Archive for July, 2009

US sanctions Hyoksin Trading Corporation

Thursday, July 30th, 2009

Nearly two weeks ago, the UN Security Council sanctioned five North Korean organizations. One of them was the Hyoksin Trading Corporation.  I believe they even have a web page here.

Today, the US imposed financial sanctions on this company.  According to the The Associated Press  (Via the Washington Post):

The Obama administration on Thursday imposed financial sanctions on a North Korean firm accused of involvement in the country’s missile programs.

The Treasury Department’s action covers Korea Hyoksin Trading Corp. It means any bank accounts or other financial assets found in the United States that belong to the company must be frozen. Americans also are prohibited from doing business with the firm.

It is the latest move by the United States to keep pressure on Pyongyang, whose nuclear ambitions have ratcheted up global tensions.

The department alleges that Korea Hyoksin Trading is owned or controlled by another North Korean firm, Korea Ryonbong General Corp., which the United States says is involved in the development of weapons of mass destruction. Korea Ryonbong supports Pyongyang’s sales of military-related items, the department said.

Read the full story here:
US tightens financial noose on North Korea
The Associated Press
Jeannine Aversa


China pulls out of DPRK mining deal

Thursday, July 30th, 2009

According to the Choson Ilbo:

A Chinese investment company developing a copper mine in North Korea with a North Korean company sanctioned by the UN Security Council has reportedly called an abrupt halt to the project.

An industry source in China said the investment firm sent a letter to NHI Shenyang Mining Machinery, the company it had commissioned to build facilities for the mine in Hyesan, North Korea, telling it to stop construction. An estimated 400,000 tons of copper are deposited there.

The Chinese firm had signed an agreement with (North) Korea Mining Development Trading Corporation (KOMID) [NKeconWatch: a.k.a. Korea Mining Development Corporation) to develop the mine in November 2006. But the North Korean partner was blacklisted by the UN Security Council after North Korea carried out its latest nuclear test.

The industry source said, “When Chinese Vice President Xi Jinping visited Pyongyang in June last year, he pledged full support for the development of the Hyesan copper mine so that it could become a model for investment by Chinese business in North Korea. This prompted NHI to hurry construction so that production could start in September this year.”

But he added the Chinese government apparently persuaded the investment firm to stop the project as Beijing takes part in the UN sanctions. “Otherwise, it’s unusual for a project to be stopped at this late stage,” he said. The investment firm reportedly gave NHI no reason for the cancellation.

Looking at Hyesan on Google Earth, this appears to be the only large-scale minig operation in Hyesan.

Read the full article below:
N.Korea Mining Project Buckles Under UN Sanctions
Choson Ilbo


Koryolink reaching 48,000 subscribers

Thursday, July 30th, 2009

According to an article in the Choson Ilbo, Koryolink has attracted nearly 50,000 subscribers since launching.  Most surprisingly, they claim that members of the Worker’s Party are not allowed to use the phones.  (I am not sure if I believe that).

According to the article:

Orascom, the Egyptian telecom firm that runs it, plans to expand the service area from Pyongyang to the whole of North Korea by the end of this year, VOA said. The operator is poised to start HSPA service at the request of foreigners in North Korea who need to use wireless high-speed internet there, the report said.
Currently, officials of the North Korean Workers’ Party or the government are reportedly banned from using mobile phones for security reasons. Ordinary North Korean residents, whose monthly pay is about 4,000 North Korean won (around US$30), cannot afford the service due to the high price of handsets, which cost at US$300-500, and the subscription fee.

“We understand that mobile phones are used chiefly by foreigners, wealthy people, and trade functionaries,” a South Korean government official said.

North Korean phone users buy prepaid phone cards and can send text messages. The North started the European-style GSM service in Pyongyang and the Rajin-Sonbong special economic zone in November 2002 but suspended it after an explosion at Ryongchon Railway Station in April 2004.

Further information: 

1. The Economist Intelligence Unit on Orascom (joint venture partner in Koryolink).

2. Here is a very informative older post on Koryolink. Make sure to read the information in the comment section.

3. Regarding the claim that party members are not allowed to purchase Koryolink service: In February, Martyn Williams gave us an interesting update on Koryolink–after only two weeks of sales.  This story notes, “But while Koryolink’s first customers might not have high-profile official jobs, they are among the more wealthy in society and price, particularly of the handsets, stands as an obstacle to greater penetration.”

