KNIC, as a sole insurer of the DPR Korea has over 10 provincial insurance branches and over 200 insurance offices at municipal (district) and county levels under its umbrella nationwide and representative offices overseas.
KNIC posted a table of financial data (all numbers are in millions of KPW and cannot be verified):
The chart shows gross written premiums (총접수보험료) experienced an average growth of 16.6% (from 41,939m KPW to 48,905m KPW) between 2008 and 2012. Investment revenue (투자수입) also increased 87% (from 1,597m KPW to 2,996w KPW). Profits (순소득), however, fell 31% on average from 8,041m KPW in 2008 to 5,544m KPW in 2012. So over time, the firm has experienced increasing costs. I am not sure what these costs are, but if you love forensic accounting, please go through the financial reports and let me know.
The DPRK won experienced a significant loss in value compared to the US$ on the black market in 2012, falling from 4,400 to 9,100 per 1$. Using an annual average rate of 6,750 KPW to the US$, profits totaled just $821,333. Using the black market rate of 9,100, profits total $609,203. Using the official rate of 100KPW to the US$, profits grow to $55.44 million. Using the official Euro rate of 130KPW, profits total E42.64 million.
It is unclear what exactly “Pre-state payment result” (국가납부전 결과) is, but I believe it is the equivalent of “Earnings Before Taxes (EBT)” under Generally Accepted Accounting Principles (GAAP). Since the DPRK has officially abolished taxes, direct cash transfers to the state must take another name, so it appears to simply be “State Payment”, but it is definitely not “tax”.
“Profit for the year” listed for each year is .675 of the “Pre-state payment result” which tells us the unofficial tax rate on the firm is a flat 32.5% (1-.675) on net earnings.
It is unclear what happens with profits in these firms. In privately owned firms in capitalist countries, profits are generally reinvested in the business or distributed as dividends to shareholders, partners, or proprietors.
1. Property Insurance Department is in charge of non-life insurance classes, such as property, crop, livestock, engineering and motor applied from institutions, enterprises, cooperatives and individual citizens.
2. Marine Insurance Department handles such lines as marine hull, cargo and liability, aviation hull and liability applied from institutions, enterprises and cooperatives.
3. Life Insurance Department provides life and personal accident coverage applied from institutions, enterprises, cooperatives and individual citizens.
4. Economic Cooperation Insurance Department offers different classes of insurance to newly developed economic zones and foreign invested enterprises (foreigners, joint ventures, representative offices, correspondent branch offices, embassies and international organizations) including Rason Economic and Trade Zone and Hwanggumphyong and Wihua Islet Economic Zone.
A pilot operation of the new electronic entry system, or radio frequency identification system (RFID), to facilitate the travel to and from the Kaesong Industrial Complex (KIC) was completed on January 15 and pilot operation began from January 28, 2014.
According to a Ministry of Unification (MOU) official, “The construction of the system began from December 11 last year and it was completed this month on the 15th. The trial operation period will begin from the 28th.”
The RFID system was agreed upon last September at the second meeting of the South-North Joint Committee for the Kaesong Industrial Complex in order to improve the South Korean companies’ access to the KIC.
The new RFID system will replace the paper document inspection with an electronic card system and personnel screening will be reduced to 5 seconds from 13 seconds while vehicle screening time will be reduced to 7 seconds from 15 seconds.
In particular, the reduced inspection time will facilitate the travel and ease the heavy traffic during Monday mornings and Friday afternoons: for personnel screenings, from 17 minutes to 5 minutes; for vehicle inspections, from 19 minutes to 8 minutes.
However, the existing personnel and vehicle access to the KIC which requires a 3-day advance notice still remains in effect, and the mobility of personnel and vehicles will still be strictly monitored and chaperoned by the North Korean military.
On the other hand, the fourth round of the sub-panel meeting was held on January 24 to discuss the operation of the RFID system, Internet connectivity, and simplification of customs process at the KIC.
In regards to the streamlining of the customs process, the two countries agreed to change it from ‘complete’ to ‘selective’ examination, but differences still remain over the ratio to be applied to the selective probe.
As for the issue of Internet connection, it is still in the infant stage and the two sides agreed to resume the negotiation on February 7.
Despite North Korea’s stunning execution of the leader’s uncle in December, its trade with China remained solid in January, up 16 percent from a year earlier, data showed Friday.
Jang Song-thaek, the country’s No. 2 man and leader Kim Jong-un’s uncle, had played an important role in dealing with Beijing before being executed late last year on treason charges. The political upheaval raised concerns over a possible instability that could spill over into other areas of the reclusive country’s moribund economy and society.
Still, trade volume between North Korea and its major trading partner China came to US$546 million in January, compared with $471 million from a year earlier, according to the data compiled by the Korea International Trade Association (KITA).
North Korean exports to China jumped 18 percent on-year to $223 million, with imports rising 14.5 percent to $323 million, the data showed.
Anthracite was the No. 1 export item for the impoverished country to its communist neighbor, selling some $101 million worth of the natural resource last month, up 21.3 percent from a year ago.
North Korea’s anthracite exports are a major source of income, and China is virtually the only destination for the shipments.
Inbound shipments of China-made cell phones soared 28 percent on-year to $14.4 million in January, the data showed.
“Trade volume between the two countries is expected to rise further given China’s growing demand for minerals for its project to develop its three northeastern provinces of Heilongjiang, Jilin and Liaoning,” said Lim Eul-chul, a research professor at Kyungnam University.
“Such political variables as Jang’s execution would not likely affect the trend,” he added.
The heavily sanctioned North Korea has been increasingly reliant on China, though the Asian giant has become frustrated with its wayward neighbor, particularly after Pyongyang’s third nuclear test early last year.
In 2013, trade volume between the two reached a record $6.45 billion last year, up 10.4 percent from the previous year, according to KITA data.
“Bilateral trade has probably yet to feel the impact of Mr. Jang’s execution,” said Cho Bong-hyun, research fellow at Seoul-based IBK Economic Research Institute.
“Both sides are still acting on trade contracts that have already been signed and usually take effect for six months,” Mr. Cho said.
Mr. Cho said he expects the impact from Mr. Jang’s purge will begin to appear in the data from the second quarter of this year. North Korea may also increasingly turn to trade with South Korea following a thawing of ties and the reopening of a jointly run Kaesong industrial park, he said.
