North Korean Economy Watch

From the Washington Post:

Senator Sam Brownback has announced the arrival in the US of the first North Korean refugees admitted to the US under the North Korean Freedom Act. 

The six person group, including four women who say they were victims of sexual slavery or forced marriages, came from an unnamed south east Asian nation (Vietnam, Laos, Thialind, Cambodia).

Jay Lefkowitz, U.S. special envoy on North Korean human rights, “We will press to make it clear to our friends and allies in the region that we are prepared to accept North Korean refugees for resettlement here.”

From the Korea Herald:

the ROKs Ex-Im Bank has focused on bolstering economic cooperation with developing countries and promoting reconciliation and cooperation with North Korea. Ex-Im Bank is the official inter-Korean settlement bank for South Korea with Foreign Trade Bank of North Korea as its counterpart.

A number of initiatives were carried out to promote better operation of the state-run lender’s Economic Development Cooperation Fund and the Inter-Korean Cooperation Fund.

Active policy dialogues with partner countries, for example, has significantly increased effectiveness through simplified procedures and co-financing approaches with multilateral development institutions. The Inter-Korean Cooperation Fund supported infrastructure projects such as the construction of roads and railways connecting the two Koreas, while providing humanitarian aid to North Korea. The fund also provided loans to South Korean firms involved in trade with North Korea.

From the Korea Herald:

The 39th annual meeting of the board of governors of the Asian Development Bank will be held at Hyderabad International Convention Center in Hyderabad, India’s fastest growing high-tech corridor, for four days ending on Saturday.

The meeting this week will bring together more than 2,500 delegates from around the world to discuss issues including governance, poverty reduction, development finance, international finance architecture as well as economic and social development.

The ADB, which is dedicated to fighting Asian poverty, does not make any investments in North Korea, which could benefit from various education and training projects.  The prospect of membership would also encourage the nation prepare for it by reforming their economy.

Strong U.S. and Japan led-opposition has kept North Korea from becoming an ADB member nation so far, the insiders said.

From Yonhap:

A U.S. human rights organization on Thursday urged North Korea to allow international monitoring of food distribution, saying its recent policy changes on outside aid may cause renewed hunger among its people.

Recent decisions by Pyongyang to suspend the operations of the World Food Program in the country and revive the food rationing system may leave many in hunger, said Washington-based Human Rights Watch in a press conference in Seoul.

“North Korea has gone back to precisely the same place, when the famine began,” said Tom Malinowski, Washington advocacy director of the organization, referring to the mid 1990s in which two million North Koreans supposedly died of hunger.

North Korea adopted a series of policies last year that irked international human rights organizations. It asked the U.N. relief agency to end emergency food aid and its monitoring in September and then announced the reinstatement of the public distribution system, in which the government provides rationing of food and equipment to individuals.

Citing interviews with North Korean defectors and World Food Program officials, the rights watchdog said the food rationing system operates on a priority basis, feeding Workers’ Party members and military and police officers while leaving many ordinary people in hunger.

Despite its improved harvest in recent years, North Korea still suffers from a chronic food shortage, it said, with the country needing approximately 6 million tons of grain a year to provide basic nutrition for its 22 million people.

The North’s grain production hovers at 4.5 million tons and it receives 750,000 tons in aid from South Korea and China, but still falls short of demand, the organization said, citing statistics from the South Korean government.

It urged Seoul to strengthen the monitoring in the North to make sure the needy people get the food.

South Korea shouldn’t “simply passively accept that it is inevitable that North Korea cannot be influenced,” Malinowski said.

North Korea experts in Seoul, however, said the recent decisions by the communist country suggest it is making efforts to stand on its own rather than depend on emergency donations. And the revival of the public distribution system illustrates its improved food situation, they said.

“When the rationing system was reduced (in the late 1990s) it was because the government didn’t have food to distribute. Now that it has expanded the rationing system, it is in a better situation,” said Chon Hyun-joon, senior research fellow with the Korea Institute for National Unification, a public research body on North Korea in Seoul.

From the Korea Times:

Rising dramatically from the East Sea, Mt. Kumgang _ about 20 miles (32 km) north of the Demilitarized Zone (DMZ) in North Korea _ is considered by most to be the most scenic area on the Korean Peninsula. The Japanese colonists even built a direct railway line to the area for sightseeing.

I didn’t comprehend the gravity of my excursion to Mt. Kumgang with my colleagues until the South Korean military escort pulled off the side of the road for our caravan of buses at the south end of the DMZ. We crossed the four-kilometer desolate and barbed-wire covered expanse, and picked up the North Korean military escort on the other side. As we approached North Korean immigration, a soldier goose-stepped into the road in front of the bus and held out a red flag to signal the buses to stop.

