Archive for the ‘Economic reform’ Category

North Korea’s largest overseas restaurant closed down

Friday, February 16th, 2018

By Benjamin Katzeff Silberstein

The largest of North Korea’s overseas restaurants has closed, and its workers have gone home, reports Daily NK. Those formerly employed in North Korea’s overseas joint ventures abroad, and as overseas labor with other companies, have been returning home in stages since sanctions passed by the UNSC last September forbade joint ventures with North Korea.

These restaurants are (were?) an interesting phenomenon. I’ve visited them in Vietnam, Cambodia, and China, and the last time I went to one was in 2013. At the time, it was packed with tourists, mostly from South Korea, and some locals. This was generally my experience with these restaurants from the first time I visited one in 2008, but of course I can’t say for sure whether that impression was representative of a general picture.

The last time I went to one was in 2016, in Beijing. On a regular Saturday night, the place was virtually empty, save for a couple of middle-aged men donning Kim Il-sung badges, drinking beer and chain smoking. Our party got our own room, complete with karaoke, even though we didn’t ask for one, simply because the place was so empty. I got a hint about what the reasons might have been earlier in the day when I called to make a reservation: since I spoke to the staff in Korean, they felt obligated to inform me that customers from South Korea were no longer welcome. This business-killing restriction was likely imposed after the mass defection to South Korea, from one of the restaurants earlier that year. For what it’s worth, this particular one – in central Beijing – seemed like a dying endeavor over a year before the sanctions, though one can’t generalize from just one data point.

Here’s Daily NK’s story:

Ahead of the Lunar New Year holiday, Daily NK obtained photos of employees of a recently-closed North Korean restaurant called Pyongyang Koryo Pavilion in the Chinese border city of Dandong returning home to North Korea.

Pyongyang Koryo Pavilion was the largest of North Korea’s overseas restaurants, and originally employed 200 people. However, the restaurant shut down in November due to intensifying international sanctions targeting North Korea for its nuclear and missile development. Its employees have continued to return to North Korea in groups.

“Management started repatriating the workers in groups following the Pyongyang Koryo Pavilion’s closure, but some of them went to work at other restaurants,” a source in China close to North Korean affairs told Daily NK on February 14. “The 30 people returning ahead of the Lunar New Year holiday were part of the contingent that had been working at other establishments following the shutdown of Pyongyang Koryo Pavilion.”

In September 2017, China’s Commerce Ministry ordered the closure of North Korean companies operating inside the country within 120 days of UN Resolution 2375, which passed on September 11, 2017. The ministry also announced that Chinese joint ventures with North Koreans and North Korean companies would be closed.

Upon the realization that the Pyongyang Koryo Pavilion would likely not be resuming operations, the North Korean authorities began to exfiltrate the workers in stages.

“They’re heading back to their hometowns, where their families live, but they don’t look very happy about it because they’re losing the opportunity to earn money abroad.

Article source (with pictures):
More North Korean overseas workers return home
Seol Song Ah
Daily NK
2018-02-16

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Advance payments in the Pyongyang housing market

Tuesday, February 6th, 2018

By Benjamin Katzeff Silberstein

Daily NK reports an interesting trend on the Pyongyang real estate market (or is it a countrywide phenomenon?) of construction companies selling apartment units before construction is finished, requiring what to me sounds like a regular deposit. First construction companies require the equivalent of $10,000 for the initial phase, and later, for interior work, at least another installment of the same amount.

I’m not sure this is an entirely new system or phenomena in the North Korean housing market, which, like virtually all spheres of the economy, has been increasingly guided by market mechanisms since the late 1990s. Nevertheless, the trend is interesting for several reasons. For example, advance payments suggest a trust in the system itself, despite a lack of transparency and formal rules. It’s unclear what would happen to customers who have made advance payments on apartments if construction doesn’t come through, but since the real estate market is still formally illegal, there is likely no judicial mechanism for people to demand their money back. It’s also unclear how widespread these practices are – obviously, most North Koreans can’t put up $10,000 for a new apartment.

Full article at Daily NK:

Real estate companies in Pyongyang are pushing ahead with construction projects in the new year after receiving permission from the North Korean authorities. These companies are reportedly securing construction funds by demanding upfront payments for spaces in the buildings.

“Owners have already been determined for half of the units in the apartment building in the Sadong area of Pyongyang, set to finish construction in the spring,” a source in the capital told Daily NK on February 1. “Typically, construction project managers announce the planned location and expected completion date, and then people who want to buy a unit are required to pay in advance in (US) dollars.”

According to the source, the advance payment system was created by individual construction project managers who lacked the private funds to begin building. They are demanding at least $10,000 USD for each advance payment, and are using these funds to begin construction.

Project managers must first gain permission to build in certain locations, and they cannot expect to raise the necessary capital through advance payments unless the location is central. This has led to intense competition between project managers to curry favor with the influential figures in charge of granting local building permits.

“Construction companies cannot earn the funds to start building unless they get a good location for the project,” the source said. “Although the new 12-floor apartment building is being built in the outskirts (of Pyongyang), they were able to secure advance payments because of the location’s convenient transport options to the city center.”

“Generally, prices for spaces in the planned buildings are set depending on the floor number and usage, such as for underground vs. upper-floor units, or for spaces intended to be used for a business,” she added. “Developers thus have to plan according to expected customer demands.”

A 1st-floor apartment may require a $10,000 advance payment, $30,000 for a mid-level unit, and $8,000 for an 11th-floor unit. Mid-level apartments are the most popular and therefore most expensive in North Korea, as they are considered a good balance between safety from burglary and ease of access by stairs during the country’s frequent power outages.

Once the building’s framework is complete, customers, who must be issued usage permits for new apartment units by the Pyongyang People’s Committee. must then pay about twice the initial payment for the interior construction of their unit to proceed.

The construction companies must also save a portion of the funds to give to the government. “For this building (in Sadong), units on the 12th-floor were deliberately withheld from sale. They are saving the entire space to give to the government upon completing construction,” said a separate source in Pyongyang, adding that this can be seen in the context of the fact that the real estate market remains illegal under North Korean law.

According to the Article 6 Section 44 of the Real Estate Administration Law (adopted by the Supreme People’s Assembly on November 11, 2009), “All revenue gained from unapproved real estate ventures are to be forfeited to the state.”

“Private businesses must give about 10% of the revenue from a construction project to the government, and they also have to give them the entire top floor,” the second source said, “but the top floor is generally not very popular anyway, the companies do not see this as a huge loss.

Article source:

Real estate companies in Pyongyang use advance payments to fund construction
Seol Song Ah
Daily NK
2018-02-06

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Wonsan-Kalma Coastal Tourist Area

Wednesday, January 31st, 2018

UPDATE 5 (2018-2-2): The web page DPRK Today conducted an interview with a North Korean official about the Kalma project.  NK News offers a good English-language article about the interview here.

UPDATE 4 (2018-2-1): The Pyongyang Times offers information on the Kalma tourist area (like construction is expected to be completed in one year):

Wonsan-Kalma area shows promise as seaside resort

The development of the Wonsan-Kalma coastal tourist zone is a priority project in the DPRK this year.

Seaside resorts are tourist destinations that are found by the coast.

The most suitable places for them are those with conditions favourable for such seaside tourist activities as swimming, sunbathing, angling, yachting, boating, motorboating, surfing and scuba diving in terms of the percentage and duration of sunshine, number of days with average temperature of 18-20℃ and with no or weak wind and the condition of seashore. Especially those with sandy beaches are so suitable for coastal tourism that many countries develop such areas into seaside resorts.

Currently, such resorts hold a significant proportion of the world-class natural tourist destinations and most of summer vacationers tour the seaside.

In the DPRK, many renowned seaside scenic attractions, including Songdowon and Lake Sijung of Kangwon Province, Majon of South Hamgyong Province and Ryongsupho of South Hwanghae Province, turned into coastal tourist centres.

The Wonsan-Kalma area in Kangwon Province is also a very promising seaside resort.

The Kalma peninsula in the southern part of the Wonsan Bay is an attached island which was formed by the wave-driven accumulation of granitic sand from the Namdae River.

The northern part of the peninsula which stands long from south to north consists in gently rolling hills and the coastline is mostly straight and smooth.

