Archive for July, 2018

Further indications that China’s sanctions pressure on North Korea is decreasing

Friday, July 27th, 2018

By Benjamin Katzeff Silberstein

This blog has previously covered the fact that China’s sanctions pressure on North Korea seems to be decreasing, according to a number of signs, after the spring of summits. No official announcement or the like has been made (which wouldn’t come in any case), but the trend is consistent with China’s previous patterns in sanctions enforcement against North Korea: keep the pressure up while global attention focuses on North Korea, and scale it back once things calm down. A recent NK Pro article lends credence to this view, based on information from sources that have visited the Sino-North Korean border, as well as other visible signs. I won’t copy and paste from it since it’s for subscribers only, but here are some of the main points:

  • Traffic across the Friendship Bridge between Dandong and Sinuiju, estimated to be carrying some 60 percent of Sino-North Korean trade, appears to have gone back to somewhat more normal levels, if not fully to what they would be in normal times. It should be mentioned that estimating traffic by counting trucks – which I have done myself – is a tricky method, since we can’t really know what volumes are inside the trucks. Still, it’s one of few methods that exist for estimating traffic over the bridge.
  • The construction of a bridge between Tumen city in China and Namyang in North Korea, which paused as tensions increased, appears to be continuing. According to NK Pro’s source, China is paying for it all.
  • Chinese tourism to North Korea has spiked in July, as other outlets have reported as well.
  • Gas prices in North Korea have fallen in July, as this blog has also covered before.

None of these indicators give hard evidence that Chinese sanctions enforcement is slacking off, but taken together, they provide a pretty clear picture. I recently spoke to a person who just visited Dandong, and said that traffic remains unusually slow, both according to their own impression and that of local businesspeople. But traffic may be slower on a given day or during a given week for other reasons. At the end of the day, we don’t really know for sure, but taken together, the impression is that things appear to be moving away from “maximum pressure” pretty consistently.

 

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National census underway in North Korea

Friday, July 27th, 2018

Benjamin Katzeff Silberstein

As is often the case, the census is fills important functions other than keeping track of demographics. And organs like the inminban, often associated with political surveillance and propaganda dispensation, are the foot soldiers of the effort. Daily NK:

It remains unclear whether it is being conducted for the United Nations Population Fund slated for October, in accordance with last year’s pilot survey.

“Rank-and-file inminban members (a type of neighborhood watch) have been conducting surveys targeted at residents, claiming that it’s just a periodic census. But people think it’s because a lot of people have disappeared,” a source in Kangwon Province told Daily NK on July 23.

A source in Ryanggang Province corroborated this news, adding that in her area the inminban are often accompanied by a Ministry of People’s Security (police) agent when interviewing families.

“For people who have traveled long distances, or with whereabouts unknown or reported as deceased, they’ll visit the household multiple times,” she said.

“When the family can’t give an answer as to why a family member has disappeared and suspect that the person has ‘crossed the river’ (either to defect, or to work in China with plans to return), they’ll follow up with the neighbors and ask what they know about the circumstances.”

Last year, North Korea requested that South Korea contribute 6 million USD to the United Nations Population Fund in June 2017 to help it conduct its first census since 2008. The South Korean government said at the time that it was “positively” considering such a contribution, but public confirmation has not since emerged.

A preliminary survey in North Korea began in October 2017 with technical support from the UN, with an official full-scale operation slated for October this year.

However, it is unclear whether the current surveys are directly connected with the official UN census project. As the source in Kangwon Province noted, “Natural disasters and other incidents have driven up the number of residents who have disappeared, so it may just be that the authorities want to ascertain their whereabouts.”

“When family members can’t provide an answer as to how or when a relative disappeared, the person in question is just listed as ‘missing,” she said, adding that “as there have been a lot of these cases in recent years, they’d surely want to resolve this in regards to resident registration records.”

The Ryanggang Province source agreed, stating, “There still hasn’t been a proper survey to document scores of deaths from various construction accidents and natural disasters, so they finally seem to be trying to ascertain what happened to those who have disappeared for one reason or another.”

A source in North Hamgyong Province opined that the upcoming divided family reunions could also be a factor in the recent census-like survey activity, with Pyongyang anticipating continued reunions in the future as inter-Korean relations continue to improve.

“Veterans of the [Korean] war are especially old, and until unification occurs defectors are also considered divided family members. The authorities would certainly see a need to investigate and classify these groups,” he said.

