North Korean Economy Watch

UPDATE:  It looks like case 4 was a shipment of contraband to central Africa.

ORIGINAL POST: Ertugrul Apakan, Chair of the 1718 Sanctions Committee, is reported to be investigating four cases of UNSC sanctions violations by the DPRK. I have listed 3 of the 4 cases below with links (as identified by Business Week):

Case 1: A North Korean shipment of chemical-safety suits that may have been destined for Syria’s military.

Case 2: Italy’s seizure of two luxury yachts allegedly bound for North Korea

Case 3: Thailand’s interdiction of North Korean arms aboard a plane allegedly bound for Iran

Case 4: ?

According to Business Week:

Apakan told a closed session yesterday that South Korea said the suits were from North Korea and that his committee had received an unsolicited letter from Syria denying any involvement, according to diplomats who attended the briefing. They asked not to be identified.

Bashar Ja’afari, Syria’s ambassador to the UN, said his government sent the letter because South Korea’s report of the incident stated that the suits were bound for his nation. He said Syria conducted a “deep inquiry” and concluded it had nothing to do with the case.

Syria and the DPRK were also allegely working on a nuclear reactor together and Syria’s Tishreen War Museum was built by the North Koreans.

Security Council Report, an independent not-for-profit organisation in affiliation with Columbia University’s Center on International Organization, published a February 2010 report on the DPRK which contains additional information.  See it here.

The British Council arranges for English teaching opportunities in the DPRK (see here, here, and here).  Chris Lawrence has been teaching at Kim Il Sung University and his experiences there were recently covered by the BBC. 

According to the article:

It was a freezing cold February morning and Chris’s new classroom at the elite Kim Il-sung University in the capital Pyongyang wasn’t much warmer than the streets outside.

These days even the children of the party faithful can’t escape some of the hardships of everyday life in North Korea.

“The main problem is a lack of heating,” he said.

“Most of us in here are wearing our outdoor clothes as we work.”

Chris is one of a small team of English teachers forming a joint project between the British Council and the Government in Pyongyang.

In a sign that it may one day open up to the Western world, North Korea has gradually shifted a lot of its language training away from Chinese and Russian and towards English.

This is Chris’s first day in the job but his new class has already made an impact.

“I’m quite impressed by the level of English in this particular group” he told me.

“I expect the students will go on to occupy some quite important positions within Korean society.”

I asked one student what he hoped to do with his English.

“I hope to achieve speaking English so that I can go abroad and do some business because I want to be a businessman,” he said.

Another said he was going to be a diplomat.

They seemed, at the moment anyway, quite willing to engage with the outside world.

I asked one student who his favourite English authors were.

He hesitated and then said “Shakespeare… and Dickens”.

I asked him if he had read anyone more recent. There was a long embarrassed pause and then he replied: “Um… Jane Eyre… or Hamlet…”

The government wasn’t only keeping a close eye on their reading list.

Everything the students said to me was being listened to by government officials who were there the entire time I was in the country, travelling on a journalist’s visa.

But despite their presence, none of the students felt the need to include in their answers to me the usual rhetoric of “studying for the glory of the party and the dear and great leaders.”

They were quite happy to talk about what they wanted to achieve in life as individuals.

It was in marked contrast to their faculty head who went into a long monologue about the virtues of the “dear leader” President Kim Jong-il as soon as I switched on my microphone.

Heated debate

Across town at the nearby Pyongyang University for Foreign Studies, the staff were much more progressive.

They told me they were very pleased to have someone from the BBC because “we record the BBC News everyday to help the students improve their language skills”.

They played me some of their archive including news bulletins from the World Service that were almost a year old, so I knew they hadn’t been recorded just for my benefit.

I found the final year class next door having a heated debate in very good English about whether it was fair to keep animals in zoos.

The students were sophisticated, knowledgeable and engaging.

They quizzed me about the on-going Iraq inquiry in Britain and then 21-year-old Ri Ji-hye asked me if she could be frank.

“It’s so good that we can listen to [the] BBC,” she said.

“It helps us a lot learning English. I so much want my country to be one of those leading in the economy.”

