Archive for the ‘Communications’ Category

American Koreans reunited with family in the DPRK

Thursday, February 9th, 2006

According to the Seattle Times: (By Barbara Demick, Los Angeles Times)

An American Foundation is working to  reunite Korean families in the US with their relatives in the DPRK.  From the article:

One of the most active U.S. charities working in North Korea announced Wednesday it will try to fill [the communication] void with a program it hopes will eventually lead to family reunions. The Eugene Bell Foundation, which operates out of Washington and Seoul supporting tuberculosis clinics inside the North, said it will start by collecting family information from Korean-Americans who belong to separated families.

“These people are in their 70s and 80s, and there are fewer and fewer of them every year. Many of them don’t speak English well and don’t understand the system well. They need our help if they will ever see their relative again,” said Alice Jean Suh, Washington office director of the Eugene Bell Foundation and the head of the campaign.

Share

Kaesong Industrial Park Update and Expansion

Tuesday, February 7th, 2006

From the Korea Times:

Tuesday, February 7, 2006

By Hwang Si-young

KT Corp., the country’s No. 1 fixed-line telecom and broadband operator, will build a gigantic communications center at the Gaeseong Industrial Complex in North Korea by 2007, the company said yesterday.

“Many local companies are expected to set up plants in Gaeseong in a few years. To meet a growing demand for fixed-line telephone and internet services, we decided to build a large communications center, approximately 9,900 square meters in size,” said KT’s Gaeseong District Office director Joung Youn-kwang.

There are currently 11 companies based in Gaeseong Complex. They are permitted and approved by the Ministry of Unification and Korea Land Corporation to do their businesses in Gaeseong.

The size of the industrial complex currently stands at 92,400 square meters, but according to KT, it will be expanded more to around 3,300,000 square meters by 2007, housing 300 or more companies.

As of now, KT operates a small communications center using a two-story temporary building in Gaeseong.

The company is likely to build a center after the overall industrial complex expansion is completed, Joung said.

KT will soon begin negotiating with its North Korean counterpart to secure land and bring additional telecommunications equipment, the company said.

Share

Foreign Radio Broadcasts in DPRK

Sunday, February 5th, 2006

Here is a list of organizations that are broadcasting into the DPRK:
1. Open Radio for North Korea  
2. Radio Free Asia
3. Voice of America
4. Social Education Broadcasting of KBS (schedule)
5. Radio Free North Korea (offical web site)

From Daily NK

Official statistics on the size of the DPRK audience that listens to foreign radio broadcasts are not available. The only way to get this information is to estimate based on the number of North Korean refugees who claim to have heard foreign radio broadcastings. Fortunately, a survey conducted by three broadcast companies who broadcast in North Korea- Radio Free Asia, Voice of America and the Social Education Broadcasting of KBS- shows the ratio of listeners among North Korean refugees.

This survey verifies that there are people who listen to foreign radio broadcasts, but the statistics were announced, not printed, and are unavailable.  It is possible that the results are inflated.

However, a more reliable survey was recently released. The Korean Press Foundation conducted a survey of 319 North Korean refugees who made it to South Korea within the last two years. 304 respondents provided valid responses. Among these 304 respondents, 13 people, 4.27%, have listened to foreign short wave radio broadcasts and 34 people, 11.2%, have listened to the foreign medium wave radio. This is quite a significant proportion.

Considering the possibility that North Korean refugees had listened to the radio more often than other North Korean citizens, let’s assume that one percent of the North Korean population listens to foreign programs. Out of a total population of 20 million, it means that there are 200,000 listeners. We can’t say this is a small number.

Then how do North Koreans get radios?

The radios recently sold in North Korea are made in China. Most Chinese radios have a function to receive a short wave, since countries with a huge territory usually use short wave. By contrast, a country like South Korea with a small territory does not need to use short wave. FM or AM is enough. As a result, short wave radios are hard to find in South Korea.

Big countries such as Russia, China, and the US use short wave to send signals over long distances. Therefore, it is easy to find short wave radios in those markets. Short wave radios in China are currently flooding into North Korea.
 

Share

Price information

Saturday, December 31st, 2005

Here is more commodity price information courtesy of Open Radio for North Korea:

Agricultural and houselhold commodities:
1) Rice
-Shin Eui Joo: The price rose from 850 won/kg (18th) to 900won/kg (31st)/ whole sale price: 620won/kg
-Bak Chun Gun: October: 1000won/kg, November 800won/kg (trading rice was banned in October with resumption of food distribution system, which caused the rising price.)
-Pyeongyang: Honammi 800won/kg Annammi 680won/kg

2) Corn
-Shin Eui Joo: 400won/kg (December)
-Bak Chun Gun: 350won/kg (November)

3) Pork
-Shin Eui Joo: 3,300won/kg (December)
-Bak Chun Gun: 3,500won/kg (November)

4) Beef: 7,000won/kg (Beef is seldom sold at markets, but was temporarily out in the black market for new year’s holiday season.)

5) Cooking Oil
-Shin Eui Joo: 2,300 won/kg (November)/Yellow Oil 
-Bak Chun Gun: 2,500won/kg (November)/Yellow Oil

6) Seasoning
-Same in the region of Shin Eui Joo, Sah Ree Won, Bak Chun Gun: 2000won/bag(200g)

7) Underwear
-Bak Chun Gun: Brassiere: 4,000~6,000won, Children’s underwear: 5,000~6,000won
-Shin Eui Joo : Underclothes: 10,000~15,000won/piece, 20,000~30,000won/set

8) Socks
-Bak Chun Gun: 500~2,000won/pair (socks for winter)

9) Shoes
– Bak Chun Gun: high quality: 15,000won, poor quality: 3,000~4,000won/ Handmade: 2,500won 

10) T.V
-Shin Eui Joo: the same as November

11) Price of house and rent
-Shin Eui Joo: One storied house (1 Room, 1 Kitchen): $600, Apartment (2 Rooms, 1 Kitchen): $1,500, Well-located apartment (3 Rooms, 1 Kitchen): $10,000~15,000(able to bargain), 100 Sq.m- apartment: $12,500 (90,000~100,000 Chinese Yuan)
-Sa Ree Won: 100 Sq.m apartment $8,750 (70,000 Chinese Yuan)
-Bak Chun Gun: One storied house (2 Rooms, 1 Kitchen): around $100, Three storied apartment: around $150~200

Footnotes:
1.  A middleman receives 10% of the purchase as compensation. If one moves to a purchased house, one needs to receive a certificate which records that you are allowed to live in the house from a police officer in charge of registration in the neighborhood, usually the payment is one mal(10du/15kg) of rice.
2.  Expense for making Kimchi(Bak Chun Gun): Chinese cabbage 200won/head, Red pepper powder 2500won/kg, garlic 3,000won/100heads, ginger 300won/kg, salt 350won/kg, sugar 1,000won/kg, salted anchovies 1,500won/kg, scallion is raised at home.  Approximately 40,000~45,000won is expended for making 150 heads of Kimchi (usually consumed with rice, and is made with pepper, scallion and salted anchovies), for family of four.

Local Fees and Markets:
1) Electricity- Bak Chun Gun: 10won/lightbulb, 70won for black and white TV (per quarter)

2) Water- Bak Chun Gun: flat rate of 200won per house (per quarter)

3) Tax on land – Bak Chun Gun: 200won/2.5 Sq.m (per month)

4) Payment for spot at markets (Bak Chun Gun)

5) Exchange rate for Renminbi and US dollar
Shin Eui Joo: 2,900won/$ (November 1: 2,715)/ Rinminbi 360won/yuan (November 1:320)/ 3600won/Euro

Footnotes:
1.  No payment at markets, but general tax is imposed. 20won/day for agricultural products, and tax for industrial products vary according to the goods.
2.  Spots in Markets are rarely traded. For people starting their business at the market, relationship with the manager is important. When business with the manager was successful, managers make a spot for them by making others’ spots smaller.

Health Care and clothing:
1) Medicine for cold and antibiotics (Bak Chun Gun)
-Medicine for cold: Chung Yeong Poong 10won/pill (Adults consume 2 pills)/ Antibiotics: Penicillin 100won per ampoule/ Distilled water: 30won
-Antibiotics: when one receives an injection of 1 ampoule of Penicillin mixed with distilled water, the doctor is paid 100won aside from the price of medicine.

2) Bribe paid for medical examination and basic treatment (Bak Chun Gun)
-5000won for releasing a medical certificate, 350won for 1 injection (ex, glucose 500g), 100won for Penicillin

3) Stationaries (Bak Chun Gun)
-Won Joo Pil( Ball Pen): 250won, Notebook (paper made of straw): 5won/20pieces, Hand-made bag in North Korea, 2,000~3,000won, Uniforms used to be purchased at a flat rate set by the government with a coupon, but uniform is seldom sold at a shop these days. People usually purchase fabrics of appropriate color and size, and hand made the uniforms. (official state rate for elementary school uniform used to be 1,500won)

Monthly tuition and expense (Bak Chun Gun) :
-No monthly tuition is officially required, but some parents give some money to the teachers privately and school requires the students to prepare various materials.
– Club activity: the students need to pay 5,000won every month. (If one participates in cell activity, he/she is exempted from external labor or social labor ).
– Monthly payment is 10 bundles of firewood/Iron 3kg/Vinyl 1kg/Rubber 1kg
– -Students who fail to bring the materials are returned home without being allowed into the class.

