Archive for the ‘Secretariat’ Category

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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Worker’s Party elders given honorary membership

Tuesday, December 6th, 2011

According to the Daily NK:

It has been confirmed that over one month in February and March this year, the Chosun Workers’ Party replaced the membership of all male party members over 60 and women over 55 with ‘honorary membership’.

It reportedly took just a month for the plan to be implemented from the Central Party down through provincial, city and county levels.

Honorary members are not required to attend weekly, monthly and quarterly self-criticism sessions in their areas of residence. In addition, honorary membership grants the right to absent themselves from frequent official meetings including study sessions, Party lectures, meetings for the dissemination of Party orders etc.

Honorary members are also exempt from a 2% deduction from wages for Party membership dues. Hitherto, cadres were still required to pay their Party dues even when the enterprises to which they had been dispatched were not operating due to shortages of raw materials, and even in retirement (usually after turning 60) Party members were still required to pay dues to local Party organizations.

On the other hand, honorary membership does still mandate presence at important events including reporting meetings or events to commemorate the birthdays of Kim Il Sung and Kim Jong Il.

Many newly-honorary members are understood to have welcomed the new measure. One source from Pyongan Province told Daily NK, “When they heard it, elder Party members were calling it ‘another act of kindness from the great General’.”

However, some of the targeted cadres are less happy with having their wings clipped. A source from North Hamkyung Province said that some irritated elderly members of the Union of Democratic Women are leaving before being pushed, putting in minimum effort or simply not attending events at all.

Elsewhere, while senior Central Committee, Cabinet and other central government organ staff are holding onto their administrative duties for now, many apparently believe they know which way the wind is blowing.

Looking at the situation today, one high level official who defected to South Korea in May this year commented to Daily NK, “It is a message to all the veterans that they need to leave because this is the Kim Jong Eun era.”

Read the full story here:
Party Elders Handed Honorary Membership
Daily NK
Lee Beom Ki and Choi Song Min
2011-12-6

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DPRK courting Coca Cola?

Wednesday, October 5th, 2011

Pictured above, the DPRK’s local cola logo. Image source here.

UPDATE 1: Stephan Haggard believes this is a non-story.

ORIGINAL POST (2011-10-5): According to Forbes:

Global capital is an inherently lonely trade, but as Gabriel Schulze ambles into the conference room of Yanggakdo International Hotel, a towering edifice separated by a ring of water from the rest of Pyongyang, the most impenetrable capital in the world, it’s hard to imagine a more isolated business meeting.

“We warmly welcome you, the Coca-Cola delegation, with Mr. Schulze as your leader,” says Park Chol Su, the president of North Korea’s Taepung International Investment Group, singling out the 6-foot-7 American from his entourage of four people. “I hope this will be a good opportunity to make progress in the relations between the U.S. and Korea.”

Why is a U.S. businessman in Pyongyang pitching America’s most iconic consumer brand to the world’s most inhospitable marketplace? Because, surprisingly, the Democratic People’s Republic of Korea is ready to buy, and eager enough to flex its atrophied capitalistic muscles that it let a FORBES reporter follow along–and record everything–as the Coca-Cola discussions heated up.

Park says his Taepung Group, established by Kim Jong Il himself, wants to bring market principles to a planned economy, even down to setting what price a bottle of Coke made in Pyongyang would go for–sort of. “Costs are based on the demands of the market, but we will respect your price,” Park tells Schulze’s delegation. “If the price is too high, it will be restricted.”

North Korea, the most hidebound and repressive of socialist states, is slowly inviting not only China but also the wider Western World to invest in its near-moribund economy. Officials claim the country is open for business with outsiders, and that the political stripes of the investors do not matter as much as the money in their pockets and the willingness to deal. Chinese companies have signed a number of multimillion-dollar deals to extract resources and build and repair infrastructure, such as making port improvements in the northeastern region of Rason and paving a road from there to the Chinese border. Taepung also claims to have inked billiondollar contracts, including one to develop a huge coal mine, but those deals haven’t been nailed.

American signature brands may actually be most welcome, despite or perhaps because of decades of propaganda casting the U.S. as the devil incarnate. Pyongyang’s economic representatives made clear in this and other meetings, with focus and determination, that they want Yum Brands to open up KFC franchises.

Extreme wishful thinking though this may be, it’s linked to a planned ten-year revamp of the North Korean economy to expand national GDP from a meager $30 billion last year to $1 trillion by 2020. (The country can’t even feed its people; there is severe malnutrition in the countryside.) That all but impossible goal cannot be approached without an unshackling of enterprise, which may never occur, and massive help from the outside world, which may never come. The expression “reform and opening,” so familiar in China, is not yet politically acceptable language in Pyongyang. But North Korea’s courtship of the West has begun.

