Archive for the ‘Secretariat’ Category

The UNSC sanctions and the North Korean economy

Friday, March 11th, 2016

By Benjamin Katzeff Silberstein

In the past few days, Daily NK has carried a number of interesting reports on how the latest round of UNSC sanctions have impacted the domestic economy in North Korea. Below, I’ve gathered a compendium of sorts. I’ll continue updating it as more stories surface.

Only a short while after the sanctions were announced, trucks carrying mineral exports were blocked from entering China. Some businesspeople were apparently surprised at China’s relatively forceful implementation of the sanctions, given that little impact had been seen from past sanctions:

Chinese authorities began prohibiting mineral exports from North Korea on March 1st in a move not strictly related to the passing of UN Security Council Resolution 2270, which outlines sanctions against North Korea. North Korean authorities and foreign-earning currency enterprises tied to the military did not see this move coming and expressed embarrassment and shock.

In a telephone conversation with the Daily NK on March 4, a source from North Pyongan Province said, “Beginning on March 1, mineral exports such as coal and ore have not been allowed to pass through Chinese customs into China. Trucks loaded with mineral deposits have been idly waiting in front of Chinese customs near Dandong. The foreign trading companies are simply waiting for instructions from the higher authorities.”

Full story:
Trucks loaded with mineral exports blocked from entering China
Seol Song Ah
Daily NK
2016-03-07

A few days later, Daily NK reported that “panic” had begun to set in, not just among high-level businesspeople and traders involved in the mineral extraction industry, but also among market vendors who worry that they won’t be able to buy products for import from China:

“The news that the UN resolution containing sanctions against North Korea passed unanimously is spreading like wildfire through [domestic] cell phones. People in the North had little interest in sanctions in the past, but these days they are expressing concern that ‘this time things are going to be different,’” a source in South Pyongan Province reported to Daily NK on March 7.

A source in North Hamgyong Province corroborated this news, reporting the same developments on the ground in that region.

“Sinuiju is known as the gateway to China and the ultimate symbol of friendly relations between our two nations. That’s why news of its closure to mineral exports is causing dismay,” she explained, adding that a rumor has also taken off that international customs offices in other border towns such as North Hamgyong’s Rajin and Hoeryong will be shuttered.

Further anxiety is being stoked by the fact that trusted allies such as China and Russia are participating in the sanctions and the fact that residents are getting detailed information about the resolution’s specific clauses.

“People are further concerned because things have apparently changed significantly since China helped the country to overcome the difficulties during the ‘Arduous March,’ [famine] in the mid 1990s. People from all over the country are concerned that China might shut the border down totally. If that happens, it will become difficult for everyone to make a living,” the source indicated.

“Wholesalers and market vendors are feeling the most vulnerable to the UN sanctions. Their greatest fear is that they won’t be able to buy products. Merchants who have been selling Chinese products at cheap prices are expecting a cost increase and have momentarily discontinued sales.”

Full story:
Panic sets in as sanctions specifics circulate 
Daily NK
Choi Song Min
2016-03-08

Not just mineral exports to China have taken a hit. Food products specialties like hairy crab, frequently imported to cities like Yanji in China from North Korea’s northern fishing cities like Rajin, are now being sold at domestic markets instead:

“These days items that were previously hard to find because they were earmarked for export are suddenly emerging at the markets,” a source from North Hamgyong Province told Daily NK on Thursday. “The price haven’t gone down enough yet, so you don’t see too many people actually buying them. But you do see flocks of curious people coming out to the markets to see all the delicacies for sale.”

She added, “High-end marine goods like roe, sea urchin eggs, hairy crab, and jumbo shrimp and produce like pine nuts, bracken, and salted pine mushrooms were once considered to be strictly for export, but now they’re easy to find. The number of such products, referred to as ‘sent back goods,’ at Sunam Market and other markets around Chongjin is growing by the day.”

Additional sources in both North and South Hwanghae Provinces reported the same developments in those regions.

Despite the sanctions that have already kicked in, products from China are still flowing into North Korea. however, the goods sold in bulk to China–minerals like coal, marine products, etc.– have nowhere to go and are therefore making their way back into the country.

Full story:
Would-be food exports to China popping up in jangmadang
Choi Song Min
Daily NK
2016-03-11

Politically, too, the topic of sanctions has become highly sensitive. According to reports by Daily NK, surveillance authorities have increased their focus on certain groups that they deem as more likely than others to speak out about the added pressures from the sanctions:

The boost in surveillance is interpreted as a move by the regime to nip in the bud any rumblings of political unrest engendered by members of society more likely to speak out about the pressure squeezing North Korea. Those tracing the lines of the circumstances leading to this pressure, namely a volley of sanctions lobbed at North Korea by the international community in response to its nuclear test and rocket launch, are a threat to the regime’s authoritarian grip over the population.

