North Korean Economy Watch

UPDATE 13 (2011-6-1): KCNA has posted video of Ambassador Robert King leaving the DPRK with Mr. Jun.  You can see it at the new KCNA web page in an article titled, “Delegation of U.S. State Department Leaves” (May 28, 2011).   There are also pictures here, here, here, here, and here.

UPDATE 12 (2011-5-27): The DPRK has announced that they released Mr. Jun.  According to KCNA:

American Young-su Jun Released

Pyongyang, May 27 (KCNA) — As already reported, American Young-su Jun has been under investigation by a relevant institution after he was arrested in Nov. 2010 on charges of anti-DPRK crime.

The investigation proved that Jun committed serious crime against the DPRK which he frankly admitted himself.

Robert King, special envoy for Human Rights and Humanitarian Issues, U.S. State Department on a visit to the DPRK, expressed regret at the incident on behalf of the U.S. government and assured that it would make all its efforts to prevent the recurrence of similar incident. Earlier, former U.S. President Jimmy Carter and Reverend Franklin Graham visited the DPRK and repeatedly asked it to leniently pardon him. Taking all this into account, the DPRK government decided to set him free from the humanitarian stand.

During his detention, the DPRK allowed him to make regular contacts with the consul of the Swedish embassy representing the U.S. interests in the DPRK as well as correspondence and phone call with his family. It also gave him hospital treatment for his health reason.

You can read more in the Wall Street Journal and the Los Angeles Times.

UPDATE 11 (2011-5-18): The Daily NK asserts that Jun has been beaten and was supporting a network of underground churches n the DPRK.

UPDATE 10 (2011-5-11): The AP (via Washington Post) reports Eddie Jun has been visited by Swedish diplomats six times since March.

The U.S. government says that an American detained by North Korea since November is being well cared for and has been permitted to speak to his family by phone.

State Department spokesman Mark Toner said Wednesday Swedish diplomats have visited Eddie Jun six times since March and were continuing at U.S. request to ask for regular consular access.

(more…)

According to the Joong Ang Daily:

The United States has received 101 North Korean refugees in the past few years under legislation to help improve human rights conditions in the reclusive state, statistics showed Saturday.

The total breaks down to nine for 2006, 22 for 2007, 37 for 2008, 25 for 2009 and eight for 2010, according to figures released Saturday by the Office of Immigration Statistics at the Department of Homeland Security.

Hundreds of thousands of North Korean refugees are also believed to be in China.

Most North Korean refugees, fleeing poverty, aim to make their way to South Korea via neighboring China.

South Korea has received more than 20,000 North Korean defectors since the 1950-1953 Korean War.

China has come under criticism for repatriating North Korean refugees under a secret agreement with North Korea, categorizing defectors as economic immigrants rather than refugees, despite the danger of them being persecuted back home.

The North Korean refugees were admitted into the U.S. under the North Korean Human Rights Act of 2004, which calls for the provision of financial aid to help improve North Korea’s human rights and accept North Korean defectors into the U.S.

In 2008, Congress approved the North Korean Human Rights Reauthorization Act for another four years, calling for “activities to support human rights and democracy and freedom of information in North Korea,” as well as “assistance to North Koreans who are outside North Korea,” and 12-hour daily broadcasting to North Korea.

The 201 Office of Immigration Statistics Annual Flow Report also showed that 73,293 people were admitted to the U.S. as refugees in 2010.

The leading countries of nationality were Iraq (18,016), Burma (16,693) and Bhutan (12,363).


Read the full story here:
U.S. takes 101 North Korean refugees
Joong Ang Daily
2011-5-9

UPDATE 1 (2011-4-22): Apparently extended/new sanctions announced by the Obama administration this week will not affect the import of Taedonggang Beer by Mr. Park.  According to KBS:

Following the latest sanction passed by the Obama administration, the United States importation of the North Korean beer brand Taedonggang was in doubt.

But a U.S. State Department official said that individuals or companies who gained import permits for North Korean goods before the order passed can continue with importation.

The official added that the new directive does not affect any North Korean imports that have been approved by the United States government.

U.S.-based firm Korea Pyongyang Trading U.S. has been given the green light to import 400-thousand bottles of Taedonggang beer this June.

ORIGINAL POST (2011-3-6): According to the Korea Times:

The VOA also confirmed that the U.S. government last year authorized the import of a North Korean beer, called “Daedonggang”.

“I received the final authorization on Sept. 30,” said Steve Park, a U.S-based importer. The first 2,000-2,500 cases of beer will be on sale this summer.

Steve Park first gained notoriety trying to import North Korean soju to the US. He was also prosecuted for being an unregistered foreign agent. You can read about these stories here.

But I wish him all the best in this endeavor.  Taedonggang beer tastes pretty good. It is a British lager after all.

