North Korean Economy Watch

From Voice of America (excerpts):

In Russia’s largest port city on the Pacific Ocean, Vladivostok, several small-framed Asian men are bustling around a half-built apartment building, trying to move large metal beams. They are North Koreans sent out by their government to earn much-needed foreign currency for the country.

Kim Dong Gil came from North Korea’s second largest city of Hamhung. He brags that North Korean workers have the best skills in the Russian construction market, which is also filled with laborers from Central Asia and Vietnam.

The estimated 5,000 North Koreans in Vladivostok come from various backgrounds and even include doctors.

“I didn’t have any construction skills since I used to be with the military,” said Kim Soon Nam, who served in the army back home. “I learned from scratch when I arrived here. I got trained by a really young person who used to curse and swear at me all the time.”

Despite the stress of living and working in a foreign country, the North Koreans have come to appreciate the culture of capitalism.

“Back home I couldn’t make money even if I wanted to. But here if I work hard, I can make a dozen times more,” explained Han Jong Rok.

Choi Jong-kun, an assistant professor of political science at Yonsei University in Seoul, says money is just one reason to leave home. The other is improving one’s status among North Korea’s political elite.

“If they bring in more money, then they would sort of have sort of upward mobility in their social class,” explained Choi Jong-kun.

North Korea does not reveal significant economic data, but exporting workers is considered a key source of hard foreign currency.

A report by the Korea Institute for International Economic Policy in Seoul estimated in 2007 that Pyongyang earns at least $40 million to $60 million a year from labor exports. Outside of Russia, the institute has tracked North Korean workers in Kuwait, the United Arab Emirates, Qatar, Bangladesh, China and Mongolia.

In Vladivostok, every North Korean worker is required to pay the Pyongyang government around $800 each month.

Kim Soon Nam says he works extra hours to make sure he has money for himself.

“If we want to save some money, we have to work Sundays and holidays, too,” he said. “We must earn a lot of money no matter what. North Koreans have to work from 8 am to 10 pm.”

The North Koreans in Vladivostok usually get a five-year visa, but many get extensions to earn more money. They sleep in dormitories and live to work, spending much of their time outside the construction sites doing extra jobs in local Russian homes.

Kim Chul Woong, a welder, says he is willing to sacrifice time from his family back in Pyongyang to give his son opportunities few North Koreans enjoy, like a computer.

“The video footage on the computer can enhance children’s intellectual development, but I don’t have the kind of money,” he said. “When I go back home after working in Russia I’ll have a good amount of money. I can buy expensive stuff for my son. If he wants to do music I can buy him a violin or a guitar.”

He says he is taking advantage of the work while he can get it. Kim Chul Woong says the construction jobs are dwindling in Russia because of the economic crisis. There is also greater competition from newly arriving Central Asians who are as hungry for dollars as he is.

Read the full story here:
N. Korean Workers Earn Dollars for Construction Work in Russia
Voice of America
Young Ran-jeon
9/28/2009

By Michael Rank

North Korea is spreading its net wider in its quest to attract more tourists from China, and now has its eye on the southern province of Guangdong as well as Shanghai.

A Chinese website (link here) reports that a delegation of North Korean travel agents is expected to travel to Guangzhou next month and that local tour operators in Guangzhou and nearby Shenzhen, on the Hong Kong border, are eager to do business.

Tourists will have a choice of two routes to North Korea – they can either fly to Shenyang or Dalian in northeast China and then take the train to Pyongyang via Dandong, or they can fly to Pyongyang via Shenyang. It puts the price at 5,000 yuan ($730) but doesn’t say how many days the tours last or any further details. It says the main attractions will be the usual ones of Pyongyang, the DMZ at Panmunjom, the Myohyang mountains and the annual Arirang pageant.

As NKEW reported in July, North Korea is also targeting Shanghai as a source of tourism revenue, and there is further talk of charter flights from Qingdao in Shandong province to Pyongyang.

