Archive for the ‘South Korea’ Category

A new defector survey about market trade in North Korea, and what it says (maybe) about Kim Jong-un

Friday, August 28th, 2015

By Benjamin Katzeff Silberstein 

In Wall Street Journal, Jeyup Kwaak reports on a new defector survey by Seoul National University’s Institute for Peace and Unification Studies (08-26-2015) (added emphasis):

The Seoul National University Institute for Peace and Unification Studies annually surveys more than 100 North Koreans who defected in the prior calendar year. The results provide firsthand insight into developments in the isolated state, though its researchers said they shouldn’t be read as generalized facts due to the small pool of respondents.


The latest survey, of 146 North Koreans who escaped in 2014, shows significant growth from the previous year in the number of people saying they conducted private business activities and paid bribes to enable them. A little more than half said they received no money from the state, down from last year’s survey but up from the one released in 2013.

Experts say between half and three-quarters of North Koreans’ income comes from quasi-illegal market activities, such as trade of basic goods smuggled in from China, but sporadic crackdowns by national or regional security officials lead to irregular business and bribery. Defectors say officials often collect fees when they set up a booth at a market.

The results themselves do not present a new trend. Several previous defector studies indicate that markets are perhaps the most important source of income and sustenance for many (if not most) North Koreans. However, a few things are interesting to note.

The links may not be entirely clear, but it is at least symbolic that the current survey, albeit with a very small number of interviewees, suggests that support for Kim Jong-un and the leadership may not be waning, at the same time as market activity continues unabated. This at least calls into question an assumption that sometimes occurs that market trade would lead people to become more critical of the regime.

Again, too much shouldn’t be read too much into a small study with participants that probably are not geographically or socially representative of North Korea as a whole. Defectors as a group rarely are. But perhaps one could imagine that market trade being so institutionalized and regulated by the regime would make it more synonymous with the regime itself. I.e., if market trading is seen as something positive, maybe this reflects positively on the regime as well — perhaps the market has been co-opted.

The article also reminds us of the rather peculiar combination of dynamics seen under Kim Jong-un. On the one hand, market trade seems to continue unabated domestically, and initiatives like the new special economic zones and the agricultural reforms show that there is at the very minimum some new thinking going on.

But on the other hand, border controls have been tightened to a degree rarely seen since the mid-1990s, according to defector reports. Just today, DailyNK reports (in Korean) that resident in the Sino-Korean borderlands have seen their access to the Amnok river, often used for laundry by locals, increasingly restricted as of late. As the WSJ writes,

Just 614 North Koreans made it to the South in the first half of this year, compared with 2,706 in the 2011 calendar year, according to the most recent ministry data.

The drop in North Koreans who visited China on legal visas so far this year should perhaps also be seen in this context.

Taken together, the tightened border controls on the one hand, and the seemingly changing (one could say “progressive”) rhetoric on economic matters on the other, paint a mixed picture.

In the early days of Kim Jong-un, the question was whether he was a reformer or a hardliner. A few years into his rule, it seems he might be neither and both at the same time.


The Kaesong Industrial Complex and inter-Korean tensions

Thursday, August 20th, 2015

UPDATE 1 (2015-8-24): The North and South Koreans have agreed to a solution to the situation. According to KCNA via Yonhap:

1. The north and the south agreed to hold talks between their authorities in Pyongyang or Seoul at an early date to improve the north-south ties and have multi-faceted dialogue and negotiations in the future.

2. The north side expressed regret over the recent mine explosion that occurred in the south side’s area of the Demilitarized Zone (DMZ) along the Military Demarcation Line (MDL), wounding soldiers of the south side.

3. The south side will stop all loudspeaker propaganda broadcasts along the MDL from 12:00, August 25 unless an abnormal case occurs.

4. The north side will lift the semi-war state at that time.

5. The north and the south agreed to arrange reunions of separated families and relatives from the north and the south on the occasion of the Harvest Moon Day this year and continue to hold such reunions in the future, too and to have a Red Cross working contact for it early in September.

6. The north and the south agreed to vitalize NGO exchanges in various fields.

ORIGINAL POST (2015-8-20): The two Korea’s literally just finished hammering out a new agreement on “wages” for North Korean workers at the Kaesong Industrial Complex. However, with the ink barely dried, a new round of escalating conflict between the Koreas is affecting operations at the KIC…

According to Yonhap:

South Korea said Friday it will limit the entry of its nationals into a joint industrial park in North Korea following the exchange of artillery fire between the two sides.

The Unification Ministry said it will only permit South Korean businessmen directly involved in the operation of factories at the Kaesong Industrial Park to enter the complex.

But other South Koreans, including those working at subcontractors, will not be allowed to move in and out of the complex in the North’s border city of the same name, the ministry said.

South Korea fired back at North Korea on Thursday following the North’s firing of shells at a South Korean front-line military unit in the western area of the heavily fortified border. No damage was reported.

A total of 124 South Korean small and medium-size enterprises operate factories at the industrial park, the last remaining symbol of inter-Korean reconciliation. About 54,000 North Koreans work there.

South Korean businessmen safely returned to the South from the complex on Thursday despite the North’s provocation.

The ministry said it has taken measures to ensure the safety of South Koreans who are temporarily staying in the North.

Read the full story here:
S. Korea to partially ban entry into joint industrial park


ROK re-configures inter-Korean cooperation fund

Monday, July 27th, 2015

According to Yonhap:

The Unification Ministry said Monday it has decided to overhaul ways to operate a government fund designed to promote inter-Korean cooperation in a bid to offer humanitarian aid to North Korea on a project basis.

South Korea set up the Inter-Korean Cooperation Fund in 1991 in order to facilitate inter-Korean exchanges and economic cooperation. As of end-June, the fund stood at an outstanding 12.4 trillion won (US$10.7 billion).

The ministry said it will overhaul ways to run the fund so as to provide project-based assistance to the North, a departure from its current practice of offering only emergency relief.

To this end, the government plans to specify the areas where civilian groups could offer humanitarian aid such as healthcare, agriculture and forestation.

“Through the overhaul, necessary aid including food and others could be delivered (to the North) on a project basis,” Jeong Joon-hee, the ministry spokesman, said in a regular press briefing.

South Korea has almost suspended its massive assistance to North Korea at the government level since 2010, when it imposed economic sanctions on Pyongyang following the North’s attacks on a South Korean warship and a border island that year. But Seoul has continued to allow civilian groups to extend aid to the North.

Seoul said in May that it will encourage more civic groups to increase support to North Korea in non-political areas if they are deemed to promote national unity and reconciliation.

Read the full story here:
S. Korea to overhaul fund on inter-Korean cooperation


Bank of Korea on the DPRK’s economic performance in 2014

Friday, July 17th, 2015

The Bank of Korea has published its annual assessment of the North Korean economy. The report on economic performance in 2014 can be downloaded here (PDF).  Previous years’ reports can be downloaded from my economic statistics page.

The report claims that the DPRK’s GDP increased by 1% in 2014. Nominal GNI was valued at 34.2 trillion KRW, (2.3% of South Korea). GNI per capita stood at 1.388 million KRW, (4.7% of South Korea).

Growth a number of industries was positive, but had fallen from 2013 rates. Among these industries were mining, as wells as agriculture, forestry, and fishing (combined) and heavy industry and chemical industry (combined).  Growth in light industry was higher than in 2013 as was electricity, gas and water (combined) and services. The biggest annual turnaround came in the construction industry, which saw a growth rate of 1.4% following a -1% fall in 2013.

The volume of North Korea’s external trade (sum of exports and imports of goods, excluding inter-Korean trade) amounted to $7.61 billion dollars in 2014 (up $0.27b from 2013). Exports totaled $3.16 billion (down 1.7% from 2013). Imports totaled $4.45 billion (up 7.8% from 2013).

Here is coverage in Yonhap:

North Korea’s economic growth is estimated to have slowed last year from a year earlier as its staple primary industries posted tepid performances, data showed Friday.

The North’s economy is projected to have expanded 1 percent in 2014, decelerating from the 1.1 percent on-year growth in the previous year, according to the data compiled by South Korea’s central bank, the Bank of Korea (BOK).

It has posted economic expansions for four years in a row since it contracted 0.9 percent and 0.5 percent in 2009 and 2010, respectively.

The BOK explained that the North’s construction sector lent support to the overall growth, bouncing back to a 1.4 percent on-year growth last year from a 1 percent fall the previous year.

Pyongyang’s agricultural and fishery industry, which accounts for 21.8 percent of its total output, expanded 1.2 percent last year, slowing from 1.9 percent growth in 2013.

Growth in its mining and manufacturing sector, which accounts for 34.4 percent of overall output, gained 1.1 percent, down from 1.5 percent a year earlier.

The data, meanwhile, showed that North Korea’s nominal gross national income (GNI) came in at 34.2 trillion won (US$29.8 billion) last year, which is roughly 2.3 percent of South Korea’s 2014 GNI of 1,496.6 trillion won.

Since 1991, the BOK has been releasing the growth estimate of the North based on data provided by Seoul’s intelligence agency and other institutions specializing in North Korean studies.

Here is coverage in Bloomberg (with carts!).


Choco Pies in North Korea (UPDATED)

Tuesday, July 14th, 2015


Pictured above (Source here): A Choco Pie wrapper in Pyongyang (October 2014)

UPDATE 6 (2015-7-14): The Daily NK reports that the DPRK’s ‘Choco Pie’ knock-off falls far short:

Daily NK has obtained a North Korean snack rolled out to squash demand for a popular South Korean treat that had first become a sensation among factory workers in the inter-Korean industrial complex and spread across the country. Known as ‘Chocolate Danseolgi,’ the snack displays a striking resemblance with the much-loved South Korean ‘Choco Pie’.

The new treat is said to have been produced to cut off fantasies about the capitalist world its workers may harbor.


Starting last month, North Korea has been providing its Kaesong factory workers with ‘Danseolgi’, according to a source who has ties with the North and passed on the new snack to Daily NK on the condition of anonymity. This comes after Pyongyang banned supplies of the famed ‘Choco Pie’ within the industrial complex last year, as they were being sold by the workers on the black market for good returns and gaining greater popularity across the country.

The South Korean ‘Choco Pie’ snack was first introduced to Kaesong workers in 2006. Due to its soaring popularity, many had come to develop a sense of curiosity or fantasies about the South, the source said. Seeing the chocolate cake snack with marshmallow filling win over so much love, Pyongyang set out to create an alternative in the hopes of choking off demand.

Last year, after banning ‘Choco Pie’ supplies, the North tried to force South Korean firms to provide its factory workers with a home-grown chocolate double-layered cake snack, and this year in March, it even rolled out a chocolate coated rice cake treat also similar to an existing South Korean product.

Despite these efforts, local goods have failed to take off, as Kaesong workers are already acquainted with tastes from South Korea and are only eating the ‘Danseolgi’ as they have no other choice, according to the source.

