North Korean Economy Watch

According to Park Ju-Min writing in the Los Angeles Times:

The portraits of North Korean leader Kim Jong Il have been taken down from the classrooms in the run-down Tokyo Chosen No. 2 Elementary School.

But a quick look into the teachers lounge reveals the Dear Leader in all his glory.

The school for ethnic Koreans in Japan, one of about 60 in the country that are funded by North Korea, faces a delicate balancing act as money from the reclusive regime has decreased amid economic turmoil there.

Since the 1950s, the schools have been run by the General Assn. of Korean Residents in Japan, or Chosen Soren, whose Tokyo headquarters acts as North Korea’s unofficial embassy.

At Chosen No. 2, the eight teachers and 54 students face a life of political isolation as they try to preserve their ethnic identity in Japan, a country many people believe is in the sights of North Korea’s nuclear missiles.

Former Principal Song Hyon-jin knows the school spreads what many Japanese consider communist propaganda. Activists have surrounded the school with megaphones shouting for students and teachers to leave the country, threats that increased after North Korea tested a nuclear device last year. A student at another Chosen school was accosted on the subway, her traditional hanbok robe, worn by many North Koreans, ripped by her attacker.

“Even though the Korean community has changed much in the past 20 years, it’s still tough to live as a Korean in Japan,” said Song, a longtime Chosen member.

The schools get no funding from the Japanese government, which doesn’t officially recognize them.

….

Because there are no diplomatic ties between Tokyo and Pyongyang, the ethnic Koreans cannot apply for North Korean passports. They must be content to send their children to Chosen schools.

Since the 1970s, enrollment in the schools has fallen to less than 12,000 from 40,000, and fees have risen dramatically. In an effort to improve the schools’ image, administrators removed portraits of Kim Jong Il and his father, Kim Il Sung, from classrooms. They also added South Korean history to the curriculum, along with Japanese language and history.

Another change was softening the emphasis on North Korean propaganda, relying instead on a more straightforward history. To avoid undue attention, middle and high school students were ordered not to wear traditional Korean school uniforms after class.

“Schools have to be more open and acceptable for non-Chosen Soren affiliates for the sake of their existence,” said Han Young-hae, an associate professor at the Graduate School of International Studies at Seoul National University. “They need to reestablish their historical views and educational direction.”

As a result, the atmosphere here has lightened. South Korea also has begun taking up the financial slack, donating computers.

“I hope to teach here forever,” said Lee Young-sim, a 25-year-old art teacher who is a product of Chosen schools.

Song is heading a fundraising drive to build a new wing at the school, in hopes of stemming the defection of ethnic Koreans to Japanese schools.

“It is difficult to protect the school when many Korean kids are going to Japanese schools,” said Song, whose two children attend Chosen schools. “But I will do my best until the good day comes.”

Read the full article here:
North Korea-funded schools in Japan have an image problem
Los Angeles Times
Park Ju-Min
2/23/2010

The Daily NK did a series of articles on the General Association of Korean Residents in Japan (Chongryon or Chosen Soren).  Below are links to all seven parts:

Part 1: Chongryon feels the pinch

Part 2: Debts, Mergers, Collapses and Foreclosures

Part 3: Homecoming Project Speeds Chongryon Demise

Part 4: South Korea Visits Weakened Chongryon

Part 5: Chongryon Remittances and Investments

Part 6: “Study Group,” the Core of Chongryon

Part 7: Study Group Money Laundering Machine

Northeast Asia Matters posted a very helpful background paper on the Tumen Area Economic Development Project. According to Northeast Asia Matters:

Many in Northeast Asia wish to see the Tumen Basin develop into a place for economic cooperation and competition. One such plan is the Greater Tumen Initiative (GTI), formerly known as Tumen River Area Development Project (TRADP), being carried out under the auspices of the United Nations Development Programme (UNDP). The 20-year 80 billion USD plan calls for the creation of port facilities and transportation infrastructure in the region to support a multinational trading hub. Countries participating in the GTI are China, Mongolia, North Korea, Russia and South Korea.

The goal of GTI is to make the area into a free economic zone for trade to prosper and attract investment into the area. For China, the project would give traders in Northeast China easier access to major international ports without having to circumnavigate the Korean Peninsula and thus stimulating growth in China’s northeast rustbelt. For Russia, the project would give the ability to better exploit resources in Siberia and allow easier access to North Korea’s resource-rich hinterland; the area just to the south of the Tumen contains reserves of oil, minerals, coal, timber, and abundant farmland.

Development of the Tumen River area and North Korea’s participation in this project means inflow of hard foreign currency, improvements in infrastructure, and possible increase in industrial capacity. North Korea, with its bleak economy, therefore, will most likely continue to support the development of Tumen River area and increase its future involvement in the project as it seeks to break the economic isolation and hardship it has suffered since the collapse of most of its communist allies and the implementation of international sanctions.