Read the original story here:
N. Korean delegation to visit NY
Korea Times
Kim Se-jeong
3/4/2011

UPDATE 4 (4/13/2011): The Street adds some more information:

A delegation of 12 North Korean economic envoys flew back to Pyongyang on Sunday after spending two weeks touring companies that “represent main strands of the U.S. economy.”

The group visited Google (GOOG), Home Depot (HD), Bloomberg, Citigroup (C), Qualcomm(QCOM), Sempra Energy(SRE), Union Bank, and Universal Studios, as well as a mushroom farm, a seafood wholesaler, and the Port of Los Angeles, where they leaned about trade infrastructure.

Journalists were not permitted access to the visitors (they entered the Googleplex through a back entrance under tight security), and no mention of the trip appeared in the American media. I stumbled upon the story after striking up a conversation with a DPRK official at the North Korean embassy in Berlin, Germany.

Located on Glinkastraße, an avenue in what was once East Berlin, the North Koreans built an 87,788 square foot compound during the 1970s. After the Cold War ended, staff numbers were significantly reduced, and, according to the surprisingly friendly official I spoke with through the embassy’s rear gate, two of the DPRK’s three buildings were leased out to private companies.

In nearly-unaccented English, he pointed out the main tenant — a youth hostel which opened for business in 2008. Though the North Korean flag flies out front, the decision to become landlords was strictly capitalistic, as years of economic sanctions have taken a tremendous financial toll on the DPRK.

After learning I was an American, the embassy official told me that a group of North Koreans happened to be in the States at that very moment.

Before I could inquire further, he was gone.

One of the few sources providing any details regarding the affair, South Korean newspaper JoongAng Ilbo, managed to obtain a copy of the delegation’s itinerary.

According to the report, “Six director-level officials were in the group, including the delegation’s head, Yon Il, a director at North Korea’s trade ministry. The other directors work for the trade ministry, agriculture ministry, finance ministry and industry ministry.”

Other delegates included lower level North Korean directors and managers, two advisors, and a researcher from a North Korean trade bank.

While Russian news outlet ITAR-TASS maintained that “[T]he initiator of these meetings is unknown,” the North Koreans were in fact invited to the U.S. by Susan Shirk, director of the Institute on Global Conflict and Cooperation at the University of California, “to see firsthand what improved relations with the United States might mean in terms of economic cooperation.”

From 1997-2000, Shirk served as Deputy Assistant Secretary of State in the Bureau of East Asia and Pacific Affairs from 1997-2000, and is the head of the Northeast Asia Cooperation Dialogue, an organization engaged in “track-two” diplomacy.

As described by Tong Kim, a research professor with the Ilmin Institute of International Relations at Korea University and an adjunct professor at Johns Hopkins University’s School of Advanced International Studies, the track-two approach “refers to contact, exchange of views, and other conduit activities between civilian organizations or individuals of two countries that are in dispute with each other.”

An email to Shirk seeking further details of last week’s visit was met with a terse “Sorry, no comment.” But sources say the North Koreans attended lectures at Stanford University and NYU, where they learned about “the market economy, consumer protection, what a CEO does, corporate strategies in the U.S., and an overview of the western legal system.”

This is one of the pillars of the track-two strategy. In “North Korea Inside Out: The Case for Economic Engagement,” a December, 2009 policy paper from an independent task force chaired by Dr. Shirk and Charles Kartman, former director of the Korean Peninsula Energy Development Organization, the case is made that:

The United States should adopt a long-term strategy of economic engagement with North Korea. North Korea’s attitude toward the world is closely related to the underlying structure of its domestic political-economy: a closed, command economy that favors the military and heavy industry and is isolated from the sweeping economic and political changes that have transformed the Asian landscape in recent decades. Encouraging a more open and market-friendly economic growth strategy would benefit the North Korean people as a whole and would generate vested interests in continued reform and opening, and a less confrontational foreign policy. In other words, economic engagement could change North Korea’s perception of its own self-interest. China’s economic transformation stands as an important precedent, showing how a greater emphasis on reform and opening can have positive effects on foreign policy as well. Economic change has the potential to induce and reinforce the D.P.R.K.’s peaceful transition into a country that can better provide for its people’s welfare and engage with other countries in a non-hostile manner.

Some, more hawkish Korea-watchers brush aside track-two diplomacy as a rube’s game being played with a staunchly anti-American entity that already knows far more about the outside world than it lets on.

However, there aren’t many other options in this increasingly unstable era, as a North Korean power handoff from Kim Jong Il to his son, Kim Jong Eun, is said to be in the offing.

