North Korean Economy Watch

UPDATE:  Culture clash when North Koreans want to talk business and US general has other ideas
By Michael Rank

It was a clash of cultures, an accident waiting to happen, when the four-star United States general and his entourage of American business leaders came to Pyongyang to discuss security issues and the North Koreans wanted to talk business.

The North Koreans had assumed the general and his colleagues wanted to talk about investing in their isolated country, and were dumbfounded to discover that was one thing the visitors had absolutely no intention of discussing.

It wasn’t entirely the North Koreans’ fault - retired Air Force General Charles “Chuck” Boyd and his pals were from a high-powered Washington-based think tank called Business Executives for National Security (BENS), so business is definitely part of their brief - but not when it comes to North Korea.

The North Korean ministers whom Boyd met made no attempt to hide their shock when they discovered that the visitors had not come with thoughts of investing a handful of dollars at least in their country, even if it is under international sanctions, and that they were there to discuss the nuclear issue instead.

“I think they had a little bit of a misunderstanding about the nature of our objective, ” Boyd told North Korean Economy Watch in a telephone interview.

“I think they believed that we came with business leaders who were interested in investing in North Korea, and of course that we had to make that clear to them right from the outset that nobody [in the BENS delegation] had any intention whatsoever of making any investments in North Korea and in fact could not” due to international sanctions.

“They were not particularly pleased to hear that. They wanted to talk about investments, they didn’t want to talk about the linkage of those investments to a resolution of the nuclear issue,” said Boyd, who has been president and chief executive officer of BENS since 2002 and steps down at the end of the year.

“There were some tense moments as we worked our way through that, but i think there was clarity in everybody’s minds when we left” that the group had come not to discuss investment but “in a larger context of trying to talk about the benefits of leaving their isolation and entering into the globalised world.”

Boyd said the tone of the conversations he held with North Korean officials “varied a bit…some were softer in their argumentation, some were harsher. I suppose the tone of the meeting with the Minister of Foreign Affairs [Pak Ui-chun] was really quite warm.”

Kim Yong-nam, president of the Supreme People’s Assembly, told him how threatened North Korea felt by its neighbours. “To the extent that I could I think I tried to relieve him of some of his anxiety about the external threats to the country,” Boyd said. He told Kim that the division of the Korean peninsula was the fault of the Soviet Union, not the United States, and he hoped a Russian would attend their next meeting in order to underline this fact. “I think  at the end of it we parted on pretty good terms,” Boyd said of his meeting with Kim, who is often reckoned to rank number two in the North Korean hierarchy after Kim Jung Il.

The delegation also included Ross Perot Jr, chairman of the board, Perot Systems Corp, Maurice Greenberg, chairman and CEO, C.V. Starr & Co, Inc, and Boyd’s wife Dr Jessica Mathews, president of the Carnegie Endowment for International Peace.

Boyd said BENS had tried to arrange a visit to North Korea for several years,  and after being rebuffed numerous times “almost out of the blue they contacted us and issued an invitation.”

He acknowledged that his visit last week had not achieved any meeting of minds between the US and North Korea, but noted: “Progress comes about in tiny little steps from a broad front, and it may be that we had some tiny bit of influence. And if we didn’t is the world worse off for having gone there? I don’t think so.”

The North Koreans were “certainly left with [an impression of] the firmness with which the private sector is in support of the need for resolving the nuclear issue,” he added.

Boyd was a combat pilot in Vietnam and survived 2,488 days as a prisoner of war. He is the only POW from the Vietnam war to become a four-star general. He will be succeeded at BENS from January 1 by former US Army General Montgomery C. Meigs.

The official North Korean news agency KCNA, which rarely lets the facts get in the way of a good story, reported that the BENS group “had an exhaustive discussion with officials in the economic field of the DPRK on the issues arising in creating environment for investment.”

See group photo here.

ORIGINAL POST: According to Yonhap:

The six-member delegation from the American Association for Advancement of Science (AAAS), led by Peter Agre, a Nobel laureate in chemistry, had traveled to Pyongyang on a mission to explore future opportunities for collaborative research activities in various fields.

The U.S. team “left here for home by air on Tuesday after discussing the matter of cooperation and exchange in the field of scientific research,” the Korean Central News Agency said. It gave no further information.

Agre, director of the Johns Hopkins Malaria Research Institute and president of the AAAS, said earlier that his delegation would meet with scientists, university and science policy officials in the North. He also planned to give a lecture for North Korean officials and students at the Kim Chaek University of Technology in Pyongyang.

While in Pongyang Agre suppsedly gave a lecture at Kimchaek University of Technology.  According to Yonhap:

The broadcast aired by the non-profit corporation said Agre and other U.S. scientists will visit the Kimchaek University of Technology to give his lecture and hold talks with representatives from North Korean academia to discuss ways to advance bilateral scientific cooperation

Agre is a medical doctor and molecular biologist who was awarded the 2003 Nobel Prize in Chemistry for his discovery of aquaporins. He is currently the chairman of the American Association for the Advancement of Science.

Also in the Yonhap story:

Another U.S. delegation visiting North Korea, consisting of businessmen, met with the North’s Vice Premier Ro Tu-chol on Tuesday, state media said in a one-sentence dispatch. The team from the Business Executives for National Security (BENS), a non-partisan Washington-based organization led by Charles Boyd, a retired U.S. Air Force four-star general, arrived in Pyongyang a day earlier.