A source with the Ministry of People’s Security [MPS, or North Korea’s equivalent of a police force] informed Daily NK on March 8 that internal orders came down at the beginning of March for the MPS to survey and track the recent movements of those anyone ascribed to the “wavering” cohort. Two separate sources in the same province verified this information, but Daily NK has not yet confirmed if the same orders are in effect in other provinces.

Full story:
MPS steps up surveillance to suppress potential ‘pot stirrers’
Kang Mi Jin
Daily NK
2016-03-11

(UPDATE 2016-02-18): a couple of days ago, Daily NK published another piece on this topic. They note that market prices have remained relatively stable, and that many people don’t seem to treat this sanctions round as anything out of the ordinary:

Market prices in North Korea have remained relatively stable despite stronger sanctions enforced by the international community, including China, as well as greater limitations on market operationsdue to nationwide preparation for Pyongyang’s May Party Congress.

Multiple Daily NK sources within the country have confirmed that rice prices in Pyongyang, South Pyongan Province’s Sinuiju, and Ryanggang Province’s Hyesan are trading at 5,100 KPW, 5,150 KPW, and 5,080 KPW per kilogram, respectively, similar to levels before sanctions were stepped up (5,100 KPW, 5,100 KPW, 5,260 KPW).

This is also the case on the foreign exchange front, with 1 USD trading for 8,150 KPW in Pyongyang, 8,200 KPW in Sinuiju, and 8,170 KPW in Hyesan, showing some signs of strengthening for the local currency from pre-sanction rates (Pyongyang 8,200 KPW, Sinuiju·Hyesan 8,290 KPW).

“There had been concern we would see fewer goods in the market because of UN sanctions, but in reality, there hasn’t been much difference,” a source from North Pyongan Province told Daily NK in a telephone conversation on Sunday. “The state is placing restrictions on opening hours for the market for the ‘70-day battle’ (mobilization for the Party Congress), but the markets have remained lively, and there’s not much change in terms of market prices.”

Further confirming trends previously reported by Daily NK last week, an additional source in North Hamgyong Province reported yesterday that some people had stocked up food worried about sanctions from the UN, but that this hasn’t led to a violent gyration in prices. “Actually, in some regions, we’re seeing prices of certain products drop,” he noted.

This price stability seen in the marketplace, in spite of the sanctions having kicked in earlier this month, can be attributed to the fact that most products are still trading as they would have save one of the North’s main export items: minerals.

The simple reality that people have experienced similar times before is also at play. “In the past, people who had stockpiled food during other sanctions discovered that after the political climate evened out a bit they were unable to get their money’s worth for everything they bought. This is why we’re seeing less of it,” a source from Ryanggang Province explained. “Initially there was a little bit of noise, but in general people are remaining calm.”

Full article:
Market prices so far showing resilience against sanctions
Daily NK
Kang Mi Jin
2016-03-14

Also, Marcus Noland recently launched a “Black Market Contest” at the Witness to Transformation blog, letting readers bet on what will happen with the unofficial exchange rate as a result of the sanctions:

The exchange rate issue has re-emerged with the imposition of sanctions. My colleague Steph Haggard leans toward the view that the imposition of a broader set of sanctions, particularly with respect to mining, together with enhanced Chinese enforcement will generate a balance of payments cum financial crisis with uncertain implications for political stability. I am more skeptical of both the additional coverage and the likely Chinese rigor in enforcement.

But this is an empirical issue. If the sanctions bite, then one would expect to see their effects manifested in the black market rate on the won. So we decided to offer up this conundrum to the wisdom of the crowd, or at least of our readership, in this Witness to Transformation Black Market Contest. Yes, you can ply your wits against North Korean loan sharks and black market traders. Or maybe the North Korean monetary authorities. Here’s how it works.

Steph thinks that within two months, evidence of the impact of sanctions should begin to emerge. So the object of the contest is to guess the black market won-dollar rate two months hence. Since the sanctions resolution passed 2 March, we will use the first DailyNK average rate applying to the post-2 May period as the reference. So you have the next month to analyze trade data, contact spies in Dandong, or call in favors in Switzerland to inform your estimate. Whoever guesses closest to the May black market rate wins. In the event of a tie, whoever submitted their entry first wins.

Please list your estimate in the comments section below. The entry period closes 15 April.

Full article:
Witness to Transformation Black Market Contest
Witness to Transformation blog
Marcus Noland
2016-03-16

(UPDATE 2016-05-02): DailyNK continues to cover domestic prices in the context of the sanctions. In late April, vegetable prices rose, but rice prices remain notably stabile:

Despite these high prices, movements on the rice and foreign currency front have remained relatively stable, leading people to believe the spike in vegetables will be short lived.

