North Korean Economy Watch

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.’

The Nation
1/18/2007

North Korea’s energy minister has been fired because he suggested that the power supply to leader Kim Jong-Il’s guesthouse should be diverted for public use, a Japanese newspaper said Thursday.

Ju Tong-il, minister of power and coal industries, was fired late last year by the leaders of the impoverished Communist state, the evening edition of the Mainichi Shimbun daily said in a story from Beijing.

“Our country’s energy situation is extremely severe,” Ju told a meeting of energy-related officials last spring, according to the daily, quoting unnamed sources close to the North Korean government.

“Or better yet, why don’t we get back electricity fed to the guesthouses of our general?” Ju reportedly suggesting, referring to Kim.

Ju later excused his remarks, saying: “I just wanted to express the fact that our domestic electricity condition is paralyzed.”

But he came under fire from leaders of the ruling Workers Party and was then dismissed, the daily said.

Agence France Presse

Golden Villas, Let’s Share Electricity!
Daily NK
Yang Jung A
1/19/2007

While North Korea’s electrical power supply worsens, North Korea’s Premier Park Bong Ju pushes for the expansion of energy supply and civil electrical support only to receive a personal punishment from authorities or in actual, his position changed.

“As a result of energy and other issues, Ju Dong Il, the Minister of the Electricity and Coal Industry was removed from his position” a Japanese newspaper “Mainichi” reported on the 18th, citing a source related to the North Korean government.

The Minister Ju was known for his proposal on energy made at a policy meeting early 2005 where a comment was made “The electricity situation in our country is seriously grave” and suggested “How about we redirect the electricity from our leader’s personal residence and use that.”

This proposal suggested that the electricity crisis be partly solved by redistributing some of the electricity supplying Kim Jong Il’s numerous personal villas throughout the nation, to much needed industries and homes.

As the Minister Ju realized his comments had set a predicament, he tried to justify himself stating “I simply wanted to express that the country’s electricity is in an immobilized state” but was known to have been reprimanded by the central authorities and his position changed. Since last October, the Ministry of the Electricity and Coal Industry had been separated to the Ministry of Electrical Industry and the Ministry of Coal Industry.

In the same month, Premier Park expressed his concerns on the export of coal to China at a trade conference saying “If this situation continues, our country will be faced with serious implications from the energy crisis. The people will be unable to use their central heating and industries will stop. It would be better to refrain from further exports.” The newspaper also mentioned that Premier Park had gone to the extent of submitting a proposal and that the ministry had even settled on the suspension of coal exports.

However, following the nuclear experiment, the National Defense Commission asserted that the acquirement of foreign currency was an absolute necessity in strengthening the military and strongly urged for the resumption of exports. In the end, the ministry’s decision was overturned and exports recommenced.

Though Premier Park has not yet been replaced, under the orders of authorities, he is known to be spending his time in self-discipline as “for now, revision is necessary.” Though Premier Park’s name is listed on the roll of honors, he has not been seen in the presence of Kim Jong Il.