North Korean Economy Watch

On January 21, the day after the Obama administration took office, the White House approved certain trade sanctions–initiated by the Bush administration–to be printed in the Federal Register.  These sanctions targeted specific Chinese, Iranian, and North Korean companies that the US believes were/are violating arms export regulations governing missile technology and other proliferation activities.  [Read more, including Federal Register text, here]

After North Korea conducted a long-range missile test in April, the US pushed the UN Security Council to adopt a presidential statement which blacklists several additional North Korean firms. [Read more here].

After North Korea conducted a second nuclear test, in violation of UNSC resolution, the UNSC adopted a resolution which tightened sanctions on the DPRK. [Read more here]

In June, the South Korean government imposed sanctions on these DPRK companies for the first time [Read more here]

The US followed up the UNSC resolution by announcing an inter-agency team that will focus exclusively on enforcing DPRK sanctions [Read more here] 

Today, the US Treasury Department announced it was targeting Hong Kong Electronics (Kish Island, Iran) [from where a former FBI agent is still missing] for supporting the balcklisted North Korean organizations.  According to Market Watch:

The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

What does this mean? It means that any bank accounts or other financial assets found in the United States belonging to the company must be frozen. Americans also are forbidden from doing business with the firm. This probably does not amount to much economically, but is probably intended to discourage banks outside of the US from doing business with these firms.

UPDATE 1: It looks like the State Departmet is also going after a North Korean company believe to be involved in weapons proliferation today.  According to a statement by the Treasury Department:

The U.S. Department of the Treasury today targeted North Korea’s missile proliferation network by designating Hong Kong Electronics under Executive Order 13382.  E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them, thereby isolating them from the U.S. financial and commercial systems.  Hong Kong Electronics, located in Kish Island, Iran, has been designated for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID).

Tanchon and KOMID have also been designated by the United States under E.O. 13382 and the UN Security Council under Resolution 1718. The Department of State also today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG), a North Korean nuclear-related company in Pyongyang, under E.O. 13382. 

“North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions,” said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world.”

Since 2007, Hong Kong Electronics has transferred millions of dollars of proliferation- related funds on behalf of Tanchon and KOMID. Hong Kong Electronics has also facilitated the movement of money from Iran to North Korea on behalf of KOMID. Tanchon, a commercial bank based in Pyongyang, North Korea, is the financial arm for KOMID – North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

Tanchon plays a key role in financing the sales of ballistic missiles for KOMID. Tanchon has also been involved in financing ballistic missile sales from KOMID to Iran’s Shahid Hemmat Industrial Group (SHIG), which is the Iranian organization responsible for developing liquid-fueled missiles. SHIG has been designated under E.O. 13382 and sanctioned by the United Nations under UN Security Council Resolution (UNSCR) 1737. Since 2005, Tanchon has maintained an active relationship with various branches of Iran’s Bank Sepah, an entity designated under E.O. 13382 and sanctioned by the United Nations under UNSCR 1747, for providing financial services to Iran’s missile program. The U.S. has reason to believe that the Tanchon-Bank Sepah relationship has been used for North Korea-Iran proliferation-related transactions.

Here is the press release by the State Department:

The U.S. Department of State today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG) under Executive Order 13382. E.O. 13382 is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Entities designated under E.O. 13382 are prohibited from engaging in all transactions with any U.S. person and are subject to a U.S. asset freeze.

NCG is a North Korean nuclear-related company in Pyongyang. It has been involved in the purchase of aluminum tubes and other equipment specifically suitable for a uranium enrichment program since the late 1990s.

The Department of the Treasury also today designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID). Tanchon and KOMID were designated by the United States under E.O. 13382 on June 28, 2005 and the UN Security Council under Resolution 1718 on April 24, 2009.

North Korea’s April 5, 2009 launch of a Taepo Dong-2 (TD-2) missile and May 25, 2009 nuclear test demonstrate a need for continued vigilance with respect to North Korea’s activities of proliferation concern. The designations add to continuing U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them.

McClatchy has more here.

According to the Washington Post:

The White House is ramping up its efforts to enforce sanctions against North Korea by forming a new interagency team to coordinate U.S. actions with other nations, senior administration officials said today.

The new team will be led by former ambassador to Bolivia Philip S. Goldberg, who is slated to leave for China in the near future as the U.S seeks concerted action to stop the North Korean regime from developing nuclear weapons.