“Vegetables are not export items and therefore their prices are determined by domestic supply and demand,” the Pyongyang-based source noted. “However strong the sanctions may be, rice prices have nonetheless remained the same and, under these conditions, not many will choose to eat expensive cabbages over rice,” the source added, suggesting that prices are likely to return to normal as the markets readjust for supply and demand.

Full article here:
Vegetable prices spikes, rice remains stabile 
Daily NK
Kang Mi Jin
2016-04-28

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Japanese police raid home of Chongryun chairman

Thursday, March 26th, 2015

UPDATE 1 (2015-5-29): Office 39 has been connected to the Japanese investigation. According to the Daily NK:

An investigation launched by Japanese police has revealed that Office 39, a special department charged with raising funds for Kim Jong Un’s use, is involved in illegal operation exporting pine mushrooms to Japan, Yomiuri Shimbun, a Japanese daily, reported on May 27th.

During a police raid on the home Huh Jong Do, the son of the head of the pro-North General Association of Korean Residents in Japan [Chongryon], the authorities uncovered documents revealing correspondence between the group and Office 39, revealing that North Korea has been exporting pine mushrooms to Japan in conjunction with Chosun Specialty Sales, an affiliate of Chongryon.

An official with the investigation said it was the first time documents explicitly stating “Office 39” have come to light, leading police to push ahead with the investigation and assert the shadowy agency’s direct involvement in the illicit operation.

Both Huh and Kim Yong Jak, head of Chosun Specialty Sales, were arrested on May 12th for violating laws administration of foreign currency. Police investigations revealed that these two men had imported approximately 1,800 kg of pine mushrooms from North Korea in September of 2010–a clear violation of Japan’s ban on trading with North Korea, implemented after North Korea’s second nuclear test in 2009.

Meanwhile, Washington D.C.-based Voice of America, quoting Japanese daily Sankei Shimbun, that Office 39, Huh, and Chosun Specialty Sales were all involved in the pine mushroom smuggling ring, dividing the profits among the involved parties.

ORIGINAL POST (2015-3-26): According to the Japan Times:

The head of the pro-Pyongyang General Association of Korean Residents in Japan, or Chongryon, had his home searched by police on Thursday, and two South Korean men were arrested on suspicion of illegally importing matsutake mushrooms from North Korea.

Raids took place at six locations, including the Tokyo home of Ho Jong Man, chairman of Chongryon, a body which has functioned as a de facto North Korean embassy for many decades in the absence of diplomatic ties between Tokyo and Pyongyang.

Observers said the raid on the chairman’s home could affect stalled bilateral talks on Pyongyang’s abductions of Japanese nationals in the 1970s and 1980s.

Police arrested Lee Tong-chol, 61, president of a Tokyo-based trading house, and Yoshihiko Kin, 42, an employee of the company. They are suspected of illegally importing about 1,200 kg of matsutake mushrooms worth around ¥3 million via China in September 2010.

The mushrooms are believed to have been sold in Japan, mislabeled as Chinese-grown produce.

Japan has banned imports from North Korea since October 2006 as part of economic sanctions imposed in response to Pyongyang’s missile and nuclear programs.

Both suspects are residents of Japan, and both denied the allegation. Investigators quoted Lee as saying he does not understand why he should be arrested, while Kin denied all knowledge of the matter.

Police are investigating the relationship between the suspects and Ho, who is a member of North Korea’s top legislature.

After the early morning raid on his home in Tokyo’s Suginami Ward, Ho told reporters angrily he does not even know the name of the trading company.

“The investigation is done unlawfully and this would lead to serious problems in the relationship” between North Korea and Japan, he said.

“This is political suppression against the General Association of Korean Residents in Japan,” he said.

Touching on the ongoing investigation into the fate of Japanese citizens abducted by North Korea, Ho said the Japanese authority is making things worse, interfering with the investigation by deliberately worsening relations with North Korea.

Meanwhile, a senior police investigator said authorities suspect a link between the illegal trade and Chongryon, and that they will do everything they can to investigate.

To that end, police have so far searched more than 10 locations, including the trading house and the homes of Lee and of Ho’s son last May.

The locations searched Thursday include the Tokyo home of the pro-Pyongyang group’s vice chairman.

Read the full story here:
Police search home of Chongryon leader over suspected North Korea mushroom shipment
Japan Times
2015-3-26

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Worker’s Party and Women’s Union address membership dues

Friday, November 1st, 2013

According to the Daily NK:

The North Korean authorities increased both Party and Chosun Union of Democratic Women’s fees in the run up to this year’s [Chosun Workers’ Party] Foundation Day on October 10th, and demanded that members pay in full and on time going forward. Members of both organizations are supposed to pay a small percentage of their wages in organizational dues on a monthly basis, but systems for payment broke down in the face of the social and political upheaval of the 90s and early 2000s.