Professor John W. Lewis of the Center for International Security and Cooperation at Stanford, who has been involved in track-two negotiations with North Korea since 1986, told the Stanford News Service, “They would definitely prefer to have these talks and meetings with American officials. But since American officials won’t talk to them, we’re the only game in town. We have this weird access.”

A wholesale transformation of the North Korean political-economy would surely reap unprecedented benefits for the world at large. Of course, it would also benefit tremendously the foreign business concerns that manage to be first to market.

In this instance, Susan Shirk’s deep connections in Washington certainly bear mentioning. Shirk is a Senior Director at the Albright Stonebridge Group, a “global strategy firm that helps corporations, associations and non-profit organizations around the world meet their core objectives in a highly competitive, complex and ever-changing marketplace,” which happens to be led by former National Security Advisor Samuel R. Berger, former Senator Warren B. Rudman, and former Secretary of State Madeleine Albright — the first American official ever to visit North Korea.

The company “address[es] challenges for clients in any country, and work[s] with them to develop and implement winning strategies for long-term growth and success” — something that dovetails nicely with the goals of Albright Capital Management, an “emerging markets investment firm” of which Albright Stonebridge is “a significant shareholder” and “strategic partner”, “leveraging collective networks and skills to enhance each firm’s ability to serve as a trusted advisor in the emerging markets.”

The kind of access someone like Madeleine Albright provides cannot be understated.

“We see a lot of potential in emerging markets for economic growth,” Jelle Beenen, a portfolio manager at Dutch investment firm PGGM, told Bloomberg in 2007. “The reason that investing there is always a problem is there are issues like fraud and political instability, so that’s why there’s value in political-risk management and the involvement of Secretary Albright is a valuable one.”

Could the “DPRK 12″ be sending a signal that the North “is finally getting serious about introducing more market-based economic reforms?” JoonAng Ilbo asks. “Has the reformist message that China, its closest ally, has been hammering home for years finally gotten across? Or is the envoys’ mission just a conciliatory gesture to try to woo food aid from the U.S. amid a deepening food crisis?”

The short answer is, no one knows.

David Straub, a former Senior Foreign Service Officer who spent 30 years focused on Northeast Asian affairs declined a request for comment, but in a recent paper, asserted that, “The fact of the matter is that no one, not even in Pyongyang, really knows what is going to happen there. I believe there could be dramatic change in the regime in North Korea even as you are reading this, but I also believe it is possible that the regime could last many decades more.”

Henry Rowen, Co-director of Stanford’s Program on Regions of Innovation and Entrepreneurship, Director emeritus of the Shorenstein Asia-Pacific Research Center, and a Senior Fellow at the Hoover Institution who gave a presentation to the North Koreans, said in an email that he knew “very little about the group and its mission,” though he added a caveat that, “My hunch is that it was less significant than you suggest.”

Most optimistic of all seems to be Dr. Siegfried Hecker, former director of Los Alamos National Laboratory (1986-97) and current co-director of Stanford’s Center for International Security and Cooperation.

Hecker, who has been granted access to North Korea’s Yongbyon nuclear complex, told an audience about an experience he had during a recent visit to Pyongyang.

As Hecker entered a subway station in the capital city, he encountered a young man “wearing a backwards baseball cap with a Nike(NKE_) swoosh.”

“When he gets to be 21 years old, they’re gonna have a hard time keeping him down on the farm,” Hecker said.

“Where there is ‘swoosh,’ there is hope.”

UPDATE 3 (4/2/2011): The Delegation spent the day in Silicon Valley touring Google headquarters and attending a talk at Stanford University.  According to Yonhap:

A delegation of North Korean economic officials toured Silicon Valley on Friday, as their rare two-week trip to the United States was heading to a close.

The 12-member delegation, comprising mid-level officials from the trade, agriculture and other ministries, has been in the U.S. since March 19 at the invitation of the Institute on Global Conflict and Cooperation at University of California, San Diego.

The group also had visited New York earlier this week.

On Friday, the North Koreans toured Silicon Valley which included a visit to the world’s largest Internet firm, Google, for about an hour and 40 minutes amid tight security. The delegation got into the building through a backdoor, and security guards restricted journalists from accessing the visitors.

Officials from the San Francisco-based Asia Foundation accompanied the North Koreans.

After the visit to Google, the delegation moved to Stanford University and attended a lunch seminar organized by the school’s Asia-Pacific Research Center.

The two-hour seminar was about industry-university cooperation and also drew well-known U.S. experts on North Korea, such as nuclear scientist Siegfried Hecker and former Defense Secretary William Perry, according to a participant who requested anonymity.

The North Koreans were scheduled to leave for home on Sunday.

It is rare for North Korean officials to visit the U.S. The North and the U.S. fought in the 1950-53 Korean War and have no diplomatic relations. The two sides have also been at odds over Pyongyang’s nuclear programs and a series of provocations.

