North Korean Economy Watch

UPDATE 32 (2012-1-27): According to an article in the New York Times, inter-Korean trade and aid declined in 2011:

On Friday, the South’s Unification Ministry said that South Korean aid to the North fell to 19.6 billion won, or $17.5 million, last year [2011], down more than 51 percent from a year earlier [2010].

Inter-Korean trade fell by more than 10 percent [from 2010 to 2011] to about $1.5 million in 2011, the ministry said.

UPDATE 31 (2011-12-10): According to the Korea Times, the potential food aid is not being auctioned off.  It is being sent to South America. According to the article:

Seoul will send baby food originally offered as aid to North Korea to El Salvador following Pyongyang’s refusal to accept delivery, to help the South American country deal with damaging floods, officials said Friday.

The delivery consists of 190,000 packs of baby food that were part of a $4.4 million flood aid package to the North, which the Stalinist regime rejected two months ago amid high tension.

It was slated to depart from the port city of Busan via cargo ship for El Salvador, which has appealed for help to deal with floods that displaced tens of thousands earlier this year.

Seoul offered the aid, which also included biscuits and instant noodles, to help the North deal with torrential summer rains. But Pyongyang demanded cement and equipment instead and eventually shunned the offer altogether.

The rerouting of the items underscores lingering tension despite efforts to warm ties and eventually resume regional dialogue on dismantling the North’s nuclear program. Regional players want the situation on the peninsula to improve before the talks begin.

Pyongyang’s silence over the aid put a damper on the early signs of improvement. President Lee Myung-bak has been exercising a softer line since September, when he tapped close aide Yu Woo-ik as unification minister, including expanding humanitarian activities and cultural exchanges.

But the North, apparently seeking rice and other forms of massive aid, has recently slammed the flexible policy as political pandering to the South Korean public, which is gearing up for elections next year.

Such remarks come even as the unification ministry continues to approve northbound aid, including $5.65 million worth for infants, children and pregnant women through the United Nations Children’s Fund (UNICEF). Consultations are ongoing over how to provide more of the baby food. Seoul has also attempted to auction some of it off through a government website.

The North Korean regime is thought to be doing all it can to secure food and other handouts ahead of next April, when it will celebrate the 100th anniversary of the birth of its founder Kim Il-sung. Watchers say that the North is liable to alternate pressure and peace offensives to secure as much aid as it can through inter-Korean and multilateral channels.

UPDATE 30 (2011-12-6): According to the Korean Herald the first auction of potential food aid (See Update 27 below) did not go so well, so Seoul is trying again:

South Korea plans a second attempt to auction off baby food originally intended for North Korean children, officials said Tuesday.

The move comes after nobody bid for 540,000 packs of baby food on Onbid, an auction Web site run by the state-run Korea Asset Management Corp.

South Korea plans to issue a second public notice and adjust the prices, said an official handling the issue at the Unification Ministry. He did not elaborate on further details.

The baby food is part of 5 billion won ($4.4 million) worth of emergency relief aid South Korea had planned to ship to North Korean flood victims earlier this year.

South Korea dropped that plan in October after differences between the two Koreas on the items to be sent. South Korea had insisted it would deliver baby food, biscuits and instant noodles to the North, instead of the cement and equipment its communist neighbor had requested.

Separately, South Korea has been in talks with local private relief agencies over how to donate another 290,000 packs of baby food to other countries, according to another ministry official.

She declined to give further details, saying consultations are taking place.

UPDATE 29 (2011-12-5): The South Koreans will donate US$5.65 million to the DPRK via UNICEF.  Accoring to Yonhap:

South Korea said Monday it will donate US$5.65 million (about 6.5 billion won) for humanitarian projects in North Korea through the U.N. body responsible for the rights of children.

The donation to the United Nations Children’s Fund, or UNICEF, will benefit about 1.46 million infants, children and pregnant women in North Korea, according to the Unification Ministry, which is in charge of relations with the North.

Seoul’s contribution will be used to provide vaccines and other medical supplies as well as to treat malnourished children next year, said the ministry.

There have been concerns that a third of all North Korean children under five are chronically malnourished and that many more children are at risk of slipping into acute stages of malnutrition unless targeted assistance is sustained.

“The decision is in line with the government’s basic stance of maintaining its pure humanitarian aid projects for vulnerable people regardless of political situation,” Unification Ministry spokesman Choi Boh-seon told reporters.

