North Korean Economy Watch

According to Yonhap:

North Korea has recently deployed about 50,000 special forces along its border with South Korea, a source here said Wednesday, as tension rises on the divided peninsula over a suspected deadly North Korean attack on a South Korean warship.

“North Korea recently completed the frontline deployment of seven light infantry divisions, which is something it had been pushing for since two to three years ago,” the high-level source said, adding each division consists of about 7,000 troops.

North Korea has in recent years increased the number of its special forces to 180,000. Defense officials here say the troops would infiltrate South Korea and try to throw its defense into confusion if another war broke between the two countries.

The frontline deployment of special forces comes as South Korean increasingly suspects a North Korean submarine sank one of its warships along their tense western sea border on March 26.

Forty died and six went missing in the sinking that has sparked national mourning and led President Lee Myung-bak to vow a stern response to those responsible.

North Korea denies its involvement in what has become one of South Korea’s worst naval disasters, but it is coming under growing suspicion because its history of attacks.

The latest attack took place in November last year, when a North Korean patrol boat shot at a South Korean one and retreated in flames after taking heavy fire.

South and North Korea remain technically at war after the 1950-53 Korean War ended in a truce, not a peace treaty.

Read the full story:
N. Korea has deployed 50,000 special forces along frontlines: source
Yonhap
5/5/2010

Joseph Bermudez, military analyst for Jane’s Intelligence Review and author of The Armed Forces of North Korea, has published the fourth issue of his very fascinating KPA Journal.

Click here to download the full issue (PDF).

Topics include: Noto-Hanto infiltration, Pokpoong main battle tank, DPRK intelligence agencies.

Previous issues of KPA Journal can be downloaded here.

Here are some articles about it:

North Korea’s Kim Jong Il arrives in China, amid internal, external tensions
Washington Post
Lauren Keane
5/4/2010

Kim Jong-il Arrives in China
New York Times
Choe Sang-hun
5/3/2010

North Korean leader in China seeking cash, clout
Los Angeles Times
Barbara Demick and John M. Glionna
5/3/2010

North Korea’s Kim seeks lifeline in China
Reuters
Royston Chan
5/3/2010

Kim Jong-il Stops Off in Chinese Boomtown
Choson Ilbo
5/5/2010

Who Is with Kim Jong-il on His China Trip?
Choson Ilbo
5/4/2010

North Korea’s Kim ‘visits China’
BBC
5/3/2010

Here are some photos of his train.

According to Bloomberg:

United Nations food aid to North Korea will run out the end of next month following a drop in international donations after the country detonated a nuclear device, the World Food Program said.

“We have resources to carry us through to June,” Lena Savelli, a Beijing-based spokeswoman for the UN agency, said in a telephone interview today. “We quite urgently need more donors to come forward and give us resources.”

The agency is in talks with donors on how to extend the program as it seeks to continue operations, she said. Kim Jong Il’s regime has relied on outside aid to feed its 24 million people since the mid-1990s when famine caused by floods, drought and economic mismanagement is estimated to have killed as many as 2 million people.

The aid shortfall may put further pressure on Kim following a botched currency revaluation late last year and tougher UN Security Council sanctions after a second nuclear test in May 2009. The Council should also consider the totalitarian regime’s human rights violations to force changes, Vitit Muntarbhorn, UN special rapporteur on North Korea’s human rights, said in a May 1 interview in Seoul.

“It’s a very helpless situation, sadly, for the people,” he said. “Given that the Security Council is the law- enforcement organ of the United Nations, it’s incumbent upon them to take it up,” said Muntarbhorn, 57, whose six-year term as the official for North Korea, expires in June.

Read the full article here:
North Korea’s Food Aid Will Run Out Next Month, UN Agency Says
Bloomberg
Bomi Lim
5/3/2010

According to Reuters (via the Washington Post):

North Korea’s health system would be the envy of many developing countries because of the abundance of medical staff that it has available, the head of the World Health Organization said on Friday.