Read the full paper here.

Institute for Far Eastern Studies (IFES)
NK Brief No.10-01-29-1
2010-01-29   

The director of the (North) Korea Institute of Social Sciences has publically stated that the shocking currency reforms announced last November were aimed at filling the state’s public finance coffers.

In an interview for the Choson Sinbo, a newspaper distributed by the pro-North ‘General Association of Korean Residents in Japan,’ director Kim Cheol Jun revealed, “[last year’s] currency exchange program in [North Korea] was effectively carried out…through the currency exchange, socialist economic management principles could be better realized and a public finance foundation was prepared on which leaping advancements in the lives of the people will be achieved.”

Many experts in South Korea and abroad had speculated that the North’s objective in revamping its currency was to boost public coffers, but this was the first time that anyone from North Korea had publicly alluded to such goal. Director Kim stated that last year was a year ‘carved into history’ as the year in which the nation was turned around toward the realization of the goals set for 2012, noting that new seeds had been developed to boost crop yields, and that double- and triple-cropping as well as improved potato and bean crops had been accomplished.

Director Kim also stated that a decisive turn-around had been made in resolving food shortage problems, noting the successful development of Lyosell as one example of improved production in North Korea. Lyosell is a silk-like material made from wood pulp transformed into cellulose, and is softer and more hygroscopic than cotton, yet almost as strong as polyester.

Director Kim added that last year also saw the completion of the Yeoungwon Powerplant, the Yeaseong River No. 1 Youth Powerplant, and the Keumya River Powerplant, as well as the installation of Computer Numerical Control (CNC) systems in the Taean Heavy Machinery Complex, the Cheollima Steel Complex, and the Hyecheong Construction Machinery Factory.

Following the currency reform, there was a total lack of policy to stabilize the lives of the North Korean people, and the ban on foreign currency, closing of markets and other control measures only pushed residents to the brink. On December 28, North Korean authorities released a memorandum completely banning the use of foreign currency, and since the beginning of the new year, markets throughout the country have been closed, causing people in the North to turn to barter in order to obtain food. However, the schedule for the closing of markets varies by region, and the state authorities have been unable to enforce state-set pricing as the government has been faced with more than a little resistance to the currency reforms.

Joseph Bermudez, a military analyst for Jane’s Intelligence Review and author of The Armed Forces of North Korea, has launched a journal dedicated to the discussion of the DPRK military: KPA Journal.

According to the introduction by Mr. Bermudez:

The goals of this modest publication are to allow me to freely share with readers new, interesting or updated information concerning: all aspects of the Korean People’s Army (KPA, more commonly known as the North Korean Army) from its birth until present; ballistic missile development; intelligence operations (e.g., seaborne infiltration operations, etc.); and other defense and intelligence issues concerning the Democratic People’s Republic of Korea (DPRK, more commonly known as North Korea).

As I have researched, written and lectured on these subjects during the past 25+ years I’ve frequently come upon fragments or collections of interesting information that either didn’t fit into then current projects or that was deleted by editors in order to save space. Recently, while conducting research for three book projects—Combat History of the Korean People’s Army, DPRK Intelligence Services 1945-1975, and an update to my earlier North Korean Special Forces: Second Edition—I once again encountered numerous examples of these fragments and collections. Rather than let this information remain in my files unused I’ve decided to use it for KPA Journal.

Additionally, as I have written reports and articles concerning recent DPRK related issues new information has subsequently come to light. It is my hope to utilize KPA Journal to share such updated information with readers. While it is my hope that KPA Journal will eventually be a monthly publication, initially it will be distributed on an irregular basis until the time arrives when I can dedicate more energy to it.

A KPA Journal website is under construction and should be online later this year at www.kpajournal.com. It will eventually serve as a repository for issues of KPA Journal, declassified documents, longer research projects, previously authored articles and more.

Should readers find any of this information of interest or value, and decide to use it in your own research efforts, I would greatly appreciate your citing KPA Journal as your source.

Readers are encouraged to share KPA Journal with friends and colleagues. If they wish to be added to the mailing list, or should you not desire to be on the mailing list, please contact me at kpajournal@gmail.com.

Download Vol. 1, No. 1 here (PDF).

According to the WorldTribune.com:

Families of victims have filed suit against North Korea on charges of supporting a major attack by the Japanese Red Army in Israel.

The group, Shurat HaDin, has filed a suit in a U.S. district court in San Juan, Puerto Rico for the families of the victims of the 1972 attack.

During the assault on Lod Airport, 26 people were killed and 80 others were injured by attackers alleged to have been trained by North Korea. The attack was attributed to the Japanese Red Army and the Popular Front for the Liberation of Palestine.

