North Korean Economy Watch

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.

Foreign Trade (Naenara)
January, 2010

(An interview of a reporter of Foreign Trade of the DPRK with Sin On Rok, director of a bureau of the Ministry of Foreign Trade)

Question: I’d like to have a talk with you about the DPRK policy on foreign trade. Would you please tell me about the fundamental of its foreign trade policy?

Answer: The DPRK Law on Foreign Trade was adopted by the decision of the Standing Committee of the Supreme People’s Assembly in 1997. Article 2 of the law stipulates that it is a consistent policy of the DPRK to develop foreign trade.

The fundamental of its foreign trade policy is to consolidate the foundation of the independent national economy and, on this basis, to expand and develop trade relations with other countries.

This foundation provides a material guarantee for promoting foreign trade on the principles of complete independence and equality. If the developing countries, in particular, fail to conduct trade business based on their self-reliant national economy, they can neither construct independent structure of trade nor defend their sovereignty in the end.

From this point of view, the DPRK government has consistently maintained trade policy of developing foreign trade on the basis of the independent national economy and further consolidating its foundations through foreign trade.

In the past the government has developed heavy industry with machine building industry as its core, light industry and agriculture simultaneously in conformity to the actual conditions of the country and, relying on them, produced and exported goods that are highly competitive in international markets. And it has always ensured that foreign trade serves development of the economy and betterment of the people’s life.

Q: What is the principle pursued by the government in foreign trade relations?

A: The DPRK government employs the policy of maintaining the principles of independence, equality and mutual benefits, as well as credit-first principle in the relations of foreign trade.

The government has so far developed trade relations holding fast to these principles and given active support and assistance to the developing countries in their efforts to establish the fair international economic order.

It has put forward the credit-first policy in trade dealings and ensured that all the trading corporations keep credit in their transactions so as to create better climate for foreign trade of the country. It is making efforts to establish rigid discipline that corporations should ensure the superior quality of exports, keep delivery date and faithfully discharge contractual obligations like payment for imported goods.

Q: I think the issue of making foreign trade diversified and multifarious also assumes due importance in the foreign trade policy of the government.

A: You are right. Article 3 of the Foreign Trade Law stipulates that diversification and variegation of foreign trade constitute a basic way for wide-ranging trade. The State shall ensure to deal with different countries and corporations employing various forms and methods in foreign trade.

For the sake of diversification of foreign trade, we pay a primary attention to the neighbouring countries in developing economic exchange and cooperation including trade.

It is due to the geographical location and role of our country in the economic development of the Northeast Asia and the rest of the world.

And the government executes a policy of expanding the scope of foreign trade to all countries in Asia, Africa, Latin America and Europe in its effort to make foreign trade diversified.

Entering the new era, our country intensified the diversified economic exchange and trade transactions with EU member nations.

The EU top level delegation paid a visit to our country in 2001. The DPRK-EU symposium was held in Torino, Italy in March 2007 and the 3rd DPRK-EU economic symposium held in Pyongyang in October 2008. These events marked important occasions in the development of economic and trade relations between the DPRK and the European countries.

The DPRK government is also carrying out the policy of making foreign trade multifarious in keeping with the developing trend of international trade.

It puts a stress on processing trade on the basis of its economic potentialities and up-to-date processing technologies.

The government encourages local trading corporations to import raw materials and accessories and to process and assemble them for export in different sectors of the economy such as textile, clothing, machinery and facilities, rolling stocks and electronic goods.

We are channeling much effort into the export of technological products like software relying on the development of information industry of the country.

Transit trade and consignment trade are also in full swing.

Q: What is the highlight in the export policy of the government at present?

A: The key issue in the export policy is to improve export structure from the export of raw materials into that of processed goods.

The government makes efforts to give full play to the potentialities of existing export bases while building new ones in various sectors, increase the variety and volume of exports and upgrade their quality.

It defined the production bases of internationally competitive goods as strategic export industries, and is concentrating its investment on them and paying a close attention to their scientific and technological development.

The government takes some measures to encourage the export business of the corporations with a view to increasing export volume of the country.

It affords preferential treatments such as loaning from banks and supply of raw materials and power to those export bases and corporations which have cultivated new markets with new items of export or produced and exported hi-tech goods.

