Archive for the ‘China’ Category

Fuel prices are dropping in North Korea, and that’s a little odd

Tuesday, July 10th, 2018

Benjamin Katzeff Silberstein

As in the rest of the country, gas prices continue to fall in Pyongyang, data from NK Pro shows, but remains much higher than the closest available month of 2017.

At the same time, recent figures from China state that its exports of refined fuel products to North Korea continues to remain well below the ceiling mandated by UN sanctions. Asia Press reports a slight increase of diesel prices in Yanggang and North Hamgyong provinces, but it’s a fairly minor one and the data by NK Pro and Daily NK still represents more data points. So what’s a plausible explanation here?

My best guess is that it’s a combination of increased smuggling, perhaps aided by China’s declining vigilance in enforcing sanctions and restrictions against illicit trade across the border. Gas prices shot up last spring when China decided to drastically cut sales of fuel products to North Korea, citing financial reasons (that North Korea wouldn’t be able to pay), but the decision was very likely influenced by political considerations as well. Now with the multitude of summits between Kim Jong-un and Xi Jinping, and Kim and Trump, China’s willingness to enforce sanctions with the same vigor as it did through the second half of 2017 and the first half of 2018 has likely waned, impacting matters like fuel prices as well. It also seems plausible that fairly small changes in supply could change prices quite drastically, since North Korea already consumes a relatively small amount of gasoline and diesel on the whole.

Another possibility is that Chinese flows of unrefined oil through the pipeline in northwestern North Korea, through Dandong and Sinuiju, have increased. These aren’t monitored in the same way as Chinese sales of refined fuel to North Korea, and as far as I know, could be increased without the international community easily noticing. These oil flows also aren’t part of regular trade between the countries, and should be regarded more as Chinese financial support to North Korea.

My best bet would be on a combination of these two factors, but there’s obviously much we don’t know about the development.

Update 2018-07-15: NK News reports some US government data seeming to hint at what’s been going on. At least 89 hip-to-ship transfers occurred between January and May, in violation of UNSC sanctions:

North Korea likely conducted at least 89 ship-to-ship transfers to illicitly obtain refined petroleum products between January 1 and May 30, U.S. data provided to the United Nations and seen by NK News on Friday claims.

Pyongyang may have illegally imported up to 1,367,628 barrels of refined petroleum as a result of the transfers, upper-end estimates suggested, over double the 500,000 barrels authorized for export to North Korea each year by current UN sanctions.

Consequently, the U.S. recommended that the UN 1718 sanctions committee issue a “public note verbale to all UN Member States to inform them that the DPRK has breached the UNSCR 2397 OP5 refined petroleum product quota for 2018,” and that all countries should “order an immediate halt to all transfers of refined petroleum products to the DPRK.”

Since the May 30 data cut-off, the Japanese government has revealed details surrounding three extra cases of North Korean vessels caught conducting likely ship-to-ship transfers, with two on June 21 and June 22, and one on June 29.

Article source:
N. Korea likely conducted 89 illicit ship-to-ship transfers in 2018: U.S. data
Chad O’Carrol
NK News
2018-07-13

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China’s exports of fuel to North Korea below UN sanctions ceiling

Friday, July 6th, 2018

By Benjamin Katzeff Silberstein

Between January and May, Chinese imports of refined oil products did not go over the ceiling mandated by UN sanctions, reports Voice of America (in Korean):

중국이 올해 1월부터 5월까지 북한에 제공한 정제유가 유엔이 정한 상한선의 한 달 허용치 수준에 그친 것으로 나타났습니다. 이 정도 수준을 유지한다면 유엔이 정한 정제유 수출 한도를 넘지 않을 것이라는 지적입니다. 김현진 기자가 보도합니다.

중국이 올해 1월부터 5월까지 북한에 정제유 5천921t을 공급한 것으로 나타났습니다.

유엔 안보리 산하 대북제재위원회 (1718 위원회) 홈페이지에 따르면 중국은 1월 201t, 2월 1천 392t, 3월 2천438t, 4월 437t, 5월 1천451t을 북한에 공급했다고 유엔에 보고했습니다.

5개월 총공급량을 배럴로 환산하면, 약 4만7천400 배럴로 유엔이 설정한 한 달 허용치를 조금 넘는 수준에 불과합니다. 연간 대북 정유공급 제한 50만 배럴을 12개월로 나누면 한 달에 4만 1천 배럴 정도입니다.

유엔 안보리는 지난해 12월 채택한 대북결의 2397호를 통해 북한으로 유입이 가능한 정제유의 상한선을 연간 50만 배럴로 정했습니다. 이전 결의가 상한선으로 정했던 200만 배럴에 비해 75%가 줄어든 것입니다.

아울러 올해 1월부터 각국이 북한에 판매하거나 제공한 원유와 정제유 양과 금액을 보고하도록 했습니다.

대북제재 전문가인 윌리엄 브라운 조지타운대학 교수는 중국이 올해 초부터 5월까지 북한에 제공한 정제유는 극히 소량으로, 유엔 결의를 잘 지키고 있는 것으로 보인다고 말했습니다.

