North Korean Economy Watch

According to the Daily NK:

It has been reported that the North Korean authorities have declared a “Special Vigilance Period” and begun regulating civilian access to Pyongyang. The move looks like the start of preparations for the Delegates’ Conference of the Chosun Workers’ Party, which could begin as early as the end of next week.

An inside source reported the news in a telephone conversation with The Daily NK today, saying, “Since the 26th, they have been regulating access to Pyongyang for provincial residents at all the ‘No. 10 Checkpoints.’”

The General Security Bureau of the National Security Agency sets checkpoints at every major entry point into Pyongyang, and these are called “No. 10 Checkpoints.” They are used to regulate the floating population; at all checkpoints, vehicles and civilians have their documents checked.

There are approximately ten checkpoints, with Junghwa No.10 (Hwangju, North Hwanghae Province to Pyongyang), Seopo No.10 (Pyongsung, South Pyongan Province to Pyongyang), and Majang No.10 (Sariwon, North Hwanghae Province to Pyongyang) seeing the highest traffic flows.

The source added, “There is also a decree whereby all local cadres on business trips and others visiting Pyongyang on family business or for other reasons must leave Pyongyang by the end of this month.”

Special Vigilance Periods are a customary move when important events are held in Pyongyang on national holidays.

On Kim Il Sung’s and Kim Jong Il’s birthdays (April 15 and February 16), the founding day of the Chosun People’s Army (April 25) and the Chosun Worker’s Party (October 10), the four major national holidays, the Special Vigilance Period conventionally lasts for seven to ten days, while there is customarily a three or four day Special Vigilance Period when the Supreme People’s Assembly is sitting. Additionally, when international VIPs visit Pyongyang, access to the city is generally restricted for four to six days.

The only specific public evidence of the start date of the Delegates’ Conference came in the form of a June 26th Chosun Central News Agency dispatch, according to which, “The Politburo of the Central Party summons a delegates conference of the Chosun Workers’ Party at the beginning of September, 2010 to elect the leading apparatus of the Workers’ Party and reflect new demands for the revolutionary development of the Party, which is facing critical changes in bringing about the strong and prosperous socialist state and Juche revolutionary achievements.”

While the statement could mean any time between September 1st and 10th, considering September 9th is the founding day of the North Korean regime, the conference looks likely to be held between September 6th and 8th.

The Chosun Central News Agency (KCNA) also reported today that county delegates’ conferences have been held and provincial delegates’ conferences will be held soon. The latter will elect provincial delegates who will go forward to the main conference.

In another report, Chosun (North Korea) Central Broadcast (the state radio station) reported that Kim Jong Il had been voted in as a delegate for the North Korean People’s Army in a military party delegates’ conference held in the April 25 House of Culture on the 25th.

Read the full story here:
Pyongyang Getting Set for Delegates’ Conference
Daily NK
Yoo Gwan Hee
8/27/2010

According to the Daily NK:

An inside North Korean source has reported the launch of a renewed movement to expose and punish drug crime.

The source explained during a phone interview with The Daily NK on August 26th, “Starting August 20th, a compulsory public lecture has been given by National Security Agency personnel in each neighborhood office. Party instructions regarding a mass struggle to prevent drug and smuggling crime were introduced there.”

The lectures were attended by people’s unit members, with the exception of workers. It is standard practice for the same lecture to be given in work places separately.

The source added, “As the Chosun Workers’ Party Delegates’ Conference approaches, the number of cases in which National Security Agency agents are directing the education of citizens is increasing. Here, they emphasized that there will be strict legal action and punishment for those who take, sell or smuggle drugs in that jurisdiction.”

The People’s Safety Ministry has apparently also dispatched separate task forces to major cities along the Yalu River to hinder smuggling. They are currently trying to bring the border area under control.

The source reported, “Just within Hoiryeong there are 40 ‘task force’ personnel under the People’s Safety Ministry cracking down on illegal immigration and drug smuggling.”

The fact that North Korean citizens living in the border area regularly take drugs or engage in smuggling is not news.

