North Korean Economy Watch

For those of you who have recently visited the DPRK or who spend too much time perusing Elufa.net or reading KCNA, you are undoubtedly aware of the DPRK’s recent emphasis on something called “CNC”.  I had no idea what CNC was, so I began collecting as much information as I could find on the net and I have posted it below.

Here is the Wikipedia page for CNC.  For those of you in China, here is what it says:

Numerical control (NC) refers to the automation of machine tools that are operated by abstractly programmed commands encoded on a storage medium, as opposed to manually controlled via handwheels or levers, or mechanically automated via cams alone. The first NC machines were built in the 1940s and ’50s, based on existing tools that were modified with motors that moved the controls to follow points fed into the system on paper tape. These early servomechanisms were rapidly augmented with analog and digital computers, creating the modern computed numerically controlled (CNC) machine tools that have revolutionized the design process.

In modern CNC systems, end-to-end component design is highly automated using CAD/CAM programs. The programs produce a computer file that is interpreted to extract the commands needed to operate a particular machine via a post processor, and then loaded into the CNC machines for production. Since any particular component might require the use of a number of different tools—drills, saws, etc.—modern machines often combine multiple tools into a single “cell”. In other cases, a number of different machines are used with an external controller and human or robotic operators that move the component from machine to machine. In either case, the complex series of steps needed to produce any part is highly automated and produces a part that closely matches the original CAD design.

That description is not nearly as helpful as this video on CNC: Click here (Might not work for readers in China).

The Asia Times ran a story which included a short history of CNC in the DPRK:

The name of the game is CNC – Computer Numerical Control – machine tools that have revolutionized the design process and said to be developed in the DPRK and already exported, for example, to China. Top exponents are the Korea Ryonha Machine Tool Corporation and the Taean Heavy Machine Complex. CNC billboards are all over Pyongyang. Inevitably CNC has its own dedicated patriotic song (no music video yet). Here are the lyrics, as translated by Andray Abrahamian, a doctoral candidate at the University of Ulsan in South Korea:

If you set your heart on anything
We follow the program making the Songun era machine technology’s pride
Our style CNC technology

(chorus)

CNC – Juche industry’s power!
CNC – an example of self-strength and reliance!
Following the General’s leading path
Breakthrough the cutting edge

Arirang! Arirang! The people’s pride is high
Let’s build a science-technology great power
Happiness rolls over us like a wave

So the narrative of building a “socialist paradise” is now being supplanted by the narrative of developing and producing state-of-the-art technology to, as the Pyongyang Times indelibly put it, “improve the people’s living standard on the word level”. This is how the DPRK is mobilizing its people to “open the gate to a thriving nation in 2012”. South Korea, watch out.

By way of luck, I managed to obtain a copy of the DPRK’s CNC song. You can download the MP3 by right clicking here.

UPDATE: A reader did find this DPRK karaoke version of the CNC song complete with lyrics (in Korean).  Watch it here.

UPDATE 2: A reader also sends in this acoustic version of the CNC song (YouTube).

If you are itching to know what the DPRK’s CNC machines look like, here is one display at the Three Revolutions Museum in Pyongyang:

Click images for larger versions

And here is some CNC propaganda that has appeared around Pyongyang:

Click images for larger versions

UPDATE: here is an additional photo taken by an anonymous tourist:

UPDATE: Here are some CNC postage stamps:

UPDATE: And CNC made part of the 2010 Mass Games (You Tube at the 1:25 mark). See a photo here.

KCNA has published plenty of news stories about CNC.  You can see them here courtesy of the Stalin Search Engine. CNC was first first mentioned on January 15, 2002 (KCNA) .  One phrase that is frequently mentioned is that thanks to innovations like CNC the DPRK is “Pushing back the frontiers of science”.  Indeed North Korean economic policy seems hell-bent to do just that.  Hopefully we will soon see them change their policies to “push back the frontiers of ignorance”.

CNC machines are produced by the Ryonha Machine [Tool] Factory (KCNA) and they have been widely promoted in the official media (here, here, here, here, and here for example).  It appears also that the Ryonha Machine Tool Factory has partnered up (with someone) to form a JV company which focuses on international trade, the Ryonha Machinery Joint Venture Corporation. Here is a PDF flyer of their products taken from the KFA web page, and some of the items they are selling can be seen here and here.

They Ryonha Machine Joint Venture Company, however, seems to have a history that might scare away many potential customers.  According to the US Treasury Department:

The U.S. Department of the Treasury today designated eight North Korean entities pursuant to Executive Order 13382, an authority aimed at freezing the assets of proliferators of weapons of mass destruction (WMD) and their delivery vehicles.  Today’s action prohibits all transactions between the designated entities and any U.S. person and freezes any assets the entities may have under U.S. jurisdiction.