The Choson Ilbo also covered the visit to Google and Stanford–including a rather funny photo.

UPDATE 2 (3/27/2011): (New York, NY) According to Yonhap:

A delegation of North Korean economic officials arrived in New York on Sunday, saying that they want to explore the possibility of economic cooperation with the United States

The 12-member delegation, comprising mid-level officials from the trade, agriculture and other ministries, flew from San Diego, where they had stayed after arriving in the U.S. on March 19 at the invitation of the Institute on Global Conflict and Cooperation at University of California, San Diego.

The delegation’s trip to New York was organized by the Asia Society.

It is rare for North Korean officials to visit the U.S. The North and the U.S. fought in the 1950-53 Korean War and have no diplomatic relations. The two sides have also been at odds over Pyongyang’s nuclear programs and a series of provocations.

But the trip came amid recent talk of the possibility of the U.S. resuming food aid to the impoverished nation and as former U.S. President Jimmy Carter is preparing to visit the communist nation to broker rapprochement between the two Cold War foes.

“We’re an economic delegation. We’re here to discuss and look for the possibility of economic cooperation between us and the United States,” one member of the delegation said, without giving his name.

Washington has downplayed the significance of the North’s delegation, stressing that their visit is a privately organized event in which the government has played no part.

“Our assessment is that they are not here for talks between the North and the U.S., considering the agencies they belong to and their ranks,” a source here said. “It’s difficult to fathom the real intentions of the North, but for the U.S., it might have seen no reason to reject the North’s delegation coming to learn about the capitalist economy.”

In New York, the North Korean officials are expected to attend an Asian Society seminar and visit media firms and Wall Street. The Asia Society has strictly barred reporters from access to the North Koreans, saying their trip is part of private-level exchanges.

UPDATE 1 (3/26/2011): (San Diego, California)  According to the Joong Ang Ilbo:

A tour bus with black tinted windows pulled up to a hotel in La Jolla, San Diego, at 5:30 p.m. on Monday and from it stepped out 12 strangers from a strange land.

The 12 were so-called “economic envoys” from North Korea who, according to their host, came to learn about American-style capitalism for one week.

Susan Shirk, director of the Institute on Global Conflict and Cooperation (IGCC) at the University of California, San Diego, invited the envoys, all North Korean officials in charge of economic affairs.

The IGCC is one of the United States’ influential, private diplomatic channels for dialogue with the communist country.

The U.S. government calls the envoys’ mission a private trip, but some North Korea watchers are trying to read more into it.

Could it be a signal that the North is finally getting serious about introducing more market-based economic reforms as leader Kim Jong-il searches for substantial achievement to smooth his relinquishment of power to his youngest son Jong-un? Has the reformist message that China, its closest ally, has been hammering home for years finally gotten across? Or is the envoys’ mission just a conciliatory gesture to try to woo food aid from the U.S. amid a deepening food crisis?

One of the 12 North Koreans admitted to JoongAng Ilbo reporters that they came to the U.S. to study the market economy. But none answered why they wanted to.

The attempt to interview them was cut short when the North Koreans got nervous. The reporters only could ask one additional question about whether the envoys knew about the democratic movements in the Middle East.

“We are not deaf,” one replied.

For the week, they will study capitalism at the IGCC building, 10 minutes away from the hotel.

ORIGINAL POST (3/4/2011): According ot the Korea Times:

A North Korean economic delegation will visit San Diego and New York City for two weeks from March 20.

Susan Shirk, director of the Institute on Global Conflict and Cooperation at the University of California, San Diego, invited the ten-member delegation who will learn about Western economic systems and theory during their stay, the Voice of America (VOA) reported.

Between 1997 and 2000, Shirk served as deputy assistant secretary of state in the East Asia and Pacific Affairs bureau, and went to North Korea last year as a director of the institute, to discuss North Korea-U.S. cooperation on a private level.

Read the full story here:
N. Korean delegation to visit NY
Korea Times
Kim Se-jeong
3/4/2011

According to the Rumsfeld Papers there were 69  North Koreans serving active duty in the US armed services in April 2003.

Source here (PDF).

Much more discussion in the comments.

(h/t to a colleague)

The Senate Foreign Relations Committee held a hearing on March 1st titled, “Breaking the cycle of North Korean provocations”.

All of the video and printed testimony can be found here.