Michael Rank contacted BENS and received the following statement:

Regarding the North Korea trip: Following initial contact several years ago, the North Korean government recently invited a small group from Business Executives for National Security (BENS) to visit North Korea.  BENS is a not-for-profit group of business executives with an interest in national security and foreign policy issues.  BENS is not a trade organization.

The group hopes to learn first-hand the views of government officials in North Korea.  The trip is solely for educational purposes and was coordinated with appropriate U.S. government agencies.  The traveling party is now in North Korea.  The travelers are: BENS President and Chief Executives Charles Boyd, Maurice Greenberg (Chairman and CEO, C.V. Starr & Co., Inc.) Corinne Greenberg, Ross Perot Jr. (Chairman of the Board, Perot Systems Corp.) Mark Newman (Chairman and CEO, DRS Technologies, Inc.), BENS Board Chairman Joe Robert and Dr. Jessica Mathews.  Greenberg, Perot, and Newman are also board members of BENS.  Ms. Mathews is President of the Carnegie Endowment for International Peace and Charles Boyd’s wife.  Reggie Gibbs, a BENS staff member is accompanying the group.  Further details about the trip will be available when the group returns next week.

UPDATE 1: According to the Joong Ang Daily:

[Stuart Thorson, professor of political science and international relations at Syracuse University] spent five days in the North Korean capital, meeting with faculty members at the Kim Chaek University of Technology and the Pyongyang University of Science and Technology, and officials from the State Academy of Sciences. Kim Chaek University is the school that has maintained cooperation with Syracuse since 2001. The delegation included Peter C. Agre, the 2003 Nobel Prize winner in chemistry. […]

Thorson said the Americans talked with North Korean scientists on issues such as developing young scientists and bringing more women into the field. The faculty at the Pyongyang University of Science and Technology gave presentations on their research work. “We were quite impressed by it, especially since the level of their physical equipment is below what we have [in South Korea] and in the United States,” Thorson said.

The faculty “responded very well” to the Americans’ presence, he said.

“We were all delighted to have the young scientists [in North Korea] talking with us about their research,” he said. “A lot of [science] has been just kind of old people talking to old people about what they’d like to have happened. There were actually young people talking about what they’re really doing.”

The unlikely science partnership between the United States and North Korea dates back to 2001. With the help of Donald Gregg, former U.S. ambassador to South Korea serving then as head of Korea Society, Syracuse University contacted the North Korean mission to the United Nations in New York. Often called the “New York channel,” the North Korean UN mission links the United States and North Korea.

Thorson said his previous experience in dealing with China helped him get started with North Korea.

“I had worked on a similar collaboration with China in the 1990s, so we were comfortable working with countries whose political system was very different than our own,” the professor said.

Thorson added that in working with China, he learned that science and technology are “very much based on shared protocols.”

“That helps us build trust,” he said. “As we share things in common, then I think we can begin to talk about other things sometimes, or perhaps even more importantly, people who talk to us can learn and begin to be more comfortable.

“This is especially important, in my view, to political science regarding North Korea and the United States, where in both countries, the other has been demonized and viewed as something other than a real place with real people,” Thorson added.

Syracuse found its partner in the Kim Chaek University of Technology. They’ve since cooperated in building a digital library at Kim Chaek in 2006, and Syracuse has helped North Korean students at the International Collegiate Programming Contest, run by the Association for Computing Machinery.

Their partnership led to the founding of the U.S.-DPRK [North Korea] Scientific Engagement Consortium in 2007. It’s made up of the U.S. Civilian Research & Development Foundation, the American Association for the Advancement of Science, Syracuse University and the Korea Society.

Thorson pointed to the digital library as an example of a positive outcome for the U.S.-North Korea science exchange. When the New York Philharmonic visited Pyongyang in 2008, some accompanying journalists went to the library and even accessed their Facebook pages from computers there.

Though Thorson realizes U.S.-North Korea relations do have an impact on science exchanges, he also thinks the worse the situation, the more such non-traditional diplomacy becomes necessary.

“My impression is that as relations get worse between the two countries, both countries realize that these informal channels are all the more important,” Thorson said. “It’s all the more reason to keep at science diplomacy with North Korea. The more difficult the problem, the more effort it takes to try to resolve that.

“If it were easy, it wouldn’t be much fun,” he said. “It’s frustrating sometimes. It’s also rewarding.”

UPDATE 2: According to the Joong Ang Daily:

The Business Executives for National Security (BENS) is an American nonprofit organization established in 1982 by American entrepreneurs whose top concern is national security. Eight BENS members recently visited North Korea, led by the organization’s current president, former Air Force Gen. Charles G. Boyd. The U.S. delegation included AIG’s former CEO Maurice Greenberg, Chairman of DRS Technologies Mark Newman and Chairman of the Board of Perot Systems Henry Ross Perot, Jr.

They are said to have visited the North at the invitation of North Korean authorities, which have been in contact with BENS for several years. It is likely a coincidence that they visited Pyongyang after U.S. Special Representative for North Korea Policy Stephen Bosworth’s visit to the North two weeks ago.