The smuggling route between Sinujiu, Hyesan, Hoiryeong and Onsung to China came into being during the March of Tribulation in the late 1990s. Pharmacists and doctors started mass-producing methamphetamines (known locally as “Ice”) and sold it in China to survive, but now many, indeed some say most, foreign currency earning units are producing, distributing, and smuggling the drug.

Among the more affluent people living in the border area near the Tumen River, “Would you like some Ice?” is a common greeting. Many such people also take Ice as a painkiller, not least because it is among the few widely available drugs which can do the job. Furthermore, use of the drug has also spread to affluent teenagers, which is creating even more concern.

Currently, in major regional cities like Hamheung and Chongjin, one dose of Ice sells for between 3,000 and 5,000 North Korean won.

Read the full story here:
North Korea Launches Drugs Crackdown
Daily NK
Yoo Gwan Hee
8/27/2010

According to the Joong Ang Daily:

Two men near the top of the North Korean power structure are competing against each other to become foreign investment czar for the cash-strapped country, according to sources with knowledge of North Korea.

North Korea experts say the contest could influence who eventually succeeds Kim Jong-il.

The sources told JoongAng Ilbo yesterday that Jang Song-thaek and O Kuk-ryol, both vice chiefs of North Korea’s National Defense Commission, are competing over who can attract more foreign investment to the North. The National Defense Commission, the country’s top state organization, is chaired by Kim.

“O Kuk-ryol dominated the foreign investment coming into the North because of his military power,” said one of the sources, “but he is in a hegemony struggle in that area with Jang Song-thaek, who thrust himself into foreign investment promotion later than [O Kuk-ryol].”

Jang is the husband of Kim Kyong-hui, Kim’s younger sister, and is one of Kim’s close confidants. Jang was also promoted to vice chairman of the National Defense Commission on June 7 at the Supreme People’s Assembly.

The sources said O, since being appointed a vice chairman of the National Defense Committee in February 2009, has capitalized on his position to expand his influence in attracting foreign investment.

O and his aides established Choson Kukje Sanghoe (Korean International Trading Company) as the organization solely responsible for foreign investment promotion and received approval for the organization from the presidium of the Supreme People’s Assembly on July 1, 2009.

Meanwhile, Jang named Park Chol-su, a Korean-Chinese businessman, president of Korea Taepung International Investment Group, which he re-purposed to attract foreign investment.

The company initially belonged to the cabinet, but Jang absorbed it into the National Defense Commission and announced the establishment of the re-purposed company in a January 20 report from the official Korea Central News Agency. The news report said Kim Jong-il issued an “order” that the state guarantee that Taepung be able to attract foreign investment.

“O Kuk-ryol is very displeased that Jang jumped into the foreign investment business that he led,” said the sources. “Currently, Choson Kukje Sanghoe and Korea Taepung International Investment Group are vying against one another.”

The sources said that the power struggle is already being watched with concern by the State Security Department, the North’s supreme intelligence agency.

The agency, the sources said, suspects that China is behind Taepung and is trying to control the North Korean economy by injecting capital through Park and the group. The sources said the agency is hesitant to report its suspicions to Kim, given his close relationship to Jang.

Jang has cultivated power through economic projects Kim has entrusted him with, such as a project to build 100,000 houses in Pyongyang. Since he was promoted to vice chairman last month by Kim, he is thought to have increased his political clout as well.

Ri Je-kang, a rival with Jang, also died in a mysterious, recent traffic accident.

“If a rivalry between Jang Song-thaek and O Kuk-ryol, both key axes of North Korean power, becomes a full-fledged power struggle, it could have a subtle effect on a North Korean succession scenario,” said Kim Yong-hyeon, professor of North Korean Studies at Dongguk University.

Read the full story here:
Bigwigs in North vie for power over investments
Joong Ang Daily
7/5/2001

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-17-1
6/17/2010
 
As North Korea’s food shortages worsen and reports of starvation continue to grow, the Workers’ Party of Korea have acknowledged the failure of the central food ration program. Since the end of May, the Party has permitted the operation of 24-hour markets, and the regime has ordered the people of the North to provide for themselves.