Besides, the government simplifies export procedures and upgrades services of the export-related institutions so as to carry on the smooth operation of export business of the country as a whole.

The DPRK government will continue to promote the impartial and reciprocal economic and trade relations with all countries on the principle of independence, mutual respect and equality.

and

DPRK Tariff System
Foreign Trade, Naenara
Kim Tong Hyok, University of the National Economics
January 2010

The tariff system in the DPRK contributes to protecting the independent national economy and improving people’s livelihood.

The basic aim of the tariff policy in our country is to apply either no or low tariff on materials and goods imported for the acceleration of economic construction and the betterment of people’s life and high tariff on goods that have been or can be produced at home.

First, the government builds a tariff barrier against the imports which can be produced in our country.

High tariff is imposed on such imports as the goods that the domestic factories and enterprises are now producing or have potentials to produce, the products that are not needed at present in economic sectors, and the goods that are of no direct use for enhancing people’s living standards so as to increase the domestic production capacity and raise the quality of the homemade articles to be competitive in the world markets.

Second, the government imposes low or no tariff on the imports which are in short supply or unable to produce at home, i.e. the latest machines and equipment, oil and crude rubber needed for consolidating the foundations of the independent national economy and some of daily necessities that are more profitable to import than to produce at home.

It is impossible for each country to produce by itself all things necessary for its economic construction and people’s life because its natural and economic conditions and the level of productive forces differ from those of others.

Third, the government holds the principle to introduce advanced technologies in executing tariff system.

It imposes no or low tariff on hi-tech products and preferential tariffs on the goods imported by foreign-invested enterprises for the purpose of introducing advanced science and technology.

Fourth, the government defined correct criteria for tariff on the imports and is properly applying them.

It stipulated appropriate criteria of assessing the price of each variety of the imports pursuant to the regulations for the implementation of the DPRK Customs Law and the provisions of the Customs Law, and is now applying them in keeping with the requirements of the developing reality.

Besides, the government has prepared the catalogues of export commodities and the tariff rate table in conformity to the provisions of GATT and exercised tariff system suitable to each phase of development of the national economy, thus further promoting foreign trade and preventing tax evasion and other commercial wrongdoings which exert negative influence upon international markets.

Today the DPRK tariff system makes a big contribution to the protection of the independent national economy and the development of foreign trade.

According to CNN:

The Beijing-based Jinghesheng Investment Company has partnered with the Democratic People’s Republic of Korea (DPRK), North Korea’s formal name, to exhibit — and sell — 60 oil paintings and 30 traditional Korean ink paintings.

“They were all carefully selected by the DPRK’s Ministry of Culture,” said exhibit director Li Xuemei. Although North Korean artworks may be available in some galleries in China and other countries, said Li, “you don’t really know where they came from, but ours are surely authentic artworks from DPRK.”

Inside a hall, the gallery showcases works of twenty North Korean artists affiliated with museums and art academies in Pyongyang. Li said the gallery receives as many as 100 visitors a day on the weekend and about 60 on weekdays.

The pieces depict landscapes and modern life. Many were painted by seasoned Pyongyang artists who hold honorific titles as “People’s Artists” and “Merit Artists.”

One oil painting, a socialist realist piece entitled “Huge Waves in the East Sea,” is three meters high and ten meters long and covers an entire wall of the gallery. Four artists collaborated on the painting using a wide scope of greens and blues to create textured and turbulent waves crashing into taupe gray rocks against a backdrop of blue sky.

The collection also includes watercolors, elegant portraits of Korean women in modern and traditional dress and wildlife.

Li said the artwork is only sold to elite customers, typically Chinese entrepreneurs in affluent cities like Hong Kong, Guangzhou and Dalian. She said 30 percent of the works on display have already been sold, but she declines to quote any prices.

“Many people chose to collect this art because North Korea is a country still closed to the outside world, although it is seeking to open up in the future,” Li said. “This makes North Korean artworks a good investment. Some artists have already passed away, making their work more unique and valuable.”

While the arts’ value may increase over time, their North Korean artists will not see any cash returns.

“In North Korea,” Li said, “art is not private property and the value made from the sales will go directly to the state.”

One artist and three North Korean government officials flew into Beijing to attend the opening of the show but stayed away from the media and declined to be interviewed.

