), Pakistan (“Mobilink”), Egypt (“Mobinil”), Tunisia (“Tunisiana”), Bangladesh (“Banglalink”), and Zimbabwe (“Telecel Zimbabwe”). Orascom Telecom had reached approximately 65 million subscribers as at September 2007.

Orascom Telecom is traded on the Cairo & Alexandria Stock Exchange under the symbol (ORTE.CA, ORAT EY), and on the London Stock Exchange its GDR is traded under the symbol (ORTEq.L, OTLD LI).


North to close embassy in Australia next month

Thursday, January 31st, 2008

Unlike most other nations’ embassies, North Korean offices must not only self-finance their operations but they must also send money back home.  It looks like they were finding it hard to make a living in Canberra.  Though an enjoyable town, Canberra is so far from most of the economic action in Australia that they were probably unable to close any deals.  In the future, they should consider opening a consulate in Sydney–if they can afford the rent.

Joong Ang Daily

North Korea can’t afford the bills anymore, so it will close its embassy here, Australia’s foreign ministry said yesterday.

North Korean diplomats informed Australian officials in November that the four-person embassy, located in a diplomatic quarter of Australia’s capital Canberra, would shut in February.

“The embassy advised that they plan to continue with non-resident diplomatic accreditation from Jakarta,” a foreign ministry spokesman told Reuters. The mission said in a letter it was closing due to “financial reasons.”

“The DPRK said it would consider reopening if its financial situation improves,” the spokesman said, referring to the North’s official name, the Democratic People’s Republic of Korea.

Australia is one of few Western countries to have diplomatic ties with the reclusive state. Pyongyang opened its embassy in May 2002.

In September 2006, Australia announced sanctions against 12 companies and one person connected with financing Pyongyang’s nuclear weapons program, including a visa ban on North Korean nationals and on North Korean shipping.


2008 Index of Economic Freedom

Thursday, January 31st, 2008

efindexcover.jpgThe 2008 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal covers 162 countries across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights. Unlike the Freedom House rankings, this is an index, meaning there is a first place winner (who should be rewarded with lots of investment and business creation) and a last place “winner” (who should be shamed into moving up the list for the same prizes)

The bottom ten countries:
148. Venezuela
149. Bangladesh
150. Belarus
151. Iran
152. Turkmenistan
153. Burma (Myanmar)
154. Libya
155. Zimbabwe
156. Cuba
157. North Korea  (unchanged)


Freedom House: Freedom in the World 2008

Thursday, January 31st, 2008


On January 16, Freedom House released the findings from the latest edition of Freedom in the World, the annual survey of global political rights and civil liberties.

The report surveyed 193 countries, 90 of which were rated “free,” 60 were labeled “partly free,” and the remaining 43 were labeled “not free.”

North Korea, rated “not free,” received the lowest rating of 7 in both political rights and civil liberties and remains one of the eight lowest rated countries along with Cuba, Turkmenistan, Uzbekistan, Libya, Sudan, Burma and Somalia.

Click here for the full report.


N. Korea: Last cold warrior standing

Thursday, January 31st, 2008

Joong Ang Daily

North Korean athletes will enter the 2008 Beijing Olympics in August with a completely different concept of international sport to the one embraced by former Cold War allies.

Eastern Bloc states used to spend heavily on sports systems that turned out Goliaths, whose wins at the Olympics were used to validate what they argued was a superior political system.

The impoverished North, however, is happier playing the role of David, where its rare wins are attributed to the teachings of pudgy leader Kim Jong-il and its losses are blamed on a playing field made unfair by its foes.

“North Korea’s paranoid nationalism can use defeat just as well as it can use victory,” said Brian Myers, an associate professor at Dongseo University in Seoul, South Korea. He specializes in analyzing the North’s ideology. The reclusive North spends its limited resources to inspire its masses and not to impress the outside world on the playing field.

“North Korean nationalism does not boast that North Koreans are physically superior to other races,” Myers explained. The North’s propaganda spreads the message of being morally superior.

