North Korean Economy Watch

KCNA
2/6/2007

The Paektusan Cup sports contest was opened. This contest, which is held on the occasion of the February holiday every year [KJI birthday], greatly helps develop the nation’s techniques of physical culture. The participants in the current contest will compete in eight events such as basketball, volleyball, table-tennis, ice-hockey and speed skating in Pyongyang, Samjiyon and other areas. Its opening ceremony took place at the Basketball Gymnasium in Chongchun Street here on Tuesday. Present there were Kim Jung Rin, secretary of the Central Committee of the Workers’ Party of Korea, officials concerned and sportspersons. Mun Jae Dok, chairman of the Physical Culture and Sports Guidance Commission, made an opening address at the ceremony, which was followed by speeches. The speakers stressed that all the players should give a good account of themselves by fully displaying the sports techniques they have usually practised and thus more significantly celebrate the February holiday. At the end of the ceremony a male basketball game was held between Sobaeksu and Amnokgang sports teams.

Daliy NK
Yang Jung A
1/24/2007

North Korean authorities are requesting “implied” voluntary offerings to be made to the army, placing a greater burden on the North Korean citizens who are battling a tough winter due to the bitter cold and dire food crisis.

The first journalist to report about North Korea Lee Joon said that at a people’s unit meeting held in the rural district of Dancheon, North Hamkyung from January 7th to the 13th, orders were made from the central committee indicating a “severe food crisis amidst the people’s army,” reported Japan’s Asia Press on the 22nd.

Lee Joon is the first underground journalist to work in North Korea and has exposed the daily lives of North Korean citizens through video footages, collections of still life photos and voice recordings both nationally and worldwide.

At the people’s unit, an order was made “The food shortage in the people’s army is severe. With a devoted heart to the nation, every family must voluntarily offer food to the army.” Though the orders imply donations as a voluntary act, it is in fact forced upon the citizens or as it implies otherwise, suffer the consequences.

Lee informed “The exact amount of donations were not specified, though citizens are being pressured to increase their offerings as one person was said to have offered 600kg and another even up to 1tn.”

Lee said “Though the army declares a shortage in food, the cost of rice and corn at the markets has not risen in comparison to late November and early December” and commented “There does not seem to be a great shortage in supply as merchants at the markets sell rice imported from China.”

Contrastingly, Lee explained “From a national perspective, it seems that the supply of food had been considered low as international aid was terminated and crop output minimal.”

In addition to this “As the nation does not have any funds, an order was made for each family to invest their money into banks” and again “Though the exact amount was not specified, this order was indisputably forced” upon the citizens, Lee said.

Lee continued “Even 3 years ago, as a 10 years redemption national loan, the people had to support the nation with their funds” and “As there were many complaints from the people, the idea was changed to a look like a savings account. I believe that forcibly collecting money is no different to the national loan.”

At present, as there are many cases where North Korean banks cannot pay interest or capital from investments, any person that does invest in banks is called as a fool. Even though the government enforces a directive, it is unlikely that the people will invest their money in banks.

Lee said “Each person must gather 2.5tn’s of provisions and offer it to the local farms because a task was assigned to increase the output of fertilizer.” and remarked “It’s something that happens often, but it did come earlier than expected.”

“The poor collect excrement from their homes or public places whereas the rich slip through the cracks by either buying goods from the markets or offering bribes” Lee explained.

Complaints are rising against the government’s frequent tasks of offering goods, though “with feelings of discontent (resulting from international sanctions) the government exploits the people as they cannot make any money” Lee said.

In particular, “There is a general consensus amongst the people who now believe that the government is not trying to change the economy (through openness and reform) but only making their lives more difficult” revealed Lee.

Donga
12/18/2006

North Korean Military: New Regime?  

If that happens, the report forecasts that the military is highly likely to control the government and independent units, such as the escort command, and the security command and the operation command will attempt to take control of the government by joining forces or individually.

Yesterday, Dong-A Ilbo obtained a report titled “North Korea’s Crisis Management System and Our Countermeasures” released by the information committee of the National Assembly. The report predicts that “we cannot rule out an abrupt collapse of the Kim Jong Il regime. But, given the neighboring countries do not have firm grounds for intervention, the fall of North Korea will happen gradually.” It was submitted to the committee on December 13 by three researchers of Peace Foundation, Cho Seong-ryeol, Kim Hak-rin and Kang dong-ho.