Quite apart from the question of how many Chinese are likely to be tempted to visit a Cultural Revolution-type theme park like North Korea, there are also bureaucratic hurdles to overcome. North Korea does not have “approved destination status” for Chinese tourists, which means in theory at least that travel there is restricted to business groups and official delegations. (Incidentally, South Korea doesn’t seem to be an ADS country either).

As the website notes, “An important issue within ADS is to avoid possible illegal immigration through tourism channels. All tourism groups travelling within the ADS framework are supposed to be monitored by both Chinese and foreign authorities to ensure they return to China. Embassies and consulates apply different methods to monitor the return of the Chinese tourists. Whenever a tourism group member does not return to China, the local travel agency is held responsible and sanctions are applied.” Not that there is much likelihood of Chinese tourists defecting to North Korea.

Furthermore, China is encouraging tourists to counter the world recession by spending their money at home, and although this is China-DPRK year marking the 60th anniversary of diplomatic relations, a further obstacle is the fact that Chinese citizens now need a passport to travel there, not just a border pass that was all that was needed previously to cross into the country at Dandong by train.

Nick Bonner of Koryo Tours says: “We have noticed a sharp drop in Chinese tourists visiting DPRK in comparison to this time last year – even though the spectacle of the 100,000 strong performance of the mass games is still going on and has been extended to October 15th.

“I think next year Chinese tourism will be coming back strong – there is a certain ‘busman’s holiday’ attraction for Chinese tourists to visit DPRK.”

UPDATE:  Michael posts much more, including pictures, here.  Despite locating the ri and seeing pictures of the grave I have been unable to find it on Google Earth.  Let me know if you have better luck.

ORIGINAL POST: Michael Rank uncovered an interesting story about a British pilot shot down during the Korean War who is now buried near Pyongyang’s Sunan Airport. According to the article:

There can be no lonelier grave anywhere on Earth. Amid fields close to the North Korean capital, Pyongyang, lie the remains of Flight Lieutenant Desmond Hinton, a British fighter pilot who flew for the United States Air Force as a member of United Nations forces in the Korean War.

Hinton is officially listed as missing in action (MIA), but his brother David, himself a retired Royal Air Force pilot, traced records of how and where Desmond died and managed to visit his grave in highly secretive North Korea.

David discovered in RAF archives a graphic report of how his brother died on January 2, 1952.

F/Lt [Flight Lieutenant] DFW Hinton had been ordered to undertake an interdiction and reconnaissance mission in the area of Sunan-Pyongyang with three other aircraft from his unit … After making a bomb run on railroad tracks just north of Sunan, he called the other members of his flight saying he was hit and on fire.

The aircraft was then seen to crash into the ground and explode on impact. The remaining three aircraft flew over the wreckage of F/Lt Hinton’s aircraft for 15 minutes, but returned to their home base after seeing no evidence that F/Lt Hinton was alive. Sadly, F/Lt Hinton is still reported as missing.

From this account, David had a good idea of where his brother had gone down in his F84e Thunderjet, over the Sunan area of Pyongyang which is now the location of the city’s airport.

He managed to buy a US military map of North Korea, and contacted the Foreign Office in London in the hope that the recently opened British Embassy in Pyongyang would be willing to ask the North Koreans if they could provide any further evidence concerning his brother’s fate. The British ambassador David Slinn and his colleague Jim Warren were only too happy to help, and found the North Koreans surprisingly cooperative.

It turned out that despite the North Korean government’s reputation of being deeply xenophobic, the remains of Desmond Hinton, who was fighting for the hated “Yankee imperialists”, had been given a decent burial close to where his body fell to ground.

David was therefore determined to pay his respects to his brother at his grave and in 2004 embarked on a remarkable journey to North Korea, taking the train from Beijing to Pyongyang.

The grave consists simply of a mound of earth surrounded by a white picket fence, without any inscription. It lies close to a narrow footpath on a hillside 200 meters from the road, near the village of Kuso-ri and 2.5 kilometers east of Pyongyang airport.

David was told that not long before his visit, his brother’s remains had been moved about 50 meters to a more accessible location.