“We’re already a leading nation in politics and other stuff. Well, it’s no offence but I want to learn English so that the other people get to learn [about] Korea.”

She smiled and said “Look at our faces – are we depressed, are we unhappy, are we hungry? No.”

That was certainly true of Ji-hye and her classmates.

But one of the challenges for her generation will not just be opening up to the rest of the world but opening their eyes to the world just beyond their city limits.

The British Ambassador to Pyongyang, Peter Hughes, is one of those who believes the country will have to wait for another generation before there’s any prospect of real change.

And he says few of people in the capital have any idea what life is like for the majority of North Koreans living beyond Pyongyang.

“I think it’s important to remember that Pyongyang is totally different from anything that’s outside of the city.”

“Only certain people can live here and one of the punishments for doing something wrong is actually to be banished outside of the city.”

“If you go out to the regional centres there is very little out there. The cities are in a bad state of repair. There are a large factories that are standing empty.”

Proud and patriotic

Back in the classroom at the Foreign Studies institute, another British Council teacher was showing North Korea’s “Generation next” how to run a brand campaign for Harley-Davidson, while on the streets outside people often stood more than a 100-strong waiting for a bus.

Pyongyang may be the country’s showcase city but even here it’s pretty obvious that the economy isn’t working.

Like their parents, the young North Koreans I met are proud and patriotic.

They have high hopes for their country even if they don’t yet understand just how far they’ve fallen behind their neighbour China.

But at least they may now be starting to learn enough about the real world to make sure they don’t repeat the same disastrous mistakes.

Read the full article here:
Meeting North Korea’s ‘Generation next’
BBC
Paul Danahar
2/13/2010

The Marmot’s Hole posted some great information on the DPRK-Malta relationship.  I encourage you to read his full post, but below I have posted information he provided from the Malta Independent:

With the Labour Party trying to project an image of a progressive and moderate all-inclusive party with new ideas, this newspaper asked Dr Sceberras Trigona, a former Foreign Minister in the Labour 1981-1987 government, for his views on the agreement he had signed with North Korea in July 1982.

At the time North Korea’s regime had, and still has, few ties with other countries due to its policy of self-reliance. However, Malta under Labour had close connections with the Asian country, with Kim Jong-Il, son of then dictator Kim Il-Sung, studying English at the University of Malta and reportedly visiting frequently with then Prime Minister Dom Mintoff.

Contact with Dr Sceberras Trigona was first made via telephone on Thursday, and he asked that the questions be sent by e-mail. The questions were as follows: 1) Given the political climate of the time, what led the Labour government to sign such an agreement with North Korea? 2) Why was a clause included in the agreement stipulating that the agreement should be kept a secret? 3) Would you sign such an agreement again if you were given the chance?

The answer to these questions received on Friday was two words: “Times change,” Dr Sceberras Trigona said tersely.

The signing of the agreement in 1982 had sparked off a political controversy after it was revealed by then Opposition Leader Eddie Fenech Adami during a Nationalist Party mass meeting in Floriana on 4 December 1983.

Newspaper reports later said that a high-level investigation had been started in the Foreign Affairs Ministry to find out who had leaked the information to Dr Fenech Adami.

In actual fact, two agreements had been signed for “a free offer of military assistance” with North Korea. The first agreement was signed in Valletta on 25 March 1982, three months after the perverse result of an election that returned the Labour Party to government in spite of obtaining fewer votes.

A second agreement, this time signed in Pyongyang in July of that same year, superseded the first, changing only the number of weapons and ammunitions that North Korea agreed to donate to Malta.

For Malta, the first agreement was signed by then Interior Minister Lorry Sant at the specific request of Dr Sceberras Trigona, who then signed the second agreement.

The agreement stipulated that North Korea “will, free of charge, provide (Malta) with weapons and ammunitions”.

The difference between the first and second agreement was in the number of weapons and amount of ammunition that North Korea agreed to give Malta – the number was increased in the second agreement.

Otherwise, the agreements were more or less the same. North Korea was responsible for the transportation of weapons and ammunition, and dispatched military instructors to train and teach local military personnel. Four instructors were sent for three months and were paid according to their military rank equivalent to those of Maltese officers.

