North Korean Economy Watch

North Korean Economy Watch has thoroughly covered news of the DPRK’s anti-corruption drive (here, here, here, here, and here).  We have speculated as to whether this campaign is motivated by primarily fiscal concerns or whether it is a broader realignment of state, party, and military portfolios necessary for a policy/personnel change within North Korea’s socialist system.

Hideko Takayama at Bloomberg highlights the fiscal aspect of the anti-corruption campaign and is the first to announce the Kim Jong Il’s brother-in-law is leading it:

Jang, 62, was sent to Beijing and the Chinese city of Dandong near the border with North Korea in February to root out corruption at North Korean corporations operating in China, the businessmen and officials said.

Jang, who was dismissed from Kim Jong Il’s power circle in 2004, was rehabilitated in December 2005 and appointed to be Director of Administration of the Workers’ party last October, an official at Chosensoren, a North Korean organization in Japan which acts as a de facto embassy, said, requesting anonymity.

The leader’s brother-in-law is also responsible for the State Security Department, the People’s Security Ministry and the Central Prosecutor’s Office, according to the Chosensoren official. In addition, Jang runs a campaign against what the government calls anti-socialist activities.

Jang’s mission was to find and punish people who were diverting profits that were supposed to be repatriated to the North Korean capital, Pyongyang.

“Jang is familiar with how the business is done outside the country and knows all about money and corrupt ways of making money,” Lee Young Hwa, professor of developing economies at Osaka’s Kansai University, said. “His assignment is like sending a thief to catch a thief.”

Read the full story here:
Kim’s Brother-in-Law Heads North Korea Anti-Corruption Campaign
Bloomberg
Hideko Takayama
5/2/2008

(UPDATE: 5 days after NKeconWatch posts the press release)

From the Japan Times (h/t OneFreeKorea)

Asked in a telephone conversation whether the hijackers called for help from the European Parliament, Ford said, “The only help they seemed to want was to publicize their offer.”

Ford said the meeting was set up by his North Korean hosts when discussing barriers to the removal of North Korea from the U.S. list of state sponsors of terrorism.

He said he has informed the Japanese government of his meeting with the hijackers.

“This is an opportunity that I hope the Japanese government will take to move closer to normalize relations between Tokyo and Pyongyang,” Ford said.

Of the nine hijackers who sought asylum in the North, three have died and two who later returned to Japan were convicted.

Read the full article here:
EU lawmaker meets North fugitives
Japan Times
4/15/2008

Press Release:

Monday 7 April 2008

Glyn Ford (Labour MEP for South West England), met in Pyongyang with Moriaki Wakabayashi and Takahiro Konishi two of the four remaining Japanese hijackers in North Korea. Moriaki Wakabayashi and Takahiro Konishi, who hijacked Japan Airlines Yodo Flight 351 from Tokyo to Fukuoka in 1970 declared that they are willing to return to Japan to face trial. 

Following the meeting with the hijackers, Glyn Ford MEP, said: “All four hijackers are now willing to return to Japan.  This offer is only conditional on the dropping of arrest warrants against three of them for possible complicity in the abductions of Japanese citizens to North Korea in the 1980s. Their return would mean that the last remaining obstacle to the US removing its terrorist state designation of North Korea would have been removed consequently allowing progress to be made towards a final settlement of the current nuclear crisis on the Korean Peninsula.”

He continued “This is an opportunity that I hope the Japanese government will take to move closer to normalise relations between Tokyo and Pyongyang. If US Army deserter and defector Robert Jenkins can return to Japan after only serving a token 30 days in jail I see no reason why the Japanese government should refuse to accept an offer that might well lead to the four remaining hijackers, all now in their late 50s and 60s, facing up to 12 years in prison.”

In January Glyn’s book North Korea on the Brink: Struggle for Survival was published by Pluto Press. It will be published in Tokyo in June by Daiichihoki and in Korea by Humanitas.

If you want to make money, you have to spend money. 

Excerpts from Yonhap:

North Korea regards [Chongryun] the pro-Pyongyang residents’ group in Japan as its major overseas support base. The pro-communist group operates a number of primary and junior and high schools in Japan where students of Korean ancestry learn the Korean history and language.

Kim Jong-il “sent 205 million yen as educational aid fund and stipends to the General Association of Korean Residents in Japan for the democratic national education of the children of Koreans in Japan,” the Korean Central News Agency said in a report, monitored in Seoul.

The latest North Korean financial donation comes amid warnings by international aid groups that the isolated communist country faces its worst food shortage in years.

Read the full sotry here:
N. Korea donates US$2 million to pro-Pyongyang group in Japan: report
Yonhap
4/12/2008

The Daily NK covers the release of KIEP’s analysis of North Korea’s external trade in 2007.  I cannot find the report in English, so I have to take the Daily NK’s word for it–insert caveat here.