“We recently replaced Party membership cards with ones containing images of Kim Il Sung and Kim Jong Il together. That was done in accordance with the revised ‘Ten Principles [for the Establishment of the One-Ideology System],’” the source from Hyesan in Yangkang Province reported to Daily NK on the 31st. “For workers earning 3000 won a month, the base membership fee of 60 won was doubled to 120 won. At the same time as Party cards were replaced, members were told to normalize payment of their dues as well.”

“When they were given the order, a lot of people pointed out that they hadn’t been paying their fees on time because they hadn’t been getting paid on time, either.” The increase means that fees now constitute a total of 4% of a Party member’s basic official salary, although with additions many members are paid closer to 6000 won per month. The Women’s Union monthly fee has risen from 20 won to 50 won, the source reported.

The source also revealed reactions to the news. “Some have welcomed it because they think it may mean a corresponding rise in wages,” he said. “We’ll have to wait and see whether that happens; in any case, these things are an attempt to concentrate power over the people in the hands of the Party.”

The source also noted that a great many people have lost their loyalty to the Party anyway. “People’s loyalties have changed, and changing Party memberships won’t do anything to bring it back,” he concluded. “‘Shouldn’t they work to change the people’s hearts, first?’ That is the question. People are Party members in name only.”

Other sources also report that there have been extensive meetings and Party membership conferment ceremonies of late, as well as lectures on the sanctioned method of storing one’s membership card. “The authorities constantly drill into us that Party membership cards must be protected like one’s own life,” the source said. “There’ll probably continue to be strong controls on that, too.”

Read the full story here:
Dues Rise as Timely Payments Decreed
Daily NK
Kang Mi Jin
2013-11-1

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North Korea’s ‘organizational life’ in decline

Tuesday, May 22nd, 2012

A quick note related to the story below: I have located on Google Earth the Workers’ Party headquarters, headquarters of the Democratic Women’s Union of Korea, headquarters of the Kim Il-sung League of Socialist Working Youth, and the headquarters of the General Federation of Trade Unions of Korea. The headquarters of the Union of Agricultural Workers of Korea, however, eludes me.  If you have any idea of its location please let me know…

Andrei Lankov writes about the purposes of these organizations in the Asia Times:

In the early 1980s, when the present author was a student at the Soviet University, my teacher often described North Korea as a “country where meetings never end”. Having grown up in Stalin’s Russia, he knew a thing or two about meetings and indoctrination, but the North Korean standards appeared excessive even to him.

The more I interact with North Koreans, the more skeptical I become about how outsiders understand the working of a repressive system.

For outsiders, regime repressiveness is usually associated with an omnipresent political police, but it appears that other, less sinister-looking, institutions have played a major role in shaping the consent of the North Korean populace.

Read more of the article below…

Since its foundation in the late 1940s, the North Korean state has followed a zero tolerance approach in its dealings with dissent. The authorities strive to discover and punish/correct even minor deviations from the prescribed way of thinking.

But the political police only get involved in rare and extreme cases. In most cases, the real and alleged offenders are disciplined by their own peers and immediate supervisors within their “organization”.

Indeed, so-called “organizational life” has been a peculiar and omnipresent feature of North Korean life since the 1960s, even though it has declined in the past two decades.

Every single North Korean must belong to a cell of one (and only one!) organization, and this cell, usually consisting of one or two dozen people, has multiple opportunities to control and correct his/her behavior. There are five such organizations in the North, with each having easily definable and mutually exclusive membership – the Korean Workers’ Party (KWP), the Youth Union, the Trade Union, the Farmers Union and the Women’s Union.

Once a North Korean turns 14, he or she is expected and, indeed, required to join the Kim Il-sung Youth Union and stay there until the age of 30 (unless he or she is lucky enough to be admitted into the KWP at young age).

After 30, the lucky and socially ambitious can still theoretically join the party (not an easy undertaking), while the rest become members of the Trade Union or Farmers Union, depending on whether they work in the fields or on a production line. Even housewives, without a job, are not left out, since they are required to be members of the Women’s Union.

The rules are simple and unambiguous. An industrial worker in his late 20s will attend meetings and other activities of the Youth Union in his work place. Once he turns 30, he is required to switch membership to the Trade Union. He might marry a woman from the same factory, but if she decides to become a housewife (a very common occurrence), she would switch membership to the Women’s Union.

Typically, every organization holds three meetings every week, each one lasting between one and two hours. Two of the three weekly meetings are indoctrination sessions. Their participants are lectured about the greatness of the Kim family, the glories of the socialist economy and the depraved nature of the pro-American South Korean puppet regime, as well as about other similarly lofty, ideologically useful topics.

The content of the lectures is supposed to be memorized and tests are occasionally held, but examiners are not excessively strict.

This system makes sure that propaganda messages are delivered to every Korean. It is possible that people do not read newspapers (because North Korean newspapers are seriously boring) or do not listen to official radio, so the major ideas of propaganda are delivered straight to their workplace.

