North Korean Economy Watch

North Welcomes Aid
Korea Times 
8/4/2006

North Korea’s Inter-Korean Economic Cooperation Committee took a positive stance yesterday toward accepting humanitarian aid from South Korea, Yonhap News Agency reported.

“There’s no reason for us to reject flood relief from the South as long as it’s not politically motivated,” Kim Song-won, head of the committee said from Dandong, China.

The remark is the first positive comment from a North Korean official on flood relief from the South amid chilly inter-Korean relations following last month’s missile threats.

Hyundai to Deliver Aid for NK Flood Victims
Korea Times
8.8.2006

Hyundai Asan, a South Korean company in charge of North Korean business projects, said Tuesday it will send relief goods to victims of flooding near a scenic mountain on the southeastern coast of the communist country.

From Wednesday to Saturday, Hyundai Asan will deliver 500 tons of cement and 200 tons of flour, worth about 100 million won ($104,000), by trucks across the inter-Korean border for North Korean victims in the inner part of Mount Kumgang, the company said. It would be the second relief delivery from South Korea after North Korea was devastated by torrential rains late last month.

On Monday, a pro-North Korea newspaper in Japan, the Chosun Sinbo, reported at least 549 North Koreans were killed and 295 others missing, hit by floods last month.

The casualty figures were seen as the highest so far in North Korea, one of the world’s most isolated nations. y

North wants aid, just not those noodles
Joong Ang Daily
8/10/2006
 
August 10, 2006 ㅡ North Korea formally asked South Korean civic groups for humanitarian aid for its flood victims ― but it doesn’t want instant noodles.

The country said it does want construction materials, construction equipment, blankets and medicine, according to a fax sent from the communist country to a South Korean civic group. The message was the first formal request from the North seeking aid. The North Korean Committee for Implementation of the June 15 Joint Declaration sent the message to its South Korean counterpart yesterday, thanking the civic groups here for helping the North’s flood victims. In the message, North Korea specified what they prefer to be included in the aid package. Instant noodles and clothes were singled out as less-wanted items.

The South Korean committee will meet with its North Korean counterpart tomorrow at the Mount Kumgang resort to further discuss assistance. The South Korean committee has launched a fundraising drive for North Korean flood victims. Aid packages by some civic groups have already been sent to the North, and more were on their way yesterday from Incheon.

Unification Minister Lee Jong-seok is scheduled to meet today with Han Wan-sang, South Korea’s Red Cross chief, to discuss the government’s flood relief program for the North. Floor leaders of the five political parties will also meet today to discuss the aid to the North. 

Government to give aid, rice, to the North
Joong Ang Daily
8/11/2006

After consultation with the South Korean Red Cross, the government has agreed to provide an aid package including rice to help North Korean flood victims, a Unification Ministry official said yesterday. The government will announce today its official participation in an emergency relief program for the North, led by the Red Cross and civic groups here.

After the North fired seven missiles last month, the South withheld its previously promised rice and fertilizer aid in protest.

In his meeting with Unification Minister Lee Jong-seok, South Korea’s Red Cross president, Han Wan-sang, asked the government to help send goods to benefit North Korean flood victims. Mr. Han said rice and construction materials are such items. Mr. Lee agreed to that proposal.

The government and the Red Cross will discuss further the shipment schedule and amount of aid.

Mr. Han was quoted by Yonhap News Agency yesterday as saying the aid package will be prepared by the end of next week.

Floor leaders of political parties, including the conservative Grand Nationals, also met yesterday to discuss the need for humanitarian aid to the North. They encouraged the government to send food, medicines and construction materials. A Grand National Party spokesman said that the food aid should include rice, although strict monitoring should follow to make sure the grain is provided to flood victims in urgent need.

The governing and ruling parties also agreed to approve a supplementary budget for the aid if necessary.

Seoul offers W10b in aid to N. Korea
Korea Herald
8/12/2006

South Korea will contribute 10 billion won ($10.5 million) to civilian relief efforts for flood-hit North Korea, an official said yesterday.

The contribution is part of an aid package that Seoul plans to give to the North, reversing an earlier decision to suspend aid in protest against the North’s missile launches last month.

Besides the contribution, the South also plans to ship official aid supplies to the North via the Red Cross.

The decision came at a policy coordination meeting between the government and the governing Uri Party, which was attended by Seoul’s point man on North Korean affairs, Unification Minister Lee Jong-seok, as well as Prime Minister Han Myeong-sook.