“Coke is strategic. I hope that Coke will serve as a bridge for relations between the two governments,” says Park, a slight man with a toothy smile and a taste for liquor, over a traditional Korean hot pot lunch and beer. Then, perhaps, sanctions could be lifted and more substantial investments could follow. “The door will be open to the whole world, not only China–even the U.S., even Western countries.”

But so far the West hasn’t come calling. North Korea remains in the dysfunctional totalitarian grip of Kim Jong Il. The regime is a defiant nuclear provocateur linked to proliferating weapons, drugs and counterfeit cash abroad, while operating a terrifyingly effective police state at home. Western companies will require more than the usual amount of persuasion. They will want something the North Koreans can’t possibly provide: a blessing from the White House.

That’s where Gabriel Schulze, scion of the Newmont Mining fortune, with a prospector’s taste for risk and opportunity, comes in. He has been surveying this forbidden market on the strength of informal connections to Coke and one of its bottlers, SABMiller, without either company’s toplevel approval–a Cold War-style mission that affords the higher-ups plausible deniability.

SABMiller sent a regional executive, at Schulze’s invitation, to the May meeting with Taepung Group, adding in a statement for this story, “We have no plans to invest in North Korea.” Coke turned down a request from Taepung Group (via Schulze) to visit this summer, and distanced itself from the remotest hint of soft-drink summitry with this statement: “No representative of the Coca-Cola Co. has been in discussions or explored opening up business in North Korea.”

Coke’s skittishness is striking from a company with a history of selling into almost any market–including such villainous or pariah states as Hitler’s Germany in the 1930s, Franco’s Spain and Pyongyang’s historical sponsors, China and the Soviet Union, in the 1980s (though Pepsi got to the Soviet Union first). North Korea is one of the last frontiers. “That is your task, to become a pioneer,” says Jang Gwang Ho, the senior North Korean official in the coterie greeting Schulze’s group.

Tall, blue-eyed and devout, Schulze is full-blooded pioneer. The great-great-grandson of Newmont founder William Boyce Thompson, he runs a family investment office out of Beijing, Schulze Global Investments, which specializes in China and difficult emerging markets.

While he has close ties to Republicans in U.S. politics, Schulze’s forays abroad, such as a cement plant in Ethiopia, are far from conservative. Schulze Global seeks “double bottom-line returns,” he says, profiting while helping poor emerging markets develop. Bringing Coke to North Korea would be historic, but he knows engagement with Pyongyang might be seen as a folly back home, both financially and politically.

“We understand that there’s a high likelihood that there could be all sorts of trouble and that we could end up losing money,” Schulze tells me after his trip. “There’s a lot of [U.S.North Korea] mistrust, there’s a lot of gamesmanship, and for us it’s not about pretending that that’s not there. We’re not in a little bubble of happiness.”

Would it even be legal for Coca-Cola to do business in North Korea, given international and U.S. sanctions? Those sanctions have proven to be narrow and permissive in practice, and there is no stricture against soft drinks (a sip of CocaCola is already imported, mostly from China, and sold to the few with disposable hard currency).

Hundreds of foreign businesses, most of them Chinese, have come into North Korea despite cautionary tales of investments gone bad, of officials changing the terms or the rules, soliciting bribes, demanding substantially higher payments or expropriating joint ventures.

And these businesses have made money. In a 2007 survey of 250 Chinese operations in North Korea, scholars Stephan Haggard and Marcus Noland found 88% saying they could turn a profit. (A majority also reported paying bribes.) Enterprises routinely encounter difficulties, yet many persist, hopeful for economic liberalization.

At least one American investor has profited in North Korea as well: Schulze Global. Three times in 2008 it made loans of hundreds of thousands of dollars to mining companies to buy equipment and expand, and each was repaid. This summer Schulze lent an additional $1 million to finance a North Korean conglomerate’s purchases of corn to feed its workers. (He consulted with sanctions lawyers in America before making the loans and has filed notices with the U.S. Treasury Department.)

“That opened the doors” to the Coke project, Schulze says. Making the world’s favorite carbonated beverage in Pyongyang would be quite another matter, though. The country still operates on a planned economy and has difficulty even manufacturing plastic bottles and cans. The government barters for sugar from Castro’s Cuba and would probably have to import steel to build a Coke factory. And although the estimated per capita income is $1,200 a year, the Coke factory’s workers would be paid barely more than a dollar a day (low wages are a key selling point to foreign investors). Further, the nation is plagued with persistent food shortages that force the regime to rely on international aid. Does a country this poor have consumers for the iconic American drink?

The answer is yes, at least in the capital. Home to the privileged upper crust, or an eighth of the nation’s 24 million people, Pyongyang has a visibly robust elite economy. The city’s wide Stalinist thoroughfares, bereft of private automobiles five years ago, are now filled with tens of thousands of foreign cars, including American and Japanese brands.

