North Korean Economy Watch

No doubt the potential costs of North Korea’s economic transition occasionally keep South Korea’s finance minister awake at night…particularly when the international credit rating agencies review South Korea’s sovereign debt rating.  So it is only rational that South Korea would seek to spread these potential costs as widely as they can. 

Last week South Korea made a small pitch to the European Bank for Reconstruction and Development to facilitate the DPRK’s transition :

“I strongly recommend North Korea as a next candidate to become a recipient country, once it decides to transform itself into a market economy,” Young Geol Lee, vice minister of strategy and finance, said in a speech. “Please bear in mind that North Korea has great potentials as a future client of the EBRD.”

Read more here.

(Hat tip to a reader) On March 26, the Anglo-Korea Society in London hosted an interesting panel discussion with the London ambassadors from both North and South Korea along with Martin Uden, Britain’s ambassador to the ROK, and Stephen Lillie, the head of the FCO Far East Group.

It is a bit too late to attend, but below are summary links and photos:
1. Official page of the event (pictures at the bottom)

2. Pearl Daborn summary

3. Michael Rank summary

4. Jennifer Barclay summary

5. Marian Werner summary

Several foreign organizations are broadcasting radio content into North Korea: Free North Korea Radio, Open Radio for North Korea, Radio Free Chosun, Voice of America and  Radio Free Asia.   

According to Yonhap, the EU government and Reporters Without Borders (RSF) are throwing financial support behind FNKR, ORNK, and RFC:

The European Union (EU) and an international group of journalists forged a deal on Tuesday to provide 400 million won (US$290,000) to help anti-Pyongyang radio broadcasting stations run mostly by defectors from North Korea.

The EU and the Reporters sans Frontiers (RSF) signed the deal with three stations — Free North Korea Radio, Open Radio for Korea and Radio Free Chosun — in Seoul to fund their programs for the next three years.

The stations have been producing and sending shortwave anti-communism and human rights radio broadcasts across the border. In the past, North Korea has asked South Korea to suspend the stations, calling them an obstacle to unification.

In a related Associated Press story, the South Korean government is allowing Voice of America access to South Korean transmission equipment for the first time since the 1970s:

That makes the signal much clearer than VOA’s long-running shortwave broadcasts from far-flung stations in the Philippines, Thailand and the South Pacific island of Saipan. Moreover, it’s an AM signal, so listening in doesn’t require a shortwave radio.

“Radio can play a big role in changing people,” said Kim Dae-sung, who fled the North in 2000 and is now a reporter at Free North Korea Radio, a shortwave radio broadcaster in Seoul. “Even if it’s simply news, it’s something that North Koreans have never heard of.”

Still, the move could be seen as yet more provocative policymaking by a government already at loggerheads with the North over Lee’s tough policy on Pyongyang, and comes at a time of heightened regional tensions over North Korea’s plans to launch a rocket early next month. Nuclear envoys from South Korea and Japan flew to Washington for talks Friday with top U.S. diplomats about North Korea.

Since Jan. 1, VOA has been using the antenna facilities of the Far East Broadcasting Company-Korea, a Christian evangelical radio station, for half of its three-hour nighttime broadcast into the North. The antenna is only 40 miles (65 kilometers) from the border.

South Korea prohibited VOA from broadcasting from its soil for carrying a 1973 report on the kidnapping of Kim Dae-jung, then a leading South Korean dissident. The authoritarian Seoul government at the time is widely believed to have been behind the abduction.

North Korea condemns such broadcasts as “U.S. psychological warfare” and often jams the signals. So far, it has not interfered with VOA’s new AM broadcast, said radio expert Park. Doing so requires more equipment than blocking shortwave signals, and the fact that North Korea isn’t doing so may indicate the North is struggling economically, he said.