[녹취: 브라운 교수] “The recent data provided to the UN from China suggest that they exported about 40,000 barrels to the North Korea in the first 5 months, that well below UN sanction limit…..”

또 올해 남은 기간 동안 이 정도 수준을 유지한다면 유엔이 정한 정제유 수출 한도를 넘지 않을 것으로 보인다고 말했습니다.

브라운 교수는 특히 김정은 국무위원장이 중국을 방문했던 5월 중국이 북한에 제공한 정제유도 소량에 불과했다고 지적했습니다.

[녹취: 브라운 교수] “The month after Kim’s visit to Beijing, China is still only shipping very small amount of refined products and it is still obeying the UN sanctions, according to China. But actually it’s very important that China is telling the world it is still obeying the sanctions… ”

자료에 따르면 중국은 5월 1천451t의 정제유 제품을 북한에 공급했습니다. 전 달 437t을 공급한 것에 비해 3배 이상 늘었지만, 지난 해 같은 기간6천400t에 비해 77% 감소한 규모입니다.

배럴로 환산해도 1만1천608배럴로 한 달 허용치에 크게 못 미치는 수준에 불과합니다.

앞서 헤더 노어트 국무부 대변인은 29일 폼페오 국무장관과 왕이 중국 외교부장과의 전화통화 소식을 전하면서, 폼페오 장관은 유엔이 금지하는 선박 환적을 통한 북한의 불법적인 석탄 수출과 정제유 수입과 관련한 유엔 안보리의 모든 대북 결의안에 대한 전면적 이행의 중요성을 강조했다고 전했습니다.

한편 올해 북한에 들어간 전체 정제유를 월별로 보면 1월, 569.62t에서 2월 3천274t으로 크게 늘었고 3월에는 1천t 이상 증가한 4천337t을 기록했습니다. 4월에는 437t으로 급감했다가 5월에는 다시 1천451t으로 세 배 이상 증가했습니다.

올해 1월부터 5월까지 북한에 수출된 정제유는 총 1만66t으로 집계됐습니다.

중국이5천921t, 러시아가 4천148t을 각각 북한에 제공했다고 신고했습니다. 중국과 러시아 외에 북한에 석유제품을 공급했다고 신고한 나라는 없습니다.

올해 북한에 수출된 정제유를 배럴로 환산하면 8만532 배럴로, 상한선의 15% 수준에 머물고 있습니다.

Article source:
유엔 “중국, 올 1~5월 북한에 정제유 5,921t 공급”…유엔 제재 상한선 크게 못 미쳐
Kim Hyun-jin
Voice of America
2018-07-06

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North Korean-Chinese efforts at scaling back sanctions

Tuesday, July 3rd, 2018

Benjamin Katzeff Silberstein

The following is from Mainichi Shimbun on a North Korean economic delegation trip to China, where it supposedly met with Chinese foreign ministry officials to discuss economic cooperation. Since I don’t read Japanese, I’ve pasted what google translate generated, mostly for my own record-keeping…

[Beijing / Urushima Koji] China has activated diplomatic offensives toward easing sanctions against North Korea. At the end of June, at the end of June, a draft statement for the media to seek relief of sanctions on the UN Security Council was distributed to the Security Council with Russia. At the working-level level in the mid-day and the morning, North Korea’s Kim Bong-tae and foreign minister of foreign affairs have accepted the visit and it seems that they are discussing economic support with a view to easing sanctions due to denuclearization.

According to a source in the middle of the morning, Mr. Kim arrived at Pyongyang airport from Pyongyang this morning. Mr. Kim is said to have been in China, who has led the economic delegation to visit. China’s Ministry of Foreign Affairs Mr. Rikuo avoided confirming the visiting information at a regular press conference the same afternoon, but on the other hand, “While the middle morning is a friendly neighboring country, each level, normal in each field We are maintaining a regular visit. ”

Following the US-North Korea summit meeting in Singapore, China is expected to ease sanctions ahead of the United States and it is believed that it is aimed at advancing negotiations with the US with trade friction etc. advantageously by placing North Korea on the side.

 In the mid-day border zone, there were projects that could support economic assistance to North Korea in the form of technical cooperation even before the easing of sanctions, and negotiation at the worker level was necessary. The Chinese government will maintain normal interaction and cooperation with Korea (North Korea) on the premise that it does not violate international obligations (such as the Security Council sanctions) “(Mr. Shuo Qi · so = = Deputy Press Bureau Director of the Ministry of Foreign Affairs) and It’s a posture.

North Korea’s Kim Jung-eun, the chairman of the Korean Workers’ Party, visited a cosmetic factory in Shinwigu, North Pyongan Province, which borders the mid-day border. Prior to this, he is showing a willingness to emphasize the redevelopment of the mid-North Korean border, such as visiting the area around the economic zones in the same way that it had jointly developed with China.