4. The previous mobile network, set up by a Thai subsidiary in 2002, is still in operation.  I know that North Korean VIPs and visiting journalists have been using this network since 2002 (despite the wide media coverage of this system being closed down).

5. If this story is true, it would imply that 1 out of every 60 Pyongyang residents has a phone (assuming pop of 3 million).  Additionally, if Koryolink sold 6,000 units in their first two weeks last February, they would have to sell nearly 9000 new units/month on average to reach a total of 50,000 today.  Does that seem reasonable?  Can anyone track down the original VOA sotry on which the Choson Ilbo story is based?

Read the full Choson Ilbo story here:
Some 50,000 N.Koreans Use Mobile Phones
Choson Ilbo


European Business Association (EBA) founding

Wednesday, July 29th, 2009

The European Business Association has acted as a de facto chamber of commerce in the DPRK since its founding on April 28, 2005.  It was jointly founded by all of the European business representatives who resided in Pyongyang at the time, and according to its press release (posted below in full), it aims to “build bridges” and increase trade between Europe and the DPRK.

Recently, a video of this founding was posted on Youtube.  You can see it here:


Click on image for video.

The EBA is now run by Nigel Cowie.  Here is their web page.

Here are previous posts about the EBA.

Here is the press release that was issued at the time:

Press Release by the European Business Association (European Chamber of Commerce), Pyongyang, on the occasion of its founding ceremony on April 28, 2005.

All of the foreign business people who are resident in the Democratic People’s Republic of Korea (DPRK) and who represent European enterprises have today jointly founded the European Business Association (EBA). The ten European, one Hong Kong and one Mongolian business managers include the heads of four European invested joint ventures (in banking, overseas shipping, pharmaceuticals production and consumer goods manufacturing) in the DPRK and the representatives of several medium- and large sized European companies.

During a short founding ceremony the EBA-members approved the statute and elected Felix Abt, resident chief representative of a large European manufacturing and trading group, president, Guenter Unterbeck, resident chief representative of the German enterprise that introduced and operates internet in the DPRK and Valentin Dimitrievich Pan, resident chief representative of the Russian railways, vice-presidents.

As a representative of the European embassies to the DPRK the Romanian Charge d’Affaires Eugene Poppa took to the floor to underline the significance of the association designed to lay the ground for both European and North Korean companies to do business with one another more smoothly in the future.

Acting Chairman Kim of the Association for the Promotion of the International Economic and Technological Exchange (APIETE) as well as chairman Jang of one the largest manufacturing and trading groups of the country expressed their welcome on behalf of DPRK enterprises to this new association to substantially further economic ties between European and Korean enterprises.

EBA-president Abt stressed the need for European companies to catch up with Chinese and other Asian companies. In fact, out of the total DPRK foreign trading volume of 3.11 billion USD in 2003 over two third was mainly with China and to a much lesser degree with South Korea and Japan according to the South Korean government. The trade with the EU accounted for less than 10 %. In 2004 foreign trade with China increased by 35,4 %.

Although the European Union increased its exports in the first 6 months of 2004 by 17,2% to 132,0 Mio. USD and its imports by 11,3 % to 17,7 Mio. USD compared to the first semester 2003, Europe’s overall share is further declining.

In its press release EBA says it is pleased to note the sharply increasing interest of Chinese and other Asian companies in investing in and doing business with the DPRK.

It regrets the comparatively weak interest by European companies which is mainly due to a lack of awareness of the promising business and investment potential of the DPRK.

The EBA will therefore contribute to encourage European businesses to invest and do more business in the DPRK. It sees itself as a bridge builder between Europe and the DPRK to substantially increase trade between the two.

The members expressed their hope that the EBA will grow quickly in numbers over the coming years as a consequence of its work aimed at enhancing economic cooperation between Europe and the DPRK.

The event was attended by officials of the DPRK, senior managers of DPRK-companies and ambassadors and other diplomats of the European embassies to the DPRK including the ambassador of the Russian Federation. A visiting Polish business delegation headed by deputy minister Witold Gorski was also present. They mentionned that the first Polish joint venture in the DPRK is operating successfully.