The KITA data show inter-Korean trade volume shrank 42% to an eight-year low of $1.15 billion last year, when the Kaesong complex was closed for several months after North Korea pulled out its workers.
North Korean-Chinese trade volume hit a record high of $6.54 billion last year, according to KITA, as North Korea exported natural resources such as coal and iron ore, while importing fuel and electronics goods.
The Korea Trade-Investment Promotion Agency, Seoul’s state-funded trade agency, said in a report last year that North Korea’s bilateral trade with China accounted for 88% of Pyongyang’s entire external trade in 2012, up from 53% in 2005.
Read the full stories here:
N. Korea, China trade unaffected by stunning execution: data Yonhap
Trade volume between North Korea and its major trading partner China reached a record US$6.45 billion last year, up 10.4 percent from a year earlier, data showed Saturday.
North Korean exports to China jumped 17.2 percent on-year, while imports from China increased 5.4 percent, according to the data from the Korea International Trade Association.
Pyongyang’s trade deficit recorded $721 million, a 25 percent decrease compared with the previous year, the data showed.
North Korea’s major export items were minerals, with $1.37 billion worth of anthracite and $294.1 million of iron ore shipped to China last year.
North Korea’s anthracite exports are a major source of income, and China is virtually the only destination for the shipments.
The isolated socialist state heavily relied on China for crude oil, buying $598.1 million from its sole financial and diplomatic backer.
Inbound shipments of China-made cell phones fell to $44 million last year, shrinking by 26.6 percent from a year ago.
The latest data showed the heavily sanctioned North Korea is increasingly reliant on China, even though the Asian giant has become frustrated with its wayward neighbor, particularly after Pyongyang’s third nuclear test early last year.
Since these numbers are aggregated, we cannot observe if the purge of Jang song-thaek and his patronage network had any effect on DPRK/China trade at the end of the year.
The DPRK also increased oil imports from China in 2013. According to Yonhap (2014-2-10):
Shipments of crude oil to North Korea from China increased 11.2 percent on-year in 2013, a South Korean government report showed Monday, the latest sign that Beijing still gives Pyongyang access to the vital commodity despite its defiant pursuit of nuclear weapons.
North Korea imported a total of 578,000 tons of crude oil from China last year, compared with 520,000 tons in 2012, according to the report based on China’s customs data.
Monthly shipments of crude oil from China to North Korea were absent in February, June and July last year, but Beijing exported “a large amount of crude oil” to Pyongyang in the second-half of last year, the report said.
In 2013, trade between North Korea and China rose 8.9 percent on-year to reach US$6.54 billion, with the North’s exports to China jumping 18 percent to $2.91 billion, the report showed.
“Our overall analysis is that international sanctions against North Korea’s nuclear and missile programs have not reduced or shrunk the North’s trade with China,” a South Korean diplomat said on the condition of anonymity.
I have uploaded the audit to this site, and you can download it here (PDF). It contains the consolidated financial reports for OTMT, including KoryoLink.
The audit is posted as an image PDF (so the text is not searchable or easily copied into blog posts), but I offer some key data below. The caveat to keep in mind is that all of the USD$ calculations appear to be determined by converting DPRK Won (KPW) at the official rate (appx 100KPW/1US$ and 130KPW/1 Euro). This may be the appropriate accounting standard to employ, but needless to say, this radically overstates the market value of the firm’s position since the current black market rate of the won is approximately 8,000KPW/1US$:
US$422 million is $42.2 billion North Korean Won (converted at the official rate). Converted back to US$ at the black market, the total is just US$5,275,000.
OTMT EBITDA (Earnings before income tax, depreciation, amortization) for the period Jan-Sept 2013 are listed as USD$178,962,000. This is just US$2,237,025 million at the black market rate.
Capital expenditure from Jan – Sept 2013 is listed as USD$40,931, 000 (Appx $665,128 at black market rate).
KoryoLink’s tax exempt status ended on Dec 15, 2013.
The audit specifically addresses the difficulties of operating in North Korea’s official financial sector:
Some additional documents from June of this year can be found here and here. I am not an accountant and already have enough on my plate, so if there are any researchers out there that want to take a crack at this stuff, please do.
Orascom Telecom Media and Technology Holding Denies Reports about Freezing Investment in North Korea
Cairo, December 8th, 2013, Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”) announced today that recent reports in some media sources claiming that OTMT is freezing its investment in North Korea are entirely inaccurate. Where OTMT currently has no plans for new investments in North Korea, the company is open for new opportunities in this market, in which it has been investing for six years. The company has not announced any intentions to freeze investments in the North Korean market.
About Orascom Telecom Media and Technology
OTMT is a holding company that has investments in companies with operations mainly in Egypt, North Korea, Pakistan, Lebanon and other North African and Middle-Eastern countries. The activities of OTMT are mainly divided into its GSM, media and technology and cable businesses. The GSM activities include mobile telecommunications operations in Egypt, North Korea and Lebanon. The media and technology division consists of OT Ventures/Intouch Communications Service and the OT Ventures Internet portals and other ventures in Egypt, including LINK Development, ARPU+ and LINKonLINE. The cable business focuses on the management of cable networks.
OTMT is traded on the Egyptian Exchange under the symbol (OTMT.CA, OTMT EY).
***Orascom Telecom has refuted recent media reports that it is freezing investment in its North Korean mobile network subsidiary.The company said that the reports “are entirely inaccurate.”In a statement it said that where OTMT currently has no plans for new investments in North Korea, the company is open for new opportunities in this market, in which it has been investing for six years.The company added that it “has not announced any intentions to freeze investments in the North Korean market.”However, it is worth noting that many companies do things without making announcements about them and the statement did not explicitly confirm that it would be spending any more money on its North Korean network, only that it was open to further opportunities.
ORIGINAL POST (2013-12-6): According to the Chosun Ilbo:
Egypt’s Orascom Telecom, the mobile service provider in North Korea, has invested US$200 million into the project so far but has yet to make a dime, according to website Middle East Online.
Orascom chief Naguib Onsi Sawiris was quoted by the U.K.-based website as saying he would make no more investment in North Korea until the company sees some returns.
Orascom started offering 3G mobile services in North Korea in a joint venture with North Korea’s postal service in 2008. The joint venture, Koryo Link, is 75-percent owned by Orascom and 25 percent by the North. It has managed to attract 2 million subscribers.
The Egyptian company invested another $200 million to build the giant Ryugyong Hotel in Pyongyang and set up a joint venture bank.