Kim Jong Il in Trouble in North Korean Emergency-

The report argues that a national crisis is likely to be caused when Kim Jong Il, the chief of the North’s Workers’ Party, the government and the military, is in trouble.

If that happens, the report forecasts that the military is highly likely to control the government and independent units, such as the escort command, and the security command and the operation command, will attempt to take control of the government by joining forces or individually.

In particular, it also expects Oh Geuk Ryeol, the 75-year-old operational director of the Workers’ Party who is considered to be the most powerful among Kim Jong Il’s cross associates, to act before others by utilizing his independent commanding authority and his elite unit equipped with advanced weapons.

The report says the first thing the North Korean military should do, after taking control, is to declare a national emergency in the name of the central military committee of the Workers’ Party, which is entitled to command and control all military power in the country according to Article 27 of the party rules. But the report also predicts that the national defense committee will be at the center of administration of power and that the new regime will maintain a group leader system temporarily.

Who Will Be the Acting Commander in Chief?-

According to the report, if the North engages in war with the outside world, the country is likely to shift an emergency control system with the commander in chief in its center, as it did during the Korean War.

Cho Myeong Rok, the 78-year-old director of the General Political Department of the Korean People’s Army, is highly likely to be appointed as a commander in chief by hierarchy. But, considering age and health, Kim Yeong Chun, the 70-year-old Chief of the General Staff of the Army responsible for military operation of the one million-strong forces, is the shoo-in, according to the report.

Establishment of the Succession System-

It has been analyzed that the establishment of a succession system is more urgent for Kim Jong Il than the overcoming of the economic crisis through reform and market opening or the formation of diplomatic ties with the U.S., since Kim is well aware that an emergency in the absence of the succession system will lead to a civil war.

For this reason, it says, chances are that Pyongyang will formalize the succession system internally in the first half of 2007, when internal cohesion following its nuclear test and the supportive atmosphere for the third-time succession of military authority to protect the vested interest of the “Military First politics” still remain.

The report also connects the gradual stabilization of the succession system and the resolution of the North’s nuclear problem. It estimates that Kim will demand approval of the succession system and massive economic assistance in return for denouncement of nuclear weapons, and that the Pyongyang-Washington ties will be normalized if Washington accepts the demand.

Korea Herald
12/18/2006

N.K. general to lead if Kim loses power

A top military commander is expected to take the reins in North Korea in the event its leader Kim Jong-il loses power during an emergency, a South Korean parliamentary report said yesterday.

The report on a possible North Korean crisis pinpointed General Oh Geuk-ryul, chief of central combat operations of the Workers’ Party, as the strongest candidate to take contingency leadership of the communist country.

The report was written by the Peace Foundation, a private think tank on security affairs commissioned by the National Assembly Intelligence Committee.

The report said if Kim loses control, it will trigger fierce power struggles among leaders of different military groups such as Kim’s security guard, the Army headquarters, the intelligence command and the combat operations department.

None of them are in position to take control of the entire military. Kim is known to have controlled all military forces through a system of checks and balances among the several independent military groups. Each separate group is directed by Kim, with no influence on one another.

Among the powerful candidates, Oh, 74, is expected to take the lead in mobilizing his well-trained soldiers equipped with the North’s most modern weapons systems, the report said.

In the event the North Korean crisis triggers intervention from outside forces, the new leadership could fall under Kim Young-chun, deputy marshal of the Korean Peoples’ Army, the report expected.

Kim, 69, is likely to lead the North’s military in fighting against any foreign interventionist forces although Cho Myoung-rok, another deputy marshal of the KPA, is higher in rank, it said. Cho, 77, was cited as weaker than Kim due to his age and suspect health.

The report also said Pyongyang’s crisis may lead to the development of a crisis management system instead of the collapse of the North Korean regime.

The new authority is expected to exercise a military-led collective leadership after invoking martial law throughout the country, it said.

With regard to the possibility of North Korean military aggression, a full-scale invasion of South Korea is unlikely to occur at the time of such a crisis although the North could trigger local conflicts in frontline areas, the report said.