But it is another weekly function that seems to constitute the true core of North Korea’s organizational life – the so-called “self- and mutual criticism sessions”. In most cases, such sessions are usually held on a weekly basis.

During a criticism session, every member of an organization – in other words, every adult North Korean – is supposed to deliver something akin to public penitence and confession. He or she must admit some improper acts that he or she committed in the previous week.

Serious deviations are seldom admitted and discussed; people usually limit themselves to relatively trivial matters like, say, being a few minutes late for a job or not taking proper care when cleaning the shop floor.

Every act of public confession should be accompanied by a proper quote from Kim Il-sung (leader from 1948 to 1994) or his son Kim Jong-ll (leader from 1994 until his death in 2011).

Then a repentant sinner must be criticized by another member of the same organization. Usually both confession and criticism are kept short, taking hardly more than a minute or two per person.

In most cases, these sessions are essentially performances where people admit the sins they know to be relatively minor and hence harmless.

It is also known that future participants of the Saturday performance (“self- and mutual criticism sessions” tend to be scheduled for Saturdays) sometimes make preliminary deals and agree on who should criticize whom and for what.

Nonetheless, there is always the small but real risk of a public denunciation, a situation getting out of control, and therefore the sessions do exercise significant pressure over organization members.

If something more improper has taken place, a more specialized session can be conducted within the organization (often called “the ideological struggle session”).

When this is to be done, the offender is subjected to one or two hours of a verbal harangue, often of a quite offensive and rude nature. Usually, this is the way in which an organization deals with offenses that are too trivial to be dealt with by the police, but are nonetheless seen as relatively serious – like, say, frequent absence from work without sufficient reason, or traveling to another part of the country without obtaining a proper permit (and being caught there).

Through organizational life, the state ensures that every single North Korean is exposed to the official ideology and also gets regular training in the politically correct ways of conduct.

The slow but unstoppable disintegration of Kim Il-sung’s “national Stalinism” in the past two decades seriously undermined the foundations of organizational life. Nowadays, a majority of North Koreans make a living outside the official state economy and they have now become much less dependent on their workplaces and supervisors.

Increasingly, they see organizational life as a troublesome and time-consuming formality. They can nowadays negotiate a deal with their supervisors, getting permission to be absent from the workplace, if they pay a contribution to the factory’s budget – this is known as an “August 3 contribution” (after the date of a government decree that allowed such practice).

Tellingly, this contribution frees the payer not only from attending his/her workplace but also from time-consuming indoctrination and mutual criticism sessions – after all, the average adult North Korean is supposed to spend three to five hours a week attending these functions.

When the functions are conducted, they are much easier than was the case in the 1970s and 1980s. The meetings are shorter nowadays, and absenteeism – once almost unthinkable – came to be ignored if it remained relatively infrequent (or if the “August 3 contribution” had been paid).

This relaxation seems to be especially pronounced in the Women’s Union, since most North Korean housewives are much involved with the black market economy and hence, if compared to workers of state factories, have less time for the boring activities of their local Women’s Union cells.

Like many institutions of the “old North Korea”, organizational life is seemingly on the decline. But this decline is by no means complete, and a majority of North Koreans are still taken care of by their organizational supervisors. And these people make sure that even minor deviations from what is considered to be correct are likely to be discovered and censured.

Read the full story here:
North Korea’s ‘organizational life’ in decline
Asia Times
Andrei Lankov
2012-5-23

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Farming Regions in State of Tension

Tuesday, May 15th, 2012

According to the Daily NK:

This year, the North Korean authorities are once again emphasizing the need to strive for greater food production as the farming season begins, launching the annual 40-day total farm mobilization period with the words “Let’s mobilize the whole party, the whole nation and all the people to reach the grain production targets.”

Rodong Shinmun published editorials on the subject on both the 11th and again on the 12th, reflecting the emphasis being optimistically placed on solving food security issues in 2012. Kim Jong Eun also emphasized the same in his major statements on the 6th and 27th of last month, understandably so given that farm productivity has the potential to play such a decisive role in stabilizing the first full winter of his rule.

Inside sources say that the mobilization atmosphere is unusually intense this year in farming villages. Cadres and people alike are feeling the strain of Kim Jong Eun’s first season in charge, with the assumption being that this year could see severe punishments meted out for any wrongdoing.

A South Hamkyung Province explained to Daily NK yesterday, “The whole nation is out there supporting the farms, including enterprises affiliated with state agencies, upper middle school and college students and military bases. People are not allowed to be at home or in the streets. Restaurants are not open either. Everybody is out on the farms. It’s just like martial law, really brutal.”

“5 or 6 safety agents have set up a desk in the street and are stopping people passing by, confiscating their identifications and the bikes they are on and sending them to nearby farms,” he went on. “People can only pass if they have a confirmation slip from a cooperative farm management committee.”