But North Korea apparently barred Orascom from sending profits from the mobile phone service back to Egypt. “Koryo Link is making profits, but North Korean authorities seem to have blocked remittance of the money,” a source in Beijing said.
One should be careful not to jump to a conclusion that North Korea is entering ‘mobile telecommunications revolution.’ North Koreans are still largely denied internet access, and international calls are blocked. Prohibitive top-up rates have made general users reserve their calls for important messages or emergencies. New digital social networking remains an unreachable luxury for the general population and traditional self-censorship prevents politically sensitive conversations on the phone. The government conducts tight surveillance of phone calls and text messages and frequently censors ‘politically inappropriate’ content on them such as South Korean songs and dramas.
However, there are still loopholes that the government cannot perfectly close. For example, a primitive but creative way to make ‘international’ calls supported by illegal Chinese cell phones is in the making, mainly employed now for remittances from defectors in South Korea to their families left in North Korea. However, if brokers can find more profit opportunities, they could surely figure out safer and more creative ways to circumvent technical barriers and the monitoring system. A defector in Seoul has already overcome that technical barrier by connecting to foreign phones with SIM cards bought in Pyongyang. The fact that millions of handheld cameras and digital voice recorders are being circulated should be source of anxiety for the regime. Despite tightly controlled and monitored, the Koryolink network could still potentially widen the loopholes of information flow to and from the outside world.
UPDATE 21 (2014-11-8): Kenneth Bae has been released. According to the New York Times:
Mr. Bae and Mr. Miller’s plane touched down Saturday night, backlit by a nearly full moon dimmed by fast-moving clouds. Mr. Bae emerged first, and was swarmed by about a dozen relatives and friends. He paused for hugs then continued inside, out of sight of the row of news cameras lined up about 100 yards away. After a few minutes, Mr. Miller came out, greeted by a smaller welcoming committee.
At a news conference, Mr. Bae thanked the Obama administration, officials in North Korea and everyone who prayed for him and his family while he was detained. “I just want to say thank you all for supporting me and lifting me up at the same time that I was not forgetting the people of North Korea,” he said.
Speaking of his ordeal, he said, “I learned a lot. I grew a lot. I lost a lot of weight, in a good way.” Some people in the room chuckled. “I’m standing strong because of you,” he added.
UPDATE 30 (2014-8-13): Kenneth Bae has been sent back to prison. According to the Voice of America:
American missionary Kenneth Bae has been transferred to a North Korean labor camp from a hospital, despite U.S. concerns that his health is worsening.
In an email sent to VOA’s Korean Service, a U.S. State Department official said Bae was transferred to a labor camp immediately after being discharged from his hospital on July 30.
“We remain gravely concerned about Bae’s health, and we continue to urge [North Korean] authorities to grant Bae special amnesty and immediate release on humanitarian grounds,” the email said.
The State Department official also asked for Bae to be moved back to the hospital in the interim.
The statement comes after Bae received a visit at the labor camp this week by officials from the Swedish embassy, which represents U.S. interests in North Korea in the absence of diplomatic relations between Washington and Pyongyang.*
The consular visit to Bae is the 12th such meeting since his arrest in November 2012 and the first in almost four months.
North Korea sentenced Bae to 15 years of hard labor in April 2013 for “hostile acts” against the regime. The Christian missionary was arrested while leading a group of tourists in the northern city of Rason.
Bae was sent to a hospital a year ago and stayed there through this past January. When his health worsened due to hard labor, he was hospitalized at the Pyongyang Friendship Hospital on March 29. The hospital was built in 1986 to treat foreigners in the country.
The Chosun Shinbo, a pro-North Korea newspaper in Japan, interviewed him late last month. The 46-year-old told the newspaper he would be sent back to a labor camp in the near future despite a worsening heart condition.
*To the best of my knowledge, I am unaware of the Swedes visiting Bae in prison. My sources inform me that these meetings generally take place in one fo the hotels in Pyongyang.
UPDATE 29 (2014-7-31): Kenneth Bae has done an interview (in Korean) for the Choson Sinbo. The interview took place at the Pyongyang Friendship Hospital in the Munsu-dong diplomatic compound.
UPDATE 28 (2014-2-9): For a second time, North Korea has rescinded an invitation for a special American envoy to visit Pyongyang.
In blocking the trip by Ambassador Robert King, Washington’s special envoy on North Korean human rights, North Korea again appeared to blame the tensions it said were caused by military exercises that the United States and South Korea are scheduled to begin this month.
Also, Mr. Bae has given another interview to the Chosn Sinbo. You can see it here:
Mr. Bae, speaking on Friday to a pro-North Korean newspaper based in Japan from his penal labor camp outside Pyongyang, said he had heard that Mr. King was to visit North Korea as early as this week to discuss his fate.
He told the newspaper, Choson Sinbo, that Pyongyang had extended an invitation to Mr. King. North Korea abruptly canceled a similar invitation for Mr. King in August, citing the military exercises as its reason.
The exercises are “transparent, regularly scheduled and defense-oriented,” Ms. Psaki said. “These exercises are in no way linked to Mr. Bae’s case. We again call on the D.P.R.K. to grant Bae special amnesty and immediate release as a humanitarian gesture so he may reunite with his family and seek medical care.”
She said Washington maintained its longstanding offer to send Mr. King to North Korea. Separately, under a request from Mr. Bae’s family, the Rev. Jesse Jackson offered to travel to Pyongyang on a humanitarian mission to help win Mr. Bae’s release, she said.
A resident of Washington State, Mr. Bae was arrested after he entered North Korea through the northeastern city of Rason with a group of visitors in November 2012. Using a tourism business as a cover, he was trying to build a covert proselytizing operation in Rason, according to a videotaped sermon he gave at a St. Louis church in 2011.
Mr. Bae was convicted of plotting to “destroy our system through religious activities against our republic,” according to North Korea’s authoritarian government, which has been in a suspended state of war with the United States for more than 60 years.
He was sentenced to 15 years of hard labor.
Mr. Bae, who had been convalescing in a Pyongyang hospital since the summer with various health problems, was transferred back to the penal work farm about three weeks ago, according to his family and Choson Sinbo.
UPDATE 27 (2014-1-20): Kenneth Bae has been brought out to make a public plea for help. According to the Associated Press:
Kenneth Bae, made the comments at what he called a press conference held at his own request. He was under guard during the appearance. It is not unusual for prisoners in North Korea to say after their release that they spoke in similar situations under duress.