WHO Director-General Margaret Chan, speaking a day after returning from a 2-1/2 day visit to the reclusive country, said malnutrition was a problem in North Korea but she had not seen any obvious signs of it in the capital Pyongyang.

North Korea — which does not allow its citizens to leave the country — has no shortage of doctors and nurses, in contrast to other developing countries where skilled healthcare workers often emigrate, she said.

This allows North Korea to provide comprehensive healthcare, with one “household doctor” looking after every 130 families, said the head of the United Nations health agency, praising North Korea’s immunization coverage and mother and child care.

“They have something which most other developing countries would envy,” Chan told a news conference, noting that her visit was a rare sign of the communist state’s willingness to cooperate with outside agencies.

Chan’s comments marked a significant change from the assessment of her predecessor, Gro Harlem Brundtland, who said in 2001 that North Korea’s health system was near collapse.

Chan, who acknowledged that countries that she visits always try to look good while pointing to where they need help, met a series of North Korean officials, visited several hospitals, and also talked to Pyongyang-based diplomats, United Nations officials and representatives of the Red Cross.

The authorities acknowledge there is a problem with malnutrition, she said, but things have become better since famine in the 1990s and a series of natural disasters in 2001.

“Nutrition is an area that the government has to pay attention (to) and especially for pregnant women and for young children,” Chan said.

NO SIGNS OF OBESITY

Chan spent most of her brief visit in Pyongyang, and she said that from what she had seen there most people had the same height and weight as Asians in other countries, while there were no signs of the obesity emerging in some parts of Asia.

But she said conditions could be different in the countryside.

News reports said earlier this year that North Koreans were starving to death and unrest was growing as last year’s currency revaluation caused prices to soar.

Chan, who described her visit as “technical and professional” — in other words avoiding politics — said the North Korean government’s readiness to work with international agencies, such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, was encouraging.

The Global Fund requires countries it works with to provide sound data, account for resources contributed and allow access by officials, she noted.

“I can confirm that at least in the area of health the government is receptive to engagement with international partners,” she said.

“They are receptive to requests for increasing transparency — have a better quality data — and being held accountable for the resources flowing into the country to improve health.”

North Korea, whose human rights record has been strongly condemned by U.N. experts, is refusing to return to six-party talks about its nuclear program, which has led to U.N. sanctions being imposed after a nuclear test in May last year.

Tension is increasing with South Korea, with which the North fought a war in 1950-53, after the sinking of a South Korean naval vessel last month for which Seoul increasingly suspects Pyongyang.

But Chan praised a joint project between North and South Korea to improve women’s and children’s health, which she said was promoting dialogue and trust between the two rivals.

Last month, the WHO said North Korea has reduced deaths from surgery and among women in childbirth under the South Korea-funded program.

The Wall Street Journal calls out Ms. Chan:

Greetings, comrades. World Health Organization Director-General Margaret Chan has returned from Pyongyang with wonderful news. The Democratic People’s Republic of Korea is making great strides in health care, with one “household doctor” for every 130 households. Thanks to on-the-spot guidance from Dear Leader Kim Jong Il, North Korean doctors selflessly choose not to emigrate and have even conquered the decadent West’s problem of obesity!

All right, we exaggerate. But only the part about the Dear Leader. Ms. Chan’s surreal statements last Friday, as reported by several wire services, really did include praise for North Korean health care and the lack of obesity. “They have something which most other developing countries would envy,” the global health administrator gushed. In her guided tours, she saw few signs of malnutrition, and the people in Pyongyang were the same height and weight as other Asians.

That’s hardly consistent with the reports of other visitors, or the accounts of North Koreans fleeing starvation—a trend on the upswing again after a poor harvest and harsh winter. Even Ms. Chan’s predecessor described the North’s health-care system as near collapse in 2001, and since then the North has continued to depend on foreign aid to feed one-third of its population. As for the abundance of doctors, the North’s declaration on the WHO website ought to arouse suspicion: “During the period 2001-2003, the number of doctors was increased by 104 percent, the nurses 125 percent and the midwives 107 percent.”

