North Korean Economy Watch

In response to the DPRK’s rocket launch, the UN Security Council issued a presidential statement containing the following:

The Security Council reiterates that the DPRK must comply fully with its obligations under Security Council resolution 1718 (2006).

The Security Council demands that the DPRK not conduct any further launch.

The Security Council also calls upon all Member States to comply fully with their obligations under resolution 1718 (2006).

The Security Council agrees to adjust the measures imposed by paragraph 8 of resolution 1718 (2006) through the designation of entities and goods, and directs the Committee established pursuant to resolution 1718 (2006) to undertake its tasks to this effect and to report to the Security Council by 24 April 2009, and further agrees that, if the Committee has not acted, then the Security Council will complete action to adjust the measures by 30 April 2009.

(Read the full text of the statement here) 

Today the Security Council followed up this statement (and resolution 1718) by voting to blacklist three North Korean companies.  According to Reuters (via the Washington Post):

The North Korea sanctions committee met a Friday deadline set by the Security Council on April 13 to produce a list of goods and North Korean entities to be blacklisted under Security Council resolution 1718, passed after Pyongyang’s October 2006 nuclear test.

The three companies put on the list are Korea Mining Development Trading Corp., Korea Ryongbong General Corp. and Tranchon (Tanchon) Commercial Bank, according to a copy of the committee’s decision obtained by Reuters.

The decision said the three companies were linked to the military and active in procuring equipment and financing for North Korea’s ballistic missile and other weapons programs.

The blacklisting prohibits companies and nations around the world from doing business with the three firms, but the impact of the action might be largely symbolic.

One Western diplomat said the three blacklisted firms had subsidiaries that also would be subject to U.N. sanctions.

Committee members also decided to ban the import and export of items on an internationally recognized list of sensitive technologies used to build long-range missiles capable of delivering weapons of mass destruction.

The US imposed sanctions on three North Korean companies in the Federal Register earlier this year.  Of these three companies, one has made the UNSC list: the Korea Mining and Development Corporation.  I can only speculate as to the fate of the other two mentioned in the US Federal Register, Mokong Trading Corporation and the Sino-Ki company. 

Read more below:
UNSC Presidential Statement

U.N. committee puts 3 North Korea firms on blacklist
Reuters (via the Washington Post)
Louis Charbonneau
4/24/2009

Chosun Ilbo
6/1/2007

According to Russia’s Itar Tass news agency on Wednesday, Russian President Vladimir Putin has signed a decree imposing sanctions on North Korea in compliance with a UN Security Council resolution in the wake of Pyongyang’s nuclear test last October.

The presidential decree applies a full weapons embargo against North Korea in pursuance of UN Security Council Resolution 1718. All Russian government agencies and enterprises will be banned from exporting to North Korea tanks, fighter jets, warships, heavy artillery pieces, missiles, and missile launchers, as well as materials that can be used for nuclear weapons development.

In addition, North Korean officials involved in development programs for weapons of mass destruction including nuclear weapons are banned from entering Russia. Shipments of luxury goods to North Korea are also banned.

The measure will likely have no tangible effects, however, given that the current annual trade volume between Russia and North Korea is only about $200 million.

The decree comes as North Korea continues to delay implementing the conditions of the Feb. 13 nuclear disarmament agreement. The decree may put pressure on North Korea to follow the agreement.

After the UN approved the sanctions against North Korea in October last year, Russian government agencies had consultations amongst themselves and coordinated with the Russian parliament. Putin finally signed the sanctions decree on Sunday.

Wall Street Journal Editorial
5/3/2007
Page A16

It’s been two and a half weeks since the 60-day deadline passed on April 14 for North Korea to comply with the first part of the nuclear accord reached in February. That includes shutting down the Yongbyong nuclear reactor, letting in U.N. inspectors and providing a list of all nuclear programs. But so far no word from Pyongyang, and nothing from Beijing or Washington either. President Bush and Secretary of State Condoleezza Rice both recently claimed their “patience” is not “endless,” contrary to all available evidence.