The human rights organization Good Friends reported this move on June 14. According to Good Friends, the Workers’ Party organization and guidance bureau handed down an order on May 26 titled ‘Relating to Korea’s Current Food Situation’ that allowed markets to stay open and ordered North Koreans to purchase their own food. This order, recognizing that the food shortages in the North have continued to worsen over the last six months, since the failed attempts at currency reform, acknowledged the difficulty of providing government food rations. It calls on those who were receiving rations to now feed themselves, while also calling on the Party, Cabinet, security forces and other relevant government agencies to come up with necessary countermeasures. Now, authorities officially allow the 24-hour operation of markets, something that most had already tacitly permitted, and encourage individuals, even those not working in trading companies, to actively import goods from China.

It has been reported that government food rations to all regions and all classes of society, even to those in Pyongyang, were suspended in April. The last distribution of food was a 20-day supply provided to each North Korean on April 15, the anniversary of the birth of Kim Il Sung. Because of the difficulty of travelling to markets, the suspension of rations caused many in farming communities to starve to death. When Kim Jong Il’s recent visit to China failed to secure expected food aid, the Workers’ Party had no choice but to hand down the ‘May 26 Party Decree’. While the suspension of rations has considerably extended the economic independence of North Korean people, the regime has significantly stepped up other forms of control over society. Public security officers have begun confiscating knives, saws and other potential weapons over 9 centimeters long in an effort to stem murder and other violent crimes. Additionally, state security officials are cracking down on forcefully resettling some residents of the age most likely to defect, while sending to prison those thought to have contacted relatives in South Korea.

According to Daily NK, North Korean security officials are pushing trading companies to continue trading with China, while calling on Chinese businesses to provide food aid. It also appears that North Korean customs inspections along the Tumen River have been considerably eased, and there is no real attempt to identify the origin or intended use of food imported from China. Sinheung Trading Company has asked Chinese partners investing in the North to send flour, corn and other foodstuffs. The Sinheung Trading Company is operated by the Ministry of State Security, and is responsible for earning the ministry foreign capital. It appears that food acquisition is now a matter of national security, as North Korea is expecting South Korea and the rest of the international community to economically isolate the country.

Daily NK
Park Sung Kook
2/2/2010

There has been an explosion in the number of casualties resulting from popular resentment at harsh regulation of market activities by the security apparatus across North Korea, according to various Daily NK sources.

For instance, in Pyongsung, North Pyongan Province, normally one of the key distribution centers in North Korea, there have been several incidents of agents from the People’s Safety Agency (PSA), the organization charged with cracking down on the smuggling of food and other officially “immoral” acts, being attacked by unidentified assailants.

A Daily NK source reported on Monday, “A group of agents who had just finished doing the rounds of the jangmadang and alley markets in Naengcheon-dong, Haksu-dong, and Cheongok-ri in Pyongsung were attacked by a number of people, who assaulted them and immediately ran away. As a result, PSA officials are feeling very tense these days.”

Commenting privately on these incidents, some people savor them as acts of revenge, but others are worried about the situation, according to The Daily NK’s sources.

There have been more examples unearthed in recent days, too. For instance, North Korea Intellectuals Solidarity (NKIS), a Seoul-based defector group, recently received news that “a fight broke out between agents of the PSA, who monitor the Hyesan jangmadang, and some residents. As the fight turned serious, one resident snatched an agent’s gun and fired randomly into the crowd. One agent, Choe, is in a critical condition.”

According to NKIS, the fight began after the PSA agents beat up a trader who was trying to avoid the crackdown, and that made other residents angry, so they attacked the agents in return. As the fight grew more serious, agents threatened residents, but this only added fuel to the flames.

Finally, a Daily NK source from North Hamkyung Province released one other incident: Cho, who used to work for the Prosecutions Department of the National Security Agency in the region, was apparently killed by a Chongjin Steel Mill worker called Jeung Hyun Deuk.