China seizes steel-hardening metal bound for DPRK

Tuesday, July 28th, 2009

According to the Associated Press (via San Fancisco Examiner):

Chinese customs authorities have seized a stash of vanadium, a strategic metal used to strengthen steel, hidden in fruit boxes on a truck bound for North Korea, an official said Tuesday.

Vanadium has defense and nuclear applications — alloys with vanadium are used in missile casings — but it was not clear what the stash would be used for.

The seizure comes as the United States has been rallying international support for strict enforcement of a new U.N. resolution adopted to punish North Korea for its nuclear test on May 25. The sanctions seek to deprive the North of financing and material for its weapons program, and allows inspections of suspect cargo in ports and on the high seas.

The metal was found during a routine check of vehicles at the China-North Korea border on Monday, said a duty officer at the customs department of Dandong city in northeastern Liaoning province.

The officer, who would only give his surname, Chang, said the stash was worth about 200,000 yuan ($29,300).

He refused to provide further details, but the Dandong News Web site posted a photograph of border agents inspecting the seizure, contained in 68 bottles in cardboard boxes. The stash weighed 154 pounds (70 kilograms). The metal appeared to be in granular form.

Read the full story here:
China seizes steel-hardening metal hidden in truck bound for North Korea
Associated Press
Gillian Wong


CRS report on DPRK counterfeiting

Monday, July 27th, 2009

The US Congressional Research Service has updated their report on the DPRK’s alleged counterfeiting operations. You may download the report here.

Here is the summary:

The United States has accused the Democratic People’s Republic of Korea (DPRK or North Korea) of counterfeiting U.S. $100 Federal Reserve notes (Supernotes) and passing them off in various countries, although there is some doubt by observers and other governments that the DPRK is capable of creating Supernotes of the quality found. What has been confirmed is that the DPRK has passed off such bills in various countries and that the counterfeit bills circulate both within North Korea and around its border with China. Defectors from North Korea also have provided information on Pyongyang’s counterfeiting operation, although those statements have not been corroborated. Whether the DPRK is responsible for the actual production or not, trafficking in counterfeit has been one of several illicit activities by North Korea apparently done to generate foreign exchange that is used to purchase imports or finance government activities abroad.

Although Pyongyang denies complicity in any counterfeiting operation, at least $45 million in such Supernotes thought to be of North Korean origin have been detected in circulation, and estimates are that the country has earned from $15 to $25 million per year over several years from counterfeiting. The illegal nature of any counterfeiting activity makes open-source information on the scope and scale of DPRK counterfeiting and distribution operations incomplete. South Korean intelligence has corroborated information on North Korean production of forged currency prior to 1998, and certain individuals have been indicted in U.S. courts for distributing such forged currency. Media reports in January 2006 state that Chinese investigators had independently confirmed allegations of DPRK counterfeiting. In June 2009, press reports claimed that the DPRK produced counterfeit U.S. bills even after 2007.

For the United States, the alleged North Korean counterfeiting represents a direct attack on a protected U.S. national asset and may provide a rationale to impose financial sanctions on the DPRK. The earnings from counterfeiting and related activities also could be important to Pyongyang’s finances. Profits from any counterfeiting also may be laundered through banks or other financial institutions.

U.S. policy toward the alleged counterfeiting is split between law enforcement efforts and political and diplomatic pressures. On the law enforcement side, individuals have been  indicted and the Banco Delta Asia (BDA) bank in Macao (a territory of China) was named as a primary money laundering concern under the Patriot Act. In June 2007, the BDA issue was resolved and the Six-Party Talks resumed. At the time, Pyongyang promised that it would punish the counterfeiters and destroy their equipment. The law enforcement effort has become entwined with diplomatic efforts and pressures to resolve the North Korean nuclear and missile issues. Following North Korea’s second nuclear test and several missile launches in May 2009, the United States reportedly has been considering further financial sanctions on the DPRK based partly on its alleged counterfeiting.

This report as well as many other CRS reports on the DPRK can be found here.


