Archive for January, 2011

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North Korean economy suffers in the new year: Power shortages and prices on the rise

Thursday, January 27th, 2011

Pictured above: Nampho Glass Bottle Factory visited by Kim Jong-il

Institute for Far Eastern Studies (IFES)
(NK Brief No. 11-01-26)
1/26/2011

According to North Korean media, Kim Jong Il began this year’s onsite instruction with a visit to the Nampo Glass Bottle Factory. The January 20th issue of the Choson Sinbo also ran an editorial stating that “These days, in our country, improving the lives of the people is especially emphasized.” It also noted that Kim Jong Il’s first onsite visit of the year was to a site important to improving people’s standard of living. The paper boasted that great efforts were being made in the development of light industry — especially factories producing daily-use goods and food products — and revealed that the bottle factory in Nampo will play an important role in meeting the increased countrywide demands for packaging from factories large and small.

Despite this praise, the reality is that the people of North Korea are suffering ever-worsening economic conditions. Just as South Korea is in the middle of a cold spell, the North has suffered chilling conditions ever since the end of December. The Korean Central News Agency reported on January 22, “The cold-weather conditions are expected to continue until the end of January,” and, “this cold spell is causing more than a little damage to the lives of the people and to spring farming preparations.”

As the cold spell drags on, their hardship will continue. North Korea is ill-prepared to deal with such cold weather; freezing pipes make it difficult for the people to access fresh water, while food and firewood are in short supply. Hunger and cold are exacerbated this winter because those without access to firewood or heating oil are also faced with an environment devoid of wild plants or animals.

Power shortages have also grown more severe in the new year. On January 20, Open Radio for North Korea (ORNK) reported that an area of the Yanggang Province has been without electricity since the first of the month. Even Pyongyang has been experiencing power difficulties, with electricity only available to most residents for 1~2 hours each day. ORNK reported that “recently in North Korea, students and parents have been burdened with supplying firewood for school heating, while the prices of coal and wood are skyrocketing in the markets.”

The cost of food has also shot through the roof. Rice, corn, pork, and other staple foods are becoming increasingly more expensive. Young-wha Lee, a spokesperson for the Japanese human rights organization Rescue the North Korean People! Urgent Action Network (RENK), announced on January 17 that a source inside North Korea had reported a 500 Won jump in the price of rice within Pyongyang, from 1,400 Won per kilogram on the January 7 to 1,900 Won within 3~4 days. Corn jumped from 750 to 950 Won, and pork was up from just under 4,000 Won to its current price at around 5,000 Won. Gasoline now costs 3,500 Won.

According to a South Korean online source for news on North Korea, Daily NK, one can see the impact of inflation by taking notice of the price gap of around 200 Won per kilogram of rice in Pyongyang and rice in rural areas (North Pyongan Province’s Sinuiju and Ryanggang Province’s Hyesan, in particular). It is noteworthy that prices are shooting up in January, rather than during the lean season of March and April.

Good Friends, a South Korean-based humanitarian organization, has also relayed reports of inflation from sources within North Korea. It has reported that rice was selling in Pyongyang for as much as 2,100 Won per kilogram on January 7, significantly more than the 1,600 Won per kilogram reported at the end of last year. Prices continued to hover around 2,000 Won until recent rations eased shortages and brought the price back down to around 1,500 Won. As North Korean organizations and social units distribute these overdue holiday rations, there has been a fall in food prices.

However, these rations were not seen in all areas of the North, and in those regions where residents were not provided food, prices remain high. Rice in Hamheung jumped from 1,500 Won per kilogram on January 1 to 1,800 Won just one week later. On January 7, similar prices were seen in Chongjin (1,750 Won) and Sinuiju (1,800 Won). Ten days later, rice in Chongjin had climbed to 1,980 Won, and was threatening to break the 2,000 Won barrier. Corn in Pyongyang was selling for 950 Won per kilogram on January 7, while it cost 780 Won in Chongjin and 850 Won in Hamheung, Sinuiju, and Pyongsong. By January 17, corn averaged between 750 and 800 Won. Only in Pyongyang, agricultural regions, and other areas receiving rations had prices fallen to 600 Won per kilogram.