South Korea has been seeking flexibility in its policies toward the North to try to improve their strained relations over the North’s two deadly attacks on the South last year.

…

South Korea donated $20 million for humanitarian projects in North Korea through the UNICEF between 1996 and 2009.

Last month, the South also resumed some $6.94 million worth of medical aid to the impoverished communist country through the World Health Organization.

..

Separately, South Korea also decided to give 2.7 billion won ($2.3 million) to a foundation to help build emergency medical facilities in an industrial complex in the North Korean border city of Kaesong.

More than 47,000 North Koreans work at about 120 South Korean firms operating in the industrial zone to produce clothes, utensils, watches and other goods. The project serves as a key legitimate cash cow for the impoverished communist country.

UPDATE 28 (2011-12-1): Distribution of private aid monitored in N.Korea. According to the Hankyoreh:

“North Koreans know that the wheat flour aid they received came from South Korea.”

These were the words of Cho Joong-hoon, director of the Unification Ministry’s humanitarian assistance division, during a meeting with reporters Wednesday at the Central Governmental Complex in Seoul upon his return from a recent visit to North Korea to monitor the distribution of aid.

“The name of the South Korean private aid group, the manufacturing company, the date, and the address were all printed on the packages of flour,” Cho said.

Arriving in North Korea on Sunday with Kim Min-ha, co-chairman of the private group Ambassadors for Peace, and three others, Cho visited three sites to observe the distribution of the 300 tons of flour provided in aid. The site were the Namchol Kindergarten, February 16 Refinery Kindergarten, and Tongmun Nursery in Chongju, North Pyongan.

It was the first visit to any part of North Korea besides Kaseong and Mt. Kumkang by a government official in the one year since the Yeonpyeong Island artillery attack on Nov. 23, 2010.

Cho said that the distribution, storage, preparation, and supply of the flour were monitored and that everything was confirmed to be proceeding as planned.

On the situation on the ground, Cho said, “Judging simply from the nursery and two kindergartens, the children’s nutritional condition does not appear to be good.” Cho noted that no heating was being supplied to the facilities despite the cold weather.

Cho said that while North Korean authorities did not official request food aid, a request was made under unofficial circumstances.

Cho also noted that construction efforts were under way on a highway connecting Pyongyang with Sinuiju.

“It is not very far from Pyongyang to Chongju, but I think the trip took about four hours because of the detour around the highway construction,” he said.

Analysts said this appears to be linked to hurried infrastructure building efforts, including highway servicing and construction, amid recent moves by North Korea to rebuild its economy through a stronger economic partnership with China.

UPDATE  27 (2011-11-29): Seoul auctions off “unwanted” DPRK food assistance. According ot the Korea Times:

South Korea has taken steps to auction off some baby food originally intended for North Korean children, an official said Tuesday.

The move comes nearly two months after South Korea dropped a plan to send 5 billion won ($4.3 million) worth of aid to North Korean flood victims, citing no response from the North as the reason for the change of plan.

South Korea had insisted it would deliver baby food, biscuits and instant noodles to the North instead of cement and equipment requested by the North.

South Korea’s Red Cross, which handles relief aid to the North, gave public notice of a bid for 540,000 packs of baby food on Onbid, an auction website run by the state-run Korea Asset Management Corp.

Separately, South Korea has been in talks with local private relief agencies over how to donate the other 290,000 packs of baby food to foreign countries.

Unification Minister Yu Woo-ik has ruled out rice aid to the communist country unless Pyongyang admits to last year’s deadly provocations.

South Korea suspended unconditional aid in 2008 and imposed sanctions on the North last year in retaliation for the sinking of a South Korean warship that was blamed on the North.

The North has denied involvement in the sinking that killed 46 sailors. It also shelled a South Korean border island in November 2010, killing four South Koreans.

Still, South Korea has selectively allowed religious and private aid groups to deliver humanitarian and medical assistance to North Korea.

Also on Tuesday, a Unification Ministry official and four civilians were to return home after a rare trip to the North aimed at ensuring that South Korea’s recent private aid had reached its intended beneficiaries.

UPDATE 26 (2011-11-25): According to Yonhap, ROK officials are traveling to the DPRK to monitor food aid:

A South Korean official and four civilians left for North Korea on Friday on a rare mission to ensure that recent aid from Seoul had reached its intended beneficiaries, an official said.

