Archive for the ‘South Korea’ Category

The August 5th UNSC sanctions on North Korea: new scope, but same old tools. Will this time be any different?

Sunday, August 6th, 2017

By Benjamin Katzeff Silberstein

On Saturday August 5th, the UN Security Council passed yet another resolution, 2371, following North Korea’s missile tests. Like resolution 2270 that was passed in March 2016, 2371 also takes aim at North Korea’s mineral exports. The new resolution also bans imports of seafood products from North Korea, and bans member states from hiring new North Korean laborers, but they do not need to fire ones already hired, so it is questionable whether this source of income will decrease and/or disappear, or merely stop increasing.

Unlike 2270 last year, it does not appear to contain a humanitarian exemption or any other loophole for mineral imports. In sum, the new resolution appears much more holistic than its predecessors in fully cutting off North Korea’s most central export revenues.

But while the content of the resolution is different, the tools remain the same. Its efficacy still hinges upon implementation by UN member states, and of course, above all, by China, and it is difficult to see why such implementation would be more likely this time. Both President Trump and the US ambassador to the UN, Nikki Haley, have made a big number of China’s and Russia’s vote in favor of the resolution. WSJ reports:

U.S. Ambassador Nikki Haley praised the councils solidarity, saying more days like this one were needed at the United Nations. She also personally thanked China for helping move the resolution from talk to action. The U.S., which had drafted and put forward the resolution, negotiated for more than a month with China over the text and final measures targeting Pyongyang.

This resolution is the single largest economic sanctions package ever leveled against the North Korean regime, said Ms. Haley, adding the council had put the country and its leadership on notice and what happens next is up to North Korea.

President Donald Trumpsaid on Twitter, The United Nations Security Council just voted 15-0 to sanction North Korea. China and Russia voted with us. Very big financial impact!

However,both China and Russia voted in favor of UNSC 2270 as well, and there are still abundantly clear signs that China did little to implement the ban on imports of North Korean minerals. Had UNSC 2270 been implemented in full, North Korea’s export revenues would already have been badly hit.

Meanwhile, South Korea’s Bank of Korea announced a few weeks ago its estimate that the North Korean economy grew by close to four percent last year. One should read those numbers with a very,veryhefty dose of skepticism, given the difficulty in estimating anything relating to the North Korean economy, but at the very least, we can safely conclude that the North Korean economy is not in dire straits. Its foreign trade increased by close to five percent last year, according to KOTRA. Though there have been several reports suggesting difficulties for companies involved in cross-border trade between China and North Korea over the past year, there are no indications that China has implemented the near-blanket-ban in minerals trade that the UNSC resolution from March last year mandates.

So why would this time be any different? My guess is that it won’t be. It is very difficult to imagine that China would have voted in favor of a resolution that would hit North Korea’s economy so badly if it would really have believed that such a resolution would be fully implemented. The basic political dynamics remain: China does not want North Korea to crumble, and China craves geopolitical stability above everything else.

As always, only time will tell. But those who applaud this resolution as a new and radical turn on the global stage in the North Korea issue may want to look back at historical precedent, and moderate their expectations.

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UN security council adopts sanctions banning imports of wide range of North Korean goods

Saturday, August 5th, 2017

Benjamin Katzeff Silberstein:

On Saturday August 5th, the United Nations Security Council approved a resolution banning member states from importing North Korean export goods such as minerals and seafood products, and from hiring North Korean laborers. Wall Street Journal:

U.S. Ambassador Nikki Haley praised the councils solidarity, saying more days like this one were needed at the United Nations. She also personally thanked China for helping move the resolution from talk to action. The U.S., which had drafted and put forward the resolution, negotiated for more than a month with China over the text and final measures targeting Pyongyang.

This resolution is the single largest economic sanctions package ever leveled against the North Korean regime, said Ms. Haley, adding the council had put the country and its leadership on notice and what happens next is up to North Korea.

President Donald Trumpsaid on Twitter, The United Nations Security Council just voted 15-0 to sanction North Korea. China and Russia voted with us. Very big financial impact!

Both China and Russia urged a return to talks with North Korea and told the Security Council that the U.S. must abandonits military exercises with South Koreaand dismantlethe missile-defense system in South Korea known as Thaadbecause North Korea perceived that as a threat and it undermined the security of the region.

We stress that additional restrictions cannot be an end to themselves, they need to be a tool to engage in dialogue, said Russias new ambassador to the U.N., Vassily Nebenzia.

The nine-page resolution steps up trade restrictions with Pyongyang by aiming to cut off a third of its $3 billion annual export revenue. It bans North Korea from trading coal, iron, lead, iron and lead ore, and seafood.

The resolution also prohibits countries from hiring North Korean laborers and bans countries from entering or investing into new joint ventures with Pyongyang.

Diplomats and sanctions experts have long warned that export revenues, even remittances from foreign workers, are cycled back to North Koreas military and nuclear programs.

A Security Council diplomat offered this estimate on North Koreas foreign revenue earnings in 2017: $295 million from seafood; $251 million from iron and iron ore, and $400 million from coal trade.

North Koreans work in China, Russia and the Arab countries in the Persian Gulf in a variety of businesses ranging from factories to restaurants and nightclubs and are estimated to send home several billion dollars in revenue, a large portion of which the government claims, according to U.N. sanctions experts.

The new resolution restricts North Koreas technology trade and tightens enforcement of sanctions on North Korean vessels by banning violators from entering ports around the world.

Under the resolution, North Koreas Foreign Trade Bank, which handles foreign exchange, will be added the U.N.s sanctions list that freezes the assets of targeted entities.

It remains to be seen whether the new sanctions will deter North Koreas pursuit of advanced ballistic missiles and nuclear weapons or bring its leader Kim Jong Un to the negotiating table.