Meanwhile, another North Korean deadline has been allowed to lapse. On January 19, United Nations Secretary-General Ban Ki Moon ordered an “external inquiry” into all U.N. programs in North Korea, including the United Nations Development Fund, Unicef, the World Food Program and the U.N. Population Fund. Mr. Ban’s announcement followed our report on irregularities in UNDP programs in North Korea and U.S. concerns that tens of millions of dollars in hard currency were funneled to dictator Kim Jong Il.

Mr. Ban imposed a 90-day deadline for the audit, but it appears to be lost somewhere in the U.N. bureaucracy. The auditors spent two weeks in March at UNDP headquarters in New York interviewing staff and looking at the books, but they have yet to set foot in North Korea, much less file a report. Oh — and the “independent” and “external” audit Mr. Ban ordered is being conducted by the U.N.’s own Board of Auditors, consisting of a team from South Africa, France and the Philippines.

We had a challenge gathering even these details. The Board of Auditors refuses to talk to the press. The UNDP understandably feels it lacks standing to comment on an investigation of itself. And Mr. Ban’s press office can’t seem to get the facts straight, first telling us the auditors were in Korea and then informing us they weren’t. You’d think someone at the U.N. would show more interest in explaining one of the boss’s priorities to the public.

It will be interesting to see how Kim Jong Il responds if the auditors get around to asking for visas. The dictator recently told the last two UNDP officials left in Pyongyang to get out. The UNDP suspended operations there in March, after our reports and after the Kim government refused to let aid officials visit the projects they fund.

Mr. Ban is staying mum on the missed U.N. deadline. But on the evidence so far, Kim can be forgiven if he concludes that the world isn’t serious about enforcing any of its deadlines concerning North Korea.

American Enterprise Institute Book forum
4/17/2007

A couple of weeks ago, I had the opportunity to attend a book forum at the American Enterprise Institute on Nicholas Eberstadt’s new book, The North Korean Economy: Between Crisis and Catastrophe.  It was very informative to hear three different perspectives on the direction of North Korea’s economic reform.

Panelists included:

Nicholas Eberstadt, AEI
Andrei Lankov, Kookmin University
Deok-Ryong Yoon, Korea Institute for International Economic Policy

In summary, Mr. Eberstadt and Mr. Lankov are pessimistic about the North Korean leadership’s desire to enact reforms–knowing that information leakages will undermine their political authority.  As Mr. Lankov pointed out, the North Korean nomenklatura are all children and grandchildren of the founders of the country who are highly vested in the current system.  They have no way out politically, and as such, cannot reform.

They argue that the economic reforms enacted in 2002 were primarily efforts to reassert control over the de facto institutions that had emerged in the collapse of the state-run Public Distribition System, not primarily intended to revive the economy.  Lankov does admit, however, that North Korea is more open and market-oriented than it has ever been, and  Mr. Yoon was by far the most optomistic on the prospects of North Korean reform.

Personally, I think it makes sense to think about North Korean politics as one would in any other country–as composed of political factions that each seek their own goals.  Although the range of policy options is limited by current political realities, there are North Koreans who are interested in reform and opening up–even if only to earn more money.  In this light, even if the new market institutions recognized in the 2002 reforms were acknowledged only grudgingly, they were still acknowledged, and their legal-social-economic positions in society are now de jure, not just de facto.  The North Korean leadership might be opposed to wholesale reform, but that is economically and strategically different than a controlled opening up on an ad hoc basis–which is what I believe we are currently seeing. Anyway, dont take my word for it, check out the full commentary posted below the fold:

(more…)

EU Business
3/27/2007
 
The European Union adopted sanctions against North Korea Tuesday, putting it in line with a UN Security Council resolution passed after the Stalinist state announced a nuclear test.

The sanctions include a ban on the sale or export of all materials that could be used in North Korea’s nuclear and ballistic missile programmes, or in the manufacture of weapons of mass destruction.

The EU also froze the assets abroad of some North Korean officials and banned exports to the country of luxury goods like caviar, truffles, high-quality wines and perfumes, and pure bred horses.

The bloc backed in November UN resolution 1718 but the application of sanctions required a formal EU decision, which was held up by a row between Britain and Spain over how Gibraltar would implement the measures.