Electricity:
-Shin Eui Joo: same as November
-Bak Chun Gun: Electricity was provided throughtout all day despite frequent blackouts occurred in the summer. / Since the beginning of the winter, electricity was provided only between 10:30pm~ 4am due to poor supply. (Mostly, candles are used at night. Candles are 40won each).
–  Pyeongyang: electricity is provided for 24 hours, but blackouts occur often. Sometimes, 3~4 hours of blackout occur. 

Water Supply:
-In case of Bak Chun Gun downtown, water pipes freeze in the winter. People dig wells for water.
-In case of Pyongyang, peripheral area is provided with water only once or twice a week. (The time when water is supplied is not announced beforehand. People have to watch the faucet on all the time).

Railway system and transportation fee:
-The fare for train from Bak Chun~ Won San with a transfer at Gaema Highland (Where Pyong Buk Sun and Gang Won Sun meets) is 35won, but most of the officials at the station hide the tickets and sell them for 1,000won.
-In order to buy train tickets, one needs to make a reservation a day ahead and stand in line to buy the ticket on the day. However, honored soldiers, soldiers on service and school teachers have priority, and it is hard for common people to buy tickets.
-What is interesting is that a lot of people take the train without paying the fare when moving from Bak Chun Gun to Ahn Joo Gun by Shin Eui Joo-Gae Sung train. It is because no body checks the tickets in this block.

Cars, buses and car fare between major cities:
-Pyongyang: same fare of 5won for subway, train without track
-Bus between Bak Chun ~ Shin Eui Joo runs once a day, and the fare is 2,500~2,800won. Additional 1,000won needs to be paid for one luggage.
-Shin Eui Joo~Nampo/ Roundtrip, once a day, 10,000won
-Shin Eui Joo~Won San/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
-Shin Eui Joo~Sa Ree Won/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
Footnote: No departure time is designated. The train leaves when the train is full.

Lodging:
-Shin Eui Joo: Same as before. Some of the private inns are as well organized as hotel. Chinese Koreans usually use them, and it costs 5,000won per night.
-Bak Chun Gun: State owned inns lacked heating system and was filled with lice, which is why they rarely exist now. Individuals run lodging facilities now (similar to lodging at a private residence)/ they come out to the station in order to invite guests, and it costs 100won per night.

Expense for obtaining travel document:
-Travel document: it costs 10,000won to travel from Bak Chun to Pyeongyang (ten box of cigarettes branded “Cat”)/ if using other ways, 6,000won~8,000won (Jagangdo 7,000won/Chungjin 8,000won/Pyeongsung 6,000won)/ 500won from Bakchun to Shin Eui Joo (Within a province)
-Travel document is not supposed to cost any money, but Municipal adminisrative committee, county administrative committee and officials in charge of the process publicly asks for money/ Only expense for travel documents to Pyongyang is flat rate of 10,000won, and expense for other provinces differ by person.
-Travel document to cross the river: Valid for one month, and cannot be extended/ costs around $100~200, which is not much more than passport or visa. (more money paid, the document is more quickly issued)/ Fee for travel document to cross the river is set for 20,000won by the government.
-When Chinese citizen visited North Korea with the document, extension is only available with a cost of $100 a day. (When one has good relationship with people of National Security Agency or any other relevant organizations, he/she can pay $50 a day) Because of the fee, they rarely extend the document.
-Passport and visa: DPRK passport is valid for 2 months and Chinese visa is valid for 90 days (In North Korea, expiration date on DPRK passport is more important than that on Chinese visa)/ Extension can be made twice, but extension is rarely requested by anyone (Specific reason for extension needs to be provided, which is a lot of work)/ Also, certificate of health is only valid for 4 months, which means that the passport cannot be extended twice/ fee for issuance of passport is set by the government for 40,000won (Some people say 150,000won). But actual expense is $100~500, and the expense varies depending on the region, person (interpersonal skills, ability, relationship with others) and the waiting time to get the passport (1 month~1year)/ Passport is issued in 1~2 months with a payment of $500 for Pyongyang, and 2~3months with a payment of $300 for other regions. / DPRK passport is valid for 2 months, but it is actually issued 1 month after the issue date.
-When visiting China to visit relatives, applicants for passport and travel document to cross the river are classified separately. In case of crossing Yalu River, if the applicant intends to stay in Dandong Province (Dandong, Bongsung, Donggang, Gwanjun) they need to apply for travel document, and if they intends to go farther than Dandong Province and for example, visit relatives in Shenyang and Fushun, they need to apply for passport.
-A case of procedure to obtain travel documents to cross the river and visa (with purpose of visiting the relatives)
-Application and procedure -> Mid March, Fill out the application (Hand $200 to officials at the office of foreign works: Confirmation of the relatives at the office of foreign works, military security office, and military police office, confirmation by a chair of women’s committee, Approval from Provincial Police Office and National Security Agency) -> Issuance of travel documents to cross the river in the beginning of November -> Two-day education in the beginning of November (First day: Exhibition on battle against espionage/ Second day: special education by the deputy of military security offic / Lastly, write out the oath) -> entered China on 23 November

Price of a business spot at the market (Bak Chun Gun)
-In case of the market at Bak Chung Eup, they don’t have the price of business spots.

Food Distribution System
-Bak Chun Gun: Distribution was carried out twice in the beginning and the end of October/ Distribution was halted in November/ The amount distributed was 15kg and did not meet the assigned amount of 57kg/ Official amount: 700g for workers, 300g for housewives, 500g for 15 year old child, 400g for 13 year old child/ rice/other crops ratio is 3:7
-Pyongyang: Food distribution was not halted except for the three months period of April~June 2005./ The amount distributed is 485g(official: 700g) for workers, 300g for housewives, 200g for students (official amount 300~500g)/ ratio of rice and other crops was 5:5. The ratio was sometimes 7:3 when things are better than the usual/ The price was 36won for Annammi, 54won for Honam rice (received from South Korea)/ Price at Yangjungso(Place where rice is gathered) was 20won less than market price/ Everyone is supposed to purchase rice from Yangjungso, but because of poor quality of rice, some well-off people buy rice at market.
-Shin Eui Joo and Sa Ree Won is similar to Bak Chun Gun.

Events, accidents, things to pay attention to

1) Penalty for listening to foreign broadcasting or watching illegal recordings
Case1> There was a public trial and punishment in July~August 2004 for 5 people for watching illegal recordings at a conference room of Gun Management Committee of Bak Chun Gun, located in downtown. / The penalty was expulsion of the family of the involved party to the mountains.
Case 2> A person who sold and showed VCD in Pyongyang in November 2005 was arrested. During investigation, the person committed suicide using a string on his bag while the investigator was absent. Reason for the suicide was not to harm the rest of his/her family/In Pyongyang as well, when one gets caught while watching illegal recordings, the penalty is usually an expulsion.

2) Wire telephone and charge for phone calls
– Installation of wire telephone: $200 at Sa Ree Won and Bak Chun Eup, $300 at Shin Eui Joo for obtaining a phone number as well/ customer needs to purchase the wire separately
-User of private wire telephone: There are relatively a lot of users of private wire telephone at Bak Chun Eup because there are a lot of Returnees from Japan and traders. Among 120 households, there are 11 households with telephone./ When somebody want to use wire telephone in a neighborhood, around 500won is paid.
-Common people use telegram for communication. 10won is charged for one page, and .5won is charged for each additional word.

3) Others
-Bak Chun Gun: There was a rumor that private cultivation would be allowed starting from this year, but instead of private cultivation, a group farming was adopted. Each group pay the assigned amount to the government, and the rest was left for the individuals to take care of. However, the groups needed to take care of fertilizer and pesticides which caused decline of the yield/ Phrase including “Communism” is gradually decreasing (example, “Communist Ethics” was replaced with “Socialist Ethics” in textbooks for elementary, middle and high school. “Rice is Communism” was replaced with “Rice is Socialism” as well/General atmosphere is that people do not believe what government and the party says.

-Pyongyang: Broadcasting criticized the resolution on situation of human rights in DPRK at the UN, but it is heard that the criticism has caused side effects/ Many of the people think that the resolution must have been adopted because there is a problem of human rights in DPRK/People in Pyongyang are known to be unhappy with Kim’s regime but have no way to change it. So they try to be patient and endure.

Share

North Korea’s Kim Allows Tentative Stirrings of Profit Motive

Wednesday, December 28th, 2005

Bloomberg
Bradley K. Martin
12/28/2005

A sign of North Korea’s fledgling moves toward a market economy can be found at the Pyongyang monument commemorating the 1945 founding of the Workers’ Party. Beneath a 50-meter-tall rendition of the party’s logo — a hammer, sickle and writing brush — sits a street photographer.