To the north lies the Hodo peninsula which stretches out from the opposite direction and in between there are Sin, Tae and other islets, serving as a natural breakwater that protects the port of Wonsan.

There is a scenic attraction called Myongsasipri which means a famous sand beach stretching for 4 kilometres in the Kalma peninsula.

A goldenrain tree rare to be found in the eastern coastal areas of the country stands at the entrance to the beach which is dotted with sweet briars. The red flowers in full bloom along the seaside surrounded by tall pines and clear blue waves of the East Sea form a harmonious whole to present a spectacular beauty.

The construction of the seaside resort in the Wonsan-Kalma area with Kalma airport will help satisfy the demands of local and foreign tourists and provide an ideal place for stopover between different tourist destinations and Wonsan-Mt Kumgang International Tourist Zone.

At present, preparations are being pushed ahead to complete as early as possible the Wonsan-Kalma project which will mark a turning point in raising the country’s tourism to the world level.

UPDATE 3 (2018-1-31): The Daily NK reports that construction on the Kalma tourist zone has started, and it looks like they are right. According to a recent article:

The North Korean authorities are mobilizing ordinary citizens and military conscripts alike in a push to accelerate construction of the “Wonsan Kalma Shore Tourist Zone” situated on the country’s east coast. Sources inside North Korea report that the authorities have conveyed their intentions to complete the project before the July 27 “Victory Day” holiday, which is referred to as National Korean War Veterans Armistice Day in South Korea.

The beach resort project, along with Kalma Airport and the Masik Pass Ski Resort, all appear to be part of a larger plan by Kim Jong Un to address economic difficulties by generating more tourism revenue. He made this clear in his 2018 New Year’s address, saying, “This year, service personnel and residents should join efforts to complete the construction of the Wonsan-Kalma coastal tourist area in the shortest period of time.”

“The authorities have mobilized 120,000 military members and 20,000 ordinary citizens for the Wonsan construction project,” a source in China close to North Korean affirms told Daily NK on January 28. “People are worried over implications of another ‘speed battle’ (intense construction mobilization) after Kim Jong Un’s order to complete the project by July 27.”

Read the rest of the article here. 

If North Korea was engaging in this sort of work, we should see evidence of it–and we can via Planet Labs. Pictured below is a plot of land on the south end of the Kalma Airport runway. On the top is the Google Earth image dated 2017-5-19. On the bottom is the Planet Labs image dated 2018-1-31:

The bottom photo clearly shows a large compound of temporary housing for construction workers. This kind of facility can be seen at all of North Korea’s large scale construction projects. The coordinates are  39.144608°, 127.503932° for those that are interested.

It is still difficult to see any significant construction taking place on the northern end of the peninsula. Planet imagery in this case is rather limited, but it also appears the construction project itself is rather recent. In the Planet image below, dated 2018-1-12, we can see just how much worker housing has been constructed in just the last two weeks.

(Note: Planet Labs created a .gif of the construction site. You can see it on Twitter here.)

If the Daily NK is correct, and this is the “Wonsan Kalma Shore Tourist Zone,” and not part of the “Wonsan-Mt. Kumgang Tourist Zone,” then this indicates that plans for the area are still changing. This will be an interesting area to watch.

Here are previous posts I have done on the Kalma Peninsula and Wonsan-Mt. Kumgang International Tourist Zone. Here is a relevant article I wrote for NK News back in 2013.

UPDATE 2 (2018-1-31): KCNA releases some propaganda posters for the Kalma project:

   

These posters  give the impression that this project as ambitious as any of the major construction projects they have done in Pyongyang (Mansudae parts 1 and 2, Unha Scientist Street, Satellite Scientist Street, Mirae Scientist Street and Ryomyong Scientist Street). I previously posted about Part 2 of the Satellite Scientists Street, but it looks that that project will take a back seat to this one.

The previously announced (2015) “Kalma Street” project appears to have stalled in 2017, and this new tourist zone is apparently unrelated. It is unclear if the Kalma Street project will be completed or if it has been scrapped.

UPDATE 1 (2018-1-25): KCNA announces more information on the Wonsan-Kalma Coastal Tourist Area:

Wonsan-Kalma Coastal Tourist Area to Be Built in DPRK

A tourist resort is to be built in the Wonsan-Kalma coastal area in Kangwon Province, the DPRK on a large scale.

The Wonsan-Kalma area is good for coastal tourism.

The Kalma Peninsula in the southern part of Wonsan bay is the connecting bar formed with granite sand.

The northern part of the peninsula ranging north and south is low hill and its coastline is straight and smooth as a whole.

It faces the Hodo Peninsula to the north and Sin, Tae and other islets are located between them which serve as seawall of Wonsan Port.

There are four-kilometer-long famous sandy beach resorts called Myongsasipri and modern Kalma Airport in the peninsula.

When the tourist area is built, it will satisfy the demand of domestic and foreign tourists and will be the most ideal place to link various tourist destinations to the Wonsan-Mt Kumgang international tourist zone.

Now, a preparatory work is brisk for completing the construction of the Wonsan-Kalma coastal tourist area, a radical turn in putting the country’s tourism on world level.

ORIGINAL POST (2016-7-15): KCNA announces new special economic zone:

Kalma Area of DPRK to Turn into Tourist Resort

Pyongyang, July 15 (KCNA) — The Kalma area, located on the central east coast of Korea, will be turned into a tourist resort.

The area boasts of four-kilometer-long beach resort, not far away from such scenic spots as Mt. Kumgang, Lake Sijung, Chongsokjong and Lagoon Samil and the Masikryong Ski Resort.

The DPRK Law on Economic Development Parks, enacted in May Juche 102 (2013), is applicable to the area. Under this law, foreign investors are allowed to conduct their business activities independently in the area.

An international friendship air festival is to take place in Wonsan City, adjacent to the Kalma area, at the end of September.

The official media hinted at this project a few days prior in a report on the Mubong Mubong Special Zone for International Tourism.

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Kim Jong-un’s 2018 new year address

Monday, January 1st, 2018

Below I have posted the economic section of Kim Jong-un’s 2018 new year speech in English and Korean:

Comrades,

동지들!

This year we will mark the 70th anniversary of the founding of the glorious Democratic People’s Republic of Korea. To mark the 70th anniversary of their state with splendour is of real significance for the great people, who have raised with dignity the status of their socialist country, the greatest patriotic legacy of the great Comrades Kim Il Sung and Kim Jong Il, to that of a strategic state recognized by the world. [Translation note: In the Korean version below, Kim Il-sung and Kim Jong-il are not mentioned by name, only by title]

올해에 우리는 영광스러운 조선민주주의인민공화국창건 일흔돐을 맞이하게 됩니다.위대한 수령님과 위대한 장군님의 최대의 애국유산인 사회주의 우리 국가를 세계가 공인하는 전략국가의 지위에 당당히 올려세운 위대한 인민이 자기 국가의 창건 일흔돐을 성대히 기념하게 되는것은 참으로 의의깊은 일입니다.

We should make constant innovations and continued progress until we win the final victory of the revolution by carrying on the tradition of heroic struggle and collective innovation which adorned the founding and course of development of Juche Korea. A revolutionary general offensive should be launched to achieve fresh victory on all fronts of building a powerful socialist country by taking the historic victory in the building of the DPRK’s nuclear forces as a springboard for fresh progress.

우리는 주체조선의 건국과 발전행로에 빛나는 영웅적투쟁과 집단적혁신의 전통을 이어 혁명의 최후승리를 이룩할 때까지 계속혁신,계속전진해나가야 합니다.공화국핵무력건설에서 이룩한 력사적승리를 새로운 발전의 도약대로 삼고 사회주의강국건설의 모든 전선에서 새로운 승리를 쟁취하기 위한 혁명적인 총공세를 벌려나가야 합니다.

“Let us launch a revolutionary general offensive to achieve fresh victory on all fronts of building a powerful socialist country!” This is the revolutionary slogan we should uphold. All officials, Party members and other working people should launch an all-people general offensive to frustrate the challenges of the hostile forces who are making last-ditch efforts and raise the overall strength of our Republic to a new stage of development as they brought about a great upsurge in socialist construction overcoming all difficulties through the great Chollima upswing after the war.