Read the full stories here:
EU, reporters promise 400 million won to promote radio broadcasts into North
Yonhap
3/24/2009 

VOA wins powerful base for broadcasts into NKorea
Associated Press (via Herald Tribune)
3/28/2009

Over the last few years, the European Union has pursued an engagement policy with North Korea.   MEP Glyn Ford makes regular trips to Pyongyang to facilitate diplomatic progress; the German Freidrich Naumann Foundation runs economic education courses; European donors founded the Pyongyang Business School; and a small group of European ex-pat businessmen formed a de facto chamber of commerce, the European Business Association in Pyongyang.  Although European companies have experienced mixed success in the DPRK they continue to look for new opportunities. 

This morning, however, Felix Abt, a Swiss director of the PyongSu Pharmaceutical Joint Venture Co. in Pyongyang informs me that his life insurance policy (purchased from a European company) has been cancelled. 

“A European life insurance company cancelled my life insurance because I am a dangerous person living in a dangerous country. Credit card organisations cancel credit cards for such persons in such countries, health insurance companies come up with other reservations and limitations and the latest organisation that has just expelled me is LinkedIn with a very curious explanation.”

I am unsure how the cancellation of life insurance policies could impact other Europen investments in the DPRK, but the marginal effect cannot be positive.  Mr. Abt has been a resident of Pyongyang for years where he manufactures Western-quality pharmaceuticals.  Needless to say, the DPRK is very much in need of his services, so it is a shame that after all this time he is now considered a liability by his insurer.

Mr. Abt also forwarded his rejection from the business networking site LinkedIn, which is posted below:
 

Apparently LinkedIn’s legal department considers logging into the server as “receiving goods of US origin” (the software I presume), and so it prohibits account holders, or even logging in, from Cuba, Iran, North Korea, Sudan and Syria—even if they are Swiss.

As regular Google Earth users are aware, the DPRK has experienced significant deforestation in recent decades from both private and state actors. The former have cleared land for fuel/heat and private food production. The latter have felled forests to export lumber. However, without private property rights over the lumber and corollary price signals, we have witnessed yet another ”tragedy of the commons”–the over extraction of a common-pool resource. 

As can be seen in the image above, official reforestation campaigns have been launched several times.  According to Good Friends, the most recent was announced last September, shortly before the DPRK appointed a new forestry minister, Kim Kwang-yong.  According to the Yonhap article below, however, South Koreans and Europeans have been supporting reforestation projects in the DPRK for nearly ten years:

North Korean workers and students rolled up their sleeves Monday for Tree-planting Day, state-run media said, amid continuing aid from South Korea despite damaged political relations.

North Korea has a high deforestation rate, as residents have cut down trees for fuel. Deforestation is closely linked to the country’s chronic food shortages, as barren mountain slopes leave rice farms prone to severe flooding by summer monsoons, according to aid workers in Seoul.

The North Korean government has banned cutting trees and sought to make its country greener with aid from South Korea and some European governments.

“Covered with trees are mountains and fields of the country from the foot of Mount Paektu, the sacred mountain of the revolution, to the military demarcation line and from the eastern coast to the western coast,” the Korean Central News Agency said in an English-language report titled “Greening and Gardening Campaign Gets Brisk.”

“The tree-planting campaign is being briskly undertaken everywhere in the country … changing the appearance of the country beyond recognition day by day,” it said.

South Korean government and civic groups have been operating sapling fields in the North Korean cities of Kaesong and Pyongyang, as well as near the North’s scenic resort Mount Kumgang, providing seedlings, equipment and technology since 1999. The project has cost South Korea some 9 billion won (US$5.7 million), according to the Ministry of Unification.

Aid workers said the inter-Korean forestry project has continued even though Pyongyang cut off all government-level dialogue in response to Seoul’s hardline policy toward it that began last year.

Ahn Sun-kyong, an aid worker from Green One Korea, an umbrella group of over a dozen non-governmental organizations in Seoul, said it plans to build a seed preservation facility and an apple farm in Pyongyang as new projects this year.

“There may be certain limitations, but this non-governmental exchange project will continue,” Ahn said.

Hwang Jae-sung from the Korean Sharing Movement, which operates the Kaepung sapling field in Kaesong as a member of Green One Korea, said most trees are prematurely cut by residents, who also rake up fallen leaves for fuel.