The treat is one of the “latest products” put out for Kaesong workers. “It was smuggled out of the country by way of a North Korean trader in the Rason Economic Special Zone who works with Chinese traders,” she explained.

“Currently in the North, the ‘Chocolate Danseolgi’ is being distributed to workers as supplies, and they’re not sold on North Korea’s regular markets,” she asserted. Every last ingredient used to make the snack, from the butter to the chocolate, is imported from China.

Predictably, Kaesong workers invariably far prefer the taste of the original chocolate snack from South Korea, the source said, adding, “North Korea will never be able to produce the South’s Choco Pie.”

One of Daily NK’s reporters who tried out the North Korean ‘Danseolgi’ described the snack as “decidedly lacking in chocolate flavor ” and “being overwhelmingly pungent of butter.” The wrapper claims to include marshmallow in the product, but our taste tester reported any semblance of its texture to be nonexistent and noted that the cake itself is incredibly prone to crumbling.

UPDATE 5 (2015-6-9): DPRK asks that all South Korean food served in the KIC be replaced by North Korean substitutes. According to Voice of America:

North Korea has asked South Korean businesses at the Kaesong industrial complex to replace all foodstuffs given to its workers at the inter-Korean park with North Korea-made products.

A representative of the South Korean businesses, who visited the complex Tuesday, told VOA’s Korean Service that South Korean companies began distributing North Korean substitutes for popular South Korean food supplies to the North Korean workers as early as March. Almost all South Korea-made food products have now been replaced with North Korean products.

Choco Pie, a popular South Korean snack cake, also has been replaced with a similar North Korea-made sweet. The chocolate covered cake with marshmallow filling has become one of the most popular items in the North’s black markets. Other North Korea-made foodstuffs given to the workers include instant noodles with chicken broth and condiments.

In an attempt to keep South Korean foodstuffs from the complex, the North is imposing an additional business tax on the companies for bringing in South Korea-made products. About 50 South Korean businesses supplying food for the complex face bankruptcy, according to representatives of the South Korean businesses.

Some business owners have expressed concern about the quality of North Korean foodstuffs. One representative said some workers are suffering from food poisoning after the switch.

A South Korean official who asked to remain anonymous told VOA the North Korean move is aimed at blocking the flow of South Korean products into the North and earning foreign currency.

South Korean companies have been providing about $60 per month in snacks to each North Korean worker. With approximately 53,000 workers at the complex, Pyongyang can now garner up to $3 million every month from the snack sales.

UPDATE 4 (2014-9-24): According to the Daily NK, workers in the KIC are receiving a different dessert than the Choco Pie now. Also, the Kumunsan Company is producing substitute goods, and they are winning over consumers:

[…] the once popular South Korean snack Choco Pie is seeing a decline in its asking price. In June, Pyongyang demanded that South Korean companies at the industrial complex stop distributing Choco Pies to workers there, as officials had found it problematic that North Korean workers were saving the snacks and selling them in the markets. More recently, the northern workers have been receiving Chaltteok Pie (찰떡) [a chocolate covered rice cake from the South], individually packaged coffee, yulmucha (율무차)[grainy tea made with Job’s Tears], and candy bars.

“In Pyongyang, at the ‘Geumeunsan Trade Company,’ (금운산, Kumunsan Trade Corporation) they have been baking bread for about a year,” the source said, adding, “Of all the different kinds of bread, the most popular are the ones with butter inside, and they are less than 1000 KPW– much cheaper than Choco Pie.”

The trade company is an affiliate of the Military Mobilization Department [Military Manpower Administration in South Korea], which deals with the procurement of military supplies among its many functions. They either directly import the goods or obtain them from military factories in various locations across the country, and oversee the manufacturing of military equipment and machinery.

Geumeunsan Trade Company maintains branches in multiple areas, including Rasun and Cheongjin, and the office in Pyongyang imports ingredients such as flour, sugar, and cooking oil directly from China. According to the source, the raw material prices are cheaper than in the  North’s markets, and the products taste good, allowing it to monopolize the confectionery market there.

“The company has brought in foreign equipment and technology, putting it ahead of the South’s Choco Pie in price and taste,” he said, concluding, “This is why with the introduction of these different breads in Pyongyang, the price of Choco Pie [from the South] has dropped to 500 KPW from 1,200 KPW.”

See also this story in Radio Free Asia.

Read the full story here:
Kaesong Goods Fetch Highest Market Prices
Daily NK
Seol Song Ah

UPDATE 3 (2014-7-1): Media reports claim that the DPRK has banned the use/possession of Choco Pies in the Kaesong Industrial Complex. According to the Washington Post:

By some estimates, as many as 2.5 million Choco Pies were traded monthly — though it’s unclear who exactly was so assiduously following Choco Pie markets.

Regardless of its volume, the trade will now surely be shrinking.

According to recent reports in the South Korean press, North Korean authorities have now banned the South Korean-produced Choco Pie at the Kaesong Industrial Complex following a lengthy crackdown on the chocolate treat that has made it scarce in Pyongyang.

Before, workers could pocket as many as 20 pies every night of work. But now, South Korean factory staff said they’ll instead get sausages, instant noodles, powdered coffee or chocolate bars as a bonus.

More information here and here.

UPDATE 2 (2013-9-20): Is the DPRK manufacturing a counterfeit Choc Pie? According to the Daily NK:


Pictured Above: Ryongsong Foodstuff Factory, Ryongsong District, Pyongyang (Google Earth)

The price of a North Korean own-brand “Choco Pie” fell to just 500 won in domestic markets following news that the Kaesong Industrial Complex (KIC) was to reopen, Daily NK has learned. The local version of the chocolate snack, which is made by Orion in South Korea, had previously risen to 3000 won on the back of the protracted KIC closure.

A source in Pyongyang reported to Daily NK on the 19th, “Sometime around May, Yongseong [Ryongsong] Foodstuff Factory in Pyongyang started selling ‘Choco Pies’ in the markets. People hadn’t seen a Choco Pie since Kaesong stopped, so their reaction was really something.”

“People were surprised because the packets said ‘Choco Pie’ and ‘Choco Rice Cake’ [a similar product with a glutinous rice center], and they couldn’t tell the difference between them and those from the ‘neighborhood below’ [South Korea] unless they checked closely,” the source went on. “Sure, people could tell they weren’t the real thing as soon as they ate them, but they were still pretty satisfied.”

According to the source, after South Korean Choco Pies disappeared from North Korean markets following the closure of the KIC, domestic traders started looking into importing the original South Korean and similar Chinese versions of the popular treat. However, the cost and difficulty of doing so meant that very few ended up crossing the border.

Therefore, attention turned to domestic production. The source explained, “Production volumes were low at first, and the state tried to control the flow of the product into the markets. They were 500 won a piece at the end of the first month; but that had risen to 3000 won by the end of last month. But the price sank back down upon news of the KIC re-start.”

“As soon as Choco Pies stopped coming out of the KIC, Yeongsong Foodstuffs Factory moved quickly and must have made quite a bit of money,” he guessed. “They were trying to imitate the South Korean pies but the product was way too sweet, which is partly why the price collapsed on the news of Kaesong.”

Only 60% (32,000) of the pre-closure North Korean workforce (53,000) returned to work when the KIC re-opened for a “trial run” on September 16th. At the same time, South Korean businesses, many facing financial difficulties after five months of nonproductive shutdown, have reportedly reduced the quantity of Choco Pies and other snacks previously distributed to workers. It is unclear what effect these circumstances could have on the price of goods flowing out of the KIC over the longer term.

Read the full story here:
NK Choco Pie Price Falls on KIC News
Daily NK

UPDATE 1 (2011-10-31): According to the Daily NK, North Korean management in the Complex requested back in August that South Korean businesses stop offering ‘Choco-pies’ (a South Korean snack) to North Korean workers and give them cash instead.

ORIGINAL POST (2009-5-20): Donald Kirk has a must-read article in today’s Asia Times on the subtle ways that the Kaesong Industrial Zone is undermining Pyongyang’s control over the North Korean people.  He points out that the DPRK’s verbal attacks on South Korea, combined with demands for new land, labor, and road use contracts in the Kaesong complex, are an attempt to blame South Korea when Kim Jong-il finally closes the project.

Quoting from the article:

Think Choco Pie, the thick wafer-like confection, all pastry and cream, served in the Kaesong Industrial Complex as a daily dessert for the 40,000 North Koreans who toil for 100 South Korean companies with factories in the complex.

“North Koreans love Choco Pie,” said Ha Tae-keung, president of NK Open Radio, which beams two hours of news daily into North Korea from its base in Seoul. “It’s an invasion of the stomach.”

North Korean workers, and the friends and family members for whom they save their daily treats, may salivate over Choco Pie, but it’s giving a severe stomach ache to senior officials fearful of the infiltration of South Korean culture in all corners of their Hermit Kingdom.

Choco Pie – along with other favorite South Korean cakes and candies as well as instant coffee – has come to symbolize the image of the capitalist South as a multi-tentacle beast that may be impossible to digest.

For Kim Jong-il, suffering from diabetes, recovering from a stroke and hoping to survive a few more years while grooming his neophyte youngest son, in his mid-20s, to succeed him, the best way to deal with the Kaesong complex, 60 kilometers north of Seoul and just above the demilitarized zone between the two Koreas, may be to spit it out.

It’s for this reason, said Ha, that North Korea has precipitously scrapped the agreements under which South Korean companies operate in the complex, built and managed by Hyundai Asan, an offshoot of the sprawling South Korean Hyundai empire.

“He’s come to see Kaesong as a burden rather than an asset, and is inclined to shut it down,” said Ha.

While the Kim Jong il government focuses its attention on cultural infiltration from the South, there appears to be little it is doing, or can do, about cultural infiltration from China–the DPRK’s most significant trading and political partner to the north:

When it comes to South Korean cultural infiltration, however, North Korea has far more to fear from the entry of goods from China than from the Kaesong complex. South Korean DVDs and CDs, even soft-core porn movies made in the South, are now distributed surreptitiously throughout North Korea. Electronic gadgetry, MP3 and MP4 players, TV sets, radios and rice cookers, also shipped via China, are also available for those with the money to pay for them.

Read the full article here:
Pyongyang chokes on sweet capitalism
Asia Times
Donald Kirk


Iron Silk Road/Eurasia Initiative: Railways, shipping, and coal (UPDATED 2015)

Sunday, July 12th, 2015


Pictured Above (Google Earth): The route of the historical Gyeongwon Railway Line from the DMZ south to Paekmakoji Station (백마고지역).

UPDATE 25 (2015-7-12): A pair of special trains carrying more than 250 South Koreans will embark on a 20-day journey this week criss-crossing Asia and Europe, a highly symbolic event to highlight South Korea’s railway ambitions. According to Yonhap:

The Park Geun-hye administration has pushed for the “Eurasia Initiative” aimed at linking energy and logistics infrastructure across Asia and Europe.