《혁명적인 총공세로 사회주의강국건설의 모든 전선에서 새로운 승리를 쟁취하자!》 이것이 우리가 들고나가야 할 혁명적구호입니다.모든 일군들과 당원들과 근로자들은 전후 천리마대고조로 난국을 뚫고 사회주의건설에서 일대 앙양을 일으킨것처럼 전인민적인 총공세를 벌려 최후발악하는 적대세력들의 도전을 짓부시고 공화국의 전반적국력을 새로운 발전단계에 올려세워야 합니다.

A breakthrough should be made in reenergizing the overall economic front this year, the third year of implementing the five-year strategy for national economic development.

국가경제발전 5개년전략수행의 세번째 해인 올해에 경제전선전반에서 활성화의 돌파구를 열어제껴야 하겠습니다.

The central task facing socialist economic construction this year is to enhance the independence and Juche character of the national economy and improve the people’s standard of living as required by the revolutionary counter-strategy put forward by the Second Plenary Meeting of the Seventh Central Committee of the Party.

올해 사회주의경제건설에서 나서는 중심과업은 당중앙위원회 제7기 제2차전원회의가 제시한 혁명적대응전략의 요구대로 인민경제의 자립성과 주체성을 강화하고 인민생활을 개선향상시키는것입니다.

We should concentrate all efforts on consolidating the independence and Juche character of the national economy.

인민경제의 자립성과 주체성을 강화하는데 총력을 집중하여야 합니다.

The electric-power industry should maintain and reinforce the self-supporting power generation bases, and direct a great deal of efforts to developing new power sources. A dynamic campaign should be conducted to drastically increase thermal power generation, and lower the loss of electric power and increase its production as much as possible by maintaining and reinforcing imperfect generating facilitates. Provinces should build power generation bases to suit their local features and put power generation at the existing medium and small-sized power stations on a normal footing to satisfy the needs of electric power for local industry by themselves. Alternated production should be organized scrupulously throughout the country, and a vigorous struggle waged against the practices of wasting electric power to make effective use of generated electric power.

전력공업부문에서는 자립적동력기지들을 정비보강하고 새로운 동력자원개발에 큰 힘을 넣어야 합니다.화력에 의한 전력생산을 결정적으로 늘이며 불비한 발전설비들을 정비보강하여 전력손실을 줄이고 최대한 증산하기 위한 투쟁을 힘있게 벌려야 합니다.도들에서 자기 지방의 특성에 맞는 전력생산기지들을 일떠세우며 이미 건설된 중소형수력발전소들에서 전력생산을 정상화하여 지방공업부문의 전력을 자체로 보장하도록 하여야 합니다.전국가적인 교차생산조직을 짜고들며 전력랑비현상과의 투쟁을 힘있게 벌려 생산된 전력을 효과적으로 리용하기 위한 된바람을 일으키도록 하여야 합니다.

The metallurgical industry should further improve the Juche-oriented iron- and steel-making technologies, increase the iron production capacity and drastically raise the quality of metallic materials in order to satisfy the needs of the national economy for iron and steel. It is necessary to ensure a preferential, planned and timely supply of electricity, concentrated iron ore, anthracite, lignite, freight wagons, locomotives and funds for the metallurgical industry. By doing so, we can fulfil next year’s iron and steel production plans and make the industry Juche-oriented without fail.

금속공업부문에서는 주체적인 제철,제강기술을 더욱 완성하고 철생산능력을 확장하며 금속재료의 질을 결정적으로 높여 인민경제의 철강재수요를 충족시켜야 합니다.금속공업부문에 필요한 전력,철정광,무연탄,갈탄,화차와 기관차,자금을 다른 부문에 앞세워 계획대로 어김없이 보장하여 다음해 철강재생산목표를 무조건 수행하며 금속공업의 주체화를 기어이 완성하도록 하여야 하겠습니다.

The chemical industry should step up the establishment of the C1 chemical industry, push the projects for catalyst production base and phosphatic fertilizer factory as scheduled, and renovate and perfect the sodium carbonate production line whose starting material is glauberite.

화학공업부문에서 탄소하나화학공업창설을 다그치고 촉매생산기지와 린비료공장건설을 계획대로 추진하며 회망초를 출발원료로 하는 탄산소다생산공정을 개건완비하여야 합니다.

The machine-building industry should modernize the Kumsong Tractor Factory, Sungri Motor Complex and other factories to develop and produce world-level machinery in our style.

기계공업부문에서는 금성뜨락또르공장과 승리자동차련합기업소를 비롯한 기계공장들을 현대화하고 세계적수준의 기계제품들을 우리 식으로 개발생산하여야 합니다.

The coal and mineral production and rail transport sectors should make concerted efforts to make the country’s self-reliant economic foundations prove their effectiveness.

나라의 자립적경제토대가 은을 낼수 있게 석탄과 광물생산,철도수송에서 련대적혁신을 일으켜야 합니다.

Notably, the rail transport sector should make the best use of the existing transport capacity by making transport organization and control more scientific and rational, and maintain discipline and order in the railways as rigid as in the army, so as to ensure an accident-free, on-schedule rail traffic.

특히 철도운수부문에서 수송조직과 지휘를 과학화,합리화하여 현존수송능력을 최대한 효과있게 리용하며 철도에 군대와 같은 강한 규률과 질서를 세워 렬차의 무사고정시운행을 보장하도록 하여야 합니다.

A turn should be brought about this year in improving the people’s standard of living.

올해에 인민생활향상에서 전환을 가져와야 합니다.

Light-industry factories need to transform their equipment and production lines into labour- and electricity-saving ones and produce and supply more diversified and quality consumer goods with domestic raw and other materials, and provinces, cities and counties should develop the local economy in a characteristic way by relying on their own raw material resources.

경공업공장들의 설비와 생산공정을 로력절약형,전기절약형으로 개조하고 국내원료와 자재로 다양하고 질좋은 소비품들을 더 많이 생산공급하며 도,시,군들에서 자체의 원료원천에 의거하여 지방경제를 특색있게 발전시켜야 합니다.

The agricultural and fishing fronts should effect an upswing. We should introduce seeds of superior strains, high-yield farming methods and high-performance farm machines on an extensive scale, do farming scientifically and technologically so as to fulfil the cereals production plan without fail, and boost the production of livestock products, fruits, greenhouse vegetables and mushrooms. We should enhance our ship building and repair capacities, launch scientific fishing campaigns, and reenergize aquatic farming.

농업과 수산전선에서 앙양을 일으켜야 하겠습니다.우량종자와 다수확농법,능률적인 농기계들을 대대적으로 받아들이고 농사를 과학기술적으로 지어 알곡생산목표를 반드시 점령하며 축산물과 과일,온실남새와 버섯생산을 늘여야 합니다.배무이와 배수리능력을 높이고 과학적인 어로전을 전개하며 양어와 양식을 활성화하여야 하겠습니다.

This year the service personnel and people should join efforts to complete the construction of the Wonsan-Kalma coastal tourist area in the shortest period of time, push ahead with major construction projects including the renovation of Samjiyon County, the construction of the Tanchon Power Station and the second-stage waterway project of South Hwanghae Province, and channel steady efforts into the construction of houses.

올해에 군민이 힘을 합쳐 원산갈마해안관광지구건설을 최단기간내에 완공하고 삼지연군꾸리기와 단천발전소건설,황해남도물길 2단계 공사를 비롯한 중요대상건설을 다그치며 살림집건설에 계속 힘을 넣어야 합니다.

Building on the success we achieved in the forest restoration campaign, we should properly protect and manage the forests that have already been created, improve the technical conditions of roads, conduct river improvement on a regular basis, and protect environment in a scientific and responsible manner.

산림복구전투성과를 더욱 확대하면서 이미 조성된 산림에 대한 보호관리를 잘하는것과 함께 도로의 기술상태를 개선하고 강하천정리를 정상화하며 환경보호사업을 과학적으로,책임적으로 하여야 합니다.

Every sector and every unit of the national economy should enlist their own technical forces and economic potential to the maximum and launch a dynamic struggle to increase production and practise economy, so as to create a greater amount of material wealth.