“There is a broad consensus about the need to have a focused and engaged effort to see that these sanctions are implemented … and that we’re sharing information with each other,” one official said, speaking on background.

U.S. officials described the new group as a way to focus the administration more squarely on implementation of the latest sanctions, which were approved by the United Nations in the wake of North Korea’s nuclear test last month.

The officials said they are hoping the group — with representatives from the State Department, the White House, the National Security Agency, Treasury and others — will help “shine a spotlight” on the actions of the regime.

“We wanted somebody who woke up every morning and thought about nothing but sanctions implementation,” one official said. “It’s a huge difference when you have somebody who isn’t worried about any of the other aspects of this.”

The White House also announced a renewed effort to use the authority of the U.N. resolution to take financial actions against the North Korean regime in an effort to choke off the money flowing from small arms trade and other activity.

Treasury officials have issued a public memorandum to private financial institutions reminding them of the global condemnation and other risks of doing business with the North Korean regime.

The letter warns that North Korean banks and institutions often use deceptive techniques to engage in financial transactions that could place legitimate financial firms at risk.

“Financial institutions should apply enhanced scrutiny to any such correspondent accounts they maintain, including with respect to transaction monitoring,” the letter states.

One senior official said the U.S. is confident that the financial sanctions will over time help to further isolate North Korea and pressure its leaders to abandon its nuclear program.

“It’s going to take time to have a bite,” he conceded. “But we’re trying to get out of the box quickly.”

The Bush administration also had a sustained effort to implement United Nations sanctions after North Korea first tested a nuclear weapon in 2006.

The Counterproliferation Directorate of the White House National Security Council coordinated the effort, while the State Department and Treasury also co-chaired an interagency effort to examine specific cases that eventually worked their way up the chain for approval.

A team of senior officials, led by the undersecretary of State for arms control, traveled to Asia to work closely with allies. But the effort was dropped after Bush shifted course and decided to pursue diplomacy with North Korea.

Their first stops: China then Malaysia.

Citations:
New North Korea Sanctions Team Formed
Washington Post
Michael D. Shear and Glenn Kessler
6/26/2009

U.S. North Korea sanctions team to visit Malaysia
Reuters UK
7/2/2009

In December 2008 this blog discussed how the DPRK’s Korea National Insurance Corporation (KNIC) received USD$58 million from several European reinsurance companies in a legal settlement.

Well, the Washington Post offers an update on how the money is being moved and even highlights the story of a defector who claims to be involved in the DPRK’s insurance racket:

For Kim Jong Il’s birthday, North Korean insurance managers prepared a special gift.

In Singapore, they stuffed $20 million in cash into two heavy-duty bags and sent them, via Beijing, to their leader in Pyongyang, said Kim Kwang Jin, who worked as a manager for Korea National Insurance Corp., a state-owned monopoly.

Kim said he helped arrange the shipment and watched in February 2003 as the cash was packed. After the money arrived, Kim Jong Il sent a letter of thanks to the managers and arranged for some of them to receive gifts that included oranges, apples, DVD players and blankets, Kim said.

“It was a great celebration,” he said.

The $20 million birthday present and the gratitude of its recipient, who is known as the Dear Leader, were annual highlights of a sophisticated global insurance fraud that North Korea has concocted to provide its communist leadership with hard currency, said Kim, who spent five years as an executive of the state insurance company in Pyongyang and worked for a year at its banking subsidiary in Singapore before defecting to South Korea.

The British court ruled the way it did [NKeconWatch: this might be an error as the court did not rule on the case–it was settled] because the reinsurance companies contractually agreed to be bound by the North Korean court system (which to nobody’s surprise systematically rules in favor of domestic agencies and firms).  Since the western reinsurance firms could not prove that the DPRK was committing fraud, they had to pay up.

And how does this program work?

While working for North Korea’s insurance monopoly, Kim Kwang Jin said, he and other managers had a tightly focused mission: to find reinsurance companies and brokers in different parts of the world who would accept high premiums to reinsure KNIC’s policies.

Those policies, he said, usually covered losses from common North Korean disasters such as mining accidents, industrial fires, transportation crashes and crop losses due to floods.