Earlier this week, North Korea asked for help from the South to recover from devastating floods in mid-July that left at least 549 people dead and 295 missing.

The North had previously refused South Korean aid from the Red Cross, saying it would take care of the problem itself.

The Unification Ministry is to allocate the money from its inter-Korean cooperation fund, which will be used to match the funds raised by each civic organization, the ruling party official said.

A ministry official said civic organizations have so far raised over 9.8 billion won in funds and goods. Other ministry officials said the fund will be used to purchase emergency relief aid, such as rice, flour, medicine and equipment.

The government held a meeting with civic organizations yesterday to decide on the size of its support for each civic organization.

The ministry and the South Korean Red Cross agreed Thursday to provide large amounts of assistance, mainly rice, that would be “substantial enough” to help flood-hit North Korea, according to Red Cross chief Han Wan-sang.

Rep. Noh Woong-rae, a vice floor leader of the ruling Uri Party, hinted Friday that the Red Cross aid may amount to more than 70 billion won worth of goods.

“(The government) gave 70 billion won worth of support (to the North) through its Red Cross when the Ryongchon incident” took place, Noh said, referring to an explosion at a train station in a North Korean town bordering China in April 2004, which left over 160 people killed and thousands injured.

“This (the previous amount) would be considered in determining the size of its aid, but the fact that the size of the (flood-affected) area is so large this time will be considered,” he said.

South Korea has been cautious in providing assistance to the North because of its no-aid pledge over the missile crisis.

But growing public calls for aid to the North have emboldened the government. The country’s main opposition party, which has been skeptical of aid provisions to the communist state, has also been supportive of emergency aid to the North.

The aid decision boosted hopes for an improvement in inter-Korean relations, which chilled after North Korea strongly protested Seoul’s decision to halt rice and fertilizer supplies until the North resolves concerns over its missile and nuclear programs.

North Korea is one of the poorest countries in the world after natural disasters and mismanagement devastated its economy in the mid-1990s. The country relies on foreign assistance to feed its 23 million people.

From the Korea Times:

Elusive Welcome Mat
By Andrei Lankov
 
It is believed that some 40,000 to 80,000 North Koreans live in Northeast China, earning money through unskilled work, or living with their Chinese partners. Some five years ago, their number was much greater _ perhaps, up to 250,000.

At first sight, defection to South Korea would be the most logical next step for these people. After all, the South Korean Constitution does not recognize the existence of North Korean state, thus every North Korean is, by definition, a citizen of the Republic of Korea (ROK), eligible to special rights and protection. However, such defections are rare _ only a few thousand North Koreans have move to the South over the last few years. Why?

The major reason is the unwillingness of the South Korean government to help refugees gain safe conduct to Korea. When a refugee manages to contact the South Korean embassy or consulate in China, he or she does not find support there. Those who have relatives in the South can use the expensive services of people smugglers (at least, $5,000 up front), but the majority have no chance to get to the South without some official support _ and this support is not forthcoming.

Among those who have been denied assistance there have even been some who would have been seen as god-given propaganda gifts 10 or 15 years ago. In 1996, for example, the South Korean Embassy in Beijing was visited by a family of six whose father, an exemplary “shock worker,’’ was once granted a rare honour _ to have his picture taken with Kim Il-sung himself. The diplomats advised the family that they were unable to do anything for them and wished the would-be defectors good luck. But they had no such luck _ they were arrested, deported back to the Democratic People’s Republic of Korea, and severely punished. A 36-year-old military officer from an elite security unit fled to China in 1996. He spent 1996-2002 repeatedly applying for permission to move to the South. He contacted the South Korean Embassy a number of times but every time the diplomats advised him “be patient and wait.’’

A defector once told a South Korean journalist: “When I first fled the North I thought that it would be easy to go to South Korea. With the help of ethnic Koreans I arrived in Qingdao [China] in August 1996. But at the Korean Consulate, on which I had pinned all my hopes, [I] was told: ‘Under the present circumstances, this is difficult.’ [I felt like] the heavens collapsed.’’

Only those who represent an exceptional propaganda value (or have had access to very important intelligence) can count on official assistance these days.

Are you going to have an outburst of righteous disgust about “heartless Seoul bureaucrats?’’ Alas, it is not that easy. There are good reasons why the South Korean officials act in such a way…

First of all, the ROK does not wish to create problems with China, which carefully maintains its neutrality in the Korean conflict and does not wish to become a transition zone for crowds of refugees heading for Seoul. South Korean officials are also wary of ethnic Koreans from China who might try to pass themselves off as North Koreans to get access to ROK citizenship.