Wearing a gray cap and inmate’s uniform with the number 103 on his chest, Bae spoke in Korean during the brief appearance, which was attended by The Associated Press and a few other foreign media in Pyongyang.
Bae, the longest-serving American detainee in North Korea in recent years, expressed hope that the U.S. government will do its best to win his release. He said he had not been treated badly in confinement.
“I believe that my problem can be solved by close cooperation and agreement between the American government and the government of this country,” he said.
Bae was arrested in November 2012 while leading a tour group and accused of crimes against the state before being sentenced to 15 years of hard labor. He was moved to a hospital last summer in poor health.
He made an apology Monday and said he had committed anti-government acts.
Bae said a comment last month by U.S. Vice President Joe Biden had made his situation more difficult.
“The vice president of United States said that I was detained here without any reason,” Bae said. “And even my younger sister recently told the press that I had not committed any crime and I know that the media reported it.
“I think these comments infuriated the people here enormously. And for this reason, I am in a difficult situation now. As a result, although I was in medical treatment in the hospital for five months until now, it seems I should return to prison. And moreover there is greater difficulty in discussions about my amnesty.”
“We shouldn’t take Kenneth Bae’s comments merely as his own,” said Kim Jin Moo, a North Korea expert at the South Korean state-run Korea Institute for Defense Analyses in Seoul. “The reason why North Korea had Kenneth Bae make this statement … is that they want Washington to reach out to them.”
“Bae’s comments are an appeal to Washington to actively persuade Pyongyang to release him,” Kim said.
Pyongyang, January 20 (KCNA) — An American criminal, Kenneth Bae, was interviewed by local and foreign reporters at the Pyongyang Friendship Hospital Monday at his request.
He said he called the press conference to clarify some facts.
Over the past 15 months he, through meeting with officials of the Swedish embassy and calls and correspondence with his family, he correctly informed the U.S. government and his family of his criminal acts and humanitarian measures taken by the DPRK government in his behalf, he said, adding:
But some media are spreading misinformation about me and launching smear campaign against the DPRK, driving me into a difficult situation.
For example, the U.S. vice-president, at a press conference over the release of another U.S. citizen, Mr. Newman, in December last year, claimed that I have been detained here for no reason.
Some time ago even my sister reportedly told reporters that I am not guilty. I think such facts enraged people here.
This is why I am in a puzzle.
Over the past five months I have been hospitalized, but now I am afraid I may be sent back to the labor camp. Worse still, I am afraid the pardon for me becomes more difficult.
To cite another example, I was told that some media reports alleged that the DPRK is a “human rights violator”, its human rights records are not good and that I have been treated unfairly.
What I would like to clarify here now is that there has been no human rights abuse and no unfair, severe act for me.
The DPRK government has done every possible thing for me from the humanitarian point of view. It allowed me to contact with the Swedish embassy and have correspondence and calls with my family. It also gave me an opportunity to meet my mother here and offered me a medical service at the hospital when my disease got worse.
I, availing myself of this opportunity, call on the U.S. government, media and my family to stop link any smear campaign against the DPRK and false materials with me, making my situation worse.
I hope that I will be pardoned by the DPRK and go back to my family. I request the U.S. government, media and my family to pay deep concern and make all efforts to this end.
Bae gave answers to questions raised by reporters.
Kenneth Bae marked a dubious anniversary over the weekend: it has now been one year since the U.S. citizen and Christian missionary was arrested and detained in North Korea.
That makes Mr. Bae the first known U.S. citizen to be detained longer than a year since the Korean War, according to the National Committee on North Korea, which has tracked the fates of this small circle of detainees.
It also raises questions about why Mr. Bae remains inside the country, much longer than Pyongyang tends to hold its U.S. prisoners. (Even the crew of the USS Pueblo, the U.S. Navy vessel captured by the North in 1968, was released after about 11 months.
The mother of Kenneth Bae, the U.S. citizen being detained in North Korea, finished a five-day visit to Pyongyang on Tuesday, but came away with little clarity on when her son might be freed.
In a statement released by the family, Myunghee Bae said that she was able to visit Mr. Bae three times during her stay, and that her son’s health had improved.
But she said the visit also made her “more anxious than ever to bring him home,” pleading with the U.S. authorities to “do everything in their power” to get her son out of North Korea.
While she was careful to thank the North Korean authorities for “generously” allowing her to visit, Mrs. Bae said “it broke my heart to leave him behind,” adding that “the pain and anxiety continue to carve a deep scar on all of our hearts.”
North Korea watchers and those in the diplomatic community have struggled to explain the North’s apparent unwillingness to release Mr. Bae, who has already been detained in North Korea longer than any U.S. citizen in recent memory.
North Korea gave an official reason for the sudden Aug. 30 cancellation of a planned by visit by US State Department special envoy for North Korean human rights Robert King, saying the decision was made because the US “sent out B-52 strategic bombers on the Korean Peninsula.”
The move is being read as a sign of displeasure with Washington refusing to accept Pyongyang’s offer of direct dialogue and demanding “good faith” steps on denuclearization.
The Korean Central News Agency quoted a North Korean Foreign Ministry spokesperson denouncing the US’s actions in an Aug. 31 talk with the press.
“We had planned to accept the special envoy visit by the US from a humanitarian standpoint and hold serious discussions here on the American currently undergoing reeducation,” the spokesperson reportedly said, referring to US citizen Kenneth Bae, who is currently serving time at a North Korean reeducation camp.
“The US has continued sticking its B-52H strategic bombing in the skies over the Choson [Korean] Peninsula for nuclear bombing drills [during South Korea-US joint military exercises]. By doing this, they instantaneously destroyed a long-awaited climate in favor of humanitarian dialogue,” the spokesperson was quoted as saying.
But experts said that the B-52 was likely to have been only a pretext for the discussion, and that the real aim was to deliver a message of displeasure – or warning – after the US failed to respond in “good faith” to Pyongyang’s dialogue overtures.
UPDATE 22 (2013-8-29): According to the Hankyoreh:
A US special envoy on North Korean human rights issues will visit Pyongyang on Aug. 30 to seek the release of Kenneth Bae, a Korean-American currently imprisoned in the country.
The visit by Robert King is the first official trip to North Korea by a senior US official since Kim Jong-un took power, and could mark a turning point in improving North Korea-US relations.