The source explained, “Jeung’s father, the chief of a foreign currency-generating company, was interrogated last July on suspicion of embezzling enormous amounts of property and foreign currency, and in January was sentenced to life in prison. However, a few days after being imprisoned, he died. Thereafter, Jeung held a grudge against his father’s interrogator, Cho, and eventually killed him.”

The source concluded, “Traders and residents have lost their property due to the redenomination and are pretty much being treated as criminals as a result of the NSA and PSA’s ‘50-Day Battle.’ Therefore, people are taking revenge on agents, since they feel so desperate that, regardless of their actions, they will die. As a result, social unrest is becoming more serious.”

On January 2, the National Defense Commission released an order entitled “On completely sweeping away hostile factions who attempt to demolish our Republic from the inside,” initiating the “50-Day Battle” crackdown by the PSA and NSA in every city, county, and province which was referred to by the North Hamkyung Province source.

Choson Ilbo
1/6/10

North Korea’s currency reform has apparently failed to tame inflation. The state has paid the first salaries since the shock currency reform late last year, with the State Security Department and the Ministry of Public Security, the frontline agencies dedicated to protection of the regime, paying soldiers 6,000 won each — 3,000 won in average monthly pay plus a 3,000 won bonus.

Soldiers usually received about 3,000 won in the old currency. That this effectively doubled means the currency reform, which exchanged old won for new at a rate of 100:1, has not been able to stop inflation.

Money is also apparently being distributed to workers on collective farms, who had a hard time last year because they failed to raise vegetables and other produce from their own patches to scrape a living for their families due to the “150-day struggle,” a campaign aimed at spurring them to work harder at farms.

According to recent defectors, cooperative farms distributed more than 100,000 won to each household in the new currency late last year to settle accounts and distribute profits. Workers at state-run enterprises were also given 1,000 to 2,000 won each, even though most of their operations are suspended.

One Korean Chinese, who visited Pyongyang recently, said, “Department store shelves are stacked with goods that the state confiscated from market traders in return for nothing on Jan. 1, and they are selling those goods at prices readjusted at the exchange rate of 100 old won for one new won. Huge crowds rushed to buy them, so they ran out of stock immediately.”

But commodity prices skyrocketed. Inflation is soaring as market traders are hoarding goods, anticipating that the real value of the new currency will plummet. According to a North Korean source, 1 kg of rice cost about 30 won right after the currency reform but is now closing in on 1,000 won. The U.S. dollar was exchanged at the rate of 75 won to the greenback right after the currency reform but soared to 400 won in late December. There is speculation that it is now only a matter of time before the rate will reach 3,000 won, the same as the unofficial exchange rate of the old won.

Market traders are angry as they have realized that they were robbed of nearly everything they earned. A former senior North Korean official said, “The latest currency reform is more cruel than the previous reform in 1992. It’s tantamount to the state confiscating 99 percent of people’s money.”

Authorities have been handing out food rations in Pyongyang and other regions since December, but North Koreans already know that the food cannot last them more than a month or two. Urban residents are experiencing particular hardship.

Daily NK
Park In Ho
1/1/2009

The marketplace has become an extremely important ground in North Korean people’s lives. 70 percent of North Korean households in the city live off trade, handicrafts and transportation businesses related to trade. If the jangmadang works well, people’s living situation is good, otherwise it is not. In the situation where the food distribution system has broken down, the whole economic existence of the populace is bound up in jangmadang trade.

Trade is bound to generate successful merchants but also failures, due to a lack of know-how or confiscation of products by the People’s Safety Agency (PSA), or simply because a competition system operates. These failures in the jangmadang do not have any second opportunity to rise again so they frequently choose extreme acts like defection, criminality or suicide. Failure is serious.

However, the revitalization of markets has caused great changes in North Korean people’s values. The individual-centered mentality among the people is expanding and the belief that money is the best tool is also spreading. Due to such effects, the North Korean communist authorities in 2008 made the regulation to prohibit women younger than 40 years old from doing business, but of course the people use all necessary means to maintain their survival.