A handmade sign displays her price list and sample photos, mostly of groups of North Korean visitors, with the monument as background.

The photographer is one of countless sidewalk entrepreneurs – – most of them selling food and drink — who have set up shop in North Korea since 2002. Before that, they would have been hauled off to re-education camps for profiteering. In the late 1990s, North Korea’s Civil Law Dictionary described merchants as a class to be eradicated because they “buy goods from producers at a low price and sell them to consumers at a high price by way of fraud, deceit and spoils.”

Since then, the party newspaper, Rodong Shinmun, has quoted Kim Jong Il, who’s held supreme power since the 1994 death of his father, Kim Il Sung, as favoring profits under socialist economic management.

North Korea, one of the world’s last Stalinist regimes, has gradually begun permitting commerce. On a four-day visit to Pyongyang, the capital, in October — arranged and scripted by the government — a group of 17 Western journalists got a glimpse of the changes. Clean, new restaurants were packed with paying customers while the streets — almost empty in 1979 and only lightly traveled in ’89 and ’92 — bustled with bicycles, motorbikes and Japanese sedans.

Casino Pyongyang

In the state-owned Yanggakdo Hotel on an island in the Taedong River, a mostly Chinese clientele played slot machines, cards or roulette at the Casino Pyongyang. Since 1998, Macau billionaire Stanley Ho, through his Sociedade de Turismo e Diversoes de Macau SARL, has invested $30 million in the casino, whose staff is also Chinese.

Now some investors from farther afield are joining pioneering Chinese and South Koreans in plunging into a country once so isolated it was known as the Hermit Kingdom. In September, Anglo- Sino Capital Partners, a London-based fund manager, said it had formed the Chosun Development & Investment Fund, which plans to raise $50 million for investments in North Korea.

“It’s the last virgin economy,” says Colin McAskill, 65, a director of Anglo-Sino and chairman of Koryo Asia Ltd., which is investment adviser to the new fund.

Natural Resources

Besides recent changes in the economic system, a 99 percent literacy rate and a minimum wage for workers in foreign-invested ventures of only $35 a month, McAskill says, he was drawn by North Korea’s rich natural resources — including iron ore, copper, lead, zinc, molybdenum, gold, nickel, manganese, tungsten, anthracite and lignite.

The fund will concentrate on North Korean companies that have been active internationally in the past, with track records as foreign currency earners, says McAskill.

He negotiated on behalf of North Korea with foreign bank creditors in 1987, when the country was unable to repay some $900 million in balance-of-payment loans that had enabled the regime in the 1970s to purchase Western industrial technology — Swiss watch-making machinery, for example — as well as such non-capital goods as 1,000 Volvo sedans from Sweden.

Oil Potential

The country’s petroleum potential lured Dublin-based Aminex Plc and its Korea-focused subsidiary, Korex Ltd., which in August announced the signing of a nine-year production-sharing agreement to explore and develop 66,000 square kilometers (25,000 square miles) of North Korean territory. The agreement covers areas in the Yellow Sea’s West Korea Bay and in the Sea of Japan as well as onshore.

While North Korea lacks proven petroleum reserves, according to the U.S. Energy Information Agency, the West Korea Bay in particular may contain hydrocarbon reserves, as it’s considered to be a geological extension of China’s oil-rich Bohai Bay.

More foreign investment may come, says Tony Michell, a Seoul- based consultant on North Korea. Michell, a 58-year-old Briton, says he has recently shepherded 20 senior managers of international companies, representing seven nationalities, to Pyongyang.

“They’re big players,” says Michell, declining to identify his clients by name or company. “They’re looking at everything, from services to manufacturing. They want to get the measure of the North Koreans and be ready if the six-party talks succeed.”

Six-Party Talks

The so-called six-party talks — between North Korea and China, Japan, Russia, South Korea and the U.S. — are aimed at ending the country’s pursuit of nuclear weapons. In September, the six countries agreed on a statement of principles to govern further talks. It called for a nuclear-free Korean peninsula, a peace treaty and economic cooperation in energy, trade and investment.

Seoul-based Hyundai Research Institute, an affiliate of the Hyundai Group, projected in September that a successful outcome to the talks would be worth as much as $55 billion to the economy in the North — and more than twice that in the South.

Optimism about the economy has boosted the prices of defaulted North Korean debt originally owed to hundreds of creditors, mostly European banks, which in the 1970s began meeting as a London-based ad hoc group to discuss restructuring options. In the 1990s, that so-called London Club turned a portion of the debt into Euroclearable certificates, securities that were denominated in Swiss francs and German marks.

The certificates are trading at about 20-21 percent of face value, up from 12 percent in 2003, according to London-based Exotix Ltd., a unit of Icap Plc, one of a few financial firms that make an over-the-counter market in them.

Excessive Optimism

The debt’s price has risen in the past on excessive optimism about the country’s future. In early 1998, the debt was trading at nearly 60 percent of face value amid rumors that North Korea would collapse imminently and be absorbed by wealthy South Korea, which would then make good on the entire outstanding debt.

That had not happened by the time of the crash later that year in global emerging-market securities, when the North Korean debt price sank to about 25 percent of face value.

Exotix estimates that North Korea owes the equivalent of some $1.6 billion in principal and interest to banks out of a total $14 billion in principal and interest owed globally to mainly communist and formerly communist countries.

Although a cease-fire was declared in 1953 in the war between North Korea and China on one side and the United Nations — under whose flag the Americans, South Koreans and others had fought — on the other side, no peace treaty has ever been signed.

The U.S. maintains sanctions under the Trading with the Enemy Act that restrict trade and financial transactions with North Korea — and apply to Americans and permanent residents of the U.S. and to branches, subsidiaries and controlled affiliates of U.S. organizations throughout the world.

China, Russia

North Korea’s flirtations with capitalism are belated compared with those of China and the former Soviet Union, which began opening their economies in the 1970s.

North Korea did pass a law legalizing foreign investment in 1984. The law, which permitted equity joint ventures between state enterprises and foreigners, attracted only $150 million in investment during the following decade, largely because investors were put off by the country’s poor roads, railroads, power systems and phone networks and by official interference in joint ventures’ recruitment, dismissal and compensation of workers, according to a 2000 thesis by Pilho Park, a postgraduate student at the University of Wisconsin Law School in Madison.

Vietnam Example

In contrast, Vietnam lured $7.5 billion in investment in the first five years after it opened its economy to foreign capital in 1988, Park wrote.

Following the collapse of European communism in the early 1990s, North Korea opened the Rajin-Sonbong Free Economic and Trade Zone on the northeastern border with China and Russia. A brief flurry of investor interest ensued and then fizzled out when a crisis over the country’s nuclear weapons program took North Korea to the brink of war with the U.S. and South Korea in 1994.

In the mid ’90s, catastrophic floods, combined with the collapse of the global communist system of aid and preferential trade, caused a severe energy shortage that crippled the economy. As much as 70 percent of manufacturing capacity went idle, according to the South Korean central bank.

Also in the mid ’90s, famine killed as many as 2.5 million North Koreans, by the estimate of the U.S. Agency for International Development.

Food Insecurity

Since then, food aid from abroad, an absence of large-scale natural catastrophes and a 2005 harvest that was the biggest in 10 years have kept North Korea from the massive starvation that’s taken place elsewhere, including Niger, says Richard Ragan, North Korea director for the United Nations World Food Program.

Still, “the country faces chronic food insecurity,” Ragan says. “One of the things that happened with the food shortages is that marginal lands became less controlled. You see people trying to farm on some of the most inhospitable plots of land you could imagine.”

In October, steep, unterraced hillsides were plowed outside Pyongyang. The crops can then wash down, rocks and all, during rainstorms, harming water supplies and damaging farmland – fertility.

A second nuclear weapons crisis boiled up in 2002 when the U.S. accused the North of conducting a secret uranium enrichment program — to replace a plutonium program that it had frozen as part of a settlement of the earlier crisis.

Economic Rules

That same year, the regime proceeded with what then Prime Minister Hong Song Nam described as dramatic new economic measures, which helped bring arbitrarily set prices and foreign exchange rates closer to those prevailing on the black market.

The North Korean won consequently dropped to 150 won to the dollar in December 2002 from 2.15 to the dollar a year earlier. The official rate is currently about 170 won, while on the black market, one dollar can bring about 2,000 won.

The government also introduced pay incentives aimed at boosting worker productivity. The system is in operation at enterprises such as the Pyongyang Embroidery Institute, where some 400 women stitch elaborate pictures for framing and sale.

Employees who don’t perform up to expectations aren’t fired; they’re denied raises, says spokeswoman Woo Kum Suk. Unable to live on their minuscule basic salary, equivalent at black market rates to something over a dollar a month, non-performers eventually quit and go elsewhere, Woo says. Good workers can see their salaries raised as much as fivefold.