The trip comes a day after North Korea threatened to turn South Korea’s presidential office into “a sea of fire” in anger over Seoul’s massive military maneuvers near the tense sea border.

…

The Unification Ministry official and four civilians were to arrive in the North’s capital later Friday via Beijing, according to the Unification Ministry, which handles inter-Korean affairs.

It is first time that North Korea has allowed a South Korean official to travel to the isolated country to monitor aid since a conservative government took power in Seoul in 2008.

They are scheduled to visit a day care center and two other child care facilities in the northwestern city of Jongju to monitor how 300 tons of flour were distributed to children and other recipients, according to a civic group.

Ambassadors for Peace Association, a civic group that is partly funded by the Unification Group, donated the flour to Jongju, the birthplace of Unification Church founder Moon Sun-myung.

The civic group said the monitors also plan to discuss details on another 300 tons of flour aid before returning home Tuesday. Some members of the civic group are associated with the controversial Unification Church.

Read previous posts on the ROK’s aid to the DPRK in 2011 below:

(more…)

According to Yonhap:

South Korea will create an exclusive unification account as part of its efforts to prepare for a future merger with North Korea, Seoul’s point man on Pyongyang said Wednesday.

The government plans to set up the unification account in an inter-Korean cooperation fund that is currently worth about 1 trillion won (US$869 million).

The fund already has a separate account earmarked for inter-Korean projects, according to the Unification Ministry in Seoul, which handles North Korean affairs.

Unification Minister Yu Woo-ik made the announcement during a meeting with South Korean reporters on the last day of his three-day trip to Beijing.

The development underscored Seoul’s longstanding commitment to unifying with North Korea. The envisioned account, which needs parliamentary endorsement, is part of South Korea’s efforts to help cushion the cost of re-unification with one of the poorest countries in the world.

A state-run think tank has estimated that the initial costs for the integration of the two Koreas could range from 55 trillion won (US$47 billion) to 249 trillion won ($216 billion).

The estimate, which is projected to cover the first year of integration, was based on the assumption that the two neighbors could be unified two decades from now, according to the Korea Institute for National Unification.

Yu said the government does not have an immediate plan to levy a tax on citizens to help finance the potential unification, though he left open the possibility of collecting a tax.

South Korea has been working on details of a so-called unification tax since last year when President Lee Myung-bak floated the idea of using taxpayer money to help finance unification.

Seven out of 10 South Koreans believed that the costs of unification would outweigh its benefits, according to a recent telephone survey, in the latest sign of public concern over re-unification’s economic burden.

The National Unification Advisory Council, a presidential advisory body on unification, released the results of last week’s poll of about 1,000 people.

The Korea Herald also reported on this story.

Here are some previous posts on reunification costs:

1. KINU study looks to mineral wealth to cover unification costs

2. DPRK risk ‘biggest drag on Seoul’s credit rating’

3. OECD on Korean unification costs

4. Reunification costs

5. Working through Korean unification blues

6. 3 Million NK Refugees Expected in Crisis: BOK

Read the Yonhap story here:
S. Korea pushes to create independent unification account
Yonhap
2011-11-23

The Korea Times reports that Seoul has ended the government’s practice of sending propoganda flyers into the DPRK:

Seoul has suspended its launches of anti-regime pamphlets into North Korea, a military source said Tuesday in the latest sign of easing tension on the peninsula.

The decision comes nearly a year after the South resumed the controversial launches in retaliation for the North’s deadly shelling of Yeonpyeong Island on Nov. 23 last year. The pamphlets are floated across the border attached to giant helium balloons.

The source, who spoke on condition of anonymity, said the launches have been stopped for “a few months” and that the decision was made in view of the “government’s efforts to improve inter-Korean ties,” Yonhap News Agency reported.

Ending an 11-year moratorium, the government resumed the launches and allowed citizen groups to send their own balloons after the shelling that killed four people.

The North has called loudly for the halting of the act, calling it a “war action.” On several occasions, it threatened to fire on border sites where civilians float the balloons, which typically carry pamphlets information on the outside world, including news of the popular uprisings in the Middle East, as well as DVDs and dollar bills.

The source said the military would continue to broadcast anti-regime messages from giant loudspeakers placed near the border. Those were resumed after a 6-year moratorium in response the North’s sinking of the warship in which 46 sailors were killed.

