North Korean Economy Watch

Asia Times
Andrei Lankov
12/13/2006

Last Thursday in Seoul, the influential opposition daily newspaper Chosun Ilbo published a government document that outlined the plans for South Korean aid to be shipped to North Korea in the next financial year. In spite of the nuclear test in October and a series of missile launches last summer, the amount sent to Pyongyang this year was record-breaking – nearly US$800 million. If the document is to be believed, the target for the next year is set at an even higher level of 1 trillion won (about $910 million).

This generosity might appear strange, since technically both Koreas are still at war. However, it has long been an open secret that this is not the war the South wants to win, at least any time soon. The Seoul politicians do not want to provoke Pyongyang into dangerous confrontation, and they would be unhappy to deal with the consequences of a sudden collapse of Kim Jong-il’s dictatorship. Now South Korea wants a slow transformation of the North, and is ready to shower it with aid and unilateral concessions.

Many optimists in Seoul believe this generosity will persuade Pyongyang leaders to launch Chinese-style reforms. However, so far no significant reforms have happened. On the contrary, news emanating from the North since late 2004 seems to indicate that the government is now working hard to turn the clock back, to revive the system that existed until the early 1990s and then collapsed under the manifold pressures of famine and social disruption.

Signs of this ongoing backlash are many. There were attempts to revive the travel-permission system that forbids all North Koreans to leave their native counties without police permission. Occasional crackdowns have taken place at the markets. There were some attempts to re-establish control over the porous border with China.

Finally, in October 2005 it was stated that North Korea would revive the Public Distribution System, under which all major food items were distributed by state. Private trade in grain was prohibited, so nowadays the only legitimate way to buy grain, by far the most important source of calories in North Koreans’ diet, is by presenting food coupons in a state-run shop. It is open to question to what extent this ban is enforced. So far, reports from northern provinces seem to indicate that private dealing in grain still takes place, but on a smaller scale.

From early this month people in northern provinces are allowed to trade at the markets only as long as an aspiring vendor can produce a certificate that states that he or she is not a primary breadwinner of the household but a dependant, normally eligible to some 250 grams of daily grain ration (the breadwinners are given 534 grams daily). It is again assumed that all able-bodied males should attend a “proper” job, that is, to be employees of the government sector and show up for work regularly.

In the past few years the economic situation in North Korea was improving – largely because of large infusions of foreign aid. If so, why are the North Korean leaders so bent on re-Stalinizing their country, instead of emulating the Chinese reform policy that has been so tremendously successful? After all, the Mercedes-riding Chinese bureaucrats of our days are much better off than their predecessors used to be 30 years ago, and the affluence of common Chinese in 2006 probably has no parallels in the nation’s long history.

The Chinese success story is well known to Kim Jong-il and his close entourage, but Pyongyang leaders choose not to emulate China. This is not because they are narrow-minded or paranoid. The Chinese-style transformation might indeed be too risky for them, since the Pyongyang ruling elite has to deal with a challenge unlike anything their Chinese peers ever faced – the existence of “another Korea”, the free and prosperous South.

The Chinese commoners realize that they have not much choice but to be patient and feel thankful for a steady improvement of living standards under the Communist Party dictatorship. In North Korea the situation is different. If North Koreans learn about the actual size of the gap in living standards between them and their cousins in the South, and if they become less certain that any act of defiance will be punished swiftly and brutally, what will prevent them from emulating East Germans and rebelling against the government and demanding immediate unification?

Of course, it is possible that North Korean leaders will somehow manage to stay on top, but the risks are too high, and Pyongyang’s elite do not want to gamble. If reforms undermine stability and produce a revolution, the current North Korean leaders will lose everything. Hence their best bet is to keep the situation under control and avoid all change.

Until the early 2000s the major constraint in their policy was the exceptional weakness of their own economy. For all practical purposes, North Korea’s industry collapsed in 1990-95, and its Soviet-style collective agriculture produces merely 65-80% of the food necessary to keep the population alive. Since the state had no resources to pay for surveillance and control, officials were happy to accept bribes and overlook numerous irregularities.

However, in recent years the situation changed. Pyongyang is receiving sufficient aid from South Korea and China, two countries that are most afraid of a North Korean collapse. The nuclear program also probably makes North Korean leaders more confident about their ability to resist foreign pressure and, if necessary, to squeeze more aid from foes and friends (well, strictly speaking, they do not have friends now).