Source:
North Korea seeks easing sanctions Economic support consultation?
Mainichi Shimbun
2018-07-03

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Kim orders officials to study lessons from China

Monday, July 2nd, 2018

Benjamin Katzeff Silberstein

Daily NK reports on both lower fuel prices and a decree by the central authorities for provincial officials to study the lessons Kim learned from his most recent trip to China:

After returning from his visit to China (June 19-20), North Korean Chairman Kim Jong Un summoned all provincial managers in the country to the capital city of Pyongyang. Sources indicate he used the meeting to explain the current status and future direction of strategic relations with China and handed down new orders on agriculture.

“After the leader [Chairman Kim Jong Un] visited China, he called into Pyongyang every provincial Party chairman and People’s Committee chairman. It seems he instructed the central Party cadres to learn from the agricultural scientific achievements that he witnessed in China,” a source in Ryanggang Province told Daily NK on June 27.

“Residents are saying that the authorities are showing special interest in agriculture because it’s the most important sector right now. Residents are sharing the thought that if they can only solve the country’s food shortage problem, they will be able to live like other strong nations.”

“Seeing as he visited China three times within a short time frame,” he added, “it’s likely that he spoke about that as well. He probably talked about how China will be useful in the new era that will focus on economic development.”

On his trip to a Chinese agricultural science center, Chairman Kim learned about advanced cultivation methods, with North Korea’s Party-run Rodong Sinmun publication providing detailed reports to the North Korean population. This can be viewed as an acknowledgment of China’s scientific excellence, as well as an effort to promote the normalization of Sino-NK ties to the domestic audience.

Following Chairman Kim’s visits, rumors are circulating among residents that “aid from China” could be in the offing.

“After the Leader’s trip to China this time, the Chinese government said that it had shouldered the burden for international train costs from [the Chinese border city of] Dandong to Pyongyang. The cost of diesel and gasoline has been declining recently, so residents are wondering whether China has been helping out,” a source in North Pyongan Province said.

The cost of gasoline per kilogram is 9,500 KPW and the cost of diesel is 6,500 KPW in the border town of Sinuiju. Compared to the beginning of the month, these prices represent a reduction of 4,500 KPW per kilogram in the price of gasoline and 1,000 KPW in the price of diesel.

Responding to the falling price of oil, the transportation and distribution sectors are showing signs of increased activity, with “servicha [vehicles used by independent operators to move people and goods for a fee] and other vehicle owners like the donju [North Korea’s new rich class] enjoying the cheaper gas prices,” he added.

As North Korea continues its diplomatic blitz, meeting with the US, South Korea, and China, the expectations of residents are surging.

“Recently, [Kim Jong Un] signed the Panmunjom Declaration with South Korea, then went to China, then held talks with America, known to be the enemy. On the domestic stage, there have been some minor changes, but residents have high expectations. We are holding these high hopes because all of these countries – South Korea, China, and the US – have very strong economies,” the North Pyongan Province-based source explained.

“The younger generation is particularly eager that they might be able to learn about the latest technology and technical skills from South Korea, China, and America. After the summit with the US, market traders have high hopes that the sanctions measures might be reduced.”

Article source:
Kim returns from China with new instructions for local Party leaders
Kang Mi Jin
Daily NK
2018-07-02

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Shockingly, China’s sanctions enforcement on North Korea eases after the summit

Tuesday, June 19th, 2018

By Benjamin Katzeff Silberstein

In perhaps the least surprising news there ever were, reports are now coming in regular intervals that Chinese enforcement of sanctions on North Korea is becoming less and less strict following the summit between Donald Trump and Kim Jong-un. Kim’s visit today in Beijing will likely speed up the process, but the Chinese enforcement of the sanctions regime would like have become less vigilant in due course regardless.

You’ll have to excuse the sarcastic tone of the title and content of this post, but this is precisely the sort of development that not just this blog, but a whole host of others too, have predicted all along. Trump’s idea that “maximum pressure” would survive through the summit and general process, regardless of what is decided, was always unfounded. That’s just not how these things work. Chinese enforcement of sanctions on North Korea depend much more on political circumstances in the region than on what sanctions the UNSC decides to level. China was always going to let down its guard once tensions de-escalated. Pressure could certainly get back on if things go back to the way they were earlier in the year, but to count on it as a matter of policy, as if it could be done easily or somehow automatically, is unwise or even naive.

To be sure, we shouldn’t draw any far-reaching conclusions from a small number of scattered news reports. But no one should be surprised if the number of reports continues to grow over the coming weeks, and if, one day in a not too distant future, Chinese customs figures of imports from North Korea also start to point upward.

I’ll be gathering articles on the matter in this post. First out is Radio Free Asia from a few days ago:

China is relaxing customs inspections and allowing restricted goods to flow across its border with North Korea, according to sources, despite making assurances that it will continue to enforce sanctions against the reclusive nation until it fully dismantles its nuclear arsenal.