North Korea is likely to grab a handful of medals in Beijing in sports such as judo, weightlifting or wrestling. It has shunned overtures from the South to compete as a joint team in Beijing, which could bring it greater sports glory, because its neighbor wants to field a squad with the best athletes on the Korean Peninsula. The North wants equal representation. At the 2004 Athens Olympics, South Korea won 30 medals while the North took five. Their combined 35 would have been seventh highest, just below the 37 of their mutual arch-rival Japan.

“North Korea has realized at this stage that no number of victories on the sports stage could change the country’s reputation as an economic basket case,” Myers said.

North Korea’s athletes may be better at providing entertainment for the opening ceremony than at competing. The North’s biggest sports spectacle is its Arirang Mass Games, a circus-like extravaganza that includes legions of teenage girl gymnasts, goose-stepping soldiers flashing taekwondo kicks and a massive flip-card animation section.

The message of the event, in which some 100,000 play a role, is that the group is North Korea’s strength, and the group reveres and protects the leaders of the destitute state.

Sports are often associated with the ruling communist party, featuring competitions with farming collectives, factory workers and soldiers. Its best athletes are celebrated for upholding “the dignity of the nation”.

“Sports constitute a powerful driving force in firmly preparing the entire people for national defense and labor,” its official media said, citing the teachings of state founder Kim Il Sung.

The North relishes the role of underdog. When one of its athletes or teams achieves even moderate success, it makes the most of the victory, proclaiming it a result of the state’s military-first policy and its self-reliance ideal called “juche.” And of course, Dear Leader Kim Jong-il, who is celebrated in state propaganda for penning operas, piloting jet fighters and shooting 11 holes-in-one the first time he played golf, also turns out to be a remarkable motivator for athletes.

After Jong Song-ok won the women’s marathon gold at the 1999 World Athletic Championships in Seville, state media quoted her as saying: “I ran the race picturing the great leader of our people Kim Jong-il. This greatly encouraged me and was the source of my strength.”

Kye Sun-hui, North Korean Olympic gold medalist in women’s judo, said Kim “gave her strength, courage, matchless guts and pluck.”


‘Vaccine diplomacy’ to launch in North Korea

Wednesday, January 30th, 2008

Joong Ang Daily
Jung Ha-won

The International Vaccine Institute, a Seoul-based international organization that develops and produces vaccines for developing countries, will begin innoculating an estimated 6,000 North Korean children against bacterial meningitis and Japanese encephalitis later this month, John Clemens, the director general of the institute, said in an interview with the JoongAng Daily.

Clemens, who has spearheaded the $500,000 project since last May, said vaccines can build understanding, and the latest project will help establish “vaccine diplomacy” between South and North Korea, too.

“One thing people commonly do not recognize is that malnutrition is a problem not only of not enough food. Infectious diseases, especially diarrheal diseases, are a major exacerbator of malnutrition in children,” he said. Clemens and four other researchers at the institute have visited North Korea since October to set up programs to vaccinate 3,000 children each in Nampo and Sariwon, near Pyongyang. “Food is obviously essential in addressing malnutrition, but we need to tackle both supply of food and control of infectious diseases.”

Clemens stressed that vital vaccines have often been used as a tool to forge peace in the most conflict-ravaged areas.

“Because vaccines are non-controversial and non-political they are an ideal mechanism to bring people together,” he said. “So we feel in a very small way that our work with North Korea is also an example of vaccine diplomacy, and we have a very good and trusting relationship with our North Korean colleagues in our joint efforts to vaccinate North Korean kids.”

The institute, established in 1999 and headquartered in South Korea, develops vaccines against diseases common in developing countries.


A Black Hole

Wednesday, January 30th, 2008

Today The Economist published a report on the political momentum of the North Korean human rights movement.  Although this web site does not keep up with the politics of the movement, the article points out how globalization is seemingly improving human rights in the DPRK…

A Black Hole
The Economist

When you learn that Chinese firms are teaching notions of corporate social responsibility to factories in North Korea, there are two possible reactions besides incredulity. One is despair. Scandals from China involving tainted products, abused workers or environmental degradation are legion: what could its companies possibly have to teach their backward, isolated and viciously repressive neighbour?The other is to celebrate the glorious rising tide of globalisation, which washes up little bits of good news on even its most remote and neglected shores.