“Proliferators of WMD often rely on front companies to mask their illicit activities and cover their tracks,” said Stuart Levey, the Treasury’s Under Secretary for Terrorism and Financial Intelligence (TFI).  “Today’s action turns a spotlight on eight firms involved in WMD proliferation out of North Korea.  We will continue to expose and designate these dangerous actors.”

Today’s action builds on President Bush’s issuance of E.O. 13382 on June 29, 2005.  The Order carried with it an annex that designated eight entities – operating in North Korea, Iran, and Syria – for their support of WMD proliferation.  The President at that time also authorized the Secretaries of Treasury and State to designate additional entities and individuals proliferating WMD and the missiles that carry them.

Korea Mining Development Corporation (KOMID), which was designated in the annex of E.O. 13382, is the parent company of two of the Pyongyang-based entities designated today, Hesong Trading Corporation and Tosong Technology Trading Corporation.  These direct associations meet the criteria for designation because the entities are owned or controlled by, or act or purport to act for or on behalf of KOMID.

Korea Ryonbong General Corporation, also named in the annex, is the parent company of the remaining six Pyongyang-based entities designated today.  These entities include Korea Complex Equipment Import Corporation, Korea International Chemical Joint Venture Company, Korea Kwangsong Trading Corporation, Korea Pugang Trading Corporation, Korea Ryongwang Trading Corporation, and Korea Ryonha Machinery Joint Venture Corporation.

As subsidiaries of KOMID and Korea Ryonbong General Corporation, many of these entities have engaged in proliferation-related transactions.

I have been unable to locate the Ryonha Machine Tool Factory on Google Earth. If anyone has any pointers, please let me know.

Here is a list of factories the DPRK claims to be using CNC technology:

Amnokgang Daily Necessities Factory (KCNA)
Amnokgang Gauge and Instrument General Factory (KCNA)
Cholima Steel Complex (KCNA, Naenara)
Chonma Electrical Machine Plant (KCNA)
Feb 8 Vinalon Complex (KCNA)
Hamhung Wood Processing (KCNA)
Huichon Machine Tool Plant (KCNA)
Kangdong Weak Current Apparatus Factory (KCNA)
Kanggye General Tractor Plant (KCNA) (Underground)
Kanggye Knitted Goods Factory (KCNA)
Kanggye Wine Factory (KCNA)
KimChaek Iron and Steel Complex (KCNA)
Kusong Machine Tool Factory (KCNA)
Kwanmobong Machine Building Plant (KCNA)
October 10 Factory (KCNA)
Pukjung Machine Complex (KCNA)
Pyongyang Cornstarch Factory (KCNA)
Rakwon Machine Complex (KCNA)
Ryongsong Machine Complex (KCNA)
Sinuiju Spinning Machine Factory (KCNA)
Suphung Bearing Factory (KCNA)
Sungri Motor complex (KCNA)
Taean Heavy Machine Complex (KCNA)
Taedonggang Brewery (KCNA)
Tahungsan Machine Plant (KCNA)
Unsan Machine Tool Factory (KCNA)

I know the locations of many of these factories but not all.  If anyone has any information on their coordinates, please let me know.

Bradley Martin, author of Under the Loving Care of the Fatherly Leader, writes in the Global Post:

Now that food shortages reportedly have forced North Korea to reverse its crackdown on capitalist-style markets, more systematic reforms for its collapsed economy may not be far behind.

The markets policy reversal came May 26 in directives issued by the cabinet and the ruling Workers’ Party to subordinate organizations, according to a report by the Seoul-based newsletter North Korea Today, which gets its information from officials and ordinary citizens inside the North. “The government cannot take any immediate measures” to relieve a food shortage that is “worse than expected,” the newsletter quoted one of the directives as saying in explanation for the policy change.

The same authorities only late last year decreed a sudden currency revaluation that crippled the “anti-socialist” markets, where stallholders had been trading for individual profit, by confiscating the traders’ wealth. The new decrees bless and deregulate what’s left of the markets, which have shrunk and in some cases closed completely in the interim, in the hope that market trading will keep people from starving. And the directives instruct managers of state-run enterprises to pursue lucrative deals — especially in foreign trade — that could help feed their employees.

This could all turn out to be the big event that finally pushes the very reluctant leadership into a multi-year campaign of serious reforms of the sort that began decades ago in Vietnam and China, according to Felix Abt, a Swiss involved in North Korean joint ventures in pharmaceutical manufacturing and computer software.