“The major point of the reinsurance operation is that they are banking on disaster,” he said. “Whenever there is a disaster, it becomes a source of hard currency.”

According to Kim, KNIC would target a different potential disaster and a different reinsurance company each year. “We pass it around,” he said. “One year, it might be Lloyd’s; the next year, it might be Swiss Re; and the next, Munich Re.”

In London, the expert on the insurance industry familiar with the helicopter case echoed Kim’s assessment of how KNIC operated. He spoke on the condition of anonymity because he was not authorized by reinsurers to talk about the case.

“They pay good premiums, and they are very sophisticated, very clever,” he said. “They would divvy business up into very small bites and use different brokers in different places. The division of losses was such that it would never be apparent to a prospective reinsurer just how bad the business was.”

The North Koreans were known in the reinsurance industry for their capacity to prepare meticulously documented claims, speed them through puppet courts in Pyongyang and demand quick payment from international reinsurers. The North sometimes restricts the ability of reinsurers to dispatch investigators to verify claims.

The North Korean insurance monopoly sometimes took advantage of the geographical and political ignorance of brokers and reinsurers, according to the London-based insurance expert. Some brokers and companies, he said, thought they were dealing with a company from South Korea, while others were unaware that North Korea is a secretive totalitarian state with one of the world’s worst human rights records.

…

When he worked at KNIC, Kim said, annual revenue from North Korea’s reinsurance claims was about $50 million to $60 million. Most of that money, he said, was used to scout out potential disasters inside North Korea, to buy more reinsurance on the global market and to pay premiums.

“The remaining hard currency should have been used to help people recover from disasters and accidents, but it was not used that way,” Kim said. “It is just going into the pocket of Kim Jong Il.”

He said cash shipments of $20 million arrived yearly in Pyongyang, usually in the week before Feb. 16, which is Kim Jong Il’s birthday and a national holiday. In his six years at KNIC, Kim said, bags of cash arrived in Pyongyang from Singapore, Switzerland, France and Austria.

The money, he added, was delivered to an entity called Bureau 39 of the Korean Workers’ Party Central Committee. It was created by Kim Jong Il in the 1970s to collect hard currency and give him an independent power base, according to defectors, Seoul-based analysts and published reports. These sources agree that Bureau 39 spends foreign currency on luxury goods for the North Korean elite, components for missiles and other weapons programs.

With Bureau 39 skimming off hard-currency earnings returned to North Korea by KNIC’s global operation, Kim said, claims to disaster victims had to be paid in won, North Korea’s currency.

“That money is nearly worthless at present, because the economy has collapsed,” he said. “This means that little is done to help people recover from fires or whatever.”

But Kim Jong Il has been pleased with the state insurance company, Kim said.

“It brings him large amounts of hard currency,” Kim said. “Working in insurance is one of the best professions in North Korea. Many people want to do it.”

Mr. Kim is working in the Washington DC area this year with the Committee for Human Rights in North Korea.

Read the full artocle here:
Global Insurance Fraud By North Korea Outlined
Washington Post 
Blane Harden
6/18/2009

Yale Global
Bertil Linter
6/11/2009

BANGKOK: The global economic meltdown has claimed an unexpected victim: North Korea’s chain of restaurants in Southeast Asia. Over the past few months, most of them have been closed down “due to the current economic situation,” as an Asian diplomat in the Thai capital Bangkok put it. This could mean that Bureau 39, the international money-making arm of the ruling North Korean Workers’ Party – which runs the restaurants and a host of other, more clandestine front companies in the region – is acutely short of funds. Even if those enterprises were set up to launder money, operational costs and a healthy cash-flow are still vital for their survival. And, as for the restaurants, their main customers were South Korean tourists looking for a somewhat rare, comfort food from the isolated North of the country. The waitresses, all of them carefully selected young, North Korean women dressed in traditional Korean clothing, also entertained the guests with music and dance.

But thanks to the global economic crisis, not only has the tourist traffic from South Korea slowed, the fall in the value of won has also reduced their buying power. The South Korean won plummeted to 1,506 to the US dollar in February, down from 942 in January 2008. No detailed statistics are available, but South Korean arrivals in Thailand – which is also the gateway to neighboring Cambodia and Laos – are down by at least 25 percent.

