North Korean Economy Watch

Sometimes the headlines write themselves.

According to the Union of Catholic Asian News (excerpt):

For the first time in almost 60 years, a Catholic priest will stay in North Korea, and look after the welfare of local workers.

Franciscan Father Paul Kim Kwon-soon says he will stay in Pyongyang, probably beginning in late November, and serve as a “social worker” for factory workers in the first joint North-South business venture.

Returning to South Korea from a visit, Father Kim told UCA News on Nov. 4 that North Korea is allowing him to run a newly built welfare center in Pyongyang that houses a soup kitchen, a free clinic and a public bath, even though “they know I am a Catholic priest.” As a visitor, he will have to renew his visa every two months.

According to Father Kim, the three-story welfare center he will manage is within the factory premises and will provide the workers with services such as medical checkups, meals and haircuts. It will have the capacity to offer free meals to up to 1,500 workers a day.

“I can say that the center will be a turning point in the humanitarian aid to the North,” the priest noted. “We only could send aid materials” in the past, he pointed out, whereas he can now bring aid materials to the North and provide direct service.

Saebyol General agreed last February to establish the center after three years of “great efforts” on the part of his Order of Friars Minor, Father Kim explained.

During the four-day visit to the North, Bishop Lazzaro You Heung-sik of Daejeon presided at the opening ceremony of the center on Oct. 30, the priest reported.

On Nov. 1 Bishop You, former president of Caritas Corea, the Korean bishops’ social service organization, celebrated a Mass at Changchung Church, the only Catholic church in North Korea, to thank God for opening the center. About 50 South Korean Catholics including eight priests and four Religious took part. No North Korean Catholics attended.

Father Michael Lee Chang-jun, secretary of Caritas Corea, accompanied Bishop You. He told UCA News on Nov. 5 that he wished “the center could provide its service not only for the workers, but other North Korean people in the neighborhood.”

Cecilia Lee Seung-jung, North Korea program manager for Caritas Internationalis, the worldwide confederation of Caritas organizations, earlier called the agreement on the center a significant development. She pointed out that inter-Korean exchanges have been limited since the current government in Seoul assumed office last February.

Records of South Korea’s Unification Ministry show aid to North Korea from the South Korean government and civil groups amounting to US$63.6 million from January to September 2008, while in 2007 it totaled US$304.6 million.

According to Church sources, North Korea maintains that 3,000 Catholics in North Korea practice their faith at “home worship places” across the country, with no residing priest or nun. Between 1949 and 1950 all priests and nuns who remained in the North were executed or disappeared.

It is very interesting that the mission will be operated out of a South/North joint venture company rather than North Korea’s Changchung Cathedral in eastern Pyongyang.  There are countless reasons why concerned parties believe this to be a superior arrangement.

To learn more about Pyongyang’s new hemp factory, click here.

To read the full story mentioned ablove, click below:
Catholic Priest To Work In North For Social Welfare
Union of Catholic Asian News
11/6/2008

Although removal from the US list of state sponsors of terror carries little economic significance for the DPRK, its government has made this one of its top policy priorities.  Now that this has been accomplished, we must ask what the DPRK’s next move is in terms of international economic integration.  Will they push for removal of more economically-significant legal barriers which isolate them, to a large degree, from global markets (indicating reform is an important policy goal), or will we continue to see mixed signals and muddle-through policies (indicating a desire to maintain the status quo)? 

We cannot answer this question without knowing the DPRK’s overall strategy.  Today, however, a North Korean academic quoted in the Japanese media acknowledges that de-listing changes little economically, and signals that we should not expect to see much change in the DPRK’s economic environment:

Ri Gi Song, professor at North Korea’s Academy of Social Sciences, told Kyodo News in an interview that other international sanctions are still in place and “there should be no illusions” about the country’s trade environment.

“The delisting from the terror list is expected to have a certain level of beneficial impact, but this does not mean that all (international) economic restrictions have been taken away,” he said.