Consumers

“In my opinion, it’s good to have this system,” she says. “Although the government supplies things to us, sometimes there’s something more we want to buy.”

North Korea has some way to go before many investors rush in. According to a UN report, net investment inflow for 2003 — the most recent year for which statistics are available — was a negative figure: minus $5 million.

Currently the country is constructing a new special economic zone at Kaesong, just north of the South Korean border, where several small companies from the South already employ North Koreans to make clothing, footwear and household goods. Authorities declined to let Western reporters visit it, permitting only a glimpse from a highway bridge a mile away.

Those who are investing are taking a long-term view. Singaporean entrepreneur Richard Savage was looking at least five years into the future in 2001, when he formed a joint venture tree plantation with the Ministry of Foreign Trade. The company, Evergreen Kormax Paulownia Ltd., is 30 percent-owned by the government, which has assigned Savage 20,000 hectares (49,000 acres) on a 50-year lease with an option to extend for 20 more.

Timber Business

Savage, 58, says he, family members, friends and a few other investors have put $3 million into the project so far. Savage says he hopes that by the time the paulownia trees mature — they grow as fast as 7 centimeters (2.85 inches) a day on his farm, and some may be ready for harvesting five years after planting — he’ll be able to sell the wood in a unified Korean market.

When the Northern economy takes off, the first beneficiary will be the building industry, he says. “That’s why I’m in timber,” he says, adding that his fallback plan is to sell the wood to China, Japan and South Korea.

It’s not the first venture in North Korea for Savage, who wears a cowboy hat and whose e-mail moniker is WildRichSavage. In 1994, he introduced North Korean officials to Loxley Pcl, a Thai telecommunications company. In 1995, an affiliate formed for the purpose, Loxley Pacific Co., signed a joint venture agreement with North Korea’s post and telecommunications ministry to create modern telecommunications in the Rajin-Sonbong special economic zone. The venture earns about $1 million a year, Loxley Pacific Chief Financial Officer C.C. Kuei, 56, says.

Mining for Gold

North Korea’s 1992 Foreign Investment Law guaranteed that foreign investors’ shares of profits could be repatriated, a promise that’s now being tested by Kumsan Joint Venture Co., a gold mining concern that’s half owned by a Singapore-led group of Asian investors and half owned by Hungsong Economic Group, a large trading, mining and manufacturing group in Pyongyang that’s controlled by North Korea’s military.

Roger Barrett, a Beijing-based British consultant, has helped arrange financing and technology for Kumsan. Barrett, 50, introduced Kumsan to the foreign investors, whom he declined to identify.

The company used its investment to buy secondhand mining equipment from Australia in 2004 for the venture’s mine 2,000 meters (6,562 feet) above sea level near the city of Hamhung. In the first year the new equipment was used, Barrett says, the mine produced about 100 kilograms (220 pounds) of gold, half of which the foreign investors took out of the country. He says doing business with North Koreans has proved to be absolutely normal. “It’s working very well,” he says.

Foreign-Run Bank

The business environment in North Korea is surprisingly welcoming, says Nigel Cowie, 43, a former HSBC Holdings Plc banker who was hired a decade ago by Peregrine Investment Holdings Ltd. to start North Korea’s only foreign-run bank.

When Peregrine collapsed in 1998, Cowie and the North Korean joint venture partner kept the local unit operating. He and three other investors bought Peregrine’s 70 percent stake in it from the firm’s liquidators in 2000. Cowie, who’s general manager of what’s now called Daedong Credit Bank, says the bank has about $10 million in assets and has only foreigners as customers, mostly Chinese, Japanese and Western individuals and institutions. Only North Korean-owned banks can do business with state enterprises and North Korean individuals.

Better Living Conditions

Living conditions for expatriates have improved significantly in the past three or four years, Cowie says over a meal of Korean barbecue in the capital’s Koryo Hotel. “For me, personally, it’s things like creature comforts, more shops, Internet, e-mail,” he says. While the Internet is available to foreigners, it is forbidden to most North Koreans.

Cowie says his biggest challenge at the bank comes from outside North Korea. In September, the U.S. Treasury Department barred U.S. financial institutions from dealing with a Macau bank, Banco Delta Asia, that it said had been “a willing pawn” in corrupt North Korean activities and represented a risk for money laundering and other financial crimes.

The bank and North Korea both denied the charges, but the Macau government took over the bank and announced it would provide no services to North Korea in the future. Cowie says the action tied up a big chunk of Daedong Credit Bank’s customers’ assets because Banco Delta Asia had been a main correspondent bank for North Korean banks.

The Treasury Department in October broadened its dragnet by ordering a freeze of the assets, wherever in the world the U.S. could assert its jurisdiction, of eight North Korean companies it suspected of involvement in proliferating weapons of mass destruction.

`WMD Trafficking’

The department explained its action in an Oct. 21 statement on its Web site: “The designations announced today are part of the ongoing interagency effort by the United States Government to combat WMD trafficking by blocking the property of entities and individuals that engage in proliferation activities and their support networks.”

North Korea sought to connect the Treasury actions to Washington’s position in the six-party talks. The country’s Korean Central News Agency, using the acronym for the Democratic People’s Republic of Korea, said on Dec. 2 that “lifting the financial sanctions against the DPRK is essential for creating an atmosphere for implementing the joint statement and a prerequisite to the progress of the six-party talks.”

Assistant Secretary of State Christopher Hill, the chief U.S. envoy to the talks, had said in a Nov. 11 press conference that the asset freeze wasn’t directly related to the talks.

Money Laundering Banned

Cowie says he doubts the U.S. action was intended to harm Daedong, which had already issued a manual prohibiting money laundering. He says he fears such U.S. actions could damp investor enthusiasm for North Korea. “It can cause the people doing legitimate business to just give up,” he says.

Cowie isn’t packing up to leave, though. Neither is Felix Abt, a Swiss native who heads a new European Business Association in Pyongyang. “I am very busy with visiting foreign business delegations,” Abt, 50, says. “Take it as a sign that the economy is developing and that more foreign business activities are under way.”

Outsiders’ investment on capitalism’s farthest frontier is gradually bringing benefits to North Koreans, too, says Savage, the tree farmer. “I can’t convert the whole country, but for the people who work for me, I’m giving them a better standard of living,” he says. “Slowly, people will prefer not to work for the government.”

If Savage and his fellow pioneers have their way, it’s only a matter of time before capitalism takes root in North Korea.

Share

Investors show new interest in North Korea

Friday, August 12th, 2005

From the Herald Tribune:
Donald Greenlees

In May, Kelvin Chia, one of the first foreign lawyers to receive a license to practice in North Korea, took a party of Indonesian miners on an investment tour.
 
Visiting a coal mine outside Pyongyang, the group was surprised by the welcome from North Korean officials and found that the basic road and power infrastructure serving the mine site was in a better condition than they expected. Chia said the mining company – which he declined to identify for commercial reasons – is likely to soon enter a joint venture with the North Korean operator to further develop the mine.
 
Since being granted the right to open an office in Pyongyang last October, Chia, who is from Singapore, says his firm has been approached by about 20 companies from Europe, Southeast Asia and Australia with an interest in investing in communist North Korea’s shaky economy. Chia’s firm was the first wholly owned foreign legal practice in North Korea.
 
“I think there is an upsurge of interest in that country,” said Chia, who is based in Singapore but runs an office of two lawyers in the North Korean capital and has plans to expand.
 
Chia’s recent experience mirrors that of other hardy business people who have persisted with North Korea in the past decade, despite a nuclear crisis and U.S. commercial embargoes. Some business people equate the current level of investor interest with the early 1990s, when foreign companies, including some multinationals, started a spate of investments in the hope that North Korea’s largely self-imposed isolation would end.
 
While the latest round of six-nation talks to dismantle North Korea’s nuclear weapons program remains inconclusive, a handful of Asian and Western investors, some with earlier experience in doing business there, are again considering possibilities in defiance of Washington’s desire to use economic seclusion as a bargaining tool.
 
These investors, mainly manufacturers and miners, are being enticed back by low wages, plentiful mineral resources and a regime that appears increasingly prepared to support foreign investment and open its economy.
 
Pyongyang has signaled plans to open investment promotion offices within its embassies in Singapore and Malaysia, according to Chia, who maintains regular contact with North Korean officials. A revised foreign investment law, passed by the North Korean Supreme People’s Assembly in 2004, relaxed some conditions on foreign investment and permitted full foreign ownership of some ventures. The assembly has also strengthened intellectual property rights laws.
 
A South Korean government official said that Pyongyang also recently started to approve visas for foreign buyers to enter the joint North-South industrial park at Gaeseong, just north of the demilitarized zone. The official said 19 visas had been approved as of mid-July for buyers from Germany, Japan, China and Australia.
 
Investment in Gaeseong is restricted to South Korean companies.
 
