Archive for the ‘’ Category

DPRK strengthens travel restrictions along Chinese border

Sunday, April 28th, 2013

…More signs of “forward to the past”?

Last week the Daily NK reported that the DPRK had been distributing enough rice to lower the price. It is still unclear if this practice will continue.  This week the Daily NK reports that the DPRK has stepped up travel restrictions along the Chinese border:

The North Korean authorities are operating enhanced controls on transit through the region of the country closest to China, including close checks on the documentation of travellers passing through in the direction of the Sino-North Korean border.

Part of the process means it has become more difficult to obtain travel permits. Although the issuance of such permits was recently resumed following months of combat mobilization and other activities that limited movement, the process of traveling through the border is making life difficulties.

A North Hamkyung Province source told Daily NK on the 26th, “The issuance of travel permits resumed on the 21st of last month, but the procedure when moving in the border region has gotten more demanding than ever. Travel permits need to be approved with not just the signature but also the seal of a person’s local PSM (Ministry of People’s Safety), relevant security agency and workplace, and if the trip is for a traditional ceremonial occasion such as a funeral then they must get a further confirmation letter saying so.”

“In the past, they did not ask for the confirmation letter, or the seal of the local security forces and NSA (National Security Agency, the state security organ) for that matter. But now they are asking for this and that certificate; it’s as if travellers are criminals,” the source said, recalling, “We used to be able to easily get travel permits by bribing people or having close associates in certain positions.”

Even for those with a permit there are still multiple layers of security and checks on the way to the border.

“Even after you get a travel permit by paying bribes, there are still the PSM agents on the trains and railway staff doing hourly checks,” the source said. “People say it is worse than the customs checks on the border.”

“Stations are being locked down by soldiers and then intensive body and baggage checks are taking place at Gomusan (the station before Musan and Hoiryeong on the Musan Line (train 9-10) and Sariwon-Rajin Line (train 113-114)) and at Huchang (the station before Rajin on the Pyongyang-Tumen River Line (train 7-8)),” the source noted. “They even have magnetic detectors for the body checks.”

Travellers ensnared by the checks are supposed to be detained locally until a security agent from his or her area of residence arrives to deal with the case. However, payments of 50,000 to 100,000 Won are apparently sufficient to attain release for those who simply don’t have the right transit permits. The only ones whose release cannot be obtained so easily are those caught with South Korean materials in their baggage; they face re-education or labor camp sentences, sources say.

Read the full story here:
Strain on the Border Trains
Daily NK
Choi Song Min
2013-4-29

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Taedonggang Fruit Processing Factory Railway Line

Friday, September 14th, 2012

Pictured above (Google Earth): The new Taedonggang Fruit Processing Factory Railway Line (in yellow). I previously blogged about this railway line here.

On August 31, KCNA announced “Railway line of Taedonggang Combined Fruit Processing Factory goes operational” and that the opening ceremony was attended by staff from the Ministry of People’s Security (MPS) and Korean People’s Internal Security Forces (KPISF). The KPISF is part of the MPS.

The presence of so many security personnel might seem odd for the opening of a railway line that is intended to provide fruit products to North Korean consumers. However, because this very same railway line connects the Kim family compound in Kangdong with the city of Phyongsong by rail (See above map), the heavy security presence seems understandable.  This railway line will be heavily watched.

The interesting (and speculative) takeaway is that it might be the case that security for the Kim family is now under the portfolio of the KPISF and not the State Security Department (SSD, Ministry of State Security, anjon-bowibu), KPA, or Military Security Command.

To learn more about the North Korean security services, check out: Coercion, Control, Surveillance, and Punishment: An Examination of the North Korean Police State by Ken E. Gause.

Below is the complete report featured in KCNA:

Railway Line of Taedonggang Combined Fruit Processing Factory Goes Operational

Pyongyang, August 31 (KCNA) — A new railway line branching into the Taedonggang Combined Fruit Processing Factory went operational with due ceremony on Friday.

The operation of the railway line helps satisfactorily carry fruits and processed goods produced by the Taedonggang Combined Fruit Farm and factories in this area and materials necessary for their management and operation.