“The markets are only allowed to open from 5PM to 8PM after farm work is done for the day, so excluding preparation and organizing time, there is only an hour or so that the market is open. Buyers and sellers are all super busy,” he added.

During the 40-day total mobilization period, school classes are halted and students sent off to farms for forty days carrying their food and bedding. Laborers, workers in administrative organs and members of the Union of Democratic Women all commute from home to local collective farms until the planting and seeding is done.

North Korea has had the policy in place since 2006. Prior to that, students still had to farm every day, but full-time workers and members of the Union of Democratic Women went out just twice or three times a month.

In 2006, five provincial Party cadres from North Hamkyung Province were caught enjoying a spa during the period. They were summarily kicked out of the Party and sent into internal exile with their families.

“Until last year we were able to get confirmation of attendance from farm management committee cadres by giving a bribe, but with this year being the first under Kim Jong Eun, those tricks are unlikely to work,” the source concluded.

Read full story here:

Farming Regions in State of Tension
Daily NK
Choi Song Min
2012-5-15

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Army Founding Day a source of stress

Wednesday, April 25th, 2012

According tot he Daily NK:

The North Korean authorities have called on the people to provide supplies for care packages to be given to military units on People’s Army Foundation Day, which falls today. It is not a new burden, but is relatively larger this year, according to a source.

The source from Chongjin in North Hamkyung Province told the Daily NK yesterday, “The people feel seriously burdened by the project going on nationwide to gather support supplies ahead of the military holiday. Each household is required to offer up towels, soap, toothpaste, socks and underwear.”

“Usually they collect around 1,000 won from each family, but this year they told us to give 10,000 won,” the source went on. “Since even providing food for the family is not easy, many people are playing a waiting game on this.”

The source explained that societal organizations (the Union of Democratic Women, General Federation of Korean Trade Unions etc) have also been gathering care packages for delivery to local military units by ‘People’s Delegations’ consisting of municipal and county Party cadres.

“Middle school classes are also suspended while students prepare and perform ‘People’s Army Comfort Concerts’ at art centers and in military camps, and the Union of Democratic Women are preparing art performances,” she added.

Problematically, the various April holidays also mean that markets are closed more often than normal, and this is driving down household incomes.

For the Day of the Sun, the markets were closed from the 14th through the 17th. The markets are also closed today for Army Foundation Day today. Moreover, they were also closed on the day Kim Jong Eun was elevated to 1st Secretary and the day of the mass rally organized to denounce the Lee Myung Bak administration, to name but two.

As such, the source concluded, “April is a hectic month. Aside from the fact that the people are exhausted because of the pressure from the authorities their income has dropped by around half so many will likely end up in debt.”

Read the full story here:
Army Founding Day a Source of Stress
Daily NK
Choi Song Min
2012-04-25

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DPRK undergoing 2012 calendar recall

Friday, March 23rd, 2012

 

Pictured above (Google Earth): (L) Kumsong Youth Publishers (금성청년출판사), (R) Pyongyang General Printing Factory (평양종합인쇄공장). According to the Daily NK article below, both factories print calendars in the DPRK.

UPDATE 1 (2012-3-23): The Daily NK updates us on the DPRK’s 2012 calendars:

The slogan on the cover of the calendar has been edited from “The Great Leader President Kim Il-sung will always be with us” to “The Great President Kim Il-sung and the Great Leader Kim Jong-il Will always be with us”

The new calendar marks February 16th (Kim Jong-il’s official birthday) as “The Day of the Shining Star”. This same day is also celebrated as the day Kim Jong-il received the title “generalissimo”.

“The Day of the Sun” (April 15th–Kim Il-sung’s birthday) was always there, however, revised text about other dates has been added.

The May picture comes from the DPRK film Petition. The June image comes from The Blessed Land.

 

July – October calendar pages

December 17th 2012 commemorates “Juche 100”. December 17th is the day Kim Jong Il passed away.

ORIGINAL POST (2012-1-10): According to the Daily NK:

North Korea has recalled all 2012 calendars because they do not specify the date of Kim Jong Il’s death (December 17th), and is producing new ones.

A Shinuiju source confirmed for Daily NK on the 5th, “Pyongyang Combined [General] Printing and other printers are creating new calendars marking Kim Jong Il’s death.”

“An order was handed down through Party organs, enterprises and people’s units calling for the return of those calendars which had been distributed. Calendars stored by traders who were planning to go and distribute them outside of North Korea are also being recalled,” the source added.

However, most of those calendars which have already been exported, such as the one obtained by Daily NK [see picture here], will continue to circulate.

The absence of the date of death is not the only problem with the new calendar. There are also problematic messages such as ‘We hope for great leader comrade Kim Jong Il’s good health.’ As such, the new calendar will reportedly both include Kim Jong Il’s official date of death and the latest slogan, ‘Great leader comrade Kim Jong Il is with us forever.’