Tony Michell, [Korean Associates Business Consultancy]a business consultant based in Seoul, has received permission to take a group of eight investors to North Korea in September in the first of what he said would be monthly investment missions. The first group will comprise European and Asian business people, none of whom are from China or South Korea, the countries with the largest investment in the North.
 
Michell, who introduced a number of companies to North Korea during the last upswing in investment interest from 1993 to 1995, said there had recently been “a revival of interest.”
 
“This comes up to the 1993 level of interest,” said Michell, managing director for Asia of the Euro-Asian Business Consultancy, adding that if the United States dropped its economic embargo “this would be a humdinger of an emerging market.”
 
Still, potential investors in North Korea have to weigh a long history of failure. Of the eight companies Michell introduced during the early 1990s, only one investment survives. An investment bank based in Hong Kong, Peregrine, entered a joint venture to establish Daedong Credit Bank in Pyongyang. Peregrine collapsed, but Daedong is marking a decade in business.
 
The experience of North East Asia Telecom, a Thai firm, is sobering. It set up a mobile phone network, but since May 2004 use of mobile phones has been suspended by the North Korean government as part of a security crackdown.
 
New investment largely dried up after October 2002 when U.S. officials claimed that North Korean officials had admitted during talks to possessing a nuclear weapons program. There is general agreement among investment advisers and economic analysts that if the nuclear impasse can be resolved foreign investment will accelerate.
 
The nuclear crisis erupted as North Korea was implementing a series of measures to open its economy and increase appeal to investors, like giving state-owned enterprises greater freedom to operate commercially, removing price controls and allowing its currency, the won, to be exchanged for the euro, which was adopted in December 2002 for all foreign currency transactions.
 
Analysts of the North Korean economy say those reforms remain largely on track and paved the way for an upsurge of direct investment in 2004 from China, North Korea’s main economic partner. Ahn Ye Hong, who studies the North Korean economy for the Bank of Korea, the South Korean central bank, said that investment from China rose from $1.3 million in 2003 to $173 million in 2004.
 
He said this investment was driven by China’s desire to “obtain as much of North Korea’s resources as it can,” particularly iron ore. He expects a further significant increase in Chinese investment this year.
 
The South Korean government is also seeking to increase direct investment in the North. Although the bulk of South Korean investment has gone into just two projects, Gaeseong and the Mount Geumgang tourism development, recent talks between the two Koreas explored the possibility of investment in upgrading or repairing mines that have fallen into disuse.
 
An official in South Korea’s Ministry of Unification said an inter-Korean economic cooperation meeting in Pyongyang between Sept. 28 and Oct. 1 would discuss the proposal further. The official, who requested anonymity due to restrictions on speaking publicly, said it was likely any South Korean involvement in redevelopment of the mines would be carried out by a joint enterprise between the government and the private sector.

Share

Stand in Line for Half Day Long to Make a Phone Call

Wednesday, July 20th, 2005

Daily NK
Kim Young Jin
7/20/2005

Demand for Wire Telephones after the Government Confiscation of Cellular Phones

Recently in North Korea, demand for house phone skyrocketed and as the government confiscated personal cellular phones, people have also be increasingly using public phones.

It is known that setting a wire telephone for a household costs more than 450,000 Won and it is difficult to get one even after 4-5 months longs reservations.

Even Cellular Phones of Government Officials Confiscated

Park Young Chul (pseudo name, age 45) whom The DailyNK met in Tumen of China testified, “As the government completely banned the use of cellular phones after the Ryonchon Incident, demand for wire phones has been skyrocketing.”

Is the use of cellular phones still banned?

“It is hard to see cellular phones in North Korea. Not in local places, even in cities, people holding cellular phones cannot be seen.”

How about the Party cadres and managers of the state enterprises?

“The government confiscated all the cellular phones after the Ryongchon accident. They are still strictly banned. Even the provincial party cadres, National Security Agency, People’s Safety Agency officials are not allowed to use cellular phones.”

There are two kinds of cellular phones used in North Korea.

One kind is the official one acknowledged by the government, the GSM method of European style, which was used since 2002. Although it costs more than $1300 only to register and it is only usable in the city, it is known that more than 20,000 people are using this kind. Most of the users are foreigners and among the North Korean people, Party cadres and special government officials possessed it as the symbol of their special right.

The other kind is the Chinese wave, which the people use in secret along the Sino-Korean border areas. Although the number of users is unverifiable, it is known that the main purpose of their cellular phone use is to communicate with their family members in China and South Korea or with the dealers for their businesses. Due to the limitation in reach of the wave, these phones cannot be used extensively in inland. They are especially targeted by the government for control.

Then after the Ryongchon accident was known to the outside world by the cellular phones, the government of North Korea confiscated all the cellular phones last May. Although the foreigners are free from prohibition, there is no way for North Korean people to legally possess cellular phones.

Wire Phone Lines Still Hard to Get Even with Money

Then how do the people in North Korea communicate with each other?

“Usually by the wire phones (house phones). People who run business with other sellers and buyers in other verify their deals through phone. Those who have enough money seek to obtain their own phone line.”

Due to the limited means of transportation and communication, price differences between the regions varied much. For example, in Huiryeong of North Hamkyung province, the price of rice was low and the price of pollak pretty high while in Chungjin the opposite. People could take advantage of such price difference and earn money in between, for instance, by buying pollak in Chungjin and selling them in Huiryeong and buying rice from Huiryeong and selling it in Chungjin.

In the past such business were done only with guesses on price, but now phones are used to check the price differences. Recently dollar dealers are known for checking exchange rates through phone calls to China and even across the nation everyday.

How much does it cost to obtain a phone line?

“In the past it was not so difficult if you had money. Now, it is pretty difficult even if you had money. It cost about 450,000 to 500,000 North Korean won. That is a lot of money in North Korea. However, it is not a matter of how much it costs. The problem is that the government does not have enough of IC block necessary for switchboard of the Ministry of Communication to set up the phone line, so even if you had requested for a phone line, you are not guaranteed to get one.

Does that mean that someone has to withdraw a line for another person to get?

“Precisely. In the end, the cost of setting a phone line is actually the cost of selling and buying the IC block. The cost also includes the expense of laying phone line from the place where switchboard is located to the designated house. That is why it is so expensive.”

After the 7.1 Economic Management Improvement Measure in 2002, the average monthly wage of a North Korean worker ranges between 1500∼2500 won, thus 450,000won is the amount which an average worker has to save for 20 years without spending a penny, but the fact that “many people are willing to obtain” shows that there is a significant number of rich people present in North Korea.

Personal Identification and Deposit Money Required for the use of ‘Public Phones’

How is the situation of the public phones?

“They are called “common phones,” and two or three of them are located in each communications office or branch office in each area (district). There is a communications office in every 8km~12km and in the city about 4km.”

How much does it cost?

“It costs 10won for one local call. Before it was 50 jun (half of 1won) but recently the price increased. Of course the price varies for long distance called, they are more expensive. You have to leave your personal identification and 40-50won of deposit at the office prior to your make the call and when you are done you get them back after you pay.”

Why do you need personal identification and deposit money?

“They made this procedure because of some people who ran away without paying”

Are there many people using the public phones?

“There was a communications office about 4km away from my house, usually if I go, I had to wait about 30 minutes to make a call. Sometimes you have to waste as long as half of the day for your turn. Still, there are many people in line waiting.”

Park sighed and said, “Only if the transportation system were a little bit better, the living of the people would be much better. When one thing gets better, the government soon turns it down.” What we see is a scene of discord between the people who are already living in capitalistic style and the government that tries to deject it.

Share

Koreas set up reunion video link

Monday, July 18th, 2005

BBC
7/18/2005

North and South Korea have joined fibre-optic cables across their border to allow families separated for decades to take part in video reunions.

A handful of face-to-face meetings have already taken place between relatives split by the 1950s Korean War, but the cables should help others reunite.

The move is part of a range of measures agreed during cabinet-level talks between the two sides in June.

The first video link-ups will be held on 15 August between 20 families.

The cables run from Munsan in the south to Kaesong in the north.

KT Corp, a South Korean telecoms company taking part in the project, said the link would allow simultaneous connections of up to 9,600 telephone lines.

“We have laid the foundation for accelerating inter-Korean exchanges,” said Kim In-chol, a North Korean postal and communications official.

Reunions between North and South Koreans, which only last a few days, are always surrounded by intense emotion, not least because many of those desperate to be reunited with their relatives are becoming increasingly frail.

Thousands die every year before getting the chance to be reunited with loved ones.

Share

Controlling Internet Café in North Korea

Wednesday, July 13th, 2005

Daily NK
Yang Jung A
7/13/2005

Pictures of the “Information Technology Store,” also known as “internet café” in other parts of the world and the “study guide” used by the Party members and workers to control circulation of South Korean soap opera DVDs were revealed to the public for the first time.