Though staunchly socialist at home, the North Korean government has been quite successful in running capitalist enterprises abroad, ensuring a steady flow of foreign currency to the coffers in Pyongyang. North Korea runs trading companies in Thailand, Hong Kong, Macau and Cambodia, which export North Korean goods – mostly clothing, plastics and minerals such as copper – to the region. At the same time, they import various kinds of foodstuffs, light machinery, electronic goods, and, in the past, dual-purpose chemicals, which have civilian as well as military applications. Those companies were – and still are – run by the powerful Daesong group of companies, the overt arm of the more secretive Bureau 39.

North Korea embarked on its capitalist ventures when, in the late 1980s and early 1990s, the country was hit by a severe crisis caused by the disruption in trading ties with former communist allies. More devastatingly, both the former Soviet Union in 1990 and China in 1993 began to demand that North Korea pay standard international prices for goods, and that too in hard currency rather than with barter goods. According to a Bangkok-based Western diplomat who follows development in North Korea, the country’s embassies abroad were mobilized to raise badly needed foreign exchange. “How they raised money is immaterial,” the diplomat says. “It can be done by legal or illegal means. And it’s often done by abusing diplomatic privilege.”

North Korea’s two main front companies in Thailand, Star Bravo and Kosun Import-Export, are still in operation. In the early 2000s, Thailand actually emerged as North Korea’s third largest foreign trading partner after China and South Korea.

Bangkok developed as a center for such commercial activities and Western intelligence officers based there became aware of the import and sale of luxury cars, liquor and cigarettes, which were brought into the country duty-free by North Korean diplomats. In a more novel enterprise, the North Koreans in Bangkok were reported to be buying second-hand mobile phones – and sending them in diplomatic pouches to Bangladesh, where they were resold to customers who could not afford new ones. In early 2001, high-quality fake US$100 notes also turned up in Bangkok and the police said at the time that the North Korean embassy was responsible as some of its diplomats were caught trying to deposit the forgeries in local banks. The North Korean diplomats were warned not to try it again.

The restaurants were used to earn additional money for the government in Pyongyang – at the same time, they were suspected of laundering proceeds from North Korea’s more unsavory commercial activities. Restaurants and other cash-intensive enterprises are commonly used as conduits for wads of bills, which banks otherwise would not accept as deposits.

For years, there have been various North Korean-themed restaurants in Beijing, Shanghai and other Chinese cities. But the first in Southeast Asia opened only in 2002 in the Cambodian town of Siem Reap. It became an instant success – especially with the thousands of South Korean tourists who flocked to see the ancient ruins of Angkor Wat. It was so successful that Pyongyang decided to open a second venue in the capital Phnom Penh in December 2003. A fairly large restaurant in the capital’s Boulevard Monivong, which offered indifferent Korean staple kimchi and other dishes and live entertainment by North Korean waitresses, closed earlier this year for lack of business.

In 2006, yet another Pyongyang Restaurant – as the eateries were called – opened for business in Bangkok. It was housed in an impressive, purpose-built structure down a side alley in the city’s gritty Pattanakarn suburb, far away from areas usually frequented by Western visitors but close to the North Korean embassy and the offices of its front companies in the Thai capital. This was followed by an even grander restaurant in Thailand’s most popular beach resort, Pattaya, which was also housed in a separate building with a big parking lot outside for tour buses. A much smaller Pyongyang restaurant opened in Laos’s sleepy capital Vientiane, but that one became popular not with South Korean tourists, but with Chinese guest workers and technicians. The Vientiane restaurant may be the only North Korean eatery that is still in operation.

After years of watching North Korea’s counterfeiting and smuggling operations, the United States began tightening the screws on Pyongyang’s finances in September 2005. This occurred after Banco Delta Asia, a local bank in Macau, was designated as a “financial institution of primary money-laundering concern.” The bank almost collapsed, and North Korea’s assets were frozen. The money was eventually released as part of an incentive for North Korea’s concession in the Six-Party talks and returned to North Korea via a bank in the Russian Far East. But, coupled with UN sanctions, the damage to North Korea’s overseas financial network was done – including the ability of Pyongyang’s many overseas front companies to operate freely. For example, the two-way trade between Thailand and North Korea peaked at US$343 million in 2006 – but then began to decline. It was down to US$100 million in 2007, and US$70.8 million in 2008.