인민경제 모든 부문과 단위들에서 자체의 기술력량과 경제적잠재력을 총동원하고 증산절약투쟁을 힘있게 벌려 더 많은 물질적재부를 창조하여야 합니다.

A shortcut to developing the self-sufficient economy is to give precedence to science and technology and make innovations in economic planning and guidance.

자립경제발전의 지름길은 과학기술을 앞세우고 경제작전과 지휘를 혁신하는데 있습니다.

The scientific research sector should solve on a preferential basis the scientific and technological problems arising in establishing Juche-oriented production lines of our own style, ensuring domestic production of raw and other materials and equipment, and perfecting the structure of the self-supporting economy. Every sector and every unit of the national economy should make a contribution to achieving production growth by intensifying the dissemination of science and technology and waging a brisk technological innovation drive.

과학연구부문에서는 우리 식의 주체적인 생산공정들을 확립하고 원료와 자재,설비를 국산화하며 자립적경제구조를 완비하는데서 제기되는 과학기술적문제들을 우선적으로 풀어나가야 합니다.인민경제 모든 부문과 단위들에서 과학기술보급사업을 강화하며 기술혁신운동을 활발히 벌려 생산장성에 이바지하여야 하겠습니다.

The Cabinet and other economic guidance organs should work out a realistic operational plan to carry out the national economic plan for this year and push forward the work for its implementation responsibly and persistently. Positive measures should be taken by the state to ensure that the socialist system of responsible business operation proves its worth in factories, enterprises and cooperative organizations.

내각을 비롯한 경제지도기관들은 올해 인민경제계획을 수행하기 위한 작전안을 현실성있게 세우며 그 집행을 위한 사업을 책임적으로 완강하게 내밀어야 합니다.국가적으로 사회주의기업책임관리제가 공장,기업소,협동단체들에서 실지 은을 낼수 있도록 적극적인 대책을 세워야 합니다.

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Kangnam Economic Development Park Announced

Saturday, December 23rd, 2017

I am on Christmas holiday, but took a quick minute to write this blog post about North Korea’s newest Special Economic Zone.

According to KCNA (2017-12-23):

SPA Presidium Decides to Establish Kangnam Economic Development Park

Pyongyang, December 23 (KCNA) — The Presidium of the Supreme People’s Assembly of the Democratic People’s Republic of Korea decided to establish Kangnam Economic Development Park in several parts of Koup-ri, Kangnam County of Pyongyang.

The DPRK is to exercise sovereignty over Kangnam Economic Development Park.

A decree on the decision of the SPA Presidium was promulgated on Thursday.

North Korea announced fourteen new SEZs in 2013, seven new SEZs in 2014, and 3 new SEZs in 2015. None were announced in 2016. This is the first SEZ to be announced in 2017, and it was announced just a day after UNSC voted to tighten sanctions on the country.

Although the article does not give many specifics, I believe this project aspires to be a manufacturing/ processing/ shipping hub built on the Taedong River. But we will learn more later, no doubt.

See Google Earth image of the area below:

Koup-ri has over 4km of waterfront property along the Taedong River and a partially completed port at  38.876443°, 125.572246°.

It also has a new fish farm constructed sometime after September 2015:

North Korea and SEZs:

My impression is that to date North Korea had scaled back expectations on their many SEZs to focus on Rason Economic and Trade Zone and Wonsan-Mt. Kumgang International Tourist Park (neither of which are expected to see much growth owing to international sanctions measures, North Korea’s corrupt business environment, poor infrastructure, and poor human human rights record). A few other SEZs have seen some construction progress or are occasionally mentioned in the official media, but have seen little progress (nothing to make up for losses at the Kaesong Industrial Zone). These include the Hwanggumphyong and Wihwado Economic Zone (Management Commitee Building constructed), the Sinuiju International Economic Park (Chinese Tourist Zone constructed), the Kangryong International Model Green Park (advertised in official media), the Unjong Hi-Tech Development Park (advertised in official media), and the Mubong Special Park for International Tourism (new border crossing and limited construction).

Seeing this announcement was a surprise to me.

More later. Happy holidays.

 

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On the Nov 21st US Treasury Sanctions against North Korea

Tuesday, November 21st, 2017

By: Benjamin Katzeff Silberstein

Today, the Treasury Department’s Office of Foreign Asset Control (OFAC) announced new sanctions against a number of Chinese and North Korean entities. The sanctions “target third-country persons with long-standing commercial ties to North Korea, as well as the transportation networks that facilitate North Korea’s revenue generation and operations,” said a press statement.

Overall, these additional measures seem designed to clamp down on avenues for North Korea to circumvent current UN sanctions. Among those sanctioned are three Chinese companies that have traded with North Korea in goods that are covered by UN sanctions from this and last year:

OFAC designated Dandong Kehua Economy & Trade Co., Ltd., Dandong Xianghe Trading Co., Ltd., and Dandong Hongda Trade Co. Ltd. pursuant to E.O. 13810.  Between January 1, 2013 and August 31, 2017, these three companies cumulatively exported approximately $650 million worth of goods to North Korea and cumulatively imported more than $100 million worth of goods from North Korea.  These goods have included notebook computers, anthracite coal, iron, iron ore, lead ore, zinc ore, silver ore, lead, and ferrous products.

Also targeted are companies that have traded in goods that are either covered by sanctions, or (it seems) fall under the dual-use category of goods that can be used in nuclear weapons/missile development:

OFAC designated Sun Sidong and his company, Dandong Dongyuan Industrial Co., Ltd. (Dongyuan), pursuant to E.O. 13810.  Sun and Dongyuan were responsible for exporting over $28 million worth of goods to North Korea over several years, including motor vehicles, electrical machinery, radio navigational items, aluminum, iron, pipes, and items associated with nuclear reactors.  Dongyuan has also been associated with front companies for weapons of mass destruction-related North Korean organizations.

The sanctions also target vessels that are suspected of having transferred oil to North Korea via other ships (ship-to-ship transfer) in violation of sanctions (this part contains some pretty impressive pictures):

All in all, these new sanctions appear to try to fill the gaps left by current sanctions. Surely, they will cause added trouble for North Korea. But the problem, to begin with, is that North Korea has historically been good at adapting to new sanction’s frameworks and finding new methods to circumvent them. Only time will tell whether these skills of North Korea still hold up in the current sanctions environment.

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Sanctions, and the weakness of North Korean food security

Wednesday, October 18th, 2017

By Benjamin Katzeff Silberstein

While some Pyongyangites started off the week by checking out plasma-screen TV’s at a consumer goods fair, Daily NK published an ominous story that reminds the reader of the dark 1990s. Rumors are now circulating of a starvation death in Hyesan:

An increasing number of North Koreans are suffering from the effects of food insecurity and malnutrition, according to inside sources who spoke with Daily NK. A rumor is circulating in Ryanggang and North Hamgyong provinces that the body of someone who starved to death has been seen near the train station in Hyesan City.
“More than a handful of people have come forward and said that they saw the body of someone who starved to death near the Hyesan train station. The food situation was relatively good for the past few years, so it’s such a shame that we’ve returned to dire circumstances so suddenly,” a source in Ryanggang Province told Daily NK.
A source from North Hamgyong Province similarly reported that “a rumor is swirling around the market that a starved body was discovered. There are so many people talking about it that it’s being viewed as a fact.”
The source added that the credibility of the rumors is high, saying, “There was a severe drought at the beginning of the year in North and South Hamgyong provinces and Ryanggang Province. The corn and rice harvest did not meet its targets, amounting to approximately half the volume produced last year.”
Full article:
Food insecurity riles North Korea’s poorest provinces
Kim Chung Yeol
Daily NK
2017-10-18

As crude as it may sound, one cannot draw sharp conclusions from one unconfirmed death by starvation in a North Korean city. But the fact that people think conditions bad enough to believe such rumors to be true says something about the instability of food supply in North Korea right now.

For several years, the supply of food in North Korea has looked remarkably stabile compared to the 1990s. A combination of more freedom for the markets to operate, more leeway for farmers in how they operate, produce and sell their goods (and procure inputs such as fertilizer), larger and more consistent imports from China – these are all factors that have led to better food security overall in North Korea. Market prices have sent a clear message on this.