Human rights, then, no longer seem so central to the West [politically]. So it is moderately encouraging to hear that Chinese garment-makers, subcontracting to North Korea to escape mounting costs at home, insist that their partners stop imposing seven-day working weeks. Just as China’s Western partners 15 years ago trapped them in misdemeanours by finding that sewing needles had broken on supposed rest days, so the Chinese are catching the North Koreans with the same tactics.

This might seem like a radical thought, but imagine how much better companies from OECD countries would be doing this. According to US Census data, the US has only imported $1.7 m from the DPRK since 1992 (including the famine).  Since isolation from western markets has been the DPRK’s policy essentially since its founding,  why try to maintain it?  Lets start investing and trading.  Agree or disagree in the comments.  I’d like to know your thoughts.


North Korea dragged back to the past

Tuesday, January 29th, 2008

In the article below, Dr. Lankov makes a compelling argument that the North Korean government is now attempting to to re-stalinize the economy because the system cannot survive liberal economic reforms.

Altough the trend seems depressing, optimists should take note that Pyongyang’s efforts to reassert control over the economy parallel a decline in belief in the official ideology.  With a deterioration of this ideology, people’s acquiescence to the DPRK’s political leaders declines, and power dynamics are all that hold the system together.  Efforts to control the general population are increasingly seen by the people as self-interested behavior on the part of their leaders, calling their legitimacy into question.

Additionally, efforts to reassert control over the economy are bound to fail because the system has already collapsed, their capital has been stripped, and there are insufficient funds to rescue the system.

In other words, efforts to re-stalinize the economy are bound to fail from both an economic and ideological perspective.

North Korea dragged back to the past
Asia Times

Andrei Lankov

When people talk about North Korea these days, they tend to focus on the never-ending saga of the six-party talks and the country’s supposed de-nuclearization. Domestic changes in the North, often ignored or overlooked, should attract more attention.

These changes are considerable and should not encourage those optimists who spent years predicting that given favorable circumstances the North Korean regime would mend its ways and follow the beneficial development line of China and Vietnam. Alas, the recent trend is clear: the North Korean regime is maintaining its counter-offensive against market forces.

Merely five years ago things looked differently. The decade that followed Kim Il-sung’s death in 1994 was the time of unprecedented social disruption and economic disaster culminating in the Great Famine of 1996-99, with its 1 million dead. The old Stalinist economy of steel mills and coal mines collapsed once the Soviets discontinued the aid that alone kept it afloat in earlier decades.

All meaningful economic activity moved to the booming private markets. The food rationing system, once unique in its thoroughness and ubiquity, collapsed, and populace survived through market activities as well as the “second”, or non-official, economy. The explosive growth of official corruption meant that many old restrictions, including a ban on unauthorized domestic travel, were not enforced any more. Border control collapsed and a few hundred thousand refugees fled to China. In other words, the old Stalinist system imploded, and a new grassroots capitalism took over.

The regime, however, did not approve the changes – obviously on assumption that these trends would eventually undermine the government’s control. Authorities staged occasional crackdowns on market activities, though those crackdowns seldom had any lasting impact: people had to survive somehow, and officials were only too willing to ignore the deviations if they were paid sufficient bribes.

By 2002 it seemed as if the government itself decided to bow to the pressure. In July that year, the Industrial Management Improvement Measures (never called “reforms”, since the word has always been a term of abuse in Pyongyang’s official vocabulary) decriminalized much market activity and introduced some changes in the industrial management system – very moderate and somewhat akin to the half-hearted Soviet “reforms” of the 1960s and 1970s.

The 2002 measures were widely hailed overseas as a sign of welcome changes: many Pyongyang sympathizers, especially from among the South Korean Left, still believe that only pressure from the “US imperialists” prevents Kim Jong-il and his entourage from embracing Chinese-style reforms. In fact, the 2002 measures were not that revolutionary: with few exceptions, the government simply gave belated approval to activities that had been going on for years and which the regime could not eradicate (even though it had tried a number of times). Nonetheless, this was clearly a sign of government’s willingness to accept what it could not redo.