Upon entering North Korea the stark change in landscape was surprising. Unique clusters of rock formations rose up from flat, treeless, sandy plains. Looming dramatically and endlessly in the distance was the epitome of all Asian mountain images _ Mt. Kumgang.

But other changes were evident, too. The area was quite rural, with small, weathered clusters of traditional Korean homes that may in fact have been quite old. Instead of cars, there were pedestrians on dusty trails, bicycles instead of motorbikes and horse-pulled carts instead of trucks.

Citizens worked the fields with their bare hands and oxen pulled plows. My immigration stamp said “Choson,’’ the name by which North Korea refers to itself and the name of the Korean Kingdom that ruled the peninsula from 1392 until 1910. I had in fact stepped back to that time.

More striking still was the abundance of North Korean soldiers _ along the road, in the farm fields and on the sides of hills. They were stationed at every road and dirt path intersecting the tourist road, which was entirely separated from the rest of the world by continuous fences. Checkpoints were everywhere, both along our road and the ordinary North Korean roads.

The North Korean hotel and park workers were shy, modest, and polite with noticeably different accents and intonation. They often gazed at me innocently, with curiosity about the presence of a Caucasian American. In one conversation a woman who knew surprisingly little about other places in North Korea mentioned that it was her dream to go to Pyongyang.

“Why haven’t you been there?” my colleague asked.

She responded with three reasons: not enough money to travel; poor conditions of transportation making it a difficult journey; and difficulty in acquiring permission to travel.

Despite her having one of the more coveted jobs in North Korea, the 200-kilometer journey from Mt. Kumgang to Pyongyang was fundamentally impossible.

From the Daily NK:

The chief researcher of the SeoJong Institute, Yang Un Chul, presented his report entitled ‘The Political Economic Implications of Chinese Economic Cooperation with North Korea, ‘ and revealed that, “Recently North Korea has been isolated from the international community because of its nuclear weapons development program. This isolation has led to North Korea’s economic dependence on China. It has also caused some people to worry about the possible economic subornation of North Korea to China. However, this is just an unlikely scenario.”

Yang explained, “Recently the trade between North Korea and China has sharply increased. In 2004, its trade with China amounted to 40% of its total trade. As for Dandong, an advance trading partner with North Korea, in 2005 frontier trade grew dramatically enough to record a 26.5% growth rate.” Yang explained the concern over this this growth rate: “Due to such increasing support and investment, some people fervently insist that China is trying to economically transform and colonize North Korea into a fourth Northeast Chinese province (Jilin, Liaoning, Heilongjiang and North Korea).”

In his research, Yang points out, “The exceptional incidence that one country is in subordination to another country can only occur in a situation of very limited market availability.” He went on to explain that, “The fact that North Korea is dependent on China for food, energy and other necessities, is a result of North Korea’s choice to source only from China, despite the availability of resources from other markets.”

It is Yang’s assertion as well that, “The excessive precaution against China or even the exaggeration of China’s influence over North Korea, actually works against North Korea’s economic recovery.” Likewise, he states, “Since China currently has relatively more influence over North Korea than we do, its penetration of the North Korean economy – promoting liberalization and true economic reform – could be an effective way to promote North Korean economic development.”

Yang emphasized that, “Unlike in the past, the Chinese government is no longer able to control North Korea’s economic activity to serve Chinese interests. Instead, the Chinese government now faces the responsibility of trying to help North Korea develop a certain level of economic independence.”

“China knows that if North Korean economic cooperation could be established with the U.S. and South Korea, China’s burden would be more manageable and North Korea could reform more quickly,” Yang explained. However, he also noted that the reality of this level of international cooperation is highly unlikely, stating, “The problem is that since North Korea does not trust the intentions of the U.S. and South Korea, China cannot help but face the difficulty of taking on North Korea alone.”

Yang’s research contends that Chinese-style economic reforms are not the most efficient way to develop North Korea’s economy, however, they may be the only effective option at this time. He stated, “China’s main goal for assisting Norh Korea is simply to maintain the stability of the Northeast region. At the same time, China acknowledges the fact that it is unlikely North Korea will normalize relations with the U.S., and therefore North Korea, by default, will turn to China for economic guidance. The price of implementing the same style of reforms that has shaped 3 of China’s most backward provinces will be high, but the market growth and gradually increasing international influence over the North Korean economy that Chinese-style reforms can offer, are still the second best option for North Korea.”