It hopes to connect rail and road networks from South Korea’s southern port city of Busan to west Europe.

The upcoming Eurasia Express expedition is expected to help raise public awareness of South Korea’s vision both at home and abroad, officials here said.

Under the slogan, “One Dream, One Eurasia,” participants will gather at Seoul Station on Tuesday from various cities in South Korea by train.

They include government officials, lawmakers, artists, academics and businessmen.

Split into two groups, they will fly to Vladivostok and Beijing later in the day, respectively, with a cross-peninsula train tour blocked by the heavily-armed border between the two Koreas.

With nearly 200 people on board, a train will run from Vladivostok to Berlin, Germany, passing through several other Russian cities and Warsaw, Poland.

The other is scheduled to travel from Beijing to Irkutsk, Russia, then the passengers will transfer to the main train for the rest of the tour.

The journey is to end in Berlin on Aug. 2, covering a total of 14,400 kilometers, or 8,948 miles, over six countries including Mongolia and Belarus.

“The Eurasia Express project is not a mere (political or diplomatic) show. It is a program to reflect the strategic importance of a Eurasia railway,” Foreign Minister Yun Byung-se said in a written interview with Yonhap News Agency.

His ministry is co-sponsoring the expedition together with Korea Railroad Corp. (Korail).

Yun plans to join the tour on the Warsaw-Berlin leg of the route.

“South Korea hopes for the creation of an economic block for peaceful exchanges and co-prosperity through the Eurasia Initiative,” he said. “Taking advantage of its geographical location as the east gate of Eurasia, South Korea needs to play a catalyst role.”

The minister said the train event will serve as an important chance to publicize Seoul’s vision and effort for a new Eurasia era.

Indeed, South Korea is seeking to join several related rail projects such as the Trans-Siberian Railway (TSR), Trans-China Railway (TCR) and the Trans-Mongolian Railway (TMGR).

The biggest hurdle is military tension between South and North Korea. No train is allowed to run through the demilitarized zone (DMZ) bisecting the peninsula.

Yun pointed out South Korea has been like an “island” for the past seven decades, a legacy of the Cold War.

A railway between the two Koreas was briefly reconnected in 2007 for cargo services, riding on the mood of reconciliation at that time.

It was severed again, however, in late 2008 after the launch of the conservative Lee Myung-bak government in the South and the North’s provocations including a nuclear test and a long-range rocket launch.

Experts agreed the Eurasia Initiative is a pipe dream without improvement in inter-Korean relations.

“Pushing for such an initiative is good itself, but we have to see a bigger picture. In the end, (South Korea) should open the way to run through North Korea,” Hong Hyun-ik, senior research fellow at the Sejong Institute said.

Lim Eul-chul, a professor at the Institute for Far Eastern Studies at Kyungnam University, said the Eurasia Express expedition is meaningful itself as an opportunity to demonstrate South Koreans’ aspiration for rapprochement with North Korea and re-connection of the railway with Europe.

It coincides with the 70th anniversary of the end of World War II and the liberation of Korea from Japan’s 35-year colonial rule.

South Korea also marks the 25th anniversary of diplomatic relations with Russia and Mongolia.

UPDATE 24 (2015-7-12):  Seoul hopes Gyeongwon (Kyongwon) Railway Line will facilitate inter-Korean rail shipments. According to Yonhap:

South Korea’s unification minister expressed hope on Sunday that the reconnection of the railway linking Seoul and the North Korean city of Wonsan will be a “starting point” for inter-Korean cooperation down the road.

The 223.7-km-long railway was built in 1914 and served as a major supply route from Seoul to Wonsan before it was severed during the 1950-53 Korean War.

The Seoul government earlier said that it will start construction of the 11.7-km-long section of the railway running through Gangwon Province next month in commemoration of the 70th anniversary of its independence from Japan.

“I want to see the railways between the two Koreas be reconnected as quickly as possible,” Unification Minister Hong was quoted as saying during his visit to the area. “I want it to be a major starting point.”

“Railways are actual linking channels for the two Koreas and I wish to discuss many other issues and cooperative projects based on this railway reconnection business,” he said.

The minister noted that there are many projects the two Koreas could cooperate on and the Seoul government’s position is to tackle any difference with the North through conversation, calling for Pyongyang to return to the negotiation table.

Construction of the southern section of the Seoul-Wonsan railway will be completed by 2017 with a total of 150.8 billion won to be invested in the project.

Here is coverage in the JoongAng Ilbo.

UPDATE 23 (2015-6-29): Seoul signals interest in renovating small portion of Seoul – Wonsan (Kyongwon) Railway line. According to the Hankyoreh:

The central government has announced plans to restore the South Korean section of the Gyeongwon railway line between Seoul and Wonsan in North Korea.

Questions are now being raised about the purpose of the restoration at a time when the existing Gyeongui and Donghae lines between North and South remain unusable.

The plan was announced on June 28 by the Ministry of Land, Infrastructure and Transport (MLIT).

“We intend to start work in late July on restoring the 9.3-kilometer section of the South Korean Gyeongwon line between Baengmagoji and Woljeong Village [at the Southern Limit Line], where traffic has previously been halted,” the ministry explained.

The project will cost 129 billion won (US$115 million) from the Inter-Korean Cooperation Fund, with additional projects to connect Woljeong Village to the Military Demarcation Line (2.4 km) and from there to Pyonggang in North Korea (14.8 km) contingent on discussions with Pyongyang, the ministry added.

South Korea currently has rail service operating on its 94.4-km section between Yongsan and Baengmagoji, while North Korea is using the 104-km section between Pyonggang and Wonsan.

The MLTI explained that the Gyeongwon Line requires repairs and linkage with the North to form it into a Korean Peninsula railroad that connects in the future with the Trans-Siberian Railroad. Indeed, the linkage of the Gyeongwon Line and Trans-Siberian Railroad is one of the key projects in the Eurasia Initiative announced by President Park Geun-hye. The line would travel via Pyongyang to Wonsan, where it would then continue to Rajin before linking with the Trans-Siberian Railroad. A Keumgangsan branch line between Baengmagoji and Woljeong Village also connects with Naegumgang.

Following an agreement at a 2000 Inter-Korean Summit during the Kim Dae-jung presidency, the two Koreas opened the Gyeongui Line to Kaesong Industrial Complex during the Roh Moo-hyun administration in 2003, and the Donghae Line to Mt. Keumgang in 2006.

But both lines have remained out of service after relations with Pyongyang soured under the Lee Myung-bak administration, which began in 2008. The Gyeongui and Donghae Lines could connect with the Trans-China Railway, Trans-Mongolia Railway and the Trans-Siberian Railroad.

During a preliminary briefing on June 26, the MLTI sidestepped questions about the point of restoring the southern section when the existing Gyeongui and Donghae Lines to North Korea remain unusable.

UPDATE 22 (2015-6-4): The DPRK has blocked South Korea’s membership in the Organization for Cooperation between Railways (OSJD). According to Yonhap:

South Korea again failed to join an international organization for railroad cooperation, a prerequisite for building a trans-Asian railway, due to opposition from North Korea, the Seoul government said Thursday.

It was the second time Seoul sought to join the Organization for Cooperation between Railways (OSJD) since 2003 when the country’s first attempt was again thwarted by Pyongyang’s opposition, according to the Ministry of Land, Infrastructure and Transport.

New membership with the OSJD requires a unanimous vote from the organization’s 28 members, including the communist North.

“We were able to secure explicit support of all other members except North Korea, and the organization is now moving to change its membership procedure from a unanimous vote to two-thirds approval from its members, so we are now looking forward to joining the organization at the next chance,” Vice Transportation Minister Yeo Hyung-koo was quoted as saying.

Yeo has been attending the 43rd ministerial talks of the OSJD in Mongolia’s Ulaanbaatar. OSJD currently has 28 members, including China and Russia.

For South Korea, joining the OSJD is a necessary step to link the country’s own railway system to the trans-Siberian and trans-China railways as part of its long-term goal to reach Europe by land, the ministry said.

UPDATE 21 (DATE UNKNOWN): DPRK 360 has apparently captured images of the coal shipment-though I am not 100% sure:

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UPDATE 20 (2015-4-27): The second shipment of coal is in Rason waiting to be shipped to South Korea. According to Yonhap:

The North Korean port city of Rajin has improved its capacity to handle a second shipment of Russian coals, boosting confidence in the joint coal shipment project involving the two Koreas and Russia, Seoul officials said Monday.

About 140,000 tons of Russian coal is expected to be transferred into South Korea on a ship from Rajin after being moved from Russia’s border city of Khasan on a re-connected railway as a second pilot operation for the three-way logistics project. The shipment will be made between April 16 and May 9.

In November, the first shipment carrying 40,500 tons of Russian coal smoothly arrived in South Korea in its pilot operation of the Rajin-Khasan project.

The project came as a symbolic project of three-way cooperation at a time when inter-Korean exchanges have been almost suspended following the deadly sinking of a South Korean warship by the North in 2010.

“Compared with in November, we think that the port’s capacity to load or unload the shipment was improved,” said an official at the Ministry of Unification, asking not to be named.

“Nothing has been decided, but there may be a third pilot operation for the project,” he said. “We expect that talks over a formal contract could come.”

The project involves three South Korean firms — top steelmaker POSCO, shipper Hyundai Merchant Marine Co. and state train operator Korail Corp. They will decide on whether to clinch a formal contract based on the outcome of the pilot operations.

This time the project also includes two power plant operators: Korea East-West Power Co. and Korea Midland Power Corp.

The coal shipment will arrive at three South Korean ports in early May, including the one in Pohang, 374 kilometers southeast of Seoul and a port in Dangjin, 123 kilometers south of the capital.

The Rajin-Khasan project is part of Seoul’s move to realize President Park Geun-hye’s vision for a united Eurasia.

UPDATE 19 (2015-4-16): The Donga Ilbo reports on the second shipment of coal from Rason to South Korea:

A second trial run in a three-party trade project involving Seoul, Pyongyang and Moscow that will transport more than 100,000 tons of soft coal from Russia to three Korean ports is scheduled to start today, the Ministry of Unification said on Wednesday.

The venture, referred to as the Rajin-Khasan logistics project, will run from today to May 9, and use Chinese ships to transfer the consignment, according to a ministry official.

A consortium of three South Korean companies – top steelmaker Posco, the Korea Railroad Corporation (Korail) and ship maker Hyundai Merchant Marine Co. – are involved in the project, which will see the soft coal transported to Rajin, North Korea, from the Russian border city of Khasan on a reconnected 54-kilometer (33-mile) railway before being shipped to South Korea.

The expected shipment will be used for thermal power generators and ironmaking. The consignment is three times the amount of coal that was transported in the pilot round, when some 40,000 tons were transferred to Pohang, North Gyeongsang, in November over the same route.