Daily NK investigated the 2008 top ten items in the jangmadang, so as to observe developments in North Korean society.

1. Rice in artificial meat, the first instance of domestic handicraft

Since 2000, the most ubiquitous street food has been “rice in artificial meat,” which is made from fried tofu with seasoned rice filling. This food is found everywhere on North Korean streets. One can find women who sell this snack in alleys, at bus stops and around stations. It costs 100 to 150 North Korean Won.

Meanwhile, the most popular street food is fried long-twisted bread. Individuals make the fried bread at home and sell it on the street. The length of the fried bread is around 20 centimeters and it sells for 100 won.

In around 2005 corn noodles were popular on the streets, but now street-stands for noodles have largely disappeared due to the existence of a permanent store controlled by the state.

These days, if one can afford to eat corn noodles, at approximately 1,000 won for a meal, one can safely say that one is living comfortably.

2. Car battery lights North Korea

The reason why North Korean people like car batteries is that the authorities provide a reliable electricity supply during the daytime, when consumption is less than at night, but at night they don not offer it. The authorities shut down the circuit from around 8 PM to 9PM, and from 12 AM to 2 AM: when the people watch television the most.

As a result, the people charge their car batteries during daytime and use it at night. A 12V battery can run a television and 30-watt light bulb. If they utilize a converter, they can use a color television, which needs more electricity.

Ownership of batteries is a standard of wealth. Officials use electricity from batteries in each room. They usually draw thick curtains in their rooms, to prevent light shining through that might draw attention to their status.

3. The strong wind of South Korean brand’ rice-cooker, Cuckoo

A South Korean brand pressure rice-cooker called Cuckoo appeared as a new icon for evaluating financial power among North Korean elites.

It has spread from the three Chinese northeast provinces into North Korea. In North Korea, Chinese rice and third country aid rice, dry compared to Korean sticky rice, generally circulates, but if the lucky few use this rice-cooker, they can taste sticky rice the way Korean people like it.

There are Cuckoo rice-cookers from South Korean factories that arrive through Korean-Chinese merchants, and surely other Cuckoo products from Chinese factories. These two kinds of rice-cookers, despite having the same brand name, sell for different prices.

The Chinese-made Cuckoo sells for 400,000-700,000 North Korean Won (approximately USD114-200), while the South Korean variety costs 800,000-1,200,000 (approximately USD229-343). A Cuckoo rice-cooker tallies with the price of a house in rural areas of North Korea. According to inside sources, they are selling like wildfire.

4. An electric shaver only for trips

The electric shaver is another symbol of wealth.

It is not that they use electric shavers normally, because one cannot provide durability. At home, North Korean men generally use disposable shavers with two blades made in China or a conventional razor. However, when they take a business trip or have to take part in remote activities, they bring the electric shaver.

There are North Korean-made shavers but most are imported from China. Among Chinese products, you can see “Motorola” products and fake-South Korean products with fake labels in Korean. A Chinese-made electric shaver is around 20,000-40,000 North Korean Won.

5. Chosun men’s fancy shoes

Dress shoes are one of the most important items for Chosun men when they have to participate in diverse political events, loyalty vows or greeting events at Kim Il Sung statues on holidays. Right after the famine in the late 1990s, it was considered a symbol of the wealth, but now general workers, farmers and students are wearing dress shoes.

The shiny enameled leather shoes with a hard heel cannot be produced in North Korea because of a lack of leather. The North Korean authorities provide the National Security Agency (NSA) and officers of the People’s Army with dress shoes, which are durable but too hard and uncomfortable.

Shoes for general citizens and students are mostly made in China and some are produced in joint enterprises in Rajin-Sunbong. The price of shoes ranges from 30,000 to 100,000 Won depending upon the quality.

6. Cosmetics prosper despite the economic crisis

Cosmetics and accessories for women are getting more varied. Lately, false eyelashes have appeared in the jangmadang in major cities. Chinese cosmetics are mainly sold, alongside fake South Korean brands. In Pyongyang, Nampo, Wonsan and Shinuiju Chinese and even European cosmetics are on sale.