DPRK official attitudes towards sexual relations

Monday, July 27th, 2009

Although the Korea Times titles the article, “Privileged North Koreans Enjoy S. Korean Movies,” the article is about neither privileged North Koreans nor South Korean films.  Rather, this interesting article by Andrei Lankov is about official attitudes towards sexual relations in the DPRK. 

Quoting from the article:

When communism was a radical revolutionary movement, it was decisively in favor of sexual liberation. When communists took power in Russia in 1917, they immediately introduced one of the world’s most liberal family and marriage laws, de-criminalized adultery and abortion, and greatly simplified divorce while putting in place some safeguards for women with children.

However, in Russia this attitude began to change from the early 1930s. The worldview promulgated as Stalin’s era continued, came to view sex as largely reproductive, something that should be confined to the bedroom of a properly married couple, and not discussed in public.

So the dominant attitudes to sex in the Soviet society of the 1940s were not that much different from the America of those years. And this was the attitude that was exported to the nascent North Korean society.

In the North, this approach was soon taken to the extreme. From the late 1950s even the slightest references to sexual activity were purged from North Korean art. Only villains could be depicted as thinking about sex, while the positive heroes were always asexual. Divorce was made difficult, almost impossible.

It seems that the government control, along with the activities of the neighborhood watch groups, the infamous “inminban,” helped to maintain the officially endorsed standards of sexual behavior. The powerful few sometimes could have extra-marital affairs, but they were an exception.

I also know of some cases when women got pregnant from premarital sex ― like a female soldier who once “did it” with her boyfriend in the late 1970s.

But once she found out that she was pregnant, she knew she was in serious trouble: if discovered, a pregnancy would lead to a dishonorable discharge from the army, after which nobody would allow her to return to her family in privileged Pyongyang.

Fortunately, her boyfriend and his well-connected family stood by her, pushed all the right buttons and arranged for an immediate discharge from the army, followed by marriage (they have two children now, and live happily in Seoul).

And regarding prostitution…

Prostitution, common in North Korean cities in colonial times, was eradicated in the early 1950s, and former prostitutes and gisaeng (high-class courtesans) were either exiled from the major cities or “re-educated through labor.”

However, the situation began to change in the early 1990s when the old system collapsed under the weight of economic difficulties. This influenced everything in North Korea, including the sexual behavior of its inhabitants.

After all, Koreans can now engage in premarital or extramarital sex without taking too many risks: the state does not care about such matters as much as it used to, and finding a suitable place and time is also much easier.

The emerging “black market capitalism” was (and still is) dominated by women who have acquired a great measure of economic freedom and independence, meaning that they are less inhibited about having affairs with men they like.

The female merchants travel a lot, they are essentially beyond the reach of the state, and they feel themselves far more confident than ever before.

In a sense, the sexual adventures of these women can be seen as a sign of their liberation. However, these lucky women are a minority. Others have fared much worse. The social disruption and famine of the late 1990s pushed many women into prostitution.

Some of them can be found in Chinese brothels, but it seems that the majority have to ply their trade within North Korea, where their situation is even worse (but never reported by the media).

Nowadays, North Korea has a number of private karaoke rooms ― a development which would have been positively unthinkable some 10 years ago. Some of those rooms serve as a cover for prostitution.

They have even devised ways to advertise this to a passerby, so a patron can know if sexual services are available in the particular outlet. The code words are “selling beds” or, more poetically, “selling flowers.”

Another cover for prostitution is provided by the private inns which proliferated some 10 years ago and operate with a disregard of the strict laws governing internal movement in North Korea.

It seems that sometimes the same inns can provide a space for lovers as well ― as long as they can pay the rather high fees.

Additional thoughts:
1. I have posted a number of stories dealing with divorce in the DPRK.  You can read them here.  Apparently it is common now.  According to this article, divorce settlements compose the most cases in the DPRK court system.

2. Prostitution is visible in the DPRK as every guest to the Yangakdo Hotel can attest.  However these workers are all foreigners (Chinese) on contract.  Some tourists do claim to have successfully liaised with a local Korean, but these stories are rare. 