Article source:
Movement on national census potentially underway
Kang Mi-jin
Daily NK
2018-07-27

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China and Russia blocked US request for North Korea oil suspension at UN

Friday, July 27th, 2018

Benjamin Katzeff Silberstein

Reports NK News:

China and Russia have blocked a U.S. request made at the UN Security Council (UNSC) to stop oil transfers to North Korea, the U.S. Ambassador to the UN – Nikki Haley – confirmed on Friday.

The U.S. made the request following a submission of evidence to the 1718 committee that claimed North Korea conducted up to 89 prohibited ship-to-ship (STS) transfers involving oil in the first five months of 2018.

Haley, speaking alongside U.S. Secretary of State Mike Pompeo, reiterated that the U.S. had proposed the complete ban on exporting petroleum products to North Korea as the STS transfers would have exceeded the annual cap for such products established under UNSC Resolution 2397.

“China and Russia blocked it. Now for China and Russia to block it, what are they telling us? Are they telling us that they want to continue supplying this oil?” she said.

“They claim they need more information. We don’t need any more information, the sanctions committee has what it needs, we all know it is going forward, we put pressure today on China and Russia to abide … and to help us to continue with denuclearization,” she added.

Haley was speaking at a press briefing in New York following meetings between herself, Pompeo, UNSC members and officials from Japan and South Korea – including Foreign Minister Kang Kyung-wha.

Pompeo, who spoke to the press prior to Haley’s comments, said he was also there to update the UNSC on diplomatic progress between the U.S. and the DPRK.

Sanctions enforcement, however, was at the forefront of the discussions and despite China and Russia blocking the U.S. request for the halting of oil transfers to the DPRK, Pompeo said the council was in agreement on other key elements.

“The UN Security Council is united, on the need for final, fully verified denuclearization of North Korea as agreed to by Chairman Kim. Members of the UN Security Council and by extension all UN member states have unanimously agreed to fully enforce sanctions on North Korea and we expect them to continue to honor those commitments,” Pompeo said.

Full article:
China, Russia blocked U.S. request for North Korea oil suspension at UN
Hamish Macdonald
NK News
2018-07-20

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Seoul needs sanctions exemptions, official says

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

If anyone ever doubted that the US and South Korea are not in lockstep on sanctions…The question is how hard Seoul is pushing behind the scenes, and how hard it is prepared to push. Joongang:

A South Korean delegation that traveled to New York over the past weekend said Seoul needed to be exempted from some international sanctions against the North to implement the Panmunjom Declaration.

The remarks came on the same day that U.S. Secretary of State Mike Pompeo reiterated that sanctions against Pyongyang will remain in place until the North fully denuclearizes.

The rare show of discrepancy between the allies came at an unusually sensitive time between the South and North, after North Korean media excruciated South Korean authorities for what it said was kowtowing to the U.S. on inter-Korean issues.

A local official said Pyongyang appeared to be fed up with Seoul’s reluctance to help the regime wiggle out of sanctions.

South Korea’s official stance has been to support sanctions on the North until the country gives up its nuclear weapons, but from time to time officials have expressed a hope to seek exemptions, especially to work out the cross-border projects that South Korean President Moon Jae-in agreed to with North Korean leader Kim Jong-un during their first summit on April 27.

Last Friday in New York, a high-level South Korean official who spoke on the condition of anonymity decided to convey that hope to reporters – just as Pompeo highlighted in a different news conference that all UN member-states unanimously agreed to fully enforce sanctions on the North. The official was part of a delegation led by South Korean Foreign Affairs Minister Kang Kyung-wha, who traveled to New York to co-host a briefing session with Pompeo on peninsular issues for representatives of the UN Security Council.

Soon after the briefing, the official told South Korean correspondents in New York that the South Korean government “needed” some exemption from international sanctions on the North to implement the Panmunjom Declaration, adding that it was asking the international community to grant that exemption as it was leading the North through dialogue and cooperation.

Full article:
Seoul needs sanctions exemption, official says
Jung Hyo-Sik, Yoo Jee-Hye, and Lee Seung-Eun
Joongang Daily
2018-07-23

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US government issues North Korea sanctions advisory

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

A new advisory was issued today by several US government department, focusing on risks that companies run throughout their supply chains, where North Korean labor may have been involved without said companies knowing. NK News:

The publication of the advisory notice comes three days after U.S. Secretary of State Mike Pompeo visited the UN Security Council (UNSC), where he called for the strict maintenance of sanctions against the DPRK amid current diplomatic engagement.