Official North Korean calendars are designed and published by a number of publishing houses including Keumsung Youth Publishing House and Agricultural Publishing Company on the authority of the Party Propaganda and Agitation Department. They are still distributed to all Party organs, enterprises and military bases, although due to economic and production limitations the paper quality has dropped in recent years, and even this measure has not been enough to stop distribution to households breaking down.

On this, one defector from North Hamkyung Province commented, “There are 28 households in a people’s unit, but only 10 calendars were given to us once.”

Other than the official calendar published for distribution, each of the authorized publishers produces a higher quality 7-page calendar for sale in places like the jangmadang. Some high-quality scroll calendars are also produced by People’s Army Publishing House, People’s Safety Ministry, and National Security Agency etc.

An additional point of interest for the reproduced calendars is whether Kim Jong Eun’s birthday (January 8th) will be made prominent. January 8th, 2012 is a Sunday and as such would typically be marked in red anyway, but usually to emphasize special days the numbers are printed in a bigger font.

Read the full story here:
North Korea in Mass Calendar Recall
Daily NK
Park Jun Hyeong
2012-01-10

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A North Korean Corleone

Wednesday, March 7th, 2012

Sheena Chestnut Greitens writes in the New York Times:

What kind of deal do you make with a 20-something who just inherited not only a country, but also the mantle of one of the world’s most sophisticated crime families? When Kim Jong-un, who is thought to be 28 or 29, became North Korea’s leader in December after the death of his father, Kim Jong-il, he became the de facto head of a mafia state.

(more…)

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Kwangbok Department Store

Tuesday, February 21st, 2012

UPDATE 1 (2012-2-21): According to the Korea Times, this store is now providing people with a legal window to exchange local for hard currency:

North Korea is apparently allowing foreign currency to be exchanged at unofficial, black market rates at a newly-renovated department store in Pyongyang, according to a diplomatic source who recently visited the country, Tuesday.

The source said people could exchange euros, dollars and yuan at kiosks at Kwangbok Area Supermarket, which recently opened after refurbishment and is said to resemble department stores in the South. The North has long kept the value of its local currency artificially high.

Euros were being exchanged at the rate of one euro for 4,420 North Korean won, while the official rate is around 130 won per euro, the source said.

“They are exchanging hard currency at a rate that seems to be an unofficial rate,” the source told The Korea Times. “People can also shop at the department store using foreign currency by taking their receipts to the booths.”

The source added that the exchange rates were written on a board inside the kiosks.

ORIGINAL POST (2012-1-6): See the original post below.


 

Pictured Above: (L) The original facade of the “Kwangbok Department Store (광복백화점)”. (R) The new facade of the “Kwangbok Area Supermarket (광복지구상업중심)”

Here is KCNA coverage of the opening of the facility (Posted to YouTube):

Astute observers will notice the American beer, Pabst Blue Ribbon, featured prominently in the beer section.

Here is coverage of the opening in KCNA (2012-1-5):

Pyongyang, January 5 (KCNA) — The Kwangbok Area Supermarket was opened with due ceremony on Thursday.

All business service at the supermarket built as a commercial service center has been put on IT and digital basis. Customers can buy varieties of goods according to their taste and requirements in the sales rooms on each floor stacked with household appliances, electronic products, foodstuff, fibre, sundries and others.

Present there were officials concerned, officials of the Korea Taesong General Trading Corporation, officials and employees of the Kwangbok Area Supermarket, members of the Feihaimengxin Trading (Beijing) Co. Ltd. staying in the DPRK and the Chinese embassy here.

O Ryong Il, general president of the Corporation, said in his speech that the work to build the supermarket was successfully completed under the energetic leadership of leader Kim Jong Iland the dear respected Kim Jong Un and the positive efforts of the peoples of the two countries.

He expressed belief that the supermarket would help towards improving the people’s living standard and promoting the well-being of the two peoples through better service and management.

Xue Rifei, executive managing director of the Feihaimengxin Trading (Beijing) Co. Ltd., said in his speech that Kim Jong Il and Kim Jong Un gave field guidance to the supermarket on December 15, 2011 and named it the Kwangbok Area Supermarket.

He expressed the expectation that an effort will be made to reenergize the supermarket to win high appreciation for its best management, service and credit.

The Korea Taesong General Trading Corporation is a sanctioned organization, and according to the US Treasury, it is a “key node” in the illicit activity of Office 39. According to NK Leadership Watch:

One of the participants at the opening ceremony was Jon Il Chun (Chon Il-chun), deputy director of the Korean Workers’ Party’s Finance and Accounting Department and section chief of Office #39.  Mr. Jon accompanied Kim Jong Il on a visit to the Kwangpok store in mid-December 2011, which was KJI’s last reported public appearance before his death.