Ri also said Japan’s sanctions against North Korea have not had a major impact on the country’s economy but are hurting Korean residents of Japan who do business with North Korea.

“There is little impact from these restrictions on the economic development of the country, but I think there is an impact on businessmen of Chongryon,” he said, referring to the pro-Pyongyang General Association of Korean Residents in Japan.

“The Korean residents of Japan cannot come and go as they please,” Ri said.

Japan’s sanctions include a ban on port calls by North Korean vessels including a cargo-passenger ferry that provided a major means of transportation for Koreans in Japan traveling to North Korea. The sanctions also ban imports from North Korea and exports of luxury goods to the country.

The sanctions were first imposed in 2006 in the wake of an impasse in the issue of past abductions of Japanese nationals by North Korea. The sanctions are subject to review every six months and were extended in October for the fourth time.

Ri said he does not think North Korea’s centrally planned economy will be affected by the current global financial turmoil that began with the U.S. subprime mortgage meltdown.

“I don’t think it will have a direct impact on our economy, as our economy is not part of the capitalist market mechanism,” he said. (Kyodo – link requires subscription)

As an aside, Mr. [Dr.?] Ri might be surprised to learn just how exposed his country is to the “capitalist market mechanism”.

(Hat tip to Oliver for the article)

The full article can be read here:
N Korea Trade To Gain From U.S. Terror Delisting: N Korea Expert
Kyodo (subscription required)
11/4/2008

Peterson Institute Working Paper
WP 08 – October 2008
Stephan Haggard and Marcus Noland

Read the paper here

Abstract: In the 1990s, 600,000 to 1 million North Koreans, or about 3 to 5 percent of the precrisis population, perished in one of the worst famines of the 20th century. North Korea is once again poised on the brink of famine. Although the renewed provision of aid is likely to avert a disaster on the scale of the 1990s, hunger-related deaths are already occurring and a dynamic has been set in motion that will carry the crisis into 2009. North Korea is a complex humanitarian emergency characterized by highly imperfect information. This paper triangulates quantity and price evidence with direct observation to assess food insecurity in North Korea and its causes. We critique the widely cited UN figures and present original data on grain quantities and prices. These data demonstrate that for the first time since the 1990s famine, the aggregate grain balance has gone into deficit. Prices have also risen steeply. The reemergence of pathologies from the famine era is documented through direct observation. Although exogenous shocks have played a role, foreign and domestic policy choices have been key.

Keywords: Famine, North Korea
JEL codes: Q1, O1, P2

UPDATE: A Catholic Priest will be operating a mission out of the factory.  Read more about this here. 

ORIGINAL POST: Yes, you read the title correctly.  Billed by Yonhap as the first inter-Korean joint venture in Pyongyang:

Pyongyang Hemp Textiles is a cooperative effort between the South’s Andong Hemp Textiles and the North’s Saebyol General Trading Co., with a total investment of US$30 million shared equally by the two sides, according to the officials.

Around 1,000 North Koreans will be working for the textiles and logistics firm, which is built on 47,000 square meters of land in Pyongyang, they said.

…The opening ceremony for the joint venture was delayed for close to two months due to deteriorating inter-Korean relations, which worsened after a South Korean woman was shot to death while traveling the communist country in early July. Pyongyang refused to apologize for the shooting, and denied requests from Seoul to cooperate in a fact-finding mission into the death.

If anyone has any idea where this company is located on Google Earth, please let me know. 

According to Wikipedia, which is not an authoritative source:

Industrial Hemp is produced in many countries around the world. Major producers include Canada, France, and China. The United States is the only industrialized nation to continue to ban industrial hemp. While the Hemp is imported to the United States more than to any other country, the United States Government does not distinguish between marijuana and non-psychoactive Cannabis used for industrial and commercial purposes.

The South Korean government seems to have made some significant changes to the way business is to be conducted between themselves and the North.  It seems regulations have been eased on South Korean companies seeking permission to operate in the North—and some new subsidies have been put on the table.