He was introduced at the grave to two witnesses to Desmond’s crash, a Mr Ri and Mr Han, local villagers who were only 13-years old at the time but appeared to have perfect recollections of the event. “They told how the aircraft passed directly over their houses at very low level and they were at the crashed aircraft within minutes,” David said.

He asked his hosts if they could dig up a piece of Desmond’s clothing, and was deeply moved when he was presented with part of his flying suit.

He would have loved to have been given Desmond’s identity disc too, but was told this had been taken by Chinese troops who were fighting with the North Koreans against the US and other forces.

David gave a short speech at the grave, thanking Colonel Kwak and the ambassador for making his visit possible, while the head of the village promised to tend the grave and paint the fence regularly.

As a former RAF officer, David was also anxious to fix the position of the grave. “I went to the memorial to the Great Leader Kim Il-sung near the village in sight of the grave and took a compass bearing. The grave bears 160 degrees, 500 meters from the obelisk,” he noted in his diary.

Read the full story in the Asia Times:
Finally, laid to rest in Pyongyang
Asia Times
Michael Rank
8/14/2009

According to Yonhap:

Trade volume during the January-June period totaled US$1.1 billion, down 3.7 percent from a year earlier and the first decline since 1999, the Korea Trade-Investment Promotion Agency (KOTRA) said in an emailed release that cited official Chinese data. The drop was in striking contrast with a 41 percent increase during the same period last year and a 16 percent gain in 2007.

North Korea was put under U.N. sanctions for its nuclear test in May, barring its weapons trade and strictly limiting cash flows into the country. The sanctions, however, do not appear to have affected North Korea’s trade with China, an official at South Korea’s Unification Ministry said.

Prices of crude oil, which account for a quarter of North Korean imports from China, subsided this year after steep hikes in 2007 and 2008, said Jeon Dong-myeong, a ministry official overseeing North Korean trade.

“It’s not a steep decline. The 3.7 percent decline in trade volume can arise from price differences,” Jeon said.

North Korean imports from China amounted to $750 million, down 8.4 percent, while exports increased by 8.2 percent to $352 million, according to KOTRA.

By item, North Korea’s crude oil imports showed the steepest decline of 54 percent, or $111 million.

Food imports slightly increased to $23 million, and fertilizer imports considerably grew to $11.9 million, close to the amount the North brought in during all of 2008, $12.7 million.

Despite the international sanctions on the country, North Korea’s trade with Germany gained by 46.53 million euros during the first half of this year, according to KOTRA. Citing Germany’s figures, it said trade volume was up 160 percent from the same period last year, and up 30 percent from the total trade volume the two countries registered for last year.

Read the full story here:
N. Korean trade with China falls slightly in first half of 2009
Yonhap
9/23/2009

Further information and requests:
1. Here is the PR of China’s Ministry of Commerce database where trade data is published (does not work well with Mozilla). The usual caveats apply.

2. I have given up on the KOTRA web page.  Can someone please send me the KOTRA email mentioned in the Yonhap story?

3.  Here are general stories about North Korea’s trading activities. Here are stories mentioning specific trade statistics.

*Note, this information was posted in 2009 and is now outdated.

ORIGINAL POST (2009-9-21): Swiss mining company Quintermina AG seems to have a stake in North Korea. According to their web page (Feb 2009):

IT’S ALL HAPPENING in the magnesia supply market. Further to last month’s lead news report on Russian magnesia supply breaking into the European market through a German trader (see IM January ’09, p.6), IM has learned that the considerable magnesite resources of North Korea are to be made available to the global market through Quintermina AG of Switzerland.

Although the company was unable to disclose details at time of press, IM can reveal that the new business is to facilitate supply of North Korean “competitive quality magnesia” for agricultural, industrial, and refractory applications.

The main focus is caustic calcined magnesia (CCM; low iron grade, agricultural grade, including 90200, 92200, 94200), and dead burned magnesia (DBM; including 9003, 9010), and later, perhaps fused magnesia (including 96%, 97% MgO).

Quintermina is headquartered in Chur, Switzerland, and is managed by David Coplet, who is also the Managing Director of Steinbock Minerals Ltd.