With this aid and new sense of relative security, the North Korean regime can prevent mass famine and restart some essential parts of the old system, with the food-distribution system being its cornerstone. This is a step toward an ideal of Kim Jong-il and his people, to a system where all able-bodied Koreans go to a state-managed job and spend the entire day there, being constantly watched and indoctrinated by a small army of propagandists, police informers, party officials, security officers and the like.

No unauthorized contacts with the dangerous outside world would be permitted, and no unauthorized social or commercial activity would happen under such system. Neither Kim nor his close associates are fools; they know perfectly well that such a system is not efficient, but they also know that only under such system can their privileges and security be guaranteed.

This is a sad paradox: aid that is often presented as a potential incentive for market-oriented reforms is actually the major reason North Korean leaders are now able to contemplate re-Stalinization of their country.

However, it remains to be seen whether they will succeed, since the North Korean society has changed much in the 12 years since the death of Kim Il-sung. New social forces have emerged, and the general mood has changed as well.

When in the mid-1990s the food rations stopped coming, previously forbidden or strictly controlled private trade became the only survival strategy available for a majority of North Koreans. The society experienced a sudden and explosive growth of grassroots capitalist economy, which by the late 1990s nearly replaced the “regular” Stalinist economy – at least, outside Pyongyang.

Apart from trade in a strict sense, North Korea’s “new entrepreneurs” are engaged in running small workshops, inns and canteens, as well as in providing all kinds of services. Another important part of the “second economy” is food production from individual plots, hitherto nearly absent from North Korea (from the late 1950s, farmers were allowed only tiny plots, not exceeding 100 square meters, sufficient only to grow some spices).

In many cases, the new business penetrates the official bureaucracy. While officials are not normally allowed to run their own business operations, some do, and as the line between the private and state businesses is becoming murky, the supposedly state-run companies make deals with private traders, borrow money on the black market and so on.

As one would expect, a new merchant class has emerged as a result of these changes. Nowadays an exceptionally successful North Korean entrepreneur would operate with capital reaching $100,000 (a fortune in a country where the average monthly salary is merely few dollars). Such mini-tycoons are very few and far between, but incomes measured in $100 a month are earned by many more merchants, and nearly all North Korean families earn at least a part of their income through the “second economy”.

These changes have produced a major psychological shift. The old assumptions about society are dead. After many decades of existence under the patronizing control of a Stalinist state, North Koreans discovered that one can live without going to an office to get next month’s food coupons. They also learned a lot more about the outside world. Smuggled South Korean videotapes are important, if dangerous, merchandise in the North Korean markets.

Contacts with China are necessary for a successful business, and these contacts bring not only goods for sale but also rumors about overseas life. And, of course, the vendors are the first people within living memory who became successful outside the official system. One of these former merchants recently told me: “Those who once attempted to trade, came to like it. Until now, [North Koreans] knew that only cadres could live well, while others should be content with eating grass gruel, but now merchants live better than cadres, and they feel proud of themselves.”

It seems that in recent months we have seen the very first signs of the social activity displayed by this new social group. Early last month, a large group of outraged merchants gathered in front of the local office in the city of Hoiryong, demanding to talk to the representatives of the authorities.

The Hoiryong riot was strictly non-political. A few months ago the local officials collected payments from the market vendors, promising to use the money for refurbishing the old market. However, the market was suddenly closed instead of being refurbished (perhaps as part of the ongoing crackdown on private commercial activities). The outraged vendors gathered near the market and demanded a refund.

The crowd was soon dispersed, and more active participants of the protest were arrested. Had a similar incident happened elsewhere, it would probably not have warranted more than a short newspaper report, but in North Korea this was an event of tremendous significance, the first time in decades that North Koreans openly and loudly expressed their dissatisfaction with a decision of the authorities.

In March 2005, a soccer riot in Pyongyang demonstrated that North Koreans are quite capable of breaking the law, but during that event the popular wrath was provoked by a foreigner, a Syrian referee, and could be construed as an outpouring of nationalistic sentiments (the soccer fans soon began to fight police, however). This time, in Hoiryong, a large group of North Koreans clearly challenged the state bureaucracy. Perhaps nothing like it has happened since the 1950s.

However, the growing power and social independence of the merchants is not the major problem the North Korean neo-Stalinists have to face. They deal with a society that has changed much, not least because of the penetration of modern technology, which facilitates the spread of information. The key role is played by the Chinese border, which is almost uncontrolled and has become an area of widespread smuggling.