From the Korea Times:

The government Tuesday abolished a system under which companies here must receive a permit to do business in North Korea.

As a result, companies which have been seeking to operate in the reclusive state would see simplified procedures when they start inter-Korean projects.

The Cabinet approved revisions of the law governing trade and cooperation between South and North Korea.

Under the previous licensing system, a permit for both companies and projects were necessary.

But now, companies have to get approval for their projects only and inter-Korean cooperation programs designated by a presidential decree can proceed without the approval.

If firms get the license in a dishonest way, the government can cancel it.

In a bid to diversify trade between the two Koreas, the revision allows services and intangible things as well as goods to be exchanged.

The government also approved a revision bill to encourage foreign investors to invest in inter-Korean trade.

It says that foreigners who invest $10 million or more can get some incentives such as cash grants.

The legislation on South-North cooperation was introduced in 1990 to support exchanges and cooperation between the two Koreas.

The Ministry of Unification has a committee under itself to coordinate related policies and make a decision on important inter-Korean cooperation issues.

To promote economic, cultural and social exchange projects, a permit from the minister has been required.

If caught violating the law, the person will be sentenced to up to three years imprisonment or fined up to 10 million won ($6,770).

Read the full article here:
Inter-Korean Business Procedures Simplified
Korea Times
Kim Sue-young
10/28/2008

(UPDATE) These adventurers set up a couple of blogs to catalogue their trip.
1. Approaching Russia/Korea border
2. Entering North Korea at Tumangang
3. By train across North Korea (1/2)
4. By train across North Korea (2/2)
5. Pyongyang-Myohyangsan

I just finished reading an incredibe DPRK travel account by two Swiss and Austrain rail enthusiasts who recently traveled the Trans-Siberian Railway from Europe to Pyongyang.  If you are interested in Russia and/or the DPRK you need to treat yourself to their pictures and travel journals as much of their material has not been published in the West.

I have included links to their trip from Ussuriyisk and Khasan to Pyongyang below, with some selected comments from their diary:

1. From Ussuriysk to Khasan (Russia):
http://www.railroadforums.com/forum/showthread.php?t=25908

Selected comments:

Trains over the border were not listed, but I knew that there is not only the twice-monthly sleeping car Moscow – Pyongyang, but also a twice-weekly cross-border passenger train Khasan – Tumangan.

I asked him [a Russian border agent], whether and how often he met foreigners here. He said, that he has been working here for about one year and that we were the 1st foreigners (except North Koreans, of course), he met.

The answer was that usually only Russian and Korean citizen cross the border, but that there have been a few third country citizen here, but they didn’t remember when that was the last time…

They also said, that among the passengers of the sleeping car to Pyongyang there are usually not even Russian citizen. Russian citizen crossing the border only go to the so called “Rajin-Sonbong Special Economic zone”, setup by the North Korean administration in cooperation with China and Russia

2. From Khasan to Tumangang Station (DPRK border)
http://www.railroadforums.com/forum/showthread.php?t=25971

3. From Tumangang Station to Pyongyang part 1:
http://www.railroadforums.com/forum/showthread.php?t=25993

Selected Comments:

(North Korea uses normal gauge – 1435mm)

We then talked about other things. They said that they had studied in Pyongyang and now have to serve at the army here in Tumangan. 

One of them told us, that he had seen the Hollywood-movie “Titanic” in the cinema in Pyongyang (I have also read before, that Titanic was shown in North Korean cinemas) and both said that they were glad to practice their language skills together with us. And one of them said, that he also wished to travel around the world like we did and see foreign countries… I hope in future it will be possible for him.

And of course the mobile-phones were of special interest, as they are forbidden in North Korea. The “translator” said, that they would be sealed and that we must open the envelope only when we leave the country. The sealing was quite simple: The customs official asked me for some of paper (obviously they didn’t have their own…) and I gave him two empty DIN-A4-sheets, in which he enwraped the mobile phones and which he closed with a yellow tape, which he then stamped several times…

They told us, that they now have to take the books, the laptop, the camera and the USB-sticks with them for some further inspection by a specialist, and that we would receive our belongings later.