Read the full article here:
Privileged North Koreans Enjoy S. Korean Movies
Korea Times
Andrei Lankov


Questions Are Raised About Who Profits from UN Aid to North Korea

Monday, July 27th, 2009

Fox News
George Russell

Is North Korea’s dictatorial regime quietly profiting from U.N. emergency food supplies delivered to its starving people, even as the regime squeezes those deliveries down to a trickle?

Documents produced by the World Food Program, the U.N.’s flagship relief agency, outlining its current emergency operations in the insular communist state, raise a number of touchy questions about the financing and logistics of the effort, which was originally intended to feed some 6.2 million of North Korea’s most vulnerable people, but which is currently providing limited rations only to 1.33 million.

The $500 million program was meant to run from September, 1, 2008 to November 31, 2009, to deliver nearly 630,000 tons of food aid to North Korea at a time when it is suffering from severe flood damage and fertilizer shortages that have led to local food price increases.

Currently, WFP says that only $75.4 million worth of food aid has been delivered under the emergency program, as international donors have recoiled at the Kim Jong Il regime’s recent nuclear detonation and provocative missile launchings toward Japan and Hawaii.

WFP emergency relief program documents obtained by FOX News show that from the outset the food agency planned to pay extraordinarily high transportation costs for sending relief supplies to North Korea from around the world–about a dollar for every two dollar’s worth of food aid shipped into the country under the program.

Moreover, enormous sums were involved: $130,334,172 for “external transport” of 629,938 tons of grain and other food relief supplies for the overall program. (The food supplies themselves are projected to cost $297,396,729.)

For comparative purposes, the “external” shipping costs planned by WFP for the aid program average about $206.90 per metric ton of food aid .

Those rates were described as “absolutely ridiculous” by an expert on bulk shipping consulted by FOX News, even for sending goods by international shipping carriers to the remote region that includes North Korea. Another international grain expert consulted by FOX News described them as “way out of line” with past and present international shipping rates for bulk grain and other basic food commodities.

What WFP has not revealed in its documentation until questioned by FOX News, however, is that a substantial, but unspecified, amount of that money is intended to move the emergency aid from China to its final North Korean destination via shipping firms owned by the Kim Jong Il government.

Nowhere in the WFP program documents, which appeared on WFP’s public website only after Fox News began raising questions about them, is there any mention of the North Korean shipping involvement.

Even though WFP has not revealed how much of the $130-plus million in planned “external transport” money Kim Jong Il’s shipping firms are in line to receive, an analysis of the current costs involved in getting such supplies to their second-last destination reveal that the amount slated to pay for the last leg of the journey to North Korea could be huge.

A WFP spokesman blamed the overall high cost on “ the remote geographical location of [North Korea] from place of procurement (normally Black Seas, South Africa and South America).”

All WFP food aid, he added, was first shipped to the northern Chinese port of Dalian, before moving on to the North Korean port of Nampo.

But the spokesman then added that high costs were also due to “the lack of competition of transporters for transshipment” between Dalian and Nampo.

In fact, shipments to and from Dalian, China, one of the major centers of China’s huge export sector, are commonplace and hardly expensive by international standards. Data kept by the U.S. Department of Agriculture, for example, shows that grain shipments from Brazil to China between April and June of this year have varied from $32.50 to $42 per metric ton.

Moreover, those international shipping rates have been on a precipitous downward slide since June, 2008-three months before the WFP aid program began. Even allowing for higher rates from the Black Sea and South Africa, international shipping experts told FOX News that the rates would come nowhere near $206 per ton-especially as there is currently a surplus of international shipping capacity.

The same, however, apparently can’t be said of transport between Dalian and Nampo-a distance of 210 nautical miles.

There, the WFP spokesman said, WFP relies entirely on “feeder vessels belonging to the [North Korean] government.”

Asked late last week by FOX News to provide specifics of the rates charged by North Korean vessels for carrying international food aid home, the WFP spokesman did not provide an answer before this article was published.

However much the Kim Jong Il regime charges for bringing food to its people, it is not the only money that WFP provides to Kim for humanitarian assistance.

The WFP documents show that the government was to receive an additional projected $5,039,504 as a transport fuel subsidy if the relief program gets back into full swing. The “fuel reimbursement levy” amounts to $8 per ton of aid delivered, and according to the WFP spokesman, is normally not provided to countries that receive food aid-they are expected to chip in for this cost on their own–except under a waiver that North Korea has been granted.