Rescue! The North Korean People Urgent Action Network (RENK), a Japanese North Korean human rights NGO and Network for North Korean Democracy and Human Rights (NKnet) together held a press conference and revealed three pictures of “Information Technology Store,” and a study guide with the title, “About Completely Destroying Enemies’ Maneuvers to Spread Conspicuous Life Style.”

The pictures and documents revealed at the conference were obtained by Kim Man Chul (pseudo name), the same staff of RENK who took pictures of Japanese food aid sold in the open markets in North Korea in May. It was known that pictures Kim provided RENK were taken by not himself but others inside North Korea.

Existence of Internet Café in North Korea Not Connected to the Outside World

The revealed pictures contain scenes of outside of the store that says, “Information Technology Store,” inside of the store and the boys playing computer games. This internet café is located in Chungjin, North Korea.

Han Kihong, director of NKnet stated, “The “Information Technology Store” is similar to an internet café, and computer classes are also provided at the price of 20,000won per month (average monthly wage of a worker is 2,500~3,000won). It is known that internet connection is good for computer games and email but only connects within North Korea, and the connection does not reach to outside information.”

Mr. Han said, “The “Information Technology Store” has state permission and operate as individual business or small enterprise. Since the price is so expensive, common people would not be able to enter.”

“The computers in the “Information Technology Store” are used computers brought in from China but due to the severe energy situation, in case electricity is cut off, it has its own electricity generator,” added Mr. Han.

The “study guide” presented to the reporters contained critical writings that characterizes circulation of South Korean soap opera DVDs, music CDs, or radio broadcastings as unsound and demoralizing and ways to fight against such conspicuous life style.

Appeasement Outside, Stricter Control of the People Inside

Mr. Han explained, “Recently there have been presuppositions that North Korea pursues appeasement outside and reformation inside thanks as the result of the frequent inter-Korean talks. However, this document (study guide) is the evidence that North Korean government is strengthening the level of control of the people from the outside world.”

This “study guide” also include criticism on Radio Free Asia (RFA) broadcastings, which states, “It (RFA) is a kind of cultural interference of the US to invade and dominate Asia” and showed how much it is alert about RFA’s influence.

About this kind of phenomenon, Mr. Han said, “Until 2000, social and educational broadcasting of KBS were popular among the North Korean people, now they trust FRA much more as reliable news source.”

The study guide also emphasizes importance of fighting against outside influence in every parts of living including hair style, manner of greetings, and eating habits. The government of North Korea is ultimately trying to strengthen internal control.

Lee Young Hwa, director of RENK, criticized the North Korea government at the conference saying, “Kim Jong Il’s conspicuity of controlling hair style and eating habits of the people who are starving to death is a maneuver that must be completely destroyed.”

Share

Trading Ideals for Sustenance

Monday, July 4th, 2005

Los Angeles Times
Barbara Demick
7/4/2005

For most of her life, Kim Hui Suk had spouted the sayings of North Korea’s founder Kim Il Sung and never for a moment harbored a doubt: Capitalists were the enemy. Individualism was evil.

But then disaster rained down on her hometown, Chongjin, on North Korea’s remote east coast. Factories ran out of fuel. Food rations stopped. Watching her family slowly succumb to the famine — her mother-in-law, husband and son eventually would die of starvation — Kim realized she had to change.

Once a stickler for following the rules, she bribed a bureaucrat so she could sell her apartment. Then, with no business skills other than the ability to calculate on an abacus, she used the proceeds of the sale to set herself up in a black market business, hawking biscuits and moonshine she brewed from corn.

Kim could have been sent away for life for such crimes. But obeying the rules would have meant a death sentence.

“The simple and kind-hearted people who did what they were told — they were the first to die of starvation,” said Kim, a soft-spoken grandmother who now lives in South Korea and has adopted a new name to protect family members still in the North.

The famine that killed 2 million North Koreans in the mid-1990s and the death of the nation’s founder, Kim Il Sung, in 1994 sparked vast changes across the secretive communist country.

Markets are springing up in the shadows of abandoned factories, foreign influences are breaching the borders, inflation is soaring and corruption is rampant. A small nouveau riche class has emerged, even as a far larger group has been forced to trade away everything for food.

This is the picture of life in North Korea as painted by more than 30 people from Chongjin, the nation’s thirdlargest city. Some are defectors living in South Korea. Others were interviewed in China, which they had entered illegally to work or beg. Accounts of aid workers and videos taken illegally in Chongjin by disgruntled residents were also used to prepare this report.

Although the North Korean regime has a reputation as the ultimate Big Brother, people from Chongjin say the public pays less and less heed to what the government says. There is little that might be called political dissent, but residents describe a pervasive sense of disillusionment that remains largely unspoken.

“People are not stupid. Everybody thinks our own government is to blame for our terrible situation,” said a 39-year-old coal miner from Chongjin who was interviewed late last year during a visit to China. “We all know we think that, and we all know everybody else thinks that. We don’t need to talk about it.”

Kim Sun Bok, a 32-year-old former factory worker who came to South Korea last summer, said the country was “changing incredibly.”

“It is not the same old North Korea anymore except in name.”

Just a decade ago, when people in Chongjin needed new trousers, they had to go to government-owned stores that sold items mostly in drab browns or a dull shade of indigo. Food and other necessities were rationed. Sometimes the government permitted the sale of home-grown vegetables, but even a hairbrush was supposed to be purchased from a state-run shop.

Today, people can shop at markets all over Chongjin, the result of a burst of entrepreneurship grudgingly allowed by the authorities. Almost anything can be purchased — ice cream bars from China, pirated DVDs, cars, Bibles, computers, real estate and sex — for those who can afford the high prices.

The retail mecca is Sunam market, a wood-frame structure with a corrugated tin roof that is squeezed between two derelict factories.

The aisles brim with fresh cucumbers, tomatoes, peaches, scallions, watermelons and cabbage, as shown by rare video footage taken last year by the Osaka, Japan-based human rights group Rescue the North Korean People. Everything else comes from China: belts, shoes, umbrellas, notebooks, plates, aluminum pots, knives, shovels, toy cars, detergents, shampoos, lotions, hand creams and makeup.

Each of Chongjin’s seven administrative districts has a state-sanctioned market. Sunam, the city’s largest, is expanding, and some say it has a wider variety of goods than the main market in Pyongyang. Many vendors wear their licenses pinned to their right breasts while the obligatory Kim Il Sung buttons remain over the heart.

Although markets have been expanding for more than a decade, it was only in 2002 and ’03 that the government enacted economic reforms that lifted some of the prohibitions against them. Most of the vendors are older women such as Kim Hui Suk, a tiny 60-year-old with short, permed hair and immaculate clothing.

She was working in the day-care center of a textile factory in the early 1990s when production ground to a halt. Men were ordered to stay in their jobs, but Workers’ Party cadres at the factory started whispering that the married women, or ajumas, ought to moonlight to provide for their families.

“It was clear that the ajumas had to go out and earn money or the family would starve,” Kim said.

She first tried to raise pigs, locking them in a shed outside her downtown apartment building and feeding them slop left over from making tofu. But the electricity and water were too unreliable to keep the business going.

In 1995, Kim sold her apartment in the choice Shinam district and bought a cheaper one, hoping to use the proceeds to import rice from the countryside. But that too failed when she injured her back and couldn’t work.

The family’s situation became dire. Her husband’s employer, a provincial radio station, stopped paying salaries, and food distribution ended. In 1996, her mother-in-law died of starvation, and her husband the following year.

“First he got really, really thin and then bloated. His last words to me were, ‘Let’s get a bottle of wine, go to a restaurant and enjoy ourselves,’ ” Kim recalled. “I felt bad that I couldn’t fulfill his last wish.”

In 1998, Kim’s 26-year-old son, who had been a wrestler and gymnast, grew weak from hunger and contracted pneumonia. A shot of penicillin from the market would have cost 40 won, the same price as enough corn powder to feed herself and her three daughters for a week. She opted for the corn and watched her son succumb to the infection.

But Kim did not give up. She swapped apartments again and used the money to start another business, this time baking biscuits and neungju, a potent corn moonshine. If buyers didn’t have cash, she would accept chile powder or anything else she could use.

“We made just enough to put food on the table,” said Kim.

Much of Chongjin’s commerce is still not officially sanctioned, so it has an impromptu quality. Money changes hands over wooden carts that can be rolled away in a hurry. Those who can’t afford carts sell on tarpaulins laid out in the dirt.

Fashion boutiques are slapped together with poles and clotheslines, enlivening the monochromatic landscape with garish pinks and paisleys. Some clothes have the labels ripped out and vendors whisper that these items came from araet dongne or the “village below,” a euphemism for South Korea, whose products are illegal in the North.

Shoppers can buy 88-pound sacks of rice emblazoned with U.S. flags, and biscuits and corn noodles produced by three factories in Chongjin run by the U.N. World Food Program — all intended to be humanitarian handouts.

Some people cut hair or repair bicycles, though furtively because these jobs are supposed to be controlled by the government’s Convenience Bureau.

“They will bring a chair and mirror to the market to cut hair,” Kim said. “The police can come at any moment, arrest them and confiscate their scissors.”