Tension between the sides have been high since 2008, when the Lee Myung-bak administration, seeking a fundamental change in the Pyongyang’s belligerence, implemented a hard line policy that slashed aid to the North and tied its provision to denuclearization steps.

The icy relations have thawed somewhat since July, when the two Koreas sat down for surprise talks in a bid to resume six-party talks on the North’s denuclearization.

Seoul also replaced its hard-unification minister with Yu Woo-ik, who has gradually expanded inter-Korean exchanges under a more “flexible” approach.

In further sign of warming, Seoul completed its delivery of hepatitis B vaccines intended to reach 1 million children in the North, a unification ministry official said.

Worth $942,300, the vaccines were delivered to the North through international relief agencies in the South in two installments. It coincided with Seoul’s recent decision to deliver $6.94 million worth of medical aid northward through the World Health Organization.

Private sector activists continue to send leaflets.

The Daily NK reports that NLL incursions by DPRK ships have decreased:

New statistics have shown a significant reduction in the number of detected North Korean intrusions across the Northern Limit Line (NLL) this year.

According to the data, ‘Intrusions across the Northern Limit Line in the Past Six Years’, submitted by Song Young Sun to the National Assembly Defense Committee, there have only been 16 intrusions this year to November, representing only 1/6 of the 95 intrusions which occurred last year.

This is also the lowest number of intrusions over the last six years; fewer than 2006 (21), 2007 (28), 2009 (50) and 2010 (95).

Commenting on the data, Song told the committee, “It seems that the military authorities have strengthened their military patrols and the government is improving inter-Korean relations, and so the North seems to be controlling tensions in that area.”

To give a sense of a desire for reduced tensions between  the two Koreas, here is a list of recent stories from my “South Korea” post index:

1. ROK to resume food and medical aid.

2. Seoul to begin Kaesong road repairs.

3. ROK government planning to resume construction and relax sanctions in Kaesong zone

4. South Korea to allow firms to resume Kaesong construction

I wonder if the trend has anything to do with this.

However, there are some recurring serious issues:

1. The Cheonan and Yonphyong 

2. KEDO

3. Kumgang

Read more here:
Seoul halts flying leaflets to N. Korea
Korea Times http://www.koreatimes.co.kr/www/news/nation/2011/11/116_98791.html
Kim Young-jin
2011-11-15

NLL Intrusion Numbers Falling
Daily NK http://www.dailynk.com/english/read.php?cataId=nk00100&num=8413
Park Seong Guk
2011-11-16

Pictured above (Google Earth): Manwoldae Palace in Kaesong, DPRK. See in Google Maps here.

According to Yonhap:

South Korea’s Unification Ministry said Sunday it has allowed a group of historians to visit North Korea this week for the resumption of a long-stalled joint project to excavate an ancient royal palace site.

The approval is another sign of lessening tensions on the divided Korean Peninsula, as Seoul is easing restrictions on civilian contact with Pyongyang following a year of animosity caused by the North’s deadly military attacks on the South.

On Monday, 14 South Korean historians will travel to the North’s border city of Kaesong, the site of Manwoldae, the royal palace of the Goryeo Dynasty that ruled the Korean Peninsula from 918 to 1392.

During their 10-day stay in Kaesong, the South Korean experts will conduct a safety survey on the site with their North Korean counterparts, a ministry official said.

“Based on the results of the safety survey, the joint excavation work will begin on Nov. 24 for one month,” the official said on the condition of anonymity.

The two Koreas launched the excavation project in 2007, but South Korea halted it last year as part of its sanctions against Pyongyang for the March sinking of a South Korean warship blamed on the North.

Seoul’s new Unification Minister Yu Woo-ik, who took office in September, has said he would consider “flexibility” in dealing with North Korea. The ministry is in charge of North Korea policy.

Kaesong served as the capital for most of Goryeo’s reign. Now it is home to an industrial complex run by both Koreas.

The Choson Ilbo also covered this story.

Read the full story here:
S. Korea OKs historians’ visit to N. Korea
Yonhap
2011-11-13

According to Yonhap:

South Korea will next week start repairing a road used by North Korean commuters to reach an inter-Korean industrial complex in the North, an official said Thursday amid signs of a thaw in bilateral relations.

The 4.5-kilometer road linking North Korea’s border city of Kaesong to the nearby industrial park is used by more than 47,000 North Korean workers who are employed by some 120 South Korean firms operating in the zone. South Korean officials earlier said the road was damaged in summer’s torrential rains, prompting the South to conduct an on-site survey.