A trader in China’s Dandong city, located in Liaoning province across the Yalu River from the city of Sinuiju in North Korea, recently told RFA’s Korean Service that inspections on trucks heading across the border to the North “have eased significantly,” and that customs officers who “used to check every single item following x-ray scans” are now searching “only around half of all vehicles.”

“In the past, when a truck driver got caught bringing restricted items on the sanctions list, the truck was impounded for a day and could only pass through the border if a fine was paid,” the source said, speaking on condition of anonymity.

“These days, those kinds of trucks [smuggling restricted goods] are fined, but can go through customs right away.”

The trader added that as customs officers have become less rigorous about their checks, “North Korean truck drivers are beginning to regularly smuggle items that are not on their manifestos.”

A resident of Dandong, who also asked to remain unnamed, told RFA that the customs process for North Koreans who travel to his city for personal reasons is also “now much easier,” noting that Chinese customs officers used to require them to open their luggage for inspection, “but they can now pass through after a routine x-ray screening.”

“Alcohol and tobacco products are limited to one bottle of alcohol and one carton of cigarettes, but the custom officers don’t make an issue out of having two or three bottles and a couple of cartons of cigarettes,” the source said.

A businessman based in Dandong, who said he exports clothing illicitly assembled in North Korea to Japan and other countries, told RFA that crackdowns on illegal trade between China and North Korea had also been reduced in recent months, making it easier for him to earn a profit.

“I use illegal vessels to send materials into North Korea and bring out processed clothes via the Yalu River, and it has been so much easier for me to operate these days,” he said.

“It always used to take me a long time to transport the clothing, due to China’s tight security along the border area, but now it doesn’t take long at all.”

Sources in Dandong and the Yanbian Korean Autonomous Region, in northeast China’s Jilin province, said that Chinese border guards ended their tight monitoring of smuggling after Kim made a rare visit to Beijing at the end of March and met with Chinese President Xi Jinping.

At that time, North Korea stopped repatriating workers it had based in China to generate foreign currency for the Kim regime, and even dispatched some additional workers to the country, the sources said.

And ever since Chinese authorities relaxed their controls on smuggling activities, they added, North Korean organizations tasked with generating foreign currency have begun steadily trafficking sanctions-restricted items into China, including iron, non-ferrous metals, chemicals, and seafood.

Trump-Kim summit

Reports of the reduced inspections follow a historic summit between U.S. President Donald Trump and North Korea’s leader Kim Jong Un, held on Tuesday in Singapore, during which Trump “committed to provide security guarantees” to the North and Kim had reaffirmed his “firm and unwavering commitment to complete denuclearization of the Korean Peninsula.”

On Thursday, U.S. Secretary of State Mike Pompeo met with his Chinese counterpart State Councilor Wang Yi in Beijing and told reporters after the talks that “China has reaffirmed its commitment to honoring the U.N. Security Council resolutions” for sanctions leveled against the North for repeated ballistic missile and nuclear weapons tests.

After Tuesday’s summit, China had suggested that international sanctions on North Korea could be lifted, but Pompeo on Thursday said Washington had “made very clear that the sanctions and the economic relief that North Korea will receive will only happen after the … complete denuclearization of North Korea.”

Full article and source:
China Relaxes Customs Inspections on Border With North Korea, Despite Sanctions Assurances
Jonhoo Kim
Radio Free Asia
2018-06-15

 

Dong-a Ilbo reports that several Chinese factories near the border, employing North Korean workers, have started operations back up after being forced to a halt due to the sanctions implementation:

More than 10 Chinese factories located in the border area between North Korea and China resumed operation around Tuesday’s U.S.-North Korea summit. The number of dispatched North Korean workers that showed a downward trend this year started increasing from last month. There are concerns that China would break away from coordination for North Korea sanctions before detailed agreements about denuclearization are concluded.

According to multiple diplomatic sources, a clothing company in Dandong, Liaoning, halted operation at the end of last year when the sanctions of the global community were strengthened but started to operate again in the middle of this month. “They hired more than five North Korean workers before resuming its operation,” said one of the sources. Among more than 600 businesses in Dandong trading with North Korea, more than 100 of them stopped operation last year but a lot of them have recently resumed operation or are preparing to do so.

The number of North Korean workers in China increased by 40 to 50 last month compared to early this year, and by more than 100 this month because of more active trade between China and North Korea. The United Nations Security Council resolution 2397, which was adopted in December last year, states that North Korean workers should return home within 24 months. China actively implemented the sanctions and sent an announcement to factories to return North Korean workers until early this year, but it reportedly has not put a pressure to send them back at all recently.

Full article and source:
More than 10 Chinese factories in border area with N. Korea resume operation
Jin-woo Shin
Dong-a Ilbo
2018-06-19

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Does the Trump-Kim summit and declaration mean anything for the North Korean economy?