“Deforestation is directly linked to the food problem,” Hwang, who last visited Kaesong in November, said. “We believe tree planting in North Korea is not only useful for preventing floods, but also can be another means of resolving the food shortages in the North.”

The aid groups say 16-18 percent of North Korean forests, or 1.5-1.6 million hectares out of the North’s 8.9 million hectares of forests, are believed to be deforested. About 80 percent of North Korea is covered by mountains.

Although the support offered by these groups is necessary to restore ecological health and productive power of the DPRK’s agricultural lands, an unfortunate consequence will likely be growing restrictions on private food production which will necessarily require the North Korean people to once again rely on the state for food distribution.

Read previous posts on forestry and environmental protection here.

Read the Yonhap story here:
N. Koreans work to make country green on Tree-planting Day: report
Yonhap
Kim Hyun
3/2/2009

Wednesday 4 March, 14:00 – 17:30
KVK The Hague, Randstadzaal
Koningskade 30, 2596 AA  Den Haag

This event is sponsored by GPI Consultancy (see previous posts here).

Speakers include:

Willem Lobbes, boardmember of the Dutch Korean Tradeclub, Director of Lobbes Insurance Consultants

Representative of the DPRK Embassy in Bern, Switzerland

Egbert Wissink, CEO of NovolinQ BV

Professor Evert Jacobsen, University of Wageningen

Kees van Galen, CEO VNC Asia Travel
 
Paul Tjia, Director of GPI Consultancy

The AGENDA can be found here (PDF).

The REGISTRATION FORM can be downloaded here.

By Michael Rank

LONDON - Britain is hosting the first ever delegation from the Workers’ Party of Korea (WPK) amid hopes that this will help to restart a dialogue between Pyongyang and the European Union on human rights, denuclearisation and other issues and lead to transfers of renewable energy technology to North Korea.

Labour Party member of the European Parliament (MEP) Glyn Ford, one of Europe’s top North Korea experts who has visited Pyongyang a dozen times, told NKEW that he was pressing the delegation to agree to reopen the dialogue that was broken off in 2005 after the EU sponsored a resolution at the United Nations in Geneva that was highly critical of North Korea’s human rights record.

He said it was hard to tell whether the four-member delegation would recommend reopening of the dialogue to decision-makers in Pyongyang. “It’s not the style of North Korea to make decisions on the spot,” Ford noted. He said he personally had opposed the resolution, which was supported by the US and Japan, because it was almost certain to result in suspension of the highly sensitive dialogue which had only just begun.

The four-man delegation is visiting Britain for a week and they are also going to Bristol and Cambridge. Ford accompanied the group to Bristol as this west of England city lies in his Euro-parliamentary constituency, and it is close to the possible site of a giant barrage across the river Severn which is currently being considered as a source of generating green electricity.

He said a deal on the nuclear issue and on reviving the human rights dialogue could result in the EU agreeing to provide wind, tidal and other renewable technology to North Korea, just as the EU has provided €500 million ($640 million) in humanitarian aid over the last eight years.

The delegation includes a scientist with a background in renewable energy, added Ford who has an MSc in marine earth science. He said the west coast of Korea has a tidal range of 11 metres (36 feet), which could make it highly suitable for an electricity-generating barrage. The Severn has a tidal range of 14 metres, the second highest in the world.

Tidal barrages are an attractive means of generating electricity because tides, unlike wind, are highly predictable, but the environmental cost of building a barrage over the Severn, up to 10 miles long, could be huge and there is considerable public opposition to the plan. But such factors are likely to loom less large in North Korea.

Ford said he had met three of the four-man delegation on previous visits to Pyongyang, and that he knew two of them fairly well. He is hoping to visit Pyongyang again with a European Socialist delegation at the end of March.

The group have already had a meeting with Foreign Office officials, who Ford said had presumably also pressed the North Koreans on human rights and the nuclear issue.