It appears Ms. Chan is either winking at the reality to maintain contact with the North or she allowed herself to be fooled. Her own organization’s doctors have described appalling conditions in North Korean hospitals, such as the lack of running water and electricity.

But then this is nothing new for the WHO. In the 1970s, the United Nations agency promoted Mao Zedong’s vision of “barefoot doctors” to serve the rural poor—even as China’s health-care system was collapsing, along with the rest of society, under the strain of the Cultural Revolution. Today the WHO has become a cheerleader for Cuban health care. As long as a totalitarian state gives plenty of poorly trained people the title of doctor, fudges its health statistics and takes visiting officials on tours of Potemkin hospitals, the U.N. seems happy to give its seal of approval.

Ms. Chan’s testimony can be read here.

Hat tip to a reader.

Read the full story here:
North Korea has plenty of doctors: WHO
Reuters
Jonathan Lynn
4/30/2010

According to the Daily NK:

The chairman of North Korea’s State Development Bank, Jeon Il Chun visited China on April 8, reportedly to try and bring Chinese investment to Daebong Mine, located near Hyesan, Yangkang Province.

Daebong Mine is one of North Korea’s major gold mines, managed under the auspices of the No. 39 Department of the Central Committee, a special department charged with raising funds for Kim Jong Il’s personal use. Jeon Il Chun is the person in charge of the No. 39 Department.

Attempts to sell shares in a gold mine directly controlled by the 39 Department, Kim Jong Il’s own private safe, to China seem to indirectly imply that Kim is suffering from a debilitating foreign currency supply crisis.

One Daily NK source in China who is well-acquainted with North Korean affairs reported that while Jeon was in China, he met with the management of three or four Chinese enterprises which already have investments in North Korea, and suggested investment conditions under which the North could transfer some of its mineral rights to them and receive capital investments in return.

The source said, “For now, as far as I know, executive managers of the No. 39 Department have been in contact with Chinese enterprises. Since the Workers’ Party is trying to sell shares in a gold mine, it seems the funding of the Party might be serious.”

“It is not clear whether or not this attempt was done on Kim Jong Il’s instructions, but attracting foreign investment in a gold mine is not a commonplace affair,” the source pointed out, adding that an investor has not yet been put in place.

What is the Daebong Mine for?

The Daebong Mine is a relatively large gold mine on the border of Woonheung and Gapsan in Yangkang Province. Until 2001, a Yangkang provincial foreign currency earning enterprise and the foreign currency earning department of the People’s Safety Agency jointly managed it. However, in May, 2002, it became a No. 39 Department affiliated enterprise.

The No. 39 Department has been raising private funds for the leader and Party operations under the Finance and Accounting Department of the Central Committee since the mid-1970s. According to defectors, it has the highest authority and the largest funds of all North Korea’s foreign currency earning enterprises. Especially, it has the ability to mobilize tremendous financial resources since it manages and controls supplies of gold and silver and rare non-ferrous metals.

A source from Yangkang Province explained, “According to Chongjin University of Mining and Metals and Kim Chaek University of Technology, the purity of the gold from the Daebong Mine is more than 76 percent, while production from Hoichang and Eunsan in South Pyongang Province is 63 percent and 61 percent respectively. More than 150kg of solid gold is produced annually, so this mine is known as the ‘loyalty mine’.”

“People say that the government earns four or five million dollars a year through this mine. Neither Yangkang Provincial Committee nor Hyesan Municipal Committee is involved with the business of the mine.”

The source added, “Since the No. 39 Department deals with the mine, only those discharged soldiers with good family backgrounds are dispatched there by the Central Committee. In October of last year, around 200 discharged soldiers with good family backgrounds came to the mine.”

Almost all the gold produced in the Daebong Mine is stored in Swiss and Austrian banks in gold bars.

A Chinese company had a contract with the DPRK’s Musan Mine which has been canceled for an unknown reason.

Click here to see what I believe is the mine’s location.