Small radio sets are widely smuggled from China, so much so that a defector recently said: “In North Korea, nowadays every official has a radio set in his house.” This is new, since until the early 1990s all North Korean radios were fixed so that they could receive only official broadcasts. Theoretically, radio sets with free tuning are still banned, but this is not enforced. These radios sets are used to listen to foreign broadcasts, especially from South Korea.

Videocassette recorders are common as well. No statistics are available, but it seems that nearly half of all households in the borderland area and a smaller but significant number of households in Pyongyang have a VCR that is used to watch foreign movies. Defectors reported that in mid-October, just after the nuclear test, all North Koreans were required to sign a written pledge about non-participation in “non-socialist activity”. It was explained during the meetings that this activity includes listening to foreign radio and watching foreign videotapes.

Thus it seems that only a few people still believe in the official myth of South Korean destitution. Perhaps most people in the North do not realize how great the difference between their lives and those of their South Korean brethren is. Perhaps, for most of them, being affluent merely means the ability to eat rice daily. Discussions with recent defectors also create an impression that most North Koreans still believe that the major source of their problems is the suffocating “US imperialist blockade”. Still, the old propaganda about the destitute and starving South is not readily swallowed anymore.

Another obstacle on the way to a Stalinist revival is a serious breakdown of morale among officialdom. The low-level officials whose job is to enforce stricter regulations do not feel much enthusiasm about the new orders. Back in the 1940s and 1950s when Stalinism was first established in North Korea under Soviet tutelage, a large part of the population sincerely believed that it was the way to the future.

Nowadays, the situation is different. The low-level bureaucrats are skeptical. They are well aware of the capitalism-driven Chinese prosperity, and they have some vague ideas about South Korea’s economic success. And they are unconvinced by government promises that, as they know, never materialize. Unlike the elite, the mid-level officials have little reason to be afraid of the regime’s collapse. And, last but not least, they have become very corrupt in recent years, hence their law-enforcement zeal diminishes once they see an opportunity to earn extra money for looking other way.

At the same time, the new measures might find support from the large segments of population who did not succeed in the new economy and long for the stability of Kim Il-sung’s era. Recently, a former trader told me: “Elderly or unlucky people still miss the times of socialism, but younger people do business very well, believe that things are better now than they used to be and worry that the situation might turn back to the old days.”

We should not overestimate the scope of this generalization. After all, it is based on the observations of a market trader who obviously spent much time with her colleagues, the winners of the new social reality. Among less fortunate North Koreans, there will be some people who perhaps would not mind sitting through a couple of hours of indoctrination daily, if in exchange they would receive their precious 534 grams of barley-rice mixture (and an additional 250 grams per every dependant).

Early this month it was also reported that low-level officials had received new orders requiring them to tighten up residence control, normally executed through so-called “people’s groups”. Each such group consists of 30-50 families living in the same block or same apartment building and is headed by an official whose task is to watch everything in the neighborhood.

The new instructions, obtained by the Good Friends, a well-informed non-governmental organization dealing with North Korea, specify the deviations that are of particular importance: “secretly watching or copying illegal videotapes, using cars for trade, renting out houses or cooking food for sale, making liquors at home”. All these are “anti-socialist activities which must be watched carefully and exterminated”. The struggle to return to Kim Il-sung’s brand of socialism continues.

Still, North Korean authorities are fighting an uphill battle. In a sense they are lucky, since many foreign forces, including their traditional enemy, South Korea, do not really want their system to collapse and thus avoid anything that might promote a revolution. However, the regime is too anachronistic and too inefficient economically, so a great danger for its survival is created by the very existence of the prosperous world just outside its increasingly porous borders.

In the long run, all attempts to maintain a Stalinist society in the 21st century must be doomed. However, the North Korean leaders are fighting to buy time, to enjoy a few additional years of luxurious life (or plain security) for themselves. How long they will succeed remains to be seen.

Dr Andrei Lankov is a lecturer in the faculty of Asian Studies, China and Korea Center, Australian National University. He graduated from Leningrad State University with a PhD in Far Eastern history and China, with emphasis on Korea, and his thesis focused on factionalism in the Yi Dynasty. He has published books and articles on Korea and North Asia. He is currently on leave, teaching at Kookmin University, Seoul.

Official Web Page:

Northeast Asia can be considered the last major economic frontier on the Asian continent.  The region has enormous economic potential, but this potential can only be realised through dynamic cooperation and sharing of resources.