Now with North Korea conducting a second nuclear test and firing off missiles, Washington has raised the possibility of the re-listing of North Korea as a state that supports terrorism. If that were to happen, many private companies would become hesitant to deal with Pyongyang and its enterprises for fear of being blacklisted by the US Treasury.

With its various money-making enterprises coming unstuck, Pyongyang is increasingly under pressure. The worldwide financial crisis has already put North Korea in a tight corner. There was never anything to suggest that the money earned by North Korea’s economic ventures abroad were to be used for social development at home, or to be spent on basic necessities such as putting food on the tables of the country’s undernourished people. Now, there won’t even be food for sale to South Korean tourists in the region.

UPDATE: IFES has contacted us with an update to this report:

“North Korea exports between 2-3 million tons of coal, collecting approximately 200 million USD.”

Original Post:
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-6-9-1
6/9/2009   

The North Korean military, which has recently taken a hard-line position internationally with rocket launches, a nuclear test and inter-continental ballistic missile (ICBM) launch preparation, appears to be strengthening its position domestically, as well. It has reportedly taken charge of coal exports, previously the responsibility of the Cabinet, and other key economic interests.

According to sources inside North Korea, authority to export anthracite, the North’s most valuable export item, was transferred from a trading company under the control of the Cabinet to a military trading company earlier this year. North Korea exports between 200-300 tons of coal each year, collecting approximately two billion USD in foreign currency. Previously, this was shared among branches of the government, with the military, the Korean Workers’ Party and the Cabinet all similar export quotas.

One source stated, “Recently, China’s trade minister signed a contract for 60,000 tons of coal from a military-run trading company, and delivered one million USD-worth of corn as payment,” noting, “previously, North Korea’s trade partner [with China] was the Cabinet-controlled trade company.” The same source went on to note that it was “exceptional that as North Korea suffers from foreign capital shortages, it demands payment not in cash, but in corn…it looks like it is measure for military use.”

Other sources reported that, as of this year, the military has also taken control of the Bukchang Thermoelectric Power Plant, the country’s largest steam-powered electrical station. The Bukchang plant, built with Soviet supplies in 1968, can produce up to 2 million kW of electricity. It was formerly operated by the Ministry of Electric Power Industry, which is under the control of the Cabinet, but at the beginning of year, some authorities were purged on charges of bribe-taking and providing power designated for government facilities to foreign capital enterprises and other businesses. Since then, the military has run the plant.

The increased number of economic assets in control of the military reflects the military’s recently-strengthened position within the regime. The North Korean economy can be divided into several sectors: Kim Jong Il’s private fund, managed by Party operations; the military-industrial ‘second economy’; and the official economy, under the control of the Cabinet. The military’s increasing control over the official economy appears to be a move to completely implement ‘Military-first Politics.’

Earlier this year the UN Security Council issued a Presidential Statement in response to the DPRK’s April rocket (missile) test. In the Presidential Statement, three North Korean firms were blacklisted–Korea Mining Development Trading Corporation, Tanchon Commercial Bank, and Korea Ryongbong General Corporation–all of whom are suspected of having ties with the North’s missile and nuclear programs.

According to Yonhap, the South Korean government has also blacklisted these firms, though no South Korean firms have realtions with any of them:

This is the first time that South Korea has imposed financial sanctions on a North Korean company in relation to Pyongyang’s ballistic activity, the ministry said.

The ministry said that it will consider taking additional measures if the U.N. comes up with separate actions against the North for conducting its second nuclear test on May 25.

Read the full sotry here:
Seoul slaps sanctions on N. Korean firms for missile test
Yonhap
Koh Byung-joon
6/9/2009

Daily NK
Yoo Gwan Hee
5/18/2009

In North Korea, the Korean Workers’ Party (KWP) cell is the lowest ranked organizational unit. The KWP is composed of the Central Committee, provincial committees, city and county committees, primary party committees, sectional party committees, and the party cell at the lowest level. The party cell, as the fundamental unit, carries out the Party’s aims and implements its decisions.

Every member of the Party is officially affiliated with a party cell. In principle, even the “Great Leader” Kim Il Sung and the “General” Kim Jong Il are included in the party cell structure and must carry out their roles and responsibilities such as reporting to the party cell secretary, undergoing reeducation sessions, and strictly adhering to party rules.

