Archive for the ‘Economic reform’ Category

Russia rejects new sanctions on North Korea

Friday, August 10th, 2018

Benjamin Katzeff Silberstein

Full comment here by the Russian Foreign Ministry:

Russia has blocked the US application to the UN Security Council Sanctions Committee on North Korea (1718) on introducing international sanctions against one individual and several legal entities, including the Russian commercial bank Agrosoyuz that are allegedly involved in illegal activities that are violating the sanctions regime against that country.

The US-presented evidence in support of this proposal is totally unconvincing.  We cannot accept the pressure exerted by the US delegation in the UN Security Council and its subsidiary bodies, which has already become a norm. By means of an artificially tightened deadline, it is trying to push through its own decisions without taking into account the opinion of the other members. The Americans are also obviously trying to use the prestige of UN Security Council Committee 1718 for justifying similar unilateral restrictions that they have just introduced under far-fetched pretexts.

Far from improving the atmosphere of Russia-US relations, the new US sanctions contradict the logic of easing tension around the DPRK. Clearly, Washington is trying to keep Pyongyang under maximum pressure as long as possible, in effect, up to the completion of the denuclearisation process. This policy is destructive for settling the issues of the Korean Peninsula and evokes extreme resentment.

Source:

Comment by the Information and Press Department on the US application to the UN Security Council Sanctions Committee on North Korea (1718) on expanding sanctions
Information and Press Department of the Ministry of Foreign Affairs of Russia
2018-08-10

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Regime takes two thirds of worker’s salaries for ‘loyalty funds’

Wednesday, August 8th, 2018

Benjamin Katzeff Silberstein

Daily NK:

As the North Korean authorities shift the financial burden of preparing for the anniversary of North Korea’s establishment on September 9 and the development of the Wonsan-Kalma Marine Tourist Zone, residents are increasingly voicing their complaints over the inherent unfairness of the situation.

“Employees at a joint Sino-North Korean enterprise [name redacted for the safety of the source] located in Rason usually receive 300 yuan (around 50,000 South Korean won) per month, but this month they were only paid 100 yuan,” said a source in North Hamgyong Province on August 6. “Without any prior notice, 200 yuan was taken out of their salaries to be used as funding for regime projects.”

The North Korean authorities have placed great importance on the development of the Wonsan area along with events surrounding the 70th anniversary of the establishment of the nation on September 9. State officials are forcibly taking money from the pockets of ordinary citizens to pay for these projects, according to the source.

“In the past, the state took some money from people’s salaries but never a full two-thirds,” he said. “It’s difficult enough surviving on 200 yuan, so people are very worried about how to survive off a measly 100 yuan.”

One family working at the enterprise typically earns 400 yuan a month but received just 200 yuan this month, he said, explaining that “it’s not enough to even get them through the month […] They have no money saved up and are worried that more money will be taken out of their salaries next month as well.”

Overseas workers are also being forced to contribute part of their salaries to what is referred to as a “loyalty fund.”

“There is money that we have traditionally given to the state each month, but now they have told us we need to give them 2,000 yuan more per month […] Business is difficult these days, which forces us to take money out of our employees’ salaries to pay state officials,” the manager of a North Korean restaurant in China’s Liaoning Province said.

The manager also noted that the authorities were asking for more money to be paid at ever more frequent intervals of time. “Our employees are usually forced to give money [to the loyalty fund] each month, but our employees are up in arms about the amount taken out by the state this month,” the manager said, expressing concern that feelings of discontent among their employees could lead to them running away or even defecting to South Korea.

Full article and source:
Regime takes up to two-thirds of salaries from workers for ‘loyalty funds’
Ha Yoon-ah
Daily NK
2018-08-08

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Seoul says reopening Kaesong will wait till sanctions are lifted

Friday, August 3rd, 2018

Benjamin Katzeff Silberstein

Korea Herald:

“The government’s stance remains unchanged when it comes to the issue of the resumption of the Kaesong Industrial Complex,” Lee Eugene, a deputy spokesperson of the unification ministry, told reporters during a regular press briefing.