Recognising Northeast Asia’s considerable potential and geopolitical significance, UNDP in 1991 agreed to support the initiative of the countries in the region to establish an institutional mechanism for regional dialogue and further cooperation.   For the past twelve years, the Tumen River Area Development Programme has facilitated economic cooperation among the five member countries: China, the Democratic People’s Republic of Korea (DPRK), Mongolia, the Republic of Korea (ROK), and the Russian Federation.  The member countries are equally represented in the Consultative Commission for the Development of the Tumen River Economic Development Area and Northeast Asia, which meets annually at Vice Ministerial level.

The main objectives of the Tumen Programme are to:

• attain greater growth and sustainable development for the peoples and countries in Northeast Asia, and the Tumen Region in particular;
• identify common interests and opportunities for cooperation and sustainable development;
• increase mutual benefit and mutual understanding;
• strengthen economic, environmental and technical cooperation; and
  work to ensure that the Tumen Region is attractive for international investment, trade and business.

The first phase of the Tumen Programme involved extensive planning and background studies.  An interim phase focused on investment promotion and development initiatives designed to build momentum for the region as a growth triangle.  The second phase built on the institutional framework for regional cooperation created by the multilateral agreements concluded in 1995.  The third – and current – phase continues to address factors fundamental to regional economic cooperation and is designed to ensure the sustainability of this regional cooperation framework.

Why the Focus on the Tumen Region?
The Tumen Region has great potential as a major entrepot for international trade because of the strategic location of the Tumen transport corridor, the strong complementarities of the Tumen River Area, vast natural and human resources, and the area’s accessibility to the resources and markets of Northeast Asia.

Northeast China and Mongolia are landlocked and therefore have a strong interest in access to ports in DPRK and the Russian Far East.  Overseas shippers also have a stake in the Tumen transport corridor, for it offers a much shorter route to affluent and new markets, and facilitates transit trade to a number of destinations.

The local governments in the Tumen Region have been steadfast supporters of the Tumen Programme since its inception.  It appears that central governments in Northeast Asia are now re-emphasising the value of the Tumen Region, particularly its strategic transport corridor.  Northeast Asian governments are rapidly improving the Tumen Region’s infrastructure network and transport services.  They are also working to create legal and institutional mechanisms conducive to cross-border trade and transport.  The Tumen Programme is actively facilitating the creation of an enabling environment through “soft” infrastructure and human capacity building.

Why is Regional Cooperation so Important?
Regional cooperation is a vital part of the development process and a building block for effective participation in world trade and capital markets.  For the Tumen Region, which partly consists of small and remote areas of large countries, economic cooperation is an effective way to avoid marginalisation.  Cross-border cooperation also helps resolve environmental issues and facilitates the adoption of international environmental standards.  Most importantly, enhanced economic cooperation in Northeast Asia helps improve political relations and stability, in turn vital elements for investment and economic growth.

It is worth recalling how remote and closed the Tumen Region was just a dozen years ago, to appreciate the full significance of its role as a frontier for economic cooperation in Northeast Asia.  Much has been achieved during the Tumen Programme’s existence, particularly in terms of opening borders and increasing interaction in a region that was, until recently, tense and largely closed.  A new trade and transport corridor has been created, which will – in time – evolve into an economic corridor with a significant impact on poverty reduction and improved living standards in the region.

The Future of the Tumen Programme
The prevailing political and economic climate in the region has altered dramatically since the start of the Tumen Programme in 1991.  The Soviet Union has dissolved, China and ROK have established diplomatic relations and a major trading partnership, and there has been a degree of rapprochement between DPRK and ROK.  The transition to stronger economic systems in the countries that relied on the Soviet Comecon trading system has reinforced the logic of economic cooperation in the Tumen Region.  The increased participation of DPRK, Mongolia and the Russian Far East, combined with the rapid expansion of the Chinese economy, will help the Northeast Asian economy grow.

Dynamic cooperation has found increasing expression in Northeast Asia, and relations in the region continue to improve, helped by stronger economic links.  Despite major improvements in the geopolitical circumstances of the region, however, much remains to be done.  The Tumen Programme is the only initiative that brings the member countries together on a sub-regional basis, and its existing institutional structure and multilateral agreements should be utilised to maximum effect to help Northeast Asia achieve peace and prosperity.

Daily NK
12/8/2006
Yang Jung A

While golf equipment was amongst the list of banned luxury goods the U.S. government announced recently, Radio Free Asia (RFA) reported on the 6th that golf is a symbol of luxurious pleasure that only the elite in North Korea can experience.