They asked us to put all this items into the two smaller backpack (both of us had a big and a small backpack). Then they took the backpacks and left the sleeping-car.

They also provided the following information:

At http://www.logistics.ru/9/7/i77_6557p0.htm you can find a Russian article about the history of this border crossing point.

The line on the Russian side from Baranovskiy to Khasan was built between 1938 and 1951. The first bridge over the border was a wooden railway bridge opened in 1952. In 1954, when cross-border freight traffic offically started, 4400 tons of freight were transported over the border. That number rose to 12.000 tons in 1955.
In 1959 the new bridge, which still exists today, was opened.
The peak in freight traffic was in 1988 with 4.795.000 tons (USSR > DPRK: 4.070.000 tons, DPRK > USSR 725.000 tons). The numbers show, that the USSR ecenomically supported the DPRK and due to the political and economical changes in the former USSR the mostly unidirectional trade between the two countries decreased after 1988:

1988 – 4.795.000
1990 – 3.526.000
1993 – 2.306.000
1994 – 761.000
1999 – 230.000
2002 – 68.000

Only after 2002 a slight increase is noticeable, in 2004 106.000 tons were transported. However, the infrastrucuture was overdimensioned, and it has therefore been reduced: Several tracks at Khasan station were removed, as well as 3 of 14 passing-tracks between Baranovskiy and Khasan.

Passenger traffic was opened in 1958 and 10582 passengers crossed the border during the first year. Till 1988 this number rose to 21.000/42.000 passengers (I’m not sure, does “vozroslo na 200%” mean “rose to 200%” or “rose by 200%”?).

The new station building in Khasan was opened in 1989 and it was suitable to handle up to 500 international passengers per day. However, also passenger traffic is now lower than it was at it’s best times. During the 1st 6 months of 2005 5315 passengers crossed the border.

4. From Tumangang to Pyongyang part 2:
http://www.railroadforums.com/forum/showthread.php?t=25993
Selected comments:

Considering the number of other trains we met, one cannot say that railway traffic in North Korea is in total disorder and in it’s last throes. Trains are running and during our trip from Tumangan to Pyongyang there were obviously no problems with electricity supply for the catenary. Only once we stopped for 5 minutes in the middle of nowhere, but that might have been caused also by something else. However, the tracks are in bad condition, that causes the delay.

Freight trains where quite rare and relatively short (passing tracks at stations have usually a length of 400-500 meters according to Google Earth, so freight traffic inside North Korea might indeed be very low. And we saw less factories than expected considering our experiences in other former Socialist states. The main economic activity in North Korea seemed to be still agriculture.

UPDATE 3: Stephan Haggard and Marcus Noland chime in with “Famine in North Korea Redux”. 

UPDATE 2: IFES notes that Pyongyang is acknowledging the food shortage:

DPRK stressing unaided resolution to food crisis
Institute for Far Eastern Studies (IFES)
NK Brief No. 08-10-24-1
10/24/2008

On October 22, the North Korean Workers’ Party newspaper, Rodong Shinmun, reported on the international food crisis, and stressed, ‘The only things we can trust in the face of today’s severe food crisis are the efforts and self sacrifice of our blood, sweat, and tears,’ emphasizing an autonomous resolution to the food problem.

According to the paper, Kim Jong Il stated, “Today in our country, the agricultural problem is a very important problem that must be decisively resolved in order to build a strong and prosperous socialist nation.”

In particular, the paper stressed the urgency of the food problems, reporting, “Rice and food are of the utmost importance, like a lifeline to us,” while admitting that fertilizer, agricultural chemicals, fuel, and other essential items were in short supply, but adding, “the basis of agricultural production is not physical conditions, but determination.” By emphasizing that ‘determination’ would be key to solving the problem was a way of indirectly admitting that the government did not have the means to provide the supplies necessary to increase agricultural output.