Admittedly, those refugees who manage to cross the border again, and reach the South Korean missions in South East Asia might count on better treatment and help. But the way across China is expensive and dangerous, especially since the Chinese police are on the lookout for likely refugees from North Korea.

Nevertheless, it appears that the major reason behind Seoul’s passivity is not a set of diplomatic calculations but a tacit understanding that refugees _ largely uneducated peasants _ have little hope of adjusting to South Korean society. Indeed, the defectors seldom fare well in the South _ in spite of the generous if recently curtailed aid packages. Encouraging defection would entail a great increase in spending on the already large aid programs.

In addition, Seoul does not want to destabilize its ex-enemy. A large-scale exodus of North Koreans to the South would likely cause a serious political crisis in Pyongyang. This is exactly the scenario that South Korean diplomacy strives to prevent: in recent years the notion of “German-type unification’’ is seen as a nightmare, to be avoided at all costs. Economic considerations play a major role, but one should not forget the remote but real chance that a cornered Pyongyang would start a new Korean War as a last resort.

Are these considerations sufficient enough to justify inaction? Frankly, I do not know. Alas, in real life people often have to make difficult choices between two evils, and attempts to present such choices in black-and-white are likely to lead to more tragedies. Seoul’s policy toward the North in the recent decade has been a basket of choices between bad and worse _ even though politicians were wise enough not to call a spade a spade, guarding the feelings of the majority who prefer to comfortably see the world in black and white. But that is another story…

From Joong Ang Daily:

North sends upbeat note on inter-Korean projects
8/7/2006

North Korea has reaffirmed its commitment toward inter-Korean economic cooperation projects, a South Korean operator of an inter-Korean business project said yesterday.

“We are confident that ongoing inter-Korean economic cooperation projects such as the Mount Kumgang tours will produce new meaningful results,” the North’s Asia Pacific Peace Committee said in a letter to Hyundai Asan Corporation, the operator of a tour program to Mount Kumgang.

The North sent the letter on Tuesday, marking the third anniversary on Friday of the death of Chung Mong-hun, the late chairman of Hyundai Asan, an arm of Hyundai Group in charge of various business projects in the communist country.

Mr. Chung committed suicide in 2003 after being interrogated by prosecutors about slush funds he allegedly provided to politicians to promote his company’s North Korea business projects, including an inter-Korean industrial complex in the North Korean border town of Kaesong.

It is the first time that Pyongyang expressed its stance toward inter-Korean economic cooperation projects currently underway since it launched missiles in early July.

There have been concerns that inter-Korean cooperation efforts may hit a snag after the test-launches. In response, the South suspended humanitarian aid, including fertilizer aid. The North reacted by halting reunion events for families separated by the 1950-53 Korean War, and also suspended the construction of a 12-story reunion center at the Mount Kumgang resort on the North’s east coast. More than 1 million South Koreans have visited since the resort was launched in 1998.

Far fewer South Koreans visited the scenic mountain resort last month, according to Hyundai Asan. The number of people taking the cross-border tour in July dropped 43 percent compared with the same period last year. A total of 19,605 people traveled there last month, according to the company. 

From Yonhap:
8/4/2006

S. Korean drug companies to send medical aid to N. Korea

SEOUL– An association of South Korean drug companies said Friday that it will send medical supplies to flood-devastated North Korea.

Torrential rains pounded the communist country in mid-July, leaving hundreds of people killed or missing, according to United Nations and other international aid workers operating in the country. The floods also wiped out arable land that could lead to the loss of 100,000 tons of crops, they said.

From Joong Ang Daily:

With bipartisan nod, Seoul to fund NGO flood aid
8/5/2006

Prompted by bipartisan recommendations from political parties that the government should send medicines and emergency food to flood victims in the North, a government official said yesterday it will provide financial support upon request for humanitarian assistance projects by non-governmental groups.

“The Grand National and the Democratic Labor parties said [Thursday] that humanitarian aid programs should resume, and we welcome such a position,” Uri Party chairman Kim Geun-tae said yesterday. “Humanitarian aid to the North must not be blocked by politics.” He urged the government to resume its humanitarian aid to the North unconditionally.

After North Korea fired seven missiles and refused discussions about the launch with the South last month, Seoul withheld previously promised rice and fertilizer aid in protest.

A senior Unification Ministry official said yesterday that the government would participate in the provision of relief goods to help North Korean flood victims through non-governmental groups. The Roh Moo-hyun administration is seriously considering funding relief groups when they seek government help.