North Koreas economy has managed to stay afloat largely because China, its main trade partner, and Russia and some African nations havent fully enforced existing U.N. sanctions. The U.S. Treasury in June sanctioned Chinese entitiesprimarily banks and shipping companiesand individuals for violating sanctions and conducting trade that contributed to North Koreas military and nuclear program.

Chinas Ambassador Liu Jieyi said his country denounced unilateral sanctions by the U.S. and said action against North Korea must be through the U.N. mechanism. Mr. Liu told the council he welcomed the U.S. position that it wasntseeking regime change in North Korea.

China has always been firmly opposed to chaos and conflict in the [Korean] peninsula, Mr. Liu said.

Although China and Russia have pushed for a resumption of the six-party talks with North Korea, disagreement remains on how to bring Washington and Pyongyang to the table. China and Russia have called for a freeze-for-freeze plan under which North Korea would halt any more military or nuclear action and the U.S. would end its military exercises with South Korea.

Full article here:
North Korea Hit by $1 Billion Sanctions After Missile
Farnaz Fassihi
Wall Street Journal
2017-08-5

 

The UN summary of the resolution reads as follows:

The Security Council today further strengthened its sanctions regime against the Democratic Peoples Republic of Korea, condemning in the strongest terms that countrys ballistic missile launches and reaffirming its decision that Pyongyang shall abandon all nuclear weapons and existing nuclear programmes in a complete, verifiable and irreversible manner.

Unanimously adopting resolution2371(2017) under Article41, ChapterVII of the United Nations Charter, the 15-nation Council decided that the Democratic Peoples Republic of Korea shall not supply, sell or transfer coal, iron, iron ore, seafood, lead and lead ore to other countries.

Expressing concern that Democratic Peoples Republic of Korea nationals working abroad were generating foreign export earnings to support the countrys nuclear and ballistic missile programmes, it also decided that all Member States shall not increase the total number of work authorizations for such persons in their jurisdictions, unless approved by the Security Council Committee established pursuant to resolution1718(2006).

Through the text, the Council decided that States shall prohibit the opening of new joint ventures or cooperative entities with the Democratic Peoples Republic of Korea entities and individuals, or expand existing joint ventures through additional investments. In addition, it decided that Pyongyang shall not deploy or use chemical weapons and urgently called for it to accede to the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and Their Destruction.

Also through the resolution, the Council named nine individuals and four entities to be subject to a travel ban and asset freeze already in place, as well as to request that the International Criminal Police Organization (INTERPOL) issue special notices with respect to designated individuals.

In addition, it reaffirmed that its provisions were not intended to have adverse humanitarian consequences for the civilian population of the Democratic Peoples Republic of Korea, and that the Security Council Committee established pursuant to resolution1718 (2006), on a case-by-case basis, exempt from sanctions those activities that would facilitate the work of international and non?governmental organizations engaged in assistance and relief activities for civilian benefit.

Furthermore, through the text, the Council called for the resumption of the Six-Party Talks between China, Democratic Peoples Republic of Korea, Japan, Republic of Korea, Russian Federation and the United States towards the goal of a verifiable and peaceful denuclearization of the Korean Peninsula.

Speaking after the resolutions adoption, the representative of the United States said the Council had put the Democratic Peoples Republic of Koreas dictator on notice by increasing the penalty of its ballistic missile activity to a whole new level. All Member States must do more to put more pressure on that country, she said, adding that the United States would take defensive measures to protect itself and its allies, including through joint military exercises.

Chinas representative said that, while todays resolution had imposed further sanctions, it did not intend to negatively impact such non-military goods as food and humanitarian aid. Calling on all parties to implement the resolutions provisions fully and earnestly, he recalled that China and the Russian Federation on 4July had put forward a road map to resolve the issue through two parallel tracks denuclearization and the establishment of a peace mechanism. Recalling that the United States had recently indicated that it was not pushing for regime change or for the Korean Peninsulas reunification, he said an escalation of military activities would be detrimental to all countries of the region.

Japans delegate said the sheer number and frequency of the Democratic Peoples Republic of Koreas nuclear and ballistic missile tests show how unprecedented and unacceptable these provocations are. Not only was the quantity outrageous, but the qualitative advancements were alarming. Noting that todays resolution would reduce the Democratic Peoples Republic of Koreas revenue by approximately $1billion, he said all Member States must demonstrate renewed commitment to implement the Councils decisions.

The Russian Federations representative, while calling on the Democratic Peoples Republic of Korea to end its banned programmes, said progress would be difficult so long as it perceived a direct threat to its security. Emphasizing that military misadventures risked creating a disaster, he said sanctions must be a tool for engaging Pyongyang in constructive talks rather than to seek the countrys economic asphyxiation.

The Republic of Koreas delegate said that Pyongyangs missile provocations on 4and 28July, together with its nuclear programme, posed a grave threat to international peace and security. Indeed, such reckless acts of defiance should be met with stronger measures, he said, adding that additional sanctions contained in resolution2371(2017) would significantly cut off the inflow of hard currency that would otherwise have been diverted to illicit weapons programmes.

Full article:
Security Council Toughens Sanctions Against Democratic Peoples Republic of Korea,Unanimously Adopting Resolution 2371 (2017)
United Nations Meetings Coverage
2017-08-05

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North Korea’s economy grew by almost 4 percent in 2017, says BOK

Friday, July 21st, 2017

Benjamin Katzeff Silberstein

Yonhap reports:

The estimated expansion of the gross domestic product (GDP) represents a sharp turnaround from 2015 when the economy of one of the world’s most isolated countries shrank 1.1 percent due mainly to a drought.

Last year’s growth is the highest since 1999 when North Korea’s economy expanded 6.1 percent, according to the Bank of Korea (BOK).

North Korea’s economy expanded 1.2 percent on average between 2012 and 2016, a sign that its economy is mired in low growth.

There are no indications that the North’s economy has suddenly improved since late 2011 when North Korean leader Kim Jong-un took power on the sudden death of his father and long-time leader Kim Jong-il, an official said.