Present at the ceremony were officials of the Ministry of People’s Security, servicepersons of the Korean People’s Internal Security Forces, officials concerned, builders and employees of the factory.

At the end of the ceremony the first train carrying fruits to be supplied to Pyongyang citizens left the factory.

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Coercion, control, surveillance, and punishment: An examination of the North Korean police state

Thursday, July 19th, 2012

Today The Committee for Human Rights in North Korea (HRNK) is releasing “Coercion, Control, Surveillance, and Punishment: An Examination of the North Korean Police State” (PDF) by Ken Gause.

Here is the table of contents:

Part I: The Internal Security Agencies
–State Security Department (SSD)
–Ministry of People’s Security (MPS)
–Military Security Command (MSC)
–Neighborhood Watch Units (In-min-ban)
–Ad Hoc Social Monitoring Organizations
Part II: What the Internal Security Agencies Do
–Surveillance of North Korea’s Citizens
–Investigation and Detention
–The Role of Internal Security Agencies in Trials
–The Role of the Internal Security Agencies in Prisons
Part III: History of the Internal Security Apparatus
–Formative Years (1945 and 1950)
–Purging the Enemies of the State (1950s and 1960s)
–Kimilsungism and the Monolithic Guidance System (1970–1980)
–Kim Jong-il as Heir Apparent (1980–1994)
–Intrigue Following Kim Il-sung’s Death (1994–1998)
–Kim Jong-il Regime
–Laying the Groundwork for Kim Jong-un’s Succession
–Kim Jong-un Regime
Conclusion
–Appendix I: Biographies of Key Internal Security Officials
–Appendix II: An Example of a North Korean Ministry of People’s Security Decree.180
–Appendix III: An Example of a North Korean Arrest Warrant

Additional Information:
1. Here is coverage in Yonhap

2. Here is coverage in the AFP

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Border Security Goes Back to NSA

Sunday, April 22nd, 2012

According to the Daily NK:

Information from inside North Korea suggests that jurisdiction over border security has been moved from the Ministry of People’s Armed Forces to the National Security Agency(NSA), in a special order given by new leader Kim Jong Eun which has seen border security units undergoing an administrative switch to the NSA on April 16.

Read more below:

(more…)

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Pyongyang seeing more inspections

Wednesday, August 24th, 2011

According to the Daily NK:

With the border area enveloped in ‘Storm Trooper Unit’ inspections, operations against South Korean goods have been stepped up in distant Pyongyang, according to a man from the city who talked to the Daily NK in Dandong, China on Tuesday.

“Inspections by ‘Group 109’, which has been around for a while, have gradually become more intense,” the man, Kim, explained. “Worst of all, they are showing up in the middle of the night without warning to search for CDs, DVDs and recorders, and if there are any materials such as pornography or South Korean merchandise, then the offender is taken away. There are no exceptions.”

“In the past when the National Security Agency or People’s Safety Ministry came to inspect, people would pay them to let it slide, but nowadays the authorities send an agent from both of those agencies and the Defense Security Command as a team, which makes it hard to get out of it if you get caught,” he added.

A Daily NK source from Pyongyang confirmed the story, saying that as recently as July one could escape Group 109 punishment for watching South Korean or American DVDs with a bribe of $100 in central Pyongyang, or less in the surrounding areas.

Group 109 is an organization set up by the Chosun Workers’ Party to crack down on illegal media including CDs and DVDs. The group is one of a number of ‘Gruppas’, as they are locally known, currently operating in the capital, with others including Group 622, which handles juvenile delinquency, and Group 27, actually a branch of the Defense Security Command, which deals with mobile phone usage.

The various groups have been conducting their assorted inspections to weed out myriad ‘anti-socialist’ behavior for some time, but bribery has always provided an escape route, albeit while those without money or connections were made an example of. However in recent times, allegedly since successor Kim Jong Eun ordered more intense inspections and punishments, the ‘Gruppas’ have had to take their tasks more seriously.