The tone of the article conveys the idea that as the food crisis worsens around the world, international food aid to North Korea is being reduced, causing the worsening of the food crisis in the DPRK. It would appear that the government is trying to calm the people’s discontent by blaming outside influences, while at the same time mobilizing the efforts of North Korean farm workers.

While all of North Korea’s media sources have been repeatedly reporting the current global food crisis, they have emphasized that most others do not have rice to give, and those that do are not giving it, so that the North’s domestic food shortages need to be resolved by the North Koreans themselves.

UPDATE: Jess adds some great statistics in the comments. 

The Daily NK reports on the Ministry of Unification’s claims about the DPRK’s food situation.

ORIGINAL POST:We are getting some mixed messages on the state of the DPRK’s agricultural production and access to food….

Last month, IFES and the Daily NK reported that the DPRK was expecting a decent harvest this fall since the country’s farmlands were spared the seasonal flooding of the previous years:

A source involved in China-North Korea trade at a company in Shenyang was quoted on the 30th as saying, “[North Korean] rice traders are expecting this year’s food production to be considerably improved compared to last year,” and, “This year, with no large natural disasters, rice paddies and crop fields are doing well, and crop production will probably be much greater than last year.”

In a related matter, one North Korean insider reported, “With the [North Korean] food situation, no one is doing as well as the wholesalers,” and, “As the fall harvest season has come, traders have come by farms in each province and reported that rice and corn harvests are very good.”

The source went on to say, “This year, farming was not difficult, so as autumn passes, the market price of rice looks likely to fall. The price of corn will fall even faster, hitting the 1000 won per kilogram level by mid October.” In fact, by the end of this year’s fall harvest, the price of food is expected to return to pre-shock levels. Currently, rice is selling for 2200 won and corn for 1300 won per kilogram in North Korean markets. (IFES)

This week, however, the UN World Food Program sent the opposite signal, highlighting the acute food shortages they are seeing:

The UN food agency said Thursday that millions of North Koreans face a food crisis, but a South Korean official said that Seoul has not decided whether to respond to a request for food aid to the communist country.

“Some areas of the northeastern provinces in the country … have become extremely vulnerable, facing a situation of a humanitarian emergency,” Jean-Pierre de Margerie, the WFP’s country director for North Korea, said at a forum on North Korea.

Around 2.7 million people on North Korea’s west coast will also run out of food in October, the WFP said in a report released Tuesday.

The food shortages have forced many North Koreans to go to hills to collect wild food to complement their daily rations and reduce the number of meals per day to two, said de Margerie.

Asked if North Koreans face starvation, he said his agency hasn’t seen any evidence of starvation but said, “We have reached (a) very critical level and we shouldn’t wait for another starvation before ringing the alarm bells.”

The WFP also said the food shortages have especially affected urban households in areas with low industrial activity due to higher food prices, reductions in public food rations and lower employment.

Donor countries should back us up … Now is (the) time to act,” de Margerie said. (AP via New Zealand’s 3 News)

According to another report in the Times of London:

On Tuesday, WFP announced that some 2.7 million people on North Korea’s west coast will run out of food in October, and that, because of the worsening food situation, it was increasing from 1.9 million to 6.5 million the population which it seeks to help with food aid.

“Some areas of the north-eastern provinces in the country have become extremely vulnerable, facing a situation of a humanitarian emergency,” the organisation’s programme director for North Korea said. “We have reached a very critical level and we shouldn’t wait for another starvation before ringing the alarm bells.”

Additionally, UN’s point man on North Korean human rights, Vitit Muntarbhorn, has gone so far as to claim North Korea is clamping down on mobile phones and long distance telephone calls to prevent the spread of news about a worsening food crisis (Times of London). 