Read the full article here:
No. 39 Department Hawking Shares in Key Gold Mine
Daily NK
5/3/010
Lee Sung Jin

According to the Korea Herald:

Twenty-four South Koreans — 18 employees of Hyundai Asan Corp. and six of its partner firms such as Emerson Pacific — returned home yesterday following 36 Chinese employees who left the resort on Sunday.

This leaves only 16 people to look after the resort — 12 Hyundai Asan employees and four of Emerson Pacific’s golf course.

North Korea last week told all but 16 employees of the South Korean companies operating in the Mount Geumgang resort to leave after announcing that it “seized” or “froze” South Korean real estate assets within the tourist zone.

The Seoul government has repeatedly said that it will take firm countermeasures against the North’s “illegal and unjust actions that are fundamentally detrimental to inter-Korean relations” in consideration of various circumstances.

…

The Seoul government is reportedly weighing several options including cutting inter-Korean trade or tightening control over goods entering the North.

North Korea last week attached “confiscation” stickers on facilities owned by the South Korean government and the state-funded Korea Tourism Organization such as the spa center and a building for reunions of families separated by the border.

They also “froze” tourism assets owned by private companies such as Hyundai Asan, sticking notes on the doors and keyholes of hotels, duty free shops and restaurants that have been dormant for nearly two years.

The Seoul government suspended tours to the Mount Geumgang resort after a South Korean tourist was shot dead there in July 2008.

Read the full article here:
S. Korean workers leave N.K. resort
Korea Herald
Kim So-hyun
5/3/2010

Last week, NK Leadership Watch wrote about the funeral of Kim Jung-rin.  Using a video of the funeral I was able to map out the procession and solve a mystery I have wondered about for some time: Where does the DPRK hold state funerals?

First, below is a map of the likely funeral procession.  It starts in Potonggang District and travels to the Patriotic Martyr’s Cemetery in the north of the city.   It is probably safe to assume that most state funerals these days follow the same route.  I only offer one caveat, however, it is possible state funeral processions drive past Kamsusan Memorial Palace rather than taking the most direct route:

Click image for larger version.

Below is an image of the building where the funeral was held.  I am told by a North Korean defector that it is called Sojang Hall (서장구락부). It is managed by the State Funeral Committee.  Its coordinates are  39° 2’13.73″N, 125°44’14.74″E.

Click image for larger version

I did some  quick research with the indispensable Stalin Search Engine and put together a list of officials who have received state funerals since 1996 (all Central Committee members):  Kim Jung Rin, Hong Song Nam, Pak Song Chol, Yon Hyong Muk, Ri Tu Ik, Ri Jong Ok, Kim Pyong Sik, Jon Mun Sop, Kim Kwang Jin, Choe Kwang.

There is apparently another kind of prestigious funeral in the DPRK called a “People’s Funeral,” however, I can only find one individual who received one: Ri In Mo.  Indeed it appears that the “People’s Funeral” was created specifically to honor him.  Read more in KCNA here, here, and here.

Barbara Demick, Los Angeles Times correspondent and author of the very interesting and enjoyable Nothing to Envy, was the first western journalist to write about Pyongyang’s construction boom and the DPRK’s goal of achieving a strong and prosperous nation  by the time of Kim Il-sung’s 100th birthday in 2012.  The article is a bit dated, but I thought it would be fun to go back and point out all of the construction projects she mentioned in Pyongyang (plus a few more).

Below are some blurbs from Demick’s article supplemented with satellite imagery:

Blurb 1: “Yet these days, high-rise apartments in shades of pink are taking shape near the Pueblo, the American spy ship captured in 1968 and still anchored in the river. A tangle of construction cranes juts into the skyline near Pothong Gate, a re-creation of the old city wall. About 100,000 units are to be built over the next four years.”

I have already blogged about the new housing near the Potong Gate (see here).  Here is the housing near the Pueblo (click on images for larger versions):

The dates of the pictures are 4/6/2005, 11/12/2006, 1/28/2009). The original Los Angeles Times story had a picture of the completed building but that does not appear to have been archived.  Kernbeisser got a photo of the building under construction.