The volume of South Korean goods trading in the market has contracted due to the recent crackdowns, but their popularity is undiminished; evasion of inspections is apparently being achieved via house calls to trusted clients. Kim says that the preference is only getting stronger for South Korean goods amongst cadres, a group which has always been safe from inspections.

“The traders go around the city knocking on people’s doors, quietly asking whether the residents would like to buy some South Korean merchandise. For this reason the nickname ‘knock-knocker’ is sometimes used to refer to them,” Kim explained.

Read the full story here:
Pyongyang Seeing Tighter Inspections
Daily NK
Lee Seok Young
2011-8-24

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On the de-facto privatization of industry in the DPRK…

Wednesday, August 17th, 2011

Pictured above (Google Earth): A bus depot in Rakrang-guyok, Pyongyang.  See in Google Maps here.

According to the Daily NK:

Growth and improvement is evident in some areas of the private sector in North Korea, Ishimaru Jiro of ASIAPRESS revealed on the 16th, pointing to the growth of bigger, better private transit concerns and relatively productive coal mining operations as evidence of this trend.

In the past, trains were almost the only viable means of long-distance transportation in North Korea. Then, as private business began to grow and the railways fell into a deep malaise, vehicles such as trucks and cars belonging to military bases, state security and state enterprises were pushed into service to earn money for moving people; this, the so-called ‘servi-cha’ industry.

The servi-cha industry has long been fragmented and small scale; but now transportation companies run by rich individuals (‘donju’) which purchase several buses and hire drivers, guides and mechanics, are acting just as a transit company in a capitalist state would do.

With profit-sharing and bribery as the backbone, a large number of North Korean organs and enterprises have decided to lend their name to these individuals, fuelling the growth and development of a network of sorts.

“From the early 2000s, a high-speed bus network mostly between major cities began to emerge,” Ishimaru, revealing the latest research by ASIAPRESS internal North Korean sources, commented. “The companies are packaged as an enterprise affiliated to some state authority outwardly, but they are actually operated by individuals who pay kickbacks to that authority.”

The People’s Safety Ministry affiliated 116 Task Force Team is one such transportation company, Ishimaru says. It operates buses connecting Shinuiju, South Pyongan Province and Pyongyang. Ordinarily, the bus parks at a station or major public location, and then departs when it is full of passengers going to the next destination.

Here are previous posts on the servi-cha industry.

Read the full sotry here:
Green Shoots of Private Enterprise Growth
Daily NK
2011-8-17

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Daily NK on anti-socialist activities

Thursday, June 23rd, 2011

Part 1: The Illogicality of Anti-Socialist Policy
Lee Seok Young
2011-6-22

In North Korea today, those actions which are subject to the harshest oversight and most excessive punishment are those deemed anti-socialist, an expression of the extent to which such actions are seen as a threat to the regime.

Yet these very actions have already taken deep root in people’s lifestyles, spreading rapidly as a result of chronic economic difficulties, food insecurity, endemic corruption and the inflow of information from abroad.

First of all, every North Korean and defector the Daily NK meets says much the same thing; that if people had not followed an ‘anti-socialist’ path during the mid-90s famine, they could not have survived. The power which maintains North Korean society through the hardest times is that derived from anti-socialist actions, and it is those actions which the authorities would like to put an end to.

The blocking of these so-called ‘anti-socialist trends’ nominally began with Kim Jong Il’s 1992 work, ‘Socialism Is a Science’, issued following the fall of the Eastern Bloc. A time of great fear for the regime, ‘Socialism Is a Science’ expressed a determination to block out anti-socialist phenomena.

However, a famine exploded nationwide shortly after the publication of the thesis, placing these very anti-socialist modes of behavior at the core of the lives of almost everybody in the nation.

Having completely replaced Kim Jong Il and the Chosun Workers’ Party as the alpha provider of sustenance, money is now uppermost in the minds of the people. If they can, they are moving away from the collective farms, factories and enterprises to become more active in the market.

“At a time when the state didn’t provide rations and workers were not even receiving their monthly wages, the ones who started trading early on were all best able to avoid this predicament,” said one defector, “Others followed after their example and, rather than trying to find work, went straight into the market.”