On Aug. 27, the US State Department issued a short, three-sentence press release about the visit but did not hold separate briefing on the issue. The release said that King would “request the DPRK [North Korea] pardon Mr. Bae and grant him special amnesty on humanitarian grounds so that he can be reunited with his family and seek medical treatment.”
King, who is currently in Japan after visiting China and South Korea, plans to board a military aircraft at a base near Tokyo for a two-day visit to Pyongyang. He is expected to return with Bae.
A senior U.S. envoy will travel to North Korea this week to seek the release of an American sentenced to 15 years of hard labor in the authoritarian country, the State Department said Tuesday.
The visit by Bob King, the U.S. special envoy for North Korean human rights issues, will be the first public trip to North Korea by an administration official in more than two years and could provide an opening for an improvement in relations severely strained by Pyongyang’s pursuit of nuclear weapons.
State Department spokeswoman Marie Harf said King will request a pardon and amnesty for 45-year-old Kenneth Bae on humanitarian grounds. Bae, a tour operator and Christian missionary, was arrested in November and accused of committing “hostile acts” against North Korea. He suffers multiple health problems and was recently hospitalized.
King is traveling at the invitation of the North Korean government. He will fly to Pyongyang on Friday from Tokyo on a U.S. military plane, and fly out on Saturday.
“We remain deeply concerned about the health and welfare of Kenneth Bae, the American citizen currently detained in North Korea,” the White House said in a statement. “We urge the government of North Korea to grant special clemency to Mr. Bae immediately and allow him to return home with Ambassador King.”
When King last visited North Korea in May 2011 to assess the impoverished North’s food situation, he came home with Eddie Jun, the last American to be held then freed by Pyongyang. Jun, a Korean-American from California, was arrested for alleged unauthorized missionary work during several business trips to the country. He was released on humanitarian grounds.
Bae’s sister revealed earlier this month that he was moved from a labor camp to a hospital after losing more than 50 pounds. Terri Chung, of Edmonds, near Seattle, says her brother, a father-of-three, suffers from diabetes, an enlarged heart, liver problems and back pain. He was born in South Korea and immigrated to the U.S. with his parents and sister in 1985. For the past seven years Bae has been living in China, Chung says.
According to U.S. officials, Washington first made its offer to send King to North Korea several weeks ago, but Pyongyang only recently took them up on the offer. Pyongyang has yet to declare it will release Bae.
UPDATE 20 (2013-8-11): Kenneth Bae transferred to hospital. According to the Telegraph:
Bae’s sister Terri Chung said that her brother had until recently been held at a prison for foreigners and put to work ploughing and planting fields.
However, he is suffering from a range of health problems including an enlarged heart and chronic diabetes as well as back and leg pain, necessitating his transfer to a state hospital, she said.
Chung said she learned of her brother’s transfer from the Swedish ambassador to North Korea, who visited Bae on Friday. The ambassador, who has met with Bae a handful of times since his detention, has been his only foreign visitor, Chung said.
UPDATE 19 (2013-7-19): Kenneth Bae is writing letters home. According to the New York Times:
The family of Kenneth Bae, the American sentenced to 15 years of hard labor in North Korea, received letters from him in the mail for the first time this past week, telling them that his health is worse and asking them to press the United States government to help secure his release, Mr. Bae’s sister said Friday.
North Korea experts said the message of the handwritten letters — and their method of delivery, which could not have happened without North Korea’s approval — suggested that the authorities there were open to the idea of negotiations on Mr. Bae. That had seemed remote three months ago when he was found guilty of committing “hostile acts” against the government.
North Korea said Mr. Bae, 44, was a Christian missionary who had sought to build a clandestine proselytizing base in the country, where the Communist government regards missionary work as sedition.
The possible opening in Mr. Bae’s case came against a backdrop of other indications that North Korea, despite its harsh public language toward the United States, is pursuing multiple ways of pushing for direct contact after months of threats and new weapons tests. So far, the Obama administration has resisted the overtures.
Mr. Bae’s sister, Terri Chung, said in a phone interview from her home in Edmonds, Wash., that Mr. Bae had been able to communicate a few times during his imprisonment, which began with his arrest in November, though those contacts were through intermediaries acting on behalf of Sweden’s ambassador in North Korea, who monitors American interests. Then weeks went by with no further word.
“This past week, we were surprised to receive a packet of letters from Kenneth through the U.S. Postal Service, bearing a Pyongyang postmark,” she said. “The packet contained four letters, dated June 13th, addressed to his wife, his mom, me and his supporters.”
She said that “all the letters contained the same message — Kenneth’s health is failing, and he asked us to seek help from our government to bring him home.”
Ms. Chung said her brother suffered from diabetes, an enlarged heart and back problems.
She declined to share the letters but said the family had conveyed their contents to officials at the State Department. Patrick Ventrell, a State Department spokesman in Washington, did not immediately return messages seeking comment.
Mr. Bae was sentenced at a time of particularly high tensions between the United States and North Korea over the North’s nuclear weapons program under its young new leader, Kim Jong-un, further complicating any possible diplomatic efforts aimed at securing Mr. Bae’s release.
North Korea said that Mr. Bae had been working as a Christian missionary with the aim of overthrowing the North Korean government. In a video of an hourlong talk, given to a Korean church in the United States in 2011 and posted online, Mr. Bae detailed his activities inside North Korea.
The postmark on Mr. Bae’s mailed letters to his family suggested they were written at about the same time that the North Korean authorities had permitted a pro-North Korea group based in Tokyo, Choson Sinbo, to interview him in prison. A videotape of that interview, broadcast July 3 on CNN, showed Mr. Bae looking distressed and thin, his head shaved, dressed in a stained blue jumpsuit with his prison number, 103. His message was similar to those in the letters: an appeal for the United States government to help secure his release.
“Although my health is not good, I am being patient and coping well,” Mr. Bae said in that interview. “And I hope that with the help of the North Korean government and the United States, I will be released soon.”
In what appeared to be an effort to show the outside world that the North Korean penal authorities had been treating him well, Mr. Bae was seen seated in a comfortable cell with a radiator and a window. The video also zoomed in on what was described as his daily work schedule, posted in Korean and English, showing he was given three meals and had four rest breaks in between field labor. No other inmates were seen at the prison, and its precise location was unclear.