However, around 2004 observers began to notice signs of policy reversal: the regime began to crack down on the new, dangerously liberal, activities of its subjects. By 2005, it became clear: the government wanted to turn the clock back, restoring the system that existed before the collapse of the 1990s. In other words, Kim Jong-il’s government spent the recent three of four years attempting to re-Stalinize the country.

This policy might be ruinous economically, but politically it makes perfect sense. It seems that North Korean leaders believe that their system cannot survive major liberalization. They might be correct in their pessimism. The country faces a choice that is unknown to China or Vietnam, two model nations of the post-Communist reform. It is the existence of South Korea that creates the major difference.

Unlike China or Vietnam, North Korea borders a rich and free country that speaks the same language and shares the same culture. The people of China and Vietnam, though well aware of the West’s affluence, do not see it as directly relevant to their problems: the United States and Japan surely are rich, but they are also foreign so their experiences are not directly relevant. But for the North Koreans, the comparison with South Korea hurts. Even according conservative estimates, per capita gross national income in the South is 17 times the level it is in the North; to put things in comparison, just before the Germany’s unification, per capita GNI in West Germany was roughly double that in East Germany.

Were North Korea to reform, the disparities with South Korea would become only starker to its population. This might produce a grave political crisis, so the North Korean government seemingly believes that in order to stay in control it should avoid any tampering with the system. Maintaining the information blockade is of special importance, since access to the overseas information might easily show the North Koreans both the backwardness of their country and the ineptitude of their government.

At the same time, from around 2002 the amount of foreign aid began to increase. The South Korean government, following the so-called Sunshine policy, began to provide generous and essentially unmonitored aid to Pyongyang. China did this as well. Both countries cited humanitarian concerns, even though it seems that the major driving force was the desire to avoid a dramatic and perhaps violent collapse of the North Korean state.

Whatever the reasons, North Korea’s leaders came to assume that their neighbors’ aid would save the country from the worst of famine. They also assumed that this aid, being delivered more or less unconditionally, could be quietly diverted for distribution among the politically valuable parts of the population – such as the military or the police, and this would further increase regime’s internal security.

So, backward movement began. In October 2005, Pyongyang stated that the Public Distribution System would be fully re-started, and it outlawed the sale of grain on the market (the ban has not been thoroughly enforced, thanks to endemic police corruption). Soon afterwards, came regulations prohibited males from trading at markets: the activities should be left only to the women or handicapped. The message was clear: able-bodied people should now go back to where they belong, to the factories of the old-style Stalinist economy.

There have been crackdowns on mobiles phones, and the border control was stepped up. There have been efforts to re-enforce the old prohibition of unauthorized travel. In short, using newly available resources, North Korea’s leaders do not rush to reform themselves, but rather try to turn clock back, restoring the social structure of the 1980s.

The recent changes indicate that this policy continues. From December only sufficiently old ladies are allowed to trade: in order to sell goods at the market a woman has to be at least 50 years old. This means that young and middle-aged women are pushed back to the government factories. Unlike earlier ban on commercial activity on men, this might have grave social consequences: since the revival of the markets in the mid-1990s, women constituted the vast number of vendors, and in most cases it was their earnings that made a family’s survival possible while men still chose to attend the idle factories and other official workplaces.

Other measures aim at reducing opportunities for market trade. In December, the amount of grain that can be moved by an individual was limited to ten kilograms. To facilitate control, some markets were ordered to close all but one gate and make sure that fences are high enough to prevent scaling.

Vendors do what they can to counter these measures. One trick is to use a sufficiently old woman as a figurehead for a family business. The real work is done by a younger woman, usually daughter or daughter-in-law of the nominal vendor, but in case of a police check the actual vendor can always argue that she is merely helping her old mother. Another trick is to trade outside the marketplace, on the streets. This uncontrolled trade often attracts police crackdowns, so vendors avoid times when they can be seen by officials going to their offices.

This autumn in Pyongyang there was an attempt, the first of this kind in years, to prescribe maximum prices of items sold in markets. Large price tables were displayed, and vendors were forbidden to sell goods (largely fish) at an “excessive price”. It was also reported that new regulations limit to 15 the number of items to be sold at one stall.