“Given an industrial stock and an infrastructure beyond repair, and the impossible task of maintaining a huge army, economic reforms appear unavoidable in the very near future,” Abt, a former president of Pyongyang’s European Business Association, wrote in an email exchange.

“It looks intriguing and it reminds me of Vietnam’s history of reforms,” said Abt, who did business for years in Vietnam before going to Pyongyang and recently has moved back to Vietnam while maintaining his involvement in North Korea.

“The Vietnamese economic situation looked dire at the beginning of the 1980s,” he explained. “Nguyen Van Linh, party secretary in Ho Chi Minh City, favored moderate economic reforms. He tried too early, lost his job and left the political bureau in 1982.

“Le Duan, secretary general of the Communist Party, was categorically against any economic reforms. He died in 1986, the year of the five-year party congress which brought Nguyen Van Linh back and elected him as his successor. The new party secretary general immediately launched the Doi Moi policy — ‘reforms.’”

Abt ventured the lesson that triggering reforms “takes something big like the death of a leading politician” in Vietnam — or, in North Korea, a “ruinous” currency revaluation.

Not every foreigner who has had firsthand economic dealings with North Korea is convinced the recent events constitute that trigger. Some worry that U.S.-led sanctions could nip any flowering of capitalism in the bud.

“The problem is still U.S. Treasury’s attitude,” said one such foreigner, who asked not to be identified further. Treasury Department officials began working several years ago to take North Korea “out of the international banking system,” discouraging trade, he noted.

Some U.S.-sponsored sanctions subsequently were eased in an effort to persuade Kim Jong Il to negotiate away his nuclear weapons capability, but after those talks went nowhere — and especially after North Korea allegedly torpedoed a South Korean warship earlier this year — enthusiasm for compromise cooled. Recent reports say Washington is moving toward aggressively strangling cash flow into the country.

There is also the argument that Kim believes he cannot afford to reform the economy because it would let in information and influences that would undermine his family’s rule by letting his isolated subjects learn that the rival South Korean system works much better.

According to Abt, one answer to both concerns could be China, which “will provide all the support necessary to the DPRK party and government to enable economic reforms without regime change.” He used the abbreviation of Democratic People’s Republic of Korea, the country’s official name. “The DPRK may expect support from other quarters, for example, the European Union, too,” he said.

“I think the dilemma of the leadership — economic upsurge versus the inflow of ‘subversive’ system-destabilizing information and ideas, particularly regarding the South — can be overcome with the necessary Chinese support,” Abt said. “Though the division of Korea can only be compared with that of Germany before 1990, China’s division — capitalist Hong Kong, capitalist Taiwan — was a sort of challenge to Deng Xiaoping and successors, too, but they learnt to manage that quite well.”

Read the full the story here:
Analysis: Kim Jong Il, the reformer?
Global Post
Bradley Martin
6/24/2010

According to the Daily NK:

North Korea has earned more than $160 million in the last ten years thanks to the construction of sculptures and other edifices in countries across Africa.

A Daily NK source in China revealed on the 18th, “Since 2000, North Korea has been earning colossal quantities of dollars through contracts for the Mansudae Overseas Project Group of Companies under the Mansudae Art Institute to construct sculptures.”

Mansudae Art Institute is an organization primarily dedicated to the idolization of Kim Il Sung and Kim Jong Il through public works, one whose construction of edifices such as the Juche Tower and Arch of Triumph in Pyongyang has added to the status of the country.

It has also been building revolutionary monuments in African countries such as Ethiopia since the 1970s in order to maintain cordial relations with socialist states, but in the early 2000s started doing work in African countries to earn foreign currency as well.

According to the source, North Korea has earned $66.03 million from Namibia alone thanks to the construction of the Presidential Palace ($49 million); the Cemetery of National Heroes ($5.23 million); a military museum ($1.8 million); and Independence Hall ($10 million).

It has also earned almost $55 million from Angola via the António Agostinho Neto culture center ($40 million); Cabinda Park ($13 million); and the Peace Monument ($1.5 million).

Additionally, the North has constructed a basketball stadium ($14.4 million) and an athlete academic center ($4.8 million) in the Congo, earning almost $20 million dollars in total.

Thanks to the Monument to the African Renaissance in Senegal, the North has made another $12 million dollars.

There are around 19.8㎢ set aside for a vacation spot for the president of Equatorial Guinea, which is supposed to earn Mansudae around $800,000, not to mention a government office building ($1.5 million), Luba Stadium ($6.74 million) and conference halls ($3.5 million).

The source also reported, “The money earned from these construction projects is managed by the No. 39 Department. Some of these dollars are used for domestic governance, while the rest go to secret accounts in Switzerland or Macau to become Kim Jong Il’s secret funds.”