“We believe that civic groups will make their requests for help next week,” the official said. “Because it is an emergency relief program, the government will participate.”

The non-governmental groups’ aid package includes rice, and the government is expected to fund the food in the aid package. The Grand Nationals, however, said earlier that relief food to the North should not include rice.

While no accurate flood damage assessment in the North is available, the Food and Agricultural Organization said yesterday that torrential rains in July flooded about 5,000 hectares (19.3 square miles), or 2 percent of the farmland in North Korea, adding that the country, which was still recovering from years of famine, lost about 1,000 tons of corn and beans from the disaster.

A spokesman for an alliance of South Korean civic groups, the South Korean Committee for Implementation of the June 15 Joint Declaration, said its delegation may be able to get more accurate information about the flood damage by next week. Committee members will meet with their North Korean counterparts at the Mount Kumgang resort on Friday to discuss the canceled inter-Korean celebration of Liberation Day, the Aug. 15 anniversary of Japan’s surrender in 1945. The North called it off earlier this week, citing severe flood damage. At the meeting, the two sides are expected to talk about humanitarian aid for flood victims.

Meanwhile, the flood disaster in the North rang alarm bells in the South about the potential for an epidemic as the number of patients with malaria in the North reportedly increased after last month’s flooding. Earlier this month, a South Korean activist group, Good Friends, said that an increasing number of malaria patients have been found in Kaesong and Haeju in the North after the flood.

The Korea Center for Disease Control and Prevention said mosquitoes could fly from North Korea to South Korean regions near the Demilitarized Zone. According to the center’s data from January to June, 333 patients with malaria were reported to the center, up 47 percent from 226 patients in the same period last year. The western parts of the DMZ, Gimpo and Paju in Gyeonggi province and Ganghwa in Incheon, are likely to be infested by malaria mosquitoes, flying up to 18 kilometers from Kaesong, Jangpyong, and Tosan in North Korea, the center said.

From the Joong Ang Daily:

First flood aid leaves for North
August 04, 2006

South Korea’s first aid package to help North Korean flood victims left Incheon yesterday, a Seoul-based international relief organization said. The eight containers full of goods include 100 tons of flour, 37,500 packs of instant noodles and 2,660 candles.

The Join Together Society, a relief agency founded by the Buddhist civic group Jungto Society, plans to send three more shipments to North Korea. Yesterday’s package, worth 120 million won ($124,262), will arrive in the North’s Nampo Harbor today, the aid group said. The aid packages will be given to flood victims of South Pyongan province, where the damage was reportedly severe.

The second shipment will include $50,000 worth of medicine and other goods including blankets and dishes, the group said. The goods will be purchased in China and sent to the North by trucks. The third and fourth shipments will be food aid, to be shipped from Incheon to Nampo.

More non-governmental groups said yesterday they will initiate fundraising drives to support flood victims in both South and North Koreas. The South Korean Committee for Implementation of the June 15 Joint Declaration, an alliance of civic, social, religious and political groups, said its members will provide contributions from today till Tuesday to raise $100,000. The fundraising drive will expand to the public by the end of next month, and the money will be spent to help flood victims of both Koreas, the committee said.

A relief agency for North Korea under the National Unification Advisory Council also announced its plan to provide aid packages to support flood victims in the North. The organization said 50 million won worth of goods, including 300 hand carts, will depart Incheon on Wednesday for Nampo. Additional goods, including medicine, will be provided, and the group planned site surveys in North Korea at the end of this month to see if the victims need further assistance, the group said.

The United Nations and the Red Cross were conservative about the North’s suffering after the July floods. The United Nations estimated at least 154 North Korean deaths and 127 missing, while the Red Cross said 141 were killed and another 112 were missing. A South Korean civic group said earlier this week that up to 10,000 were missing or dead.

Meanwhile, international media reported yesterday that the North has refused aid offers from the World Food Program and Red Cross.

From the Korea Herald:
August 2, 2006

A South Korean civic group announced yesterday that it will send 130 million won ($138,000) worth of flood relief to North Korea tomorrow.

This is the first time that humanitarian aid is being sent to the North after it suffered heavy damage from the latest torrential downpours, the group said.

The Join Together Society said it shipped 100 tons of flour, 38,000 packs of instant noodles and living necessities such as clothes, shoes and candles.

JTS is a relief and development organization founded in 1994, and headed by well-known Buddhist monk Ven. Pomnyun.