According Good Friends, grain prices in the North have shot up this year because several Party officials in charge of grain imports are behind schedule with incoming shipments, and the rising value of the US dollar and Chinese yuan have driven up the cost of overseas purchases.

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Posted in Electricity, Energy, Food, General markets (FMR: Farmers Market), Light Industry, Manufacturing, Price liberalization | 1 Comment »

DPRK spurs on light industrial production, focuses on quality

Thursday, January 27th, 2011

Institute for Far Eastern Studies (IFES)
(NK Brief No. 11-01-19)
1/19/2011

North Korean media outlets have been highlighting production of goods in the Pyongyang Textile Mill, the Sunheung Food Factory and other sites that represent the North’s light industry sector, while mines, power plants and other factories in regions throughout the country exhibit an atmosphere of productivity as labor is poured into an ‘offensive’ for increased output. In the first week of the year, after the New Year’s Joint Editorial was published, assemblies were held in cities and regions around the country in support of a labor revolution and in an effort to foster light industry. Lately, similar meetings have been held in factories and on cooperative farms.

North Korean authorities are also emphasizing the need to increase the quality of consumables, calling it a patriotic endeavor. An article on January 12 in the Korean Workers’ Party newspaper, the Rodong Sinmun, was titled ‘Raising the Quality of People’s Consumable Goods is True Patriotism.’ The article emphasized the need to reform consumable goods production in order to successfully improve the lives of the people, something the regime has publicly promised to do this year.

The paper also stressed that the quality of consumable goods is most important to this effort, and that “decisively increasing the quality of consumables” is an esteemed and patriotic task. It called on all workers to focus on improving the quality of each and every good they produce, stating that it was necessary in this “age of development” to advance the people and the country.

The article said that the Party was prioritizing the improvement in quality, and that while it would take “decisive” steps to boost production numbers, improving quality was absolutely necessary, as well. It appears that the regime’s focus on quality improvement has two meanings. First, it is an effort to show the Party’s devotion to the people. The newspaper stated that the quality issue was not just an industrial issue, but rather, that the Party saw it as an issue about the people, and pointed to the tireless efforts of workers at the Samilpo Special Goods Factory, the Kangseo Pharmaceutical Factory, the Sinuiju Cosmetics Factory, the Pyongyang Gum Factory and the Ryongseong Food Plant.

Second, improving the quality of goods is a way to show patriotism. The article encouraged workers to increase their efforts by stating that “popular goods that are favorably received by the people and that are internationally competitive can only [be produced] through the efforts of truly patriotic people,” and it pointed to the “myriad food products” coming out of the potato processing plant in Daehongdan as an example. “Truly patriotic people” think about the country’s development before producing even one product,” according to the article, and a true patriot considers whether each and every product is internationally competitive.

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Posted in Light Industry, Manufacturing | 2 Comments »

Security agents raise money from defector families

Thursday, January 27th, 2011

Pictured above: Ontan Worker’s District, Onsong (Google Earth)

According ot the Daily NK:

In advance of next week’s lunar New Year’s Day holiday, National Security Agency agents are concentrating on getting together things for the holiday from households of those whose family members have crossed into China or South Korea.

Exploitation by the NSA or other powerful state apparatus is exceedingly common, of course, and the obtainment of necessities for holidays such as Kim Il Sung and Kim Jong Il’s birthdays, the Korean thanksgiving day (Chuseok) and lunar New Year’s Day are often covered via exploitation of the people. The difference this time, however, is that the specific targets are the families of defectors.

A source from North Hamkyung Province told The Daily NK today, “NSA agents in charge of northern border regions including Onsung have been engrossed in preparations for the holidays and generating private benefits, targeting smugglers and households with family members who have crossed into China or South Korea.”

The source explained, “Modes of exploitation by agents of the NSA and People’s Safety Ministry and cadres of the Party or prosecutors have been varied of late. They win houses which have problems over to their side and then get them to give certain things.”

The source said that as the lunar New Year’s Day comes closer, these moves have become more active and transparent. “NSA agents visit all of these houses and force them, or sometimes beg for things. They are no different from thieves, just without a knife.”

According to the source, the Conspiracy Research Office of the NSC in Onsung, North Hamkyung Province, which employs 25 agents, has allotted each agent items to get from their district.