“North Korea’s economic structure is very fragile and is not really set up for high growth,” the official spoke on the condition of anonymity.

The BOK estimated North Korea’s gross national income (GNI) stood at 36.4 trillion won (US$32.4 billion) in 2016. South Korea’s per-capita GNI stood at 31.98 million won, which is 22.1 times larger than the North’s 1.46 million won.

Related to last year’s growth, the central bank said North Korea’s mining industry grew 8.4 percent, the highest since 1999 when it expanded 14.2 percent.

North Korea’s trade volume came to $6.55 in 2016, up 4.6 percent from a year earlier, the BOK said. The increase came despite tightened U.N. sanctions imposed on North Korea over its repeated nuclear tests and its long-range rocket launches.

The sanctions call for, among other things, a ban on the country’s exports of coal and other mineral resources to cut off North Korea’s access to hard currency.

Still, the provision will not apply if transactions are determined to be exclusively for livelihood purposes and unrelated to generating revenue for North Korea’s nuclear or ballistic missile programs or other activities prohibited by previous U.N. resolutions.

China accounts for nearly 90 percent of North Korea’s foreign trade, and mineral resources are a key part of their bilateral trade.

Full article:

N. Korea’s economy grew 3.9 pct in 2016: BOK

Yonhap News

2017-07-21

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North Korea Sells South Korean Cookware Seized at Kaesong

Monday, February 6th, 2017

Benjamin Katzeff Silberstein

Reports Radio Free Asia:

South Korean cookware seized illegally by North Korean authorities after the Kaesong joint industrial park was closed last year are being found for sale in large quantities in Chinese cities near the North Korean border, sources say.

Formerly viewed as a symbol of cooperation between the two halves of the divided Korean peninsula, Kaesong was closed in February 2016 after North Korea ordered all South Koreans out of the complex, seized South Korean assets there, and declared the area under military control.

The move came a day after South Korea announced it was pulling out of Kaesong in retaliation for North Korean nuclear and long-range missile tests earlier in the year.

Now, electric rice cookers produced by South Korean firms in Kaesong are turning up for sale across northeastern China, a source in Kaifeng, in central China’s Henan province, told RFA’s Korean Service.

“North Korea began to sell South Korean products left behind in Kaesong starting in mid-December,” said the source, familiar with trade in the northeast and speaking on condition of anonymity.

“Their exact number is unclear, but it’s known to be in the hundreds.”

Electric cookers bearing the Kaesong markings “Made in Korea” are among the most popular items offered for sale in Korean stores located in cities in China’s northeast, sources said.

“Those buying the cookers are mainly South Korean businessmen.  Then resell them to Korean merchandise stores located in Shenyang, Yanji, and other places,” RFA’s source in Kaifeng said.

‘A complicated problem’

Speaking separately, the operator of a shop in China near the border with North Korea told RFA that he was approached in early December by four North Koreans he had never seen before.

“They asked if I would be interested in buying electric cookers made in Kaesong for a low price,” the source said, also speaking on condition he not be named.

“They said there were about 6,000 of these that they could sell.”

“At first, I thought that I could make a lot of profit by selling them, but then I refused the offer because I thought this could become a complicated problem for me later on,” he said.

While the same rice cookers are also made in Qingdao, in China, and labeled “Made in China,” those made in Kaesong are more popular with consumers because of their “Made in Korea” markings, he added.

 

Full article:
North Korea Sells South Korean Cookware Seized at Kaesong
Reported by Joonho Kim for RFA’s Korean Service. Translated by Soo Min Jo. Written in English by Richard Finney.
2017-02-06

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DPRK builds replica Blue House (UPDATE: And destroys it)

Sunday, December 11th, 2016

UPDATE 2 (2016-12-12): Kim Jong-un visited the nearby training grounds of “Special Operation Battalion of KPA Unit 525,” the unit that carried out the assault on the replica Blue House, on November 4 of this year. Here is the model of the actual Blue House at the training grounds:

Although Kim Jong-un visited this location in early November, these images were apparently not published until after the combat drill was officially announced on December 11. No doubt they would have given away the secret if they had been.

The model has a few discrepancies when compared with satellite imagery, but is a fairly accurate representation of the actual Blue House and its surroundings.

One soldier was also looking at this satellite image on a computer:

The caption reads (roughly): “View of US-ROK Combined Forces Command basic command post. [UPDATE] In the comments section, James Pearson at Reuters has identified this as the Yongsan Garrison ( 37.536828°, 126.983589°) in Seoul:

UPDATE 1 (2016-12-11): The North Koreans finally got around to destroying the Blue House replica. According to Rodong Sinmun (2016-12-11), Kim Jong-un watched a combat drill of Special Operation Battalion of KPA Unit 525 on the outskirts of Pyongyang:

 

 

 

Kim Jong-un appeared happy with the test:

Here is the Google Earth image of the replica:

Here is the video.

So why stage this combat drill now? Inter-Korean politics? UN Security Council meeting on NK human rights?

ORIGINAL POST (2016-4-27):

Blue-house-replica-ROK

The-real-blue-house

Pictured above: (Top) South Korean military image of the replica blue house built in North Korea (Bottom) A Google Earth satellite image of the Blue House in Seoul.

The South Korean military is reporting that the North Koreans have built a replica of the Blue House in “Dewonri/Daiwonri”. According to the Japan Times:

North Korea is preparing to blow apart a replica of South Korea’s presidential Blue House on an artillery range outside Pyongyang, in an apparent propaganda exercise, the South’s military said Wednesday.

An official with the Joint Chiefs of Staff in Seoul said the North’s military had been detected building the half-sized replica at the Daiwonri range near the capital earlier this month.

“The North is apparently preparing to showcase a mock attack on the Blue House using the replica as a target,” the official said.

Around 30 artillery pieces, hidden under coverings, have been brought to the range.