Mobile phone use is common, with more than 300,000 accounts in the capital using the 3G network built by Egyptian telecom Orascom. That includes some of the city’s traffic women, famous for white gloves and powder-blue uniforms. With traffic lights now doing most of their work for them, one was spotted on the sidewalk jabbering into her cellphone.

The city’s new Pothonggang Department Store was fully stocked with imported fare to be had at prices in North Korean won that are affordable only at the black-market exchange rate (2,500 won to the dollar at the time, compared with the official rate of 100 won). Name brands like Heinz Ketchup (the equivalent of $4 a bottle), Mars bars (a little more than $4 per bag) and all manner of high-end liquors and cigarettes are on offer, usually imported from Europe or Asia. On another floor you can find imported sweaters, dresses and shoes.

The checkout lines run briskly in midafternoon, the shopping done mostly by women, many of them likely the wives of government officials and army officers. (Kim Jong Il showcased the store with a visit in December.) Out on the streets the proles shop for snacks and locally made sodas–typically fruity concoctions in glass bottles–at hundreds of kiosks throughout the city, mostly priced at the black market rate of 20 cents to 40 cents.

Those prices would be 25 times higher at government exchange rates and thus out of reach for almost all North Koreans on their official salaries–but hard currency is flowing into the capital, “through this and that channel,” Jang says, and is spent. “Although officially they are not receiving the salaries from the government in hard currency, they have! So they like to spend the hard currency for their children because the children like to drink the Coke,” he explains.

Jang, of course, is not a commoner or for that matter a typical North Korean apparatchik. He speaks fluent if idiosyncratic English, was educated partly in the U.K. and is married to a doctor. First vice president of Taepung Group, he has a dual appointment on a government body overseeing economic development. Over two days of meetings Jang exudes an almost relaxed air of detachment. He typically parries questions with humor and stories while puffing on Dunhill cigarettes and flashing a Longines watch. (The president of Taepung, Park Chol Su, is a Chinese national, chosen in part for his Chinese contacts and experience.)

Do North Koreans like to drink beer? asks Anton van Heerden, a South African who runs SABMiller’s Asian supply chain. Yes, especially a growing cadre of retirees. “I can see so many old men, over 60, normally in the evening if we look around the city, they are making a queue to buy the beer,” Jang says, adding with a laugh: “There are crazy people! A lot of people drink the beer–30 bottles in the evening! I don’t know how.”

Friendly though they are with Schulze, Jang and Park both make clear that they answer to a higher power, the leader they refer to only as “the top man,” “the General” or the “Dear Leader”: Kim Jong Il. Park was born to Korean parents in northeastern China in 1959, as Kim Il Sung’s regime recovered from the Korean War. Park built relationships with North Korean officials by selling them much-needed gasoline in the 1990s. He is a salesman again, puffing up his chest as he blusters about the will of the General to change North Korea’s economy, led by his Taepung Group.

Parse the bombast and you get a rare glimpse inside the complexities of power relationships. Park says he has never met the top man and instead takes his instructions from a close Kim confidant, 73-year-old Kim Yang Gon, who is chief of the United Front Department, an intelligence arm of the Korean Workers’ Party, and chairman of the Taepung Group. Still greater power at Taepung likely lies with another member of the board of directors, Kim Jong Il’s brother-in-law Jang Song Taek, who as vice chairman of the National Defense Commission is considered North Korea’s second-most-powerful man. The National Defense Commission, chaired by Kim Jong Il, is also Taepung’s controlling shareholder.

To some Western analysts the tight control of Taepung signals that Kim’s coterie is not an agent of change and reform but precisely the opposite–a means to tighten its grip over the North Korean economy. The reasoning: Kim wants Taepung to bring in multibillion-dollar deals for resources, power plants, ports and roads, they say, so that he and his cronies can control the spoils.

Schulze hears the skeptics. But he notes that a Coca-Cola investment would be far more symbolic than lucrative. The total ante probably wouldn’t exceed $10 million (with Schulze Global’s share at $2 million)–tiny by comparison with some resource deals. He also argues that the only realistic way to engage with North Korea is precisely through those in power. “People say this is the leadership looking to benefit itself, and I would say yes, that is absolutely true.” But, he adds, “it doesn’t negate the fact that selfish ambition can still drive positive change and development, particularly in the economy, which can make a real difference in the lives of North Koreans.”

His groundwork laid in North Korea, Schulze will continue his quixotic quest to lobby not only Coke but also Capitol Hill and the Obama Administration. He is, in a way, following in the footsteps of his great-great-grandfather Thompson, the mining magnate. Thompson shocked his friends in the business establishment when, after returning from Russia after a trip in the fall of 1917, he urged that the U.S. and Britain engage with the new communist regime there to moderate the impulses of Lenin and Trotsky. No one, obviously, followed that advice.

Read the full story here:
Invading North Korea
Forbes
Gady Epstein
2011-10-5

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