Tuesday, June 12th, 2018

By Benjamin Katzeff Silberstein

The short answer is: no. One of the most notable absences from the US security perspective was that of CVID – complete, verifiable, irreversible dismantlement of North Korea’s nuclear weapons. From a North Korean perspective, diplomatic hardliners may be asking: what about sanctions relief? Neither the statement at the end, nor Trump’s press conference, gave any word on sanctions relief. The US has said that such relief will only come when CVID is completed, but to get North Korea to go along, it will likely need to make at least partial concessions along the way.

Sanctions relief may well come sooner than that in practice. No one should be under the illusion that Chinese sanctions enforcement, which has been the real key over the past ten months or so, is about adhering to international norms and UN resolutions. China evaluates whether such enforcement is beneficial to its own interests, and up until the late summer or early fall of last year, the consistent answer was “no”. With Trump’s increased pressure, that changed, as trade statistics have shown, with Chinese imports from North Korea plunging. Now that tensions have eased, China’s assessment may well ease too. We’ve already seen signs that goods as well as North Korean guest workers are once again crossing the border. Surely, China will see the Singapore summit’s very occurrence as a sign that it might be far less risky to let up more on sanctions enforcement. It will be crucial over the coming weeks and months to monitor trade flows, reported as well as unreported ones, over the Sino-Korean border.

For anyone curious about Kim Jong-un’s potential as a reformer in the economic realm, the following story by the Daily NK should be of interest:

The North Korean authorities held a video conference with high-ranking Party cadres ahead of the summit with the U.S. instructing them not to use the terms “reform and opening up.” This appears to be a precautionary measure implemented in response to the heightened expectations of North Korean residents for “greater freedoms” arising from the inter-Korean and U.S.-NK talks.

“In order to prevent ideological wavering that may occur among party executives and residents, the authorities organized a meeting on June 4 with organs directly under the authority of the Central Party Secretariat (Chairperson of the Provincial Party Committee, Chairperson of the Provincial People’s Committee, Director of the Provincial Public Security Bureau, etc.), a source in Ryanggang Province told Daily NK on June 10.

“This meeting was conducted via online video conference, hosted by the first vice director of the Organization and Guidance Department of the Central Committee of the Workers’ Party of Korea. The participants were provincial heads and secretaries across major organs, including Party and People’s Committees and the Ministry of State Security; however, the Ministry of People’s Security was not called upon to participate.”

According to the source, at the meeting, the first vice director said that the talks with the U.S. were planned out of necessity.

“He said that we shouldn’t mention reform and opening up from now on and that North Korea will never follow that path,” he explained.

“He told us to just follow our General’s (Kim Jong Un) orders and that the demolition of the Punggye-ri site does not mean we are giving up our nuclear weapons, but that it is the final step in the completion of our General’s nuclear strategy. He said that we shut down the Punggye-ri site because we have to get rid of unnecessary things.”

A source in South Pyongan Province informed Daily NK on June 10, “In a recent high-level executive meeting, there was mention that there will be absolutely no reform or opening up. We have decided not to use these terms.’”

Meanwhile, according to a separate source in Ryanggang Province, the participants of the meeting took part using computers in their own private offices. “In North Korea, there is an intranet called ‘Cheongbong Maeari (Blue Peak Echo)’, whose use by ordinary residents can be grounds for arrest, but can be used freely by party-level agency executives inside the agencies,” the source explained.

In North Korea, where internet use is restricted, it is also known that a nationwide intranet operated by the government called ‘Kwangmyong’ is commonly used. However, it is presumed that there is a separate intranet used only by party executives and government officials.

“After the announcement on the Central Committee’s video conference was made, a Provincial Party plenary meeting was held the next day. The chairperson of the Provincial Party Committee also gathered key officials in the province and urgently passed on the message of the meeting and told them to stay focused and speak and act according to our General’s plans, especially in times like this,” the additional Ryanggang Province-based source said.

“The Chairperson emphasized that regardless of how the talks go, things are going well according to our General’s plans and we should stand together more closely by our General. This video conference seems to be intended to provide assurance that North Korea will not be pushed around by the United States and to prevent unrest and confusion among party executives.”

Article source:
North Korea convenes meeting ahead of talks with U.S. to prohibit use of the terms ‘reform and opening’
Daily NK
2018-06-12

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South Korean companies gearing up to rush north

Sunday, June 10th, 2018

By Benjamin Katzeff Silberstein

These days, it seems that scarcely no South Korean company isn’t looking north. Hopes are high that with a diplomatic opening – if this time is different, which we really don’t know – North Korea will be open for business. And aside from some Chinese companies and entities, no other have the know-how and language skills to make investments in North Korea profitable. Indeed, those that have happened have largely been in the realm of “adventure capital”, that is, high risks with the potential of high rewards. It seems that relatively few have reached the latter.

Many South Korean businesses will likely ask that the government underwrite potential investments, given the vast political risk. Moon’s government doesn’t seem completely adverse to this, despite the questions it raises about moral hazard and market fairness.

Looking at the types of investments that companies are talking about, it is hardly a given that they will – if they happen – have a positive, broad impact on the North Korean system and society. See below for the sorts of investments being talked about:

SM Group said it has set up a task force to check the country’s mineral resources, particularly in iron ore. The group said its ownership of South Korea’s sole operational iron ore mine effectively gives it an edge over others in terms of processing know-how and facilities it has on hand.