Nevertheless, we are paying special attention to their behavior because BENS helped abolish nuclear weapons in the Commonwealth of Independent States (CIS) after the collapse of the Soviet Union. At that time, the U.S. removed more than 7,000 nuclear weapons in Ukraine, Kazakhstan and Belarus. In return, the CIS countries were promised safety, economic incentives and incorporation into Western society, in accordance with the Nunn-Lugar Cooperative Threat Reduction Program (CRT) in 1991.

Companies under the control of BENS were responsible for removing and destroying the weapons and other nuclear materials, after securing a commercial contract with the U.S. government.

The resumption of the six-party talks is still clouded with difficulties, but if North Korea decides to give up its nuclear weapons, there is a high possibility that the U.S. companies will spearhead their removal.

I have not read the full report yet, but here are the details:

PRESS RELEASE EXCERPT: A newly released Asia Society/U.C.-Institute on Global Conflict and Cooperation report focuses on economic engagement with North Korea as a peaceful means of inducing change in the DPRK. As the likelihood of some form of US-DPRK talks increases, this report proposes a fundamental rethinking of Washington’s approach toward the DPRK. Economic engagement, properly integrated into a system of sanctions, can transform North Korea into a country that can better provide for its people’s welfare and engage with other countries in a non-hostile manner. As the report shows, North Korea’s history of experiments with reform is limited, and domestic resistance to transition is formidable. But recent trends and tentative past efforts suggest some impulse toward reform and opening from within. North Korea should be actively engaged from the inside to encourage change in its domestic and foreign policy.

The report identifies a number of potential benefits to the U.S. and its allies of economic engagement with the DPRK.

* Economic engagement would encourage the transformation of the DPRK’s political economy and foreign policy, with direct benefits to international peace.
* It would open space for the Korean people to have greater contact with outsiders, and vice versa.
* It would reinforce changes that are already taking place from the ground up.
* An active economic engagement policy would bring the long-term strategic approach of the U.S. into alignment with those of its allies and partners.

The report recommends a combination of the following avenues to initiate the new policy approach: official contacts, Track Two dialogues, academic exchanges, and non-governmental organizations’ (NGOs) development programs. The report further recommends that the U.S. government adopt a new visa policy to increase contacts significantly. Finally, the report suggests how the U.S. could help enable international financial institutions to begin to interact with North Korea.

Download the full report here (PDF).

According to the Los Angeles Times:

Dale Salwak, who teaches English literature by day and performs as a magician at night, knows that arranging for North Korean illusionists to visit the U.S. is no easy trick.

Salwak teaches English literature by day at Citrus College and performs illusions at night at places such as Hollywood’s Magic Castle. His skill at floating mysterious zombie balls in the air and turning silk scarves into exploding flowers earned him an invitation earlier this year to visit the secretive Asian nation.

His six-day stay in Pyongyang in April prompted him to attempt to organize an exchange program that will lead to visits by North Korean magicians to this country.

Officially, the 62-year-old Salwak was attending the 26th Spring Friendship Art Festival, which is held biannually by the Kim Jong-il government to promote “friendship, solidarity, exchange and cooperation” among musicians, dancers, acrobats and other performers.

Salwak’s invitation was arranged by several South Korean magicians who were acquainted with him. He was the only American among 680 performers from Asia and Europe. [This last fact is not true. See here.]

“When I arrived, I was told to ‘act as if you’re always being watched, because you are.’ We were given a list of dos and don’ts — ‘don’t express your feelings, don’t talk about politics’ — and told we’d have to turn over our cellphones. We weren’t allowed to take telescopic camera lenses, we could bring no books or magazines. We turned over our passports when we arrived.”

Salwak was assigned two young college-student “managers” who were at his side every time he stepped from his hotel. They spoke fluent English and translated when he spoke with others. They also supervised the two-minute phone calls he was allowed to make from the hotel.

Nonetheless, he came to respect his escorts. “I knew how I behaved, what I said, would reflect on my managers,” he said. “So I was extra careful.”

The visitors had no direct contact with regular Pyongyang residents, although they saw blocks-long lines of people waiting for buses as their group was driven through the capital, he said.

Salwak said the visiting magicians took in several North Korean magic shows and performed twice themselves. He said he staged his own impromptu 20-minute card-trick exhibition for two dozen dining room workers when he showed up early for breakfast at the hotel.

He said he hopes to arrange for the North Korean magicians’ American visit in time for them to attend a planned International Brotherhood of Magicians convention next July in San Diego. He said there will be no restrictions on where they go or whom they talk to.

“I’ve started by writing a letter and sending it through the appropriate channels. We’ll see what happens,” Salwak said.

Along with giving North Koreans an opportunity to perform here, Salwak envisions holding a forum so that the visitors can discuss their views of the performing arts and their role in it.

Read the full story below:
La Verne professor wants to pull some diplomacy out of his hat
Los Angeles Times
Bob Pool
10/9/2009

According to Reuters (via the New York Times):

The United States moved on Tuesday to freeze the assets of two North Korean entities believed to be involved in atomic and missile programs, raising pressure on Pyongyang to resume disarmament talks.

Despite a recent charm offensive by North Korea, the State Department moved against its General Bureau of Atomic Energy, which oversees the nuclear program, and Korea Tangun Trading Corp, believed to support its missile programs.

Both were targeted under a presidential executive order that allows the White House to freeze the U.S. assets of people and entities suspected of developing weapons of mass destruction or the means to deliver them, including missiles.