Here are the images from the story including a table of financial data (which I would take with a grain of salt):

Additional Information:

1. I blogged here about the Derg Monument in Ethiopia.

2. I have located some of the Mansudae Overseas projects mentioned in this story (as well as numerous other places not menioned in this story: Egypt and Syria, Zimbabwe, DR Congo). However, here are GeoEye satellite images of some of the Namibia and Angola projects mentioned above courtesy of Google Earth:  

Namibia National Heroes Acre (22°39’46.02″S,  17° 4’41.06″E):

Namibia State House (22°35’28.83″S,  17° 6’2.76″E)

Cultural Center of António Agostinho Neto (Mausoleum) (8°49’24.73″S,  13°13’8.52″E)

According ot the Choson Ilbo:

North Korea in March restored a special department in the Workers Party codenamed Room 38 which manages leader Kim Jong-il’s coffers and personal slush funds, it emerged Monday. The North last fall merged Room 38 with Room 39, which manages party slush funds.

“Rooms 38 and 39 were merged to simplify Kim Jong-il’s slush funds,” said a North Korean source. “But when it became difficult to secure hard currency due to international sanctions, Room 38 seems to have been restored because there was a feeling that Room 39 alone can’t meet the need.”

Room 38 is reportedly led by Kim Tong-il, who heads three regional departments in charge of earning hard currency.

Room 39 tries to maximize earnings from gold and zinc mining and farming and fisheries. It also manages stores and hotels exclusively for foreigners in Pyongyang. Room 39 seems to have suffered badly due to the recent suspension of inter-Korean trade. “Taesong Bank and Zokwang Trading, which received remittances from Mt. Kumgang tourism, are both controlled by Room 39, and is also in charge of the exports of agricultural and fisheries products,” said a government source.

Kim Jong-il needs dollars to maintain the party elite’s loyalty to him and his heir presumptive. He is said to have told party bigwigs in February, “From now on I will judge your loyalty based on the amount you contribute to the fund.” His son Jong-un is also said to be amassing separate slush funds for his own use.

But international sanctions on exports of weapons, counterfeit dollars, fake cigarettes and drugs remain in place, and the United States is pushing ahead with additional financial sanctions over the North’s sinking of the South Korean Navy corvette Cheonan in March. Pyongyang was dealt a heavy blow in 2005 when the U.S. froze US$25 million in the Banco Delta Asia in Macao which was apparently for Kim’s personal use.

Kim earlier this year appointed his high school friend Jon Il-chun head of Room 39. Jon was also named chairman of the National Development Bank, established early this year with a view to conducting normal international financial transactions to induce foreign investment. “North Korea seems to be planning to divert part of foreign investment to Kim’s slush fund,” said a government official.

NK Leadership Watch has more. 

Read the full story here:
Kim Jong-il Restores Special Department to Swell Coffers
Choson Ilbo
6/24/2010

According to Reuters:

There are no private cars in North Korea and countless factory chimneys have not belched smoke in years, but state media said on Tuesday scientists were inventing new ways to cut air pollution and protect the environment.

The country “has directed a great effort” to research environmental protection, the state news agency KCNA reported.

“Researchers have developed a new material for removing exhaust fumes from automobiles so as to cut the greenhouse gas emissions and reduce air pollution 35-40 percent,” it said, without elaborating.

It also said “units” in the capital, Pyongyang, that caused pollution had been registered, suggesting that dirty industries were under pressure to get clean.

“They are now developing a gas and dust arrester necessary in production processes and new materials needed to secure environmental safety of products,” it said.

The isolated communist country’s state-run media periodically boasts revolutionary innovations in science and technology, despite a moribund economy and chronic food shortages.

Perhaps the most visible in recent years have been related to the relatively well-funded — and well-fed — military. North Korea has conducted two nuclear tests since 2006 and several missile launches, upsetting its neighbours.

North Korean scientists also invented a device using “locally available materials” to incinerate hospital waste, KCNA said, and the Environmental Protection Institute of the Ministry of Land and Environmental Conservation had intensified research into pollution-free vegetable production.

Here is the original KCNA story:

Scientific Achievements of Environmental Protection
 
Pyongyang, June 22 (KCNA) — The Democratic People’s Republic of Korea has directed a great effort to scientific researches for environmental protection.

Researchers have developed a new material for removing exhaust fumes from automobiles so as to cut the greenhouse gas emissions and reduce air pollution 35-40 percent.

They have also put the environmental management of industrial establishments on IT basis.