There are two sets of items: one set is ten bottles of liquor, 5kg of pork, 20 packs of expensive cigarettes called “Yeomyung,” and the other set contains 20kg of gasoline, a certain amount of fruit and candy, and bottles of oil. Each agent has to select one set.

According to Onsung Jangmadang standards, a bottle of liquor can be bought for 4,000 won, 1kg of pork for 5,000 won, a pack of “Yeomyung” for 6,000 won, 1kg of gasoline 3,000 won, and a bottle of oil for 5,000 won.

In Ontan workers-district within Onsung, there are three agents. The goods assigned to them are also unaffordable, but only defector families have to provide them, the source said.

The source explained, “When an agent visits one’s home, they won’t leave until the host has set up a table of drinks for him. After drinking some, the agent coaxes them, ‘Have you got some news from the South?’ ‘Are you getting money well?’ or ‘When you get a call next time, you should grumble that the situation is hard, so that they will send more money.’”

Sometimes, agents call for bribes for their own family events, too. The source said, “While talking, agents hint furtively that there will be a family event and call for something for that, saying, ‘There will be nothing bad for you if you help out.’”

“Agents say openly that, ‘If more money is delivered, we can live well; it’s is a good thing, and a way to maintain socialism.’ They only need so much as to smell money and they come running,” the source complained.

Due to possible revenge from agents, people cannot complain about the situation and have to provide them with the things they demand, according to the source, who added, “However, the effect works only at that moment when they get the goods. When a problem occurs for these defector families, they are nowhere to be seen.”

Read the full story here:
Defector Families Are Moneybags for NSA Agents
Daily NK
Im Jeong Jin
1/27/2011

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Posted in Finance, General markets (FMR: Farmers Market), Ministry of State Security (MPSS, NSA, SSD), Political economy, Price liberalization | Comments Closed

North Koreans traveling to Rason to gamble

Thursday, January 27th, 2011

According to the Daily NK:

High level North Korean cadres are visiting a casino in the far northeast of the country, disguising their identities so as to avoid government regulations which forbid them from entering, a defector-led NGO has revealed.

Reporting the news, an NK Intellectuals Solidarity inside source explained yesterday, “Recently, cases of high level North Korean cadres disguising their identities to enter Orakjang Casino, which is in the Emperor Hotel in Rasun City, have been occurring frequently.”

The Emperor Hotel was established in 2000 by Emperor Group, a Hong Kong-based property developer. With around 100 rooms, bars, cafes, an indoor swimming pool, sauna, night club, sports center and a fine sea view, the hotel, which cost $64 million to build, employs around 500 people, including a number of North Korean women.

According to the source, while the hotel was regularly frequented by Chinese tourists and officials when it opened, it closed down at the end of 2004 after one official, acting independently, squandered a fortune in public funds there.

However, seizing the opportunity presented by Kim Jong Il’s visits to China last year, the hotel reopened and, according to the source, has recently been doing well off Russian traders, among others.

On this, the source explained, “One of the conditions placed on the opening of the hotel was that North Koreans would not be allowed to enter, and at the beginning their entry seemed to have been thoroughly prohibited,” adding that therefore, “However, as the number of Chinese traders going to the casino increased, so high North Korean cadres doing business with the Chinese and wealthy North Koreans disguising their identities also entered.

The North Koreans apparently pretend to be Korean-Chinese when they enter the casino, where some reportedly gamble away as much as $10,000 per day.

Because North Korean enterprises and factories are unable to operate properly due to a lack of raw materials and capital, average cadres and staff go to gamble mostly to relieve their boredom, the source explained.

Read the full story here:
Casino Luring in Bored North Koreans
Daily NK
Cho Jong-ik
1/27/2011

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Posted in Civil society, Gambling, Rason Economic and Trade Zone (Rajin-Sonbong), Sports | Comments Closed

ROK seeks DPRK business registration system

Thursday, January 27th, 2011

According to KBS:

South Korea says it plans to implement during the first half of the year a registration system for South Korean firms that trade goods with North Korea.

An official from the Unification Ministry in Seoul said Monday that revisions must be sought on the law governing inter-Korean exchanges and cooperation in order to introduce the registration system.