“These designations continue U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them,” the State Department said in a statement.

The action requires U.S. individuals, banks and other institutions to block the assets of the North Korean entities.

It was unclear whether either actually had any assets under U.S. jurisdiction but American officials said Washington hoped the move would discourage other countries from doing business with North Korea.

“Are we hoping for a spillover effect? Of course,” said one U.S. official.

These two organizations were targeted by the UNSC earlier this year.

Here is information and (links to information) taken by the US and UN in 2009.

Read the full story here:
U.S. Acts to Freeze Assets Of Two N.Korean Entities
Reuters (via New York Times)
9/8/2009

According to the AFP:

North Korean officials quietly visited Los Angeles last week to talk about resuming food aid, which the impoverished state cut off five months ago during a standoff, participants have said.

The move comes as tensions gradually ease with North Korea, which stunned the world by conducting a nuclear test earlier this year but in recent weeks has made overtures for dialogue.

Five North Korean officials received special US permission to visit Los Angeles where they met representatives of non-governmental organizations that provide relief worldwide, according to the groups.

Richard Walden, president of Operation USA, said the charity picked up the North Koreans at the airport as a goodwill gesture and took them on a tour of its warehouse stocked with medicine and medical equipment to be sent overseas.

“They were very open, very nice and very cordial,” Walden told AFP. “They looked like they were from any other aid ministry in any country.”

…

he delegation, which also met with other relief groups, included four members of the Korea-US Private Exchange Society, the North Korean body charged with handling relief goods from US non-governmental organizations.

A fifth delegation member came from North Korea’s mission at the United Nations and received special permission to travel beyond the New York area, Walden said.

I also read the North Koreans made a pit stop in Los Vegas

Read the full story here:
AFP
NKoreans on quiet US trip on food aid
8/29/2009

UPDATE 21: According to Yonhap:

Two North Korean soldiers who arrested female U.S. journalists on the border with China in March have been treated like heroes, according to North Korean media reports monitored here on Thursday.

The North Korean soldiers, Son Yong-ho and Kim Chol, appeared on a special program of the Pyongyang-based Korean Central TV Broadcasting Station and reflected on the moment they detained the two American journalists — Laura Ling and Euna Lee of the San Francisco-based Internet outlet Current TV.

During the TV program produced to celebrate the inaugural anniversary of North Korean leader Kim Jong-il, the master of ceremonies disclosed that North Korean leader Kim gave the “Kim Il-sung Youth Honor Award” and a special leave to the North Korean border guard soldiers for their “feat” in the arrest of the U.S. journalists.

Kim Il-sung, the founder of North Korea, is the father of leader Kim Jong-il.

In the TV program, soldier Son said that he received a hero’s welcome when he visited his hometown on a special leave. “I arrived in my hometown like a triumphant general. All residents came out to give me wreaths of flowers. A top local official even gave me a ride on his shoulder,” said Son.

He also recalled the American reporters’ arrest, saying, “On the early morning of March 17, we arrested the people as they appeared to have hostile purposes. One of the Americans offered us money begging for mercy, but we flatly turned down the offer.”

Laura Ling and Euna Lee were arrested in March on the China-North Korea border while reporting on refugees fleeing the isolated state. They were sentenced in June to 12 years in a labor camp for an unspecified “grave crime” and illegal border-crossing.

UPDATE 20: Ms. Ling and Ms. Lee wrote an article for the Los Angeles Times giving some more details of their capture:

We arrived at the frozen river separating China and North Korea at 5 o’clock on the morning of March 17. The air was crisp and still, and there was no one else in sight. As the sun appeared over the horizon, our guide stepped onto the ice. We followed him.

We had traveled to the area to document a grim story of human trafficking for Current TV. During the previous week, we had met and interviewed several North Korean defectors — women who had fled poverty and repression in their homeland, only to find themselves living in a bleak limbo in China. Some had, out of desperation, found work in the online sex industry; others had been forced into arranged marriages.

Now our guide, a Korean Chinese man who often worked for foreign journalists, had brought us to the Tumen River to document a well-used trafficking route and chronicle how the smuggling operations worked.

There were no signs marking the international border, no fences, no barbed wire. But we knew our guide was taking us closer to the North Korean side of the river. As he walked, he began making deep, low hooting sounds, which we assumed was his way of making contact with North Korean border guards he knew. The previous night, he had called his associates in North Korea on a black cellphone he kept for that purpose, trying to arrange an interview for us. He was unsuccessful, but he could, he assured us, show us the no-man’s land along the river, where smugglers pay off guards to move human traffic from one country to another.

When we set out, we had no intention of leaving China, but when our guide beckoned for us to follow him beyond the middle of the river, we did, eventually arriving at the riverbank on the North Korean side. He pointed out a small village in the distance where he told us that North Koreans waited in safe houses to be smuggled into China via a well-established network that has escorted tens of thousands across the porous border.

Feeling nervous about where we were, we quickly turned back toward China. Midway across the ice, we heard yelling. We looked back and saw two North Korean soldiers with rifles running toward us. Instinctively, we ran.

We were firmly back inside China when the soldiers apprehended us. Producer Mitch Koss and our guide were both able to outrun the border guards. We were not. We tried with all our might to cling to bushes, ground, anything that would keep us on Chinese soil, but we were no match for the determined soldiers. They violently dragged us back across the ice to North Korea and marched us to a nearby army base, where we were detained.