“The exercise is believed to be aimed at stirring up hostility against the South, summoning up loyalty (to leader Kim Jong Un) and fueling security concerns in the South,” the official said.

I refer to this area as the “Taewon-ri (대원리) Artillery Range”, and I have previously written about it at NK News here. The Americans call the location “Sungho Dong Military Training Area”.

The South Korean military also released a second photo:

area-near-Taewon-ri

 

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Bank of Korea estimate of North Korean economy in 2015 published

Friday, July 22nd, 2016

UPDATE 1 (2016-12-15): Yonhap reports on some statistics released by Statistics Korea. They largely mirror Bank of Korea data, so I have put the report here:

North Korea’s per capita income was unchanged at 1.39 million won (US$1,179.10) last year, about one twenty-secondth of South Korea’s, government data showed Thursday.

According to data by Statistics Korea, North Korea’s nominal gross national income (GNI) came to 34.5 trillion won in 2015, with its moribund economy contracting 1.1 percent last year.

In comparison, South Korea’s GNI stood at 1,565.8 trillion won last year, roughly 45 times larger than North Korea’s.

North Korea’s population stood at 24.47 million last year, while South Korea had a population of 51.01 million, the data showed.

Mobile phone subscriptions in North Korea were 12.88 per 100 people, while those in South Korea were 118.46 per 100 people, according to the data.

South Korea’s total trade volume was valued at $963.3 billion last year, compared with North Korea’s $6.3 billion.

South Korea’s overall energy output capacity reached 97.64 million kilowatts, 13 times larger than the North’s 7.42 million kilowatts.

In 2015, Seoul’s total rice production reached 4.32 million tons versus 2.01 million tons for Pyongyang.

The two Koreas also showed significant gaps in social infrastructure.

South Korea’s road network totaled 107,527 kilometers compared with the North’s 26,183 kilometers.

The statistics office has been publishing general information on the North since 1995 as a way of providing insight into the economic and social conditions of the reclusive country.

ORIGINAL POST (2016-7-22): I have added the report to my DPRK Economic Statistics Page. You can download the PDF here.

The Bank of Korea claims the DPRK economy shrank in 2015 by 1.1%

This number has numerous drawbacks which I have discussed before.

According to the Yonhap:

North Korea’s economy is estimated to have contracted 1.1 percent last year amid negative growth in most industries, South Korea’s central bank announced Friday.

The Bank of Korea (BOK) has issued an annual report on the estimated gross domestic product (GDP) of one of the world’s most secretive nations.

It said the communist country’s GDP shrank 1.1 percent in 2015 from a year earlier, the first negative growth since 2010.

The bank cited a drop in crop and mining output by 0.8 percent and 2.6 percent, respectively.

The manufacturing sector suffered a 3.4 percent decline. The electricity, gas and tap water business also tumbled 12.7 percent due to a fall in hydroelectric power production attributable to a drought, according to the BOK.

But the construction field posted a 4.8 percent rise, and the service sector grew 0.8 percent.

The North’s mining and manufacturing industries accounted for 32.7 percent of its GDP, down 1.7 percentage points from 2014.

The BOK put the North’s gross national income (GNI) at 34.5 trillion won ($30.3 billion), 45 times less than that of South Korea. The North has around 25 million residents, half of the South’s population.

The data also showed that the North’s trade volume totaled $6.25 billion, down 17.9 percent on-year.

Exports slipped 14.8 percent to $2.7 billion, and imports shed 20 percent to $3.56 billion.

The North is under heavy U.N.-led economic sanctions for its nuclear and missile activities.

Since no accurate economic data from North Korea are available, the BOK said the statistics are based on estimates using methodologies applied to gauge South Korea’s own economy. Thus, it’s not desirable to directly compare the data with those of other foreign nations, added the bank.

Here is coverage in the Wall Street Journal:

North Korea’s economy likely shrank last year for the first time in five years, South Korea’s central bank said, potentially increasing the ruling challenge for leader Kim Jong Un, who has promised to boost prosperity while confronting the U.S. and other nations with nuclear weapons.

The Bank of Korea said Friday that it estimated North Korean gross domestic product fell 1.1% in 2015, the first decline since 2010 and the largest fall since a 1.2% contraction in 2007.

North Korea doesn’t release official statistics or allow outsiders to make assessments of its economy from within the country. As a result, the BOK’s estimate of North Korean GDP is often cited as the best guess. It bases its calculations on information from Seoul’s spy agency and other authorities that study North Korea.

The biggest recent economic setback for North Korea has come from a sharp fall in the price of coal, its main export product, and a slowdown in China, its sole major trading partner. The South Korean central bank said the North’s external trade was valued at $6.25 billion in 2015—down 18% from a year earlier.

New international sanctions on North Korea following its nuclear bomb test in January this year and long-range rocket launch in February may increase the economic pressure on Pyongyang. For the first time, United Nations sanctions target North Korea’s commodities trade, while the U.S. has sought to cut off Pyongyang’s links to the international financial system.

North Korea insists it will continue to pursue twin policy priorities of nuclear weapons development for its defense while seeking to boost its economy. In his first speech in 2012, Mr. Kim said North Koreans should “not have to tighten their belts again” and has regularly visited economic projects such as factories and farms.

However, output in nearly all North Korean industries contracted last year, including agriculture, fishing, mining and energy, the South Korean central bank said in its report.

Construction was a rare bright spot, growing an estimated 5%, as Mr. Kim has pursued the redevelopment of areas of central Pyongyang, including major new housing projects. The Bank of Korea also estimated a 0.8% increase in service-sector output, reflecting the emergence of unofficial market trading and underground financial services.

The North’s per capita income was around $1,224 in 2015, the bank said, compared with South Korea’s $27,200.

Here is coverage in Reuters:

North Korea’s economy contracted in 2015 at the sharpest pace in eight years, an estimate from the Bank of Korea showed on Friday, as low global commodity prices landed a blow to exports, a key driver for the impoverished country’s economy.