Panelists included:
The Honorable Kurt Campbell
Assistant Secretary of State for East Asia and Pacific Affairs
Department of State
(Download testimony)

The Honorable Stephen Bosworth
Special Representative for North Korea Policy
Department of State
(Download testimony)

Mr. L. Gordon Flake
Executive Director
The Mansfeild Foundation
(Download testimony)

Download Testimony
Dr. Marcus Noland
Deputy Director
Peterson Institute for International Economics
(Download testimony)

Download Testimony
Dr. Robert Carlin
Center for International Security and Cooperation, Stanford University
(Download testimony)

According to the Korea Times:

Dr. Stephen Linton, founder of the Eugene Bell Foundation, says his group’s program to combat multidrug resistant TB (MDRTB) has cured its first patients after four years of working to establish adequate care in the North.

“We’re making progress,” Linton, 60, said in a phone interview. “It has been a tremendous learning curve for the North Koreans on a very short time frame. It takes most nations decades to put together a good MDRTB program because the treatment is so intensive.”

A growing health concern worldwide, MDRTB emerges when regular TB is inadequately treated, creating bacteria resistant to first- and sometimes second-line drugs. Half of those who do not get treatment, which can take up to two years to complete, die.

The problem is compounded in poor countries not properly equipped to diagnose the disease and where malnutrition makes the body more susceptible to TB.

The organization’s hopeful outlook follows its most recent trip to the North in November last year, when it found a steadily-increasing rate of patients testing negative for the strain ― meaning they are no longer infective.

It also comes as the international community wrestles with how to help the impoverished country ― which has called in recent weeks for humanitarian assistance ― without supporting its provocative behavior.

In the case of treating MDRTB, the doctor says the breakthrough would be impossible without meaningful contributions on both sides of the tense border that divides the Koreas.

Powerful medicine

By 2007, Linton had been travelling to the North to treat TB for more than a decade, so he was braced for the news when caregivers complained that first-line drugs were not helping some patients.

“I knew it was going to be a real headache,” he said of the undertaking. “But the commitment of our donors and the desire to treat the people in most need ― that was a powerful incentive.”

Later that year, Linton and his team took sputum from 19 patients, brought the samples to a South Korean hospital for analysis, and returned six months later with medicine. On subsequent trips, the number of patients wanting the test grew.

By 2009, as an indication of the worsening health situation but also the growing trust in the program, Eugene Bell was overwhelmed by crowds of people at its testing centers.

The program now accommodates upwards of six hundred patients at six specialized centers across the country’s northwest.

Linton, who spent his childhood in South Korea, says the process requires significant “buy-in” from North Koreans, beginning with the health authorities.

In their biggest show of cooperation, the government agreed to Eugene Bell’s recommendation that treatment take place in centrally-located MDRTB centers, despite reluctance over the logistics.

It also needs the dedication of health care providers, who must vigilantly keep patients on their programs. If not, they can become resistant to MDRTB medications, opening the door for the emergence of XDRTB, which Linton calls “virtually incurable.”

But the biggest commitment comes from patients, who are prescribed with a harsh cocktail of drugs. Some need to learn to trust outside help, not always an easy task in the isolated country.

“This is a very rigorous and rough treatment program. It takes a lot of very strong, toxic medicines to treat MDRTB. Patients suffer a good bit,” said Linton, who counted nausea, vomiting, temporary deafness and psychosis as side effects.

If after eighteen months, a patient’s sputum tests negative for MDRTB, they are effectively cured. But if after a year they still test positive, the treatment is considered a failure.

“Most of those people know, because they are still coughing up phlegm,” the doctor said. “But failing people is terrible. This work can be very dramatic at times.”

You can read previous posts about the Eugene Bell Foundation here.

UPDATE: On February 24th the Korea Economic Institute held a conference with Dr. Sharon Perry, DPRK Tuberculosis Project, Stanford School of Medicine.  You can see the video of the conference here: Part 1, Part 2, Part 3, Part 4. The paper is here (PDF).

Read the full sotry here:
Aid group engages N. Korea in fight against TB
Korea Times
Kim Joung-jin
2/21/2011

According to the Choson Ilbo:

The U.S. State Department cut the entire budget for promoting democracy in North Korea from a 2012 budget proposal submitted to Congress on Monday. Since 2008, the department allocated US$2.5-3.5 million a year to the Economic Support Fund to support organizations working for democratization and human rights there, but it did not allocate a penny to the fund this year.

“Many government agencies are cutting their budgets, and so is the State Department,” said a diplomatic source in Washington. “It has drastically cut funds for other countries such as the Philippines as well.”

But Radio Free Asia quoted a State Department official as saying it is possible that Washington will keep supporting the North through an emergency relief fund.

Read the full story here:
US Scraps Budget for Promoting Democracy in N.Korea
Choson Ilbo
2/16/2011

According to Voice of America:

US news broadcaster Voice of America has reported that the American government allowed 3.1 million US dollars worth of goods to be exported to North Korea last year.

Out of the 18 export cases 15 of them were humanitarian goods such as food and medical items, while the other three were portable generators.