…

While contemporary North Korean art is typically laden with a heavy message, the artworks showcased in the 798 art district leaves out traces of politics or propaganda. New collections of North Korean art will rotate through the gallery until in the coming months.

“We’ll show artworks on rotation,” Li said. “We’ll show different styles in the next collection.”

Additional Information:

1. The gallery is located in Beijing’s 798 district located here.

2. Pictures of the gallery and art can be seen here.

3. Nick Bonner has his collection on display in Beijing as well.  His new web page is here.  His old web page is here. Mr. Bonner recently showed some North Korean art in Australia.

4. Felix Abt offers pieces by artists at Pyongyang’s Paekho Art Studio here.

5. David Heather sells North Korean art here and here from the Mansudae Art Studio.

6. A separate web page claims to be the official site of the Mansudae Studio here.

7. The Mansudae Art Studio is located here.

8. Here is another page claiming to sell North Korean art.  It seems to be based in Germany.

9. Here are a couple of books on North Korean art: Art Under Control in North Korea, North Korean Posters

10. Here is a book review of North Korean Posters which offers additional information.

According to the US Treasury Department’s Press Release (h/t One Free Korea):

FinCEN Updated Advisory:
North Korea Government Agencies’ and Front Companies’ Involvement in
Illicit Financial Activities

VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today added an additional North Korean bank to its June 18 guidance to financial institutions regarding the involvement by Democratic People’s Republic of Korea (“North Korea”) government agencies and front companies in illicit activities. Based on new publicly available information, Kumgang Bank has been added to the list of North Korean banks. This update amends the FinCEN issuance of FIN-2009-A002, on June 18, 2009.

As further described in the guidance, the U.N. Security Council has called for enhanced monitoring of financial transactions, to prevent the financing of North Korea’s nuclear, ballistic missile, and other weapons of mass destruction (“WMD”)-related programs or activities. The Security Council’s action, combined with the potential that North Korea will attempt to evade these financial measures, illustrates the increased risk that North Korea and North Korean entities, as well as individuals acting on their behalf, pose to the international financial system and financial institutions worldwide.

FIN-2009-A002 can be read here.

Links to previous posts on sanctioned DPRK organizations (US and UN) can be found here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See group photo here.

ORIGINAL POST: According to Yonhap:

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

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

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

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

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

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

Also in the Yonhap story:

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

Michael Rank contacted BENS and received the following statement:

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

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

UPDATE 1: According to the Joong Ang Daily:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

UPDATE 2: According to the Joong Ang Daily:

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

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

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

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

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

Institute for Far Eastern Studies (IFES)
NK Brief No.09-12-21-1
12/21/2009

The Korean Central Broadcasting Station (KCBS) announced on December 16 that the North Korean Supreme People’s Assembly Standing Committee has revised the North’s Real Estate Management Law, the Commodities Consumption Level Law, the General Equipment Import Law, and other laws related to economic management. This on the heels of the November 30th announcement, when authorities announced across-the-board currency reform measures, apparently in an attempt to regain control of the country’s market economy.

The KCBS reported that the Real Estate Management Law “regulates fundamental issues of real estate registration and inspection, use, and payment of user fees,” but offered no further details.

Since 2006, North Korean authorities established new offices in each city, county, and region throughout the country. These offices were responsible for surveying property, occupied and vacant, claimed by organizations and businesses, as well as recording the size of each structure on these lands.

In the mid-1990s, with the onset of serious food shortages, food rations to workers were halted and North Korean authorities from every branch and level (including the military, railway, business enterprises) were encouraged to distribute foodstuffs in ways more beneficial to themselves. These authorities planned to resolve food distribution issues through agricultural moves.

The new Real Estate Management Law appears to be aimed at labeling land used for private purposes as strategic nationalized land and strengthening the state’s ability to collect real estate taxes. However, the broadcaster failed to explain in detail how this restructuring would occur.

By enacting the Commodities Consumption Level Law, North Korean authorities can control the basis at which goods are injected into each production sector. This appears to be in preparation for taking cost-reduction measures for enterprises related to production in each region. The broadcaster explained that there were legal demands for the enactment and enforcement of regulations on the level of consumption.