Diplomats who have dealt with North Korea said the unspoken message in both the video and the letters was that the North Korean authorities wanted to see more publicity about Mr. Bae as part of their broader effort to seek direct contact with the United States government.
UPDATE 18 (2013-7-3): The DPRK has released video footage of Kenneth Bae and an interview. See CNN and NK News.
UPDATE 18 (2013-5-15): Kenneth Bae has been transferred to a prison. According to KCNA:
American Citizen Begins His Life at “Special Prison”
Pyongyang, May 15 (KCNA) — Pae Jun Ho, an American citizen, started his life at a “special prison” on Tuesday.
Pae was sentenced to 15 years’ hard labor for his anti-DPRK crime, an attempt to topple the DPRK, at the trial held on April 30, according to Section 60 (an attempt at state subversion) of the DPRK Criminal Law.
DPRK Supreme Court Spokesman Exposes Crimes of American Pae Jun Ho
Pyongyang, May 9 (KCNA) — A spokesman for the Supreme Court of the DPRK gave the following answer to a question raised by KCNA Thursday as regards the assertion made by the U.S. government and media about the alleged unreasonable legal action taken against American Pae Jun Ho who committed crimes against the DPRK, claiming that he was not tried in a transparent manner and it was trying to use this issue as a political bargaining chip:
Pae set up plot-breeding bases in different places of China for the purpose of toppling the DPRK government from 2006 to October 2012 out of distrust and enmity toward the DPRK. He committed such hostile acts as egging citizens of the DPRK overseas and foreigners on to perpetrate hostile acts to bring down its government while conducting a malignant smear campaign against it. He was caught red handed and prosecuted while entering Rason City of the DPRK, bringing with him anti-DPRK literature on Nov. 3 last year.
Pae visited different churches of the U.S. and south Korea to preach the necessity and urgency to bring down the DPRK government. He was dispatched to China as a missionary of the Youth With A Mission in April, 2006. After setting up plot-breeding bases disguised with diverse signboards in different parts of China for the past six years, avoiding the eyes of its security organs, he brought together more than 1 500 citizens of the DPRK, China and foreigners before whom he gave anti-DPRK lectures. He invited even south Korean pastors hell-bent on the moves to escalate confrontation with compatriots to give lectures for malignantly slandering the Juche idea of the Workers’ Party of Korea and the socialist system in the DPRK and instigating them to the acts to bring down its government.
He planned the so-called “Jericho operation” to bring down the DPRK through his anti-DPRK religious activities from December 2010 to March 2012. In order to carry out the plan he infiltrated at least 250 students who had been educated at the plot-breeding bases operated by him into Rason City under the guise of tourists. He failed to set up an anti-DPRK base at Rajin Hotel in Rason City.
He collected and produced several anti-DPRK videos to make the false propaganda sound plausible and showed them many people in a bid to egg them onto activities to bring down the DPRK government. He bribed Song Je Suk and other citizens of the DPRK on foreign tours in an effort to get them involved in activities to topple the DPRK government. He dared commit such hideous crime as hurting the dignity of the supreme leadership of the DPRK.
The DPRK Supreme Court held a trial of Pae at its court behind closed doors on Apr. 30, 2013 at his request in accordance with Section 270 of the DPRK Criminal Procedure Law.
As he refused pleading, the court did not allow the presence of a counsel, pursuant to Section 275 of the above-said law.
In the course of hearing Pae admitted all his crimes and they were clearly proved in an objective manner by evidence and testimonies made by witnesses.
The court sentenced him to 15 years of hard labor in consideration of candid confession of his crimes though they are liable to face death penalty or life imprisonment for an attempt at state subversion according to Section 60 of the DPRK Criminal Code.
Pae will be fully guaranteed the right as a prisoner according to the DPRK law while in jail.
Pyongyang, May 2 (KCNA) — A trial of Pae Jun Ho, an American citizen, took place held at the Supreme Court of the DPRK on April 30. He was arrested while committing hostile acts against the DPRK after entering Rason City as a tourist on Nov. 3 last year.
The Supreme Court sentenced him to 15 years of compulsory labor for this crime.
Pyongyang, April 27 (KCNA) — The preliminary inquiry into crimes committed by American citizen Pae Jun Ho closed. He entered Rason City of the DPRK on Nov. 3 last year for the purpose of tour and was arrested for committing crimes against the DPRK.
In the process of investigation he admitted that he committed crimes aimed to topple the DPRK with hostility toward it. His crimes were proved by evidence.
He will soon be taken to the Supreme Court of the DPRK to face judgment.
UPDATE 11 (2013-1-28): In the Korea Herald, Namkung refers to serious charges leveled against Mr. Bae:
“My understanding is that he has been accused of serious crimes including plotting to overthrow the regime and assassinating the leadership,” Namkung said in an email interview.
“Richardson’s hope was to see the detainee, Kenneth Bae, and if possible, bring him home. However, North Korea was not cooperative in this regard.”
For weeks, North Korea has refused to allow the United States government to contact a Korean-American man detained in the communist nation, the State Department said Friday.
“As we said about three or four weeks ago, we had contact through our Swedish protecting power. We have not been able to have another contact since then. We continue to ask,” department spokeswoman Victoria Nuland said at a press briefing.
She was responding to a question on Kenneth Bae, a Korean-American tour operator who was arrested by North Korea’s security authorities in early November.
UPDATE 9 (2013-1-11):Retuers reports that Richardson delivered a letter for Bae:
Richardson was unable meet with Korean-American Kenneth Bae, a 44-year-old tourist who was detained in North Korea late last year, but he said he was able to give a letter from Bae’s son to authorities.
“I delivered the letter to North Korean officials,” Richardson told Reuters on Friday. “They said they would provide that to him.”
UPDATE 8 (2013-1-10): KCNA reports that the Richardson delegation has left the DPRK:
Delegation of Google Inc. of U.S. Flies Back
Pyongyang, January 10 (KCNA) — The delegation of the Google Inc. of the U.S. headed by Bill Richardson, former governor of New Mexico State, left here on Thursday.
No reports of any meetings were reported while the delegation visited the DPRK.
The delegation did hold a press conference at Beijing Capital Airport. Bloomberg reports:
“As the world becomes increasingly connected, their decision to be virtually isolated is very much going to affect their physical world,” Schmidt told reporters today at the Beijing airport after the visit to the North Korean capital, Pyongyang. “The government has to do something — they have to make it possible for people to use the Internet, which the government in North Korea has not yet done. It is time now for them to start or they will remain behind.”