The agreement stipulated that the Maltese government had to provide a one way ticket from Malta to Pyongyang to the instructors and “subsistence expenditure during the flight and expenses for lodging, meals, medical treatment, transport means (including the driver) and salaries during their stay in Malta, and training equipment needed in the education of the Maltese military personnel”.

The Maltese government had also agreed to “protect” the Korean instructors and “ensure their safety, and exempt them from Customs duties and taxes”.

Both sides also agreed to “observe strict secrecy in respect of all transaction made pursuant to this agreement and shall not disclose any matter hereof to any third country”.

Read the Marmot’s Hole post here.

Read the Malta Independent article here:
1982 Labour government “secret” agreement with North Korea
Malta Independent
Stephen Calleja
Date unknown

UPDATE 13:  According to the Times of London, the weapons were headed for Hamas and Hezbollah:

An aircraft full of weapons seized in Bangkok last year was heading from North Korea to Hezbollah, the Lebanese militia, and Hamas, the Palestinian group, Avigdor Lieberman, the Israeli Foreign Minister, said yesterday.

The Thai authorities said that the aircraft was carrying 35 tonnes of weapons, including rockets and rocket-propelled grenades. The Thai Government informed the UN that the haul had been bound for Iran, which is believed to ship weapons to its ally Syria, which distributes them to Hezbollah or Hamas.

North Korea had the “intention to smuggle these weapons to Hamas and to Hezbollah”, Mr Lieberman said in Japan, where he was on an official visit. “This co-operation between North Korea and Syria [does not] improve the economic situation in their countries,” he added.

UPDATE 12: Thailand to release pilots.  According to the AP (via the Washington Post):

Thai prosecutors dropped charges against the five-man crew of an aircraft accused of smuggling weapons from North Korea, saying Thursday the men would be deported to preserve good relations with their home countries.

The Attorney General’s Office said the decision was made after the governments of Belarus and Kazakhstan contacted the Thai Foreign Ministry and requested the crew’s release to face prosecution at home.

“To charge them in Thailand could effect the good relationship between the countries,” said Thanaphit Mollaphruek, a spokesman for the Attorney General’s Office. “We have decided to drop all the charges and deport them to their home countries.”

“To charge them in this case would not be a benefit to Thailand,” he added.

The crew – four Kazakhs and a Belarusian – were expected to be released later in the day, said their lawyer Somsak Saithong.

…

Thailand’s Foreign Minister Kasit Piromya indicated earlier this month the men would be released, telling reporters in Geneva the government had “suggested to the office of the attorney general to release them because the U.N. resolution does not oblige Thailand to … bring up charges on the pilots and the crew.”

Thursday’s decision was likely to spark international criticism. The weapons’ ultimate destination remains a mystery, though Thailand has said the plane’s final destination appears to have been Iran. Experts have also voiced concerns that authorities in the former Soviet republics have turned a blind eye to illicit activities of air freight companies that use Soviet-era planes to fly anything anywhere for a price.

A Thai government report to the U.N. Security Council, leaked to reporters in late January said the aircraft was bound for Tehran’s Mahrabad Airport.

But Thai government spokesman Panitan Wattanayarkorn said subsequently that “to say that the weapons are going to Iran, that might be inexact.”

“The report only says where the plane was going to according to its flight plan, but it doesn’t say where the weapons were going to,” he said. “It’s still under investigation, and the suspects are under our legal system.”

Investigations by The Associated Press in several countries showed the flight was facilitated by a web of holding companies and fake addresses from New Zealand to Barcelona designed to disguise the movement of the weapons.

Read previous posts on this topic below:
(more…)

According to Yonhap:

South Korea’s new ambassador to Russia said on Wednesday that he is committed to implementing the envisioned South Korea-North Korea-Russia natural gas pipeline.

South Korean President Lee Myung-bak and Russian President Dmitry Medvedev agreed at their 2008 summit in Moscow to cooperate on building a tripartite gas pipeline involving North Korea. But the agreement has yet to be realized, as Pyongyang has failed to respond amid chilly inter-Korean relations.

Ambassador Lee Youn-ho, who accompanied President Lee on the Russian trip in his capacity as knowledge economy minister, said that the three-nation gas pipeline project, if realized, will be very meaningful “economically and politically.”