“Spring Fragrance,” a North Korean luxury cosmetics brand, is famous for being Kim Jong Il’s gift that he presents to women soldiers or artists when he visits military units or cultural performances. It costs more than 200,000 North Korean won.

Lotions for women, made in China, are approximately 2,000-4,000 won, foundation cream is 3,000-5,000 won, and lipstick is from 500 won to 2,000 won. Hand cream is 3,000-5,000 won.

7. Hana Electronics recorder, the biggest state-monopoly production

“Hana Electronics” was originally set up to produce CDs and DVDs of North Korean gymnastic performances or other artistic performances, so as to export them foreign countries. The company has been producing DVD players since 2005.

Due to the state monopoly, the DVD player of the Hana Electronics dominates the market. North Korean people call a VCR and a DVD player a “recorder.” Since around 2005, after the booming interest in South Korean movies and dramas, the players have been selling very well.

At the beginning, North Korean visitors to China brought the DVD or CD players into North Korea, but as they got popular among the people, Chinese-made players were imported from China and since 2006 they have been really popular in every jangmadang.

Accordingly, since 2006, the authorities have started blocking the importation of the Chinese player and are selling the Hana Electronics players, which sell for around a 20 or 30 percent higher price than Chinese players in state-run stores. Now, they can be sold in the jangmadang by private merchants and comparatively free from inspection by the PSA. The prices are 130,000-150,000 won.

8. Bicycles are basic, the motorcycle era is here now

In major cities, numbers of motorcycles are increasing. Especially in border regions where smuggling with China is easier than in other cities, motorcycles are common.

The motorcycles are ordinarily used for mid or long distance business. Most motorcycles are made in China and some are Japanese second-handed products, which sell for 1.5-2.5 million won. 125cc new products are over 5 million won. The cheapest second-handed motorcycle is 500,000 won.

9. Vinyl floor covering for the middle class and vinyl for the poor

Demand for vinyl floor coverings and vinyl has been increasing since the late 1990s, when residential conditions improved. In the late-1990s people had to use sacks of cement or Rodong Shinmun (newspaper) as a floor covering, but now they are using vinyl floor coverings.

Uses for vinyl are unimaginably diverse: from a basic protection against wind and cold to when people take a shower at home in the vinyl tunnel hung on the ceiling of the bathroom.

Depending on the thickness and width, there are four or five kinds of vinyl in the jangmadang for from 150 to 500 won. Vinyl floor covering is a Chinese product selling for from 3,000 to 10,000 won.

Daily NK
Lee Sung Jin
12/17/2008

Recently in the North Korea-China border region, North Korean smuggling groups associated with the National Security Agency have been actively operating.

A source from Yangkang Province relayed in a phone conversation with the Daily NK on the 16th, “On the 9th in Songjeon-ri, Kim Jong Sook County in Yangkang Province, a van ferried on a raft fell into the water, so the border guards and the National Security Agents tried to get it out in the middle of the day. The van was being smuggled from China by the ‘national smuggling group.’”

The “national smuggling group,” or “NSA smuggling group,” which earned its epithet from the North Korean citizens, is directly operated by the National Security Agency and is composed of soldiers, well-to-do merchants, Chinese emigrants, and Chinese relatives of officials.

The group was organized in the fall of last year and has been in operation since then. The source added that its size, members, and range of traded items have significantly increased.

The source stated further, “In Hyesan alone there were at least three smuggling groups by the end of the summer, but with the passing by of the fall harvesting season, there are now about seven in operation. With the National Security Agency making profit from these groups, the No. 8 Bureau of the Chosun (North Korea) People’s Army (in charge of mobilizing war supplies) even formed a group last summer.”

In particular, it has become known that the No. 8 Bureau, under the patronage of the National Security Agency, sold a massive supply of medicinal herbs secured in North Korea to the Chinese merchants in exchange for Chinese rice.

The source emphasized, “Usually, there are four or five active members of a smuggling group. In the past, they only smuggled at night, but the groups have lately been taking advantage of quiet places during the day to hand over goods.”