The report advised that South Korea needs to prepare to deal with the North’s new leadership and to enhance military preparedness for any possible clashes.

Daily NK
Han Young Jin
10/18/2005

Kim Jong Il’s politics of gift is a well-known practice. On only on the birthdays of Kim Il Sung and Kim Jong Il, but also on the day of party establishment and other national and traditional holidays.

The reason why Kim Jong Il distributes gifts to the people is to increase level of obedience and make them express gratitude towards “the Commander’s special grace.” Although it may look like a lousy way of convincing people to the South Koreans, to the North Korean people, it had been a long tradition. The reason why they offer gifts to the participants to the Arirang Performance lies along the same line. Although gift offering did exist in other former communist countries, but the level of practice is incomparably higher in North Korea.

Kim Jong Il sends to gifts to about 20,000 people every holiday, and the amount he spends on these gifts is about $20 million US dollars every year.

There was special food distribution on the day of 60th Anniversary of the Party Establishment. Apart from food distribution there is a separate group of people who receive special gifts. The number of them reach to 20,000, who are core members supporting the Kim Jong Il dictatorship.

The receivers include the family members of the liberation movement activists against Japanese colonialism, initial communists (palchisan), the party, high level officials and the military. The members of the initial communists are only about 300 in number. Kim Il Sung ordered, “The party must take care of the sons of the palchisan down to three generations” so they are entitled to special treatment.

The bereaved family department of the Worker’s Party takes care of these families. The sons and grandsons receive free education up to university, offered jobs and free cars as well as housing.

5,000 Entitled to Special Treatment

The people entitled to special treatment reach up to 5,000. The first level cadres such as of the Central Party, the People’s Arm Force, guard commanders and military commanders are entitled as main distribution everyday. The ministers of the cabinet and vise ministers are smaller in number and in a level lower than the military and party cadres.

The people entitled to gifts on the three main holidays (New Year’s Day, birthdays of Kim Il Sung and Kim Jong Il) number to 15,000. They are the cabinet cadres and military cadres above commanding officer level and cadres of different levels such as families of those sent abroad (for espionage and information gathering), foreign business workers and bereaved families.

The representatives of the Supreme People’s Assembly and provincial party secretaries, chiefs of the People’s Committee, Central Procurator’s Office, Central Court, National Security Agency, Security Office and other provincial level cadres also receive gifts from Kim Jong Il the three main national holidays. High level officials whose rank is as high as the central party secretaries in local cities and counties too are on the list of the gift receivers.

Managed by Keumsusan Accounting Department

Sending out of gifts under Kim Jong Il’s name is managed by the Keumsusan Accounting Department. All the cadres of secretarial level and above in the Central Organization and Guidance Department receive electronics, clothes and even food from Japan and South Korea. They always receive enough to eat that they prefer to receive more electronics than food.

The secretaries of the Worker’s Party and the cabinet ministers receive the most luxurious gifts they can possibly get. The gifts include two pairs of suits, two bottles of expensive imported liquor, expensive underwear, clocks with Kim Il Sung and Kim Jong Il’s names engraved, expensive refrigerators and color TV.

The workers of the Keumsusan Accounting Department visit each government agencies and offices with the gifts in refrigerating truck used specifically gift delivery. They call the receivers in secret and distribute the gifts with vouchers.

At the time, the receivers bow to the portrait of Kim Jong Il and say, “We will repay the high political confidence and grace of the Great Leader Commander Kim Jong Il with our loyalty (devotion).”

In case of the cabinet members or military officials where the receivers are only a small number, the truck of the Keumsusan Accounting Department delivers the gifts to the houses. In local places, they gather the receivers in one place and hold a small ceremony for the gift distribution. For the local receiver, the gifts include two bottles of expensive liquor, a box of tangerines, foreign sweets, one pair of suit, and a cartridge of cigarettes, “Pyongyang.”

20 Million USD on Gifts Every Year

The defector who has an expertise in the matter says the amount of money Kim Jong Il spends on gifts every year reaches up to 20 million US dollars. The Keumsusan Accounting Department had been taking 1% of the annual national budget and directly ordered gifts from foreign countries.