Here are the highlights:

• The estimated total value of North Korea’s foreign trade decreased from US$2.996 billion 2006 to US$2.7 billion in 2007.

• China occupies 70% of the trade volume, up from 56.7 in 2006 (a startling increase).

• Trade with Japan fell to US$900,000, a decrease of 92% from 2006 (so it appears that some Chinese are getting rich from international trade restrictions).

• Trade with Thailand fell 42.4% since the nuclear test.

• Trade with the EU fell by 53.2% since the nuclear test.

To be honest I do not trust these numbers, so if someone comes across the KIEP report in English, please send it to me.

According to the Daily NK, the KIEP report is called: “Economic Prospect of North Korea in 2008″ by Cho Myung Chul and Hong Ihk Pyo

The full story can be read here:
North Korea’s Economic Prospect for 2008
Daily NK
Yang Jung A
3/3/2008

Instutute for Far Eastern Studies (IFES)
NK Brief No. 08-1-24-1
1/24/2008

North Korean leader Kim Jong Il has started the new year by visiting a series of facilities and locations important to the economy in order to stimulate ‘Economic Revival’. DPRK media outlets reported on January 21 that Kim had examined the 18th national program performance and exhibition which opened last year, and that on the 6th, he visited the Ryesung Power Plant in North Hwanghae Province and dispensed on-location directives.

In North Korea, Kim’s new year’s traveling is indicative of the country’s national goals for the year, and Kim’s trip to economic facilities appears to indicate that DPRK authorities are focusing on rebuilding the economy this year.

On January 9, the Chosun Sinbo, a publication of the General Association of Korean Residents of Japan, reported, “In the changing face of the Northeast Asian political atmosphere emerging as the 6-Party agreement is implemented, [we] are preparing an advantageous atmosphere for the revival of the North Korean economy,” and called for “more active promotion of economic cooperation and exchange with each country in the world.” The article stressed promoting ‘21st century rehabilitation by one’s own effort’ by acquiring modern science and technology appropriate for the country.

Last year saw the beginning of improvement in U.S.-DPRK relations and resolution of nuclear issues, and the national strategy for this year seems to be economic expansion based on these developments. In particular, the symbolic significance of Kim Jong Il’s personal visits to two places of economic interest goes to show that North Korea is on a path intended for economic growth. In North Korea, on-location guidance by Kim Jong Il indicates national objectives and serves to focus national capabilities on that location.

According to North Korea’s New Year’s Joint Editorial, “The role of science and technology in the construction of an economically powerful nation must be decidedly elevated,” and went on to stress that, in line with the demands of the information industrial age, a revolution in education is necessary and a competent labor force that can participate in the creation of a strong and prosperous nation must be greatly promoted.

If Kim Jong Il’s inspection of the power plant is an indication of support for the construction of infrastructure and other electrical facilities necessary for economic development, the inspection program indicates what industrial sector the North will focus its energies on in the future. Through increased production in the light industrial and agricultural sectors, North Korea is expected to focus on improving the lives of the people first, and in the future, focus on development of the IT sector.

In October, the Korea Economic Institute published a presentation of North Korean economic data assembled by the Bank of Korea.  Basic stats below:

• GDP: -1.1% in 2006 (+3.8% in 2005)-Due to decrease in agriculture output. 
• Services are the largest component of the economy (34%)
• Trade volume (exports + imports) approximately US$3 billion
• 2005 trading partners in order: China, South Korea, Thailand, Russia, Japan, Singapore

See the full report here: northkorea.ppt

Via Youtube:

This feature is the only of which I am aware that so extensively covers the Chongryun in Japan.

Cick on the image to see it.

Daily NK
Lee Sung Jin
10/29/2007

South Korean housewives are afraid to open their wallets due to the threefold increase in the price of cabbage and radish compared to last year with the kimchi preparation season ahead. The skyrocketed price of cabbage in North Korea has also caused concerns about disturbance to the kimjang (kimchi preparation) season.

Lee Ok Ran (45), who trades in Hoiryeong, relayed in a phone conversation with DailyNK on the 25th, “Due to the flood damage and the delayed seedtime, the amount of the cabbage harvest has decreased significantly. In the middle of October, we have to enter the kimjang season, but are worried because the price of cabbage has risen exorbitantly. The saying that the price of cabbage is like the price of gold seems fitting now.”

Ms. Lee said, “Large cabbage has not been reaped yet, so cabbage from China has mostly been sold in the jangmadang (markets). Unripe cabbage made in North Korea is being sold at 450~500 won per bundle and Chinese-produced cabbage costs around 1,800~2,000 won.” Last year, North Korean-produced cabbage was sold for 200~250 won per bundle.