He said, “When the groups engage in smuggling, the commander or vice-commander of the border guard unit will go on duty. After the National Security Agency calls the border unit, the smuggling group(s) goes out at a pre-determined time and hands over the goods.”

Goods that are currently handled by the groups are not only marine products or scrap iron, but are increasingly high-priced goods such as gold or drugs, because they can be traded for cash.

The source explained, “The smuggling groups have to give approximately 30 million North Korean won (approximately USD8,500) per person a month to the state, but ordinary smuggling does not suffice to make such a sum of money. The state severely punishes trading drugs or gold, but given the exorbitant sum which has to be paid to superiors, there has been a tendency to engage in the trading of such goods.”

He noted, “Nowadays, each unit acquires the necessary goods, so the border smuggling channel created by private individuals for trading has also been used by the national organization.”

As reported earlier this year by the Daily NK, Kim Jong il’s brother in law, Jang Song Taek, was leading an anti-corruption campaign in North Korea’s northern provinces along the Chinese border. Aside from controlling financial leakages, these efforts could be interpreted as attempts by Kim to gain control over military-owned trade companies.

According to a past report:

The inspection group withdrew all trade certificates with exception of those certificates belonging to the families of anti-Japanese guerrilla fighters, and those certificates issued by the Ministry of Finance or the Shinuiju Municipal Administrative Committee.  Therefore, presently at Shinuiju Customs, all import items without trade certificates issued by the above mentioned three groups have to be sent back to China.

Jang’s efforts, though seemingly effective at reasserting financial control of the region, had apparently taken their toll on local commerce:

In Hyesan, Yangkang Province, markets have been significantly reduced in size and scope recently, due to the anti-socialist group’s inspections[.]

[T]he merchants were at unease when under inspection by the National Security Agency (NSA) and other governmental organizations which govern the jangmadang [markets].

For example, transportation of goods by traders has withered away since last year, as the authority of the People’s Safety Agency (PSA) [controlled by Jang] rose and [it] launched [] a strict crackdown on traders’ belongings.

The source explained the situation in Hyesan, that “Hyesan had become the city where Chinese goods were traded for the cheapest value because Chinese goods [enter the country] at Hyesan[.] [During] the (PSA) inspection period [goods] could not be transported inland due to the inspection of trains and cars. Lives of the common people became even tougher than before, since goods could not be circulated through the jangmadang in spite of their low prices.”

“The more stringent the regulation became, the more bribes cadres received and worsened were the lives of people,” the source added.

(NKeconWatch: I have “cleaned up” some of the grammar here to make it more readable.  If you want to see the original version, click here.)

And in Sinuiju:

The intensive inspection of Shinuiju, in which over 70% of Chinese-North Korean commercial traffic occurs, caused several aftereffects inside North Korea: commercial traffic passing through Shinuiju and Dandong decreased by half compared to the past, and the aftermath of the inspections in Shinuiju added fuel to the fire of price rises in jangmadang goods across the country.

For instance, sugar, which is a raw material for doughnuts or candies that are consumed the most by average civilians in the jangmadang, carried a price of around 1,500 won per kilogram before the inspections, but in mid-May, it rose to 2,100 won and vegetable oil hiked from 5,500 to 7,500 won per kilogram. Such an increase in prices also caused a significant threat to the survival of citizens who made a living off the jangmadang trade.

But the final result of the evaluation of the Shinuiju inspection, which caused quite a stir externally, has purportedly been negligible.

The source said, “The volume of trade has decreased over several months and the number of visitors to China has also been reduced by half. The results of the inspection have not produced too much difference, except for the execution of 14 corrupt officials.”

The source further noted, “The only change which has been visible to the eye is the rise in the cost of bribes offered to North Korean customs from 40 to 80 dollars per hundred kilograms of goods. There was a rumor that the loading volume carried into the North would be fixed at 120kg, from 360kg, but this has not been done yet.”(Daily NK)

The Daily NK now reports that in the wake of these developments, Kim Jong il’s National Defense Commission (NDC) has moved in and directly taken over the inspections—and economic conditions have improved:

[Markets] have become lively again in the past few days as inspections by the National Defense Commission (NDC) have gotten underway.