The South Korean Ministry of Unification, however, is publicly disputing the UNWFP’s numbers:

A South Korean official has disputed the U.N.’s assessment that millions of North Koreans are at risk of food shortages, saying Friday that the impoverished communist country does not appear to face a “serious” food emergency.

Unification Ministry spokesman Kim Ho-nyeon said that North Korea’s harvest this year is not bad, citing South Korean civic officials who recently visited the country.

“We believe that the North’s food condition is not in a serious crisis situation,” Kim told reporters, adding that the weather has been good and there were no heavy rains like the ones that devastated the North last year.

His comments came a day after the U.N. food agency said millions of North Koreans face a food crisis and called on donor countries, including South Korea, to provide urgent food aid.

Korea Business Consultants has published their latest newsletter.  You may download it here.

Topics covered include:
Six Party Talk progress
South Korea/Russia gas deal
More factories opening in the DPRK
UN survey of DPRK population
Summit pledges
Pyongynag hosts autumn trade fair
KEPCO to Abandon NK Reactor Gear
Trust Company Handling DPRK’s Overseas Business
DPRK-Russia Railway Work Begins
ROK Opposition Calls for Renewed Cooperation with DPRK
ROK Delegation Leaves for DPRK
ROK Aid Workers Leave for DPRK
“ROK Makes US$27.6 Billion from DPRK Trade”
“Kaesong Output Tops US$400 Million”
DPRK, Kenya Set Up Diplomatic Ties
Medvedev Hails DPRK Anniversary
Claim to North Korean rock fame
International Film Festival Opens
Ginseng

UPDATE: According to Yonhap, the aid shipment has left Virginia:

The latest food aid from the United States to North Korea, comprised of 25,000 tons of corn and other grains, has made its departure from the U.S. state of Virginia, a U.S. radio station reported Saturday.

The Mary-Ann Hudson, a U.S. cargo vessel carrying 20,000 tons of corn and 5,000 tons of beans, left from Norfolk, Virginia, on Friday and is scheduled to arrive at North Korea’s western port of Nampo on Nov. 18, Radio Free Asia reported, citing a spokesperson of World Vision.

In June, the U.S. started shipping the first batch of some 500,000 tons of food aid, which it pledged to deliver to the North over a year-long period, through the World Food Programme (WFP).

Previous shipments were organized by the WFP, but the latest round is conducted jointly by relief organization World Vision and four other relief agencies, according to the spokesperson.

Since the late 1990s, when an estimated 1-3 million North Koreans starved to death, the North has prioritized its agricultural sector while accepting foreign aid to help feed its population of 23 million people. (Yonhap, Latest U.S. grain shipment to N.K. departs, 10-19-2008)

ORIGINAL POST: Press release from Mercy Corps (10/16/2008):

A fourth shipment of U.S. food aid for the Democratic People’s Republic of Korea sails this week to be distributed by five humanitarian agencies delivering urgent assistance to North Koreans suffering from severe food shortages. The commodities are scheduled to arrive before winter.

More than 894,000 of North Korea’s most vulnerable people – mainly children, pregnant and nursing mothers, and the elderly – will receive daily rations from this shipment of 25,060 metric tons of bulk corn and soy. The distributions are conducted in two North Korean provinces, led by Mercy Corps with World Vision as co-lead. Samaritan’s Purse, Global Resource Services and Christian Friends of Korea are the partner agencies.

“This new shipment of food will bring critical sustenance to many hungry people in North Korea,” said Nancy Lindborg, president of Mercy Corps. “We are very pleased with our success in getting food to needy people for the past few months, and are confident that efficient food distributions will continue into the winter.”

On arrival at the western port of Namp’o in the latter half of November, the food will be rationed to recipients through public distribution centers, orphanages, school, hospitals and nurseries in Chagang and North Pyongan Provinces. The program, funded by the U.S. Agency for International Development’s (USAID) office of Food for Peace, is the first U.S. food assistance program for North Korea since 2000.