The ship will leave Incheon tomorrow and will reach the North’s western port of Nampo tomorrow at the earliest, said the Seoul-based civic group.

The move came after the South Korean government stopped aid packages as the North test-fired seven missiles into the East Sea last month. However, civic groups here have urged Seoul to revive its humanitarian aid as food shortage problems in the North got worse in the aftermath of the massive downfall.

JTS said that the flood relief will be sent to an organization that helps North Koreans residing overseas. The goods will be used to relieve flood victims in the Yangduk county of Pyeongan Province, northwest of Pyeongyang, it added.

Red Cross In S. Korea Says North Rejects Aid
Washington Post
Kwang Tae Kim
Associated Press
Thursday, August 3, 2006; Page A18

SEOUL, Aug. 2 — The South Korean Red Cross said Wednesday that its North Korean counterpart had rejected an offer of aid for flood victims.

North Korea “expressed thanks for Seoul’s offer” but said “it will handle the recovery efforts from recent floods by itself,” a senior North Korean Red Cross official said, according to the South Korean Red Cross.

Floods caused by heavy rains in mid-July killed at least 154 North Koreans and left more than 127 missing, according to the United Nations. North Korea’s official media have said the disaster caused hundreds of deaths and cut off roads, bridges, railroads and communications.

However, the Good Friends group, a Seoul-based aid organization for North Korean refugees, said in a statement Wednesday that about 10,000 people were dead or missing and 1.5 million were left homeless by the floods.

The project coordinator for Good Friends, Lee Seung Yong, declined to identify sources for the information, but previous reports of activities in North Korea from the group have since been confirmed.

North Korea has relied on foreign donations of food since the 1990s, when natural disasters and decades of mismanagement led to the deaths of as many as 2 million people.

South Korea, a key provider of rice and fertilizer to the North, recently suspended aid shipments to protest the county’s refusal to discuss its missile launches in early July. The tests drew international condemnation and raised regional tensions.

North Korea protested the South’s decision and cut off government-level exchanges. But civilian-level exchanges remain intact, leading the North to seek civilian assistance from the South for flood victims while rejecting the offer of aid from the government-run Red Cross.

The South’s Korean Council for Reconciliation and Cooperation, which is composed of civic groups and ruling Uri Party members and is partly funded by the government, said it would send aid to the North by next weekend. It said the aid would probably be accepted but declined to give details.

JTS Korea, a private relief agency based in Seoul, also said Tuesday that it would ship emergency goods to the North. The agency’s spokeswoman, Hyun Hee Ryun, said North Korea had specified what kind of supplies it needed, suggesting that the aid would be accepted.

N. Korea declines aid from Red Cross after flooding
Korea Herald

North Korea, which was hit by torrential rain and flash floods last month, declined offers of aid from the International Red Cross and its South Korean branch, an official said.

“We asked the North Korean government what it would need in terms of relief aid to help in their efforts to recover after last month’s heavy rains,” said Kim Hyung-sup, a spokesman at South Korea’s National Red Cross. “North Korean authorities replied that while they appreciate the offer, they are able to manage on their own. I seriously doubt that.”

The International Committee of the Red Cross – to which the South Korean Red Cross belongs – also offered aid, which North Korea declined, Kim said.

Hundreds of people are dead or missing in North Korea after the rains, the country’s official Korean Central News Agency said on July 21. Floods last week also damaged farmland, tens of thousands of shelters and public buildings. Hundreds of roads, bridges and railways were destroyed, it said. South Korea was also hit and damages in the South are estimated at around 2 trillion won ($2.1 billion).

North Korea canceled two festivals this month, citing relief efforts. It postponed its Arirang Festival, featuring its mass games, as well as an annual festival with South Korea to mark their independence from Japanese colonial rule at the end of World War II.

“The biggest problem for North Korea will be food shortages, especially in winter and next year, because most of its farmlands were flooded,” Kim said. “Water and medical supplies are likely to be in demand, either because of the wounded as well as concerns of infectious diseases that may spread in the aftermath of the rains.”

A South Korean civic group said Tuesday that it plans to provide emergency aid to North Koreans.

The Join Together Society, a humanitarian aid group in Seoul, said it will send eight TEUs filled with relief goods, including 100 tons of flour, to the North from Aug. 3-9. TEUs, or 20-foot equivalent units, are a measure of containerized cargo capacity.

It is the first time that a South Korean civic group is providing aid to the communist state since Seoul stopped all efforts in the wake of the North’s recent missile tests and its ongoing boycott of six-way nuclear talks.