The gross domestic product in North Korea last year fell a real 1.1 percent, South Korea’s central bank said, which was the first fall since 2010 and compares with a 1.0 percent gain in 2014. It also marked the fastest decline since a 1.2 percent drop in 2007.

Isolated North Korea does not publish economic data.

All sectors except construction and services declined, a likely burden for North Korean leader Kim Jong Un already under pressure from international sanctions against multiple provocations including a nuclear test in January.

“The key reason for the GDP contraction looks to be trade as global commodity prices fell while China demand also declined,” said a Bank of Korea official, who declined to be named as he was unauthorized to speak to media.

“North Korea’s main commodity exports are coal and iron ore, which likely all declined last year.”

Neighboring China is North Korea’s chief trading partner.

The Bank of Korea data showed exports in North Korea fell 14.8 percent last year in annual terms as mineral product shipments slumped 14.7 percent. This was far worse than a 1.7 percent decline seen in 2014.

Imports dropped a faster 20.0 percent last year, compared with a 7.8 percent increase in 2014.

The central bank official said trade is expected to worsen this year as it becomes difficult for North Korea to boost shipments with other countries with international sanctions likely to grow heavier following Pyongyang’s continued missile launches and nuclear threats.

Construction rose 4.8 percent last year, accelerating from a 1.4 percent gain in 2014, the same data showed.

Meanwhile, a 0.8 percent gain in services last year reflects North Korea’s economic shift towards capitalism as the black market there has become more pervasive. Financial services have also grown, which likely contributed to the gain, the BOK official added.

The Bank of Korea has released GDP data on North Korea every year since 1991 based on information received from related sources, including the Ministry of Unification.

Here are comments from The Institute for Far Eastern Studies (IFES):

North Korean GDP Dropped Estimated 1.1% in 2015

The Bank of Korea (BOK), South Korea’s central bank, released data on July 22, 2016 indicating that the North Korean economy shrunk by 1.1% in 2015. If this estimate is correct, this would mean that the North Korean economy contracted for the first time since Kim Jong Un came to power in 2012. At the same time, these estimates also indicate that the gap in per capita GDP between North and South Korea widened from 21.3 times in 2014 to 22.2 times in 2015.

The last time North Korea’s annual growth rate was below zero in BOK statistics was five years ago. Back in 2009, it was estimated to be -0.9%, edging up to -0.5% in 2010. However, the last four years have been a time of continued expansion according to the BOK with North Korea’s economy estimated to have grown 0.8% in 2011, 1.3% in 2012, 1.1% in 2013 and 1.0% in 2014. The estimated growth rate for 2015 was the lowest since the -1.2% of 2007.

The BOK’s data indicates that while growth sped up in North Korea’s construction sector in 2015, the performance of the agriculture, fisheries, mining, manufacturing, and public service (electricity, gas and water) sectors was poor.

In the mining sector, declining magnesite and iron ore production resulted in a 2.6% loss of output, while in manufacturing, both light and heavy industrial saw production decline and consequently the sector contracted by an estimated 3.4%.

Output in the public service sector fell by a dramatic 12.7%. The BOK highlighted a drought in 2015 as being a key contributory factor in this regard: reducing hydroelectricity output, as well as exerting a negative influence on steel and machine tool production. At the same time, gains in agricultural and fisheries sector, which had been estimated to be 1.2% in 2014, was partially reversed in 2015, with the sector believed to have contracted by -0.8%. Although output in the livestock and fisheries sector expanded rapidly, this was offset by declines in cereals production including rice and corn due to drought.

Conversely, the construction sector expanded by 4.8% as both output in building and public works-related construction rose. The service sector, principally public services, the wholesale and retail service sector, and communications, grew by an estimated 0.8%.

North Korea’s nominal Gross National Income (GNI) was estimated to be 34.5 trillion South Korean won (KRW), i.e. 2.2% of South Korea’s nominal GNI. Per capita GNI rose to 1.393 million KRW, an increase on the 2014 figure of 1.388 million, but still only 4.5% of South Korea’s per capita GNI.

The gap between North and South Korean per capita GNI rose from 21.3 times in 2014 to 22.2 times 2015. At the same time, combined North Korean commodity imports and exports declined by 17.9% to $6.25 billion (excluding North-South trade) compared to the previous year ($7.61 billion).

The year 2015 saw a decline in the price of minerals, including iron ore, internationally. Reduced demand for North Korean anthracite in China had an impact, with North Korean exports declining to $2.7 billion, a 14.8% decline year-on-year. Textile exports increased by 5.3%, but mineral product exports fell by 14.7%. Income (totaling $3.56 billion), chiefly from mineral products and textiles, thus shrunk by a dramatic 20%.

The difference in the scale of North Korean and South Korean trade volumes rose to 154.1 times in 2015 (an increase from 144.3 times in 2014). At the same time, according to South Korean Ministry of Unification statistics, inter-Korean trade rose by 15.7% year-on-year to $2.71 billion.

Here are comments by Marcus Noland.

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Not surprising: Inter-Korean trade to fall in 2016

Friday, May 13th, 2016

According to the Choson Ilbo:

Trade with North Korea is expected to be practically zero this year now the joint Kaesong Industrial Complex has been shut down.

According to a 2016 White Paper published by the Unification Ministry on Thursday, last year’s cross-border trade volume was a record US$2.7 billion, up 15.9 percent from 2014, thanks to an increase in trade through the industrial park.

But that accounted for 99.6 percent of all cross-border trade since other trade had already been suspended under earlier sanctions in the wake of the sinking of the Navy corvette Cheonan in 2010.

Now the industrial park has been closed there is no trade left, the ministry said.

Since the North’s latest nuclear test in January, Seoul has also halted humanitarian aid to the North. Last year, Seoul gave Pyongyang humanitarian aid worth W25.4 billion, up 30 percent from 2014 (US$1=W1,167).