“With North Korea’s people in a precarious situation facing low food stocks and the onset of a harsh winter, our primary concern is the country’s most vulnerable groups, children and mothers especially,” said George Ward, senior vice president of international programs for World Vision in the U.S. “We are moving urgently to ensure this assistance reaches those in most need at a critical time.”

The NGO partnership is on track to distribute 100,000 metric tons of the food aid during the year-long program, reaching 895,000 people, while the World Food Programme (WFP) is distributing another 400,000 metric tons in U.S. assistance. This week’s shipment is the first one entirely allotted for the NGO partnership to dispense.

The lack of food in North Korea became severe this year as floods devastated harvests, China erected barriers to food exports, and prices skyrocketed globally for staples such as rice and maize. In a June 2008 assessment, a team of experts from the partner agencies confirmed findings of food shortages and acute needs in North Korea. Malnourishment was prevalent, rations were reduced, and food stocks were dwindling. Separately, the WFP projected a shortage of 1.66 million metric tons of food, relative to the population’s needs.

The U.S. food assistance program includes clear provisions for monitoring distributions and conducting ongoing needs assessments. The partnership of humanitarian agencies has a staff of 16 based in the DPRK for the duration of the program to monitor activities continually and conduct random visits to distribution points.

UPDATE 2: Below are a list of materials from the US Department of State web site related to the DPRK’s list removal:

1. Existing Sanctions and Reporting Provisions Related to North Korea (thorough, but does not mention that the DPRK never obtained MFN or NTR status with the US, making it subject to the higher column 2, Smoot-Hawley, tarrifs.

2. Briefing on North Korea With Special Envoy for the Six-Party Talks Ambassador Sung Kim, Assistant Secretary of State for Public Affairs Sean McCormack, Assistant Secretary of State for Verification, Compliance, and Implementation Paula DeSutter, and Acting Assistant Secretary of State for International Security and Nonproliferation Patricia McNerney.

3. U.S.-DPRK Agreement on Denuclearization Verification Measures.

4. U.S.-North Korea Understandings on Verification

UPDATE 1: Since being removed from the list, it is now easier for the DPRK to obtain avian flu vaccinations from the US:

Yet deep inside an 86-page supplement to United States export regulations is a single sentence that bars U.S. exports of vaccines for avian bird flu and dozens of other viruses to five countries designated “state sponsors of terrorism.”

The reason: Fear that they will be used for biological warfare.

Under this little-known policy, North Korea, Iran, Cuba, Syria and Sudan may not get the vaccines unless they apply for special export licenses, which would be given or refused according to the discretion and timing of the U.S. Three of those nations – Iran, Cuba and Sudan – also are subject to a ban on all human pandemic influenza vaccines as part of a general U.S. embargo.

Under normal circumstances it would take at least six weeks to approve export licenses for any vaccine on the list, said Thomas Monath, who formerly headed a CIA advisory group on ways to counter biological attacks. All such decisions would follow negotiations at a “very high level” of government.

That could makes it harder to contain an outbreak of bird flu among chickens in, say, North Korea, which is in the region hardest hit by the virus. Sudan and Iran already have recorded cases of the virus in poultry and Syria is surrounded by affected countries. Cuba, like all nations, is vulnerable because the disease is delivered by migratory birds.(Associated Press)

ORIGINAL POST:
As reported in the Associated Press Saturday morning:

North Korea has agreed to all U.S. nuclear inspection demands and the Bush administration responded Saturday by removing the communist country from a terrorism blacklist. The breakthrough is intended to salvage a faltering disarmament accord before President Bush leaves office in January.

“Every single element of verification that we sought going in is part of this package,” State Department Sean McCormack said at a a rare weekend briefing.

North Korea will allow atomic experts to take samples and conduct forensic tests at all of its declared nuclear facilities and undeclared sites on mutual consent. The North will permit experts to verify that it has told the truth about transfers of nuclear technology and an alleged uranium program.

Verifying North Korea’s nuclear proliferation will be a serious challenge. This is the most secret and opaque regime in the entire world,” said Patricia McNerney, assistant secretary for international security and nonprofileration.