Details that are available in the public domain reveal that Quintermina is a joint venture between RHI and Coplet.

It would seem that RHI and Steinbock have formed a joint venture to secure magnesia materials from North Korea.

The magnesite resources of North Korea, an extension of the magnesite-talc belt from Liaoning, China, are considerable, amounting to some 3,000m. tonnes. Current production is in excess of 100,000 tpa DBM.

Sourcing magnesite from North Korea over the last few decades has been tackled by few, and even fewer have succeeded. Key challenges include lack of fuel and power supplies, basic infrastructure for freight, and modern technology, not to mention dealing with a very sensitive government.

However, Steinbock and its associates, notably the logistics company Yasheya Ltd, have a respected pedigree in dealing with North Korean minerals going back many years. Steinbock told IM that it has managed to regularly ship lots of 5-10,000 tonne CCM and DBM on a monthly basis over the last two years.

RHI, a leading refractories producer and consumer of magnesite, has made little secret of its intention to secure and invest in raw material resources worldwide (see IM October’08, p.6).

Outside China, North Korea stands out as the relatively untouched “Eldorado” of magnesite. Last month we reported “North Korea as an alternative [magnesia source] is looking no closer to coming to large scale commercial fruition.” Perhaps we are about to be proved wrong.

IM intends to publish a more detailed report on Quintermina in a forthcoming issue.

David Coplet of Quintermina will be speaking on Supply of magnesite from North Korea and China at MagMin 2009, 10-12 May 2009, Amsterdam – see p2&3. (PDF)

There is more information and pictures published from May 2009 here and here.

UPDATE: Some interesting follow up from a member of Phoenix Commercial Ventures at the Gerson Lehrman Group web page:

Analysis
My colleagues and I are directors of a number of businesses (Phoenix Commercial Ventures) that have been based in the DPRK (aka North Korea) for a number of years. Goldman Sachs is correct to highlight the upside of business opportunities with the DPRK.

The DPRK (North Korea) represents one of the last “green field” economies in the world with exceptional investment opportunities. As such it provides an unparalleled opportunity for business professionals who know and understand the risks, the people and the country. As estate agents are fond of saying, it is a case of “location, location, location”.

1 Physical Location
The DPRK (North Korea) physically borders Russia, China and ROK; as such it is in a prime location in this most important of trade routes. Additionally, its location in Asia Pacific gives it access to one of the world’s wealthiest and most vibrant regions.

2 Resource Location
The DPRK has abundant mineral resources including; coal, gold, magnesium, nickel, copper, graphite, nephelite, zinc etc. The total value of which is estimated at being around $2.5 Trillion (IHT 21 Dec 2007).

The DPRK has a well educated (99-100% literacy), intelligent, hard working population whose wage rates are highly competitive.

The DPRK has a forward looking environmental policy that offers green investors opportunities to generate environmentally friendly power for supply locally and export elsewhere.

3 Historical Location
The recent improvements in geopolitical issues demonstrates that the time is right, in terms of historical context, for progress to be made with regard to the DPRK entering the world financial community and to benefit from world trade.

Practicalities
It is not difficult to set up shop, if you approach the DPRK with a well thought through serious business proposal/well researched business plan and are a professional with reputable/professional local contacts.

It should be emphasised that businesses in the DPRK are no more fond of having their time wasted than businesses anywhere else in the world, local businesses having had their time wasted tend to prefer to deal with professionals that they trust.

When setting up a business within the DPRK remember that you cannot manage solely by email and need people on the ground, as is the case with Phoenix Commercial Ventures. Organisations that do not have people on the ground in DPRK will fail.

One of the major challenges facing a newcomer to the local market is a very practical one – how to find a way to balance the need for pre-start-up feasibility studies requiring possibly large amounts of information from the local Korean partner, against the need to demonstrate to the local authorities that the investor is serious.

There have been many cases over the years of potential foreign investors making promises they cannot fulfil, and the Koreans have consequently become somewhat sceptical. It is therefore essential to promise only what you know you can deliver, and to deliver within the timeframe agreed.