North Korea’s iron ore deposits are estimated at 50 billion tons worth some 213 trillion won (US$197.7 billion).

Besides resources, companies such as Keangnam Enterprises Co. and Dong Ah Construction Industrial have said they are moving to secure a foothold in the North’s building business once all sanctions are lifted.

Dong Ah said its past experience as a builder for the defunct Korean Peninsula Energy Development Organization that moved to build a light water reactor for Pyongyang could help it win future orders, especially in power infrastructure work areas.

Keangnam said that its participation in Seoul’s Official Development Assistance program for emerging economies will make it easier for it to engage in similar projects in the North if conditions permit.

SM Line Corp said it wants to ship North Korean resources using the country’s cheap labor and explore the opening of new shipping routes and related shore infrastructure.

“Work in the North will be a win-win development for all sides, and this is the reason why the company is looking into the matter,” a source at the shipping line said.

Besides medium-size companies, the large conglomerate Lotte said it has set up a team that can expand business ties not only with North Korea but also Russia and China.

Meanwhile, there has been growing interest by local companies who want to set up operations at Kaesong Industrial Complex in North Korea, which has been shuttered following the North’s nuclear and long-range missile provocations.

Dong-a Publishing said it wanted to take advantage of the low labor costs to set up business in Kaesong.

The company said due to the labor intensive work in the publishing field it makes sense to move its plant to the North.

Related to such moves, a business group representing South Korean firms that had operated factories in Kaesong said recently that upwards of 20 companies a day have called to make inquiries about opening new factories in the special economic zone.

Article source:
S. Korean mid-tier companies interested in biz opportunities in N. Korea
Yonhap News
2018-06-10

Much of what’s being talked about, in other words, is extraction of natural resources. Sure, this would be done with North Korean labor, but even though the domestic economy could get an upswing through these sorts of operations, North Korea wouldn’t necessarily reap the full potential benefits of its mineral assets, which could be sold for much higher prices if they were locally refined and processed. This is likely something that the North Korean leadership is very well-aware of, and Kim Jong-un talked about it in speeches in the 1990s. But given the need for hard currency, they may not see that they have much of a choice in the matter.

Other companies want to get in on the cheap labor. That’s all fine and good for the companies and the potential prospective North Korean employees, but factories of this sort can be set up pretty easily without sourcing raw materials locally, and with few connections with overall North Korean society.

In other words, if these investments come to see the light of day (again, a big “if”), it’s not a given that it’ll be in any way transformative for the North Korean economy. We have seen much of this before, and we know from Kaesong that the state is indeed both capable and willing to contain economic development to specific areas, keeping it separated and in check from broader North Korean society.

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China’s economic openings to North Korea after summit(s)

Saturday, June 9th, 2018

Benjamin Katzeff Silberstein

A recent Reuters report looks at some of the ways, including tourism and the restaurant business, through which economic contacts between North Korea and China have increased after the spring of summits:

North Korean officials have toured China to discuss economic development. Speculators are snapping up property along their common border. And South Korea is studying ways to boost engagement with its isolated neighbor to the north.

Across the region, there are signs that U.S. President Donald Trump’s campaign of “maximum pressure” on Pyongyang to give up its nuclear weapons is weakening ahead of his summit with North Korean leader Kim Jong Un in Singapore on Tuesday.

Trump, along with leaders like South Korea’s President Moon Jae-in, have credited the pressure campaign with bringing Kim to the negotiating table through a combination of international sanctions, political isolation, and threats of military action.

However, unless there is a major provocation or resumption of nuclear testing or missile launches by North Korea, strategists and academics say it is unlikely that maximum pressure will ever fully return.

“Trump’s campaign is over,” said Kim Hyun-wook, a professor at the Korea National Diplomatic Academy. “The diplomatic openings with North Korea have already been taking a toll on the maximum pressure campaign.”

Trump has himself said he doesn’t want to use the term “maximum pressure” any more because of improving relations with North Korea.

Joseph Yun, the United States’ former top negotiator with North Korea, told a Senate hearing on Tuesday: “Practically it is not possible to continue maximum pressure when you’re talking with your adversary. I don’t think you can have serious engagement as well as maximum pressure.”

Preparations are already underway in China, South Korea and Russia, which share land borders with North Korea, for better ties with the isolated nation.

[…]

Along China’s border with North Korea, speculators are buying land and traders are stockpiling cheap North Korean coal amid hopes that restrictions will soon be lifted.

“It’ll be good if North Korea opens up,” said a hat seller in the border city of Dandong, who only gave her name as Yang. “The people there are so poor, it’s like China in the 1980s.”

She said the number of North Koreans shopping in the city had dropped in recent months after the sanctions were tightened. But now, she said, property prices in Dandong were being driven up by speculators betting that trade would revive.

Other local people in Dandong said North Korean workers were returning, prompting the opening of some restaurants and hotels.