The official said that the government will conclude such legal revisions within the first half of the year.

The ministry plans to propose a related bill before May in hopes of winning parliamentary approval for the plan by June.

The ministry had unveiled plans to introduce such a system when it briefed President Lee Myung-bak late last year on its key policies for 2011.

Additional Information:

1. The DPRK is working to bypass ROK trade restrictions.

2. The South Korean government is investigating companies suspected of trading with the DPRK.

Read the full story here:
S.Korea Seeks Registration System for Firms Trading with NK
KBS
1/24/2011

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Posted in International trade, South Korea | Comments Closed

New NKIDP report: Crisis and Confrontation on the Korean Peninsula: 1968-1969

Tuesday, January 25th, 2011

The Wilson Center’s North Korea International Documentation Project (NKIDP) has published another manuscript in the Critical Oral History Conference Series: Crisis and Confrontation on the Korean Peninsula: 1968-1969

Download PDF here

The Donga Ilbo reported on this paper:

Armed North Korean spies caught while trying to storm South Korea’s presidential office to assassinate then President Park Chung-hee on Jan. 21, 1968, are known to have also planned to attack the U.S. Embassy.

When the North seized the American intelligence ship USS Pueblo in waters off the North Korean port of Wonsan two days later, the U.S. planned to immediately mobilize F-4 Phantom fighters to bomb the North. This plan was shelved, however, because the U.S. Air Force lacked devices for loading conventional weapons required for an air strike.

This information was derived from a compilation of declassified documents from 1968-69 titled, “Crisis on the Korean Peninsula and Standoff” obtained exclusively by The Dong-A Ilbo from the Woodrow Wilson International Center for Scholars in Washington Monday.

The documents were compiled after the center held in September 2008 a closed forum with 15 experts and seven former U.S. officials who worked in both Koreas and China in the late 1960s.

Through the forum, the U.S. think tank comprehensively analyzed classified documents 1,285 pages in volume, including those from the former Soviet Union and the Eastern European bloc like the former East Germany and Romania.

Those who attended the forum included Horst Brie, former East German Ambassador to North Korea; Walter Cutler, former political adviser to the U.S. ambassador to South Korea; Thomas Hughes, former director of the Bureau of Intelligence and Research at the U.S. State Department; James Leonard, former chief of the Korea Desk at the State Department; and David Reuter, analyst for Northeast Asia at the U.S. National Security Agency.

Also at the event were Kang In-duk, former South Korean unification minister, and Yoon Ha-jeong, former South Korean vice foreign minister.

Leonard said, “According to multiple documents considered classified at the time, North Korea’s seizure of the USS Pueblo constituted an emergency situation. After the incident was reported to the U.S. Air Force, F-4 Phantoms were to be mobilized within several minutes but did not take off because they only were equipped with devices for loading nuclear weapons but none for loading conventional weapons.”

“The USS Pueblo incident was apparently a disgrace to the U.S.,” he said, adding, “With security concerns heightened at the time and Seoul’s presidential office under attack, the U.S. Defense Department should have been prepared to protect the Pueblo by mobilizing the Air Force when necessary.”

Ultimately, Washington merely mobilized the nuclear aircraft carrier Enterprise and two Aegis destroyers from the U.S. Navy`s 7th Fleet.

Kang, who served as the first chief of the North Korea intelligence bureau at the (South) Korean Central Intelligence Agency, said, “Armed North Korean spies, including Kim Shin-jo, originally had five targets including the U.S. Embassy in Seoul, (South Korean) Army headquarters, Seoul Prison and Seobinggo North Korean Spy Detention Camp.”

“But judging that the targets were too scattered, the North reduced the group of armed spies to 31 from the originally planned 35, and only targeted the presidential office.”

Through interrogation of Kim, Seoul secured intelligence that the spies originally had the U.S. Embassy as a target but it did not inform Washington of this finding.

Cutler, who was stationed in Seoul at the time, said, “We had no prior intelligence that the embassy was a target and thus took no special security measures in this regard.”