Power plant operators Korea East-West Power Co. and Korea Midland Power Corp. are also participating in the second trial run.

The Russian coal will be transported via two China-flagged vessels, a 44,000-tonner and a 49,000-tonner, that will sail from the Rajin port down the East Sea and around the Korean Peninsula to three ports. The coal is expected to arrive first in Dangjin Port in Gyeonggi, where it will be used by the Korea East-West Power Co.

More is scheduled to arrive the following day in Gwangyang Port in South Jeolla for use by Posco. Korea Midland Power Corp. will get its delivery on May 9, at the Boryeong Port in South Chungcheong.

An inspection team of 18 government officials and representatives from the three South Korean companies will make a weeklong visit to the North Korean city with Russian railway authorities on Friday for the project.

“Our government completed the procedures needed for this second trial operation, receiving approval to visit North Korea and import the coal,” a Unification Ministry official said on Wednesday. “Pyongyang will, depending on its contract with Russia, receive payment just for the cost of using the North Korean port.”

The companies will then decide on whether to forge a formal contract for the trilateral project based on the outcome of both test runs.

The Rajin-Khasan project is a part of President Park Geun-hye’s Eurasia Initiative first announced in October 2013 as a way to boost the regional economy through free trade and economic cooperation in the Eurasian bloc by reconnecting the railways that link both Koreas, China and Russia.

UPDATE 18 (2015-4-14): South Korea awaits  DPRK approval for second coal shipment. According to Yonhap:

A group of three South Korean firms has been in talks with North Korea and Russia over another pilot operation, during which some 150,000 tons of Russian coal may be shipped to the South between late April and early May, according to the source.

“As North Korea has not given final approval for the second operation, the date and size of the shipment has not been decided,” the source said, requesting anonymity.

The logistics project is seen as a symbol of trilateral cooperation between the two Koreas and Russia at a time when inter-Korean relations remain stagnant.

The project involves three South Korean firms — top steelmaker POSCO, shipper Hyundai Merchant Marine Co. and state train operator Korail Corp. They will decide on whether to clinch a formal contract based on the outcome of the two pilot operations.

The project could help realize South Korean President Park Geun-hye’s vision for a united Eurasia.

UPDATE 17  (2015-4-12):  Second trial shipment of coal announced. According to Yonhap:

A consortium of Seoul firms is expected to run another pilot operation of a key logistics project involving South and North Korea and Russia in late April, a government official said Sunday.

The so-called Rajin-Khasan logistics project is the symbol of trilateral cooperation between the two Koreas and Russia at a time when inter-Korean relations remain stagnant.

In the previous pilot operation, 40,500 tons of Russian coal arrived in South Korea on a ship from the North Korean port city of Rajin in November after being transported from Russia’s border city of Khasan on a re-connected railway.

“The companies are in the process of setting a specific schedule with the North and Russia as they are seeking to run a second operation late this month,” said an official at the unification ministry, asking not to be named.

The logistics project involves three South Korean firms — top steelmaker POSCO, shipper Hyundai Merchant Marine Co. and state train operator Korail Corp. They will decide on whether to clinch a formal contract based on the outcome of the two pilot operations.

The project could help realize South Korean President Park Geun-hye’s vision for a united Eurasia.

In October 2013, Park unveiled her Eurasia initiative that calls for, among other things, infrastructure development and freer trade among Eurasian nations by linking their railways.

South Korea imposed the May 24 punitive sanctions on North Korea in 2010 following Pyongyang’s deadly sinking of the Cheonan warship in March that year.

The move has suspended all trade and exchange programs with the North, apart from a joint factory park project in the North Korean border city of Kaesong. The three-way logistics project also has been regarded as an exception.

Here is coverage in the Donga Ilbo.

UPDATE 16 (2014-12-7): According to Yonhap, KEPCO is mulling participation in the Rajin-Khasan project:

The five KEPCO units, led by Korea Midland Power Corp., are reviewing the economic feasibility of the project. “But it is hard to say we will participate in the project as nothing has yet been decided,” said an official at KEPCO.

Last month, a group of officials from the units, along with government officials, visited the North’s Rajin port to assess the viability of importing Russian coal, industry sources said.

South Korea’s leading steelmaker POSCO, a major shipper Hyundai Merchant Marine Co., and the state-run rail operator Korea Railroad are already taking part.

UPDATE 15 (2014-12-1): Seoul offers support to Rajin-Khasan transport project. According to Yonhap:

The South Korean government vowed full support Monday for the nascent Rajin-Khasan project, saying it would help spur the “Eurasia Initiative” proposed by President Park Geun-hye.

The unification ministry described the logistics program, which is on a test run, as the “starting point” for economic cooperation among the two Koreas and Russia.

“It is meaningful as a project to lay the foundation for realizing the Eurasia Initiative, peace in Northeast Asia and the renovation of our economy,” ministry spokesman Lim Byeong-cheol said at a press briefing.

He was referring to South Korea’s plan to bring Russian coal through the North’s port of Rajin.

In the landmark pilot operation, 40,500 tons of Russian coal arrived in the South on a Chinese-flagged ship over the weekend from Rajin. The coal was transported from the Russian town of Khasan to Rajin on a 54-kilometer railway that was re-connected last year.

South Korea’s top steelmaker POSCO began unloading the coal from the ship at its iron mill in Pohang on Monday.

Lim said his government will provide every necessary support for the tripartite project in an effort to achieve the Eurasia Project.

Another ministry official said the South’s consortium, also involving Hyundai Merchant Marine Co. and Korail Corp., is expected to ink a formal contract with Russia next year.

It plans to purchase a stake from RasonKonTrans, a joint venture in charge of the Rajin-Khasan scheme, he told reporters on background.

RasonKonTrans was established in 2008 by Russia’s RZD Trading House and the port of Rajin, with 70 percent controlled by Russia and 30 percent by North Korea.

The South’s consortium is seeking to buy some of Russia’s stake.

“If necessary, I think there could be one more round of pilot operation (before signing the deal),” the official said.

Last year, President Park suggested linking energy and logistics infrastructure in the Far East and Europe.

But Seoul is not yet considering any other measure such as the modernization of the North’s Rajin port, he added.

UPDATE 14 (2014-12-1): Here is coverage of the first coal shipment from the Institute for Far Eastern Studies (IFES):

As South Korean companies have recently been showing interest in the Rajin-Khasan Project currently ongoing between North Korea and Russia, the first ever shipment of 45 thousand tons of Russian coal is set to depart from Rajin harbor (DPRK) on November 28, 2014 and arrive in the South Korean port city of Pohang the following night.

According to the Ministry of Unification, the South Korean delegation will work in conjunction with a Russian railroad construction company while visiting North Korea to do a comprehensive technical inspection of Rajin harbor. The inspection will cover the loading and shipment of coal, entrances and exits for transport ships, railway-to-port connectivity and other complex logistical processes, and will take place from November 24th to the 28th.

Accordingly, a total of 12 representatives from South Korean companies including POSCO, Hyundai Merchant Marine Co. and KORAIL, plus one representative from the Ministry of Unification are slated to take a train from the Russian settlement of Khasan to the North Korean port at Rajin on November 24th. The consortium is visiting North Korea in order to oversee a pilot demonstration of the Rajin-Khasan Project, which will bring coal from Russia into Rajin harbor, where it would then be transported to Pohang harbor in South Korea. This visit is expected to mark the South Korean consortium’s full-fledged participation in the Rajin-Khasan Project.

The pilot project will cover the shipment and transportation of 45 thousand tons of coal mined from the West Siberian region in Russia to the South Korean port of Pohang. After the coal is mined and transported to Rajin, North Korea via railroad, it will be loaded onto a Chinese national freighter (capable of holding 56 thousand tons) which is expected to depart Rajin harbor at 10 A.M. on November 28th and arrive in Pohang the following evening at approximately 10 P.M.

Specifically, this marks the first use of the direct maritime route connecting Rajin harbor to Pohang harbor, which passes over the Northern Limit Line in the East Sea, since the implementation of the May 24 Measures. This direct route, which takes approximately 36 hours, has been calculated to save up to 15 percent in both time and fuel costs. It is expected that this cost-cutting effect would become even greater if the South Korean companies involved in the Rajin-Khasan Project are able to sign into a long-term contract.

The total scale of the pilot project is said to be approximately 4 million USD (approx. 4.45 billion KRW), with around 10 percent of the total being provided by a joint DPRK-Russian corporation known as RasonKon Trans. In relation to this, the Ministry of Unification has stated that the majority of this money is being paid to Russian mining companies, with a small portion being given to North Korea for port dues and other costs, and that there appear to be no problems or abnormalities in this international trade project.

It appears that POSCO, Hyundai Merchant Marine, KORAIL and other South Korean firms have been examining a possible stake in Russian railroad construction companies, and will proceed with establishing a corporate body in Russia to invest in RasonKon Trans. The equity structure of RasonKon Trans currently stands at 7:3, with the Russians holding the larger share. South Korean firms are currently reviewing investing in a stake of the Russian share, and formal contracts are not expected until 2015.

The goal of this pilot project is to test how much supply the project can technically handle, and to use that figure as a base for calculating profitability. The South Korean representatives are planning to hold negotiations with Russia; however, it appears that it will be difficult to conclude these talks within the year. In July, an inspection team was dispatched to Rajin harbor as part of the “Rajin-Khasan Logistics Project,” where they concluded that the port was capable of transporting 4 million tons per year.

The coal mined in West Siberia is transported via the 54 kilometer Rajin-Khasan railroad and takes merely one hour to reach Rajin, where it is then transported to the harbor and distributed to as many as three piers equipped to handle shipment.

UPDATE 13 (2014-11-30): So now that the first trial run is over, what is to stop North Korea from demanding more revenue once the transportation route is formalized? Russia–according to this piece in the Korea Times:

Choi Kyung-soo, a director at the North Korean Resources Institute in Seoul, says that a trilateral partnership tends to be less risky than a bilateral project such as the Gaesong Industrial Complex.

“There is a possibility that the North may try to use the trade route as a means to put pressure on the South when things go badly for them. But I think Russia won’t sit idle if its economic interests are affected,” he said.

Because there is a role that a third party can play, Choi says, the shipment of Siberian coal to South Korea via the North Korean port will be less risky than the Gaesong Project.

UPDATE 12 (2014-11-21): Russia and South Korea launch first pilot project to ship coal via Rason. According to Yonhap:

Under the envisioned program, South Korea’s top steelmaker POSCO will bring in Russian coal via the North Korean port of Rajin. Two other South Korean firms — Hyundai Merchant Marine Co. and Korail Corp. — are joining the project.

“Since it is a normal international commercial trade, it’s my understanding that there is no problem with the U.N. sanctions,” the official told reporters on background.

It is also a “special case” as far as Seoul’s bilateral sanctions on Pyongyang are concerned, he added.