The owner of one Korean restaurant was training staff on presenting a new menu in preparation for more visitors from other parts of China, including people intending to visit North Korea.

The Liuji Restaurant, which was shut after its owner was investigated in 2016 for dealings with North Korea, reopened in March after Kim’s visit to China, his first trip out of the country since taking office.

It was not clear what happened to the investigations or who the new owner was.

The restaurant’s North Korean staff explained the closing as “renovations.”

On June 5, state carrier Air China announced it would resume regular flights between Beijing and Pyongyang, which officials had indefinitely suspended in November, citing poor demand.

Although the first Air China flight had only around 20 passengers, tour operators said busloads of Chinese tourists were in Pyongyang, their numbers surging in recent weeks because of the lowered tensions.

“I went to the train station (in Pyongyang) and it was the busiest I’ve ever seen it,” said the founder of the Dandong-based INDPRK tour company, who goes by the name Griffin Che. “I’d guess about 100 Chinese tourists arrived by train today. In the past I would see a maximum of 30-40 tourists.”

Che said the prospect of new economic opportunities in North Korea has him interested in branching out beyond tourism into investment and coal trading.

U.S. lawmakers have raised concerns that traders in China are already skirting sanctions, but Beijing-based diplomats say that there is no evidence that China is abandoning its U.N. Security Council commitments.
[…]

Some of that political isolation has been reduced, however, by Kim Jong Un’s meetings with leaders of China and South Korea, and this week’s summit with Trump.

At the end of May, Russian Foreign Minister Sergei Lavrov landed the first meeting between a Russian official and Kim as head of state, and extended an invitation for the North Korean leader to visit Russia.

Russia has long been skeptical of the sanctions regime, and South Korea’s Moon has proposed a three-way study on potential joint projects, including railways, gas and power linking Siberia to the Korean peninsula.

“Even if the summit fails and U.S.-North Korea tensions resurface, Russia is unlikely to support new rounds of sanctions on North Korea,” said Artyom Lukin, a professor at Far Eastern Federal University in Vladivostok.

“If previously adopted U.N. sanctions continue to be in effect, Russia will abide by them, but it will probably find some legal ways and loopholes to make their enforcement as mild as possible.”

Kim has met Chinese President Xi Jinping two times in recent months and analysts say Beijing’s willingness to maintain last year’s level of pressure on North Korea is waning.

[…]

Two North Korean restaurants in Jakarta have shut down.

In Vietnam, two North Korean restaurants in Ho Chi Minh City closed in October last year, but there is still one in Hanoi, owned by a Vietnamese businessman who also runs a shipping company.

The country’s once-close ties with North Korea have been strained over North Korea’s alleged use of a Vietnamese citizen in the assassination of Kim Jong Un’s half brother, Kim Jong Nam, in Kuala Lumpur in February last year.

In March, Vietnam filed a report to the United Nations in which the country said it has “always fully implemented” sanctions on North Korea.

In response to U.S. pressure, Thailand said annual trade with North Korea fell by 94 percent, although some North Korean businesses have continued to operate in the country, including two restaurants in Bangkok.

At the Pyongyang Haemaji Restaurant, North Korean waitress Pak Il Sim said tables were routinely full of customers, most of them Japanese.

When asked if the restaurant had come under pressure from Thai authorities to close, she said: “No, business as normal”.

Full article and source:
Door already ajar: Trump may struggle to isolate North Korea again
Brenda Goh and Josh Smith
Reuters
2018-06-09

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Goods, and people, crossing the China-North Korea border

Wednesday, April 25th, 2018

By Benjamin Katzeff Silberstein

Over the past couple of weeks, there’s been several news stories that suggest and increased stream of goods – and people – across the North Korean border to China. First, there were the reports that some 400 North Korean workers, who were earlier expelled due to China’s sanctions implementation, came back to China. It shouldn’t be all that shocking if Chinese sanctions enforcement eased somewhat after Kim Jong-un’s visit to Beijing a few weeks ago. Judging from historical patterns, Chinese sanctions enforcement on North Korea may well have relaxed as international tensions around North Korea’s nuclear program are somewhat eased as well.

South Korea’s MBC seem to make the same assessment in a recent dispatch from the Sino-Korean border. On April 24th, they reported that North Korean-owned restaurants in Dandong have opened again after being closed for several months, since China began enforcing UN security council-mandated sanctions against North Korea. Shops selling North Korean goods in China have had their shelves restocked, and judging by ticket sales, the number of Chinese tourists visiting North Korea has increased.

It’s hard to tell precisely what all this means. Surely, this could all be a sign of Chinese concessions to North Korea following Kim’s meeting with Xi. More likely, the relaxation is also a concession to Chinese companies: China’s implementation of sanctions has not only hit against North Korea, but against Chinese business interests in the border regions as well. It appears that the main beneficiaries of whatever relaxation has happened are businesses near the border, such as a number of Chinese factories, and North Korean-run restaurants (usually run as joint ventures with Chinese partners). Information is, as usual, very spotty and one should be careful not to draw too many general conclusions from anecdotal evidence.