Meanwhile, they have registered units causing environmental pollution in Pyongyang and confirmed methods and procedures for preventing pollution. They are now developing a gas and dust arrester necessary in production processes and new materials needed to secure environmental safety of products.

Besides, they have invented a new device to destroy by fire such wastes from hospitals as contaminated injector and bandage with locally available materials.

Scientists of the Environmental Protection Institute of the Ministry of Land and Environmental Conservation have intensified a research in pollution-free vegetable production.

Read the full Reuters story here:
N.Korea says puts “great effort” into environment
Reuters
6/22/2010

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.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-14-2
6/14/2010

During the third session of the 12th Supreme People’s Assembly, convened on June 7, Kim Jong Il promoted his brother-in-law Jang Sung Thaek to vice-chairman of the National Defense Commission (NDC), named a new premier, and replaced several department heads and ministers. This appears to be an attempt to shore up the regime as it seeks to “open the door to a strong and prosperous nation” by 2012, the 100th anniversary of the birth of Kim Il Sung. Kim Jong Il made a personal appearance at this latest assembly meeting, unlike the SPA meeting held in April. The leader’s presence hints at the importance of the latest gathering.

This promotion of Jang Sung Thaek and shake up of Cabinet positions appears to be part of efforts to realize the quickly approaching goal of establishing a ‘strong and prosperous nation’ by 2012, assigning those most able to positions of responsibility, regardless of age or experience. Most notably, Jang, widely thought to be second-in-command in North Korea, was promoted to vice-chairman of the NDC. He was first appointed to the NDC at the first meeting of the 12th SPA in April 2009, making his climb to vice-chairman in a mere 14 months.

Before the latest promotion, Jang held the position of vice-director of the Workers’ Party of Korea, a newly created position that he was the first to hold. In this position, Jang oversaw national security offices, police, and the courts, putting him in a position of power difficult for anyone else to achieve. Having traveled to both South Korea and China, Jang Sung Thaek was likely promoted to present the image of a strong military and, at the same time, establish stable relations with the international community in order to ensure a smooth transition of power as well as to resurrect the economy by 2012. When Kim Jong Il led a delegation to China last May, the Chinese government treated Jang very well, ignoring standard protocol for someone in his position.

In addition, Choe Yong Rim was named the North’s new premier, and eight new vice-ministers were appointed. Regional Party secretaries were allowed to participate directly, allowing those who are most knowledgeable of local conditions to impact the decisions of the administration. Most of the new appointments were very experienced elites, including Choe Yong Rim (80) as premier, and Kang Neung Su (80), Kim Rak Hui (77), Ri Thae Nam (70), and Jun Ha Chul (82). The regime is promoting a number of veterans who are making their “last stand for the motherland” as part of the effort to ensure stable transformation of power after Kim Jong Il.

With Kim Rak Hui’s appointment as vice-premier and new appointments to the Ministry of Foodstuff and Daily Necessities Industry as well as the head of the Light Industry Ministry, North Korea seems to be pursuing the improvement of standards of living promised in the 2010 New Year’s joint editorial. Pyongyang Party officials appear to be attempting to reassert a centrally planned economy in the aftermath of botched currency reform efforts; however those witnessing regional economic conditions appear much more able to come up with appropriate economic policies. North Korea has been unable to make any significant progress in resolving its food shortages or its inability to provide daily necessities to the public, leading the regime to scapegoat some high-ranking officials. Now, many in and outside of North Korea are watching closely to see if the regime can launch economic efforts capable of successfully ‘opening the door to a Strong and Prosperous Nation’ in the next two years.

Writing in the Asia Times…

A few days ago, a new session of the Supreme People’s Assembly – North Korea’s rubber-stamp parliament – was convened in Pyongyang. In most cases, such sessions do not attract much attention outside a tiny circle of the full-time Pyongyang watchers: few people would be excited by the sight of monotonously and tastelessly dressed men and women sitting in rows and raising their hands to signal their unanimous approval of the laws and resolutions that – as everybody understands – seldom bear any relation to reality.

However, this time observers suspected that something unusual was going to happen. The assembly’s last session took place in April, and was not supposed to meet again so soon. As we learned on June 7, parliament was convened to authorize (with the expected 100% approval rate) a major reshuffle of the North Korean leadership – and, judging by the urgency of gathering, this reshuffle was seen as a pressing matter.

A few days earlier, on June 3, the official North Korean wire agency reported that one day before, Yi Che-kang, the first deputy chairman of the ruling Korean Workers’ Party, had been killed in a traffic accident. The victim of a car crash was, formally speaking, second only to Dear Leader Kim Jong-il in the party hierarchy.