Citing from a Pyongyang report by an Agence France-Presse correspondent, RFA revealed “The main golf course in North Korea is “Pyongyang Golf Course” with about 100 members, which in reality are all officials of Chosun Workers’ Party” and “Annual membership paid by the member amounts to $10,000.”

The correspondent said “This is a figure the average North Korean citizen could not even dream as an expense” and “The golf course in North Korea is a symbol of luxurious pleasure only experienced by authority officials or the elite.”

In the vicinity of Lake Taesung in Yongkang-gun, Nampo 38km from Pyongyang is “Pyongyang Golf Course,” equipped with a complete 18 hole course and ample enough to host an international golf tournament. The course was established in ’87 in celebration of Kim Il Song’s 75th birthday, sponsored by the Jochongnyeon, the pro-North Korean residents’ league in Japan.

Although it is said that a golf course exists within the grounds of Kim Il Sung’s Mountain Myohang villa and Ryongsung resort, the only golf course open to the public is ‘Pyongyang Golf Course.’ Mountain Myohang golf course is located in a valley 1.5km from Hyangsan Hotel, whereas Ryongsung golf course is situated 20 min by car from Pyongyang.

There are also mini courses, such as Yangkakdo golf course and Pyongyang golf practice range, Nampo Wawoodo golf course (9 holes). With investments by South Korean business, more golf courses are being constructed in areas such as Mt. Geumgang.

However, these golf courses are mainly accommodated to foreigners and excluding the elitist class, common people in possession of foreign currency such as Korean born Japanese or foreigners with blood-relatives are also using the courses.

Golf is one of Kim Jong Il’s favorite pastimes. In a book written by Fujimoto Kenji, once Kim Jong Il’s personal cook, Fujimoto wrote of his times at a golf course with Kim Jong Il at his villa.

At the golf course Fujimoto visited with Kim Jong Il, Kim asked Fujimoto ‘Compared to all the other places in the world, what do you think about the golf courses in North Korea?’ That day, when Kim Jong Il visited the golf course was October 6th and categorized a public holiday as a ‘The day Kim Jong Il visited.’

One time, North Korean mass media announced that at Kim Jong Il’s first time round of golf in `94, he scored an “eagle” followed by five “hold in ones,” recording a total score of 34. This only incited laughter from the international community.

If he had made 34 hit shots in a round of 18 holes, based on a game of par 72, this would mean he is 38 under. Even if a golf angel happened to come from the heavens, this would be impossible. While deifying Kim Jong Il and having no knowledge of golfing rules, media officials only made the situation into a laughing comedy.

In response, the New York Times sarcastically commented, that if the reports by North Korean media was true, Kim Jong Il should be selected as the “World’s number one golfer” as even professional golf competitors find it difficult to claim a hole a one in a lifetime.

Yonhap
12/8/2006

A South Korean textbook publisher has donated a second-hand rotary press to North Korea to help the communist state publish school textbooks, Seoul-based UNESCO Korea said Friday.

“North Korea has requested that UNESCO assist with textbook printing presses and paper since 2000, and (South Korea’s) Daehan Printing and Publishing Co. expressed its intention to make the donation,” a UNESCO Korea official said.

The press was used in printing textbooks for South Korea’s elementary and secondary school students until 2000, the official said.

The donation is the second project UNESCO Korea has sought to help North Korean students. In 2002, UNESCO and Daehan Pulp Co. provided the North with 200 tons of paper for middle-school English textbooks there.

Kyodo News is claiming that recently enacted UN restrictions on trade in luxury goods to the DPRK are having little effect on shops in Pyongyang (with the exception of Japanese cigarettes).  I suspect there are several reasons for this:

1.  Sanctions never completely cut off the supply of goods.  Where there is a willing buyer, there will almost always be a willing seller (particularly if the buyers is a well-connected party finctionary).  Quantity falls a little, price rises a lot.  A few more people get into the smuggling business.

2.  Most goods are imported from China.  China is not as tough on its “little brother” as the Japanese and US. 

3.  This will raise the value of North Koreans that have legitimate foreign connections (I dont want to name names but you know who you are! 🙂

4.  There are several places in Pyongyang worth checking out to learn more aobut the impact of sanctions in Pyongyang.  The DHL office in the Foreign ministry building, the shops on changwang street, and the Ragwan department store near the ice skating rink.  Ragwan was set up to sell to Koreans who returned from Japan and have yen to spare.