So far, the Kim regime’s National Coordinating Committee, a subsidiary of the Ministry of Foreign Affairs, has received $1.16 million under this waiver since September 2008, with the promise of an additional $361,400 to come. The WFP spokesman emphasized that the money was not paid in hard currency.

The same apparently applies to $4,409,566 intended by WFP to enhance a “capacity building strategy of government counterparts” envisaged in the relief plan. According to the WFP spokesman, this means management training and information systems upgrades for the Kim government to handle the new food aid. WFP is also paying for warehouses and equipment to handle the aid. So far, the regime has only $103,200 of the projected total, with another $155,000 committed.

Amid all the fuzzy math of the WFP relief program, there is a final quirk: the inexplicably high transportation costs work to the benefit not only of the Kim regime, but also to the benefit of WFP.

As a matter of standard practice, WFP charges a standard 7% management fee against “direct operational costs” of such relief efforts to support its worldwide operations, over and above the costs it incurs in the specific relief exercise. These, in WFP-speak, are known as the organization’s “indirect support costs.”

Based on direct operational costs in North Korea of $445,033,971-including the $133.3 million in “external transport” costs– WFP expected to reap $32,948,811 as its 7% share of “indirect support costs.”

Its 7% “indirect support” levy on the extraordinary $130.3 million transport bill would amount to about $9.1 million.


Friday fun: KCNA and the random insult generator

Friday, July 24th, 2009

Though quite familiar to veteran DPRK-watchers, the “colorful” language that fills North Korea’s official news was the subject of a humorous story in the BBC  last week.

According to the article:

A government official recently claimed that North Korea’s official state media has insulted the South Korean president more than 1,700 times this year alone.

That is an average of 10 insults a day.

He is variously called “a lackey”, “a stooge”, “a dictator” and the leader of “a gang of traitors”.

The official admitted that the jibes were sometimes “downright silly”.

At times of extreme hostility the language turns flamboyant, even poetic.

America sank so low in 2003, according to state radio, that even the “piles of manure in the fields” were “fuming out the smoke of hatred.”

It is strong stuff, no doubt, but sometimes the outside world can be tempted to analyse too deeply.

And why do the insults sound so antiquated?

Joo Sung-ha, the defector turned South Korean journalist, says there is an easy explanation for North Korea’s use of seemingly antiquated words like “brigandish” to refer to its opponents.

“They’re using old dictionaries,” he says.

“Many were published in the 1960s with meanings that have now fallen out of use, and there are very few first-language English speakers available to make the necessary corrections.”

So, while North Korea’s rhetoric is certainly worthy of analysis, perhaps we shouldn’t be too alarmed by every outburst.

Further thoughts:

1. For those interested, I posted a copy of Let’s Learn Korean which I bought on my last trip to Pyongyang. It contains many linguistic gems. Download it here.

2. All of these colorful metaphors can be easily found using the invaluable STALIN search engine which helps readers search the KCNA for specific stories.  This is especially useful for researchers who need to count the number of times someone’s name is mentioned in the North Korean media.  The STALIN search engine also has a humorous Random Insult Generator and Juche/Gregorian calendar converter.

3. Joshua has also invented the KCNA drinking game.

4. And let’s not forget the entrepreneurial individual who posts KCNA headlines to Twitter.


North Korea medical team arrives in Ethiopia

Thursday, July 23rd, 2009

Ethiopian Review
Mehret Tesfaye

A medical team of Democratic Peoples Republic of Korea (DPRK) has arrived here on Tuesday to provide voluntary medical service for two years in Ethiopia, the Ministry of Health said.

Public Relations Directorate office of the Ministry told ENA on Wednesday that the 27 member medical team arrived here as per the agreement of Ethiopia and the DPRK to cooperate in the health sector.

State minister of health, Dr. Kebede Worku, welcomed the team upon its arrival at the Addis Ababa Bole International Airport.

The office said 11 of the team members will be deployed to Oromia State while 10 to Tigray state and the remaining six to South Ethiopia Peoples’ State.

Another voluntary medical team comprising four members will also arrive here in the near future.

Dr. Kebede said the historical relation between the two countries is being strengthened.