This news had to be suspicious: North Korea’s traffic is arguably the thinnest in Asia, but the country has a long tradition of traffic incidents taking the lives of high officials. The first such incidents occurred in the early 1970s, during the transition of power from the country’s founding father Kim Il-sung to his son.

Nowadays, the new dynastic transition is unrolling. In early 2009, after long delays and much hesitation, Kim Jong-il decided that his youngest son, Kim Jong-un, would become the next great leader of the country. So far, no reference to the “Young General” has appeared in the open media, but one can come across accolades to his greatness and superhuman wisdom in classified materials that are published for the benefit of officials (and distributed widely).

The events of the past week allow us to surmise how the power structure of North Korea will look like in the first years after Kim Jong-il’s death. It seems that North Korean political heavyweights have finally begun to prepare for the unthinkable – the demise of the Dear Leader.

The choice of Kim Jong-un as a heir designate serves, above all, the interests of the North Korean elite, so one can even suspect that the choice was somehow pushed on Kim Jong-il by his entourage. The “Young General” really is young, being merely 27 or 28 years old. Even North Korean propaganda mongers find this embarrassing, so they insist General Kim is in his early 30s.

The choice of such an exceptionally young candidate serves, above all, the interests of the old guard, Kim Jong-il’s own entourage. A young crown prince has no power base and no allies. Thus, even if he technically becomes the supreme leader, he will have no choice but to follow the advice of his father’s entourage, that is, people who are running the country now. He is doomed to become a puppet – at least for some while.

However, a weak crown prince will require an able prince regent. For the past few years, most Pyongyang watchers agreed that the most likely candidate to take such a position is Jang Song-taek, a brother-in-law of Kim Jong-il.

Born in 1946, he is 64 and hence young by the standards of North Korea, where a majority of the top leaders are in their 70s and 80s. The recent Supreme People’s Assembly session confirmed these speculations. At the session, Jang was appointed vice chairman of the National Defense Commission. The North Korean constitution stipulates that the chairman of this body is head of the state, and Kim Jong-il runs the country exactly in this capacity. Therefore, Jang officially became the second-placed person in the country.

The car incident that killed Yi Che-kang was also timely for Jang Song-taek. Yi was widely believed to be a rival of Jang. Now, with Yi dead, Jang seems to have no serious rivals left. The recent assembly session also appointed a new head of the North Korean cabinet. In North Korea, the prime minister is essentially a top technocrat, but it is still significant that this position went to Choe Yong-rim, who is rumored to be close to Jang.

Jang’s position remains precarious: Kim Jong-il is still the supreme leader, and in North Korea even blood connections with the highest family do not always secure a person from august wrath. In the past, family members have been exiled a number of times, and in one case a young relative of the Dear Leader was assassinated in Seoul, where he had defected. A few years ago, Jang Song-taek disappeared from public sight for a year, and he is widely believed to have spent this time in exile.

At any rate, the North Korean elite – with at least tacit approval of Kim Jong-il – began to work on the architecture of a post-Kim Jong-il regime. It seems that the future power structure will consist of Kim Jong-un, a much extolled Star of Revolution and Shining Comrade (or whichever flowery titles they will invent) who will essentially be a powerless puppet while real authority will dwell with a council of technocrats and generals presided over by Jang Song-taek. In all probability, it means that the death of Kim Jong-il will not bring about much change: for a while the country will be steered by the same people who have been running it for the past two or three decades.

However, power transitions do not always go as intended. To start with, Kim Jong-un’s personality cult is still in its infancy, and it will take few years to develop it to the usual North Korean levels. We are yet to see pages of all newspapers filled with countless stories of the “Young General’s benevolence”. However, before the personality cult is developed enough, not only Kim Jong-un’s position but the entire system will remain insecure. We do not know whether Kim Jong-il and his old guard have enough time at their disposal: at the latest Supreme People’s Assembly session the Dear Leader did not look particularly well.

It is also possible that after Kim Jong-il’s death some cracks in the top leadership, now invisible, will lead to intense infighting and thus undermine the cohesion that is essential for the stability of the system.

And even if the transition goes smoothly enough, the resulting system will remain inherently unstable. Kim Jong-un might be young, inexperienced and compliant now, but he will get stronger and wiser, and in all probability will not be too happy about the control of the old dignitaries. Many young kings ended up challenging and removing their regents.

On the other hand, the likely members of the future regent council are quite old, with an average age of 75 or so, hence in a decade many of the present-day top dignitaries will be dead from natural causes (and, perhaps a car crash or two).

Finally, Jang Song-taek might be tempted into assuming all power for himself. Nasty things are known to have happened to young crown princes in the past – from food poisoning to riding incidents and, perhaps, even good old car crashes.