Proponents of de-listing say it is an important step in accomplishing the goals of the six-party talks which are ultimately aimed at realizing a denuclearized Korean peninsula.  Critics of this agreement claim that it addresses only the DPRK’s plutonium program while ignoring nuclear proliferation and uranium enrichment.  

North Korea stepped up the pressure this week barring IAEA inspectors from the DPRK’s nuclear facilities at Yongbyon:

North Korea “today informed International Atomic Energy Agency inspectors that effective immediately access to facilities at Yongbyon would no longer be permitted,” IAEA spokesman Marc Vidricaire said today in an e-mail. The country “has informed the IAEA that our monitoring activities would no longer be appropriate.”

The demand that inspectors leave the whole complex, which is the source of the country’s weapons-grade plutonium, followed a Sept. 24 instruction that monitors quit the reprocessing plant. The new orders will prevent UN personnel from seeing whether North Korea is removing spent uranium fuel rods from cold-water holding tanks. Spent uranium can be turned into plutonium.

IAEA inspectors will remain in the town of Yongbyon until ordered to leave by North Korean authorities, the agency said. (Bloomberg)

UPDATE: According to Reuters, “North Korea said on Sunday it would resume taking apart its plutonium-producing nuclear plant and allow in inspectors in response to a U.S. decision to remove it from a terrorism blacklist and salvage a faltering nuclear deal.”

Despite these recent developments, or maybe because of them, the Bush administration quickly negotiated a de-listing agreement with Pyongyang and spent the last few days selling it to other governments involved in the six-party talks. Though South Korea supported the move, the Japanese government was divided.  Japanese Finance Minister Shoichi Nakagawa (a North Korea hard-liner) called the move “extremely regrettable” as Japan was using US terrorism de-listing as leverage to discover the whereabouts of kidnapped Japanese citizens.  This leverage is now gone since the next president of the US will not likely go through the effort of adding the DPRK to the list again.  Other members of the Japanese government, however, believe there will not be any resolution to this issue until the nuclear issue is resolved. 

De-listing marks the end of the second of three phases agreed to in the six-party talks.  The third stage includes completely dismantling Yongbyon and ending atomic development on the Korean peninsula.  This is likely to be even more difficult than the previous stages. (Bloomberg)

De-listing, however, carries more political than economic significance.  According to the State Department web site (here) countries are added to the list for the following reasons:

Countries determined by the Secretary of State to have repeatedly provided support for acts of international terrorism are designated pursuant to three laws: section 6(j) of the Export Administration Act (which expred in August 2001), section 40 of the Arms Export Control Act (wikipedia), and section 620A of the Foreign Assistance Act. Taken together, the four main categories of sanctions resulting from designation under these authorities include restrictions on U.S. foreign assistance; a ban on defense exports and sales; certain controls over exports of dual use items; and miscellaneous financial and other restrictions.

Designation under the above-referenced authorities also implicates other sanctions laws that penalize persons and countries engaging in certain trade with state sponsors. Currently there are five countries designated under these authorities: Cuba, Iran, North Korea, Sudan and Syria.

As discussed before (here and here), the DPRK still faces a myriad of legal barriers which restrict it from accessing global trade and financial markets, including the US Column 2 tariffs (Smoot-Hawley Tariffs), US Treasury sanctions, bilateral Japanese sanctions (renewed on Friday), and recent UN resolutions 1695 and 1718.  In other words, the DPRK does not have much to gain financially from de-lisitng.

Here is the initial executive order to begin de-listing.  Now that the US terrorism list is one country shorter, who remains? Cuba, Iran, Syria, Sudan.

Read the full article here:
N Korea off US blacklist after nuke inspection deal
Associated Press (via Washington Post)
Matthew Lee
10/11/2008

N. Korea Removed From U.S. List of Terror Sponsors
Bloomberg
James Rowley and Viola Gienger
10/11/2008