The South maintains the May 24th Measure, effectively blocking all inter-Korean economic projects except for the Kaesong Industrial Complex. The sanctions were imposed for the North’s deadly torpedo attack on a South Korean warship in 2010.

Once the trilateral program is formally launched, he admitted, the North will be able to secure a stable supply of cash.

The three countries are poised for the first test run of the project next week, in which POSCO will import 40,500 tons of coal from a Russian mine in the West Siberian region.

The 54-kilometer railway between the North Korean city of Rajin and Russia’s Khasan will be used and then a Chinese-flagged 56,000-ton ship will carry the coal to the South’s port in Pohang.

The ship is scheduled to depart Rajin on Nov. 27 for about a 36-hour voyage.

If the project proves cost-effective, the South Korean consortium will hold further talks with the Russian side for a formal contract. It would be hard to ink the deal within this year, though, given the time needed for the relevant process, said the official.

POSCO brings in some 2 million tons of Russian coal every year by way of Vladivostok.

The Rajin-Khasan project is expected to cut shipment costs by 10-15 percent in the long term, according to the ministry official.

“But the stability (of its operation) is the key to its success,” he said, citing the possibility of political setbacks amid Pyongyang’s unpredictable behavior.

Meanwhile, a team of 13 South Korean delegates plans to visit Rajin and Khasan next week to monitor the pilot run worth US$4 million. The delegation is composed of a unification ministry official and a dozen related company officials.

The ministry said it approved their trip to the North earlier Friday.

South Korea has an ambition of linking its railway network with that of Europe through North Korea.

Here is coverage in the Korea Times.

The Wall Street Journal also included this information:

Based on current coal prices, the shipment is valued at around $4 million. North Korea is receiving an undisclosed sum, which a Unification Ministry official called “very small.” A spokesman for the Russian Railways said North Korea receives 30% of the usage fee for about 50 kilometers (31 miles) of railroad from the Russian border to Rajin but couldn’t provide details about the payment. A spokesman for Posco declined to comment on the cargo value or the payment structure.

A Unification Ministry official said that since the structure of the deal involves payment via a third country it isn’t subject to Seoul’s sanctions against Pyongyang. The official, who requested customary anonymity, said the exception was also made to promote South Korean President Park Geun-hye’s “Eurasian Initiative,” which aims to link Europe and East Asia with energy and transport networks.

According to the JoongAng Ilbo, the ship was sipposed to depart Rason on Nov 28, but because the loading went smoothly, the vessel left port on Thursday, Nov 27. It arrived in South Korea on the following Saturday.

UPDATE 11 (2014-7-24):  North Korea apparently willing to allow South Korean investment Rason railway project. According to Yonhap:

North Korea is willing to host South Korean firms’ investment in the country’s railway project with Russia, a South Korean government official said Thursday after a recent on-site inspection visit to the North.

A group of 38 government officials and representatives from South Korean rail operator KORAIL, steelmaker POSCO and shipping company Hyundai Merchant Marine Co. returned on Tuesday from their one-week visit to the North’s Rajin port near the country’s northeastern border with Russia.

It was the three-firm consortium’s second visit to the North, intended to conduct a feasibility study on their plan to join the so-called Rajin-Khasan logistics project, linking the North Korean port city to Russia’s Trans-Siberian railway.

“(The North) basically said they are pleased with South Korean investment and reacted with a hope that this (deal) could help South-North Korean relations advance,” a South Korean government official who joined the recent North Korean tour said on condition of anonymity.

The official said based on the recent on-site inspection, the local business consortium may finalize the review of its plan to join the project, adding that it is likely to strike a deal with the Russian side later this year or early next year.

During their summit meeting in Seoul in November, South Korean President Park Geun-hye and her Russian counterpart, Vladimir Putin, agreed to help the South Korean firms join the project, which would let them invest indirectly in the North.

The local consortium is reportedly planning to test-run a transportation route within this year to move Russian coal to the North Korean port and then to ship it to South Korea’s eastern port of Pohang.

The official said the North Korean port of Rajin is now fully ready for such coal transportation.

“(Transportation) seemed to be possible at any time,” the official said, referring to the Rajin port’s third pier, which has been completed recently and launched last week. The local consortium is seeking to use the new pier if it enters into the North Korean-Russian project.

The new pier is capable of handling 4 million tons of coal annually, the official added.

Under the bilateral logistics project, North Korea and Russia reopened in November a 54-kilometer stretch of railroad track linking the North Korean port to the eastern border Russian city of Khasan after a five-year renovation.

The South Korean official also said the cross-border railroad was being well operated as of recently.

If the local consortium finally decides to join the project, it reportedly may so do by acquiring half of Russia’s share in the project.

The South Korean government has been promoting South Korean firms’ participation in the logistics project, which it views as closely linked to President Park Guen-hye’s “Eurasian Initiative,” a vision that calls for building more infrastructure and freeing up trade between Eurasian nations to create what could become a large single market rivaling the European Union.

The unification ministry earlier said that a formal deal between the consortium and its Russian counterpart for the project will be signed in the second half of the year.

UPDATE 10 (2014-6-11): According to Russian media:

Russian Minister for Far East Development Alexander Galushka announced plans to extend the Trans-Siberian Railroad into North and South Korea during a Russian-Korean trade meeting in Vladivostok on Thursday.

The expansion program calls for a collaborative railway construction project between Russia, North Korea and South Korea. Russian officials hope the expansion will not only triple the speed at which goods are shipped between Europe and Korea, but also restore peace between North and South Korea, reports.

“We have agreed to launch trilateral projects between Russia, DPRK and South Korea with a focus on the railroad project,” Galushka said, according to “It’s important to extend the Trans-Siberian Railroad to the Korean peninsula. It will service to stabilize and improve the situation on the Korean peninsula as a whole.”

Mechel, Russia’s largest steelmaking company, has agreed to supply the steel required for the first phase of the expansion. South Korea’s Hyundai Construction has been identified as a likely commercial partner in the project.

North Korean officials have been reluctant to participate in any collaborative infrastructure program despite the poor conditions of its rail system. Members of the North Korean government began to express interest in a railway development project last September after Russia re-opened a 33-mile expanse of track to Khasan, the last Russian city before the North Korean border, according to

UPDATE 9 (2014-4-29): The Choson Ilbo reports that Ms. Choi has returned from the DPRK:

The Organisation for Co-Operation between Railways (OSJD) has decided to hold two major meetings, the Commission on Freight Traffic in 2015 and Conference of General Directors in 2019, in Seoul.

KORAIL president Choi Yeon-hye made the announcement at Gimpo Airport on Monday after returning from an OSJD meeting in Pyongyang. It is unprecedented for an associate rather than full member to host the conference.

The OSJD is an organization of 27 former and current communist countries, including Russia, China and North Korea.

“We don’t know yet whether the North will attend the meetings in 2015 and 2019, but the participants unanimously decided to hold them here, and the North didn’t oppose it, so we expect them to come,” she added.

The annual conference of general directors alternatively takes place in Asia and Europe, but exceptionally the 2019 meeting will also be held in Asia following the 2018 meeting in Vietnam.

The government here is keen to work with the railway body to link South Korea to Eurasia via North Korea.

Here is coverage in Yonhap.

UPDATE 8 (2014-4-22): The Choson Ilbo reports that the head of Korail has left for the DPRK:

KORAIL president Choi Yeon-hye is appropriately on her way to North Korea by train.

Choi left for Pyongyang on a train from Beijing on Monday afternoon to attend a meeting of the Organisation for Co-Operation between Railways (OSJD), KORAIL said Monday.

The OSJD is an organization of 27 former and current communist countries, including Russia, China and North Korea.

The government approved Choi’s request to visit to the North on Sunday after the North sent her a letter of invitation. She got a visa from the North Korean Embassy in Beijing the same day.

The train runs from Beijing to the North Korean border city of Sinuiju in 24 hours, where she switches trains for the 225 km stretch to Pyongyang.

A KORAIL executive said, “Choi’s visit is the North’s first approval of a South Korean official’s visit” since the South imposed sanctions against North Korea in 2010.

She is the first senior South Korean figure to visit Pyongyang since the inter-Korean summit in 2007.

President Park Geun-hye is keen to connect South Korea to Eurasia by railway, which requires cooperation from the OSJD.

Here is coverage in Yonhap.

UPDATE 7 (2014-4-18): The DPRK has “sort of” invited the head of Korail to a conference in Pyongyang. According to Yonhap:

North Korea has invited the head of South Korea’s rail operator to an international conference to be held in Pyongyang next week, a source with knowledge of the matter said Friday.

However, the North made the invitation verbally, which is preventing Choi Yeon-hye, president and CEO of the Korea Railroad Corp., from formally applying for the trip to Pyongyang, the source said.

The rail conference in Pyongyang, scheduled for April 24-28, is meant to boost international cooperation between railway operators, the source said, adding that it is expected to bring together top rail officials from China, Russia and 25 other member states of the Organization for Cooperation of Railways.

South Korea’s Unification Ministry, which handles inter-Korean affairs, said no decision has been made yet on whether to allow Choi to travel to the North for the conference.

UPDATE 6 (2014-3-29): Russia and North Korea held talks on entry of the Russian firms into the Kaesong Industrial Complex and the railway project. According to Yonhap:

Also on the table in the Pyongyang-Moscow talks was how to boost cooperation among the two Koreas and Russia, with Pyongyang and Moscow making it clear that the two “share mutual interest” in the trilateral cooperative projects, according to the report.

“The (Russian) ministry reaffirmed the countries’ mutual interest in joint projects with South Korea, including international connections for railways, gas pipelines and power lines,” it said, adding that the minister stressed stability on the Korean Peninsula is key to achieving the goal.

Discussions of the project to connect the Trans-Siberian Railway (TSR) with the Trans-Korean Railway (TKR), dubbed the “Iron Silk Road,” have been under way for more than a decade, but geopolitical obstacles have hindered it, particularly given North Korea’s nuclear ambitions.

South Korea and Russia have also been in discussions to push for a project to build a gas pipeline linking the two via North Korea.

The next meeting of the bilateral commission is scheduled for June in Russia’s far eastern city of Vladivostok, according to the ministry.

You can read more about the gas pipeline here.

UPDATE 5 (2014-3-24): South Korea to import coal through Rajin by next year. According to Korea IT Times (note-I changed the South Korean “Najin” to the North Korea “Rajin”):

A pilot program to carry coal from the port of Rajin in North Korea to Pohang in the south is expected to bear fruit within the year. A high-ranking official at the Ministry of Oceans and Fisheries said on March 23, “We have finalized a plan to ship coal between Rajin and Pohang before the year’s end as part of the Eurasia Initiative.”

Once the coal shipment from Siberia arrives in Rajin through the Hasan train station on the Russian side, South Korean ships will move the cargo to POSCO in Pohang from the No. 3 wharf in Rajin.