Another new business is a computer salon. It looks like an Internet cafe, but because there’s no access to the Web in North Korea, it is used mostly by teenagers to play video games.

More products are available, but inflation puts them out of reach for most people. The price of rice has increased nearly eightfold since the economic reforms of 2002 to 525 won per pound; an average worker earns 2,500 won a month — about $1 at the unofficial exchange rate.

World Food Program officials in North Korea say the vast majority of the population is less well off since the economic changes, especially factory workers, civil servants, retirees and anybody else on a fixed income. But there are those who have gotten rich. Poor Chongjin residents disparage them as donbulrae, or money insects.

“There are people who started trading early and figured out the ropes,” said a 64-year-old retired math teacher who sells rabbits at the market. “But those of us who were loyal and believed in the state, we are the ones who are suffering.”

If Chongjin’s economic center is Sunam market, its political heart is Pohang Square, a vast plaza dominated by a 25-foot bronze statue of Kim Il Sung.

The grass here is neatly mowed, the shrubbery pruned and the pavement in good repair. Even when the rest of the city is without electricity, the statue is bathed in light. Across the street, a tidy pink building houses a permanent exhibit of the national flower, a hybrid begonia called Kimjongilia, named for current leader Kim Jong Il.

Since the practice of religion is barred, Pohang Square stands in as a spiritual center. Newlyweds in their best clothes pose for pictures, bowing to the statue so that their union is symbolically blessed.

When Kim Il Sung died on July 8, 1994, half a million people came to Pohang Square to pay their respects in the pouring rain and stifling heat. But among the adoring multitudes, there were malcontents.

One was Ok Hui, the eldest daughter of entrepreneur Kim Hui Suk. Though she dutifully took her place in the throng, any sadness she felt came from a foreboding that Kim Jong Il would be worse than his father.

“I went day and night along with everybody else. You had to…. But there were no tears coming from my eyes,” recalled Ok Hui, now 39, who did not want her family name published.

Ok Hui worked for a construction company’s propaganda unit, a job that entailed riding around in a truck with a megaphone, exhorting workers to do their best for the fatherland. But she didn’t believe what she preached.

Her father had taught her to doubt the regime. As a reporter and member of the Workers’ Party, he knew more about the outside world than many people and realized how far North Korea lagged behind South Korea and China.

“He and his friends would stay up at night when my mother was out, talking about what a thief Kim Jong Il was,” Ok Hui said.

Her mother, though, remained a firm believer. “I lived only for the marshal. I never had a thought otherwise,” said Kim Hui Suk. “Even when my husband and son died, I thought it was my fault.”

Ok Hui and her mother frequently clashed. “Why did you give birth to me in this horrible country?” Ok Hui remembers taunting her mother.

“Shut up! You’re a traitor to your country!” Kim retorted.

“Whom do you love more? Kim Jong Il or me?” her daughter shot back.

The regime was probably less beloved in Chongjin than elsewhere in North Korea. Food had run out in its province, North Hamgyong, earlier than in other areas, and starvation rates were among the highest in the nation.

Chongjin’s people are reputed to be the most independent-minded in North Korea. One famous report of unrest centers on the city. In 1995, senior officers from the 6th army corps in Chongjin were executed for disloyalty and the entire unit, estimated at 40,000 men, was disbanded. It is still unclear whether the incident was an attempted uprising or a corruption case.

Chongjin is known for its vicious gang wars, and it was sometimes difficult to distinguish political unrest from ordinary crime. There were increasing incidents of theft and insubordination. At factories, desperate workers dismantled machinery or stripped away copper wiring to sell for food.

Public executions by firing squad were held outside Sunam market and on the lawn of the youth park, once a popular lover’s lane.

In a village called Ihyon-ri on the outskirts of Chongjin, a gang suspected of anti-government activities killed a national security agent who had tried to infiltrate the group, former kindergarten teacher Seo Kyong Hui said.

“This guy was from my village. He had been sent to inform on a group that was engaged in suspicious activities,” she said. “They caught him and stoned him to death.”

Work crews went out early in the morning to wash away any anti-regime graffiti painted overnight, according to human rights groups, but most people were too scared to express their discontent. Badmouthing the leadership is still considered blasphemy.

To discourage anti-regime activity, North Korea punishes “political crimes” by banishing entire families to remote areas or labor camps.

“If you have one life to live, you would gladly give it to overthrow this government,” said Seo, the teacher. “But you are not the only one getting punished. Your family will go through hell.”

Even as Kim Jong Il’s regime weakens, many of its stalwarts are growing richer. Many of Chongjin’s well-to-do are members of the Workers’ Party or are connected to the military or security services. In the new economy, they use their ties to power to trade with China, obtain market licenses, extract bribes and sell bureaucratic favors.

“Those who have power in North Korea always figure out ways to make money,” said Joo Sung Ha, 31, who grew up in Chongjin and now works as a journalist in Seoul.

Joo was the pampered only son of a prominent official, and his family lived in Shinam, in the city’s northern hills overlooking the ocean. By the standards of South Korea or China, the single-family homes with lines of fish and squid drying from the roofs are nothing special. But for North Koreans, these are mansions.

The Joo family had a 2,000-square-foot cement-block house and a walled garden about twice that large. The garden proved crucial in protecting the family against the famine, though they had to contend with hungry soldiers who would scale the walls and steal potatoes and cabbages.

North Korean families like to measure their status by the number of wardrobes they own, and Joo’s family had five — plus a television, a refrigerator, a tape recorder, a sewing machine, an electric fan and a camera. They didn’t have a phone or a car — at that time those were unthinkable even for a well-off family — but they did have a bicycle.

“The appliances were of no use after the electricity ran out,” Joo said. “The bicycle was the most important thing, because the buses and trams stopped running.”

Joo attended the best elementary school in Chongjin, the city’s foreign language institute, and eventually the country’s top school, Kim Il Sung University in Pyongyang. He never met a native English speaker in the North, or any foreigner for that matter, but he trained his ear with videotapes of the BBC and banned Hollywood films.

“I sometimes watched ‘Gone With the Wind’ twice a day. Anybody else would have been arrested for watching Hollywood movies,” he recalled.

Joo’s glimpses of Western culture eroded his loyalty to the system. “I saw myself 20 years down the road in the prime of my career and North Korea would be collapsing,” he said.

While many of his classmates went to work for the regime’s propaganda news service after graduating, Joo arranged to return to Chongjin, where he taught high school until he escaped in 2001.

“The people from our neighborhood couldn’t understand,” said Joo, who stays in contact with his family. “They thought I had everything.”

Kim Hye Young, an actress, was also a child of privilege. Her father, Kim Du Seon, was an official of a trading company that sold mushrooms and fish in China. He learned how to navigate the bureaucracy, using his connections with the army and security services.

“If one of [the officials] had a wedding in the family, they would come to me for a couple of cases of wine,” the older Kim said.

As trade with China became more important, the family prospered. They took drives in a company car and ate at Chongjin’s nicest restaurant.

Growing up, Kim showed a flair for theater, and through her acting became a member of the elite in her own right. Her best-known role was in a play called “The Strong and the Righteous,” in which she portrayed a spy who sacrifices her life for North Korea.

When the production won first place in a Pyongyang drama festival in 1996, she got to meet Kim Jong Il. Still breathless with the memory, she said the leader shook her hand and gave her a fountain pen.

“I knew that I, as an actress, had an important role to promote the ideology of my country,” Kim said.

Kim and her sisters were largely oblivious to the famine, and their mother said she took pains to shelter them.

“My daughters don’t know to this day how many children in our neighborhood starved to death,” said her mother, Choe Geum Lan. She also didn’t tell them that their father, as a result of his business trips to China, had become increasingly pessimistic about North Korea’s future.

In 1998, when Kim was home from Pyongyang on vacation, her parents told her the family was going to visit an aunt in Musan, a city near the Chinese border. It was not until they had crossed to the other side that Kim and her teenage sisters, were told they had defected.

Kim, now 29 and advertising toothpaste on South Korean television, is one of the few defectors who says she didn’t want to leave.

“I was content with my life,” she said.

Today, North Korea’s elites are even better off, buying telephones for their homes and even cars.

“For $4,000 or $5,000, anybody can buy a car now. It used to be that you weren’t allowed to register your own car. We couldn’t dream of it,” said Kim Yong Il, a defector from Chongjin who lives in Seoul.

Recently, he arranged to have a computer smuggled from China to his relatives in Chongjin. North Korea’s state-run companies don’t have computers, so they’re eager to hire people who do. “If you have a computer, you can get a job,” he said.

Visitors have been shocked to glimpse the new conspicuous consumption in Chongjin.

Jeung Young Tai, a South Korean academic who was in Chongjin delivering South Korean government aid, noticed a paunchy man standing in front of the Chonmasan Hotel next to a new Lexus.