Schmidt said that North Korea’s existing mobile-phone network, operated in a joint venture with Orascom Telecom Media & Technology Holding SAE, could be retooled to offer Internet access. There are about 1 million phones on the network, Schmidt said.
“It would be very easy for them to turn that on,” Schmidt said.
Mr. Richardson said he told North Korea’s top vice minister for nuclear negotiations that Pyongyang should temper its nuclear-development efforts. “We need dialogue on the peninsula, not confrontation,” he told reporters. He also said he pushed Pyongyang for a moratorium on ballistic-missile tests, and that officials responded by insisting that the recent satellite launch was for peaceful reasons.
“I must say I personally disagree,” he said.
Mr. Richardson also said he pressed North Korean officials about an American who is being detained there, and was encouraged by their statements that judicial proceedings will begin soon and that the detainee’s health is good. It wasn’t clear whether Mr. Richardson’s delegation met with the detainee, 44-year-old Kenneth Bae, held since late last year on unspecified charges.
UPDATE 7 (2013-1-9): The Richardson delegation visited the Kumsusan Palace of the Sun. There are no photos or videos of this trip. No doubt Gov. Richardson would be nervous about pictures of him paying homage to the memories of Kim Il-sung and Kim Jong-il.
UPDATE 6 (2013-1-9): KCNA reports that the Richardson delegation is touring Pyongyang:
Delegation of Google Inc. of U.S. Tours Pyongyang
Pyongyang, January 9 (KCNA) — A delegation of the Google Inc. of the U.S. headed by Bill Richardson, former governor of New Mexico State, Wednesday visited the Grand People’s Study House here.
The guests went round several reading rooms and lecture rooms, being briefed on the fact that people and students acquire knowledge about modern science and technology and improve their cultural attainments at the study house.
They also visited the E-library of Kim Il Sung University, Korean Computer Center, etc.
The visit to Kim Il-sung University was featured on the 1-8 evening news. See it here.
The visit to the Grand Peoples Study house was featured on the 1-9 evening news. See it here.
Schmidt and Cohen chatted with students working on HP desktop computers at an “e-library” at the university named after North Korea founder Kim Il Sung. One student showed Schmidt how he accesses reading materials from Cornell University online on a computer with a red tag denoting it as a gift from Kim Jong Il.
“He’s actually going to a Cornell site,” Schmidt told Richardson after peering at the URL.
Cohen asked a student how he searches for information online. The student clicked on Google — “That’s where I work!” Cohen said — and then asked to be able to type in his own search: “New York City.” Cohen clicked on a Wikipedia page for the city, pointing at a photo and telling the student, “That’s where I live.”
Kim Su Hyang, a librarian, said students at Kim Il Sung University have had Internet access since the laboratory opened in April 2010. School officials said the library is open from 8 a.m. to midnight, even when school is not in session, like Tuesday.
While university students at Kim Chaek University of Science and Technology and the Pyongyang University of Science and Technology also have carefully monitored Internet access — and are under strict instructions to access only educational materials — most North Koreans have never surfed the Web.
Computers at Pyongyang’s main library at the Grand People’s Study house are linked to a domestic Intranet service that allows them to read state-run media online and access a trove of reading materials culled by North Korean officials. North Koreans with computers at home can also sign up for the Intranet service.
But access to the World Wide Web is extremely rare and often is limited to those with clearance to get on the Internet.
At Kim Chaek University, instructors and students wishing to use the Internet must register first for permission and submit an application with their requests for research online, Ryu Sun Ryol, head of the e-library, said.
But he said it is only a matter of time before Internet use becomes widespread.
“We will start having access to the Internet soon,” he said in an interview last month. He said North Korea is in the midst of a major push to expand computer use in every classroom and workplace.
UPDATE 5 (2013-1-7): Even though this delegation is run by Bill Richardson for “humanitarian” purposes, KCNA is emphasizing the business angle. Here is the KCNA report of the delegation’s arrival:
Delegation of Google Inc. of U.S. Arrives
Pyongyang, January 7 (KCNA) — A delegation of the Google Inc. of the U.S. headed by Bill Richardson, former governor of New Mexico State, arrived here on Monday by air.
Here is KCNA video that has been ripped and uploaded to You Tube:
UPDATE 4 (2012-1-5):Wired published a statement from Richardson’s office which details who is in the delegation:
Governor Bill Richardson will travel to North Korea next week on a private humanitarian mission. The delegation will consist of former New Mexico Governor Bill Richardson, Google Executive Chairman Eric Schmidt, Dr. KA Namkung, Director of Google Ideas, Jared Cohen; as well as some staff members.
Since no media is accompanying the delegation, Gov. Richardson will have a press availability at the Beijing Airport on Thursday, January 10th.
UPDATE 3 (2013-1-3): According to Reuters, the US Department of State has criticized the Richardson delegation to the DPRK. According to the article:
The State Department said on Thursday the time was not right for Google Inc Executive Chairman Eric Schmidt and former diplomat Bill Richardson to visit North Korea, which drew international criticism for a rocket launch last month.
State Department spokesman Victoria Nuland said Schmidt and Richardson would be traveling as private citizens, not representatives of the U.S. government.
“Frankly, we don’t think the timing of this is particularly helpful,” Nuland told reporters, citing North Korea’s launch of a long-range rocket in December. “They are well aware of our views.”
“We are obviously aware of the trip that has been announced,” [Nuland] said, later correcting herself to say that the department was aware of media reports about the trip.
“They are private citizens. They are traveling in an unofficial capacity,” she said. “They are not going to be accompanied by any U.S. officials. They are not carrying any messages from us. They are private citizens and they are making their own decisions.”
On Wednesday, Google did not respond directly to a question about whether Schmidt was going to North Korea, although a spokeswoman’s response suggested a visit would not be for company business.
UPDATE 2 (2013-1-2): According to the Associated Press, Bill Richardson is reportedly headed to the DPRK. Though the article does not mention it, he will likely be working for the release of Mr. Bae. The news of Mr. Richardson’s visit is overshadowed by his travel companion, Google’s executive chairman, Eric Schmidt. According to the article:
Eric Schmidt will be traveling to North Korea on a private, humanitarian mission led by former New Mexico Gov. Bill Richardson that could take place as early as this month, according to two people familiar with the group’s plans who asked not to be named because the visit had not been made public.