“After signing an agreement (with the North), we expect to start repair work next week,” said an official at the Unification Ministry, which handles inter-Korean relations in the South.

“It will likely take about three months to complete the work, unless the weather becomes too cold, and cost us around 1.8 billion won (US$1.59 million),” the official said, speaking on condition of anonymity.

The repairs will involve restoring damaged paved sections and filling in holes on unpaved sections. Repairing the road is expected to save time for North Korean commuters and reduce traffic accidents.

The Daily NK offers some additonal information:

A government official explained today that the decision was made pursuant to agreement between the Kaesong Industrial Complex Management Committee, LH Construction and the North Korean authorities.

“The agreement has not yet been signed, but we are hoping to start the construction at the beginning of next week,” the official explained.

“Our side has taken on responsibility for planning the road repairs and supervising the construction,” he went on. “The weather could change things, but the construction should require three months and is expected to cost 1.8 billion South Korean won.”

Aside from the aforementioned construction, there are also plans to reconstruct two turning points for buses serving the complex. The human resources for the construction will be provided by North Korea.

There are plans to extend bus service to cover the areas of Pongchon (봉천), Kumchon (금천), and Phyongsan (평산). However, the roads to these areas are unpaved and extension of transportation services to these areas will require negotiations with the North Korean authorities.

Read the full story here:
Seoul to start repairing road leading to Kaesong complex next week
Yonhap
2011-11-3

According to the Choson Ilbo:

The Weekly Chosun has obtained detailed official records of some 2 million adult residents of the North Korean capital Pyongyang from a source in the North Korea-China border area. The data, which contains the names, date of birth and home addresses of 2,108,032 Pyongyang residents, was compiled by the North’s State Security Department in 2005.

The data does not include children up to age of 17 or an estimated 10,000 members of the elite including relatives of leader Kim Jong-il, or of soldiers stationed in Pyongyang from provincial areas, according to the source.

But it does include people in four districts that were excluded from the Pyongyang administrative area last year. According to official data published by South Korea’s Unification ministry based on the North’s Central Yearbook in February, Pyongyang’s population shrank by about 500,000 as a result of administrative restructuring. But the list shows only about 197,000 adults living in those four districts in 2005.

The difference of 300,000 is too big to make sense, even if the omitted child population is taken into consideration.

The most remarkable aspect of the data is the shortage of men. There are a mere 870,000 men on the list compared to 1.22 million women.

What caused the imbalance is not known but it is possible that many men are soldiers and therefore not counted. Another guess is that there are more women in the capital because they are shipped there for mass rallies.

A former senior North Korean official who defected to the South in 2007, said, “More than six out of every 10 Pyongyang residents are female. It’s mostly the elite who are allowed to live in Pyongyang. A lot of men have been moved out to the suburbs, but the women are mobilized for mass events, which explains the gender imbalance.”

Based on analysis of the records, the average marriage age is 27 years old. More than 80 percent of adults in Pyongyang were registered as married, compared to South Korea, where single households are on the rise. Some 410,000 or 20 percent of the total population in Pyongyang were unmarried and under 27 years old. Divorcees accounted for about 1 percent of the total population with 21,000, although North Korean defectors say divorce and remarriage rates there are gradually increasing.

About 830,000 or more than one-third are party members — a very high ratio considering that the total number of party members across North Korea is about 2 million.

The remaining 1.28 million seem to be either prospective members or family of members. They are said to be working mainly in party-affiliated organizations.

A defector from Pyongyang told the Weekly Chosun, “It’s hard for non-party members to live in Pyongyang. Many people are in the process of becoming party members, even if they haven’t been admitted yet. They consider it an honor. So really most people in Pyongyang are in the party.”

According to the data, there are 124 registered foreign nationals in Pyongyang from 15 countries including the U.S., Japan, China, the former Soviet Union or Russia, the Czech Republic, Canada, France, and Lebanon. Japanese citizens top the list with 86, but they are likely to be ethnic Koreans. About one person from every European country lives in Pyongyang.

Read the full story here:
Official Data Shed New Light on Pyongyang Population
Choson Ilbo
201-1-23

Pictured above (Google Earth): The towns mentioned in the article below from which the Kaesong Industrial Zone could draw more labor: Pongchon (봉천), Kumchon (금천), and Phyongsan (평산).