The ministry official added, “In a visit to Rajin in February we found that the port facility is capable of handling coal load up to 4 million tons a year. We will send a due diligence team again within the first half to find out the depth of the water near the port.”

The pilot coal shipment program is undertaken as part of the Rajin-Hasan railway project. The 54-kilometer railway link is critical to connecting the rail lines in the south to Busan and the trans-Siberian railway to European destination. Earlier in 2000, Russian President Vladimir Putin and then-ruler of North Korea Kim Jong-il agreed to build the line at the cost of US$340 million.

Rajin is a port city located at the northernmost corner of North Korea bordering Russia. The Russian government has since 2010 been working on building berths capable of holding 70,000-ton vessels in Rajin’s No. 3 wharf. The Chinese government is also in talks with North Korean authorities over building container unloading facility as well as expanding the wharves No. 4 to 6. The problem, however, is the Russian side has not found coal mines big enough to supply the volume demanded by Korean companies including POSCO.

UPDATE 4 (2014-3-24): South Korea has joined the Organization for Cooperation Between Railways (OSJD) in Warsaw. According to the Choson Ilbo:

Korea has taken the first step toward connecting its railways to the Eurasian continent. The Korea Railroad Corporation on Sunday said it became an associate member of the Organization for Cooperation Between Railways (OSJD) in Warsaw, Poland.

In order to connect Korean railways from Busan to Europe, it is essential for KORAIL to register to the OSJD, which makes the rules on the Eurasian continent and overseas treaties amongst member states.

This makes a more realistic prospect of a planned “Silk Road” railway connecting the Korean Peninsula to Europe that lies at the core of President Park Geun-hye’s “Eurasia Initiative.”

The initiative, which was announced in October last year, aims to strengthen Eurasian economic cooperation and prompt an opening of North Korea to lay the groundwork for reunification with the South.

The OSJD invited KORAIL to a meeting of the heads of member states’ railways in Pyongyang next month.

UPDATE 3 (2014-3-5): South Korean companies could be operating out of Rason by next year. According to Yonhap:

South Korea may be able to use the North Korean port city of Rason for logistical purposes as early as early next year, the unification ministry said Wednesday.

“The flow of goods through the Rason region may become possible around next spring if things go smoothly,” Unification Minister Ryoo Kihl-jae said in a lecture to a group of former lawmakers.

“In early February, South Korean companies paid an on-site visit to the Rason area and if this (cooperation project) goes smoothly, major progress would take place around September this year,” the minister said of Seoul’s push to join the Rajin-Khasan development project between Pyongyang and Moscow.

The project is designed to develop Rajin, the northeastern North Korean port city now reintegrated into Rason, into a logistics center linked to Russia’s Trans-Siberian Railway.

The government is planning to link the North Korean port to two major South Korean southern ports of Pohang and Busan.

UPDATE 2 (2014-2-6): According to the Wall Street Journal:

…Seoul’s Unification Ministry said on Sunday that an 18-strong Southern business team will visit Rajin in North Korea’s northeast, near Russia and China, on Feb. 11-13. Three firms are going: steelmaker Posco; Hyundai Merchant Marine011200.SE -6.55%, a shipper; and state-owned monopoly Korail. The government isn’t sending anyone.

This follows a deal signed during Russian President Vladimir Putin’s one-day visit to Seoul in November. The plan is for the South Korean trio to acquire up to half of Russian Railways’ 70% stake in RasonKonTrans, a $340 million project which last fall, five years late, finished upgrading 54 kilometers of track from Russia’s border at Khasan down to Rajin, Asia’s most northerly all-year ice-free port. Harbor facilities are also to be modernised.

I was skeptical at the time. The companies sounded non-committal, and two big political reefs loomed. Had anyone asked North Korea, whose railways ministry owns the other 30% of RasonKonTrans? And wouldn’t this breach the ban Seoul imposed in 2010 on all trade and investments in North Korea, outside the Kaesong Industrial Complex? The Southern government says no.

This is just an inspection tour, but North Korea appears to have raised no objection – which is interesting, if scarcely consistent. Pyongyang plays politics with family reunions: a sadistic heartbreaker for elderly Koreans yearning to see their long-lost kin, if only once and briefly.

According to Xinhua (2014-2-9):

A group of South Korean company officials will visit the Democratic People’s Republic of Korea ( DPRK) to carry out field study for joining in Rajin-Khasan railway and port development project between Pyongyang and Moscow, South Korea’s unification ministry said on Sunday.

A total of 18 officials from South Korea’s state-run Korea Railroad Corp. (KORAIL), steelmaker POSCO and shipper Hyundai Merchant Marine are scheduled to visit DPRK’s northeastern port city of Rajin from Tuesday to Thursday.

The ministry said they will meet their Russian counterparts in Vladivostok and then departed for the DPRK.

South Korean President Park Geun-hye and Russian President Vladimir Putin agreed to cooperate in the Russian-led project during their summit in Seoul last November.

The Rajin-Khasan project aims to refurbish DPRK’s Rajin port and a railroad connecting it to the nearby Russian town of Khasan, paving the way for the Trans-Korean Railway and the Trans-Siberian Railroad reaching Europe.

A double-track railway between Rajin and Khasan reopened last September after years of renovation. It is reported that if the trilateral program runs smoothly, the Rajin port will become a logistics center for South Korean and Russian firms.

The project is part of Park’s plan for building the “Silk Road Express” by linking roads and railways running from South Korea to Europe via the DPRK, Russia, China and other Eurasian nations.

According to Yonhap (2014-2-9):

Officials from South Korean companies set to participate in an economic project between Pyongyang and Moscow will visit North Korea this week for an on-site inspection, the government said Sunday.

The unification ministry said 18 officials from three South Korean firms will visit North Korea’s northeastern port of Rajin from Tuesday to Thursday. The companies are state-run Korea Railroad Corp. (KORAIL), top steelmaker POSCO and No. 2 shipper Hyundai Merchant Marine. No government official will join the trip, the ministry said.

Their inspection is part of South Korea’s participation in the Rajin-Khasan development project, the Russian-led rail and port development venture in North Korea.

It’s designed to develop Rajin into a logistics center linked to Russia’s Trans-Siberian Railway. Last September, a double-track railway reopened between Rajin and Khasan, the nearby Russian town, after years of renovation.

In their summit meeting in Seoul last November, South Korean President Park Geun-hye and Russian President Vladimir Putin agreed to help South Korean firms join the Rajin-Khasan project.

Also last year, Park unveiled her plan to expand economic cooperation with Eurasian nations, dubbed the Eurasian Initiative. The policy is built on the idea that exchanges between South Korea and Eurasian nations, in particular Russia, could help induce the reclusive North Korea to open up and alleviate tensions on the Korean Peninsula.

Chris Green of the Daily NK has translated an  interview with the executive director of POSCO Corporate Strategic Planning Dept, Jeon Woo-sik, wherein he offered details about the delegation visiting Rason?

Ha Joon-soo, “나진~하산 프로젝트 현장 실사단 내일 방북“ [Rajin-Khasan Project onsite inspection team to visit North Korea tomorrow], KBS News, February 10, 2014.

Q: What is the makeup of the inspection team?

Jeon: There are five people going from POSCO [포스코]: a ports expert, an investment expert, and staff. There are six from Korail [코레일], another five from Hyundai Merchant Marine [현대상선], and two from the inspection company [실사법인], which makes eighteen. Aside from that, twenty staff from Russian Railways [러시아 철도공사] will accompany [the group]. Meetings with the North Korean side will be conducted in English and Russian, so the Russian side will bring interpreters.

Q: What is an “inspection company”?

Jeon: There is the need for personnel to expertly verify accounting and tax documentation, so we incorporated a body [for that].

Q: There will be no [South Korean] government officials with the group?

Jeon: None. This is a purely private undertaking, and it was decided that if government officials were included it could have a negative impact. Therefore, we formed the entire team from the private sector, and the government accepted this position.

Q: What is the team’s schedule?

Jeon: We minimized it as far as possible. Given that experts from each sector will be doing the inspecting, we decided that three days would be sufficient. Today [February 10] they departed for Vladivostok in Russia, and tomorrow morning [February 11] they will set off by special train. After completing the border formalities at Khasan on the Russia-DPRK border, we expect them to arrive in Rajin at around 12. Construction at Rajin Port is currently underway, so they will conduct visual inspections of the state of the port, whether pier construction is being done properly, and what the state of the Rajin-Khasan railway is. It is also expected that they will get additional information from the Russian side.

Q: What was done in advance to facilitate this?

Jeon: We applied for the visit in the middle of January, and document checks took about three weeks. The North Korean government signed off on the visit on February 5, and [the South Korean] government approved it on February 7.

Q: Can you give a concrete breakdown of what the team is going to do?

Jeon: The port and railway inspections will be divided into areas of expertise. More concretely: they will check the state of the rail track bed, the width of the track and the spaces between the rails, as well as signaling systems and stations. In the Russian documentation it says that Pier 3 is 600m long, but this must be verified, along with the depth of the water, whether it freezes in winter, the state of the mobile port cranes, whether it will be possible to use the pier over the long term, its strength, and how much investment is likely needed for dredging. Once that has been done, we’ll be able to roughly assess the investment cost on the Russian side.

Q: Is it right that, according to the Russian side, construction at Pier 3 will be complete at around the end of 2013?

Jeon: Port construction progress is currently at 90 percent. It’s winter now so construction isn’t possible, but it should be 100 percent complete during the next quarter. We’ll check on the construction of the port distribution terminal during these inspections. As it stands, coal from Siberia is what is coming in, so as long as there is storage for coal it is enough.

Q: Why do you need to perform in-situ checks?

Jeon: As you will be aware, the “Rajin-Khasan Project” is a cooperative one between North Korea and Russia. It’s an integrated port and rail freight business, and is worth a total of $340,000,000. Of this, North Korea has invested 30 percent and Russia 70 percent.

However, around half the Russian stake is supposed to be supplied indirectly by this consortium of Korean firms; yet even last November when a MoU was adopted between Russia and Korea, decisions were made based on documents from the Russian side. We have never seen for real how the construction is proceeding. How much should be invested can only be decided once the precise reality has been seen.

Q: What will happen once the inspection has been completed?

Jeon: We need to know the results of the inspection before we can decide that. Investment sums will be decided within this calendar year.

Q: So, when can we expect boats loaded with coal to come from Rajin down to Pohang and Busan [in South Korea]?

Jeon: Russian Far East ports are at saturation point dealing with Russia’s natural resources. The best thing would be for the freight headed for South Korea to be taken out and sent through Rajin instead. However, for a South Korean vessel to come and go from Rajin Port requires an authorization process. This part is linked to the 5.24 Measures[1], meaning that it would become possible more rapidly if the 5.24 Measures were lifted.