“The stance has not been changed either that things will be considered in line with progress in denuclearization efforts and within the frame of sanctions,” she added. “From a broad perspective, it would be desirable to push for its resumption after the lifting of the sanctions.”

Opened in 2004, the industrial park in the North’s border town of Kaesong was hailed as a key symbol of economic cooperation between the rival Koreas as it combined South Korean capital and technology with cheap labor from North Korea. The Seoul government, however, halted its operation in 2016 in retaliation for Pyongyang’s missile and nuclear provocations.

The North has recently ramped up its call for the South to reopen the industrial park amid a thaw in relations, but the US.

Article source:
Seoul says reopening of Kaesong complex should wait until sanctions lifted
Korea Herald/Yonhap
2018-08-03

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Seoul needs sanctions exemptions, official says

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

If anyone ever doubted that the US and South Korea are not in lockstep on sanctions…The question is how hard Seoul is pushing behind the scenes, and how hard it is prepared to push. Joongang:

A South Korean delegation that traveled to New York over the past weekend said Seoul needed to be exempted from some international sanctions against the North to implement the Panmunjom Declaration.

The remarks came on the same day that U.S. Secretary of State Mike Pompeo reiterated that sanctions against Pyongyang will remain in place until the North fully denuclearizes.

The rare show of discrepancy between the allies came at an unusually sensitive time between the South and North, after North Korean media excruciated South Korean authorities for what it said was kowtowing to the U.S. on inter-Korean issues.

A local official said Pyongyang appeared to be fed up with Seoul’s reluctance to help the regime wiggle out of sanctions.

South Korea’s official stance has been to support sanctions on the North until the country gives up its nuclear weapons, but from time to time officials have expressed a hope to seek exemptions, especially to work out the cross-border projects that South Korean President Moon Jae-in agreed to with North Korean leader Kim Jong-un during their first summit on April 27.

Last Friday in New York, a high-level South Korean official who spoke on the condition of anonymity decided to convey that hope to reporters – just as Pompeo highlighted in a different news conference that all UN member-states unanimously agreed to fully enforce sanctions on the North. The official was part of a delegation led by South Korean Foreign Affairs Minister Kang Kyung-wha, who traveled to New York to co-host a briefing session with Pompeo on peninsular issues for representatives of the UN Security Council.

Soon after the briefing, the official told South Korean correspondents in New York that the South Korean government “needed” some exemption from international sanctions on the North to implement the Panmunjom Declaration, adding that it was asking the international community to grant that exemption as it was leading the North through dialogue and cooperation.

Full article:
Seoul needs sanctions exemption, official says
Jung Hyo-Sik, Yoo Jee-Hye, and Lee Seung-Eun
Joongang Daily
2018-07-23

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US government issues North Korea sanctions advisory

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

A new advisory was issued today by several US government department, focusing on risks that companies run throughout their supply chains, where North Korean labor may have been involved without said companies knowing. NK News:

The publication of the advisory notice comes three days after U.S. Secretary of State Mike Pompeo visited the UN Security Council (UNSC), where he called for the strict maintenance of sanctions against the DPRK amid current diplomatic engagement.

The purpose of the advisory is to “highlight sanctions evasions tactics used by North Korea that could expose businesses – including manufacturers, buyers, and service providers – to sanctions compliance risks under U.S. and/or United Nations sanctions authorities,” it reads.

“Businesses should be aware of deceptive practices employed by North Korea in order to implement effective due diligence policies, procedures, and internal controls to ensure compliance with applicable legal requirements across their entire supply chains,” it added.

The U.S. Department of State, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Department of Homeland Security’s (DHS) co-authored the advisory.

The notice identifies what the government deemed as two primary risks to businesses, which are the “inadvertent sourcing of goods, services, or technology from North Korea” and “the presence of North Korean citizens or nationals in companies’ supply chains, whose labor generates revenue for the North Korean government.”