The DPRK Government is actively encouraging foreign investment in areas such as mining, energy, agriculture and IT.

Investors in the DPRK are accorded generous tax concessions:

1. A reduced rate of tax of 10% (standard rate – 25%)
2. An additional tax exemption – whereby the investor is fully exempt from paying tax from the year of investment for 3 years, and 50% exempt for the subsequent 2 years
3. Any tax paid will be returned, if a subsequent investment is made

The DPRK is also undertaking small experiments with free market economy principles that would have been unthinkable a couple of years ago. There are now 24-hour stores operating in Pyongyang, several places providing computer access and a series of adverts on the TV.

Kim Yong-sul, DPRK Vice Minister for Trade, is quoted as saying at a Pyongyang meeting of overseas ethnic Korean businessmen October 25 2004:

“In the past, we only allowed foreign companies entry into specialized economic zones, but now, we will allow them to set up in other places around the DPRK.”

Misconceptions
There are a number of misconceptions harboured by some in the West about doing business in the DPRK. The one that we most frequently encounter is that people do not believe that it is possible, as a Westerner, to set up and run a company in the DPRK. This is patently untrue, the DPRK allows Western companies to set up and run joint ventures (JV’s) with a majority shareholding, with local partners and to remit profits;  the government encourages foreign investment.

One of our (Phoenix Commercial Ventures Ltd) aims is to demystify the business environment, demonstrate that people can make successful and ethical joint ventures in the DPRK that provide a decent return, employ local people, engage with local professionals; thereby encouraging others of good repute to come and do the same.

Another misconception is that communications from outside the DPRK with people working in the DPRK are impossible. This is untrue. I can call via phone and email my colleagues directly from London.

Starting and running a JV in the DPRK requires the same approach as it would in any other country – it is the fact that it is a JV that is important, not that it is in the DPRK.

That means you have to have the good judgement to size up and choose a good partner with whom you are going to work well together, but then you have to do just that – work well together, with emphasis on each of those words.

If you start a joint venture where you are always suspicious of the joint venture partner, then you shouldn’t have started the JV in the first place, it will never succeed – that is exactly the same in any country.

It is absolutely essential to have resident foreign management, a joint venture cannot be run remotely from abroad. The quality of, and relationship with, the local staff is essential; as is that of the foreign management. The aim of the JV should be to bond the personnel into an independent unit, who are striving for the success of the JV, and to remove entirely any idea of ‘our side’ and ‘their side’ within the JV.

The Barclays Report
Goldman Sachs are not alone in viewing the future positively. In 2004 Barclays Capital Research issued an upbeat report about the DPRK:

“The North Korean economy does not seem about to collapse” (contrary to what many might think).

1. As time goes by we are likely to see “the development of an uneasy coexistence with the US”.
2. There are some signs of improvement in the North Korea’s economy, thanks to recent reforms. The growth will remain very slow, but the regime has built in “coping mechanisms” that will prevent collapse.
3. “A slow income growth could be supportive of political stability, because it would make it easier for the regime to control popular expectations.”
4.What the Chinese would call peaceful evolution is possible:

“Political and economic stability would, over the longer term, see the completion of the transition from a planned to a market economy and greater integration of North Korea into the global economy. This in turn, could support a long-term normalisation of North Korea’s diplomatic relations with the external world.”

Plus Ca Change
When we were exhibiting at the Pyongyang Spring International Trade Fair in May 2008, our CEO was at our stand and was approached by a young Korean lad who in perfect English said “Excuse me, am I disturbing you?”

It turned out that he wanted his photo taken.

The above may not seem much of an anecdote to those who have little understanding of the DPRK. However, those who do will realise the significance of that.

We are also attending the current four day international trade fair which opened this Monday in Pyongyang, with 120 companies from the DPRK and 14 other economies taking part.

The DPRK offers an unparalleled opportunity for business professionals who know and understand the risks, the people and the country.