According to the Hankyoreh (2014-2-11):

Explaining that the Rajin-Hasan Project is a “special case” that is going ahead despite the May 24 measures, Unification Minister Ryoo Kihl-jae said that North Korea would have to take meaningful steps before the May 24 measures could be revoked.

During a plenary session at the National Assembly on Feb. 10 on issues related to diplomacy, unification, and national defense, the minister said that the May 24 punitive measures against North Korea would not be lifted until the North took action showing its remorse for the sinking of the Cheonan warship.

The May 24 measures, instituted after the Cheonan was sunk in 2010, constitute a complete ban on economic activity, exchange, and cooperation with North Korea.

But when asked about the Rajin-Hasan project, in which POSCO, Korail, and other South Korean companies have recently received permission to invest, Ryoo said that the project is moving ahead because it has particular significance for South Korea’s national interest regarding relations with Russia. If the project makes progress in the future and material starts to move, Ryoo predicted, various discussions will take place. That is to say, South Korea is moving forward with the Rajin-Hasan project as an exception to the May 24 measures.

On Monday, South Korean Prime Minister Chung Hong-won also said that the Rajin-Hasan issue is a special case.

“What happened to the principles that President Park Geun-hye was talking about?” complained one businessman involved in economic cooperation with North Korea. “If you’re going to relax the restrictions, you should relax them for everyone. It‘s not fair just to relax them for large companies,” the businessman said on condition of anonymity.

Read the full stories here:
North Korea’s Rajin as Rotterdam? A Little Less Crazy Now
Wall Street Journal
Aidan Foster-Carter

S. Korean firm officials to visit DPRK for Rajin-Khasan joint project

S. Korean corporate officials to visit N. Korea as part of Pyongyang-Moscow venture

Rajin-Hasan Project going ahead as a “special case”
Choi Hyun-june

UPDATE 1 (2014-1-16): South Korea launches task force on railway and other projects. According to Yonhap:

South Korea is set to launch a task force on economic cooperation projects with North Korea and Russia, including a long-discussed plan for a trilateral rail link, Seoul officials said Thursday.

The move is the first follow-up step after President Park Geun-hye announced late last year her plan to expand economic cooperation with Eurasian countries for more trade opportunities.

Called the Eurasian Initiative, the policy is centered on the idea that exchanges between South Korea and Eurasian nations, especially Russia, will help induce an opening up in the reclusive North, which lies in between, thus allaying the long-running military and diplomatic tensions on the Korean Peninsula.

The task force, tentatively named the Trilateral South, North Korea, Russia Cooperation Task Force, will be launched as soon as February under the wing of the foreign ministry’s Europe division, according to the officials.

Under the task force, about five government officials will be charged with reviewing the feasibilities of various economic project ideas among the three nations, including much-discussed plans to link a railroad, gas and oil pipes, and electrical grids between South Korea and Russia through North Korea, according to them.

“All the issues concerning the trilateral cooperation among South and North Korea, and Russia can be subject to the task force’s reviews,” a foreign ministry official said. “Specific details about the projects will be known after the task force goes into operations.”

Discussions of the project to connect the Trans-Siberian Railway (TSR) with the Trans-Korean Railway (TKR), dubbed the “Iron Silk Road,” have been under way for more than a decade, but geopolitical obstacles have hindered it, particularly given North Korea’s nuclear and missile ambitions.

In a summit meeting held in Seoul last November, South Korean President Park and Russian President Vladimir Putin signed a memorandum of understanding to help South Korean companies join the Rajin-Khasan development project in North Korea, the Pyongyang-Moscow project to link their railways for better logistics.

ORIGINAL POST (2013-11-13): The Russians and South Koreans recently discussed and signed a MOU on investment in the Rajin-Russia railway link and port. According to Yonhap:

South Korea agreed Wednesday to take part in a Russian-led rail and port development project in North Korea that could help reduce tensions with Pyongyang and open up a new logistics link between East Asia and Europe in line with President Park Geun-hye’s “Eurasian initiative.”

The memorandum of understanding was the most tangible outcome from Park’s summit with Russian President Vladimir Putin. It calls for steel giant POSCO, Hyundai Merchant Marine Co. and Korea Railroad Corp. to participate in the Rajin-Khasan development project.

The project was designed to develop North Korea’s ice-free northeastern port of Rajin into a logistics hub connected to Russia’s Trans Siberian Railway. In September, a 54-kilometer, double-track rail link reopened between Rajin and the nearby Russian town of Khasan after years of renovation.

Once the project to modernize the port of Rajin is completed, the rail-connected port can be used as a hub for sending cargo by rail from East Asia to as far as Europe. South Korean firms can also ship exports first to Rajin and transport them elsewhere via Russian railways.

North Korea and Russia launched the US$340 million project in 2008.

“The two sides agreed to encourage the rail and port cooperation project that companies of the two sides are pushing for so that it can move smoothly forward,” said a joint statement issued after the summit.

The project fits into Park’s “Eurasian initiative,” which calls for binding Eurasian nations closely together by linking roads and railways to realize what she called the “Silk Road Express” running from South Korea to Europe via North Korea, Russia and China.

Wednesday’s agreement was seen as a first step toward the ambitious vision.

“We, the two leaders, agreed to combine South Korea’s policy of strengthening Eurasian cooperation and Russia’s policy of highly regarding the Asia-Pacific region to realize our mutual potential at the maximum level and move relations between the two countries forward,” Park said during a joint press conference.

“South Korea and Russia will join hands to build a new Eurasian era for the future,” she said.

The Korean consortium plans to buy a stake in RasonKonTrans, the Russian-North Korean joint venture carrying out the rail and port renovation project. A final decision on the planned purchase will be made after a due diligence study in the first half of next year, officials said.

State monopoly Russian Railways has a 70 percent stake in the joint venture, with the North holding the remaining 30 percent. News reports have said that the Korean consortium plans to buy about half the Russian stake.

The purchase could be in conflict with Seoul’s ban on new investments in North Korea, though it is an indirect investment via Russia. The ban is part of sanctions Seoul imposed on Pyongyang after the North torpedoed and sank a South Korean warship near their Yellow Sea border in 2010.

The project could pave the way for similar indirect investments in the North and help reduce tensions on the divided peninsula. Inter-Korean relations, which had shown signs of a thaw following months of high tensions, chilled again after Pyongyang unilaterally canceled reunions for separated families in September.

Putin arrived in South Korea from Vietnam earlier Wednesday on a one-day visit for his second summit with Park. They first met in September on the sidelines of a Group of 20 major economies meeting in Russia’s second-largest city of Saint Petersburg.

In Wednesday’s summit, the two leaders also signed an MOU to enhance cooperation in shipbuilding. Officials said the deal laid the groundwork for South Korea to win orders of at least 13 liquefied natural gas tankers from Russia on the condition of technology transfer.

Also discussed was a long-discussed project to link railways of the two countries via North Korea and through to Europe. The two sides signed an MOU on rail cooperation and agreed to study the project as a long-term venture. The rail project has been talked about for many years, but little headway has been made due to security tensions.

Other projects the two sides agreed to cooperate on as long-term ventures included building a natural gas pipeline linking Russia and South Korea via the North and developing Arctic shipping routes to reduce shipping distances and time between Asia and Europe.

In total, the summit produced 17 cooperation agreement, including a visa-exemption pact calling for allowing Koreans and Russians to visit each other’s nation without a visa for up to 60 days, as well as an accord to set up cultural centers in each other’s nation.

Other topics for the meeting included regional and global security issues, such as the North Korean nuclear standoff. Russia is a member of the six-party talks aimed at ending Pyongyang’s nuclear program and is also one of the five permanent members of the United Nations Security Council.

“The two sides confirmed they cannot accept Pyongyang’s policy of building independent nuclear and missile capabilities … and stressed that North Korea cannot have the status of a nuclear state,” the joint statement said.

They also emphasized the North should abide by international denuclearization obligations and commitments, and agreed to work together to create the right conditions for restarting the long-stalled six-party talks on ending Pyongyang’s nuclear program, the statement said.

In an apparent swipe at Japan, the statement said that the sides shared a concern that the strong cooperation potential in Northeast Asia has not been realized due to obstacles created by recent “retrograde acts and words on history.”

Putin’s visit to Seoul is the first by a leader from the four major powers that also includes the United States, Japan and China since Park came into office. The Russian president is also the sixth foreign leader to visit South Korea under the Park administration.

Yonhap also published this related but separate report:

The ministry, in charge of all inter-Korean relations, said plans by a South Korean consortium to buy a stake in RasonKonTrans, the Russian-North Korean joint venture, can strengthen ties between South Korea and Russia and create greater opportunities for all sides. The project, first launched in 2008, cost Pyongyang and Moscow US$340 million.

It said the memorandum of understanding, signed on the sidelines of summit meeting between South Korean President Park Geun-hye and Russian President Vladimir Putin earlier in the day, did not mean Seoul was abandoning its so-called May 24 blanket ban that prohibits all economic and personnel exchanges with the North.

The ban has been in place since 2010, after Seoul accused Pyongyang of sinking one of its warships near the sea border in the Yellow Sea. Seoul at present only permits humanitarian assistance exempt from the sanctions rule.

“This project is special, and efforts will be made to assist visits by South Koreans who have to go to the North to carry out due diligence,” said a ministry official who declined to be identified.

He added that while an investment does conflict to some extent with Seoul’s ban, it is slightly different, since companies will be buying stakes in the Russian company.

“It will be an indirect form of investment and not the direct kind that has been banned so far,” the source said. However, he conceded the move marks the first time that investments into a North Korean project have been authorized.

South Korean businessmen from steelmaker POSCO, Hyundai Merchant Marine Co. and Korea Railroad Corp. are expected to go on fact-finding missions to Rajin and check the rail line linking the port city with the Russian town of Khasan.

Under the project, aimed at utilizing North Korea’s ice-free port, Russia aims to transform Rajin into a logistics base linked to its Trans Siberian Railway (TSR). If the project makes headway, Rajin can be used by South Korean companies to send cargo by rail to Europe using the TSR.

On the controversy that may arise from “bending” the rules, the ministry official said the government is willing to review other indirect forms of investments involving other countries if proposed.

“If a proposal is submitted, it will be judged in terms of the nature of the project, the effect it will have on cross-border relations and North Korean attitude,” he stressed.

Additional Information:
1. Read more about the Russia-Rajin rail link here.

2. Read more about the Russia – South Korea gas pipeline here.

3. Read previous posts on the Rason SEZ here.

Read the full stories here:
S. Korea to participate in Russian-led rail, port development project in N. Korea
Chang Jae-soon


Production at Kaesong Industrial Complex up in 2015

Thursday, July 9th, 2015

According to Yonhap:

The value of production made at an inter-Korean industrial park rose 26 percent in the January-April period from a year earlier despite a drawn-out row sparked by North Korea’s unilateral wage hike, government data showed Thursday.

The value of production at Kaesong Industrial Complex in the North reached a combined US$186 million in the first four months of the year, compared with $148 million a year earlier, according to the Unification Ministry.