The rules and regulations of the KWP stipulate, “The party cell is the basis of life in the Party and, as such, concentrates the masses on the Party and is the combat unit of the Party which directly implements the party line and policies.”

The party cell has between 5 and 30 members; units with 31 or more members form a primary party committee with further cells beneath.

General meetings of the cells, as the leading organization of the Party, must be held at least once a month. The party cell secretary is an unpaid official.

The rules and regulations also delineate the duties of party cells as follows: ▲ establish the one-ideology system among the party members and the working masses; ▲ expand the lower ranks; ▲ enhance the party involvement of the members; ▲ strengthen the ideological education of both newly-admitted and candidate members and working masses; ▲ accept the requests of the working masses and combat counterrevolutionary elements; ▲ strengthen the societal organization of the working masses; ▲ embody the Cheongsan-ri spirit and the mindset of anti-Japanese guerillas in all business activities; ▲ toughen the Worker and Peasant Red Guard and prepare for mobilization; and ▲ report the party expenditures of the members and the candidate members to the party committees.

For the purpose of strengthening the party cells, the first party cell secretaries competition was held in the Pyongyang Gymnasium in March 1994. The second such competition was held 13 years later over a two-day period on October 27 and October 28, 2007 at the April 25 Cultural Hall.

In 1990, after the Chosun Central News Agency’s (KCNA) No. 5 Bureau No. 2 Cell members sent a letter pledging their utmost devotion to Kim Jong Il, the “Party Cell of Loyalty” concept was launched.

To stimulate the “Party Cell of Loyalty” idea, meetings, recitals of official speeches, decisions and decrees and research discussions were emphasized upon.

In this year’s New Year’s Editorial, the party cell was designated as the advance offensive vanguard unit and it was demanded that party members and workers collectively stir up reform.

From Slate (regarding the upcoming trial of Euna Lee and Laura Ling):

We do have some basic understanding about how the North Korean justice system is organized. The journalists will be tried by the Central Court, the nation’s highest judicial body. Usually, the Central Court only hears appeals cases from the lower, provincial courts, but for grievous cases against the state, it has initial jurisdiction. The Central Court is staffed by judges elected by the Supreme People’s Assembly, North Korea’s one-party parliament. The North Korean Constitution stipulates that each trial is to be conducted by one judge and two “people’s assessors”—i.e., lay judges—though special cases may be heard by a three-judge panel. (Appeals cases usually get the panel.) Legal education or experience is not an official prerequisite for becoming a judge, and rulings from the Central Court are not subject to appeal.

North Korean law does recognize the right of the accused to defend herself and to be represented by an attorney. According to the country’s penal code, either the defendant, her family, or her “organizational representatives” may select the defense attorney. As the two arrested journalists were not allowed access to any counsel during pretrial investigation, however, there are doubts that they will actually be allowed to select their own counsel. According to the U.S. State Department, there is “no indication that independent, nongovernmental defense lawyers [exist]” in North Korea in the first place.

The proceedings will be conducted in Korean, but the North Korean Constitution does grant foreign citizens the right to use their own languages during court proceedings. Trials are supposed to be open to the public, unless they might expose state secrets or otherwise have a negative effect on society. According to testimony from North Korean defectors, though, trials are often closed in practice. Announcements of the court’s findings and executions of sentences are often carried out in public as a means of educating the citizenry.

Thursday’s announcement from North Korea’s news agency did not specify what crime the two journalists are being charged with, though Pyongyang has previously accused them of “hostile acts” and illegal entry into the country. If they were prosecuted under a law regarding foreigners who “abuse” or “provoke national difficulty in order to antagonize” the North Korean people, they would face five to 10 years of “re-education” in a labor camp. Illegal entry carries a sentence of two to three years.

Previously, prisoners could be sentenced to death for a number of vague crimes, such as “ideological divergence” or “opposing socialism.” But subsequent to the enactment of a new penal code in 2004, the death penalty is reserved for four crimes: participating in a coup or a plot to overthrow the state, terrorism, treason, or “suppressing the people’s movement for national liberation.” In practice these four crimes seem to cover a wide range of activities, including, in one reported case from 2007, the making of international phone calls. Judicial proceedings are apparently not required for executions to be carried out.