The purpose of the advisory is to “highlight sanctions evasions tactics used by North Korea that could expose businesses – including manufacturers, buyers, and service providers – to sanctions compliance risks under U.S. and/or United Nations sanctions authorities,” it reads.

“Businesses should be aware of deceptive practices employed by North Korea in order to implement effective due diligence policies, procedures, and internal controls to ensure compliance with applicable legal requirements across their entire supply chains,” it added.

The U.S. Department of State, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Department of Homeland Security’s (DHS) co-authored the advisory.

The notice identifies what the government deemed as two primary risks to businesses, which are the “inadvertent sourcing of goods, services, or technology from North Korea” and “the presence of North Korean citizens or nationals in companies’ supply chains, whose labor generates revenue for the North Korean government.”

Full article:
U.S. government issues North Korea sanctions enforcement advisory
Hamish Macdonald
NK News
2018-07-23

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WSJ on South Korean firms planning for business opportunities in North Korea

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein 

WSJ:

After months of rapprochement—including summit meetingsbetween North Korean leader Kim Jong Un and South Korean President Moon Jae-in, and one between Mr. Kim and President Donald Trump —hopes are rising for more open access to North Korea, a country of 25 million people with vast mineral reserves and lots of cheap labor.

Samsung C&T Corp . , the de facto holding company of South Korea’s biggest and best-known conglomerate, created a North Korea task force in May, staffed by an executive and three managers.

Samsung’s construction arm, which has built some of the world’s tallest skyscrapers and is building subway lines in Singapore and Riyadh, Saudi Arabia, sees opportunity in the North as economic growth slows in the South.

Full article here:
Companies See Glimmers of Opportunity in North Korea
Jonathan Cheng
Wall Street Journal
2018-07-23

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North Korea’s negative growth in 2017: things look bad, unsurprisingly, but take the numbers with a grain of salt

Friday, July 20th, 2018

By Benjamin Katzeff Silberstein

Bank of Korea (BOK) has put out their yearly estimate of North Korea’s GDP trends. This year, they estimate that the country’s GDP decreased by 3.5 percent. Off the top of my head, this seems a fairly reasonable estimate, particularly since sanctions were only in force for a minor part of the year (late fall and onward). Some quick thoughts below:

As always, remember: estimate GDP in North Korea is very, very hard. How do you evaluate, for example, the market sector versus the state sector? Given how complicated and partially opaque North Korea’s system for pricing it, how can a GDP figure even be reasonably estimated? That said, BOK has been doing this for many years, and their figures are, for all their faults and flaws, some of the most reasonable estimates among the few that exist. Still, as one of the leading experts in the field once told a class of grad students studying the Korean economy: if someone gives you a figure on the North Korean economy with a specific decimal number, you can be sure that it’s wrong.

Some news outlets have made a big number of the fact that this contraction is the largest for over two decades, according to the BOK numbers. While that is true, the proportions are very different: in 1997, BOK estimates that the economy contracted by 6.5 percent, that is, almost double the contraction of 2017. So we’re not talking about any crisis nearly as significant as the famine of the 1990s.

BOK estimates a drop by 1.3 percent in agricultural and fisheries production. Notably, still, market prices for food have looked completely normal throughout the year, as this blog has noted several times before. It’s unclear how exactly agricultural production is estimated, and what the “sector” here really means – only what goes into the state-side of agricultural production and supply, or the sale of surplus production on the semi-private markets? The latter may very well be underestimated given how tricky it is to asses what share of agricultural production still lies firmly and solely within the state system.

It’s unclear how much of the shortfall in electricity production is compensated for by items like solar panels and other forms of electricity generation increasingly prevalent on the ground. Many have noted the various creative ways in which much of the North Korean population already adapts to the shortfall and unreliability of public supply of electricity.

The estimated trade numbers are very dire but also probably approximately realistic. Though the 37 percent shortfall in exports may be an overestimate given that they (presumably) don’t account for smuggling, it is undeniable that the economy is taking a very large hit from sanctions. People who recently visited the Chinese border speak of very low levels of activity in goods transports and the like. This gives cause for some skepticism toward the reports claiming that Chinese sanctions enforcement has gone much more lax lately: it may well have, but that hardly means the doors are flung open. At the same time, imports went up 1.8 percent. Either China is letting North Korea run a trade deficit which they assume they’ll get back once sanctions are eased, or the regime has much more currency stashed away to pay with the goods for than many have thought. The truth may lie somewhere in the middle there.