Read the full story here:
Trade with N.Korea Falls to Near-Zero
Choson Ilbo
Kim Myong-song
2016-5-13

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Kim Jong-un’s mother’s grave (Ko Yong-hui)

Friday, April 8th, 2016

I reported this in Radio Free Asia last week….

It has never been announced in the North Korean media, but Kim Jong-un has “quietly” built a grave for his mother, Ko Yong-hui, on Mt. Taesong.

Ko-grave-2016-4-8

Pictured above (Google Earth): The grave of Kim Jong-un’s mother, Ko Yong-hui.

The site where the grave was built was cleared of a few small buildings by May 2012 (Kim Jong-il died in December 2011).  Construction appears to have been completed by October 2012.

Although the grave is on Mt. Taesong, it does not appear to be a revolutionary site. It is not featured on a nearby map of revolutionary sites on Mt. Taesong, and North Koreans are not being brought to it by the bus load (very little traffic in fact). Kim jong-un may have visited the grave unofficially, but never as a public ritual. The only foreigner I have spoken to who has visited the site saw only one guard on duty. So maybe someday years from now it is intended to be a revolutionary site, but not for now.

Back in 2010, Michael Madden posted this picture of Ms. Ko’s birthplace in Osaka, Japan. I was able to locate it on Google Earth at these coordinates:  34.663147°, 135.531080°

Ko-birthplace

Ko’s father (Kim Jong-un’s maternal grandfather) was buried on Jeju-do in South Korea, but the family had his grave moved to an undisclosed location to prevent it from attracting crowds. It is highly unlikely that Kim Jong-un will ever visit this grave.

UPDATE: A reader sent in this very helpful information:

Ko’s father is not buried on Jeju-Do! This grave is a so-called “가묘”, an “empty or fake grave”. The reason for erecting a “가묘” was to be able to perform the (in Korean culture) important ancestor rites, since they are actually without any remains of the deceased since their whereabouts are mostly unknown. Especially after the Korean War, many “가묘” were erected in Korea, because many family members just disappeared …

Here is more information about the “fake” tomb of Kim Jong Un’s grandfather in Jeju-Do: http://m.blog.daum.net/_blog/_m/articleView.do?blogid=0Li0k&articleno=7763730

Under the photo it is written “가묘” (for the empty/fake tomb)

On the tombstone you may read the following sentence:  “사정에따라 허총을 만들다” (because of circumstances an empty/fake tomb was made)

Here they use 허총, this word has the same meaning as 가묘.

Further the following is written on the tombstone:

“His name was 고경택 (Ko Kyong-thaek)

He was born in 1913, in 1929  he moved to Japan and he died in 1999.

The last two lines mention the name of his father (Ko Yong-ok) and his six sons: Ko Yong Hun, Bong Hun, In Hun, Kwang Hun, Chol Hun and Sang Hun.

His daughters (among them obviously Ko Yong Hui) are not mentioned.

Those 가묘/허총 (fake tombs) can also be seen in North Korea!

The Korean wiki-page about the Patriotic Martyrers Cemetery in Pyongyang includes the following information:

“대한민국에서 사망한 김삼룡, 김달삼, 최일천, 조봉암, 김종태, 최영도, 최백근, 이현상 등은 가묘 형태로 묘소가 마련되어 있다.”

 Roughly: (all the mentioned martyrs) died in South Korea, that is why a 가묘 had to be set up …
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2016 closure of the Kaesong Industrial Complex

Friday, February 12th, 2016

UPDATE 7 (2016-5-12): Yonhap offers some postmortem statistics on the Kaesong  Industrial Complex:

The total value of products churned out from the Kaesong Industrial Complex in North Korea reached US$3.23 billion in the 11 years of its operations before it was shut down earlier this year, a report by South Korea’s unification ministry said Thursday.

The joint factory park that began production in 2005 as part of a deal reached between the leaders of the two countries in June 2000, had been the last remaining economic link between the two countries. On Feb. 10, Seoul announced the closure of the joint venture as punishment for North Korea’s defiant nuclear test in January and a long-range rocket launch in February.

The ministry’s white paper said in 2015, the annual production volume reached its peak at $563.3 million. Last year also marked the first time yearly production numbers exceeded the $500 million threshold, data showed.

In the first year of operations in 2005, the corresponding number stood at $14.9 million before it grew steadily to $323.3 million in 2010 and $469.5 million in 2012, according to the findings.

A four-month suspension of operations, amid escalating inter-Korean tensions, caused annual production to drop to $223.8 million in 2013 before numbers rebounded to $470 million the following year.

As of the end of 2015, a total of 54,988 North Koreans were employed at the factory park designed to combine South Korea’s capital and the North’s cheap labor force. The numbers marked a growth of more than 1,000 workers from a year earlier.

Spurred by last year’s biggest-ever production at the factory, trade volume between the South and the North reached $2.71 billion, the highest figure recorded to date, the white paper also showed.

The brisk performance helped push up the number of travelers between the countries in 2015, with the figure rising to an eight-year high of 132,101.

The unification ministry’s report then said South Korea’s humanitarian assistance to the North soared to a six-year high of 25.4 billion won (US$21.8 million) in 2015.

In the same year, the number of North Koreans defecting to the South reached 1,276 last year, the smallest tally since 2001 when the figure stood at 1,043, according to the ministry.

The annual addition of North Korean defectors took the total population of North Korean defectors in South Korea up to 28,795 as of the end of last year, with about 70 percent of them being women.

“Based on the principle of maintaining solid security, the government has strived to normalize South-North relations and bring about peace on the Korean Peninsula,” the ministry said in assessment of its performance in 2015.

“The government is keeping the Kaesong factory park venture closed and taking stringent sanctions in collaboration with the international community,” the ministry said, denouncing North Korea’s defiant nuclear test in January that was followed by numerous military threats.