Institute for Far Eastern Studies (IFES)
2011-10-20

According to South Korea’s Ministry of Unification (MOU), the “May 24 Sanctions” that went into effect after the sinking of the naval boat Cheonan was relaxed and began to permit the resumption of construction of businesses in the Kaesong Industrial Complex (KIC). In addition, plans to build fire stations and emergency medical facilities in the area are also currently underway.

After South Korean Grand National Party chairman Hong Jun-pyo visited KIC on September 30, 2011, the ROK government has reached the following decisions: 1) to allow the resumption of halted factory constructions; 2) to build a fire station and emergency medical facility; 3) to resume repair work for commuting roads for KIC employees; and 4) to extend the operations of commuter buses.

This means seven companies that received permits in the past to begin construction but stopped after the sanctions went into effect would be able to resume the halted construction projects.

According to the Ministry of Unification, the seven companies include three metal and machinery, three textile, and one electronic factories, taking up a total area of 103,527 square meters. The total site of production facilities of stage 1 businesses in the KIC reaches 2,171,900 square meters, in which the currently operating 123 companies take up 783,471 square meters. With the sanctions lifted, the total area of businesses in operation will reach 885,950 square meters.

In addition, five companies awaiting construction for expansion will have to wait a little longer. The authorities announced to discuss this issue at a later date, looking positively on their construction to resume shortly as well.

Also the MOU announced to push forward with the establishment of fire stations and emergency medical facilities, “to protect the properties and health of businesses and employees of the KIC. The plans to break ground for fire station will begin in mid-November and is expected to be completed by late next year.”

The layout for the KIC fire station was completed in December 2009 and 3.3 billion USD has been budgeted to fund the construction. The station will be constructed on a steel frame on a 3,305 square-meter lot with the total floor space to be around 2,182 square meters.

The Kaesong Management Committee has been operating a “fire/police station” from April 2005. But with occurrences of accidental fires since last winter, it has reinforced the number of fire engines and manpower – currently at a total of eight fire trucks and 36 fire fighters.

Medical facilities in the KIC will also be completed by the end of 2012 once the construction begins early next year. About 3 billion USD is set for this project.

Currently at the KIC, Green Doctor’s Cooperation Hospital is in charge of providing medical and health services in the KIC, with South Korea Green Doctor’s Kaesong Hospital treating the South Korean employees and North Korean Comprehensive Clinic treating the North Korean employees exclusively. The South Korea Green Doctor’s Kaesong Hospital is currently operated by volunteers at a clinic level. The hospital was in the process of improving the facilities to more than ten beds. However, this project was halted after the May 24 sanctions went in effect.

On another note, the MOU also announced that maintenance work for the road connecting Kaesong City to the KIC would begin. The road is normally used by North Korean employees of the KIC. It was also announced that the number and operation of commuter buses would increase to help with the commute. The buses operate in the 20 km radius; the plan is to increase that to 40 km. Since September 2010, the number of buses increased to 400.

There are plans to extend the service to cover the areas of Kumchon, Bongchon, and Pyongsang. However, the roads to these areas are unpaved and extension of transportation services to these areas will require negotiations with the North Korean authorities.

Although these measures will alleviate some of the problems faced by the businesses in the KIC, the MOU still stands firm on its position that North Korea must take responsibility and make formal apology for the Cheonan incident in order for a fundamental resolution of the situation to occur.

1. “Relying on One’s Strength: The Growth of the Private Agriculture in Borderland Areas of North Korea”
Andrei Lankov，Seok Hyang Kim ，Inok Kwa
PDF of the article here 

The two decades which followed the collapse of the communist bloc were a period of dramatic social and economic transformation in North Korea. The 1990-2010 period was a time when market economy re-emerged in North Korea where once could be seen as the most perfect example of the Stalinist economic model. The present article deals with one of the major areas of socioeconomic change which, so far, has not been the focus of previous studies. The topic is about the growth of private agricultural activities in North Korea after 1990. This growth constitutes a significant phenomenon which has important social consequences and also is important from a purely economic point of view: it seems that the spontaneous growth of private plots played a major role in the recent improvement of the food situation inside North Korea.

______________________

3. Korea Sharing Movement anti-malarial program (Via Cancor)
Read a PDF of on the project here

______________________

4. What is it like to teach at the Pyongyang University of Science and Technology (PUST)?
Find out from one instructor here. More on PUST here.