“If the South Korea-Russia gas pipeline can pass through North Korea, it can be linked to the construction of electric power and railway networks (in North Korea),” said Ambassador Lee.

Lee then called for significant improvement of ties between South Korea and Russia, claiming the two are now more ready and fit than ever to forge a relationship that will be mutually beneficial.

You can read past posts about the Russia-Korea gas pipeline here. 

Read the full article here:
Seoul’s new envoy to Russia vows to speed up gas pipeline project
Yonhap
Byun Duk-kun
2/10/2010

(* = assist from the US Navy)

According to UPI:

Pirates seized a North Korean-flagged cargo ship owned by Libya’s White Sea Shipping in the Gulf of Aden off Somalia and Yemen, an anti-piracy task force said.

The 4,800-ton MV Rim changed course and was headed for the Somali Basin Wednesday, the European Union Naval Force said, CNN reported. The task force said two U.S. Navy ships working with NATO had confirmed the incident.

There was no immediate confirmation how many crew members were aboard the vessel when it was taken.

This marks the 4th pirate attack involving a North Korean ship or crew off the coast of Somalia.  The US Navy has rescued two ships.  When Uncle Sam is not around this sort of thing happens.  If any North Korean crew were unfortuante enough to be involved in this case, they probably face a long wait in captivity.  I can’t think of anyone likely to pay their ransom.

Previous pirate posts below:

DPRK ships (2)* Vs. Somali Pirates (1)

DPRK Merchants (1)* vs. Somali Pirates (1)

Freed N. Korean vessel opens new window for U.S.-N. Korea ties

Hat tip to Josh.

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

According to Bloomberg: 

President Barack Obama said he’ll keep North Korea off the U.S. government’s list of states that sponsor terrorism.

North Korea “does not meet the statutory criteria” for inclusion on the list, that automatically imposes sanctions, Obama wrote in a letter to congressional leaders yesterday.

Former President George W. Bush removed North Korea in 2008 after the communist state agreed to inspections of sites suspected of being part of the regime’s nuclear program. It had been designated as a state sponsor of terrorism since 1988.

Last June, Secretary of State Hillary Clinton said the administration was considering re-designating North Korea after it conducted nuclear and missile tests earlier in the year.

Cuba, Iran, Sudan and Syria are classified as state sponsors of terrorism, according to the State Department.

Read the full story here:
Obama Keeps North Korea Off U.S. List of Terrorism Sponsors
Bloomberg
Hans Nichols
2/4/2010

According to the Korea Times:

Canada granted 66 North Korean defectors refugee status in 2009, which is almost 10 times higher than in 2008, a report said Saturday.

Radio Free Asia, quoting a report from the Canadian Immigration and Refugee Board of Canada, said that more North Koreans are expected to receive the status as there are 59 defectors currently under review.

The North American country’s first case of granting refugee status to a North Korean was in 2000. In 2008, there were seven more cases.

…

According to the radio, a total of 93 North Koreans had also settled down in the United States as of last December.

Read the full article here:
66 North Koreans Given Refugee Status in Canada
Korea Times
Kim Sue-young
1/31/2010

According to the AP (Via Boston Herald):

President Barack Obama’s top intelligence official said Tuesday that North Korea relies on its nuclear weapons program because of a crumbling military that cannot compete with South Korea.

Director of National Intelligence Dennis Blair described in testimony before the U.S. Congress a North Korean army that struggles with aging weapons, poorly trained, out-of-shape soldiers, inflexible leaders, corruption, low morale and problems with command and control.

North Korea, Blair said, has little chance of reversing a huge gap in military capabilities with South Korea and so “relies on its nuclear program to deter external attacks on the state and to its regime.”

…

Officials from South Korea, the U.S., Japan, Russia and China have been working to get North Korea back to nuclear disarmament talks after Pyongyang walked away from the negotiations last year. For more than a decade, the North has gained energy and aid concessions from the talks and then backed away from nuclear agreements.

Blair said the United States does not know whether the North had made nuclear weapons but that it has that capability. He said that while a 2006 nuclear test was a “partial failure,” the May test of last year was more successful.