In particular, the production at the park rose 21.8 percent on-year to $51.1 million in March and gained 19.7 percent to $50 million in April, when a wage dispute between the two Koreas heightened.

In a separate report unveiled in April, the ministry said that the volume of inter-Korean trade hit a record high in 2014 on growth in exchanges at the industrial park despite Seoul’s punitive sanctions on Pyongyang.

The value of inter-Korean trade reached $2.34 billion last year, up 106.2 percent from a year earlier, it said.

Here is coverage in Arirang News.

Read the full story here:
Production at joint industrial park rises 26 pct in Jan.-April


DPRK emigration numbers in 2015

Sunday, July 5th, 2015

According to Yonhap:

The portion of female North Korean defectors topped 80 percent this year, government data showed Sunday, apparently because North Korean women are under less severe scrutiny by the communist country.

The number of female North Koreans who came to the South reached 444 in the January-May period, accounting for 83 percent of the 535 North Koreans who came to the South, according to the unification ministry.

The data was compiled tentatively as the government’s background checks for North Korean defectors have not been completed, it said. Around 30,000 North Koreans have defected to South Korea in search of freedom so far.

Since the portion of female North Korean defectors topped the 50 percent mark for the first time in 2002, the weight has been on the rise, the data showed.

In particular, since North Korean leader Kim Jong-un took office in late 2011, the portion has increased above the 70 percent mark. The corresponding data reached 75.6 percent in 2013 and came in at 78.2 percent in 2014.

Experts said that it might be easier for women to flee the communist country as they are relatively less scrutinized by North Korean authorities.

Meanwhile, the number of North Koreans who defect to the South has been on the decline since 2011, the data showed.

In 2014, the number of defectors reached 1,396, down 48.4 percent from 2011, it said.

“Regardless of sex, the number of North Korean defectors has been falling,” a unification ministry official said. “The trend is likely to continue this year as well.”

While the number of North Koreans coming south has been on the decline since Kim Jong-un came to power, there has been a flurry of media reports recently that indicate that the number of high-level defectors leaving the country is on the increase.

According to the Chosun Ilbo (2015-7-2):

About a dozen senior North Korean officials have defected in recent years because they feared for their lives in leader Kim Jong-un’s purges, a source said Wednesday.

The defectors were working in China and Southeast Asia, some charged with earning hard currency for the regime.

Several have already arrived in South Korea while others are staying in a third country.

Early this year, a mid-ranking official who had been dispatched to Hong Kong from Room 39, a Workers Party office that handles Kim’s slush funds, sought asylum in South Korea with his family.

He reportedly told investigators here he was terrified of Kim’s draconian purges, which saw senior officials executed by anti-aircraft gun, and that officials left in North Korea find it almost impossible to flee because of tight controls but those working overseas can find some opportunities to defect.

Last year, a senior official of Taesong Bank, who had handled Kim’s slush funds in Siberia, fled to South Korea with millions of dollars. Even a senior official of the State Security Department fled the North and arrived here. According to the National Security Service here, the defection particularly upset Kim.

An army general has been staying in a third country since he fled the North recently, according to sources. The general was reportedly involved in the two inter-Korean summits in 2000 and 2007.

The defections highlight the climate of fear among senior apparatchiks since the brutal execution of Kim’s uncle and one-time eminence grise Jang Song-taek, as well as that of former armed forces minister Hyon Yong-chol.

In a report to the National Assembly, the NIS claimed that the North executed more than 70 senior party, government and military officials by firing squad since Kim took power.

And According to Yonhap (2015-7-6):

North Korea may continue to see its officials desert the communist country to settle abroad down the road, but the exodus is not likely to lead to the collapse of the regime, experts said Monday.

North Korea is believed to be coping with an increased number of defections by government officials as of late with frequent fears of purging and punishment haunting North Korean officials under leader Kim Jong-un.

About 10 North Korean military and party officials have reportedly fled the communist country recently in their pursuit of asylum in South Korea or in a third country.

Those defectors reportedly included a mid-ranking North Korean party official who sought asylum in the South with his family early this year while he was managing slush funds in Hong Kong for leader Kim.

Another high-ranking military official also reportedly has been staying in a country outside of South and North Korea since fleeing the communist country.

The recent outflow may continue in the future as more officials terrified of Kim’s “reign of terror” are likely to renounce their allegiance to the communist country, experts noted.

“For the time being, North Korean officials are likely to continue to flee the communist country or seek asylum, which would weaken the regime of the North’s leader Kim Jong-un,” said Chang Yong-seok, a researcher at the Institute for Peace and Unification Studies at Seoul National University.

Kim Yong-hyun, a professor of North Korean studies at Dongguk University, also noted, “Desertion by these people may take place intermittently in the process of solidifying the Kim Jong-un regime and securing the regime’s stability.”

Since taking power in late 2011 after his father Kim Jong-il’s sudden death, the junior Kim has resorted to unusually brutal means to solidify his power base.

In late 2013, Jang Song-thaek, the husband of Kim’s aunt and once the country’s second most powerful official, was executed on charges of treason, along with many other officials with close ties with Jang.

Former defense chief Hyon Yong-chol was also purged in late April apparently due to his disloyalty to Kim.

Still, experts stressed that the terror-driven exodus may not immediately lead to a collapse of the Kim regime although it is likely to resort to military provocations outside the country in order to quell potential political instability inside.

“If Kim’s reign of terror prolongs, his governing style could bring about an instability in the communist country,” said Jung Sang-don, a research fellow at the Korea Institute for Defense Analyses (KIDA). “Then, there is a possibility that North Korea could make provocations in a bid to tide over its internal problems.”

Yang Moo-jin, a professor at the University of North Korean Studies, also dismissed the view that a series of defections by officials meant instability in Kim’s regime, saying that there have been no signs of abnormal activities among the North Korean military power or other citizens.

Here is coverage in the Korea Times.

Read the full story here:
Portion of female N. Korean defectors tops 80 pct this year: data


Kaesong Complex outlet opens in Seoul

Saturday, July 4th, 2015

According to the Joong Ang Ilbo:

Despite the fact that personal exchanges between North and South Koreans are rare, products made by North Korean laborers can easily be found here in the capital area.

Kaesong Joint Industrial Complex Cooperatives, which sells men’s clothing and textiles produced at industrial facilities in the North, opened a branch June 17 in Jongno District, central Seoul, with donations from 12 companies, at the inter-Korean venture park.

The joint industrial complex was established in 2004 in Kaesong, the most southern city in North Korea. Currently, 124 companies from South Korea run operations there, with 60 percent related to textiles.

The entrance to the new store is designed to appear like a rail road stop, with a sign to its right reading: “To the world, along the rail road.”

“It shows our dream to reach Europe by train with our products after unification,” said Lee Jong-deok, the store’s deputy chief director.

Products from the joint industrial complex can already be found in other stores in South Korea; however, the 12 companies reportedly decided to run their own shop in an attempt to dispel negative public opinions surrounding the industrial complex, the last remaining symbol of inter-Korean cooperation.

“We designed the inside of the store with light white colors to do away with this unfavorable image around Kaesong,” said Je Jeong-oh, the operations director.

According to Je, the industrial complex is the only place where both Koreas can truly cooperate with each other, and despite the wage issue, the employees from the South and North employees are hospitable toward one another.

The store sells products without retail margin, with prices much cheaper than market value. A coat made of 100 percent cashmere, for instance, can be purchased for 299,000 won ($267) in the store.

When the JoongAng Ilbo inquired about a similar product at a department store, an employee there answered that the asking price would be at least 700,000 won.

“The quality of the fabrics is good, and most of all, the needlework on the products is perfect,” said one shopper, Sin Mi-yeong, 61. “I’m surprised by how low the prices are here.”

Unification Minister Hong Yong-pyo visited the store on opening day and reportedly purchased some clothing.

“I see it as a place where visitors can physically experience a sense of unification,” he said at the time.

And even with its fledgling status, the store already has regulars. Choe Beom-jin, who runs a supermarket next to the shop, remarked that he would only buy his clothes there from now on.

Meanwhile, the store’s management board has ambitious plans for its line: Products labeled with the store’s name will be on display during Hong Kong Fashion Week, which will run from Monday to Thursday.

Seven more branches are also set to open nationwide by year’s end.

“It takes 90 minutes by car to reach Kaesong from Seoul,” Je said. “It’s just sad we can’t make the trip, even if we wanted to. I hope the store serves as a starting point to unification.”

Read the full story here:
Kaesong items prove a hit in Seoul
Joong Ang Ilbo
Chun Su-jin


South Korea allows fertilizer aid shipment

Sunday, April 26th, 2015

According to Reuters:

South Korea said on Monday it has approved a request by a private aid group to send fertilizer to North Korea, the first such move in nearly five years that signalled a slight relaxing of sanctions imposed after one of its navy ships was attacked.

South Korea’s Unification Ministry, which handles ties with the North, said it approved the shipment of 15 tonnes of fertilizer as part of a charity group’s project to build a greenhouse farm in the North.

The approval came despite a deadlock in dialogue between the two states and a ban on large-scale public or private aid to the impoverished North since May 2010, although some forms of help such as medicine have been allowed on humanitarian grounds.

South Korea imposed sanctions in May 2010 after a torpedo attack sank one of its navy ships killing 46 sailors, cutting off most political and commercial exchanges with the North. The North denies Seoul’s accusation that it was behind the attack.

Although the approval of fertiliser shipment was symbolic as the first of its kind in five years, a Unification Ministry official said it did not automatically mean the government was considering the resumption of large state-sponsored aid.

“Large-scale fertilizer support for North Korea should take inter-Korean situations and public consensus into account,” a Unification Ministry official said.

Gyeongam Foundation, a charity fund run by bed manufacturer Ace, has been operating the agricultural support program to build greenhouses for North Koreans and providing farming equipment.

During a period of warming ties beginning in 2000, South Korea supplied as much as 350,000 tonnes of fertilizer to the North annually, and up to 500,000 tonnes of rice as a goodwill gesture by the liberal leaders in Seoul in office at the time.

The election of a conservative leader in the South who took office in 2008 soured relations, with aid from the South falling sharply.

Food production in North Korea has improved in recent years largely due to favourable weather and minor changes to its farm policy, but it still relies on foreign aid to make up for the deficit in what is needed to feed its people.

North Korea, already heavily sanctioned by the United Nations for its missile and nuclear tests, is technically still at war with the South after the 1950-53 Korean War ended in a truce, not with a peace treaty.

After a delegation of high-level North Korean officials made a surprise visit in October last year to the closing ceremony of the Asian Games, South Korea has said it was willing to discuss the sanctions as a way to move forward in their ties.

North Korea has since refused to resume dialogue.

Read the full story here:
South Korea allows first fertilizer aid to the North since 2010 sanctions
Ju-min Park