“This will be the first time North Korea is being held to account in a U.S. court for its support of terrorism over many decades,” Shurat HaDin said on Dec. 1.

According to Shurat HaDin’s web page:

The case arises from a lawsuit brought by the families of victims of the 1972 terror attack at the Lod Airport in Israel in which 26 people were killed and 80 injured. The complaint alleges that the government of North Korea trained and financed the terrorists who perpetrated the heinous massacre.

The families are represented by Shurat HaDin director Nitsana Darshan-Leitner, the Osen Law group, attorney Robert Tolchin of New York and attorney Manuel San Juan of Puerto Rico.

In May 1972, terrorists from the Japanese Red Army (JRA), working in league with the Popular Front for the Liberation of Palestine (PFLP), placed automatic weapons, ammunition, and grenades in their check-in luggage on a flight from Italy to Israel. When their bags emerged in Tel-Aviv at the arrivals hall, they took out the weapons and opened fire in every direction mowing down passengers, flight crew members and airport workers. They also attempted to blow up airplanes on the ground using hand grenades. Two of the three attackers were killed, and a third, Kozo Akumoto, was captured, tried, and sentenced to prison in Israel.

Most of the victims were Catholic pilgrims from Puerto Rico who had come to visit the Holy Land for the first time.

North Korea was behind the attack. As the trial will show incontrovertibly, in the months leading up to the massacre the leaders of the JRA and PFLP met each other and with North Korean officials, who provided funding, intelligence, training, and other material support for the terrorists. The attack was part of the JRA’s declared strategy of taking their anti-Western violence and plans of communist revoultion to other parts of the world, beginning with Israel—a strategy approved by the North Korean government.

This will be the first time North Korea is being held to account in a U.S. court for its support of terrorism over many decades. It is widely known that one of the world’s most oppressive regimes is also a consistent support of terrorism, including providing weaponry, training bases, and funding for Palestinian terrorist organizations. They were also responsible for building an enormous underground bunker system for Hezbollah that dramatically increased the terrorist group’s fighting capacity in the 2006 Lebanon War.  For this reason, the U.S. State Department put North Korea on its official list of states that sponsor terror in 1988—a fact that makes it possible for American victims to sue the North Korean government and collect against their assets in a U.S. court. Although North Korea was removed from the list late in 2008 for political reasons, the current lawsuit was filed on behalf of the Puerto Rican families before the deadline for filing lawsuits, as were two other lawsuits Shurat HaDin currently has pending against North Korea.

The trial will begin on December 3 in the U.S. Federal Court in San Juan, Puerto Rico.

A copy of the complaint can be found here.

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-11-10-1
11/10/2009

North Korea is pouring all efforts into the construction of 10,000 family homes in Pyongyang by 2012. Whether this construction plan can be completed within the next three years will weigh on the success or failure of the regime’s goal of establishing a ‘Strong and Prosperous Nation.’

An article run on November 4 in the Chosun Sinbo, a newspaper of the Jochongryeon, the pro-Pyongyang Korean residents’ association in Japan, stated, “Currently, the construction of 10,000 family dwellings is underway in Pyongyang, and the efforts poured into this over the next 3 years will show the strength of the country.” It was also reported that “North Korean authorities are devising policies to concentrate all efforts into the construction area in order to see this through.”

The article also confirmed that the apartment construction project was part of the “effort to open the door to a ‘Strong and Prosperous Nation’,” and that completion of the project “would mean the complete solution of the people’s housing problems in Pyongyang.”

The newspaper claimed that the project is the largest project ever undertaken by the North. In the 1980s and 1990s, 5,000-unit apartments were built along Kwangbok Street and Unification Street over 4 to 5 years, but the current project is twice as large. The aim is to complete the project in 3 years. Each unit is said to be 100 square meters.

North Korean authorities are reportedly pledging that the ‘Strong and Prosperous Nation’ will not just be reflected through economic statistics or increased production, but that they are putting all efforts into increasing the standard of living for the people.

In order to meet the expected increase in demand for electricity, a hydroelectric power plant is being built in Huicheon, Chagang Province, and is expected to be complete by 2012.

It is expected that it will be difficult for the North to complete 10,000 apartments in the next 3 years, and so authorities are also conducting campaigns to repair and upgrade old production lines in factories and companies in order to meet the demand for materials. As well, Preparations are also underway to create a system of factories and businesses to produce needed materials within Pyongyang. The construction project has meant the removal of some military barracks in the area, causing some conflicts between soldiers and civilians.