The General Equipment Import Law newly regulates import plans, contracts, and the use of goods by factories, schools, hospitals, ships and broadcasters in an effort to control quality. In each sector, the measure prevents double-investment and controls consumption competition.

As these economic control measures are focused on factories and other bases of production along with importers, it appears that, in conjunction with the recent currency reform, North Korean authorities are attempting to control production quality on all levels. For example, as the North is suffering ongoing supply difficulties due to a lack of materials, the law on consumption levels is an attempt to restrict goods by forcefully managing demand. The law on imports appears to be in an effort to regulate general-use goods in light of the increased reliance on foreign equipment.

Peking Review, Vol. 4, No. 28, p.5.
Transcribed/HTML: Max, B. and Mike B.
(h/t Northeast Asia Matters)

July 11, 1967

The Chairman of the People’s Republic of China and the Presidium of the Supreme People’s Assembly of the Democratic People’s Republic of Korea, determined, in accordance with Marxism-Leninism and the principle of proletarian internationalism and on the basis of mutual respect for state sovereignty and territorial integrity, mutual non-aggression, non-interference in each other’s internal affairs, equality and mutual benefit, and mutual assistance and support, to make every effort to further strengthen and develop the fraternal relations of friendship, co-operation and mutual assistance between the People’s Republic of China and the Democratic People’s Republic of Korea, to jointly guard the security of the two peoples, and to safeguard and consolidate the peace of Asia and the world, and deeply convinced that the development and strengthening of the relations of friendship, co-operation and mutual assistance between the two countries accord not only with the fundamental interests of the two peoples but also with the interests of the peoples all over the world, have decided for this purpose to conclude the present Treaty and appointed as their respective plenipotentiaries:

　　　The Chairman of the People’s Republic of China: Chou En-lai, Premier of the State Council of the People’s Republic of China.

　　　The Presidium of the Supreme People’s Assembly of the Democratic People’s Republic of Korea: Kim Il Sung, Premier of the Cabinet of the Democratic People’s Republic of Korea,

Who, having examined each other’s full powers and found them in good and due form, have agreed upon the the following:

Article I

The Contracting Parties will continue to make every effort to safeguard the peace of Asia and the world and the security of all peoples.

Article II

The Contracting Parties undertake jointly to adopt all measures to prevent aggression against either of the Contracting Parties by any state. In the event of one of the Contracting Parties being subjected to the armed attack by any state or several states jointly and thus being involved in a state of war, the other Contracting Party shall immediately render military and other assistance by all means at its disposal.

Article III

Neither Contracting Party shall conclude any alliance directed against the other Contracting Party or take part in any bloc or in any action or measure directed against the other Contracting Party .

Article IV

The Contracting Parties will continue to consult with each other on all important international questions of common interest to the two countries.

Article V

The Contracting Parties, on the principles of mutual respect for sovereignty, non-interference in each other’s internal affairs, equality and mutual benefit and in the spirit of friendly co-operation, will continue to render each other every possible economic and technical aid in the cause of socialist construction of the two countries and will continue to consolidate and develop economic, cultural, and scientific and technical co-operation between the two countries.

Article VI

The Contracting Parties hold that the unification of Korea must be realized along peaceful and democratic lines and that such a solution accords exactly with the national interests of the Korean people and the aim of preserving peace in the Far East.

Article VII

The present Treaty is subject to ratification and shall come into force on the day of exchange of instruments of ratification, which will take place in Pyongyang. The present Treaty will remain in force until the Contracting Parties agree on its amendment or termination. Done in duplicate in Peking on the eleventh day of July, nineteen sixty-one, in the Chinese and Korean languages, both texts being equally authentic.
(Signed)
CHOU EN-LAI
Plenipotentiary of the
People’s Republic of China

(Signed)
KIM IL SUNG
Plenipotentiary of the
Democratic People’s Republic of Korea

Book Review 1: The Cleanest Race: How North Koreans See Themselves-And Why It Matters
Author: B.R. Meyers
Reviewed by: Andrei Lankov
Review Publisher: Far Eastern Economic Review (the last issue)
Order this book on Amazon here

Most books on North Korea focus on the nuclear issue, that never-ending soap opera of the international diplomacy. In the rare cases when North Korean domestic dynamics are taken into account, the authors (most of whom do not speak or read Korean) concentrate on the official pronouncements of the regime.