On a more casual note, the supermarket marks a point of administrative departure from the way department stores are typically managed in socialist countries. The Kwangbok Department Store (the former name) was one of Pyongyang’s premier formal retail outlets. For decades it operated in the same way as other socialist department stores: customers ended up standing in three lines before they were able to collect their merchandise (one line to order, another line to pay, and another line to pick up). The new Kwangbok Supermarket has adopted a market-style check out line. Though unnoticed by foreigners, this is the first such check out line I have seen in a North Korean department store.

This point was also highlighted in AP coverage:

A separate story in KCNA notes that the shop will sell both foreign and domestic goods:

The supermarket is supplied with home and foreign-made products which are in demand in the country.

Although I have not acquired data specific to this store, I believe it is reasonable (even rational) to assume that if the supermarket sells imported goods it will charge had currency for them. This opinion is based on the following assumptions: 1. The Chinese investors will not accept North Korean won under any circumstances. 2. The goal of Office 39 is to acquire hard currency for the Kim family. 3. North Korean retail outlets frequently post prices in multiple currencies so I don’t see any reason why it would be different here. Today a plurality of North Koreans can easily acquire foreign exchange.

Here is my working assumption of the business model: Chinese partner acquires merchandise and imports it to the DPRK. Sales in hard currency go towards allowing the Chinese supplier to recover its costs. Chinese partner either earns a profit from a markup it charges Kwangbok or it divides the profit with Office 39 along some agreed percentage.

If Chinese profits are earned from a cost-plus markup that it charges Kwangbop, then the partnership is closer to an exclusive supplier deal rather than a true joint equity deal. The North Koreans could cheat on this deal by finding cheaper suppliers and decreasing its purchases from the Chinese partner. If after-sales profits are split between the Chinese and Office 39, then both partners will need auditors on hand to make sure the books are accurate. The Chinese partner will also need a good relationship with the Chinese embassy if it runs into problems with the DPRK managers should they unilaterally change the terms of the contract (the split).

A Chinese firm reportedly tried to invest in the Pyongyang Department Store No. 1 several years ago. Not much seemed to happen, but maybe there is some more info here.

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Kim Jong-il visits Kwangbok Department Store

Friday, December 16th, 2011

UPDATE (2011-12-19): KJI’s financial manager appears on tour of Kwangbok.  According to Yonhap:

The head of a shadowy North Korean agency charged with managing slush funds for leader Kim Jong-il has again appeared in public after five months.

Recent footage from the North’s state television network showed Jon Il-chun standing closer to Kim than Kim’s heir apparent son, Kim Jong-un, on an inspection tour of a supermarket in Pyongyang.

Kim Jong-un is being groomed to succeed his father Kim Jong-il as the country’s next leader in what would be the country’s second hereditary power transfer.

Jon and Kim Jong-un were also seen standing side by side on an escalator at the Kwangbok Area Supermarket, according to recent photos released by the North’s official Korean Central News Agency.

Jon, who has rarely been exposed to media, was last seen on Kim’s trip to a factory in July.

He heads Office 39, which has often been referred to as Kim’s “personal safe” for its role in raising and managing secret funds for the North Korean leader.

The office is also believed to be involved in counterfeiting US$100 bills and drug trafficking.

Last year, the United States blacklisted Office 39 as one of several North Korean entities to come under new sanctions for its involvement in illegal activities such as currency counterfeiting.

ORIGINAL POST (2011-12-16): According to the Daily NK:

Chosun Central News Agency (KCNA) today reported news of an onsite inspection by Kim Jong Il, Kim Jong Eun and others to the Kwangbok District of Pyongyang, the city’s commercial center. The main site on the visit was reportedly the newly expanded and redesigned Kwangbok Department Store.

The redevelopment of the store was ordered by the elder Kim following his trips to China earlier this year, where he was repeatedly exposed to the full force of China’s commercial development.

According to KCNA, “To enhance the people’s welfare and improve their lives, upon the direct suggestion and boundless affection of the fatherly General with his perpetual concern for the people, Kwangbok Department Store, which was constructed in October, 1991, has been transformed anew into the commercial center of Kwangbok District.”

“From warehouse to sale, the realization of information technology and numerical control of all management operations guarantee accuracy and speed, and the store has been stocked to guarantee the utmost convenience of visitors,” it went on.

KCNA went on to say that Kim Jong Il listening to information from related officials, and subsequently declared himself satisfied with the way the store matched the people’s needs in all areas, from sales plans to the amount and quality of goods available.

“We must proceed with the kind of commercial activity that can sell to the people of the capital city those things that they would not be able to live without in their daily lives such as clothing, shoes, food, conveniences, family items, school goods and cultural things, and leave them with no complaint,” he emphasized.

Read the full story here:
Kim Satisfied with “Transformed” Store
Daily NK
Kang Mi Jin
2011-12-16

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