Currently there are various export restrictions placed on North Korea by the US due to the North’s nuclear programs and its human rights abuses.

But the American government allows certain exports for humanitarian purposes such as blankets, shoes and medicine on a case-by-case basis.

Read the full story here:
US Allowed $3.1 Million Worth of Exports to N. Korea : VOA
Arirang News
2/12/2011

Each year the “intelligence community” in the person of the Office of the Director of National Intelligence (ODNI) reports to the US Congress on the status of potential threats from across the globe.

Below I have posted the texts of these reports as they relate to the DPRK.  I have also provided links to the reports themselves should you be interested in continuing your research.

FEBRUARY 10, 2011: Statement for the Record on the Worldwide Threat Assessment of the U.S. Intelligence Community for the House Permanent Select Committee on Intelligence

North Korea (p 6-7)
Pyongyang’s nuclear weapons and missile programs pose a serious threat to the security environment in East Asia, a region characterized by several great power rivalries and some of the world’s largest economies. North Korea’s export of ballistic missiles and associated materials to several countries, including Iran and Syria, and its assistance to Syria in the construction of a nuclear reactor, destroyed in 2007, illustrate the reach of the North’s proliferation activities. Despite the October 2007 Six-Party agreement in which North Korea reaffirmed its commitment not to transfer nuclear materials, technology, or know-how, we remain alert to the possibility North Korea could again export nuclear technology.

We judge North Korea has tested two nuclear devices. The North’s October 2006 nuclear test is consistent with our longstanding assessment that it had produced a nuclear device, although we judge the test itself to have been a partial failure. The North’s probable nuclear test in May 2009 is consistent with our assessment that the North continued to develop nuclear weapons, and with a yield of roughly two kilotons TNT equivalent, was apparently more successful than the 2006 test. Although we judge North Korea has tested two nuclear devices, we do not know whether the North has produced nuclear weapons, but we assess it has the capability to do so.

In November 2010, North Korean officials told US visitors that North Korea is building its own light water reactor (LWR) for electricity production. The claimed prototype LWR has a planned power of 100 megawatt-thermal and a target completion date of 2012. North Korean officials also told the US visitors in November that it had constructed and started operating a uranium enrichment facility at Yongbyon that they claimed was designed to produce low-enriched uranium (LEU) and support fabrication of reactor fuel for the LWR. The US visitors were shown a facility at the existing fuel fabrication complex in Yongbyon, which North Korea described as a uranium enrichment plant. North Korea further claimed the facility contained 2,000 centrifuges and was operating and producing LEU that would be used to fuel the small LWR. The North’s disclosure supports the United States’ longstanding assessment that the DPRK has pursued a uranium-enrichment capability.

We judge it is not possible the DPRK could have constructed the Yongbyon enrichment facility and begun its operation, as North Korean officials claim, in such a short period of time—less than 20 months—without having previously conducted extensive research, development, testing, fabrication, and assembly or without receiving outside assistance.

Based on the scale of the facility and the progress the DPRK has made in construction, it is likely that North Korea has been pursuing enrichment for an extended period of time. If so, there is clear prospect that DPRK has built other uranium enrichment related facilities in its territory, including likely R&D and centrifuge fabrication facilities, and other enrichment facilities. Analysts differ on the likelihood that other production-scale facilities may exist elsewhere in North Korea.

Following the Taepo Dong 1 launch in 1998, North Korea conducted launches of the Taepo Dong 2 (TD-2) in 2006 and more recently in April 2009. Despite the most recent launch’s failure in its stated mission of orbiting a small communications satellite, it successfully tested many technologies associated with an ICBM. Although both TD-2 launches ended in failure, the 2009 flight demonstrated a more complete performance than the July 2006 launch. North Korea’s progress in developing the TD-2 shows its determination to achieve long-range ballistic missile and space launch capabilities. If configured as an ICBM, the TD-2 could reach at least portions of the United States; the TD-2 or associated technologies also could be exported.

Because of deficiencies in their conventional military forces, the North’s leaders are focused on deterrence and defense. The Intelligence Community assesses Pyongyang views its nuclear capabilities as intended for deterrence, international prestige, and coercive diplomacy. We judge that North Korea would consider using nuclear weapons only under certain narrow circumstances. We also assess, albeit with low confidence, Pyongyang probably would not attempt to use nuclear weapons against US forces or territory unless it perceived its regime to be on the verge of military defeat and risked an irretrievable loss of control.

North Korea (p11-12)
We assess that North Korea‟s artillery strike on Yeonpyeong Island on 23 November was meant in part to continue burnishing successor-designate Kim Jong Un‟s leadership and military credibility among regime elites, although other strategic goals were also factors in the attack. Kim Jong Il may feel the need to conduct further provocations to achieve strategic goals and portray Jong Un as a strong, bold leader, especially if he judges elite loyalty and support are in question.