The General Association of Koreans in Japan (Chongryun) have made a video about foreign direct investment and joint venture companies in the DPRK.  I have posted links to the video below.  It features the PyongSu pharmaceutical factory among other things.  It is in Korean and Japanese (with Japanese subtitles), so if there are any readers who care to translate, please let me know if there is any interesting information in the videos:

Part 1:

Part 2:

Part 3:

Lankov writes in the Financial Times:

The US and its allies have almost no leverage when it comes to dealing with North Korea. There is much talk about sanctions, but, to be effective, they must be upheld by all major states, and this is not going to happen. China and Russia, driven by their own agendas, have already made clear that they would not support a tougher approach. These two states have veto power in the Security Council, and are major trade partners of North Korea (slightly more than half of Pyongyang’s entire trade is with them).

The ineffectiveness of sanctions has been demonstrated before. In 2006 when Kim Jong-il’s regime conducted its first nuclear test, even China was outraged and supported UN sanctions. However, it soon became clear that the sanctions were not working, since not only China, but also the US chose to return to business as usual. As a result from 2006 the North Korean government, despite theoretically being subjected to sanctions, felt more secure domestically and internationally than at any time since the early 1990s. This time, however, even the chance of passing a resolution is slim.

What else can be done? Military actions are unthinkable. Unilateral economic pressure will not work since neither the US nor its major allies have significant trade with North Korea. Financial sanctions, imposed on the foreign banks serving the regime, would probably deliver a blow, but it is unlikely that this would lead to a serious crisis in Pyongyang.

Indeed, even if an efficient sanctions regime were imposed, its only victims would be common people in North Korea. In the late 1990s, about 5 per cent of the entire population starved to death, but there were no signs of discontent: terrified, isolated and unaware of any alternative to their system, North Korean farmers did not rebel, but died quietly.

This means that diplomatic condemnation will have no consequences, and North Korean dictators understand this. If anything, the excessive noise is harmful: the sharp contrast between bellicose statements and lack of real action will again demonstrate to North Korean leaders that their opponents are powerless.

However, there is something even worse than empty threats, and this is empty threats followed by generous concessions. If history is a guide, this is likely to happen. In 2002-06 the US took a very harsh approach to the North, but everything changed in October 2006 when North Korea conducted a partially successful nuclear test. In merely four months, US policy was dramatically reversed, negotiations were restarted, and aid delivery resumed. Perhaps this change of policy was wise in itself (isolation would not work anyway), but its timing was bad. It once again confirmed to North Koreans that blackmail works.

The recent launch confirmed they had learnt the lesson. Since the regime was afraid the US was not paying enough attention to it, it was deliberately provocative, in the hope that the US, after a short outburst of militant rhetoric, would rush back to the negotiating table ready to make more concessions. It might be right.

—

There is no alternative to negotiations with Mr Kim’s clique. But Pyongyang dictators should be taught that provocations do not pay (or, at least, do not pay handsomely and immediately). This is especially important now, when Mr Obama’s administration has its first encounter with North Korean brinkmanship.

Read the full article here:
Sanctions will have no effect on North Korea
Financial Times
Andrei Lankov
4/12/2009

From the National Comittee on North Korea:

On April 10, 2009 the Japanese government renewed sanctions on the DPRK that were set to expire on April 13. The sanctions, first implemented in 2006, ban entry into Japanese ports of all North Korean flagged vessels and charted flights between Japan and the DPRK, as well as ban, in principle, visits by Japanese government officials to the DPRK and visits by DPRK government officials to Japan. The sanctions also ban all DPRK imports and payments for imports from the DPRK. The 2006 sanctions, initially implemented for six months and renewed for six month periods thereafter, were renewed for a full year on April 10.

The Japanese government also instituted stricter reporting requirements on the amount of funds people in Japan can remit or transfer to the DPRK. The new regulations reduce the amount of funds that can be transferred undeclared to the DPRK from 30 million yen (US$298,000) to 10 million yen ($99,000). In addition, travelers can bring only 300,000 yen cash ($2,990) to the DPRK without reporting it; this is down from a previous limit of over a million yen.

Although the new reporting requirement has been called a “new sanction,” it does not seem to be a genuine sanction since it does not limit remittances to the DPRK. According to Xinhua, Japanese Chief Cabinet Secretary Takeo Kawamura told reporters, “The measure is aimed at getting a clearer picture of fund flows to North Korea (DPRK).” He also said that the move is “appropriate giving consideration to the unsettled abduction issue.”

Japan considered but rejected a ban on all exports to the DPRK. Newspapers report that the Japanese government thought such a ban would have little impact.

And according to Bloomberg:

Trade between Japan and North Korea fell 97 percent to 793 million yen in 2008 — all in Japanese exports — from 21.4 billion yen in 2005, according to Japan’s Finance Ministry.

You can read the full Bloomberg story here:
Japan Imposes New North Korea Sanctions After Missile Launch
Bloomberg
Takashi Hirokawa and Toko Sekiguchi
4/10/2009