Full article:
U.S. government issues North Korea sanctions enforcement advisory
Hamish Macdonald
NK News
2018-07-23

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WSJ on South Korean firms planning for business opportunities in North Korea

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein 

WSJ:

After months of rapprochement—including summit meetingsbetween North Korean leader Kim Jong Un and South Korean President Moon Jae-in, and one between Mr. Kim and President Donald Trump —hopes are rising for more open access to North Korea, a country of 25 million people with vast mineral reserves and lots of cheap labor.

Samsung C&T Corp . , the de facto holding company of South Korea’s biggest and best-known conglomerate, created a North Korea task force in May, staffed by an executive and three managers.

Samsung’s construction arm, which has built some of the world’s tallest skyscrapers and is building subway lines in Singapore and Riyadh, Saudi Arabia, sees opportunity in the North as economic growth slows in the South.

Full article here:
Companies See Glimmers of Opportunity in North Korea
Jonathan Cheng
Wall Street Journal
2018-07-23

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NK News on the growing Naegohyang conglomerate

Wednesday, July 18th, 2018

Benjamin Katzeff Silberstein

NK News:

It began as a tobacco company, but has since widened its scope to the sporting goods industry, and reportedly became known in the North through a soccer match for the 2010 World Cup at Yanggakdo Stadium in Pyongyang on 6 June 2009, the state-run KCTV reported in a video released in October 2016.

Before the game, according to the narrator, unknown individuals handed out Naegohyang-branded sports t-shirts to spectators at the 30,000-seat Yanggakdo Stadium. On that day, “the t-shirts replaced tickets for the game,” the video said.

Even though state media praised them for their generosity and patriotic spirit, initial coverage appeared reluctant to reveal who they were.

“We could not know who they were,” the narrator said.

Sports t-shirts were given out again to waves of spectators in 2015 when North Korea played Uzbekistan at Kim Il Sung stadium, with locals seen wearing the company-branded t-shirts and caps.

Full article here:
Naegohyang: a North Korean company branches out
Tia Han
NK News
2018-07-18

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Kim Jong-un and deforestation

Monday, July 16th, 2018

Benjamin Katzeff Silberstein

Kim Jong-un is clearly aware of, and engaged in, the forestry issue, which not least his visits in July show. North Korea’s forestry situation is dire and has vast environmental and economic consequences. He gave an interesting speech on it in 2015. Here’s a recent article by Daily NK on the role of the forestry issue, and what can reasonably be done:

Citizens of poorer countries typically focus their energy on subsistence agriculture in order to survive. In North Korea, this focus has widely occurred at the expense of environmental issues, with many in the country viewing environmentalism as a “luxury.”

However, there will likely be an increase in environmental awareness when the economy improves through reforms and opening. Increases in personal income levels will allow the population to pay more attention to and seek ways to address environmental issues.

North Korea has experienced severe environmental destruction over the past 70 years. Widespread logging has left barren vistas throughout the country, exemplifying the poor state of North Korea’s natural environment and serving as a stark reminder of the economic, technological and societal factors at play.

The Korea Forest Research Institute (KFRI) in South Korea has published satellite images showing the extent of North Korea’s environmental destruction. According to the data, forests once covered 9,160,000 hectares of North Korean territory, with 2,840,000 hectares of this forest area now destroyed. This means that 32% of North Korea’s total forest area has been wiped out, an area 46 times the size of the city of Seoul.

The regime has paid very little attention to environmental conservation and as a result the country frequently suffers massive loss of human life due to landslides and other natural disasters.

Recently, however, there are signs that the North Korean government is paying more attention to the fate of its forests. In early July, Kim Jong Un, during an on-site visit to a reed branch farm in North Pyongan Province and the Sinuiju Chemical Textile Factory, which produces paper and textiles with reeds, located around Sinuiju, commented on the insufficient supply of paper and called for support for paper companies making paper out of reeds (as opposed to wood).

North Korea’s paper industry is almost completely dependent on using pulp, which is made out of wood. Pulp is made by mixing water with wood sourced from coniferous trees. Pulp contains lignin and other elements which makes it relatively practical during the manufacturing process, but because it can easily change color it cannot be used for high-quality paper. Instead, it is commonly used for newspapers.