But, whatever happens, the first days of June saw the contours of post-Kim Jong-il North Korea emerge.

Read the full story below:
Son rising for a post Dear Leader era
Asia Times
Andrei Lankov
6/16/2010

According to the AFP:

North Korea has completely cut off state food rations after China failed to supply the impoverished communist country with extra cereals, a welfare group said Monday.

The ruling communist party announced in a directive on May 26 that there would be no state rations for a while, said South Korea’s Good Friends group which has contacts in the North.

People were authorised to buy food supplies through private markets, it said, adding the directive was due to delayed shipments of food from China.

“The directive was unavoidable” because China failed to send the aid which had been anticipated after leader Kim Jong-Il’s trip to Beijing in early May, group president Pomnyun, who uses just one name, told reporters.

Private markets are now open around the clock across the North, he said.

The North suffered famine in the mid-1990s which killed hundreds of thousands and it still grapples with severe food shortages. The UN children’s fund estimates one third of children are stunted by malnutrition.

The state food distribution system collapsed during the famine. Free markets sprang up and were condoned for a time.

Since 2005 the regime has been reasserting its grip on the economy, with controls or outright bans on the private markets.

A currency revaluation last November, designed to flush out entrepreneurs’ savings, backfired disastrously, fuelling food shortages as market trading dried up and sparking rare outbreaks of unrest.

The North was forced to suspend its campaign to curb the private markets.

Read the full story here:
N.Korea completely cuts off state rations: aid group
AFP
6/14/2010

Martyn Williams releases three DPRK stories this week all covering interesting issues…

North Korea Moves Quietly onto the Internet

North Korea, one of the world’s few remaining information black holes, has taken the first step toward a fully fledged connection to the Internet. But a connection, if it comes, is unlikely to mean freedom of information for North Korea’s citizens.

In the past few months, a block of 1,024 Internet addresses, reserved for many years for North Korea but never touched, has been registered to a company with links to the government in Pyongyang.

The numeric IP addresses lie at the heart of communication on the Internet. Every computer connected to the network needs its own address so that data can be sent and received by the correct servers and computers. Without them, communication would fall apart.

It is unclear how the country’s secretive leadership plans to make use of the addresses. It seems likely they will be assigned for military or government use, but experts say it is impossible to know for sure.

North Korea’s move toward the Internet comes as it finds itself increasingly isolated on the world stage. The recent sinking of a South Korean warship has been blamed on the insular country. As a result, there are calls for tougher sanctions that would isolate North Korea further.

“There is no place for the Internet in contemporary DPRK,” said Leonid A. Petrov, a lecturer in Korean studies at The University of Sydney, referring to the Democratic People’s Republic of Korea. “If the people of North Korea were to have open access to the World Wide Web, they would start learning the truth that has been concealed from them for the last six decades.”

“Unless Kim Jong-Il or his successors feel suicidal, the Internet, like any other free media, will never be allowed in North Korea,” he said.

The North Korean addresses were recently put under the control of Star Joint Venture, a Pyongyang-based company that is partly controlled by Thailand’s Loxley Pacific. The Thai company has experience working with North Korea on high-tech projects, having built North Korea’s first cellular telephone network, Sunnet, in 2002.

Loxley acknowledged that it is working on a project with Pyongyang, but Sahayod Chiradejsakulwong, a manager at the company, wouldn’t elaborate on plans for the addresses.

“This is a part of our business that we do no want to provide information about at the moment,” he said.

A connection to the Internet would represent a significant upgrade of the North’s place in cyberspace, but it’s starting from a very low base.

At present the country relies on servers in other countries to disseminate information. The Web site of the Korea Central News Agency, the North’s official mouthpiece, runs on a server in Japan, while Uriminzokkiri, the closest thing the country has to an official Web site, runs from a server in China.

North Korean citizens have access to a nationwide intranet system called Kwangmyong, which was established around 2000 by the Pyongyang-based Korea Computer Center. It connects universities, libraries, cybercafes and other institutions with Web sites and e-mail, but offers no links to the outside world.

Connections to the actual Internet are severely limited to the most elite members of society. Estimates suggest no more than a few thousand North Koreans have access to the Internet, via a cross-border hook-up to China Netcom. A second connection exists, via satellite to Germany, and is used by diplomats and companies.

For normal citizens of North Korea, the idea of an Internet hook-up is unimaginable, Petrov said.

Kim Jong-Il, the de-facto leader of the country, appears all too aware of the destructive power that freedom of information would have to his regime.