Money, then, is the fundamental toxin that now threatens to shake the very basis of the Kim regime, completely undermining the ‘let’s work the same, have the same and live well’ lifestyle that the regime has long been demanding from the people.The authorities, as part of a losing battle to halt this slide, ‘educates’ the people with the mantra, “Don’t become a slave to money,” but it makes no difference.

People are growing more and more money-oriented. What simply began as a desperate rearguard action to survive extreme poverty has become a preoccupation with accumulating wealth. The many who don’t have the capital to start a business are keen to work with those who do.

One interviewee, a woman hailing from North Hamkyung Province, told The Daily NK, “They have to keep trying, but they can’t eliminate it. How could they, when the state itself is actually encouraging its spread? Everywhere you go, they demand bribes, and people with money never get punished even when clearly guilty, because everyone is desperate to earn money.”

Given that the central authorities demand Party funds from regional bodies, and regional Party and military cadres in turn work with smugglers, and the cadres charged with inspection turn a blind eye to criminal acts in exchange for bribes, the whole system is, as the interviewee said, rotten from the top down.

One defector who left his position as a cadre in a Yangkang Province enterprise agreed, recalling, “The Party periodically collected money from our factory, but since all the machinery had long since stopped running, they made us work in the market and give 30% of the profits to the authorities. It was the state that promoted anti-socialism in consequence.”

Another defector originally from North Hamkyung Province said in a similar vein, “The National Security and People’s Safety agents stationed on provincial borders stop people without the right permit to travel, but let them pass in exchange for a few packs of cigarettes. Some even ask for your wrist watch. It’s not just the people; the whole nation is busy being anti-socialist.”

Increasing exposure to foreign materials is also influencing the situation somewhat. Such things are especially popular with students and women working in the markets, two groups which are more up-to-date than most.

South Korean and Western culture is being transmitted quickly via DVD, and materials that are brought into the state from China by traders and smugglers are also pushing forward new trends such as the ‘Korean Wave.’

To the North Korean people, who once lived in near complete isolation from the rest of the world, the introduction of foreign materials has intensified their yearnings for a new life style. The stricter the regulations become, the thirstier for something else the people become.

Part 2: Crackdowns Enhancing Anti-Socialist Cycle
Mok Yong Jae
2011-06-23

‘Anti-socialism’ in North Korea is a destabilizing force disturbing the foundations of the system. For that reason, the authorities place a great emphasis on rooting it out. Inspections are frequent and their targets varied. But the fact is that this has done little to stop the growth of such activities; in fact, quite the opposite; some believe that targeted inspections actually increase instances of smuggling, for example.

These focused inspections are handed down in the name of the ‘Party Center’ in other words Kim Jong Il. The latest inspections over anti-socialist trends in border areas have been being carried out by Kim Jong Eun’s direct instruction. First people are educated about and warned against ‘anti-socialist behavior’, then provincial Party and military cadres launch an inspection.

If a concerted inspection is to be unleashed on a given area, an inspection unit is set up, and it does the work. In the case of recent inspections targeting drugs and defection, the inspection units have even been sent from the Central Committee of the Party. The makeup of the unit can differ slightly depending on the target of the inspection, but usually includes agents from the National Security Agency (NSA), People’s Safety Ministry and Prosecutors Office. Precise search sites are usually selected at random and the searches conducted without warning, while ‘criminals’ are flushed out in part by getting citizens to report on one another.

However, the effectiveness of this system has a limit. This is primarily due to an overwhelming degree of official corruption at nearly all levels.

The Spread of Bureaucracy and the Limits of Inspections

The primary agents conducting the inspections, agents from the NSA and PSM, collude with smugglers for their own benefit. Anti-socialist activities are not a new means of survival, and the more commonplace the inspections become, the more focused the agents doing it become on their own self-interest; i.e. rent seeking rather than uncovering instances of wrongdoing.

For example, agents seek out big smugglers only in order to offer them an opportunity for their actions to be ignored, something they will do for a price. A source from Yangkang Province explained to The Daily NK, “Hoping not to lose their goods, also so as to avoid prison, in many cases smugglers try to win over agents. They talk to the official for a while, and if they think ‘this guy can be won over’ then some even gently encourage them to find a way to forego any punishment.”