Brian Myers takes a fresh approach. He largely ignores what the regime tells the outside world about itself, but concentrates instead on what North Koreans themselves are supposed to believe, paying special attention to the North Korean narratives and mass culture, including movies and television shows. North of the DMZ, mass culture is not about entertainment. Rather it is a lighter version of propaganda whose task is to deliver the same message, but in more palatable form.

As in the case in the Soviet Union, Pyongyang uses works of fiction to send signals which cannot be transmitted otherwise due to current political considerations. For example, when North Korean media found a few kind words for South Korean President Kim Dae Jung who visited North Korea in 2000 with impressive amounts of giveaway cash, North Korean novels still ridiculed him as a pathetic double-dealer.

Continue Reading here…

Bookr review 2: North Korean Posters
Editor: David Heather
Reviewed by: Aidan Foster-Carter and Kate Hext
Review Publisher: Print Quarterly, December 2009 issue (Vol XXVI no 4), pp 429-31.
Order this book on Amazon here

North Korean art is hardly well-known, but it has recently seen something of a surge. For this David Heather can claim some credit, and does. As he boasts in his brief (just one page) preface to this block of a book, “I held the largest exhibition of North Korean Contemporary Art in the West in June 2007 in the heart of London and managed to fly the North Korean Flag in Pall Mall for probably the first time ever” (p.7, capitals in original).

That militant tone, here tongue in cheek, is deadly serious in North Korean Posters. On page after gaudy page angry Korean heroes curse and smite the foe, mostly Americans with hook noses. Fists, tanks and sledgehammers crush; bayonets lunge and stab; rockets rain down – including on a shattered US Capitol (p. 138), in blithe disregard of post-9/11 sensitivities.

In a year when North Korea has been censured by the UN for testing a nuclear device and a long-range missile, such images can only reinforce stereotypes of what Koen De Ceuster in his introduction calls a country “often misrepresented and largely misunderstood” (p.9). Yet there is more to North Korean art than this, as anyone who attended David Heather’s shows at La Galleria can attest. (For those who missed out, images and comment can still be found by searching Philip Gowman’s London Korean Links website, an indispensable resource.)

Here one finds a commercial tie-in modestly unadvertised in North Korean Posters. The said posters, plus a range of other artworks – various genres of painting, tapestry and ceramics – may be purchased via www.northkoreanart.org, which proclaims that: “La Galleria Pall Mall has the privilege to be the only Gallery outside DPR Korea to be permitted to sell art and represent individual artists from North Korea. We can certify that all the works are original and authentic, made and signed by the artists themselves in Pyongyang.” These posters, here described as “Propaganda Popart” (sic), can be yours for £250 each (unframed) plus postage.

“Individual artists”? Not one is named in the book under review. Nor are the pieces dated; so one cannot trace the evolution of styles or themes, let alone particular artists. By contrast, the first volume in this series by Prestel – Soviet Posters, featuring Sergo Grigorian’s collection (2007) – is divided into six periods; each work is dated, with notes on artists and other detail. The absence of such basic data in North Korean Posters is a serious omission. De Ceuster’s useful Introduction gives the broad context, yet is oddly free-standing. With few exceptions the posters are left to shout for themselves, with no information except basic translations of the slogans – which, bizarrely and inconveniently, are printed sideways rather than below.

Furthermore, when is a North Korean poster “original and authentic”? De Ceuster notes that “hand-painted reproductions find ready buyers abroad.” Northkoreanart.org is silent on this key question for collectors: what exactly does your £250 buy, an original or a copy? (Also its comments on the actual art are trite, even illiterate: gouache and propaganda are misspelled.)

The ambiguities go on. Curiously, Northkoreanart does not say who exactly is its partner in Pyongyang, but its sister site LaGalleria.org reveals this as the Mansudae Art Studio. Yet a search swiftly brings up mansudaeartstudio.com, based in Italy and claiming to be “the only official web-site of the Mansudae Art Studio in the West,” which pipped Heather to the post with an exhibition in Genoa in May 2007. Will the real Mansudae reps please stand up? The Italian site is far more educative. Through it one can buy The Hermit Country, which despite a clichéd title (it must have miffed the comrades) is a much better, broader book on modern North Korean art, not limited to posters. The moving spirits here are a pair of Pier Luigis: Cecioni, a collector who owns 600 works; and Tazzi, an idiosyncratic but insightful critic.