Story below:

Kyodo News (Hat tip DPRK Studies)
12/8/2006

Impact of sanctions not yet felt in Pyongyang stores

While countries have begun drawing up lists of luxury items they will deny North Korea as part of sanctions in response to the country’s nuclear test, the impact of the measure has yet to be felt in the handful of stores that sell imported goods in Pyongyang.
During a recent visit, shelves at a store inside the Koryo Hotel in central Pyongyang were stocked with French perfume, Russian vodka and Japanese “sake” rice wine, and restaurants in the North Korean capital still offered foreign beer.

Nor were changes visible in exchange rates for Japanese yen, the euro and Chinese yuan, which remained at around the level of previous months in several hotels that cater to non-Korean visitors and tourists.

“I would have thought that there would be a run on foreign goods by expatriates here, but so far there has been no major change,” a diplomat living in Pyongyang said. “The stores visited by the foreign community here still have, for example, chocolate and wine.”

After North Korea carried out its first nuclear test in October, the U.N. Security Council passed Resolution 1718, which condemns the nuclear experiment and denies the nation military hardware, nuclear technology and luxury items.

The idea behind the ban on luxury goods is to pressure North Korea’s elite, not the ordinary public, in a country that faces chronic food shortage.

While the U.N. Security Council resolution detailed the military and nuclear items the U.N. member countries will deny North Korea, it left the decision on luxury goods up to each country.

Japan’s list of 24 items, for example, includes high-quality beef, fatty tuna, caviar, fur products and jewelry. Many other countries have yet to complete their lists.

Another Pyongyang resident, meanwhile, said he has noticed one change — a dramatic rise in the price of Japanese cigarettes.

There has been a three-fold increase in the price over the past few months, said the international aid worker.

While cigarettes are among the luxury items Japan denies North Korea under the U.N. resolution, there could be another reason for the price hike — a Japanese ban on port calls by the ferry Mangyongbong-92 which has been in place since North Korea test-fired missiles in July.

The ferry, the only passenger link between the two countries, has also been used to ship Japanese goods into North Korea.

“The impact of the denial of luxury goods would not be very visible” in the streets of Pyongyang as they target the country’s elite, said Noriyuki Suzuki, a senior analyst at Radiopress, which monitors North Korean media in Tokyo.

But the impact of Japanese sanctions that include a halt in all imports from North Korea “would probably result in a gradual decrease in not just luxury items but all Japanese goods in the country,” he said.

Donga
12/7/2006

As the United Nations Security Council (UNSC) adopted a resolution against North Korea, some of the projects pursued in partnership with Pyongyang needed to be postponed. So I explained the background to a North Korean director-level official in charge of relevant work, but he knew nothing about the UNSC sanctions.”

He suggested that the U.S.` financial sanctions against the North were already having an impact on the upper class. “I recently met a businessman selling medical devices to North Korea, who told me that the sales of blood pressure testers widely used by the North Korean upper class recently dropped dramatically. I believe this is because foreign currency inflows into North Korea are on the decline due to the financial sanctions against it,” he explained.

He also mentioned subtle changes taking place in relations between North Korea and China that have become growingly complex these days.

“The North is recently beefing up security measures against Chinese merchants operating in Pyongyang. The development project of the Musan iron mine in North Hamgyong Province of North Korea, which China has pushed for enthusiastically as part of its endeavor to secure natural resources, is put off for now. It is reported that after the North Korean nuclear test, the Chinese authorities ordered a postponement of the project for the time being.” As China needs raw material in the long term, however, he projected, “Though there currently are some conflict factors between China and North Korea, China will have to support the North as it does not want the country to collapse.”

With regard to what North Korean society as a whole is like after the nuclear test, he stated, “There are absolutely no signs of political changes. The North Korean regime`s control over the society is rock-solid, not being swayed at all.” He also indicated, however, “More recently, the North Korean authorities are strengthening their control over foreigners there.”

As to why the North Korean regime forces humanitarian international groups leave the country and tries not to receive food aid from outside, he cited two reasons: First, as international groups have operated in the North for a long period of time, North Korean residents started to show “real goodwill” to them. This leads to social uncertainties there. Second, as a country emphasizing “self-reliance,” North Korea finds it hurting its ego to receive foreign aid every year.

He worried that a food shortage is expected when the season of spring poverty unfolds in earnest in April. He stressed, “Given this year`s harvest was not good, if foreign aid decreases, North Korea is highly likely to face the worst-ever food shortage, arbeit not a famine, since the mid-1990s (dubbed the “Painful March under Trials”). Help from the international community is desperately needed.”