Then, when the inspecting agents begin dropping heavy hints about expensive merchandise, electronics or a piano, for example, the smugglers say, “I’d be delighted to buy that for you,” and for that receive their freedom.

Thus, it is rare for money to change hands directly; goods are bought in China and handed over when the inspection period has come to a close. The smuggler also obtains a permit to import a certain amount of other goods without penalty in the future. By winning over agents in this way, assistance in future times of trouble can also be secured.

In addition, as Lee Jae Won, the former chairman of the Korean Bar Association Committee on Human Rights in North Korea and someone who has interviewed a great number of defectors as author of the 2010 White Paper on Human Rights in North Korea, concludes, “Anti-socialist activities are extremely common for North Korean cadres in public positions such as prosecutors and judges.” The bribing of prosecutors and judges in exchange for leniency or to escape conviction is a daily occurrence, as much as bribing the security forces and cadres.

What Anti-socialist Counteroffensive? Officials are the source of Antisocialism

Now much more so than in the past, cadres and agents are directly involved in the antisocialist activities.

A Chinese-Korean trader who often goes between Dandong and Shinuiju told The Daily NK, “There are so many drugs in North Korea that even the officers supposed to be policing it are taking drugs themselves. Some of them even asked me to take opium to China and sell it. I go back to North Korea every year to visit relatives, and I’ve seen officers there doing bingdu (methamphetamines) with my own eyes.

It is also said that the families of cadres are the main source of South Korean movies and dramas on DVD. Party cadres are, in effect, the very source of the Korean Wave that their bosses in Pyongyang ban on the premise of defending the state from the ‘ideological and cultural invasion of the South Chosun reactionaries’.

A source from Pyongan Province confirmed the story, telling The Daily NK, “These DVDs and VCDs come from the houses of cadres who travel overseas a lot. The children of cadres love watching them. The families of traders have a lot of them, too, but it’s the cadres they’re spreading from.”

Thus, while the central Party single-mindedly attacks anti-socialist behaviour, the cadres and agents who are meant to be carrying out the orders are deeply involved in the ‘anti-socialism’ themselves. The more crackdowns that occur, the more contact there is between the elite and security forces on the one hand and smugglers and traders on the other, offering more opportunities for symbiosis. It is for this reason that some claim the inspections are actually catalyzing the anti-socialism.

Meanwhile, An Chan Il of the World North Korea Study Center pointed out to The Daily NK that the whole thing is completely inevitable, saying, “These inspection teams are not receiving proper rations from the state, so of course they take bribes instead when sent out into the field. Administrative irregularities and corruption are at the very heart of these anti-socialist inspections. The only way for the families of inspecting agents to survive is for the father to be a part of this anti-socialist behavior.”

Choi Yong Hwan from the Gyeonggi Research Institute agreed, adding, “These inspections are intensifying social inequality. The fundamental cause of this is the collapse of the state rationing system due to economic difficulties. It’s a situation where even the agents are hungry, so there is a permanent pattern of them attempting to guarantee their own survival via corruption. There is a vicious cycle repeating here, whereby those who are able to ingratiate themselves with the inspecting agents and cadres survive, and those who do not or cannot get punished.”

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Younger cadres gaining security posts

Thursday, June 23rd, 2011

According to the Daily NK:

Recently, younger cadres have started being posted to city and county units of the National Security Agency (NSA) and People’s Safety Ministry (PSM), according to sources.

One such source from North Pyongan Province explained on Sunday, “NSA and PSM cadres are being rapidly changed for younger men, who are now playing a pivotal role. There are now two or three men in their late 20s and early 30s in the case of an NSA office, and among the ten men in a PSM office, five or six are in their 30s.”

“The change to younger agents began last year, making men in their mid-40s who should be at peak capacity start looking over their shoulder,” the source added.