The Rodong Sinmun and other state propaganda materials are almost all made out of paper produced from pulp.

North Korea created the 121 Cooperative Enterprise under the management of the Korean Workers’ Party’s Financial Administration Department to produce paper for the Rodong Sinmun. This enterprise operates a network of tree harvesting companies based throughout the country that fell thousands of trees each year.

The trees are then transported from forests near the Amnok River, Chongchun River and Duman River to Kilju, Sinuiju and Anju where they are made into pulp and finally turned into paper for newspapers at the 121 Paper Factory in Anju, South Pyongan Province. Most of the wood harvested each year in North Korea is used for newspapers or other government projects and amounts to significant volumes.

The destruction of the country’s forests has increased annually and most of it is due to the activities of the North Korean government.

North Korea has recently paid more attention to the preservation of its natural environment, and a welcome sign is that the country is making more paper out of reeds than wood. However, the country lacks the technical ability to assess its own environmental issues and has not put in place the proper systems to take advantage of production methods that are cleaner and more efficient.

North Korea has long had notional policies to protect its environment. The country’s environmental protection agency was made independent from the Ministry of Security in the late 1980s and became the “Ministry of Land and Environment Protection.” In April 1998, as the rest of the government shrank in size due to the economic crisis, this ministry was expanded and turned into a full government ministry. The ministry was instrumental in helping environmental protection and management practices become more systematic through the establishment of forestry administration offices, nurseries, and forest monitoring centers under each of the country’s provincial governments.

These organizations designated a period of mass mobilization each spring and fall for citizens to plant trees and conduct activities related to the prevention of landslides and mudslides. Ironically, however, North Korea’s forests have been degraded even further despite these efforts. This is largely due to the fact that the government still relies heavily on wood products.

North Korea’s policy of self-sufficiency in the economic sphere has continued to raise the country’s dependence on wood and led to accelerating deforestation throughout the country, which in turn leads to greater destruction arising from natural disasters.

Mountainous areas and those near rivers suffer the most from deforestation. Areas without trees can experience massive mudslides, even after only receiving light rainfall.

Daily NK sources recently reported that significant loss of human life and destruction of property occurred during a landslide following rainfall near a dam construction site in North Pyongan Province. The sources said that deforestation that had occurred near the construction site was to blame.

The construction of power plants and roads typically leads to the complete deforestation of mountains nearby. The state is unable to provide the wood required for construction, and so construction workers must find a way to handle the lack of materials themselves. They have little choice but to cut down trees near the construction site.

North Korea is now focusing on the construction of massive dams as a way to increase its energy supply. This construction is leading to the deforestation of nearby forest areas.

Deforestation enacts a heavy toll on North Korea’s economy and its population is becoming more concerned about its effects. Many complain that the deforestation is damaging their own ability to lead happy lives.

North Korea is faced with a whole slew of issues: lack of energy for its citizens; the lack of economic power to deal with its environmental problems; and a planned economy that has only hampered economic development. The country must, however, implement more environmentally-friendly economic policies before further damage occurs.

The North Korean government must address the social, technological, economic and market-related factors that drive deforestation. They must also be open to assistance from abroad so that their attempts to prevent further deforestation and protect existing forests are successful.

Article source:
Kim Jong Un wants to stop deforestation, but can he?
Jo Hyon
Daily NK
2018-07-16

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Crackdowns in North Korea continue against “anti-socialist elements”

Monday, July 16th, 2018

By Benjamin Katzeff Silberstein

The wave of crackdowns against “anti-socialist” activity in North Korea following the spring of summitry continues. The latest report by Daily NK (below) focuses on crackdowns against those breaking the economic rules in fishing villages. This all highlights a central problem with North Korea’s often ad-hoc marketization process: much of the space the state grants for economic activity beyond its reach, it can quickly take away whenever it sees fit:

While there are signs that the ‘anti-socialist’ crackdown by the North Korean authorities has slowed in recent days, sources have reported that crackdowns are still occurring in the fishing communities of North Hamgyong Province.