But perhaps “stabile” was the wrong way to describe food supply. “Consistent” may have been a better way of looking at it. A system is hardly stabile when a combination of relatively usual events for the country – bad weather and changing geopolitical conditions – can shake its core.

As usual with these dynamics, it would be wrong to attribute the changes to one single factor. That is, we cannot say that sanctions –> starvation in some automatic fashion. Rather, several trends have coincided and caused the dire situation:

First, North Korea has experienced a very troubling drought early on in the farming season. As Andy Dinville shows at 38North, using satellite data, weather conditions have been particularly bad this year, significantly harming this year’s harvest.

In any normal year since the early 2000s, when market mechanisms seriously became a routinized part of North Korea’s agricultural economic system, it seems that the effects of a drought could have been offset at least in part by increased imports from China, or other sorts of shifts.

Which brings us to a second factor, namely sanctions and the current tensions, and China’s enforcement of economic pressure on North Korea. Not only does this mean that overall trading conditions are difficult, and that Chinese sellers are wary of trusting that they’ll actually receive payments from North Korean buyers. It also means that goods such as fertilizer for farming are more difficult to acquire. Like the Daily NK article notes:

“Last year, North and South Hamgyong and Ryanggang provinces endured a flood of epic proportions and this year there was a drought, so the agricultural situation in both regions is poor. Additionally, because of the sanctions, it has been harder to procure different kinds of fertilizer necessary for farming, so this has exacerbated the damage.” he continued.
Third, the geopolitical instability naturally makes for a nervous market overall. The price of corn, for example, is up by 47 percent compared to last year. It is important to note that this sort of change in market prices has not been observable during the many instances in the past when international aid organizations have warned of food shortages in North Korea. Hoarding is a natural behavior on any market when actors believe a shortage is looming in the near future. It is a stark sign of the shift in China’s behavior from previous rounds of sanctions that North Korean markets now seem to confirm that China is putting real and heavy economic pressure on the country. The loopholes may still be there but they are much more narrow than usual.
As winter approaches, things aren’t likely to get any easier. Fuel shortages will make heating more difficult and expensive than usual for average North Koreans, particularly as the state soaks up oil and fuel from the market, raising prices further. Things may well get much worse before they get any better.
UPDATE 2017-10-24: 
A reader with extensive experience working on North Korean food security emailed a somewhat skeptical note regarding the food production decrease estimates I cite above. The main point is: even if food production goes down, it may not spell disaster as the past few years harvests have been exceptionally good in comparative perspective. I quote an excerpt here with the reader’s permission:
It really doesn’t look like there is much difference between positive and negative trends, particularly if you just look at the end of August. And his [Dinville] data compares the 2017 harvest with the 2016 harvest, which was probably the best harvest in 30 years. So even if 2017 is a bit lower than 2016, it will still be a relatively stable year and much, much better than 2001. There were no major disasters in the country, as well, aside from the drought and the effects of the flooding from last fall in a few counties in the northeast. My takeaway from his [Dinville’s] data is that there were a few fields (the red “strongly negative” portion) that couldn’t be irrigated sufficiently but we shouldn’t extrapolate to the entire country harvest. Kitchen gardens have also expanded in the country and can help to mitigate a poor harvest, at least for some families.
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Gas prices volatile in Pyongyang as tensions run high

Monday, September 25th, 2017

By Benjamin Katzeff Silberstein

DailyNK reports:

Following the country’s sixth nuclear test on September 3, fuel prices in North Korea have been subject to unusual volatility. The price of fuel soared in April and rose again slightly in September. But it has been reported that gasoline coupons have not been influenced by the price fluctuations, and are being actively traded on the North Korean black markets.
“As fuel prices have been fluctuating, gasoline coupons have become popular items in Pyongyang’s black markets. The merchants who previously bought dozens of coupons have started offering them for sale as the prices began to rise,” a source familiar with North Korean affairs in China told Daily NK on September 20.
And opportunities are ripe for arbitrage:
According to the source, gasoline can be purchased for the same price at the time that the coupon was issued. For example, if a 15 kg gasoline coupon was previously purchased for 30 USD, the same amount of fuel can be obtained even if the price rises suddenly to 35 USD. In this way, the dealers can make a profit by selling the coupon for 32 USD.
“The coupons are especially popular when the gasoline prices are unstable. The merchants are selling the coupons on the black markets as the fuel prices rise,” the source said.
Originally, gasoline coupons were issued from North Korea’s central government organizations and were sold to officials or foreign embassy staff in Pyongyang. But now the foreign currency earning companies are issuing the coupons themselves. The authorities have actively encouraged new strategies to earn foreign currency.
The black market is ever the present factor:
These foreign currency earning companies are said to be profiting from the fluctuating fuel prices, regardless of efforts to limit the sales of coupons.
“If the authorities move to restrict the sales of coupons, the companies will just sell the coupons on the black market. Despite strong sanctions being imposed on fuel, the major companies that are still holding a large amount of fuel become more powerful in times of fuel crisis,” a source in South Pyongan Province explained.
“Even the Pyongyang cadres have no choice but to purchase coupons on the black market.”
Full article here:
Volatile gasoline prices in Pyongyang
Seol Song Ah
Daily NK
2017-09-25
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The impact of sanctions (2017) on the North Korean economy

Thursday, September 14th, 2017

Benjamin Katzeff Silberstein

I’ll try to gather some of the many stories on the impact of sanctions on the North Korean economy in this post, starting with the one below from Reuters (with my annotation in brackets, [BKS]):

DANDONG, China (Reuters) – The United Nations may have failed to slow North Korea’s weapons programs, but the country’s economy is already showing signs it is feeling the squeeze from the ongoing clampdown on trade, including a curb on fuel sales by China.

The latest sanctions agreed on Monday by the UN Security Council ban the export of textiles from North Korea, one of its few substantial foreign currency earners. They also capped imports of oil and refined products, without imposing the full ban the United States had sought.

Chinese traders along the border with North Korea and some regular visitors to the isolated country said scarcer and costlier fuel, as well as earlier UN sanctions banning the export of commodities such as seafood and coal, are now taking a toll.

“Our factory in North Korea is about to go bankrupt,” said an ethnically-Korean Chinese businessman in Dandong who sells cars refurbished at a factory in North Korea. He declined to be identified due to the sensitivity of the situation.

[My emphasis: Sanctions may target the regime first and foremost, but civilians certainly do not go untouched by them./BKS]

“If they can’t pay us, we’re not going to give them goods for free,” he said, referring to his North Korean customers.

A trader at another auto-related businesses in Dandong said cross-border trade had been hurt over the past few years, which he attributed to sanctions and less access to petrol. Several Chinese traders told Reuters the sanctions had stymied North Korean businesses’ ability to raise hard currency to trade.

“Last month sales were really bad, I only sold a couple of vehicles,” said the Chinese trader who sells new trucks, vans and minibuses to North Korea. “In August last year, I sold tens of vehicles and I thought that was bad.”

On top of the sanctions, some traders said Chinese officials have stepped up efforts to curb smuggling across the border, a key source of fuel in the northern parts of North Korea.

[Question is: for how long will these efforts last? /BKS]

And Chinese bank branches in the northeast have curtailed doing business with North Koreans, according to branch staff [BKS emphasis].

FUEL PRICES SURGE

Still, North Korea has made strides in increasing its economic independence and not all traders or observers agreed the international pressure was having a major economic impact.

Many residents, long accustomed to restrictions and shortages, were most concerned about the risk of already tight fuel supplies being cut further, said Kang Mi-jin, a North Korean defector in Seoul who reports for the Daily NK website.

“If the U.S. were to say they plan to bomb Pyongyang, North Koreans wouldn’t care less. But if China says they are considering slashing oil exports to North Korea because of missile or nuclear tests, North Koreans would absolutely freak out,” she said.

[BKS emphasis.]

Reuters reported in late June that state-run China National Petroleum Corp (CNPC) had suspended sales of gasoline and fuel to North Korea over concerns it would not get paid, and Chinese customs data showed that gasoline exports to the North had dropped 97 percent from a year earlier.

Petrol and diesel prices in North Korea surged after the cut and have almost doubled since late last year. In early September, petrol cost an average of $1.73/kg, compared with 97 cents last December, according to data from the defector-run Daily NK.