A source in North Korea reported to Daily NK on Friday that “Merchants in Hyesan these days are fish in water. They say that they would not mind at all going through such inspections for an entire the year!”

Part of the reason for the turn around has been a change in focus.  Whereas Jang’s work hit many “ordinary” North Koreans (particularly those working for the wrong trading companies), NDC inspections are focused on controlling the mid- to upper-level cadres.  It is entirely speculatory to ask whether Kim’s strategy was to unleash Jang to get control of the region and afterwards assert direct control himself, or whether complaints from locals forced the NDC to end Jang’s campaign.

Of course this is all unverified information from inside North Korea, so who knows how much of it is correct!

Daily NK
Moon Sung Hwee
6/17/2008

The Central Committee of the Chosun (North Korea) Workers’ Party recently commanded the People’s Safety Agency (PSA) to increase its authority.

A source from North Korea reported in a telephone interview with Daily NK on the 11th that “According to a document from the Central Committee of the Party, the legal authority of agents of the PSA is being strengthened.”

The source explained that “From now on, agents of the PSA can investigate every criminal offense committed by the military, the National Security Agency, the public prosecutors and cadres of courts. This command from the Party was delivered to the cadres’ lectures over the country on May 10.

The most remarkable part is that in every field except anti-nation or anti-regime crimes the PSA can inspect and search the houses of suspects from the military, the Party, the NSA and the public prosecutor’s office.

Through this, control over the military, which abused its power and was acknowledged as a public enemy by average residents for a decade under the military-first policy, is being systematized.

The document stated clearly that the PSA has the right to detain anyone who disobeys the agents’ onsite inspections in their homes and even to arrest them, according to the source.

One proviso only was added that when the agents undertake a house search of the cadres of the Party, they have to receive prior approval from upper levels within the PSA and they do not have the authority to arrest cadres of the Party on the spot as a suspect.

The source explained that up to this point general crimes committed by soldiers were just dealt with by the military police or the Defense Security Command of the People’s Army. Since the Shimhwajo Case in 1998, the PSA has not examined the cadres of the NSA or prosecutors.

The source relayed that regulations regarding punishment towards agents who intentionally overlook an inspection or who leak information on an inspection are specified in the document.

Since Jang Sung Taek, a brother-in-law of Kim Jong Il, led the Ministry of Administration of the Chosun (North Korea) Workers’ Party, the political authority of the PSA accordingly started being strengthened. The source explained that “In the past, the PSA was not able to intervene in any case without the permission of the prosecutors, but since October 2007 the agents of the PSA were granted the authority to deal with the arrest of criminals and with sending them to court themselves.

The position that Jang Sung Taek took in October 2007 was that the Director of the Ministry of Administration of the Chosun (North Korea) Workers’ Party is responsible for general public security organizations such as the National Security Agency, the People’s Safety Agency, the Central Prosecutor Office and the Special Court.

The source analyzed that “The Party did not push legislation on the expansion of the authority of the PSA, because political conflicts with other governmental organizations would be brought out.”

Some say that the background to the promotion of the PSA stems from Kim Jong Il’s fear that the authority of the NSA and of the military were too big while the Party’s power was extraordinarily weakened.

One other source said that “Although the military or information organizations have attempted many coups in human history, the police force has always sided with the government. Therefore, Kim Jong Il drastically strengthened the authority of the PSA.”

The source added that “Regarding the promotion of the PSA, the cadres of the Party took concrete examples of assassinations such as Nicolae Ceauşescu of Romania and Park Chung Hee of South Korea, emphasizing the Romanian police’s fight against the military in order to protest Ceauşescu.”

“The People’s Safety Agents,” which is a newspaper circulated just in the PSA, and lecture materials for the PSA lately describe the PSA as the “escort warrior for the General” or “the second Escort Bureau,” the source explained, regarding the change of the PSA’s state.