“There was a crackdown on a fishing company in Hamgyong Province that owned more fishing boats than it had registered with the state,” said a source in North Hamgyong Province on July 11.

“The boats that were registered with the state sent the required amount of fish to the government, while the catch from the unregistered boats was sent somewhere else. The company is getting punished for this.”

An inspection revealed that the fishing company had only 30 ships registered, but was actually operating more than 300 small fishing boats.

“The authorities are angry because they confirmed the number of unregistered fishing boats across North Hamgyong Province to be around 2,300,” said a separate source in North Hamgyong Province. “The authorities confiscated all of the unregistered boats and handed them over to the province’s major fishing enterprise. The state also ordered that all the fishing boat captains are to be replaced.”

There are still crackdowns on illegal activities in places that the authorities have designated as “problem areas.” The crackdown on the unregistered fishing boats has led to anger from fishermen in the towns.

The article also gives a clue to one of the sources of the so-called “ghost ships” that arrived on Japanese shores over the past year or so:

Locals are complaining that it is difficult for their small boats to fulfill the harvest quotas set by the government set and that the state is only focused on meeting those quotas with registered boats. Fishing boat operators contend that they risk their lives to earn a living and are being treated unfairly by the state.

“We have to catch seven tons of squid or sailfin sandfish during the harvest seasons, but we can’t catch even half of that in our small boats […] The state is calculating that the large number of unregistered boats means that fishing companies are fishing a lot and making a significant amount of money, but in fact fishing with such small boats means that we cannot catch much at all,” the second source quoted one captain as saying.

This source also stated that the crackdown has led to the firing of several fishing boat captains. “[The captains] just stare out to sea and are at a loss for what to do,” he said.

“They receive no rations from the state and are just eking out an existence. The crackdown has led to the collapse of the base of the fishing industry in the region.”

The initial source also said that captains that had purchased their own boats are unable to get any financial return on them.

“Many of them are complaining that nothing they do helps them make a living and are unsure how they will survive,” he said.

Article source:
North Korean authorities continue crackdowns in fishing villages
Ha Yoon Ah
Daily NK
2018-07-16

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Reopening Kaesong key to cooperation, says ROK gov’t official

Friday, July 13th, 2018

Benjamin Katzeff Silberstein

A South Korean official (albeit one specifically representing the interests of the zone) calls re-opening Kaesong a “first step” towards resumed inter-Korean economic cooperation. Yonhap:

A South Korean official in charge of promoting investments in North Korea’s Kaesong Industrial Complex said Friday that the reopening of the now-suspended industrial park in the North’s border town will be a first step towards resuming inter-Korean economic cooperation.

Addressing a unification symposium in Seoul, Kim Jin-hyang, chairman of the Kaesong Industrial District Foundation, said the operation of the Kaesong complex has to be restarted as quickly as possible.

“Inter-Korean economic cooperation cannot be discussed without the Kaesong Industrial Complex,” said Kim, who doubles as chief of the Kaesong Industrial District Management Committee.

The government of former President Park Geun-hye abruptly announced the closure of the Kaesong park on Feb. 10, 2016, in retaliation for the North’s fourth nuclear weapons test and long-range missile launch.

Kim dismissed the abrupt closure of the complex as a “completely failed policy,” saying, “The decision was a grave disaster that shut down peace, economy and security altogether. North Korea was never dealt a blow when the Kaesong park was closed.”

“The Kaesong complex was not a special favor to the North. It was intended to support the South Korean economy stuck in a low-growth trap,” he said.

Kim noted that the Kaesong park is also very symbolic in terms of security and peace, arguing that the mix of about 60,000 South and North Korean workers in a single location can deter tensions and guarantee peace.

He stressed that South Korea should now join Singapore, Russia and China in preparing for large-scale investments in North Korea following its successive summit talks with the United States and South Korea to enhance the peace mood on the Korean Peninsula.

Article source:
Reopening of Kaesong Industrial Complex key to inter-Korean cooperation: official
Yonhap News
2018-07-13

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