He says recently, the responsibility of purchasing gifts transferred to the United Front Department of the Central Party. “As it became responsibility of the United Front Department of the Central Party to purchase the gifts, some of the gifts sent from South Korea have turned into Kim Jong Il’s gifts to the cadres under his name,” he added.

Some gifts come back to Kim Jong Il in peasant, roe, honey and mountain (wild) ginseng from the people.

Cadres do not talk about what they have received. In sometime early 1980s, Kim Jong Il once offered Benz cars to the cadres of the United Front Department and Organization and Guidance Department of the Central Party, and the cadres fought over the color of the cars. After criticisms from Kim Jong Il, cadres are not allowed comment on the gifts they received.

However, the cadres who have received gifts do not hide that they received gifts. Some of them gather the people from the department to their offices or homes and share “the Commander’s gifts.”

The party notifies the worker’s about gift receivers to arouse more fidelity out of the people by letting the party workers know that responsible workers receive special treatment and to show off that Kim Jong Il love and trusts the workers.

Korea Times
Park Song-wu
9/27/2005

The Pyongyang regime has described Chang Song-taek, North Korean leader Kim Jong-il’s former right-hand man, as a “tree’’ that is now cut off, sources well-informed of the North’s power structure in Seoul said on Tuesday.

Chang, Kim’s brother-in-law and a confidant until purged in late 2004 for an alleged bid to enhance his power, was predicted to return to the Workers’ Party because the Dear Leader, 63, reportedly has a limited number of associates to rely on.

But such a possibility looks slim now as Kim has apparently changed his mind, according to sources in Seoul.

“(Chang) was predicted to make a comeback in the past because he was such a close confidant (of Kim Jong-il),’’ the Yonhap news agency quoted a source as saying. “But now almost all the people who, for example, have simply eaten naengmyon (or Korean cold noodles) together in the Yokryukwan restaurant (in Pyongyang) have been expelled to local areas. The likelihood of Chang’s comeback is near zero now.’’

Chang was formerly vice-director of the party’s exceptionally powerful bureau _ the Organization and Guidance Department. High-profile defector Hwang Jang-yop once described him as the “No. 2 man’’ in North Korea.

Now Ri Che-kang (phonetic), new vice-director of the potent department, is known to be in charge of removing Chang and his close allies from the political scene.

The intended purge of Chang, 60, is allegedly a result of his efforts to promote Kim Hyong-nam, an illegitimate son of Kim Il-sung, the founding father of North Korea, as a contender to Kim Jong-il.

Kim Hyong-nam, 33, was adopted at birth by a sibling of Chang, according to a country report on North Korea by the Economist Intelligence Unit.

The expulsion process resembles one that took place in the 1970s when the Pyongyang regime underwent a power struggle during which “side branches’’ of Kim Il-sung were trimmed away.

At that time, the regime purged Kim Il-sung’s uncle Kim Young-ju as well as others, including the leader’s second wife Kim Song-ae (phonetic) and her children. In 1976, Kim Young-ju disappeared from the political scene and did not re-appear until 1993 when he returned to the Party Central Committee.

Chang is reportedly in a bad state of health now. Even if Kim Jong-il reinstates him, he is unlikely to return to the party. Sources in Seoul predicted that the most likely scenario is that Chang will be named an ambassador _ a job which cannot influence domestic politics.

Kim Jong-il has not yet decided who will succeed him, even though his own ascension to power was carefully prepared over more than 20 years.

There are three known rival candidates for the succession _ all Kim Jong-il’s sons, by two mothers, neither of whom he married.

The eldest, Kim Jong-nam, 34, was reportedly the favorite until 2001 when he was caught visiting a theme park in Japan on a false passport, embarrassing the Pyongyang regime.

Kim Jong-nam’s two rivals are his younger half-brothers _ Kim Jong-chol, 24, and Kim Jong-woon, 22. Kim Jong-il is said to favor Kim Jong-woon, as the more manly of the two, the country report said. Their mother, Ko Young-hee, a former dancer who became his consort, died of cancer in 2004.

Her death triggered numerous media reports predicting an imminent power struggle in the Pyongyang regime, which is described by the Western media as a “Communist dynasty.’’