ORIGINAL POST: (Thanks to a reader: Paper link at the bottom) A new paper by Goohoo Kwon at Goldman Sachs argues that the economy of a reunified Korea could be larger than France and Germany by the middle of this century.  The paper is not available on line yet, but according to to an article about the GS paper in the Wall Street Journal:

Since the reunification of West and East Germany 20 years ago, South Korean leaders and economists have convinced many people here that reuniting with North Korea will be costly and disruptive. In the latest gloomy forecast, a government think tank last month said that the tax burden ratio, or proportion of tax revenue to gross domestic product, would need to rise by two percentage points and stay that way for 60 years to pay for reunification.

In the study released Monday, Goldman Sachs economist Kwon Goo-hoon says the risks of reunification need to be re-evaluated, particularly in the wake of the rapid development of countries like Vietnam and Mongolia that also had state-run economies like North Korea’s.

His study contains North Korean data that he acknowledges may not be accurate and assumptions about future behavior that may not pan out. Even so, its tone is more optimistic than previous studies that contributed to South Koreans’ ambivalence about unification.

In an interview, Mr. Kwon said he believed for a long time that unification would be too costly for the South. He based that view largely on what happened with the newly united Germany, where the currencies were quickly equalized, the border opened and huge transfer payments made from the former West to the former East Germany.

“People always look at Germany when they discuss unification of the Koreas, but if you look at China and Hong Kong, or more properly Eastern Europe, Mongolia or Vietnam, you see there are better ways of doing this,” Mr. Kwon said. “I think it’s a matter of education and dialogue.”

In March, the Bank of Korea published a report that said Hong Kong’s gradual integration with China beginning in 1997 and France’s handling of its former colonies after World War II were better models. Both that study and Mr. Kwon’s suggest the two Koreas maintain separate currencies and restrict crossings at the inter-Korean border, perhaps for decades as North Korea’s currency appreciates and its people grow wealthier.

Mr. Kwon’s study goes several steps further by suggesting that the huge growth potential of North Korea could help offset the slowing growth of South Korea, which is burdened by limited natural resources and a fast-aging population. By contrast, North Korea has huge mineral deposits and a population that is younger and growing twice as quickly as South Korea.

Using long-term growth forecasts Goldman Sachs has previously published for industrialized countries, Mr. Kwon concluded that the gross domestic product of a united Korea would be the world’s eighth-largest in 2050 at $6 trillion, surpassing France around 2040 and Germany and Japan later that decade.

Today, South Korea’s GDP is about $800 billion and North Korea’s is believed to be around $20 billion, though no data has been collected inside the North since the 1960s. Some economists believe its economic output is considerably less, while others note that most estimates tend to leave out the North’s well-known illicit activities such as narcotics production and currency counterfeiting.

Nearly all previous economic reports on Korean unification focused on the costs that South Koreans will face and ignore or play down investment and business opportunities that may also occur. Mr. Kwon said the tone of the discussion will change as economic and demographic pressures grow in the South and he wanted to produce an analytical framework ahead of that.

Further information:
Goldman Sachs Has a Different View of Korean Unification
Wall Street Journal
Evan Ramstad
9/21/2009

Global Economics Paper No. 188: A United Korea? Reassessing North Korea Risks
Goldman Sachs Slobal ECS Asia research
Goohoon Kwon, CFA
September 2009

Lots of North Korean economic info here.

UPDATE 9/16/2009: Despite the downward trajectory that business in the Kaesong Zone seemed to be taking this year, things appear to have bottomed out.  According to Yonhap, the Koreas have signed a Kaesong wage increase.  According to the article:

South and North Korea agreed to a 5 percent wage hike at a joint industrial park on Wednesday, the Unification Ministry here said, in the latest sign of inter-Korean projects returning to normal.

North Korea earlier demanded a 400 percent raise in monthly wages for its workers at the South Korean-run park in Kaesong, just north of the border.

South Korea’s management office in Kaesong “signed an agreement on a 5 percent wage increase” with its North Korean counterpart, ministry spokesman Chun Hae-sung said in a brief statement.

The North voluntarily withdrew its earlier demand last week in a striking shift from its unyielding attitude in four rounds of negotiations from April to July. The demand called for monthly wages be raised to US$300 from the average $70-80, apparently in retaliation against Seoul’s hard-line policy toward Pyongyang.