“The cost of living has gone up, the price of petrol has risen and there are fewer cars on the streets,” a foreign resident of the North Korean capital told Reuters. The only thing that had become cheaper was coal, he said, after China banned North Korean coal imports earlier this year.

Some of the scarcity of oil products and higher prices may have been caused by hoarding in anticipation of a clampdown on supply.

[Hoarding does seem like a likely culprit judging from the price trend from late spring this year. Basically, none of the current measures are ones that North Korea likely didn’t expect. /BKS]

North Korea canceled an air show scheduled for this month in the coastal city of Wonsan, citing “current geopolitical circumstances”. Several Chinese traders said they believed it was because the military is saving aviation fuel.

The new UN resolution imposes a ban on condensates and natural gas liquids, a cap of 2 million barrels a year on refined petroleum products, and a cap on crude oil exports to North Korea at current levels.

OIL NOT BOMBS

North Korea uses far less crude than during its industrial heyday in the 1970s and 1980s, according to the U.S. Energy Information Administration. After cut-price supplies from China and the Soviet Union ended following the Cold War, consumption dropped from 76,000 barrels per day in 1991 to an estimated 15,000 last year, according to the EIA.

[Oil consumption is already relatively low — key point. /BKS]

The use of small-scale solar has become widespread in the North, with many apartment balconies dotted with panels providing power for cooking and lighting.

China has not disclosed crude exports to North Korea for several years but industry sources say it supplies about 520,000 tonnes of crude a year to North Korea through an aging pipeline.

The pipeline already operates at the minimum level for which the waxy crude from China’s Daqing oil fields can flow without clogging, according to a senior oil industry source.

Chun Yung-woo, a former South Korean envoy on the North Korean nuclear issue, said the North could endure for a year or two without oil imports.

North Koreans are so used to living in harsh economic conditions that they would just get by for at least one year even if the oil ban is adopted, rationing the existing stockpile among top elites at a minimum level and replacing cars, tractors, equipment with cow wagons, human labor etc,” he said.

“They would also manage to produce oil from whatever resources are available, whether it be coal, trees or plants.”

Full article:

As North Korea girds for latest sanctions, economy already feels the squeeze
Sue-Lin Wong
Reuters
2017-09-13

This last point is extremely important: the weakness of the North Korean economy is also its strength. It is still highly underdeveloped and also resilient because so much of it functions on ad-hoc, creative solutions. That’s not to say that current sanctions (if fully enforced — a big “if”) may come to hurt the economy and society if pressure is continued over a longer stretch of time, but they’re unlikely to be completely crippling right away.

(UPDATE 2017-09-26): Added below is some Daily NK coverage from last week on consequences inside North Korea and for North Koreans of the current economic pressure. On September 13th, they reported that large numbers of North Korean workers returning home from China had been spotted at the Dandong railway station:

Daily NK has received photos of North Korean workers waiting to board trains home at Dandong’s railway station (Liaoning Province) on the morning of September 4. They were reportedly working at a cold storage facility in China but having failed to have their contracts extended, have had no choice but to return home.

“Every day, groups of North Korean workers are returning to their country via Dandong railway station due to the sanctions. The Chinese factory owners used to prefer North Korean workers because of the cheaper wages, but now they are employing Chinese workers even though their wages are higher,” a source familiar with North Korean affairs in China told Daily NK.

North Korean trading companies were previously using a system to dispatch workers to overseas factories for three to five year intervals, with an extension of the contracts or the signing of new ones upon expiration of the original contract. Officially, the companies are required to recall workers whose contracts have ended and dispatch new workers, but many workers have been extending their stays in exchange for bribes given to the company managers.

The Chinese factories benefit from a cheap labor force, so the extensions were easily accepted in the past.

However, these factories have recently ceased extending labor contracts and issuing new ones with North Korean trading companies following the adoption of new UNSC sanctions.

Daily NK previously reported that a large number of Chinese factories announced that they will no longer extend labor contracts for North Korean workers due to the sanctions.

As a result, the North Korean authorities are keen to find alternative routes to earn foreign currency and have instructed some workers to look for other ways to earn foreign currency rather than return home after their period of dispatch.

Daily NK also reported that at least some North Korean workers in Dandong (Liaoning Province) have managed to find work at nearby restaurants and hotels.

North Korean workers are often repatriated after an extended period of overseas dispatch, as the regime considers them more likely to learn about the external world and attempt defection. But as the regime has become desperate in its attempts to earn foreign currency, it has started encouraging these workers to extend their stays.

Full article:
Dandong railway station packed with North Korean workers returning home
Kim Ga Young
Daily NK
2017-09-13

Gas prices in North Korea have been skyrocketing for several months, and the rate of the increase has gone up during the current crisis, Daily NK reports:

At the beginning of this month, gasoline prices in North Korea’s capital city of Pyongyang began to sharply rise. Now, oil prices in other regions of the country have started climbing as well. This news was ascertained and delivered to Daily NK on September 7 by inside informants on the ground in North Korea.
After the UN Security Council adopted another round of international sanctions against North Korea (Resolution 2371) on August 5, there were no major price fluctuations. However, oil prices did start to rise in certain regions after the North conducted its sixth nuclear test earlier this month.
According to the inside sources, one kilogram of gasoline rose from KPW 18,000 in Pyongyang at the beginning of September to KPW 23,000 on September 7th. Diesel prices also exceeded the KPW 12,000 mark.
Up until the fourth week of August, diesel was selling for KPW 12,800 per kilogram in Pyongyang. The cost of diesel actually fell in August. At the beginning of the month, it sold for about KPW 15,100.  But then it started to climb again towards the end of the month, jumping to KPW 14,100 at the end of the month, and then surpassing KPW 20,000 within a week after that.
Asked about these quickly elevating prices during a phone conversation with Daily NK  a source in Pyongyang said, “Gasoline prices started to rise at the end of August to KPW 18,000, and then jumped up to KPW 20,000 at the beginning of September. As a result of this increase, motorbikes disappeared from the streets of Pyongyang. The presence of taxis and cars is down by at least half. The streets are totally empty.”
“Some autobike drivers are concerned because the gas price jump will make it harder for them to make a living transporting people and goods,” the source added. “The possibility is large that related industries will also be hurt by the price increase.”
There are signs that the gasoline price increase is also affecting areas far from the capital city, such as Hyesan City, Ryanggang Province. A source from that region said, “The cost of gasoline in Hyesan increased to KPW 21,600 per kilogram.” As recently as the third week of August, the price was at a mere KPW 12,050. Towards the end of the month, it climbed to KPW 14,400, and then kept climbing in September.
The source added, “Gas prices are also rising in rural areas of the country. Some areas feature gas prices approaching the price in Hyesan, and others have surpassed that. Merchants are baffled because the price dipped and then rose suddenly.”
Full article:
Gas prices in North Korea jump on rumors of possible embargo
Kang Mi Jin and Kim Ga Young
Daily NK
2017-09-15

(UPDATE 2017-09-18): Anna Fifield reports in the Washington Post on the textile exports ban and its impact on North Korea’s female population in particular:

There are few areas in the North Korean economy, outside its nuclear weapons program, that could be called booming. But the garment industry has been one of them.

Over the past few years, North Korea has been sending increasing numbers of seamstresses to China to sew clothes for international buyers, and it also has been encouraging the expansion of the garment industry at home.

There are factories around the country producing suits, dresses and children’s clothes — almost all of which are labeled “Made in China.”

That should all theoretically come to an end now, after the U.N. Security Council unanimously decided last week to prohibit North Korea from exporting labor and textiles, adding to existing sanctions on coal, iron ore and seafood.

“Today’s resolution bans all textile exports,” Nikki Haley, the United States’ ambassador to the United Nations, said Monday when the resolution passed. “That’s an almost $800 million hit to its revenue.”

North Korea exported about $725 million worth of clothing last year, according to South Korea’s trade-promotion agency, making it a significant source of income for the cash-strapped country.

Adding textiles to the sanctions list means that more than 90 percent of North Korea’s publicly reported exports last year are now banned, Haley said. Coal, iron ore and seafood exports were prohibited in a previous resolution.

While diplomats have been describing the ban as being on “textiles,” economists say it should more accurately be called a “garment” ban. North Korea does not export bolts of fabric but instead produces labor-intensive articles of clothing.