Over the next 140 days, we were moved to Pyongyang, isolated from one another, repeatedly interrogated and eventually put on trial and sentenced to 12 years of hard labor.

…

In researching the story, we sought help from several activists and missionaries who operate in the region. Our main contact was the Seoul-based Rev. Chun Ki-won, a well-known figure in the world of North Korean defectors. Chun and his network have helped smuggle hundreds of North Koreans out of China and into countries — including the U.S. — where they can start new lives. He introduced us to our guide and gave us a cellphone to use in China, telephone numbers to reach his associates and specific instructions on how to contact them. We carefully followed his directions so as to not endanger anyone in this underground world.

Because these defectors live in fear of being repatriated to North Korea, we took extreme caution to ensure that the people we interviewed and their locations were not identifiable. We met with defectors away from their actual places of work or residence. We avoided filming the faces of defectors so as not to reveal their identities. The exception was one woman who allowed us to film her profile.

Most of the North Koreans we spoke with said they were fleeing poverty and food shortages. One girl in her early 20s said she had been told she could find work in the computer industry in China. After being smuggled across the Tumen River, she found herself working with computers, but not in the way she had expected. She became one of a growing number of North Korean women who are being used as Internet sex workers, undressing for online clients on streaming video. Some defectors appeared more nervous about being interviewed than others. But they all agreed that their lives in China, while stark, were better than what they had left behind in North Korea.

We also visited a foster home run by a pastor who worked for Chun. The home housed six children born to North Korean women who were forced into marriage in China. The mothers had either been repatriated to North Korea or had abandoned their families. Because the children have Chinese fathers, it is unlikely they will be deported to North Korea. The foster home provides them with decent conditions, an education and hope for a better life.

In the days before our capture, our guide had seemed cautious and responsible; he was as concerned as we were about protecting our interview subjects and not taking unnecessary risks. That is in part why we made the decision to follow him across the river.

We didn’t spend more than a minute on North Korean soil before turning back, but it is a minute we deeply regret. To this day, we still don’t know if we were lured into a trap. In retrospect, the guide behaved oddly, changing our starting point on the river at the last moment and donning a Chinese police overcoat for the crossing, measures we assumed were security precautions. But it was ultimately our decision to follow him, and we continue to pay for that decision today with dark memories of our captivity.

After we were detained, the two of us made every effort to limit the repercussions of our arrest. In the early days of our confinement, before we were taken to Pyongyang, we were left for a very brief time with our belongings. With guards right outside the room, we furtively destroyed evidence in our possession by swallowing notes and damaging videotapes. During rigorous, daily interrogation sessions, we took care to protect our sources and interview subjects. We were also extremely careful not to reveal the names of our Chinese and Korean contacts, including Chun. People had put their lives at risk by sharing their stories, and we were determined to do everything in our power to safeguard them.

Our families and colleagues back home maintained total silence about our work for two full months, both to minimize the potential impact on sensitive underground work in China and to protect us. We were surprised to learn that Chun spoke with reporters publicly in the immediate aftermath of our arrest. Among other things, Chun claimed that he had warned us not to go to the river. In fact, he was well aware of our plans because he had been communicating with us throughout our time in China, and he never suggested we shouldn’t go. Chun’s public statements prompted members of our families to speak directly with him in Korean, pleading with him to refrain from any further comment that might jeopardize our situation and those of relief organizations working along the border.

…

We know that people would like to hear more about our experience in captivity. But what we have shared here is all we are prepared to talk about — the psychological wounds of imprisonment are slow to heal. Instead, we would rather redirect this interest to the story we went to report on, a story about despairing North Korean defectors who flee to China only to find themselves living a different kind of horror. We hope that now, more than ever, the plight of these people and of the aid groups helping them are not forgotten.

Read the full story here:
Hostages of the Hermit Kingdom
Los Angeles Times
Laura Ling and Euna Lee
9/1/2009

UPDATE 19: To read more about the DPRK’s legal processes and statutes that were in play throughout the DPRK’s detention of the two reporters, click here. 

UPDATE 18: Current TV filed for an IPO (Initial Public Offering) in January. More here. In April, shortly after Euna and Laura were captured, the IPO was cancelled:

Al Gore’s Current Media has canceled plans for a $100 million IPO. In a filing with the Securities and Exchange Commission, Current Media says it has withdrawn its registration “in light of current market conditions.” When the company initially filed for the IPO last January, it said it would use proceeds to pay down debt and fund general operations. Since then, the market has tanked, and Current Media has run into a bit of a rough spot, eliminating 60 positions in November. The company last reported results a year ago, posting a net loss of $7.5 million for the first three months of 2008, compared to a loss of $2.9 million during the same period the year before.

I am not asserting that the IPO and the Laura/Euna saga are directly related.  I am merely posting this information because it adds some context to the story.

UPDATE 17:  According to the Chison Ilbo, China used the reporters’ captured video to round up North Koreans hiding in China and those helping them:

Video footage shot by two TV journalists who were detained in North Korea after filming on the Chinese border was used by China to round up on North Korean refugees. China also deported one South Korean human rights activist who is seen in the footage and closed five orphanages that had protected North Korean children.