The Kaesong park opened in late 2004 as an outcome of the first inter-Korean summit four years earlier. It houses 114 mostly small-sized South Korean firms producing clothing, electronic equipment, kitchenware and other labor-intensive goods with about 40,000 North Korean workers.

The venture is seen as a much-needed source of dollar income for the North, which is currently under U.N. sanctions for its May nuclear test that bans cash flows to the country.

The 5 percent rate hike will increase the minimum wage to about $58 from the current $55.

Separately, North Korea was conducting a door-to-door survey on South Korean businesses at the joint park, said ministry spokeswoman Lee Jong-joo.

North Korea asserted that the two-day survey that continues until Thursday was to examine the firms’ output and “listen to their complaints and difficulties regarding tax and accounting,” Lee said. Such on-site surveys have been done sporadically, she added.

Although tensions might have eased, it remains to be seen whether the business community can be coaxed into making serious capital investments in the DPRK.

Read previous Kaesong Industrial Zone news below:

(more…)

According to the Choson Ilbo:

Italian customs recently confiscated 420 bottles of expensive liquor on their way to North Korea. Italian newspaper Vivere Ancona said customs in the eastern port city seized 150 bottles of brandy and 270 bottles of whisky in containers destined for North Korea at the end of last month.

The confiscation follows a UN Security Council ban on the export of arms, high technology and luxury goods to North Korea after the communist country’s nuclear test in May. The liquor is reportedly worth 12,000 euro, but the brands were not identified.

In July, Italian customs seized two luxury yachts worth W23 billion ordered by North Korea (US$1=W1,222). At the time, the order was disguised as coming from a Chinese company, but the investigation revealed it had actually been made by North Korean leader Kim Jong-il.

Here is a post about the yachts.

Here is a post about DPRK weapons seized by UAE.

Read the full story here:
Italy Seizes Luxury Liquor Bound for N.Korea
The Choson Ilbo
9/14/2009

UPDATE: According to Yonhap, Chinese and Australian ships were shipping the arms:

North Korean cargo carrying arms exports to Iran left a western port five days after Pyongyang’s nuclear test in May and was transferred aboard Chinese and Australian freighters before being seized by the United Arab Emirates (UAE) in July, according to an Italian company that handled the delivery.

Mario Carniglia, head of the international freight-forwarding firm Otim, said the containers, reportedly loaded with rocket launchers, detonators, and munitions, were shipped via the Chinese cities of Dalian and Shanghai and were transferred to an Australian vessel just after the U.N. Security Council adopted Resolution 1874 which bans the North from engaging in arms trade.

“(The containers) left the Nampo Port on May 30,” he said in a recent interview with Yonhap News Agency in Rome on Wednesday. A North Korean ship carrying the 10 containers arrived in Dalian two days later and a Chinese cargo ship moved them to Shanghai on June 13, he said.

“The containers were placed on (the Australian freighter) ANL-Australia in Shanghai,” he said, flipping through related documents.

The cargo was on its scheduled course until the UAE intercepted the ANL-Australia on July 22. The U.S. Navy had been focusing on trailing another North Korean vessel, the Kangnam 1, which appeared to be headed to Myanmar also carrying weapons exports.

The seizure was the first made under Resolution 1874 that calls upon all states to inspect cargo to and from North Korea if they have “information that provides reasonable grounds to believe the cargo contains” illicit weapons.

The Australian government said earlier, based on its own probe, that there were rocket-propelled grenades and other weapons in the seized containers, though Carniglia said his firm did not know the contents of the cargo.

He said North Korea provided documents identifying the content as “Oil Pumping Equipment.”

“We couldn’t see the contents as the containers were sealed when shipped from Nampo,” he said in the interview conducted in Italian. He refused to identify the exporter in North Korea, citing business ethics.

“All we were responsible for was handling the shipping from China to Iran,” Carniglia said.

He added that North Korea has not filed a complaint or asked for the return of the cargo, held at the UAE now for more than 50 days.