“When you make simple clothes like T-shirts, the machinery is important. The labor is not so important. So it makes no sense to do things like this in North Korea,” said Paul Tjia, a Dutch consultant who helps businesses operate in North Korea, especially in the garment industry.

“But for garments that require a lot of manual work, like bras or winter sports clothes, it makes a lot of sense to make those in North Korea, because the price-to-quality ratio is very attractive,” said Tjia, who most recently went to Pyongyang in May.

[…]

Although China supported the new U.N. resolution, its implementation of previous sanctions has been spotty at best, analysts say.

But if Beijing is serious about stopping North Korea’s exports of apparel and workers to sew garments in Chinese factories, it would have a significant impact on the North’s economy, said Marcus Noland of the Peterson Institute for International Economics.

“The reason that this is important is not only because apparel exports are a significant number, but because it’s the one non-resource area that’s really growing,” Noland said, differentiating apparel exports from mineral exports such as coal and iron ore. “So it’s not just the static number that’s important. It’s the fact that this sector was emerging as an area of comparative advantage.”

[…]

Previously, governments had stressed that the sanctions were targeting the regime and were aimed at cutting off its access to the money or equipment it needed for its nuclear weapons program.

This effort to shut down North Korea’s garment industry is one that will have wide-reaching ramifications across North Korean society.

“Assuming that the ban is enforced, it will have a huge impact,” said Abrahamian, who visited North Korean garment factories several times while working for Choson Exchange, an NGO focused on business training for North Koreans.

“Tens of thousands, possibly even hundreds of thousands, of North Koreans are employed in this industry, and 98 percent of them are women. That’s the demographic that’s clearly going to suffer as a result of this,” he said.

Full article:
Ban on North Korean clothing exports will hurt women the most, experts say
Anna Fifield
Washington Post
2017-09-17

A few days after the sanctions were adopted that limit oil exports to North Korea, Daily NK interviewed a North Korean merchant working in China, who said he was basically out of work:

Mr. A: In broad strokes, I’d say at least 80% of us North Korean merchants in Dandong were stomping our feet and complaining that we have no work now as soon as the new sanctions were released. Joint ventures with Chinese firms are blocked, bank accounts are blocked, and use of North Korean laborers is limited. These were all important sources of money for us. There is no work left for us to do.
DNK: And the work that you were doing has effectively gone down the drain? 
Mr. A: Yes. Recently, some of the projects that we have been proposing to the Chinese side have been rejected.
DNK: This happened to you personally?
Mr. A: I have mostly earned money by acting as an intermediary connecting North Korean and Chinese merchants. I charged a commission for playing this role. But if demand decreases for this service, there’s nothing I can do. I also used to take the profits I earned to purchase things that North Koreans need, such as materials, but now that has also become quite difficult to do.
The fall harvest is approaching in North Korea, which means that threshers and other agro materials are needed, but because of these sanctions, the work has dried up and I can’t buy them. I think this will have an effect on the size of the fall harvest.
Full article:
Reacting to sanctions, N. Korean merchant in China: ‘We have no work’
Kim Chung Yeol
Daily NK
2017-09-18

Bloomberg wrote last week (2017-09-15) on the smuggling of fishery products in the wake of the sanctions on these goods:

In the fishing grounds where the Yalu River opens up to the Yellow Sea, Chinese and North Korean trawlers intermingle as they search for crabs, conch and yellow clams.

Drifting among them are Chinese boats called “mother ships” that act as floating middlemen, offering dollars, renminbi and even goods like cigarettes for the latest catch, according to traders who have been aboard the vessels. One of them, who called himself Mr. Du, said the seafood is then taken ashore to China and sold in wholesale markets, where it all gets mixed together.

The practice is just one form of smuggling along China’s 1,350-kilometer (840-mile) border with North Korea, roughly the distance from Paris to Rome. Locals use boats, cars, trucks and several rail lines to carry everything from diesel fuel to silkworms to cell phones back and forth across the Yalu.

[…]

For China, implementing sanctions is a tricky balance. It wants North Korea to stop doing anything that leads the U.S. to bolster regional defenses that could also be used against China. At the same time, authorities have long feared that a collapse of the regime in Pyongyang could destabilize China’s northeastern region and bring U.S. troops to the banks of the Yalu.

[…]

hile the latest penalties will take effect from Oct. 1, a ban on North Korean seafood passed a month ago — taking away roughly $300 million in revenue each year — came fully into force only on Sept. 5. Interviews along the border last week with dozens of traders, wholesalers, smugglers, former local officials and foreign diplomats showed that fresh North Korean seafood was still available even as China visibly stepped up enforcement.

China’s border with North Korea stretches from the industrial town of Dandong north to the town of Hunchun, near where the countries converge with Russia. Along the route, police and military have increased patrols and set up checkpoints to inspect vehicles.

Foreign affairs offices for the Dandong and Hunchun city governments didn’t respond to faxes seeking comment on efforts to stop smuggling. Foreign Ministry spokeswoman Hua Chunying told reporters in Beijing on Friday that China was opposed to North Korean violations of sanctions and would continue to strictly implement UN resolutions.

In Hunchun, dozens of seafood wholesalers had closed after the earlier sanctions took effect. Chinese authorities seized shipments of North Korean squid at the border, according to Shi Haiyan, a shopkeeper at Quanhe Port, which sits on a river linked with the Sea of Japan.

“The sanctions are strict now — seafood can’t come through at all,” the 34-year-old said last week.

Even so, restaurants in Hunchun were still selling North Korean crabs and conch. The goods are harder to find but still available, according to a shop owner who asked to be identified only by his family name, Lyu.

The situation was similar in Dandong, the biggest Chinese city along the border and the center of the country’s trade with Kim’s regime. Dandong is home to a pipeline that regularly supplies oil to North Korea — a crucial supply source that was exempted from the new sanctions.

The city of 2.4 million people has several bridges that cross the Yalu, one of which is inoperable because North Korea hasn’t built a road linking to it. Another one bombed out during the Korean War attracted Chinese tourists singing Communist songs about defeating America.

Hundreds of cars and trucks traverse the main Friendship Bridge each day, including many North Korean drivers looking to fill up with petrol. Getting across has become harder after the latest round of sanctions came into effect, according to Wang Lisheng, 64, a former county official from nearby Hekou village who used to trade metals with North Korea.

At Dong Sheng, Dandong’s main seafood market, four traders said last week they could still source the city’s signature yellow clams from North Korea even though supplies had dropped. Ha Wei, 38, said the price of dried clams had risen 20 percent to 30 yuan ($4.6) per half kilogram (1.1 pound) since the sanctions took effect.

Still Demand

About 40 kilometers away at the Yellow Sea Seafood Products Market, a larger complex where hundreds of workers sift through freshly unloaded seafood that is then shipped throughout China, multiple traders told Bloomberg they also were still able to procure goods from North Korea.

“We still have North Korean goods but much less in the last week after sanctions,” said Xu E, 44, a conch trader.

Mr. Du, who described how smugglers bring North Korean seafood into China, has been running goods across the China-North Korea border for the past 20 years. He’s been detained in North Korea several times, including once when he was fed only carrots for three days before being released.

In the 1990s, he said, border smugglers regularly dealt everything from coal to diesel to North Korean brides. He avoided trading guns, drugs or people — things that could earn him a prison sentence instead of a fine. Despite the risk of violating sanctions, he said, the easy money will continue to attract smugglers on the border.

“As long as there’s demand, smugglers will keep coming,” Du said. “No matter how hard Beijing tries.”