Regarding his life as a diplomat in Pyongyang, he said that even though he needed to get permission from the North Korean authorities to go to provincial areas, he could move freely within downtown Pyongyang. As the structure of everyone monitoring each other has been internalized in North Korea, he added, when one tries to shoot an “inappropriate” scene from the perspective of North Korea, someone appears out of nowhere to stop him.

He plans to return to Pyongyang sooner or later.

Donga
12/6/2006

“The relationship between North Korea and China can be compared to a river that seems calm on the surface but has a great number of uncertainties surging underwater.”

Kurt Campbell, the senior vice president at Center for Strategic and International Studies (CSIS) and a think- tank in the U.S., had an interview with this newspaper on December 04. Senior vice president Campbell, renowned as an authority in international securities especially regarding China, said, “The official stance of China is to protect North Korea, but the nation is upset internally at the attitude of North Korea that belittles China and the global society. Without a noticeable change in the attitude of North Korea, China might take steps to reappraise its policies toward North Korea it has maintained over the years.”

―You analyzed in a seminar last month that North Korea will come into possession of nuclear capability targeting China.

“North Korea is feeling threats from many sides. What I meant was that while the major military is aimed at the U.S. across the truce line and Japan, North Korea should be aspiring underneath the surface to have suppressive force against China out of concerns regarding their relationship with China.”

At this point, senior vice president Campbell diagnosed that “North Korea seems determined to become a nuclear nation and will not give up on it” and went on to give his view that “even in case North Korea returns to the six-party round table, it will not show fundamental improvements.”

―How do you view the South Korea-U.S relationship in the present and in the future?

“The relationship between South Korea and the U.S is quite stable at the lower level. The greatest risk to the relationship between South Korea and the U.S. presently is not in the relationship itself but in the domestic politics of South Korea. Uncertainties are being aggravated by questions over where President Roh will take the problems (of the Korean Peninsula).”

―You said the South Korea-U.S relationship is stable at a low level.

“The nuclear testing by North Korea helped compose the relationship between South Korea and the U.S. The replacement of U.S. Defense Secretary Donald Rumsfeld will also help. He was not a factor conducive to the South Korea-U.S. relationship. I think he looked at South Korea not as a profitable strategic partner but as a pain in the ass. In this aspect it was incidental and ironic that the aim of Secretary Rumsfeld and President Roh, regarding matters such as the transfer of right to control strategies in war, converged at the same point. Of course their motivations diverged greatly. On the other hand the future U.S. Defense Secretary Robert Gates seems to be a person who shares the opinion that having a closer relationship with South Korea is important.”

―How would you grade the response by related nations toward North Korean nuclear testing?

“I hope to see South Korea, the U.S., and China sending North Korea a concurring message. But what I’m concerned about is whether the government of South Korea did not send a message that “even though the nuclear testing was depressing, it was not unforgivable, and a certain level of business can go on.”

Yonhap
12/6/2006
Byun Duk-kun

Unification Minister Lee Jong-seok returned to South Korea Wednesday after a two-day visit to North Korea aimed at rallying support for a cross-border tourism program criticized by the United States.

The South Korean government’s point man on North Korea arrived in the country’s eastern city of Goseong shortly after crossing the heavily-fortified border with North Korea around 5 p.m.

Lee was the highest-ranking South Korean official to visit the South Korean-developed tourist destination in Mount Geumgang since the communist North tested a nuclear device about two months ago.

The visit was geared towards meeting South Korean officials and businesspeople at the North Korean resort, but it followed Washington’s intensified criticism against the tourism program.

The United States had long opposed the inter-Korean tourism program, but never too explicitly. It asked the Seoul government to halt the country’s cross-border project with the North after Pyongyang conducted its first nuclear weapons test on Oct. 9.

The Mount Geumgang tourism program appears to be “designed to give money to North Korean authorities,” Assistant Secretary of State Christopher Hill said while traveling here in October.

Hill represents Washington in international negotiations aimed at persuading the North to abandon its nuclear ambitions. The talks are also attended by the two Koreas, Japan, China and Russia.

Seoul remained taciturn on the U.S. demand, only taking what U.S. critics called “eye-washing measures.”

The unification minister, however, said the tourism program must “continue” and “be developed further.”

“We must never take a break from trying to ease tension between the North and South Korea, no matter how difficult the times and conditions are,” the minister said while meeting with reporters at the North Korean resort,

“In that sense, these projects (with North Korea) must continue to be developed and widened,” he added.