North Korea has depended on outside aid since the 1990s. More than a million people have died from famine because of years of flooding, drought and economic mismanagement. One in three North Koreans is chronically malnourished and many are forced to scavenge for food, resorting to ferns, acorns, grass and seaweed.

International food aid for North Korea reached 1.08 million tons last year, the world’s second largest after Ethiopia’s 1.1 million tons, according to the United Nations’ Food and Agriculture Organization. South Korea sent 394,000 tons of food aid to North Korea last year.

Daily NK:

It has been learned that serious damage has been incurred in North Korea due to heavy rain, which has also led to the cancellation of the Arirang festival.

Due to the heavy rain, hundreds of people have died, and 100,000 tons of food was lost. The Food and Agriculture Organization (FAO) estimated that necessary food aid would amount to 830,000 tons between November 2006 to October 2007.

High production agruicultural areas such as Hwanghae and South Pyongan provinces have already complained about likely food shortages next year. North Korean traders from China said that, “due to the damage from the heavy rain, the whole country will face loses”. Many international organizations have voiced a desire to aid the North Korean people after learning of the flooding, keeping the missile conflict a separate issue.

Although international organizations, including the International Red Cross, have offered to aid the North Korean people, North Korea has refused the aid. The World Food Program (WFP) offered to provide 74 tons of food to the Yeungsan district of North Hwanghae province, but due to the WFP condition of monitoring distribution of the food aid, North Korea has refused to accept it.

It was also confirmed that North Korea refused aid offered by the International Red Cross offices in Europe and the U.S., and has not yet responded to an offer of aid made by the Korean National Red Cross. It seems unlikely that the North will accept the aid, as the government has firmly refused external aid, in order to keep the international community ignorant to the situation in the North.

If the North Korean government continues to take this attitude, the number of victims will no doubt increase, particularly as the international community increases the level of isolation against North Korea.

Last December, when the U.N. General Assembly passed the North Korean Human Rights Resolution, North Korea asked the U.N. office in North Korea to withdraw. During that time, when North Korea refused food aid from the WFP, it was criticized as using its people as hostages to pressure the international community.

The South Korean government officially took the stand that it would not aid North Korea. Although some people have said that ignoring the need for aid is a bad decision, others believe that sending aid when the North did not request it would only it would only invite misunderstanding.

If the government rushes to aid North Korea, it will be criticized for supporting the North, while leaving domestic flood sufferers to fend for themselves.

However, many people point out that even though they maintain an alliance against the North in regard to the missile conflict, the South Korean government should still offer humanitarian assistance. Cooperation through international organizations, such as the WFP, with monitoring of distrubution, could ensure that the North Korean people receive the aid that they need.

from the Daily NK:

Recently, concerns mounted that a counterfeit $100 “supernote” was being used as “official currency” between North Korean traders.

For a while, the supernote was used in areas of China in common trade and drug smuggling. The counterfeit money began circulating in Jangmadang and then North Korean markets, as “unofficial forms of trade”.

As of early this year, the supernote circulated amongst North Korean common traders was valued at $70, and by June, had spread throughout the whole nation. It appears that the counterfeit money is being accepted as “income currency”.

This information was obtained by North Korean and Chinese tradesmen residing both in and outside of North Korea.

On July 26th, Park Chul Woong (pseudonym, 34), a Korean-Chinese merchant in Dandong, China said “It has been a while since counterfeit money has been used as a form of transaction in North Korea. Now, tradesmen use the supernote amongst themselves to do business”.

Park said “Even if you make a small deal of $1,000, this still equates to 600 sheets of North Korean 5,000 won notes. (The largest North Korean bill) As people do not want to carry this amount of money with them, merchants use the counterfeit money instead”.

Also, Park said “Merchants do not deal with North Korean currency as they do not trust it. When inflation rises rapidly as in 2002, merchants sit around and discuss how the money has no value. However, there is nothing you cannot do with the dollar. As the dollar is scarce, merchants have resorted to using fakes.”

The traders complain that the North Korean currency has lost its value so much, that if they were to use the money for trade at markets they would have to carry numerous bags of it. They also said “Every day the market price fluctuates dramatically. The more you trade with North Korean money, the greater the loss.”

No control of counterfeit money
 
Last May, Kim Young Man (pseudonym, 38), a Korean-Chinese who went to Shinuiju for an Investment Conference, said “North Korea is unhestitantly using the counterfeit $100 note as real $70. It is of concern as to how far they will take this.”