Chinese police also confiscated related materials including list of activists working for North Korean refugees in China, data on North Korean orphans, and video footage showing North Korean women who were sold into the Chinese countryside or appeared in porn videos.

The claims were made Thursday by Lee Chan-woo (71), a pastor with the Durihana Mission, a South Korean organization that aids North Korean defectors. Lee was caught and deported by Chinese police for helping the two reporters, who worked for former U.S. vice president Al Gore’s Internet news channel Current TV.

Lee said Laura Ling, Euna Lee and a man named Mitch Koss met him at a hotel in Yanji, in China’s Jilin Province, on March 14. They said they wanted to gather information about North Korean women who were working in adult videos at the North Korean-Chinese border area and on other North Korean women who were sold into the Chinese countryside.

They also wanted to know about children born to North Korean women and Chinese men. At the time, Lee was protecting some 21 children who had been abandoned by their Chinese families after their mothers were taken back to the North at five orphanages.

“I allowed them to collect information about the children on condition that they would not film their faces,” he said.

The three visited an orphanage the following day. Euna Lee, who speaks fluent Korean, asked children to send video messages to their mothers who had been deported to the North, and to bow to their mothers in front of the camera. But Lee said he stopped them from filming the scene.

The next day, the journalists filmed North Korean women at the border. They crossed the border and were arrested by North Korean soldiers on March 17. Ling and Lee were taken to North Korea, but Koss made it back and was arrested by Chinese border guards and handed over the video footage he was carrying.

On the early morning of Mar. 19, Chinese police raided Lee’s house and confiscated his computer, camera and various documents. “The documents contained the personal information of 25 North Korean orphans in addition to the children staying at the orphanages, and the phone numbers and addresses of human rights activists and their future plans,” he said. “I was interrogated intensively by three Korean-Chinese police officers until March 26. It was during interrogation that I found out that Chinese police had confiscated the video.”

Lee was deported to South Korea on April 8 after paying a fine of 20,000 yuan (approximately W4 million). “The five orphanages were forced to close down one by one,” he said. “I found Chinese relatives for 17 of the 21 orphans and a safe shelter for the remaining four, who have no relatives there.”

UPDATE 16:  According to the New York Times clinton’s visit, and the journalists’ release were arranged by Joseph R. DeTrani:

The visit was arranged under a veil of secrecy with the help of an unlikely broker: a high-level American intelligence officer who spent much of his career trying to unlock the mysteries of North Korea.

When former President Bill Clinton landed in Pyongyang on Aug. 4 to win the release of two imprisoned American journalists, senior officials said he met an unexpectedly spry North Korean leader, Kim Jong-il, who welcomed him with a long dinner that night, even proposing to stay up afterward.

Mr. Kim was flanked by two longtime aides, and he gave no hint that North Korea was in the throes of a succession struggle, despite the widespread questions over how long he might live.

Mr. Clinton and the Obama administration were determined not to extend a public-relations coup to Mr. Kim, who expressed a desire for better relations with the United States. But the visit is already setting off ripples that could change the tenor of the relationship between the United States and North Korea.

Mr. Clinton steered clear of broader issues during his humanitarian mission, officials said. Indeed, he did not even ask to see Mr. Kim, requesting instead a meeting with “an appropriate official.” To help the former president in case something went awry, the White House recommended John Podesta, an adviser to both Mr. Clinton and President Obama, join his delegation.

And to ensure he would not leave empty-handed, Mr. Clinton asked that a member of his entourage meet with the journalists, Laura Ling and Euna Lee, shortly after he landed to make sure they were safe, said a senior administration official, who had been briefed on the visit.

The role of the intelligence officer, Joseph R. DeTrani, in arranging the visit, has not previously been reported. Mr. DeTrani is the government’s senior officer responsible for collecting and analyzing intelligence on North Korea. His efforts to pave the way for Mr. Clinton’s visit offer a glimpse into how the administration has been forced to use unorthodox methods to overcome the lack of formal communications.

During the Bush administration, when the United States was in still in talks with North Korea, the White House did not use intelligence officers for these purposes, an official familiar with the talks said. Indeed, before taking the job of North Korea mission manager in the Office of the Director of National Intelligence in 2006, Mr. DeTrani served as the special envoy to the six-party talks with North Korea.

UPDATE 15: According to the Los Angeles Times, Lisa Ling states that Laura and Euna crossed into North Korea for “maybe 30 seconds” before they were captured and detained.   Lisa says Laura plans to write an editorial explaining what happened and how she was captured.

Additionally, the media is reporting the following quote a fair amount:

She had two guards in her room at all times, morning and night. And even though they couldn’t speak to her, somehow they developed a strange sort of kinship, Lisa Ling said. “She had some really lovely things to say about the people who were watching over her.”

My suspicion is that this “kinship” is largely imagined and was possibly even nurtured by the North Koreans.  The guards were almost certainly not doing anything they were not specifically authorized to do.  Nobody seems to realize that there were two guards stationed in her room precisely to prevent one of them from becoming acquainted with and developing sympathies for the two American women.  These guards had to report on each other as well as the prisoner.  This bastardized version of the buddy system is essentially the same reason the DPRK stations at least two guards together at each post along the DMZ.

Finally, the North Korean news videos of Clinton’s visit are finally up on Elufa.net.  You can watch and download them here. Here is KCNA coverage of President Clinton’s visit on Youtube.