He explained, “Chosun (North Korea) cabbage has a lot of insect marks and the leaves are tough, but on the other hand, Chinese-produced cabbages have better quality, so generally reflect over a twofold difference in price. Mostly, the party leaders buy and eat these cabbages rather than average civilians.”

However, with the soaring price of North Korean cabbage, the cost of imported cabbage has increased significantly.

Ms. Lee added, “In the winter, there is only one type of a sidedish—kimchi–so they are called ‘a half-year’s gourmet food.’ At this time, if we cannot prepare kimchi, we will not see kimchi for the entire year next year.”

North Korean civilians have prepared for kimchi by harvesting cabbage or radish seeds, planted starting late July immediately after reaping wheat and corn, from the end of October.

The reality of the cabbage scarcity is due to the loss of the majority of cabbage, which had just started sprouting in early August, in the flood.

The North Korean Central News Agency and the Chosun Shimbo issued by Chongryon (General Association of North Korean Residents in Japan) reported on the 10th, “In some areas of South Pyongan and Kangwon, collective farm laborers plowed the fields submerged in the flood and have started re-sowing.”

The North Korean farmers started sowing cabbage and radish seeds again, but the amount of the harvest is expected to be half of the annual average amount. Due to this, North Korea’s “kimjang combat,” which is supposed to start the middle of October, is supposed to be hit with a huge setback.

In North Korea, using military language such as “combat” for important events is customary. Just as there is the spring rice-planting combat, the summer weeding combat, and the fall harvesting combat, the words, “kimjang combat,” are used during kimjang season.

In northernmost Yangkang, North Hamkyung, kimjang season begins in the middle of October. Come November, all regions of North Korea, such as South Hamkyung, Jagang, North Pyongan, South Pyongan, and Hwanghae are swarming from the combats.

However, the price of cabbage has exorbitantly this year and by kimjang season, the price of hot pepper and seasoning skyrockets, so the concern of North Korean ordinary people for surviving the winter will be raised a notch.

BBC
10/9/2007

Japan has extended economic sanctions on North Korea, citing a lack of progress in a row over Japanese nationals abducted by Pyongyang.

The measures - which ban imports from North Korea and visits by its ships - will continue for another six months.

A top official said Japan was seeking advances on both the abduction and nuclear issues.

The move comes exactly a year after North Korea carried out its first nuclear test, on 9 October 2006.

Since then, Pyongyang has agreed to end its nuclear programme in return for millions of dollars worth of aid.

It has closed its main Yongbyon reactor and last week committed to a timetable for disclosing and dismantling all its nuclear facilities by the end of the year.

Later this week, a US-led team of experts are due to visit North Korea, where they will begin supervising the process of dismantling its nuclear installations.

‘No progress’

Japan is one of the five countries involved in the nuclear deal with North Korea.

But a major sticking point in the bilateral relationship has been the issue of Japanese citizens abducted by Pyongyang in the late 1970s and early 1980s to train spies.

“We saw the need to extend the sanctions because there has been no progress over the abduction issue,” Chief Cabinet Secretary Nobutaka Machimura told journalists after the move was agreed at a Cabinet meeting.

North Korea admitted in 2002 that it had kidnapped 13 Japanese nationals. It has returned five of them and says the remaining eight are dead. It says the issue has now been resolved.

But Japan wants concrete proof of the deaths and believes that several more of its citizens were taken. There is huge public concern over the issue in Japan.

Talks in Mongolia last month aimed at resolving the dispute came to nothing.

The abduction row was not the only factor behind the decision, Mr Machimura said.

“We also took into comprehensive consideration the overall situation involving North Korea, including the nuclear issue,” he said.

A foreign ministry official told the Associated Press news agency that Japan wanted to see concrete steps from Pyongyang towards disabling its nuclear programme.

The sanctions - imposed last October after North Korea’s nuclear test - prevent visits by the Mangyongbong-92 ferry, the only direct link between the two countries, and ban imports from the impoverished nation.

They have now been extended until 13 April, officials said. The decision needs the endorsement of parliament, but the opposition have already agreed to the step.

Institute for Far Eastern Studies
NK Brief No. 07-10-2-1

DPRK-U.S. RELATIONS
North Korean and U.S. officials kicked off the month of September with meetings held in Geneva on the 1st~2nd. The bilateral talks focused on how to implement the February 13 agreement. After two days of talks, U.S. Assistant Secretary of State Christopher Hill stated he is “convinced” the North will disable nuclear programs by year’s end, a timeline offered by the DPRK negotiators. North Korean press reported that the DPRK would be removed from the U.S. terrorism roster and sanctions imposed under the Trading with the Enemy Act would be lifted in return.