A source from Yangkang Province concurred, adding, “Just now in the local NSA, prosecutors’ office and PSM, early- to mid-30s people have been stationed in almost all posts. These early- and mid-30s people are even taking places as high as vice director of the city or county NSA.”

The NSA and PSM represent the domestic force behind the Kim dictatorship, the tools of both policing and intelligence functions. As such, experts assert that if people loyal to the Kim Jong Il system are being replaced, that is another telling sign that North Korea is edging towards a system led by successor Kim Jong Eun.

Cheong Seong Chang of Sejong Research Institute explained, “This looks like generational change to facilitate the Kim Jong Eun succession system. To increase Kim Jong Eun’s ability to secure the system, they are changing existing cadres for younger men at a rapid pace.”

Even as late as the early 2000s, to become an NSA or PSM agent required an individual to have ten years of military service and two years of civilian work under his belt, and to have passed through a political college dedicated to the respective service.

Having gotten a foot in the door, an individual needed at least three to five years to gain promotion through local agent, vice section chief, section chief, vice director and then director positions, and as a result one would often be in one’s 50s before reaching the vice director’s chair. Of course, family background and political conditions also had to be met.

However, now there is an alternative course, with viable candidates being plucked from military service of only five or six years to enter an ordinary civilian college, and thereafter being stationed with the security forces.

After which, following two or three years as an entry-level agent, those who enter via this foreshortened route are sent for six months of political education, graduating whilst still in their late 20s or early 30s. It is these individuals who are now emerging early into mid-level positions in the security forces.

While it is claimed that this process is open to all soldiers with good backgrounds and represents an example of “Kim Jong Il’s consideration” of his subjects, the reality is that only a minority of young people, noticeably the children of cadres, can benefit from it, according to sources.

Regardless of which, the Pyongan Province source said that this policy change is causing problems, with the younger men speaking disrespectfully to people who are below them but who society traditionally views as their elder.

The Yangkang Province source explained, “Because they got pushed down the pecking order overnight, got hurt or feel betrayed, many are driven to drink. These older men are complaining at getting nagged by younger people.”

Alongside this, recently most new placements are far from an individual’s home.

A Shinuiju source commented, “In the past, prosecutors or People’s Safety agents were people born locally, but since August they have been coming from other provinces or counties. This seems to be a policy handed down to combat the many cases of agents turning a blind eye to the actions of family and friends.”

However, “These days, if you have money you can solve anything, so the interpersonal connections of these people make no difference,” the source concluded.

Read the full story here:
Younger Men Taking Over Security World
Daily NK
Lee Beom Ki and Lee Seok Young
2011-6-21

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On the DPRK’s informal credit markets…

Monday, May 16th, 2011

According to the Daily NK:

Loan-sharking of both money and food is back to being widespread in North Korea these days, and sources say this is causing problems.

The activity is said to have waned for a time in the face of strict crackdowns during the currency redenomination in 2009; however, according to sources, a lot of those people who were expropriated by the currency redenomination have now started borrowing money from loan sharks in order to begin trading or get access to food, meaning it has spread widely once again.

A source from Hyesan, Yangkang Province explained on the 13th, “Those without funding for trade tend to borrow money at high interest. If they borrow money from an acquaintance, the interest rate is five percent, or they make an agreement with a loan-shark, who they don’t know well, to give ten percent.”

“Some loan-sharks get from 15 to 20 percent interest from smugglers for loans over a single night! Even though it is risky, depending on the regulations, they lend money to smugglers because they can earn large sums of money in just a few days.”

Loan sharks have been the target of crackdowns for years. In August 1997, the Ministry of Public Security (formerly the People’s Safety Ministry) released a decree stating that authorities could go so far as to execute those caught loaning food at high interest rates. Additionally, right before the currency redenomination in September of 2009, the National Security Agency cracked down on loan-sharking, releasing a decree calling on officials to “Map out measures to uproot usury.”

However, given that even agents of the People Safety Ministry use loan-sharking for the trading activities of their families, the crackdowns are doomed to fail.

According to sources from several provinces, the activity is also more common in rural areas than in cities, because in cities people have more survival mechanisms, but rural people do not have many alternative ways to get hold of money or food.