For a serious academic survey, Jane Portal’s aptly titled Art Under Control in North Korea (Reaktion/British Museum, 2005), with its fully integrated text and illustrations, is essential. The current art scene in Pyongyang was recently described in an excellent piece by Adrian Dannatt in March’s Art Newspaper. This is big business, on an industrial scale. Mansudae has a thousand artists producing “at least 4,000 top level original works a year [and] a factory-style section producing copies for western hotels;” while abroad it claims to have held over 100 shows in some 70 countries.

Perhaps there are yet more ‘sole agents’ out there? North Korea lends itself to a Columbus complex. People who happen upon it often imagine they are the first ever to do so, and even when disabused they like to claim a special niche. Scepticism is in order, on many counts.

As Dannatt says: “it could not be easier to assemble a collection of contemporary DPRK art … but it could not be harder to source the originals.” He quotes Nicholas Bonner, the doyen of collectors in this area – he began in 1993, and is curating a major exhibition in Brisbane in December – on how many ‘original’ works are in fact copies, and how to tell the difference. Bonner’s website Pyongyangartstudio.com, showcasing his gallery in Beijing, makes no monopoly claims but focuses on the actual art. Interestingly Bonner eschews the propaganda genre, but has a fascinating selection of film posters: a far less aggressive variant, ignored by Heather. He is also scrupulous in specifying that what he offers are “hand painted copies.”

But back to the book. North Korean Posters is a sadly missed opportunity. It reiterates visual cliché, but gives almost no context – historical, political, artistic – for these specific works. It is just a picture book to flick through: no dates, no dimensions, no artists. For a publisher of Prestel’s stature these are shameful lapses. Is the image somehow meant to speak for itself?

Absent such essentials, this is just another twist on commie chic – like Che Guevara T-shirts. It is all very postmodern and cynical. Once upon a time North Korea was communist. Some of these posters are about ideals people believed in, as they strove to build a better society. In today’s DPRK, a half-starved neo-feudal tyranny, one of the few ways to earn hard cash is factories of well-trained draughtsmen flogging second-hand images – bilious or kitsch, take your pick – to gullible, exoticizing Westerners. (Here as in all else, the contrast with South Korea’s brilliant and original art scene is acutely painful.) The laugh is on us too, if we just gawp at these admittedly striking visuals. Have we lost our minds? Do we care to know what we are we looking at? Neither Heather nor Prestel seem bothered. Caveat lector – et emptor.

I used a copy of Soviet Posters and North Korean Posters to make this artistic discovery.

UPDATE:  According to AFP:

South Korea is preparing to ship medical supplies worth more than 15 million dollars to help North Korea fight an outbreak of swine flu, officials said Monday.

The unification ministry, which handles cross-border ties, said the shipment would include antiviral drugs for 500,000 patients — Tamiflu for 400,000 and Relenza for 100,000 — and sanitation supplies.

The aid will cost an estimated 17.8 billion won (15.3 million dollars), which will be financed by a state fund for inter-Korean cooperation, it said.

Spokesman Chun Hae-Sung said Seoul would send the shipment as soon as possible, and definitely by the end of the year. But the North, which had accepted the offer, had not yet set a firm date.

The drugs shipment will be the first direct South Korean government aid since relations soured last year, although Seoul has funded assistance to Pyongyang through private groups.

North Korea Wednesday reported nine cases of (A)H1N1 in the capital Pyongyang and the city of Sinuiju bordering China. No death toll was given.

Observers say the virus could pose a particular threat to the North because of malnutrition amid persistent food shortages and a lack of drugs such as Tamiflu.

Good Friends, a Seoul-based welfare group with cross-border contacts, quoted an unidentified Sinuiju city official as saying more than 40 people had died of the swine flu in the border city alone.

The World Health Organization, however, told Yonhap news agency that all nine North Korean patients have recovered.

Yonhap quoted Suzanne Westman, coordinator of outbreak alert and response at the WHO’s New Delhi office, as saying no additional cases were reported in the isolated communist country.