Kim Jong Il has advanced preparations for his third son to succeed him, by anointing him with senior party and military positions, promoting probable key supporting characters, and having the younger Kim make his first public appearances. These steps strengthened the prospects for the 27-year old Jong Un to develop as a credible successor, but the succession process is still subject to potential vulnerabilities, especially if Kim Jong Il dies before Jong Un consolidates his authority.

The North has signaled it wants to return to a nuclear dialogue. The North probably wants to resume nuclear discussions to mitigate international sanctions, regain international economic aid, bolster its ties with China, restart bilateral negotiations with South Korea and the United States, and try to gain tacit international acceptance for its status as a nuclear weapons power.

Since 2009, Pyongyang has made a series of announcements about producing enriched uranium fuel for an indigenous light water reactor that it is building at its Yongbyon nuclear complex. In midNovember, 2010, the North showed an unofficial US delegation what it claims is an operating uranium enrichment facility located in the Yongbyon rod core production building.

North Korea‟s conventional military capabilities have eroded significantly over the past 10-15 years due to persistent food shortages, poor economic conditions, inability to replace aging weapons inventories, reduced training, and increased diversion of the military to infrastructure support. Therefore, Pyongyang increasingly relies on its nuclear program to deter external attacks on the state and to its regime. Although there are other reasons for the North to pursue its nuclear program, redressing conventional weaknesses is a major factor and one that Kim and his likely successors will not easily dismiss.

Nevertheless, the Korean People‟s Army remains a large and formidable force capable of defending the North. Also, as demonstrated by North Korean attacks on the South Korean ship Cheonan in March 2010 and Yeongpyong Island in November. North Korea is capable of conducting military operations that could potentially threaten regional stability. These operations provide Pyongyang with what the regime may see as a means to attain political goals through coercion.

The full 2010 report can be downloaded in PDF here.

FEBRUARY 2, 2010: Annual Threat Assessment of the Intelligence Community for the House Permanent Select Committee on Intelligence

North Korean WMD and Missile Programs (p14-15)
Pyongyang’s nuclear weapons and missile programs pose a serious threat to the security environment in East Asia. North Korea’s export of ballistic missiles and associated materials to several countries including Iran and Pakistan, and its assistance to Syria in the construction of a nuclear reactor, exposed in 2007, illustrate the reach of the North’s proliferation activities. Despite the Six-Party October 3, 2007 Second Phase Actions agreement in which North Korea reaffirmed its commitment not to transfer nuclear materials, technology, or know-how we remain alert to the possibility North Korea could again export nuclear technology.

The North’s October 2006 nuclear test was consistent with our longstanding assessment that it had produced a nuclear device, although we judge the test itself to have been a partial failure based on its less-than-one-kiloton TNT equivalent yield. The North’s probable nuclear test in May 2009 supports its claim that it has been seeking to develop weapons, and with a yield of roughly a few kilotons TNT equivalent, was apparently more successful than the 2006 test. We judge North Korea has tested two nuclear devices, and while we do not know whether the North has produced nuclear weapons, we assess it has the capability to do so. It remains our policy that we will not accept North Korea as a nuclear weapons state, and we assess that other countries in the region remain committed to the denuclearization of North Korea as has been reflected in the Six Party Talks.

After denying a highly enriched uranium program since 2003, North Korea announced in April 2009 that it was developing uranium enrichment capability to produce fuel for a planned light water reactor (such reactors use low enriched uranium); in September it claimed its enrichment research had “entered into the completion phase”. The exact intent of these announcements is unclear, and they do not speak definitively to the technical status of the uranium enrichment program. The Intelligence Community continues to assess with high confidence North Korea has pursued a uranium enrichment capability in the past, which we assess was for weapons.

Pyongyang’s Conventional Capabilities. Before I turn the North Korean nuclear issue, I want to say a few words regarding the conventional capabilities of the Korea People’s Army (KPA). The KPA’s capabilities are limited by an aging weapons inventory, low production of military combat systems, deteriorating physical condition of soldiers, reduced training, and increasing diversion of the military to infrastructure support. Inflexible leadership, corruption, low morale, obsolescent weapons, a weak logistical system, and problems with command and control also constrain the KPA capabilities and readiness.

Because the conventional military capabilities gap between North and South Korea has become so overwhelmingly great and prospects for reversal of this gap so remote, Pyongyang relies on its nuclear program to deter external attacks on the state and to its regime. Although there are other reasons for the North to pursue its nuclear program, redressing conventional weaknesses is a major factor and one that Kim and his likely successors will not easily dismiss. Six Party Talks and Denuclearization. In addition to the TD-2 missile launch of April 2009 and the probable nuclear test of May 2009, Pyongyang’s reprocessing of fuel rods removed from its reactor as part of the disablement process appears designed to enhance its nuclear deterrent and reset the terms of any return to the negotiating table. Moreover, Pyongyang knows that its pursuit of a uranium enrichment capability has returned that issue to the agenda for any nuclear negotiations. The North has long been aware of US suspicions of a highly enriched uranium program.