In any case, as I write for NK Pro, the signs of relaxation we’ve seen so far don’t merit any change in the assessment that North Korea is experiencing significant pressure from the sanctions. Key exports that dropped in 2017 due to China’s sanctions implementations have, as far as we can tell from publicly available information, not gone up. This may very well change in the future, and the anecdotal signs of relaxation along the border may be indicative of a broader change. But for now, the evidence doesn’t seem to be there.

 

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Chemical factory in North Korea closed due to sanctions

Thursday, April 19th, 2018

Benjamin Katzeff Silberstein

Says Radio Free Asia:

A North Korean chemical plant which had been shuttered for 20 years and renovated for reoperation in 2016 appears to have been shut down again due to international sanctions imposed on the regime of leader Kim Jong Un, sources inside the country and in neighboring China said.

The Chongsu chemical plant located in the workers’ district of Sakchu county in North Hamgyong province sits opposite the city of Dandong in northeastern China’s Liaoning province across the Yalu River separating North Korea and China.

North Hamgyong province is not opposite Dandong, and RFA is likely mixing North Hamgyong up with North Pyongan province. I’m grateful to a reader and good friend for pointing this out!

The chemical factory It underwent a major renovation in October 2016 and until recently was known to produce batteries for military use, sources said.

“The Chongsu chemical plant had been reactivated for less than a year, and it’s been eight months since any smoke has come out of it,” a resident of Dandong’s Kuandian county told RFA’s Korean Service. “If there is no smoke coming out of its smokestack, then it’s evident that the plant has stopped operating.”

“International sanctions on North Korea may have had a big impact on the deactivation of the chemical plant,” said the source who declined to be named. “There is strong possibility that the chemical plant was not able to obtain necessary materials because of China’s sanctions.”

The United Nations, with backing from North Korea’s longtime ally China, unanimously approved sanctions against North Korea in December as punishment for its development and launch of a ballistic missile that Pyongyang said is capable of striking the U.S. mainland.

The sanctions place caps on the import of crude oil, and refined oil products, such as diesel and kerosene that are crucial to North Korea’s economy. They also impose a ban on the export of a range of products, including food, machinery, electrical equipment, wood, earth, and stones, to other countries.

In early January, China’s Ministry of Commerce began imposing limits on exports of crude oil, refined oil products, steel, and other metals to North Korea, in line with U.N. sanctions.

China suspended North Korea coal imports in 2017 after the U.N. adopted a previous sanctions resolution to punish the country for its nuclear weapons program by tightening restrictions on coal exports.

“Because of China’s sanctions, chemicals, including sulfuric acid, are not allowed to be sent to North Korea,” the source said. “So how can the plant produce batteries without an essential material?”

Authorities let the Chongsu chemical plant fall into neglect in 1996 during the Great Famine during which up to 3 million North Koreans starved to death due to a variety of factors, including the state’s economic mismanagement, an end to aid and trade concessions from the former Soviet Union after it collapsed, and a series of floods and droughts.

“When they initiated the major renovation of the chemical plant, they probably did not expect there would be sanctions against them or any power shortages,” he said.

A North Korean resident of North Hamgyong pointed out that that the chemical factory could not sustain operations after a nearby hydropower plant stopped generating electricity last year when the Supung Dam, its water source, dried up during a drought.

“In order to operate factories in North Korea, raw materials and electricity must be guaranteed,” said the source who declined to be named.

Fertilizer production

The chemical plant was built in 1943 and produced calcium cyanamide, a chemical fertilizer commercially known as nitrolime, and phosphate fertilizers when Korea was under Japanese colonial rule (1910-1945).

In 1966, when North Korea founder and former leader Kim Il Sung was in power, the facility was expanded to produce other chemical fertilizers.

The London-based International Institute for Strategic Studies issued a dossier in 2004 listing five major North Korean civilian chemical production facilities that sat on the border with China, including the Chongsu chemical complex.

A report issued five years later by International Crisis Group listed a chemical plant in Chongsu as one of four chemical weapons sites on the border with China, though specific names of the facilities were not given.

Though North Korea has long denied having a chemical weapons program that produces nerve, blister, blood, and choking agents, the U.S. Defense Department believes the rogue nation likely possesses production capability and a chemical weapons stockpile that could be used with artillery and ballistic missiles, according to an Associated Press report in March.

In February, the U.S. determined that North Korean used the chemical warfare agent VX to assassinate Kim Jong Nam, the half-brother of Kim Jong Un, at the Kuala Lumpur international airport in Malaysia in February 2017.

In response, the U.S. imposed sanctions on North Korea under the Chemical and Biological Weapons Control and Warfare Elimination Act in addition to existing U.S. comprehensive sanctions targeting unlawful North Korean activities.

Full article here:
Sanctions Force North Korea to Shutter Chemical Factory
Joonho Kim
Radio Free Asia

2018-04-19

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