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Posted in North Korea International Documentation Project (NKIDP), Political economy | Comments Closed

DPRK working to avoid ROK trade restrictions

Tuesday, January 25th, 2011

According to Choson Ilbo:

North Korean products are being sold in South Korea labeled as Russian after the South stopped all cross-border trade in May last year. The North is desperate to unblock the flow of hard currency and is pushing for resumption of dialogue over the Kaesong Industrial Complex and lucrative package tours to Mt. Kumgang.

The Unification Ministry has released a list of the top 10 North Korean agricultural and fisheries imports, which show that the South brought in around 310,000 tons between 2006 to 2010. Imports totaled US$677 million tons, which worth $135 million a year. Over the last decade, North Korea also earned more than $500 million from the Mt. Kumgang tours, while the Kaesong Industrial Complex brought in $50 million annually.

Shellfish exports made the most money for the North, totaling 171,533 tons worth $268 million, followed by dried fish ($78.76 million), processed fish products ($76.02 million) and other seafood ($67.42 million).

Before the South halted trade following the sinking of the Navy corvette Cheonan, most North Korean shellfish was brought into the port city of Sokcho on the east coast. South Korean importers paid in U.S. dollars in Sokcho after signing contracts in the Chinese border town of Dandong with North Korea’s official economic cooperation agency.

But since trade was halted, North Korean shellfish has been labeled in Dandong as Chinese in origin and apparently sent to the western port city of Incheon. North Korean fisheries products are also apparently loaded on to Chinese vessels in the West Sea and brought into South Korea. As the pressure to bring in more dollars increases, chances have risen that the North’s agricultural and fisheries products are being falsely labeled.

A South Korean businessman who trades with North Korea, said, “Since trade was halted, North Korea has been trying to sell its products to South Korea labeled as Chinese or Russian in origin. This shows just how desperate North Korea is for dollars.”

The alternatives would be to sell the goods to China, the North’s largest trading partner, but prices have to be slashed and it costs more to transport them. Most of the dollars North Korean makes from selling goods to South Korea appear headed straight for leader Kim Jong-il’s coffers and used to prop up his rule. Kim’s funds are divided into local and foreign currencies and the latter, raised by selling farm and fish products, account for a key portion. Products such as shellfish and mushrooms that can bring in the most foreign currency are controlled by the Workers Party or the military, making it hard for the money to be used to boost the welfare of the North Korean people.

“North Korea uses a lot of the money it makes from trade to fund its rule, either buying gifts for government officials or building luxury homes,” said Cho Myung-chul, a professor at the Korea Institute for International Economic Policy, who taught economics at Kim Il-sung University in North Korea. “North Korea desperately needs money to win the hearts and minds of the public and gain support for the hereditary transfer of power. That’s why it’s seeking talks with South Korea, so it can find a way to sell its products.”

South Korea is also prosecuting South Korean firms suspected of trading with the DPRK.

Read the full story here:
N.Korea Sells Products in South Under False Labels
Choson Ilbo
1/22/2011

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Posted in China, Food, International trade, Russia | 3 Comments »

US reduces support for Free North Korea Radio

Monday, January 24th, 2011

According to Radio Netherlands Worldwide:

Free North Korea Radio, a South Korea-based shortwave station targeting North Koreans, saw its annual financial support of 400,000 to 500,000 US dollars from the US government more than halved last year, a first since the station`s foundation in 2004, due to accounting errors. Mainly led by North Korean defectors, the station lets North Koreans know what is happening in both South Korea and the world by renting foreign shortwave frequencies with US funds. The broadcaster also breaks news about the isolated communist country to South Koreans. If financial support decreases, such activities cannot continue.

Read the full story here:
US government reduces support for Free North Korea Radio
Radio Netherlands Worldwide
Andy Sennitt
1/24/2011

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Posted in Communications, Radio, USA | 1 Comment »

KJI and JST meet with Orascom president

Sunday, January 23rd, 2011

Pictured above (L – R): Jang Song-thaek, Naguib Sawiris, and Kim Jong-il

According to Martyn Williams:

The CEO of Egypt’s Orascom Telecom has been given a rare honor during his current trip to Pyongyang: an audience with Kim Jong-il and dinner hosted by the reclusive leader for the businessman whose firm owns a majority of North Korea’s only 3G cellular network.

Naguib Sawiris arrived in the North Korean capital on Friday and was received on Sunday by Kim Jong-il, the Korea Central News Agency reported on Monday.