Apart from the North Korean visit to the UK, Britain’s Lord Alton, a veteran campaigner for human rights in North Korea, is due to visit Pyongyang early next month. Alton, a devout Catholic, is scheduled  to meet the chairman of Korean Religion Association and visit the Russian Orthodox church and the Jangchung Catholic church in Pyongyang. He will be one of the first Western visitors to the Russian Orthodox church, which opened in 2006 amid considerable official fanfare.

The WPK delegation’s visit to Britain has received little if any media attention so far. In fact hardly anyone would have known about it if the generally extraordinarily uninformative North Korean news agency KCNA had not announced on January 27 that “A delegation of the Workers’ Party of Korea led by Pak Kyong Son, vice department director of its Central Committee, left here today to visit the UK.”

Joseph Dresnok, the last of the DPRK’s four US defectors, sat down with Mark Seddon to give his first interview since the 2006 release of Crossing the Line.

Click on image below to see the interview on YouTube:

Pictured Above: Dresnok with Glyn Ford, EU parliamentarian and author of North Korea on the Brink

The interview was also written up in The Guardian.  Much of the material is covered in Crossing the Line, with a couple of notable exceptions:

Dresnok describes himself as a citizen of Pyongyang. “I call it my country because I have been here for 46 years. My life is here. Enough? The government will take care of me until my dying breath.” So would he like to return to the US? “I tell you, yes; I must be honest to you. I would like to see the place. But how can I go there and dance in front of the American government, when they are arming South Korea?” Dresnok knows that he would be arrested on arrival, as was Jenkins, when he returned to the west in 2004. There is no love lost between Dresnok and Jenkins, who recanted on his return just over three years ago, denounced Dresnok and was granted clemency after only 30 days in the clink. Were he ever to leave North Korea, Dresnok is unlikely to get off so lightly, having been painted as the ringleader by Jenkins. Abshier and Parrish both died in North Korea, where their families remain.

…

And with that Comrade Joe prepares to return to his apartment, where his wife and children are waiting. It is illegal to listen to foreign broadcasts, but as he gets up Dresnok offers his opinion on the US election: “I’m told McCain will get it.”

(Hat tip to Gag Halfrunt for the story)

According to an article in the Associated Press today (reprinted in the Washington Post):

The U.S. has recently stepped back from its demand for a detailed declaration addressing North Korea’s alleged secret uranium enrichment program and nuclear cooperation with Syria; North Korea has denied those allegations. Washington now says it wants North Korea to simply acknowledge the concerns and set up a system to verify that the country does not conduct such activities in the future.

How can any uranium enrichment verification plan be implemented in the DPRK?  One solution was proposed to me by Glyn Ford, a member of the European Parliament, when I met him in Beijing last March.  His idea was this: Any uranium enrichment program would require a colossal amount of electricity delivered at a consistent voltage.  So one way the west could monitor if such a program was taking place would be to keep tabs on the North Korean power grid for suspicious spikes in activity or to build voltage fluctuations into the power supply.

Read the full article here:
US official to travel to NKorea
Associated Press (Printed in the Washington Post)
Foster Klug
5/6/2008

(Posted from Shanghai, China - I am on vacation, so this is just a quick note)

While in Beijing a few days ago, I ran into Glyn Ford giving a talk in conjunction with the release of his new book, North Korea on the Brink.

Mr. Ford was on his way to Pyongyang to pitch an idea he believes could resolve the HEU (Highly-Enriched Uranium) impasse, which is bogging down implementation of the most recent version of the Agreed Framework.

His idea is this:

Even if the North Koreans have an HEU program it would require a colossal amount of electricity delivered in a consistent fashion.  So one way the west could monitor if such a program was taking place would be to keep tabs on the North Korean power grid for suspicious activity, or to build in fluctuations to the power supply so that the machinery which does the enriching is not able to function.

If both sides can know that there is currently no HEU program underway, then maybe they can avoid the politicalty trecherous waters of determining whether such a program once existed–allowing us all to move on to the next phases of the agreement.