Loans are used in these agricultural areas in order to borrow grain from March to May, and are paid back double in the harvest season. In Yangkang Province, meanwhile, when people borrow one kilogram of rice or flour, they must pay it back in the form of 2.5 or 3 kg of potato starch, since the major product of the province is potatoes.

It is the kind of interest rate that was applied during the March of Tribulation, but people still apply it now.

This is a vicious circle of poverty, another defector pointed out. “Those who suffer loan-sharking each year face another worrying fall because their harvest must be paid to the loan sharks.”

The author of this Daily NK story unfortunately chooses to describe the DPRK’s “informal lenders” as “loan sharks,” making them morally equivalent to thieves and bullies, rather than describing them as lenders in a high-risk market.  This sort of pejorative name-calling is common among those who don’t understand how credit markets work, particularly in a high-risk business environment such as the DPRK.

The reality is that informal and black market lenders in the DPRK are making de jure illegal loans from their own savings.  This means that if the loan is officially discovered, the lender (and probably the borrower) will face criminal charges.  Even if the lender is not arrested, he must pay regular protection money to keep it that way.  Additionally, there is little property in the DPRK which can be credibly used as collateral in a loan, which means that even if the loan is not discovered by the authorities, if the borrower defaults or absconds with the funds there is little the lender can take possession of to recover his capital.  This level of risk requires borrowers to pay much higher interest rates to coax scarce lenders into the market.

In addition to the high interest rates that black market lenders usually charge, they also earn a bad reputation for their resort to “informal” mechanisms to insure and recover these loans.  Some insurance mechanisms, such as lending to family members and close acquaintances, might work well.  Other mechanisms, such as making threats of harm (and following through), are not as widely respected. But these are “technological” adaptations and responses to the DPRK business environment, not purely sadistic behavior.  In other words, these market practices are completely predictable given the institutional environment and not unique to the DPRK.  If the DPRK court system impartially enforced contracts, and collateral could be legally secured, these sorts of technologies would be unnecessary.

I am not claiming that black market lenders are angels, or even pleasant people (in fact some of them may be powerful individuals in the party and security infrastructure), but they are financing the development of the DPRK’s unofficial economy out of nothing more than financial self-interest.  Without their efforts a whole class of informal and black market entrepreneurs would be unable to access capital markets to start new businesses or finance operations.  The unpleasant side of black market lending should not be placed on the market participants themselves, but on the DPRK’s policymakers who have pursued economic policies that have made this sort of behavior necessary.

Read the full Daily NK story here:
Loans Creating Circle of Poverty
Daily NK
Kang Mi Jin
2011-5-16

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Surveillance bureau 118 Sangmu launched

Sunday, March 6th, 2011

According to the Choson Ilbo:

The North Korean regime in January launched a new surveillance bureau charged with snooping on its people, Radio Free Asia reported Thursday.

Quoting a source in the city of Hyesan, Ryanggang Province RFA said the bureau, named 118 Sangmu, combines forces from the State Security Department, the Ministry of Public Security, prosecutors’ offices and party organs, in accordance with leader Kim Jong-il’s instructions “to eradicate antisocialist elements.” Senior officials involved are baffled because the new bureau’s tasks overlap with those of an already existing bureau, 109 Sangmu, it claimed.

Since its launch in 2005, 109 Sangmu cracked down on drugs and DVDs of South Korean soap operas. Over recent years, surveillance bodies have mushroomed, including Bureau 27, an agency which monitors mobile phone use under the State Security Department; 111 Sangmu, which cracks down on child beggars; patrol units of the Ministry of Public Security; mobile strike forces; border guard posts under the Civil Defense Department; and worker inspectors.

The proliferation is already causing problems. On Feb. 24, a pitched battle broke out near the border in North Hamgyong Province between border guards and a security patrol over how to handle three smugglers, a man and two women, who were arrested by the patrol after border guards pursued them, RFA quoted another source in the province as saying. “It nearly led to a shoot-out between the two groups,” the source added.

Internal Surveillance Agencies Mushroom in N.Korea
Choson Ilbo
3/4/2010

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