Pictured above (Google Earth): Kaesong Industrial Zone (Sept. 2009)

According to Reuters:

South Korea said on Tuesday it will allow 120 of its firms to restart building a joint industrial park with North Korea, a fresh sign of tensions between the rival countries easing.

Construction of five factories can resume, and work to build seven new ones can go ahead, South Korea’s Unification Ministry said, 17 months after stopping activity in protest at what the South said was an attack by the North on one of its ships.

The South Korean firms employ about 46,000 North Korean workers at the Kaesong industrial park to make clothes, utensils and watches, taking advantage of cheaper labour and property than is available in the South.

According to the Choson Ilbo:

[The Ministry of Unification] will also build a fire station and hospital at the complex, repair a highway linking the city of Kaesong with the industrial complex, and add 45 buses to shuttle North Korean workers to and from the facility.

Previous posts on the Kaesong Zone can be found here.

Read the full story here:
S.Korea allows work at factories in North to restart
Reuters
2011-10-11

Andrei Lankov writes in the Korea Times:

In 2010, the volume of trade between these two countries was merely $110 million. As international trade goes, this volume is tiny. By comparison, in the same year North Korea’s trade with China was around $3.4 billion, some 30 times larger than its trade with Russia.

The reason for this inactivity is quite simple: Russian companies have no interest in dealing with North Korea. In the Soviet era, trade flourished because it was subsidized due to geopolitical concerns of Moscow. Currently, when it comes to pure economic considerations, North Korea has almost nothing to offer the new Russian economy.

North Korea has only two resources that can be sold on the international market. First, it has deposits of minerals (coal, iron ore). Second, it has a relatively large quantity of cheap labor ― or to put things in a less cynically capitalist way, there are millions of North Koreans willing to work for $10 a month.

But Russian companies are decisively uninterested in North Korean minerals. These mines may be attractive to resource-hungry China, but not to Russia, which has the riches of Siberia at its disposal. The chronic political instability in which North Korea is immersed is another reason which lessens Russian interest in North Korean minerals.

Cheap labor is more attractive, and indeed Russia has continuously used North Korean labor since 1967 but not in the North itself. Some Chinese companies began to outsource to North Korea, and built small factories there, in order to take advantage of the obscenely low local wages. This approach is not very attractive to Russia, since it is not a major player in producing winter parkas, wool hoods, or running shoes. Russian companies prefer to use North Korean workers inside Russia itself.

These workers are sent to Russia by the North Korean authorities and can be described as indentured labor. Their families are hostages who can be punished if a worker does something improper and the workers are also expected to ‘donate’ a significant part of their wages to the state. Despite these harsh conditions, one should not forget that these jobs are among the best paid regular jobs in the country. North Koreans compete for opportunities to become indentured laborers in Russia.

That said, the scale of these ventures is rather limited, as is the demand for cheap labor in the Russian Far East (the only part of Russia where the use of North Korean laborers really makes practical sense).

Aside from this, North Korea has something else to offer – its geographical location. This country blocks all land routes to the prosperous South. Russia has much interest in the South Korean market, especially when it comes to the sale of natural resources. Impeding this is the existence of North Korea, and the continued strained relations between the two Korean states, making sales of Russian commodities rather difficult.

So it is not incidental that the two most important potential projects are a railway and a gas pipeline. Both projects can hardly be described as “economic cooperation” between North Korea and Russia, since neither has much to do with the North Korean economy itself. North Korea, in these cases, is present merely as a space to be traversed. It would be no different if it were a dessert or jungle. Russia is willing to pay North Korea for facilitating Russia’s economic link with the South, and that is all.

So it is not surprising that an agreement on the pipeline construction was signed after the Russian-North Korean summit. This project is indeed acceptable to the North, since it will mean easy money for transit, it is favorable to Russia, and it will be good for the general situation since it will bind Russia, North and South Korea closer.

Yet, a word of caution is necessary. In spite of all official statements, we should not expect large-scale construction work to begin in the near future. The political risks remain huge, so it is likely that Russian companies will not rush headlong into the project. The recent agreement should rather be seen as a declaration of intent. In all probability, the trans-Korean pipeline and trans-Korean railway will be built eventually. But the completion of these important initiatives will probably take many, many years.

Read the full story here:
Russia-N. Korea Trade
Korea Times
Andrei Lankov
2011-9-25