The resolution was passed after Pyongyang announced on October 9 that it had carried out its first nuclear weapons test, triggering world-wide outrage.

U.S. Federal Register (Hat Tip OneFree Korea)

Here are the highlights:

DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 732, 738, 740, 742, 746, 772 and 774

[Docket No. 070111012-7017-01]
RIN 0694-AD97

North Korea: Imposition of New Foreign Policy Controls
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Final rule.
———————————————————————–

SUMMARY: In accordance with recent United Nations (UN) Security Council resolutions and the foreign policy interests of the United States, the United States Government is imposing restrictions on exports and reexports of luxury goods to the Democratic People’s Republic of Korea (North Korea), and is continuing to restrict exports and reexports of nuclear or missile-related items and other items included on the Commerce Control List (CCL). To this end, the Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to impose license requirements for the export and reexport of virtually all items subject to the EAR to North Korea, except food and medicines not listed on the CCL.
    BIS will generally deny applications to export and reexport luxury goods, e.g., luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other
alcoholic beverages; musical instruments; art; and antiques and collectible items including but not limited to rare coins and stamps.
    BIS will continue to generally deny applications to export and reexport arms and related materiel controlled on the CCL and items controlled under the multilateral export control regimes (the Missile Technology Control Regime, the Nuclear Suppliers Group, the Australia Group, and the Wassenaar Arrangement). This includes items specified in UN documents S/2006/814, S/2006/815 and S/2006/853. BIS will also generally deny applications to export and reexport other items that the UN determines could contribute to North Korea’s nuclear-related, ballistic missile-related, or other weapons of mass destruction-related programs.
    BIS will also generally approve applications to export or reexport: non-food, non-medical humanitarian items (e.g., blankets, basic footwear, heating oil, and other items meeting subsistence needs) intended for the benefit of the North Korean people; items in support of United Nations humanitarian efforts; and agricultural commodities and medical devices that are determined not to be luxury goods.
    BIS will review on a case-by-case basis applications to export and reexport all other items subject to the EAR.

DATES: This rule is effective January 26, 2007.

The following further amplifies the illustrative of list luxury goods set forth in Sec.  746.4(c):
    (a) Tobacco and tobacco products
    (b) Luxury watches: Wrist, pocket, and others with a case of precious metal or of metal clad with precious metal
    (c) Apparel and fashion items, as follows:
    (1) Leather articles
    (2) Silk articles
    (3) Fur skins and artificial furs
    (4) Fashion accessories: Leather travel goods, vanity cases, binocular and camera cases, handbags, wallets, designer fountain pens, silk scarves
    (5) Cosmetics, including beauty and make-up
    (6) Perfumes and toilet waters
    (7) Designer clothing: Leather apparel and clothing accessories
    (d) Decorative items, as follows:
    (1) Rugs and tapestries
    (2) Tableware of porcelain or bone china
    (3) Items of lead crystal
    (4) Works of art (including paintings, original sculptures and statuary), antiques (more than 100 years old), and collectible items, including rare coins and stamps
    (e) Jewelry: Jewelry with pearls, gems, precious and semi-precious stones (including diamonds, sapphires, rubies, and emeralds), jewelry of precious metal or of metal clad with precious metal
    (f) Electronic items, as follows:
    (1) Flat-screen, plasma, or LCD panel televisions or other video monitors or receivers (including high-definition televisions), and any television larger than 29 inches; DVD players
    (2) Personal digital assistants (PDAs)
    (3) Personal digital music players
    (4) Computer laptops
    (g) Transportation items, as follows:
    (1) Yachts and other aquatic recreational vehicles (such as personal watercraft)
    (2) Luxury automobiles (and motor vehicles): Automobiles and other motor vehicles to transport people (other than public transport), including station wagons
    (3) Racing cars, snowmobiles, and motorcycles
    (4) Personal transportation devices (stand-up motorized scooters)
    (h) Recreational items, as follows:
    (1) Musical instruments
    (2) Recreational sports equipment
    (i) Alcoholic beverages: wine, beer, ales, and liquor