He said “Even business employees of the National Security Office or the Department of the People’s Armed Forces General Logistics Bureau use counterfeit when paying Chinese tradesman for products such as seafood and hand-made goods. If North Korean authorities discover that counterfeit money is circulating in North Korea on such a large scale, chaos could ensue.”

Also, he said “Merchants generally carry dollars. Rich merchants store their real currency in safekeeping and use counterfeit money for “exchange”. He continued, “Although the whole world has eradicated counterfeit money, North Korea is still far behind”.

At Dandong’s economic development zone, a Chinese tradesman said “The U.S. alleges that it will eradicate the counterfeit money, but there has been little change. The value of the counterfeit money at $70 is not depreciating”.

On the one hand, tradesmen say “Apart from the supernotes manufactured by North Korean authorities, computer-made supernotes have been discovered and rejected as a means of business.”

At present, it is difficult to estimate how much counterfeit money is circulating around North Korea. However, if the counterfeit money is accepted amongst common traders at Jangmadang, this means that the counterfeit currency has reached a large scale and is spreading further.

This substantiates the failure of the North Korean authority’s implementation of foreign transaction of the Euro in December, 2002.

Last July, at the Interpol Conference on counterfeit money in Riom, France, North Korea was marked as “a hotbed of counterfeit money”. It is expected that the U.S. will take drastic measures to control the counterfeit dollars circulating throughout North Korea as official currency.

Joong Ang Daily
August 01, 2006

With North Korea more isolated than ever from the international community over its nuclear program and recent missile launches, Pyongyang is taking steps to tighten controls on its people in a bid to show it can defy the international community, North Koreans interviewed in Beijing said.

“It seems that we have to sing the revolutionary songs again,” said one North Korean in Beijing, saying it was time for his country to get mentally tougher. “Nobody listens to us, thus the only way left is to stick together,” the North Korean said.

If Pyongyang hoped to gain more concessions in nuclear negotiations and resolve the issue of financial sanctions imposed by Washington on Banco Delta Asia through its missile launch, the results have been the opposite.

A United Nations Security Council resolution backed by Pyongyang’s long-time ally, Beijing, was adopted. The Bank of China also froze North Korean accounts at its Macao branch, a Korean lawmaker has said.

In addition, a senior official of the United States Treasury Department said recently, Singapore and Vietnam have made commitments to clamp down on illicit North Korean financial activities such as money laundering.

A source in Seoul who is familiar with North Korea’s circumstances said yesterday that Pyongyang has decided to halt exchanges with the outside until April of next year. The Arirang Festival scheduled for this month has already been cancelled.

Experts said a series of economic measures aimed at reviving the North’s ailing economy, which have been underway since 2001, will also likely be put on hold.

“Inside the North, there are even some calling for a halt of the Kaesong Industrial Complex and the Mount Kumgang tours,” said the source, who added that large numbers of North Korean college students are submitting requests to enlist in the military.

Recently, a senior North Korean official on a visit to Beijing said the North is fully prepared to engage in “a march of suffering.” Recent rhetoric coming out of Pyongyang reflects a war-like atmosphere in the country. The state-run Rodong Sinmun has warned that “invaders would be swept away by the fierce anger of the country.”

A government official in Seoul yesterday admitted that in the short run, diplomatic efforts to lure Pyongyang back to nuclear negotiations would be tough. “We are in a difficult situation, but what else can we do but try?” said the official.

Nautilus Institute
Nathaniel Aden
August 2006

Paper here: Nautilus-Aden.pdf
web link here

Abstract:  China is North Korea’s largest international trading partner. Since 1995, energy and fuels have dominated bilateral trade between allies.  North Korea is a net importer of Chinese crude oil and oil products; however, it became a net exporter of electricity and coal to China in 2003.  Whereas North Korean coal and electricity exports are sold at sub-market “friendship prices,” Chinese coal and oil products have been sold to North Korea at premium prices.  Over the past ten years, North Korea’s imports have become increasingly energy-intensive, while exports have become more labor-intensive.  Chinese customs data suggest that Beijing is taking a pragmatic, market-oriented approach to trade with its reclusive neighbor, while the increasingly asymmetrical energy embodiment of bilateral trade may reflect dilapidation of North Korea’s non-military industries.

Bullet Points:
1.  In 2005, bilateral trade with the PRC accounted for 39% of North Korean international trade by value.

2. North Korean trade data are compiled by partner-country Customs Bureaus, the United Nations, and the Internaitonal Monetary fund (IMF).  China and South Korea provide the best “mirror” statistics.  Customs data do not include aid shipments, official development assistance, direct government transfers, foreign direct investment, services, remittances, barter trade, smuggling, illicit trade, trade in military equipment.