We judge Kim Jong-Il seeks recognition of North Korea as a nuclear weapons power by the US and the international community. Pyongyang’s intent in pursuing dialogue at this time is to take advantage of what it perceives as an enhanced negotiating position, having demonstrated its nuclear and missile capabilities.

The full 2010 report can be downloaded in PDF here.

FEBRUARY 25, 2009: Annual Threat Assessment of the Intelligence Community for the House Permanent Select Committee on Intelligence

North Korea’s Nuclear Ambitions (p24-26)
In addition to a possible India-Pakistan conflict, Pyongyang’s nuclear ambitions and proliferation behavior threaten to destabilize East Asia. The North’s October 2006 nuclear test is consistent with our longstanding assessment that it had produced a nuclear device. Prior to the test, we assessed that North Korea produced enough plutonium for at least a half dozen nuclear weapons. The IC continues to assess North Korea has pursued a uranium enrichment capability in the past. Some in the Intelligence Community have increasing concerns that North Korea has an ongoing covert uranium enrichment program.

Pyongyang probably views its nuclear weapons as being more for deterrence, international prestige, and coercive diplomacy than for warfighting and would consider using nuclear weapons only under certain narrow circumstances. We also assess Pyongyang probably would not attempt to use nuclear weapons against US forces or territory unless it perceived the regime to be on the verge of military defeat and risked an irretrievable loss of control. Progress was made, albeit painstakingly, last year in Six Party Talks; the DPRK has shut down three core facilities at Yongbyon and has completed eight of the eleven disablement steps. However, much work remains. At the latest round of talks held in December in Beijing, the DPRK refused to agree to a Six Party verification protocol needed to verify the completeness and correctness of its nuclear declaration. Since then, Pyongyang has issued hardline statements suggesting further challenges to denuclearization.

On the proliferation side, North Korea has sold ballistic missiles and associated materials to several Middle Eastern countries, including Iran, and, in our assessment, assisted Syria with the construction of a nuclear reactor. We remain concerned North Korea could again export nuclear technology. In the October 3 Second Phase Actions agreement, the DPRK reaffirmed its commitment not to transfer nuclear materials, technology, or know-how. We assess Pyongyang is less likely to risk selling nuclear weapons or weapons-quantities of fissile material than nuclear technology or less sensitive equipment to other countries or non-state actors, in part because it needs its limited fissile material for its own deterrent. Pyongyang probably also perceives that it would risk a regime-ending military confrontation with the United States if the nuclear material was used by another country or group in a nuclear strike or terrorist attacks and the United States could trace the material back to North Korea. It is possible, however, that the North might find a nuclear weapons or fissile material transfer more appealing if its own stockpile grows larger and/or it faces an extreme economic crisis where the potentially huge revenue from such a sale could help the country survive.

We assess that poor economic conditions are fueling systemic vulnerability within North Korea. Public statements by the regime emphasize the need for adequate food supplies. A relatively good fall harvest in 2008, combined with the delivery of substantial US food aid—500,000 tons of grain have been promised and about one-third of this has been delivered—probably will prevent deterioration in the food security situation during the next few months. However, we assess North Korea is still failing to come to grips with the economic downturn that began in the early 1990s and that prospects for economic recovery remain slight. In addition to food, shortages in fertilizer and energy continue to plague the economy. Investment spending appears is negligible, trade remains weak, and we see little progress toward economic reforms. Pyongyang has long been in default on a relatively large foreign debt and we assess that badly needed foreign investment will not take place unless the North comes to terms with its international creditors and conforms to internationally accepted trade and financial norms, badly needed foreign investment will not take place.

Pyongyang’s strategic posture is not helping its economy. Trade with Japan has fallen precipitously since the nuclear and missile tests of 2006, and, while commercial trade with South Korea rose in 2008, South Korean aid and tourism to the North declined due to increased North-South tensions.

Despite this poor economic performance and the many privations of the North Korean public, we see no organized opposition to Kim Jong Il’s rule and only occasional incidents of social disorder. Kim probably suffered a stroke in August that incapacitated him for several weeks, hindering his ability to operate as actively as he did before the stroke. However, his recent public activities suggest his health has improved significantly, and we assess he is making key decisions. The state’s control apparatus by all accounts remains strong, sustaining the dismal condition of human rights in North Korea.

The full 2009 report can be downloaded in PDF here.