Blair said North Korea has shipped missiles to Iran and Pakistan and helped Syria build a nuclear reactor.

The North is thought to have enough weaponized plutonium for at least half a dozen atomic bombs. North Korea argues that it was compelled to develop nuclear weapons to cope with a military threat from the United States, which has about 28,500 troops in the South.

Blair said North Korean leader Kim Jong Il wants recognition of his country as a nuclear weapons power, something he said the United States will not do.

Dennis Blair’s Annual Threat Assesment of the US Intelligence Commuity can be read here. Here is what it had to say about the DPRK:

North Korean WMD and Missile Programs

Pyongyang’s nuclear weapons and missile programs pose a serious threat to the security environment in East Asia. North Korea’s export of ballistic missiles and associated materials to several countries including Iran and Pakistan, and its assistance to Syria in the construction of a nuclear reactor, exposed in 2007, illustrate the reach of the North’s proliferation activities. Despite the Six-Party October 3, 2007 Second Phase Actions agreement in which North Korea reaffirmed its commitment not to transfer nuclear materials, technology, or know-how we remain alert to the possibility North Korea could again export nuclear technology.

The North’s October 2006 nuclear test was consistent with our longstanding assessment that it had produced a nuclear device, although we judge the test itself to have been a partial failure based on its less-than-one-kiloton TNT equivalent yield. The North’s probable nuclear test in May 2009 supports its claim that it has been seeking to develop weapons, and with a yield of roughly a few kilotons TNT equivalent, was apparently more successful than the 2006 test. We judge North Korea has tested two nuclear devices, and while we do not know whether the North has produced nuclear weapons, we assess it has the capability to do so. It remains our policy that we will not accept North Korea as a nuclear weapons state, and we assess that other countries in the region remain committed to the denuclearization of North Korea as has been reflected in the Six Party Talks.

After denying a highly enriched uranium program since 2003, North Korea announced in April 2009 that it was developing uranium enrichment capability to produce fuel for a planned light water reactor (such reactors use low enriched uranium); in September it claimed its enrichment research had “entered into the completion phase”. The exact intent of these announcements is unclear, and they do not speak definitively to the technical status of the uranium enrichment program. The Intelligence Community continues to assess with high confidence North Korea has pursued a uranium enrichment capability in the past, which we assess was for weapons.

Pyongyang’s Conventional Capabilities. Before I turn the North Korean nuclear issue, I want to say a few words regarding the conventional capabilities of the Korea People’s Army (KPA). The KPA’s capabilities are limited by an aging weapons inventory, low production of military combat systems, deteriorating physical condition of soldiers, reduced training, and increasing diversion of the military to infrastructure support. Inflexible leadership, corruption, low morale, obsolescent weapons, a weak logistical system, and problems with command and control also constrain the KPA capabilities and readiness.

Because the conventional military capabilities gap between North and South Korea has become so overwhelmingly great and prospects for reversal of this gap so remote, Pyongyang relies on its nuclear program to deter external attacks on the state and to its regime. Although there are other reasons for the North to pursue its nuclear program, redressing conventional weaknesses is a major factor and one that Kim and his likely successors will not easily dismiss. Six Party Talks and Denuclearization. In addition to the TD-2 missile launch of April 2009 and the probable nuclear test of May 2009, Pyongyang’s reprocessing of fuel rods removed from its reactor as part of the disablement process appears designed to enhance its nuclear deterrent and reset the terms of any return to the negotiating table. Moreover, Pyongyang knows that its pursuit of a uranium enrichment capability has returned that issue to the agenda for any nuclear negotiations. The North has long been aware of US suspicions of a highly enriched uranium program.

We judge Kim Jong-Il seeks recognition of North Korea as a nuclear weapons power by the US and the international community. Pyongyang’s intent in pursuing dialogue at this time is to take advantage of what it perceives as an enhanced negotiating position, having demonstrated its nuclear and missile capabilities.

…

North Korea and Venezuela possess more limited intelligence capabilities focused primarily on regional threats and supporting the ruling regime. North Korea continues to collect information on US technologies and capabilities. Venezuela’s services are working to counter US influence in Latin America by supporting leftist governments and insurgent groups.