UPDATE 6 (2016-2-24): Korean firms claim huge losses from factory shutdown. According to Yonhap:

South Korean firms based in a jointly run industrial park in a North Korean border city have suffered more than 815 billion won (US$660 million) in losses from its shutdown, their association claimed Wednesday.

Earlier this month, North Korea expelled South Korean workers from the Kaesong Industrial Complex and froze the assets of companies operating there, a day after the South suspended operations in retaliation for Pyongyang’s rocket launch.

The shutdown of the industrial park, regarded as the top achievement of inter-Korean reconciliation and cooperation efforts, is feared to deal a heavy blow to the South Korean firms involved.

A total of 124 South Korean companies have been operating in the zone, some 50 kilometers northwest of Seoul, employing more than 54,000 North Korean workers to produce labor-intensive goods, such as clothes and utensils.

The estimated financial damage breaks down to some 569 billion won in investment and facilities, and some 245 billion won in inventory.

The association said any potential losses stemming from compensation to their customers and the stoppage of their operations was not included in the tally.

According to the association, 49 companies largely rely on their factories in the industrial park for their production. “Actual damage should be counted more accurately, and will be revealed later,” it said.

South Korean companies at the inter-Korean industrial park have been urging their government to roll out full support measures as their losses from the park’s shutdown are unimaginable.

When the industrial park was closed in 2013 for 160 days, South Korean firms reported a combined loss of 1.05 trillion won.

The companies, however, claim the actual damage will be greater considering the loss of business partners and credibility.

“We strongly demand that the government fully compensate our losses in investment and other assets as insurance coverage is very limited,” it said.

In order to minimize South Korean firms’ possible losses, the country’s financial regulator earlier said it would provide financial aid to the firms operating there.

The complex, which opened in 2004, had served as a major revenue source for the cash-strapped North, while South Korea had benefited from cheap but skilled North Korean labor.

The complex had been recognized as an exception to Seoul’s sanctions against Pyongyang designed to punish it for the sinking of a South Korean warship in 2010.

UPDATE 5 (2016-2-12): Seoul cuts off power supplies to factory park in North Korea (AP)

South Korea has cut off power and water supplies to a factory park in North Korea, officials said Friday, a day after the North deported all South Korean workers there and ordered a military takeover of the complex that had been the last major symbol of cooperation between the rivals.

UPDATE 4 (2016-2-11): NK Leadership Watch posts CPRK statement.

UPDATE 3 (2016-2-11): North Korea freezes Gaeseong assets, expels South Korean workers (Korea Herald)

At about 10 p.m., the South Korean government confirmed that all of the 280 South Korean workers who had been at the facility returned home safely.

“The frozen equipment, materials and products will be managed by the committee of Gaeseong people,” Pyongyang’s statement said prior to the workers’ return to South Korea.

“From 10 p.m. (10:30 p.m., South Korean time) on Feb. 11, (the North) will seal off the industrial park and nearby military demarcation line, shut the western overland route and declare the park as a military off-limit zone.”

The South Korean firms operating in the complex sent one truck each to Gaeseong to bring to the South their finished products, production materials, equipment and other belongings, while Seoul authorities vowed to try their utmost to minimize possible damages to firms.

An additional 130 South Koreans entered the complex to prepare for the suspension of factory operations. There were 70 more South Koreans in the park from the previous day as more workers were sent to carry out the government’s withdrawal instructions.

Apparently in line with Pyongyang’s instructions, North Korean workers did not show up at the park, Seoul officials said. Some 55,000 North Korean workers worked at the complex through which Pyongyang raked in around $100 million annually.

UPDATE 2 (2016-2-11): North Korea to Freeze South’s Assets at Kaesong Industrial Park (New York Times)

North Korea said on Thursday that it would freeze all South Korean assets at a joint industrial complex the South shut down to retaliate for a recent nuclear test and a rocket launch by the North.

It also ordered all 248 South Korean managers in the factory park in the North Korean town of Kaesong expelled by 5 p.m. on Thursday, allowing them to return home with only their personal belongings. The North said it would sever all communication across the border after the last of the South Koreans left.

In addition, it said it was shutting down the only cross-border highway open between the two Koreas. The road has linked South Korea with the factory park since 2004, when it began operations just over the western inter-Korean border. The zone will return to the control of the North Korean military, it said.


South Korea’s action was “a declaration of an end to the last lifeline of the North-South relations” and “driving the situation in the Korean Peninsula to the brink of a war,” said a statement from the Committee for the Peaceful Reunification of Korea, a North Korean government agency in charge of relations with the South.

“The South Korean puppet group will experience what disastrous and painful consequences will be entailed by its action,” it said, calling the South Korean president, Park Geun-hye, “a traitor for all ages.”

The corridor linking Kaesong and Seoul, the South Korean capital, was the main invasion route for North Korean troops during the 1950-53 Korean War and was at one time the most heavily guarded section of the 155-mile border.

After a historic inter-Korean summit meeting in 2000 in which the two sides agreed to promote reconciliation, the hard-line North Korean People’s Army grudgingly stepped aside as South Korean engineers removed barbed-wire fences, tank traps and minefields to build the highway across the border.

The Kaesong complex began as a pilot project to combine South Korean manufacturing skills with cheap North Korean labor. Eventually, more than 45,000 North Koreans worked for 123 South Korean-owned factories there. The plants produced more than $515 million worth of textiles, electronic parts and other labor-intensive goods last year, according to the South Korean government.

UPDATE 1 (2016-2-10):  South Korea Takes a Stand, Closes Kaesong Industrial Complex (RFA)

Until Wednesday, Kaesong was one of the few instances where the two countries cooperate.

Established in 2004, the industrial park is the last remnant of former South Korean President Kim Dae-Jung’s Sunshine Policy, which also led to a historic summit with then-North Korean leader Kim Jong Il in 2000.

While Kim was awarded the Nobel Peace Prize for implementing the Sunshine Policy, his legacy was dismantled in 2010 when South Korea’s Unification Ministry declared the policy a failure.