As supplemental material, I have posted numerous DPRK statutes on this web page.  To see the full list, scroll down the menu to “DPRK policies,” under which you can see them all.  Of course, the DPRK is not a “rule of law” country, so the statutes themselves and even the constitution are not worth that much in terms of defining the “rules of the game” or defining/predicting the scope of “legitimate” government activity. 

There have been several foreign law firms that have attempted to set up shop in the DPRK.  Currently the only firms with legal offices or a periodic presence are: Hay, Kalb, and Associates, Kelvin Chia Partnership, and Chiomenti  of Italy (formerly Birindelli e Associati ).

Read the full article below:
Objection, Dear Leader!
Slate.com
Nina Shen Rastogi
5/14/2009

According to Yonhap:

North Korea has carried out a reshuffle of government organizations, shifting the jurisdiction over its overseas espionage and cash cow operations from the Workers’ Party to the military, sources said Sunday.

The North has separated its two major spying and cash-generating overseas trade units — Room 35 and Operation Unit — from the Workers’ Party and transferred them to the People’s Armed Forces, the sources said on condition of anonymity.

The Operation Unit is known to train and send agents to South Korea, the United States and Japan, but its recent operations are believed to have shifted toward trades of arms, drugs and fake bills.

Room 35 is North Korea’s intelligence unit in charge of collecting information from South Korea, Japan, China, Southeast Asia and Europe.

Kim Hyon-hui, one of the two North Korean agents who blew up a Korean Air flight over Myanmar in 1987, was believed to have belonged to the Room 35 and to have been trained in the Operation Unit.

“North Korea’s Operation Unit handles a large amount of cash through illegal activities such as counterfeiting currency, manufacturing drugs and exporting arms,” a source said. “With the Operation Unit now under its wing, the North Korean military will have a major source of independent financing.”

The latest shakeup appears to be intended to address overlapped functions among government organizations and raise their overall efficiency, according to North Korea watchers.

The sources said North Korea may be trying to shed a terrorism-related image from its ruling Workers’ Party, which has tagged along since the 1987 flight bombing.

The full article can be found here:
N. Korea puts spy agencies under military control in major shakeup
Yonhap
5/10/2009

In response to the DPRK’s rocket launch, the UN Security Council issued a presidential statement containing the following:

The Security Council reiterates that the DPRK must comply fully with its obligations under Security Council resolution 1718 (2006).

The Security Council demands that the DPRK not conduct any further launch.

The Security Council also calls upon all Member States to comply fully with their obligations under resolution 1718 (2006).

The Security Council agrees to adjust the measures imposed by paragraph 8 of resolution 1718 (2006) through the designation of entities and goods, and directs the Committee established pursuant to resolution 1718 (2006) to undertake its tasks to this effect and to report to the Security Council by 24 April 2009, and further agrees that, if the Committee has not acted, then the Security Council will complete action to adjust the measures by 30 April 2009.

(Read the full text of the statement here) 

Today the Security Council followed up this statement (and resolution 1718) by voting to blacklist three North Korean companies.  According to Reuters (via the Washington Post):

The North Korea sanctions committee met a Friday deadline set by the Security Council on April 13 to produce a list of goods and North Korean entities to be blacklisted under Security Council resolution 1718, passed after Pyongyang’s October 2006 nuclear test.

The three companies put on the list are Korea Mining Development Trading Corp., Korea Ryongbong General Corp. and Tranchon (Tanchon) Commercial Bank, according to a copy of the committee’s decision obtained by Reuters.

The decision said the three companies were linked to the military and active in procuring equipment and financing for North Korea’s ballistic missile and other weapons programs.

The blacklisting prohibits companies and nations around the world from doing business with the three firms, but the impact of the action might be largely symbolic.

One Western diplomat said the three blacklisted firms had subsidiaries that also would be subject to U.N. sanctions.

Committee members also decided to ban the import and export of items on an internationally recognized list of sensitive technologies used to build long-range missiles capable of delivering weapons of mass destruction.

The US imposed sanctions on three North Korean companies in the Federal Register earlier this year.  Of these three companies, one has made the UNSC list: the Korea Mining and Development Corporation.  I can only speculate as to the fate of the other two mentioned in the US Federal Register, Mokong Trading Corporation and the Sino-Ki company. 

Read more below:
UNSC Presidential Statement

U.N. committee puts 3 North Korea firms on blacklist
Reuters (via the Washington Post)
Louis Charbonneau
4/24/2009