The trip would be the first by a top executive from U.S.-based Google, the world’s largest Internet search provider, to a country considered to have the most restrictive Internet policies on the planet.
UPDATE 1 (2012-12-21): The DPRK announces it has arrested another American. According to KCNA:
American Arrested in DPRK for Committing Crime
Pyongyang, December 21 (KCNA) — The Korean Central News Agency released the following report on Friday:
American citizen Pae Jun Ho who entered Rason City of the DPRK on Nov. 3 for the purpose of tour committed a crime against the DPRK. He was put into custody by a relevant institution.
In the process of investigation evidence proving that he committed a crime against the DPRK was revealed. He admitted his crime.
Consular officials of the Swedish embassy, which look after interests of the U.S. in the DPRK, visited him Friday.
Legal actions are being taken against Pae in line with the criminal procedure law of the DPRK.
Original Post (2012-12-13): The DPRK is allegedly holding another American citizen. According to the New York Times:
A 44-year-old American citizen has been held in North Korea for a month, a human rights activist in Seoul said Thursday, addressing unconfirmed reports that had circulated in the South Korean news media for several days.
The American, Kenneth Bae, runs a travel company that specializes in taking tourists and prospective investors to North Korea. He had visited the North several times without incident before being detained in early November, according to the activist, Do Hee-youn, who heads the Citizens’ Coalition for the Human Rights of North Korean Refugees, based in Seoul. Mr. Do said he had learned of Mr. Bae’s detention through a mutual friend in China.
South Korean news reports on Thursday said that Mr. Bae, a naturalized United States citizen born in South Korea, was detained after escorting five European tourists into North Korea through the city of Rajin on Nov. 3. The Europeans were allowed to leave the country, the reports said. North Korea operates a free-trade zone in Rajin, which is near the Russian border, but it has had difficulty attracting foreign investors.
Mr. Do said he had few details about the circumstances surrounding Mr. Bae’s reported arrest. The South Korean daily newspaper Kookmin Ilbo cited an unnamed source as saying that Mr. Bae was detained after North Korean security officials found a computer hard disk in his possession that they believed contained delicate information about the country. Mr. Bae was later transferred to the North Korean capital, Pyongyang, for further investigation, according to that report.
Mr. Do said that Mr. Bae was interested in helping orphans who beg for food in North Korean markets. “The most plausible scenario I can think of is that he took some pictures of the orphans, and the North Korean authorities considered that an act of anti-North Korean propaganda,” he said.
North Korea is promoting the development of its postal and communication sectors.
North Korea recently held the “National Communications Workers’ Rally” on September 16, 2013. The First Chairman of the National Defence Commission Kim Jong Un sent a letter addressed to the participants titled “Time for a New Shift in the Communications Industry.”
At the event, Deputy Premier Jon Sung Hun delivered a speech emphasizing that “(communications sector officials) must work with the mission and duty to raise the national communications business up to the state-of-the-art level.”
The dedication of technicians working at the mobile communication base station, research of scientists and technicians at the communications sector, and modernization of information and communications in Pyongyang were acclaimed for achievements.
In the North, letters and parcel delivery as well as land-based and mobile phones, and intranets are considered a part of the communications sector. The Ministry of Communications under the Cabinet oversees this entire industry.
During his life, former leader Kim Jong Il also showed great interest in the communications sector. At the national rally for communications workers on August 25, 1993, Kim sent a letter encouraging the participants: “Let’s push forward toward modernization of the communications sector.” In North Korea, this text is regarded as the bible of the communications industry.
North Korea has been holding the National Communications Workers’ Rally once every ten years, with the last event held in October 2003 at the People’s Palace of Culture in Pyongyang.
Meanwhile, Rodong Sinmun, the official newspaper of the Korean Workers’ Party, devoted the entirety of page four to introducing the achievements of the International Satellite Communication Bureau and the fiber-optic cable factories. It covered extensively the successes of the postal and communications industries.
The newspaper stated, “The workers and technicians of the communication sector successfully finished the fiber optic cable construction in the provincial, city, and district levels in a short period.” The news also boasted that “They realized the high-speed and large-capacity of communications based on state-of-the-art technology and high-tech facilities.”
In addition, Rodong Sinmun reported the advancement of the speed and accuracy of communications, high-speed data network and exchange capacity, making positive contribution in distance learning and remote medical system.
The news also acclaimed, “The fiber-optic cable communication and communication facilities and operation has reached the level of modernization,” and “Most of all, the high-tech mobile services is contributing greatly to ensuring the convenience of people’s daily lives.”
Recently, North Korean mobile communications has made great progress. Reportedly, North Korea has over 200 million subscribers (as of April 2013). About 1 in 12 North Koreans have mobile phones. The younger generation is also reported to be reading mobile news, multimedia message (MMS), and sending and receiving video calls via 3G.
Mobile phones in North Korea are spreading rapidly and mobile games are also growing in popularity.
After decades of being divided into a population of a small and mostly invisible elite and everyone else, a middle class of about 2 million people is on the rise. These are the people who have mobile phones, use taxis and show a remarkable diversity in clothing and accessories. The local 7-inch tablet computer, ‘Samjiyŏn’, sells for US$180 and comes with the Android operating system and a number of apps such as a dictionary, changgi (Korean chess), and a collection of the works of the two deceased former leaders, Kim Il-sung and Kim Jong-il.
The quality of life in the capital differs significantly from the rest of the country. Some observers believe this will increase discontent; but it also smartly diverts attention away from the shiny examples of foreign metropolises spread on pirated DVDs and USB sticks, and offers the population a domestic Xanadu. The key question for social stability is thus not what peasants in the countryside dream about, but what middle-class Pyongyangites aspire to. Meanwhile, the number of solar panels and small windmills is rising, which is the countryside’s solution to having less privileged access to power.
Despite all the changes, many of the old problems remain unsolved. Prices rise, speculation is rampant and frustration grows in sync with corruption and an ever-more obvious gap between the poor and the new middle class. It would be unrealistic to imply that Kim Jong-un even theoretically had the chance to improve the lives of the majority of his people significantly within a year of taking over. But he has not been idle. Inequality in North Korea is a sign of deepening change. A growing income and welfare gap between individuals indicates that the economy is on the move away from socialist egalitarianism towards capitalist diversity.
Read the full report here:
North Korea’s rolling economic reforms
East Asia Forum