And at a hot spring in Kyongsong, on the city’s outskirts, he saw a woman carrying a lap dog — a striking sight in a country where there is so little food that the only pets usually are goldfish.

“You get the sense that there is a tremendous gap between rich and poor and that the gap is growing,” Jeung said.

The flip side, of course, is that the poor are getting poorer.

In Chongjin, those at the very bottom of the heap can be found at the train station.

The cavernous building boasts a large portrait of Kim Il Sung above the entrance and a granite-faced clock that rarely tells the right time. In front is a vast plaza crammed with people waiting for trains — sometimes for days, because the trains have no fixed schedules — and people waiting for nothing at all.

These are the homeless, many of them children. They’re called kotchebi, or swallows, because they wander the streets and sometimes between towns in search of food. Many gravitate to Chongjin station, because it is a major hub and the travelers have more to give.

A video shot last year by a military official and sold to Japan’s NTV television captured barefoot children near the station in torn, filthy clothing fighting over a nearly empty jar of kimchi. One boy scooted along the pavement on his buttocks; the narrator said his toes had been eaten away by frostbite.

Kim Hyok knows how easy it is for a child to end up at the station; he spent the better part of two years living there.

“If you can’t find somebody or they left their home, chances are you can find them at the station,” said Kim, now 23 and resettled in South Korea.

Kim’s mother died when he was a toddler, and he was raised by his father, a party member and an employee of a military unit that sold fish in China. During his early childhood, Kim, his father and elder brother lived in relative comfort in a high-rise apartment in the Sunam district.

When the government stopped handing out rations in 1993, Kim’s father used his connections to place his sons in an orphanage 60 miles away.

Kim, who was about 12 at the time, wasn’t sorry to be sent away. It was considered a privilege because the orphanages had food.

In 1997, just before his 16th birthday, Kim “graduated” from the orphanage. He caught a train back to Chongjin, but when he got to his neighborhood, things looked unfamiliar. The electricity was off. Many apartment buildings had no glass in the windows and appeared vacant.

Climbing the eight flights in pitch dark to his family’s unit, he heard a baby crying and wondered whose it might be. Confused and scared, he knocked on the door.

A young couple opened the door and told him his father had moved long ago but left a message: Look for him at the train station.

The phenomenon of vagrancy is testament to how much North Korea has changed. Before the famine, the government controlled people’s movements so strictly that they could not dream of visiting a relative in a nearby town without a travel permit, let alone selling their homes. Not showing up for work could bring a visit from police.

But as people embarked on increasingly desperate hunts for food, families broke apart. With few telephones and a barely functional postal service, parents and children became separated.

“People just started wandering around because they were hungry,” Kim said. “They would sell their apartments for a few bags of rice.”

Kim never found his father. He also never found his brother, who had left the orphanage a year earlier.

With no place to go, Kim ended up at the train station. By night, he slept squeezed into a narrow space designed for a sliding iron gate. By day, he loitered near the food vendors on the plaza. He often worked with a gang of other kids — a few would topple a vendor’s cart and the others would scoop up whatever spilled.

“If you’re not fast, you can’t eat,” said Kim, who even today in South Korea bears the signs of chronic malnutrition, with a head that looks oversized on a shockingly short frame.

Kim began hopping the slow-moving trains that pass through Chongjin on their way to the Chinese border. Once on board, Kim would scramble up to the top of a car, flatten himself to avoid the electric lines above and, using his pack as a pillow, ride for hours.

At the border, he would wade across the river to hawk the items in his pack: household goods on consignment from Chongjin residents, who were selling off their possessions.

In 1998, Kim was arrested by Chinese authorities, who do not recognize North Koreans as refugees. He was sent back to North Korea and spent two years in a prison camp before escaping again in 2000 to China, where he was eventually taken in by missionaries and brought to South Korea.

For every homeless person who survived, many more likely died. Kim Hui Suk recalled a particularly ghoulish scene at the train station.

“Once I saw them loading three bodies into a cart,” Kim said. “One guy, a man in his 40s, was still conscious. His eyes were sort of blinking, but they still were taking him away.”

Although the ranks of the homeless have thinned since the height of the famine, North Korean residents say their numbers are still considerable.

“If somebody disappears, you don’t know whether he dropped dead on the road or went to China,” the coal miner said.

About 100,000 North Koreans have escaped to China in the last 10 years. Many have ended up returning to North Korea, either because they were deported or because they missed their families. They often bring back money, goods to trade and strange new ideas.

Smugglers carry chests that can hold up to 1,000 pirated DVDs. South Korean soap operas, movies about the Korean War and Hollywood action films are among the most popular. Even pornography is making its way in.

This is a radical change for a country so prudish that until recently women were not permitted to ride bicycles because it was thought too provocative. Seo Kyong Hui, the kindergarten teacher, said that when she left North Korea in 1998, “I was 26 years old, and I still didn’t know how a baby was conceived.”

Even today, women are prohibited from wearing short skirts or sleeveless shirts, and both sexes are forbidden to wear blue jeans. Infractions bring rebukes from the public standards police.

But it is a losing battle to maintain what used to be a hermetic seal around the country. Just a few years ago, ordinary North Koreans could make telephone calls only from post offices. Dialing abroad was virtually impossible. Now some people carry Chinese cellphones and pay for rides to the border to pick up a signal and call overseas.

Smugglers also bring in cheap Chinese radios. Unlike North Korean radios, which are preset to government channels, the Chinese models can be tuned to anything, even South Korean programs or the Korean-language broadcasts of Radio Free Asia.

In the past, being caught with such contraband would land a person in political prison. Nowadays, security personnel will more likely confiscate the illicit item for personal use.

When a policeman caught Ok Hui, the entrepreneur’s daughter, with a Chinese radio in 2001, the first question he asked was, “So how do you work this thing?”

She wrote down the frequencies for South Korean radio stations.

“Don’t you have earphones so you can listen without anybody hearing you?” the officer then demanded.

North Korea instructs its citizens that the country is a socialist paradise, but the government knows outside influences can puncture its carefully crafted illusions.

“Bourgeois anti-communist ideology is paralyzing the people’s sound mind-set,” warns a Workers’ Party document dated April 2005. “If we allow ourselves to be affected by these novel ideas, our absolute idolization for the marshal [Kim Il Sung] will disappear.”

Among those who make it to China, many describe a moment of epiphany when they find out just how bad off North Koreans are.

Kim Ji Eun, a doctor from Chongjin, remembers wading across the partially frozen Tumen River in March 1999, staggering to a Chinese farmhouse and seeing a dish of white rice and meat set out in a courtyard.

“I couldn’t figure it out at first. I thought maybe it was for refrigeration,” recalled Kim, who now lives in South Korea. “Then I realized that dogs in China live better than even party members in North Korea.”

Many Chongjin residents who are caught trying to flee the country end up back in the city, behind the barbed wire of Nongpo Detention Center.

It sits near the railroad tracks in a swampy waterfront area. Prisoners are assigned back-breaking jobs in the nearby rice paddies or brick factory, where the workday begins at 5 a.m.

Ok Hui was one of those who served time in Nongpo. A rebel by nature, she had become fed up with North Korea and a difficult marriage.

In September 2001, during one of several failed attempts to escape, she was arrested in Musan and brought back to Chongjin by train. Guards tied the female prisoners to one another by tightly winding shoelaces around their thumbs.

In Nongpo, the inmates bunked in rows of 10, squeezed so tightly together that they had to sleep on their sides. Newcomers sometimes had to bed down in the corridor near overflowing toilets. Meals consisted of a thin, salty soup, sometimes supplemented by a few kernels of raw corn or a chunk of uncooked potato.

“The walls were very high and surrounded by wire,” Ok Hui said. “One woman tried to climb the wall. They beat her almost to death. You can’t imagine. They made us stand and watch.”

One day, when she was assigned to work in the fields, she spotted an old woman. She took off her underwear and offered it to the woman in exchange for sending a message to her mother. Underwear is scarce in North Korea, so the woman accepted and agreed to send a telegram to Ok Hui’s mother.

With her market earnings, Kim Hui Suk bought 10 packs of cigarettes for a security official to arrange her daughter’s release.

Some days later, the prison administrator came to talk to Ok Hui and other female prisoners who were picking corn. They were all due to be freed shortly, and the administrator urged them to resist the temptations of capitalism and imperialism, and to devote themselves to North Korea.

Then, he asked for a show of hands: Who would promise not to run away again to China?

Not a single woman raised her arm.

“We were all just thinking that our whole lives we had been told lies,” Ok Hui recalled. “Our whole lives, in fact, were lies. We just felt this immense rage toward the system.”

The prison administrator looked at the women squatting sullenly in silence in the cornfield.

“Well,” he said, “if you go again to China, next time don’t get caught.”

Forty days after her release, Ok Hui escaped again to China and made her way to South Korea. She used $8,000 in resettlement money from South Korea’s government to pay a broker to smuggle her mother out of North Korea. Today Ok Hui works in a funeral home and her mother as a housekeeper.

Share

An affiliate of 38 North