Read all the posts related to this chain of events below:
(more…)

Nearly two weeks ago, the UN Security Council sanctioned five North Korean organizations. One of them was the Hyoksin Trading Corporation.  I believe they even have a web page here.

Today, the US imposed financial sanctions on this company.  According to the The Associated Press  (Via the Washington Post):

The Obama administration on Thursday imposed financial sanctions on a North Korean firm accused of involvement in the country’s missile programs.

The Treasury Department’s action covers Korea Hyoksin Trading Corp. It means any bank accounts or other financial assets found in the United States that belong to the company must be frozen. Americans also are prohibited from doing business with the firm.

It is the latest move by the United States to keep pressure on Pyongyang, whose nuclear ambitions have ratcheted up global tensions.

The department alleges that Korea Hyoksin Trading is owned or controlled by another North Korean firm, Korea Ryonbong General Corp., which the United States says is involved in the development of weapons of mass destruction. Korea Ryonbong supports Pyongyang’s sales of military-related items, the department said.

Read the full story here:
US tightens financial noose on North Korea
The Associated Press
Jeannine Aversa
7/30/2009

According to Reuters:

Countries appear even less willing to give following North Korea’s second nuclear test in May, Torben Due, the U.N. World Food Programme representative in North Korea, told a news conference in Beijing.

“It’s a very sensitive area. I understand to a certain extent why donors are questioning,” he said. “But my angle is as a humanitarian. Being a humanitarian organisation you should look at the needs of the people. WFP does not engage in the political part of it.”

Due said no new donations had been received following that second test.

An appeal for more than $500 million in food aid has been just 15 percent met, meaning a planned relief operation to reach 6.2 million people has been scaled back to target 2 million.

Due, who lives in Pyongyang and was passing through the Chinese capital, told of the human toll of the state’s struggling economy and international seclusion, with mothers and children stunted by starvation.

“We are now in the middle of the lean season in North Korea, where food supplies are low and it’s a very difficult situation for many people in the country,” he said.

“But more importantly it should be noted that we have a situation where a very large part of the population has been undernourished for 15 or 20 years.”

In some parts of North Korea, some women weigh just 45 kg (99 lb) when they give birth, he added, citing a medical survey.

“The children that survive these conditions will be born with compromised immune systems … and that will contribute to their stunting,” Due said. “It’s a problem which goes from one generation to the next.”

Given the DPRK’s prerogatives, however, the US is not inclined to send food aid.  According to the Associated Press:

The United States said Wednesday it is “very concerned” about the North Korean people but cannot send needed food aid without assurances from their Stalinist government that it will reach them.

“We currently have no plans to provide additional food aid to North Korea and any additional food would have to have assurances that it would be appropriately used,” Kelly told reporters.

“We remain very concerned about the well-being of the North Korean people,” the spokesman said.

“But we are very concerned because we need to have an adequate program management in place, monitoring and access provisions and we don’t have that right now,” he added.

He recalled that in March North Korea expelled non-governmental organization (NGO) monitors in line with its decision to reject US food aid.

“At that time we had about 22,000 metric tonnes in storage there. We’ve learned that the DPRK (North Korean) has distributed this food,” Kelly said. 

I have not seen any food prices from North Korean markets in a while.  If anyone has come across any, please send them to me. 

Recent defectors offer a more nuanced account:

The food supply in the North may have improved slightly in the past two years due to better weather, but Jo said food still is hard to come by. “Even last year, we had a campaign in Kangwon province of getting by with two meals a day. Soldiers sometimes would just get three potatoes a day.”

There is a thriving market economy in North Korea at the local level where the average person buys food staples and consumer goods often made in China. Private plots of land are increasingly used for providing food for one’s family, said Cho Myungchul, a researcher who was an economist in the North before defecting to the South 15 years ago. (Reuters)

Read more here:
U.N. says North Korea food aid has dried up
Reuters
Ben Blanchard
7/1/2009

US cannot send food aid to NKorea despites its concerns
AFP
6/1/2009

Life in North Korea: lies, potatoes and cable TV
Reuters
Jack Kim
7/1/2009

On January 21, the day after the Obama administration took office, the White House approved certain trade sanctions–initiated by the Bush administration–to be printed in the Federal Register.  These sanctions targeted specific Chinese, Iranian, and North Korean companies that the US believes were/are violating arms export regulations governing missile technology and other proliferation activities.  [Read more, including Federal Register text, here]

After North Korea conducted a long-range missile test in April, the US pushed the UN Security Council to adopt a presidential statement which blacklists several additional North Korean firms. [Read more here].

After North Korea conducted a second nuclear test, in violation of UNSC resolution, the UNSC adopted a resolution which tightened sanctions on the DPRK. [Read more here]

In June, the South Korean government imposed sanctions on these DPRK companies for the first time [Read more here]

The US followed up the UNSC resolution by announcing an inter-agency team that will focus exclusively on enforcing DPRK sanctions [Read more here] 

Today, the US Treasury Department announced it was targeting Hong Kong Electronics (Kish Island, Iran) [from where a former FBI agent is still missing] for supporting the balcklisted North Korean organizations.  According to Market Watch:

The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

What does this mean? It means that any bank accounts or other financial assets found in the United States belonging to the company must be frozen. Americans also are forbidden from doing business with the firm. This probably does not amount to much economically, but is probably intended to discourage banks outside of the US from doing business with these firms.