The government does not forget about other kinds of commercial activities. In recent years, private inns, eateries, and even bus companies began to appear in large numbers. In many cases these companies are thinly disguised as “government enterprises” or, more frequently, as “joint ventures” (many North Korean entrepreneurs have relatives in China and can easily persuade them to pose as investors and sign necessary papers).

Recently a number of such businesses were closed down by police. People were told that the roots of evil capitalism had to be destroyed, so every North Korean can enjoy a happy life working at a proper factory for the common good.

Yet even as the government pushes people back to the state sector of the economy, These new restrictions have little to do with attempts to revive production. A majority of North Korean factories have effectively died and in many cases cannot be re-started without massive investment – which is unlikely to arrive; investors are not much interested in factories where technology and equipment has sometimes remained unchanged since the 1930s.

However, in North Korea the surveillance and indoctrination system has always been centered around work units. Society used to operate on the assumption that every adult Korean male (and most females as well) had a “proper” job with some state-run facility. So, people are now sent back not so much to the production lines than to indoctrination sessions and the watchful eyes of police informers, and away from subversive rumors and dangerous temptations of the marketplace.

At the same time, border security has been stepped up. This has led to a dramatic decline in numbers of North Korean refugees crossing to China (from some 200,000 in 2000 to merely 30,000-40,000 at present). The authorities have said they will treat the border-crossers with greater severity, reviving the harsh approach that was quietly abandoned around 1996. In the 1970s and 1980s under Kim Il-sung, any North Korean trying to cross to China or who was extradited by the Chinese police would be sent to prison for few years.

More recently, the majority of caught border-crossers spent only few weeks in detention. The government says such leniency will soon end. Obviously, this combination of threats, improved surveillance and tighter border control has been effective.

The government is also trying to restore its control of information. Police recently raided and closed a number of video shops and karaoke clubs. Authorities are worried that these outlets can be used to propagate foreign (especially South Korean) pop culture. Selling, copying and watching South Korean video tapes or DVDs remain a serious crime, even though such “subversive materials” still can be obtained easily.

It is clear that North Korean leaders, seeking to resume control that slipped from them in the 1990s and early 2000s, are not concerned if the new measures damage the economy or people’s living standards when set against the threat to their own political domination and perhaps even their own physical survival.

Manifold obstacles nevertheless stand in the way of a revival of North Korean Stalinism.

First, large investment is needed to restart the economy and also – an important if underestimated factor – a sufficient number of true believers ready to make a sacrifice for the ideal. When the North Korean regime was developed in the 1940s and 1950s it had Soviet grants, an economic base left from the days of Japanese investment and a number of devoted zealots. The regime now has none of these. Foreign aid is barely enough to feed the population, and the country’s bureaucrats are extremely cynical about the official ideology.

Second, North Korea society is much changed. Common people have learned that they can survive without relying on rations and giveaways from the government. It will be a gross oversimplification to believe that all North Koreans prefer the relative freedoms of recent years to the grotesquely regimented but stable and predictable existence of the bygone era, but it seems that socially active people do feel that way and do not want to go back. Endemic corruption also constitutes a major obstacle: officials will be willing to ignore all regulations if they see a chance to enrich themselves.

It is telling that government could not carry out its 2005 promise to fully restart the public distribution (rationing) system. Now full rations are given only to residents of major cities while others receive reduced rations that are below the survival level. A related attempt to ban trade in grain at markets also failed: both popular pressure and police inclination to take bribes undermined the policy, so that grain is still traded openly at markets.

Even so, whether the government will succeed in re-Stalinizing society, its true intent remains the revival of the old system. North Korean leaders do not want reforms, assuming that these reforms will undermine their power. They are probably correct in this assumption.


N.K. orchestra to perform in Britain: report

Tuesday, January 29th, 2008

Back story: It looks like Suzanne Clark’s efforts are finally paying off…


North Korea’s national symphony orchestra will perform in Britain as part of its planned concert tour to Europe in early September, a U.S. radio station reported Friday.

The North’s 120-member State Symphony Orchestra will hold three concerts in London and Middlesbrough Sept. 2 to 14, Radio Free Asia said, quoting a British businessman who arranged the tour.