The UAE is reportedly in consultation with the U.N. sanctions committee on how to handle the seized shipment.

In a related move, the U.N. committee demanded an explanation from North Korea last month for the apparent arms export attempt.

The head of the North’s mission to the U.N., Sin Son-ho, sent a reply letter reiterating his country’s position that it is not bound by any U.N. resolution.

Sin also said that North Korea’s experimental uranium enrichment program is in a “completion phase,” claiming the country has made advancements in mastering an alternative route to producing nuclear weapons apart from its plutonium-based program.

ORIGINAL POST: According to Bloomberg:

The United Arab Emirates has seized a ship carrying North Korean-manufactured munitions, detonators, explosives and rocket-propelled grenades bound for Iran in violation of United Nations sanctions, diplomats said.

The UAE two weeks ago notified the UN Security Council of the seizure, according to the diplomats, who spoke on condition they aren’t named because the communication hasn’t been made public. They said the ship, owned by an Australian subsidiary of a French company and sailing under a Bahamian flag, was carrying 10 containers of arms disguised as oil equipment.

The council committee that monitors enforcement of UN sanctions against North Korea wrote letters to Iran and the government in Pyongyang asking for explanations of the violation, and one to the UAE expressing appreciation for the cooperation, the envoys said. No response has been received and the UAE has unloaded the cargo, they said.

…

he Security Council voted on June 12 to adopt a resolution that punishes North Korea for its recent nuclear-bomb test and missile launches through cargo inspections and enforcement of restrictions on financial transactions. The measure calls for the interdiction at seaports, airports or in international waters of any cargo suspected of containing arms or nuclear or missile-related materials going to or from North Korea.

According to the Wall Street Journal:

According to the Security Council diplomat, the weapons were carried on an Australian vessel, the ANL-Australia, which was flying under a Bahamian flag. According to an Aug. 14 letter sent to the U.N. sanctions committee, the exporting company was an Italian shipper, Otim, which exported the items from its Shanghai office.

“The cargo manifest said the shipment contained oil-boring machines, but then you opened it up and there were these items,” the diplomat said. ANL and Otim officials couldn’t immediately be reached to comment.

…

A spokeswoman for the Australian Department of Foreign Affairs and Trade said the Australian government is aware of the incident and is investigating to determine whether any Australian laws may have been broken.

The seizure could also raise fresh questions about North Korea’s intentions. After taking an aggressive stance against the West earlier this year, Pyongyang appears to have softened its rhetoric, releasing two captive American journalists and sending a delegation to meet with South Korea’s president.

Read more here:
UAE Seizes North Korean Weapons Shipment to Iran
Bloomberg
Bill Varner
8/28/2009

Cargo of North Korea Matériel Is Seized en Route to Iran
Wall Street Journal
Peter Spiegel and Chip Cummins
8/29/2009

UPDATE: This story was picked up by Yonhap, the Korea Herald, and the Choson Ilbo  (twice).–probably because of Joshua.

ORIGINAL POST:
By Michael Rank

Chinese police have reported how the bodies of 56 North Koreans attempting to flee to China, including seven children, were found floating in the Yalu river in 2003.

An official notice issued by police in the border town of  Baishan in Jilin province describes how 53 corpses were discovered by local people on the morning of October 3, 2003, followed by three more at 5 a.m. the following day.

“An examination found that the dead were all citizens of the Democratic People’s Republic of Korea. Postmortems showed that the 56 bodies had all been shot. The evidence suggests that they had been shot by Korean armed border guards when attempting to cross illicitly into China,” says the document, dated October 7, 2003.

The dead consisted of 36 males and 20 females, including five boys and two girls.

The bodies were cremated locally on October 6, and township officials are “awaiting instructions from higher authority” on what to do with the ashes and with possessions found on the bodies. The document was issued by Badaogou police station in Baishan, a town in Changbai Korean Autonomous County which covers a large area on the North Korean border.

I am grateful to “treasuresthouhast” who posted the document here. He took it from an unnamed Chinese blog which apparently reposted it from bbs.163.com.