UPDATE 1: It looks like the State Departmet is also going after a North Korean company believe to be involved in weapons proliferation today.  According to a statement by the Treasury Department:

The U.S. Department of the Treasury today targeted North Korea’s missile proliferation network by designating Hong Kong Electronics under Executive Order 13382.  E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them, thereby isolating them from the U.S. financial and commercial systems.  Hong Kong Electronics, located in Kish Island, Iran, has been designated for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID).

Tanchon and KOMID have also been designated by the United States under E.O. 13382 and the UN Security Council under Resolution 1718. The Department of State also today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG), a North Korean nuclear-related company in Pyongyang, under E.O. 13382. 

“North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions,” said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world.”

Since 2007, Hong Kong Electronics has transferred millions of dollars of proliferation- related funds on behalf of Tanchon and KOMID. Hong Kong Electronics has also facilitated the movement of money from Iran to North Korea on behalf of KOMID. Tanchon, a commercial bank based in Pyongyang, North Korea, is the financial arm for KOMID - North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

Tanchon plays a key role in financing the sales of ballistic missiles for KOMID. Tanchon has also been involved in financing ballistic missile sales from KOMID to Iran’s Shahid Hemmat Industrial Group (SHIG), which is the Iranian organization responsible for developing liquid-fueled missiles. SHIG has been designated under E.O. 13382 and sanctioned by the United Nations under UN Security Council Resolution (UNSCR) 1737. Since 2005, Tanchon has maintained an active relationship with various branches of Iran’s Bank Sepah, an entity designated under E.O. 13382 and sanctioned by the United Nations under UNSCR 1747, for providing financial services to Iran’s missile program. The U.S. has reason to believe that the Tanchon-Bank Sepah relationship has been used for North Korea-Iran proliferation-related transactions.

Here is the press release by the State Department:

The U.S. Department of State today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG) under Executive Order 13382. E.O. 13382 is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Entities designated under E.O. 13382 are prohibited from engaging in all transactions with any U.S. person and are subject to a U.S. asset freeze.

NCG is a North Korean nuclear-related company in Pyongyang. It has been involved in the purchase of aluminum tubes and other equipment specifically suitable for a uranium enrichment program since the late 1990s.

The Department of the Treasury also today designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID). Tanchon and KOMID were designated by the United States under E.O. 13382 on June 28, 2005 and the UN Security Council under Resolution 1718 on April 24, 2009.

North Korea’s April 5, 2009 launch of a Taepo Dong-2 (TD-2) missile and May 25, 2009 nuclear test demonstrate a need for continued vigilance with respect to North Korea’s activities of proliferation concern. The designations add to continuing U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them.

McClatchy has more here.

According to the Washington Post:

The White House is ramping up its efforts to enforce sanctions against North Korea by forming a new interagency team to coordinate U.S. actions with other nations, senior administration officials said today.

The new team will be led by former ambassador to Bolivia Philip S. Goldberg, who is slated to leave for China in the near future as the U.S seeks concerted action to stop the North Korean regime from developing nuclear weapons.

“There is a broad consensus about the need to have a focused and engaged effort to see that these sanctions are implemented … and that we’re sharing information with each other,” one official said, speaking on background.

U.S. officials described the new group as a way to focus the administration more squarely on implementation of the latest sanctions, which were approved by the United Nations in the wake of North Korea’s nuclear test last month.

The officials said they are hoping the group — with representatives from the State Department, the White House, the National Security Agency, Treasury and others — will help “shine a spotlight” on the actions of the regime.

“We wanted somebody who woke up every morning and thought about nothing but sanctions implementation,” one official said. “It’s a huge difference when you have somebody who isn’t worried about any of the other aspects of this.”

The White House also announced a renewed effort to use the authority of the U.N. resolution to take financial actions against the North Korean regime in an effort to choke off the money flowing from small arms trade and other activity.

Treasury officials have issued a public memorandum to private financial institutions reminding them of the global condemnation and other risks of doing business with the North Korean regime.

The letter warns that North Korean banks and institutions often use deceptive techniques to engage in financial transactions that could place legitimate financial firms at risk.

“Financial institutions should apply enhanced scrutiny to any such correspondent accounts they maintain, including with respect to transaction monitoring,” the letter states.

One senior official said the U.S. is confident that the financial sanctions will over time help to further isolate North Korea and pressure its leaders to abandon its nuclear program.

“It’s going to take time to have a bite,” he conceded. “But we’re trying to get out of the box quickly.”

The Bush administration also had a sustained effort to implement United Nations sanctions after North Korea first tested a nuclear weapon in 2006.

The Counterproliferation Directorate of the White House National Security Council coordinated the effort, while the State Department and Treasury also co-chaired an interagency effort to examine specific cases that eventually worked their way up the chain for approval.

A team of senior officials, led by the undersecretary of State for arms control, traveled to Asia to work closely with allies. But the effort was dropped after Bush shifted course and decided to pursue diplomacy with North Korea.

Their first stops: China then Malaysia.

Citations:
New North Korea Sanctions Team Formed
Washington Post
Michael D. Shear and Glenn Kessler
6/26/2009

U.S. North Korea sanctions team to visit Malaysia
Reuters UK
7/2/2009