Blurb 2: “But South Korean companies and individuals have mostly ignored the political chill. Among the biggest players here are a unit of the Hyundai conglomerate, which operates the resort where the shooting occurred, and companies affiliated with the Rev. Sun Myung Moon’s Unification Church, which also runs a car assembly plant in North Korea [Pyonghwa Motors]. The church last year completed work on what it calls the World Peace Center, behind the Potonggang Hotel, also owned by church affiliates.”

You can see a satellite image of Pyonghwa Motors plant near Nampo here.

Here is an image of the Potonggang Hotel.

Here is the World Peace Center.

Blurb 3: A Chinese company, meanwhile, is renovating the No. 1 Department Store in the heart of downtown.

Here is an image of Department Store No. 1.

Blurb 4: The Taedonggang Hotel, where Soviet dignitaries stayed in the 1960s and which burned down in 2002, is being restored as a five-star hotel. The Pyongyang Grand Theater, which stages revolutionary operas, is under renovation. The oldest and most elegant of the city’s movie theaters, the Taedongmun Cinema, was restored over the summer and used for screenings at the Pyongyang International Film Festival, which opened here last week.

Here are satellite images of the Taedonggang Hotel reconstruction:

Kernbeisser offers a great visual contrast between the hotel’s past and future. Click the links for images.

Here is an image of the Pyongyang Grand Theater under renovation.

Of course these places only scratch the surface of construction work in the DPRK in the last few years. I started to make a list of construction and refurbishment projects, but it got very long very fast.  Since I have other things to do on this lovely Sunday afternoon you will have to wait for me to get around to it at a later date.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-28-1
2010-04-28

The price of rice in North Korean markets, steadily declining until the end of March, saw an upswing in April. Rising prices indicate early concerns over food shortages expected during the lean crop season of May-June.

Recently, in the Nammun Market of Hyeryeong City (Satellite image here), rice that sold for 300 Won/Kg at the end of March was priced at 500 Won/Kg, and when there were no special rations delivered on the ‘Day of the Sun’, Kim Il Sung’s birthday (April 15), rumors spread that no state rations would be forthcoming, driving market prices up further.

Pyongyang itself was not immune to the rising prices. As rations were handed to Pyongyang residents in March, rice fell to as low as 200 Won/Kg in the Seongyo Market (Satellite image here), but by April 15, it had climbed back to 300 Won/Kg with rumors of upcoming shortages.

In the past, rice prices have fluctuated due to rumors of rations and/or food shortages, but since the latest currency reform, prices have been much more susceptible to people’s emotional concerns. Daily NK has been watching rice prices in Hyeryeong’s Nammun Market since February, and concluded that as rumors of price increases spread, price tags in markets shot up, at which time sellers felt the urge to dump their goods, bringing prices back down.

Immediately following last year’s currency reforms, North Korean authorities ordered the closing of markets. These markets reopened on February 5. Authorities had also dictated that rice be sold for 24 Won/Kg, but the time markets reopened, a ‘compromise plan’ allowed prices to climb to 240 Won/Kg. Within a month (March 7), prices shot up to 1,500 Won, only to crash back down weeks later (April 2) to 300 Won. Such drastic price fluctuations indicate a limited availability of food in the markets. This kind of seesawing prices reflects a lack of trust in authorities. As residents lost faith in North Korean authorities, they tried to sell their holdings, but differences in domestic prices, exchange rates, and black markets meant severe price instability.

From December to January, restrictions on the use of foreign currency, along with a sharp drop-off in rice trading, really drove up prices. However, authorities’ restrictions on foreign currency began to waiver, and this, combined with the launch of investigations into illegal hording of food supplies by businesses and foreign trading companies, led to an influx of rice into markets, bringing prices back down.

Now, with the future of rations in question even in Pyongyang and other major cities, rice prices are again on the rise. With many people predicting that economic conditions and food supplies will be lean in the near future, market prices will likely continue to increase. In North Korea, the price of rice is an important index, reflecting economic stability.