Seoul was never expected to halt, let alone suspend, the tourism program, but the minister’s remarks come amid international efforts to punish the North for its nuclear test.

Shortly after the Oct. 9 test, the United Nations Security Council approved a resolution that prohibited the transfer to North Korea of any financial resources or assets that can benefit the communist nation’s nuclear and weapons of mass destruction programs.

Millions of dollars have been paid to Pyongyang since the Mount Geumgang resort opened in 1998, while Hyundai Asan, the South Korean developer of the resort, regularly pays large amounts of money to the North in the form of admission fees levied on South Korean tourists traveling there.

The South Korean government claims the money is unlikely to be used for the North’s nuclear or WMD programs, though it admits there is no way of knowing for certain.

The U.N. Security Council has yet to decide whether Seoul’s continued, and apparently renewed, support for the Mount Geumgang tourism program runs counter to its North Korea sanctions resolution.

“I believe no one can dispute the positive effects that the Mount Geumgang tourism program and the Kaesong industrial complex project have had on North-South relations,” said Lee.

The unification minister has offered to step down from his Cabinet post and is expected to be replaced next week by Lee Jae-joung, senior vice chairman of the presidential National Unification Advisory Council.

He was scheduled to arrive in Seoul later in the day.

Yonhap
12/6/2006

South Korea is set to announce its participation in a U.S.-led campaign to stop container-borne radioactive materials after refusing to help interdict North Korean ships suspected of carrying weapons of mass destruction.

A Foreign Ministry official confirmed Wednesday that Seoul decided to join the International Container Scanning Network, or ICSN.

“The government plans to formally announce the decision later this week,” the official said, asking not to be identified.

The ICSN calls for its members to install state-of-the-art radioactivity detectors at their major ports so customs officials can screen the contents of containers without opening them.

International efforts to curb the flow of nuclear materials have gained more urgency since North Korea conducted a nuclear test in October.

Seoul’s decision to join the ICSN was widely interpreted as designed to offset its limited participation in the Proliferation Security Initiative (PSI).

South Korea said last month that it would stay away from any PSI-related activity in the vicinity of the Korean Peninsula, citing its unique geopolitical situation. South Korea remains technically at war with the communist North and the two sides are vulnerable to military clashes especially in the poorly-demarcated West Sea.

South Korea described its position in the PSI as “special status,” as it kept the door open for PSI activities in remote areas.

Government officials, however, said the PSI was not considered when it made the decision to join the ICSN, a project still being tested.

Herald Tribune
12/5/2006

Japanese police raid pro-North Korea group over alleged accounting violation

Japanese police raided offices of a pro-North Korean association and later arrested an executive over suspected accounting violations on Tuesday, the latest crackdown as Tokyo intensifies pressure on the reclusive communist regime.

Investigators searched the offices of the Hyogo chamber of commerce affiliated with the General Association of Korean Residents in Japan, which acts as Pyongyang’s de facto embassy, prefectural (state) police spokesman Naoki Awazu said.

Awazu said no other details were immediately available.

Police suspect a 36-year-old former senior official at the group’s local business office helped North Korea-affiliated companies and offices evade taxes and provided accounting services without a license, Kyodo News agency reported.

Eitetsu Kawa, a North Korean living in Japan, was later arrested on suspicion of accounting law violations.

Japan has been cracking down on the residents’ association amid concerns about North Korea’s nuclear and chemical weapons programs, but it was not immediately known if Tuesday’s raid was linked.

The reclusive regime angered Japan and other nations when it tested ballistic missiles in July and conducted a nuclear test in October.

Pro-Pyongyang Japanese residents have come under increasing scrutiny by authorities as tensions have escalated with North Korea.

Tokyo was also planning to urge local governments to review preferential property taxes for facilities owned by North Korean organizations to check on how the pro-North association uses its buildings and facilities.

On Tuesday, the North’s state-run Korean Central News Agency protested the recent raids, calling them “an infringement upon the dignity of (North Korea) and a vicious political provocation.”

Last week, police raided the association’s Tokyo headquarters and its offices in the northern Japanese city of Niigata on suspicion that a relative of a group official illegally obtained a small amount medical supplies for shipment to the impoverished country.

In August, Japanese police arrested a pro-North resident in Japan for allegedly exporting to the North machinery that can be used to make biological weapons.

In March, Japanese police raided another pro-North Korea local chamber of commerce in connection with Pyongyang’s abduction of Japanese citizens in the 1970s and 1980s.