On September 7, Hill announced that North Korea had invited nuclear experts from the United States, Russia, and China to the DPRK in order to survey nuclear facilities and recommend dismantlement plans. The experts examined North Korean nuclear sites from September 11 to September 16.

On the same day, U.S. President Bush stated Washington would consider a peace treaty with North Korea in return for the North’s abandonment of nuclear arms.

On September 17 it was reported that North Korea had admitted that it had earlier procured materials needed to build uranium enrichment centrifuges. The admission regarded the import of 150 tons of hard aluminum pipes, enough for 2,600 centrifugal separators.

On September 20, the DPRK was removed from Washington’s list of countries producing illegal drugs. The North was added to the list in 2003.

On September 28, U.S. President Bush authorized 25 million USD worth of energy aid for North Korea. These funds could be used to provide the DPRK 50,000 metric tons of heavy fuel oil, equal to the amounts provided by China and South Korea as part of the February 13 agreement.

DPRK-JAPAN RELATIONS
Two days of talks between North Korean and Japanese diplomats began on September 5 in Mongolia, with both sides expressing confidence that there would be progress. Wartime compensation issues were discussed, although Japan continued to link normalization of relations with kidnapping issues.

Following the talks, North Korea stated that kidnapping issues were resolved with Japan, while Japan stated that both sides reiterated existing positions. On the same day, Japan rejected a DPRK request to allow North Korean ships to dock in Japan in order to pick up aid for flood victims.

On September 30, Chief Cabinet Secretary Nobutaka Machimura said Japanese economic sanctions on North Korea would be extended for another six months due to “basically no progress” on abduction issues.

DPRK-SYRIA ARMS COOPERATION
Reports began coming out of Israel in early September that reconnaissance flights over Syria had taken pictures of North Korean nuclear supplies and materials. Following Israeli air strikes, it was reported that Special Forces had entered Syria and confiscated material that appeared to be of DPRK origin. Conflicting reports stated that the facilities struck were missile storage facilities, rather than of a nuclear nature. North Korea has denied any nuclear cooperation with Syria.

DPRK-UAE RELATIONS
North Korea established ambassador-level diplomatic ties with the United Arab Emirates on September 18. A joint statement said the two countries aim to “enhance understanding and boost the links of friendship and cooperation between their two peoples.” Ties with such an oil-rich nation on friendly terms with Washington could be significant as the North moves to dismantle nuclear facilities.

ROK-DPRK ECONOMIC COOPERATION
It was reported on September 4 that stock prices of South Korean companies engaging in inter-Korean economic cooperation have shot up on news that the DPRK will dismantle nuclear programs. This includes not only those companies operating in the Kaesong Industrial Complex, but also firms involved in providing electricity and other projects planned in exchange for the North’s denuclearization.

On September 20 it was announced that the ROK government plans to request a 50 percent increase for inter-Korean cooperative projects in next year’s budget. The Ministry of Planning and Budget will request 822 million USD for cross-border projects, as well as 580 million USD for humanitarian assistance.

On September 27, it was reported that the ROK government was reviewing a proposal to jointly develop Nampo, Haeju, Najin, Sunbong, Wonsan, and Shinuiju. The North has requested development of heavy industries, while South Korea seeks cooperation on light industrial projects.

SIX-PARTY TALKS
The latest round of six-party talks opened in Beijing on September 27, with both the U.S. and DPRK negotiators promising progress. On September 30, talks were ended to allow delegates to return to their home countries to work on a ‘nuts and bolts’ joint statement. U.S. delegate Hill stated the delegates were close to agreeing on a definition of facilities, and that the proposed joint statement was very detailed. Before returning to Pyongyang, Kim Kye-gwan was quoted as saying that the North can report nuclear programs, but will not declare nuclear weapons by the end of the year. An ROK official stated that the North’s position was acceptable to Seoul. Negotiators are also thought to have agreed to begin removal of ten core devices from three nuclear facilities beginning in November. The joint statement is scheduled for release on October 2.

DPRK FLOODING
Acting UN Coordinator to the DPRK Jean-Pierre de Margerie stated on September 3, “The level of damage to infrastructure, to communications, to crops, to farmland and to households, is considerable,” but also pointed out, “The [DPRK] government has improved its level of cooperation by giving us unprecedented access to the field to conduct our assessments of the damage.”

ESPIONAGE IN THE DPRK
Li Su-Gil, spokesman for the DPRK National Security Service, reported on September 5 that several foreigners had been arrested along with a number of DPRK citizens accused of spying for a foreign country; Specifically, for having “collected official documents and information on the DPRK’s important military facilities, and spread the idea of so-called democracy and freedom to the people.” The identities and nationalities of those arrested were not revealed.