3.  The DPRK has spent an increasing amount of money on diminishing quantities of energy imports, particularly Chinese crude.  The decline of energy import volumes in the face of increasing overall imports and trade may reflect demand sensitivity to increased international market prices and/or North Korea’s lack of hard currency with which to purchase imported energy and fuels.

4. The DPRK has significant, ongoing refining capabilities.

5. Between 1985 and 2002, the DPRK domestic coal production has declined from 37.5 million tons to 21.9 million tons.  Nonetheless, North Korea increased its export quantity to 2% of total domestic production since 2002. 

6.  Starting in May 2005, North Korea has been an uninterrupted monthly electricity exporter.  Hydropower may account for much of the DPRKs surplus electric power.

7.  Energy prices reflect the pragmatic, market-oriented character of China’s economic relationship with North Korea.  North Korea may be providing China coal at subsidized prices, below those of China’s other trading partners.

8.  North Korea coal export prices show an awareness of market prices starting in 2002.

9.  The DPRK has consistently paid premium prices for Chinese oil product exports over the last ten years.

10. Aside from politically-determined prices, several conditions could explain this: 1.  Real factors (transport costs, demand, goegraphy) 2. Pyongyang’s insulation from market realities 3.  No DPRK leverage.

11. In 2005, North Korea imported $2omillion worht of trucks, $2 million worth of cars, $1 million of tractors.  The transport sector has not grown significantly since 1995.

12.  Shift of DPRK trade towards energy-intensive imports and labor-intensive exports suggests deterioration of non-military industry.

From the Donga:

The Chinese Government is hurriedly working on making the world recognize Mt. Baekdu (or Mt. Changbai in Chinese) as Chinese territory.

The Wenhui Newspaper of Hong Kong reported on July 30 that China has decided to register Mt. Baekdu on the World Geopark list designated by the United Nations Educational Scientific and Cultural Organization (UNESCO).

The Jilin Provincial Government of China has so far made efforts to get Mt. Baekdu registered as a world natural heritage site by the year 2008 when Jilin hosts the general assembly of the UNESCO World Heritage Committee. It might be fair to call this the “Mt. Baekdu Project” of incorporating the old territory of Goguryeo, an ancient Korean kingdom, into Chinese history, as it follows the Northeast Asia Project that focused on incorporating its history into China’s.

Back in 1980, China got Mt. Baekdu designated as a UNESCO Man and Biosphere (MAB) zone; the State Council designated Mt. Baekdu as a national-level natural protection zone in 1986 and has since managed it.

Mt. Baekdu has long been managed by the Yanbian Korean Autonomous Prefecture, where people of Korean origin collectively reside. Last year, the Jilin Provincial Government established the “Committee for Protection, Development and Management of Mt. Changbai,” an organization directly belonging to the provincial government and responsible for management of the mountain.

In a meeting with the “First Delegation of Chinese Internet Journalists Visiting Jilin” on July 22, Vice Director Li Zhanwun of the Committee said, “Mt. Changbai ranked second out of 17 places on the preliminary list of the nation’s cultural and natural heritage that the National Construction Ministry announced for the first time in January. Protection and development of the areas near Mt. Changbai has entered a new phase of development.”

The Committee plans to inject two billion Yuan (approximately 240 billion won) to develop the western slope of Mt. Baekdu on the Chinese side and open it around the year starting 2007.

Mt. Changbai Airport, which is currently being constructed in Fusong County 36 kilometers away from the North Korean border, is scheduled to open before the 2008 Beijing Olympics begins. The Jilin Provincial Government is also sparing no investment to expand the transportation networks near Mt. Baekdu, and is planning to complete construction of the Mt. Changbai Eastern Railroad, three highway networks and circular roadways in the next three years.

The Chinese National Tourism Agency and the Jilin Provincial Government recently held the first tourism festival near Mt. Baekdu; they are also active in attracting tourists from Russia and other foreign countries by holding the Yanbian Korean ethnic exposition. They also seek to stimulate the economy by developing mineral water in the areas nearby Mt. Baekdu and expanding cultivation of ginseng there.

Meanwhile, the Chinese government is reportedly seeking to register as UNESCO world cultural heritage the remnants of the Sanggyeong Yongcheonbu, which is the old capital of another ancient Korean kingdom—Balhae—located in the Bohai Bay, Ningan City, Heilongjiang Province.