Closing Kaesong now snuffs out what remains of North-South cooperation and closes a window through which some North Koreans could get a taste of life in the south, Lankov said.

“I have supported the continued operation of the Kaesong complex because of the enormous effects of South Korean Choco Pie cookies on the North Korean workers, which the North Korean regime banned distribution of some time ago,” Lankov said.

“The Kaesong Industrial Complex has served as sort of a window through which its North Korean workers can get a glimpse of life in South Korea,” he added.

Labeled a special administrative industrial region of North Korea, Kaesong operated as a collaborative economic development zone that hosts South Korean companies attracted by its access to cheap labor. Kaesong is only six miles inside North Korea, with direct rail and highway access to the south.

The industrial park has been controversial in South Korea, as some conservative South Koreans argue that it extends a lifeline to the North Korean leadership, undermining United Nations sanctions.

Kaesong has been closed before.

In 2013, North Korea pulled its 53,000 workers from the plant in a show of strength during an earlier time of rising tensions between the two nations. At the time, North Korea said it “gets few economic benefits from the zone while the South side largely benefits from it.”

While the earlier closure did not last, the closure announced Wednesday looks set to become permanent.

ORIGINAL POST: Here is a statement from the Ministry of Unification:

Government Statement regarding the Complete Shutdown of the Gaeseong Industrial Complex

North Korea has pushed ahead with the extremely provocative act of launching a long-range missile on the heels of its 4th nuclear test, showing disregard for the repeated warnings of the international community and the suffering of its people.

North Korea’s provocations are a direct challenge to peace and stability on the Korean Peninsula and in the international community and its actions are absolutely unacceptable. Notwithstanding international efforts to deter North Korea from developing its nuclear capabilities and long-range missiles,

North Korea has declared that it would follow up on its recent provocations with additional nuclear tests and missile launches, thereby not even showing the slightest intent to forgo the development of its nuclear and missile capabilities.

The status quo is not static, as North Korea’s nuclear capabilities will be upgraded, all but leading to a catastrophic disaster. If left unattended, North Korea’s nuclear and missile development will lead to a fundamental imbalance in and threat to the security landscape of Northeast Asia, not to mention the Korean Peninsula, and the countries of this region will be left with no choice but to take measures to ensure their own survival and shore up their security, and there are concerns that this could eventually even lead to a nuclear domino effect.

Under these grave circumstances, it is clear that the existing approach will not work in discomfiting North Korea’s nuclear and missile development plans. Accordingly, what is in order is a vigorous response together with the international community that, for sure, exacts a price for North Korea’s misguided actions, as well as extraordinary measures that compel North Korea to give up its nuclear capabilities and change its ways.

At a time when the international community is seeking sanctions in the wake of North Korea’s violation of UN Security Council resolutions with its nuclear test and long-range missile launch, there is a need for Korea, as a key party, to show leadership in taking part in these moves.

Over the years, our Government has been working to continue maintaining the Gaeseong Industrial Complex despite North Korea’s repeated provocations and under extreme state of affairs, all with a view to assisting the lives of the North Korean people, providing impetus to lifting up the North Korean economy, and achieving the shared progress for both South and North Korea. We have also made every effort to move the Gaeseong Industrial Complex forward under the position that it should be developed in conformity with international norms.

However, such assistance and the efforts of our Government have ultimately been wrongly harnessed in the service of upgrading North Korea’s nuclear weapons and long-range missiles.

To date, the total amount of cash that flowed into North Korea through the Gaeseong Industrial Complex is 616 billion won (560 million dollars), with 132 billion won (120 million dollars) in cash having flowed into North Korea last year alone, and the Government and the private sector have invested a total of 1.019 trillion won. It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles.

This tramples on the efforts of the Korean Government and the 124 businesses that have set up shop in the Gaeseong Industrial Complex, and puts at risk the lives and safety of the Korean people.

Today, in order to stop funds of the Gaeoseong Industrial Complex from being used to support the development of North Korea’s nuclear and missile capabilities, and to prevent our businesses from suffering, the Government has decided to completely shut down the Gaeseong Industrial Complex.

We have notified the North Korean authorities of this decision and called on them to extend such cooperation as is rendered necessary by the complete shutdown of the Gaeseong Industrial Complex, including the safe return of our citizens.

The Government will move expeditiously forward with all steps to ensure the safe return of our citizens, and will set up a Government Task Force under the Office for Government Policy Coordination to provide the necessary whole-of-government assistance to our businesses.

We ask for the full understanding of our people that the Government’s complete shutdown of the Gaeseong Industrial Complex is an unavoidable decision, which takes into account the seriousness of the situation on the Korean Peninsula, and we call upon the people to stand with us as we seek to overcome such challenges.

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Inter-Korean trade at all time high in 2015

Thursday, January 21st, 2016

According to Yonhap:

Trade volume between South and North Korea reached an all-time high in 2015 despite strained inter-Korean ties over the North’s pursuit of nuclear weapons, a trade association here said Thursday.

Trade between the two Koreas came to US$2.71 billion last year, up 15.8 percent from a year earlier, according to the data provided by the Korea International Trade Association. The figure was the largest ever on record.

South Korea’s shipments to the North grew 11 percent on-year to $1.26 billion, while its imports from the communist country expanded 20.3 percent to $1.45 billion, the data showed.

Inter-Korean trade surpassed the $1 billion mark in 2005, when the industrial park built in the border city of Kaesong went into operation in full swing. The amount neared $2 billion in 2012.

The trade, however, has been swayed by the ups and downs in relations between the two countries, which technically remain at war after the 1950-53 war ended in a truce.

Recently, the North claimed that it has successfully conducted a hydrogen bomb test, rocking relations with the South.

Read the full story here:
Inter-Korean trade hits record high in 2015 despite shaky ties
Yonhap
2016-1-21

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