The first of the patients, all children aged between 11 and 14, was discovered on November 25 and the last case on December 4, she said, adding that three of the infections were in Pyongyang with the other six in Sinuiju.

“All contacts have been identified, put in isolation and treated,” she told Yonhap, adding that North Korea had a solid surveillance system and a sufficient number of physicians is believed to be able to handle the outbreak.

ORIGINAL POST: According to KCNA:

Anti-A/H1N1 Flu Campaign Intensified

Pyongyang, December 9 (KCNA) — New Influenza A/H1N1 broke out in some areas of the DPRK amid the growing of its victims worldwide.

According to the Ministry of Public Health, nine cases were reported from Sinuiju and Pyongyang.

The relevant organ is further perfecting the quarantine system against the spread of this flu virus while properly carrying on the prevention and medical treatment.

The State Emergency Anti-epidemic Committee has taken steps to enhance the role of prevention and treatment centers at all levels and increased checkup stations across the country while directing efforts to the medical treatment of its cases.

According to Yonhap:

The World Health Organization (WHO) is working “closely” with the North Korean government to help stem the spread of an Influenza A outbreak there and assess the scope of flu infections among North Koreans, a WHO spokesperson said Wednesday.

North Korea said earlier in the day that it has confirmed nine domestic cases of H1N1 virus infections. The highly infectious disease may be particularly dangerous to the North Korean people, who are mostly undernourished and may have weakened immune systems.

“We are working closely with the (North Korean) government to see what is required and if they need any assistance from WHO,” Aphaluck Bhapiasevi, a WHO spokeswoman on the H1N1 pandemic, said over the telephone.

Bhapiasevi also said there are likely more cases of the H1N1 virus than announced, as people who have mild symptoms are not tested.

“In any country, there may be more cases than have been laboratory-confirmed,” she said. “They may not reflect actual number of the cases.”

In May, WHO provided 35,000 Tamiflu tablets each for North Korea and about 70 other underdeveloped countries to help fight possible outbreaks. Seoul officials say the North would need millions of tablets to safeguard its 24 million people.

Through its office in North Korea, the world health body has been making “preliminary assessments” of the scope of the outbreak, she said. “We have been discussing support that would be required.”

According to the AP, the DPRK will accept ROK assistance as well:

North Korea agreed Thursday to accept medicine from South Korea to fight an outbreak of swine flu, a Cabinet minister said, in a development that could improve relations between the nations after a deadly maritime clash.

“Today, the North expressed its intention to receive” the medical aid, Unification Minister Hyun In-taek told reporters.

North Korean state media reported Wednesday that there were nine confirmed swine flu cases in the country. South Korea plans to send the antiviral Tamiflu to the North, Health Ministry spokesman Lee Dong-uk said, without giving specifics.

South Korea’s Yonhap news agency said South Korea plans to send enough doses of Tamiflu for about 10,000 people. It cited a government official it did not identify.

The move came two days after South Korean President Lee Myung-bak offered unconditional aid to North Korea to help contain the virus — the government’s first offer of humanitarian aid since Lee took office in early 2008 with a hard-line policy toward the North.

(h/t NK Leadership Watch)

Visitors to Pyongyang’s Victorious Fatherland Liberation War Museum (Location here) will be interested to know that the DPRK has exported its museum technology to Syria’s Tishreen War Panorama (Location here).

The images are from this web page.

According to an official web page (I think), the panorama dimensions are 129.5m x 7.8m.  It was painted by Kim Sing Chol, O Kwang Ho, Ri Jae Su, Ri Kap Il, Kim Chol Jin, Choe Song Sik, Ri Jong Gap, Kim Ki Dok, Cha Yo Sang, Ri Yon Nam, and it opened on 6th October 1999.  These artists are employees of the Mansudae Overseas Development Group (Art Studio).

I thank a reader for sending me this information.  I have been mapping North Korean projects in Africa, Asia, and the Middle East on Google Earth.  Here are some I have blogged about: Monument to African Renaissanace, Zimbabwe Hero’s Park, Ethiopia’s Derg Monument, Kinshasa Kabila Statue, and quite a few more.  If you are aware of any North Korea projects in your area please let me know.

UPDATE: Cairo’s October War Panorama is also built by the North Koreans.   It appears to have nearly identical architecture.  It is located here.