Full article:
Smuggled North Korea Clams Show China’s Struggle to Stop Kim
Bloomberg News
2017-09-15

 

(UPDATE 2017-09-19):

DailyNK has published several stories in the past few days on the dire impact that sanctions and tensions are having on the economy. News of sanctions implementation by China, it seems, are impacting North Korean market prices in dire ways:

This upsurge in prices began to occur before the United Nations unanimously passed its latest round of sanctions. Security Council Resolution 2375 – which passed on September 11 – contains some of the strictest provisions yet, including a ban on importing North Korean textiles and a restriction of exports to North Korea to just 30% of current levels. However, since the cost of goods increased prior to the UN’s adoption of 2375, analysts are wondering what lies behind the jump.
According to inside sources, the cost of one kilogram of rice was about KPW 5,800 at the end of last month in Pyongyang, South Pyongan Province Sinuiju City, and Ryanggang Province Hyesan City. On September 5th, the prices passed the KPW 6,000 mark and have continued to slowly rise. After the North’s nuclear test, gasoline prices rose sharply around the country. Rice and other grains followed suit in due course.
Insiders located in the border regions near China – which have long served as hubs of trade and smuggling – are also sensing the climbing prices. A source from Ryanggang Province explained to Daily NK on September 11, “When we heard about economic sanctions in the past, there were merely slight increases in the cost of rice, but now we are seeing a different kind of effect.”
She continued, “Even though we are currently at the height of the corn harvest season, corn is nonetheless selling for KPW 2,700 per kilogram, [it sold for just KPW 1,900 per kg at the end of August]. Merchants haven’t been overly concerned until now, but now that we see corn prices increasing during the harvest season, it seems clear that the economic situation will continue to deteriorate.”
Witnessing the cost of diesel and gasoline spike upwards, some merchants have predicted that this will cause the price of other products to raise as well, and have therefore responded by reducing the number of products available for sale. By doing so, they hope to be able to sell at a higher price later. This reduced supply, in turn, has itself pushed prices up.
Also, as reports and rumors from the outside world penetrate further into North Korea, more and more people are coming to realize that North Korea’s closest friends, especially China, are meaningfully participating in the sanctions. This information also helps to push prices up.
A poor yield of corn this year is also playing a role. Severe droughts in the spring have hurt bottom line harvests of grains such as corn.
North Korean traders are doing their utmost to maintain contact with the outside world so they can ascertain information about how the international situation will affect their livelihood. The source explained, “Residents who trade with Chinese merchants are trembling with fear because they are worried that the goods they deal in will become restricted or the prices will rise.”
The residents are especially concerned because prices are rising for both food products and other daily necessities.
In a telephone call with Daily NK on September 10, a source from Kangwon Province said, “Spring water was selling for KPW 500-600, but it’s risen by about KPW 500. At this time of year, a portion of tofu on the expensive end would sell for KPW 1,100, but now it’s going for KPW 1,300.”
It is also possible that the gasoline price rise is partially due to an effort by the authorities to restrict supply in order to ration. Kim Jong Un, sensing an impending reduction in trade and gasoline supply, might have begun to store up food and oil in military and private warehouses–behavior that would certainly block up market-based distribution networks.
Full article:

What explains the recent rise in the cost of goods in North Korea?
Kang Mi Jin
Daily NK
2017-09-19

 

Daily NK continues to cover the volatile gasoline prices in North Korea, reporting some consequences for the market for gas coupons:

“As fuel prices have been fluctuating, gasoline coupons have become popular items in Pyongyang’s black markets. The merchants who previously bought dozens of coupons have started offering them for sale as the prices began to rise,” a source familiar with North Korean affairs in China told Daily NK on September 20.
According to the source, gasoline can be purchased for the same price at the time that the coupon was issued. For example, if a 15 kg gasoline coupon was previously purchased for 30 USD, the same amount of fuel can be obtained even if the price rises suddenly to 35 USD. In this way, the dealers can make a profit by selling the coupon for 32 USD.
“The coupons are especially popular when the gasoline prices are unstable. The merchants are selling the coupons on the black markets as the fuel prices rise,” the source said.
Originally, gasoline coupons were issued from North Korea’s central government organizations and were sold to officials or foreign embassy staff in Pyongyang. But now the foreign currency earning companies are issuing the coupons themselves. The authorities have actively encouraged new strategies to earn foreign currency.
These foreign currency earning companies are said to be profiting from the fluctuating fuel prices, regardless of efforts to limit the sales of coupons.
“If the authorities move to restrict the sales of coupons, the companies will just sell the coupons on the black market. Despite strong sanctions being imposed on fuel, the major companies that are still holding a large amount of fuel become more powerful in times of fuel crisis,” a source in South Pyongan Province explained.
“Even the Pyongyang cadres have no choice but to purchase coupons on the black market.”
For these reasons, she said, most of the gasoline coupons are often valued at their equivalent in USD.
“Recently, people have been able to use the gasoline coupons for their USD value at restaurants and stores. They can even exchange the coupons for money. It has become a common practice to provide gasoline coupons to officials in Pyongyang as a bribe,” she concluded.
Full article:
Volatile gasoline prices in Pyongyang
Seol Song Ah
Daily NK
2017-09-25
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Russian-North Korea projects foundering because of missile tests: minister

Tuesday, August 29th, 2017

According to Reuters:

Commercial ventures planned between Russia and North Korea three years ago are not being implemented because of Pyongyang’s missile testing program, the Minister for the Development of the Russian Far East, Alexander Galushka, said.

Russia has been under international scrutiny over North Korea because it has taken a more doveish approach to Pyongyang than Washington, and Russian trade with North Korea increased sharply at the start of this year.

The United States government earlier this month imposed new North Korea-related sanctions that targeted Russian firms and individuals for, it alleged, supporting Pyongyang’s weapons programs and providing oil.

However Galushka, in an interview with Reuters, said Moscow was faithfully implementing the international sanctions regime on North Korea, and held up the stalled bilateral projects as an indication that Pyongyang was paying an economic price for its weapons program.

“Russia has not violated, does not violate and will not work outside the framework (of the resolution) that was accepted by the U.N. Security Council,” said Galushka, who also heads a Russia-North Korean Intergovernmental Commission.

Russian businesses discussed a number of projects with North Korea in 2014. But then North Korea conducted military tests, including some involving nuclear weapons, and the projects became difficult to implement, Galushka said.

One such project, called “Pobeda”, or “Victory,” would have involved Russian investments and supplies that could be exchanged for access to Korean natural resources.

“We told our North Korean partners more than once … that it hampers a lot, makes it impossible, it restricts things, it causes fear,” Galushka said, referring to the weapons testing.

Another joint project between the two countries is a railway link with North Korea, from the Russian eastern border town of Khasan to Korea’s Rajin.

It is operating but below its potential. The link could work at a capacity of 4 million tonnes a year, officials have said previously, but now it only carries around 1.5 million tonnes of coal per year, according to Galushka.

UN sanctions also prohibit countries from increasing the current numbers of North Korean laborers working in their territories.

According to Galushka, around 40,000 employees from North Korea worked in Russia. Mainly they are engaged in timber processing and construction.

Russian business is interested in access to the North Korea workforce, Galushka said, but the numbers will stay in line with what the sanctions permit.

He said 40,000 workers from North Korea “is a balance formed in the economy, neither more nor less.”

Bilateral trade between the two countries has been decreasing for the last four years, from $112.7 million in 2013 to $76.9 million in 2016, according to Russian Federal Customs Service statistics.

But it more than doubled to $31.4 million in the first quarter of 2017 in year-on-year terms. Most of Russia’s exports to North Korea are oil, coal and refined products.

Asked to explain why trade was rising if political issues were hurting commercial projects, a spokeswoman for Galushka’s ministry said in an email: “According to the latest data, there was an objective increase due to exports to North Korea, primarily oil products. But the export of oil does not violate the agreements of the UN countries in any way.”

The interview with Galushka took place before the U.S. imposed the sanctions targeting Russian entities and individuals for trading with North Korea.

Galushka’s ministry referred questions about the new sanctions to the Russian foreign ministry.

Maria Zakharova, a foreign ministry spokeswoman, told reporters Washington’s unilateral sanctions worsened tensions on the Korean peninsula, and that Russia is fulfilling its international obligations in full.

You can read more about the Russian investment projects in this former post.

NK News also reports that the ferry service between Rajin and Vladivostok has also been suspended, although the reasons for the suspension remain murky.

UPDATE: Following North Korea’s sixth nuclear test in early September, Vladimir Putin has signaled his unwillingness to sanction North Korean fuel imports (partially provided by Russia). You can read more in the Washington Post, New York Times, and Yonhap.

Read the full story here:
Russian-North Korea projects foundering because of missile tests: minister
Polina Nikolskaya and Katya Golubkova
Reuters
2017-8-28

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