While boasting of his own prowess online at an inter-Korean summit meeting in 2007, he reportedly rejected an Internet connection to the Kaesong Industrial Park, the jointly run complex that sits just north of the border, and said that “many problems would arise if the Internet at the Kaesong Park is connected to other parts of North Korea.”

Kim himself has made no secret of the Internet access that he enjoys, and famously asked then-U.S. Secretary of State Madeleine Albright for her e-mail address during a meeting in 2000.

The government’s total control over information extends even as far as requiring radios be fixed on domestic stations so foreign voices cannot be heard.

The policy shows no signs of changing, so any expansion of the Internet into North Korea would likely be used by the government, military or major corporations.

The World’s Most Unusual Outsourcing Destination

Think of North Korea, and repression, starvation and military provocation are probably the first things that come to mind. But beyond the geopolitical posturing, North Korea has also been quietly building up its IT industry.

Universities have been graduating computer engineers and scientists for several years, and companies have recently sprung up to pair the local talent with foreign needs, making the country perhaps the world’s most unusual place for IT outsourcing.

With a few exceptions, such as in India, outsourcing companies in developing nations tend to be small, with fewer than 100 employees, said Paul Tija, a Rotterdam-based consultant on offshoring and outsourcing. But North Korea already has several outsourcers with more then 1,000 employees.

“The government is putting an emphasis on building the IT industry,” he said. “The availability of staff is quite large.”

At present, the country’s outsourcers appear to be targeting several niche areas, including computer animation, data input and software design for mobile phones. U.S. government restrictions prevent American companies from working with North Korean companies, but most other nations don’t have such restrictions.

The path to IT modernization began in the 1990s but was cemented in the early 2000s when Kim Jong Il, the de-facto leader of the country, declared people who couldn’t use computers to be one of the three fools of the 21st century. (The others, he said, are smokers and those ignorant of music.)

But outsourcing in North Korea isn’t always easy.

Language can be a problem, and a lack of experience dealing with foreign companies can sometimes slow business dealings, said Tija. But the country has one big advantage.

“It is one of the most competitive places in the world. There are not many other countries where you can find the same level of knowledge for the price,” said Tija.

The outsourcer with the highest profile is probably Nosotek. The company, established in 2007, is also one of the few Western IT ventures in Pyongyang, the North Korean capital.

“I understood that the North Korean IT industry had good potential because of their skilled software engineers, but due to the lack of communication it was almost impossible to work with them productively from outside,” said Volker Eloesser, president of Nosotek. “So I took the next logical step and started a company here.”

Nosotek uses foreign expats as project managers to provide an interface between customers and local workers. In doing so it can deliver the level of communication and service its customers expect, Eloesser said.

On its Web site the company boasts access to the best programmers in Pyongyang.

“You find experts in all major programming languages, 3D software development, 3D modelling and design, various kind of server technologies, Linux, Windows and Mac,” he said.

Nosotek’s main work revolves around development of Flash games and games for mobile phones. It’s had some success and claims that one iPhone title made the Apple Store Germany’s top 10 for at least a week, though it wouldn’t say which one.

Several Nosotek-developed games are distributed by Germany’s Exonet Games, including one block-based game called “Bobby’s Blocks.”

“They did a great job with their latest games and the communication was always smooth,” said Marc Busse, manager of digital distribution at the Leipzig-based company. “There’s no doubt I would recommend Nosotek if someone wants to outsource their game development to them.”

Eloesser admits there are some challenges to doing business from North Korea.

“The normal engineer has no direct access to the Internet due to government restrictions. This is one of the main obstacles when doing IT business here,” he said. Development work that requires an Internet connection is transferred across the border to China.

But perhaps the biggest problem faced by North Korea’s nascent outsourcing industry is politics.

Sanctions imposed on the country by the United States make it all but impossible for American companies to trade with North Korea.

“I know several American companies that would love to start doing IT outsourcing in North Korea, but because of political reasons and trade embargoes they can’t,” Tija said.

Things aren’t so strict for companies based elsewhere, including those in the European Union, but the possible stigma of being linked to North Korea and its ruling regime is enough to make some companies think twice.

The North Korean government routinely practices arbitrary arrest, detention, torture and ill treatment of detainees, and allows no political opposition, free media or religious freedom, according to the most recent annual report from Human Rights Watch. Hundreds of thousands of citizens are kept in political prison camps, and the country carries out public executions, the organization said.

With this reputation some companies might shy away from doing business with the country, but Exonet Games didn’t have any such qualms, said Busse.

“It’s not like we worked with the government,” he said. “We just worked with great people who have nothing to do with the dictatorship.”

Radio Wars Between North and South Korea (YouTube Video)