On the other hand, Yang insisted that “It is not necessary to worry about Chinese companies occupying North Korea, as some South Koreans have raised concerns over.” Instead, he explained that companies are bound to carve out lucrative markets through investment and marketing, and that “Currently, due to the unique North-South relations, and the difficulty of investing in North Korea, Chinese companies should actually be encouraged to enter, invest in and sell commodities to North Korea; activity that will benefit both countries’ economies.”

Subsequently, Yang explained, “China’s influence over North Korea can be effective in teaching North Korea about international labor divisions and the principles of market economies. If China can bring about the concepts of reasonable pricing, and market and income redistribution, China’s intervention could be instrumental in discarding North Korea’s planned economy, and finally allowing a market economy to emerge.”

from the AFP:

North Korea received aid from China to help its fight against bird flu which has hit the impoverished state in recent years.

The Chinese aid, which included test kits, “will help prevent the spread of bird flu in the country via its border and trading ports,” the Korean Central News Agency said.

North Korea has recently launched public awareness campaigns against the avian influenza virus and has focused its efforts on isolating chickens and ducks from wild birds. No bird flu case has been reported so far this year.

The PDRK reported virus outbreaks in 2004 and 2005.

Early this year, a Japanese human rights activist said a North Korean woman had been infected in December. But Pyongyang has yet to confirm the case.

Yonhap
5/30/2007
Kim Hyun

A cover album of North Korean pop songs featuring South Korean singers will be released in Seoul next month based on an unprecedented musical copyright contract between the two Koreas, promoters in Seoul said Wednesday.

Some Northern songs have gained popularity in the South, where they have been circulated illegally. Pyongyang has protested the unregistered circulation through informal channels since it established copyright laws in 2000.

From the Joong Ang Daily:

Jay Lefkowitz, Washington’s special envoy on North Korean human rights, has continued to criticize the working conditions for North Korean laborers at the Kaesong Industrial Complex, where South Korean companies have located plants.

On the surface, wages and working conditions are the main issue, but experts say there is a more fundamental difference between Seoul and Washington on economic support for the North and on human rights issues there.

In an essay in the Wall Street Journal’s weekend edition, Mr. Lefkowitz said daily wages for North Koreans at the complex were less than $2. That appears to be correct; the monthly minimum wage at the complex is $57, including a 30 percent commission to the government. But because companies at the site pay those wages to a North Korean labor service provider, it is not known how much, if any, of the wages actually find their way into workers’ pockets.

There are currently, 6,850 North Korean workers at the complex; the number will go up by about a fifth this month.

The Unification Ministry here was outraged by Mr. Lefkowitz’s comments, especially by a reference to “slave labor.” The minister, Lee Jong-seok, said on Sunday that he wasn’t sure whether Mr. Lefkowitz was trying to improve human rights in the North or hamper them.

Seoul has put human rights issues in North Korea on the back burner, angering many conservatives here, arguing that the best way to improve rights was by economic development of the North, assisted by massive amounts of economic assistance from South Korea. 

From Yonhap: 

SEOUL, May 1 (Yonhap) — North and South Korea are to hold working-level talks this week to discuss ways to increase economic cooperation, including Seoul’s proposal to jointly develop the Han River’s sand-rich estuary and mineral mines in the communist North, Seoul’s Unification Ministry said Monday.

The new round of dialogue between officials of the Inter-Korean Economic Cooperation Promotion Committee is to be held in the North’s border town of Kaesong from Wednesday through Thursday, the ministry said in a press release.

The meeting will include talk of ways to jointly develop the western mouth of the Han River, called the Imjin River in the North, which is believed to contain at least 1 billion cubic meters, or about 1.6 billion tons, of sand.

It will also serve as a venue to fix the next meeting of the inter-Korean committee, the highest-profile dialogue between the divided Koreas. Last month the two sides agreed on a deadline of end-May.

The sand project was proposed by Unification Minister Lee Jong-Seok, Seoul’s chief delegate to the inter-Korean Cabinet talks, at a meeting in Pyongyang last month.

The Seoul metropolitan area houses almost half of the country’s 48 million population live and requires some 80 million tons of sand a year for use in construction, according to ministry officials.

The South Korean minister also proposed the two sides work together in developing the North’s zinc and magnesite mines in the country’s northwestern city of Danchon.

In an eight-point agreement adopted at the end of the ministerial talks, the North Korean side welcomed Seoul’s proposal, but left actual projects for joint mining to be discussed at the upcoming inter-Korean economic talks.

The South Korean delegation is to be led by the head of the ministry’s social and cultural exchanges bureau, Kim Chun-sig, while the North Korean side will be led by Cho Hyon-ju, an official from the North’s National Economic Cooperation Committee, the ministry said.