Kim Jong-il, “warmly welcomed his DPRK visit taking place at a time when Orascom′s investment is making successful progress in different fields of the DPRK, including telecommunications,” the report said.

Orascom holds a 75 percent stake in Cheo Technology, which operates North Korea’s only 3G cellular network.

The network, the remaining stake in which is held by the government, uses the Koryolink service name. It has seen fast growth in subscribers and currently claims more than 300,000 accounts in just the two years since its launch.

After starting first in Pyongyang, the network has been expanded to cover provincial capitals and smaller cities and a 3G signal is now within reach of 75 percent of the population, the company said in November last year.

The Orascom group has made several other investments in the country. In 2007 it invested in a cement factory and in late 2008, at around the same time it launched the 3G network, it opened a local bank. The company has also been tied to renewed construction work at Pyongyang’s pyramid-shaped Ryugyong Hotel. The iconic building was halted in 1992 and has remained vacant ever since.

According to the AFP:

North Korean leader Kim Jong-Il has met the head of an Egyptian company that provides a mobile phone service in the impoverished communist nation, state media reported Monday.

Naguib Sawiris, chairman and CEO of Orascom Telecom Holding, has been visiting the North since Friday. His company has provided a mobile phone service in the North jointly with a local firm since late 2008.

Kim “warmly welcomed his DPRK (North Korea) visit taking place at a time when Orascom’s investment is making successful progress in different fields of the DPRK, including telecommunications,” the North’s state news agency KCNA said.

Kim had “a cordial talk” with Sawiris and hosted a dinner for him, it added.

Orascom said last year that mobile phone subscriptions in North Korea had more than quadrupled in the space of a year — to 301,199 by the end of September 2010 from 69,261 a year earlier.

However, it said overall “mobile penetration” remains at one percent in the country, which has an estimated per-capita GDP of 1,700 dollars and a population of 24 million.

North Korea strictly controls access to outside information and fixes the tuning controls of radios and televisions to official stations.

It began a mobile phone service in November 2002 but shut it down without explanation 18 months later and began recalling handsets.

But in December 2008 the country introduced a 3G mobile phone network in a joint venture with the Egyptian firm.

The Egyptian group in 2007 sealed a 115 million dollar deal to invest in a North Korean cement plant. It is also reportedly involved in completing construction of the 105-storey Ryugyong Hotel in the capital.

Martyn has more at North Korea Tech.

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Posted in Cell phones, Communications, Economic reform, Foreign direct investment, Orascom Telecom Holding, Telephones | Comments Closed

ROK spending on inter-Korean exchanges at record low

Sunday, January 23rd, 2011

According to Yonhap:

In another reflection of frayed inter-Korean relations, South Korea last year used the smallest amount of funds earmarked for exchanges with North Korea since the sides held their first summit in 2000, the Unification Ministry said Sunday.

The ministry, the main South Korean government arm handling affairs involving North Korea, spent 86.25 billion won (US$76 million), or 7.7 percent of the 1.12 trillion won designated as the “South-North Cooperation Fund,” officials said this week.

The fund was created in 1991 to support humanitarian and economic exchanges between the divided Koreas, which remain technically at war after the 1950-53 Korean War ended in a truce.

Last year’s spending was the smallest since 2000 when the sides held their landmark summit talks and agreed on a wide range of cooperation projects as part of their reconciliation efforts.

But the cross-border ties deteriorated to the worst level in more than a decade when the North bombarded a South Korean island and was also found responsible for sinking a warship last year.

South Korea has suspended humanitarian aid and cross-border trade in retaliation, pressing North Korea to apologize if the impoverished communist country seeks to restore their relations.

The cooperation fund’s implementation rate had ranged from 37 to 92.5 percent between 2000 and 2007, but nosedived after a conservative government took power in 2008 with a hard-line policy on the North. That year, the rate stood at 18.1 percent before dropping further to 8.6 percent in 2009.

Read the full story here:
Spending on inter-Korean exchanges lowest since 2000: ministry
Yonhap
1/23/2011

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Posted in International Aid, International trade, RoK Ministry of Unification, Statistics, Trade Statistics | Comments Closed

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