 

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China investing in North Korean infrastructure, says Kyodo News

Friday, July 20th, 2018

Benjamin Katzeff Silberstein

Kyodo:

China has decided to invest 600 million yuan (about $88.4 million) in infrastructure such as roads in North Korea around a bridge connecting the two countries, bilateral sources said Friday, raising concerns that Beijing may violate U.N. resolutions.

Chinese President Xi Jinping’s leadership is scheduled to start the infrastructure investment by the end of this year, the sources said, as Beijing and Pyongyang have been strengthening their economic cooperation recently.

The effective economic aid would be regarded as a violation of U.N. resolutions aimed at preventing North Korea from producing nuclear weapons and ballistic missiles, U.N. diplomats said.

While preparing to dispense the aid, China is expected to begin negotiations with U.N. Security Council member states with an eye on easing economic sanctions against North Korea, now that Pyongyang has pledged to work toward denuclearization, the sources added.

The new bridge over the Yalu River from the Chinese border city of Dandong, Liaoning Province, to the North Korean county of Ryongchon was completed in 2014 after four years of construction.

But roads connecting to the bridge have yet to be developed on the North Korean side, preventing it from going into operation.

Earlier this month, Liaoning authorities decided to set up a project to support the construction of the roads and the Chinese central government has already approved it, the sources said.

Since March, relations between Beijing and Pyongyang have been markedly improving, with North Korean leader Kim Jong Un visiting China for summit talks with Xi no less than three times.

The two leaders apparently exchanged views on denuclearization on the Korean Peninsula and economic aid, with Kim vowing to build a “powerful socialist economy.” The North Korean leader has often visited the border near China recently.

Full article:
China to invest in infrastructure in N. Korea, may violate sanctions
Kyodo News
2018-07-20

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Chinese oil exports to N Korea increased after KJU’s third visit to China

Thursday, July 19th, 2018

Benjamin Katzeff Silberstein

Says Chosun Ilbo:

Though the exact figure is not known, China sent an estimated 200,000 to 300,000 tons of fertilizer to the North, according to sources in China.

In 2013, China supplied the North with 200,000 tons of fertilizer. Kwon Tae-jin of the GS&J Institute, an agricultural think tank in Seoul, said, “There are different ways of calculating harvest rates for different types of fertilizer and soil. But in case of urea fertilizer, it’s possible to produce two tons of food more for each ton of fertilizer.”

[…]

China also dramatically increased oil shipments to the North. A source in Beijing said it nearly doubled crude oil supplies to the North through pipelines from Dandong since Kim’s recent visits.

“Some 30,000 to 40,000 tons of oil is enough in the summer to maintain the lowest possible flow of oil in the pipelines to ensure that they don’t clog, and about 80,000 tons in winter,” the source added. “Though it’s summer now China has recently increased flow to the winter level.”

Full article/source:
China Doubles Oil Shipments to N.Korea After Kim’s Visit
Lee Kil-seong and Kim Myong-song
Chosun Ilbo
2018-07-19

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South Korean companies gearing up to rush north, part x

Wednesday, July 18th, 2018

Benjamin Katzeff Silberstein

Hardly a day goes by without a new article on South Korean companies or business interests eyeing investments in North Korea as a golden opportunity. Here’s the Korean Tourism Association (from Joongang Daily):

Attracting both local and foreign travelers to lesser-known mountains and rivers across the peninsula is one of the goals of the Korea Tourism Organization under its newly appointed president Ahn Young-bae.

In the spirit of easing tensions between North and South Korea, Ahn plans to set up a team that will focus on promoting travel throughout both countries.

“If the relationship between the South and North [improves], ‘peace travel’ will really start to take off,” said Ahn during his first press conference, adding that this is one way to develop unique tour programs that can appeal to many travelers.

To develop new ideas to make the tourism industry in Korea more sustainable, Ahn also plans to set up a new tourism big data center. Here, he said, one can find out which areas are becoming popular vacation spots and what travelers are purchasing during their time away from home so that the travel industry can set up better marketing strategies. While a future management team, another initiative Ahn plans to start, will focus on how to make such changes, a value management team will conduct research based on the data and present their findings to the organization.

Full article:
KTO sees opportunity up North : New president plans to use big data to improve local tourism
Lee Sun-Min
Joongang Daily
2018-07-18

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