North Korean Economy Watch

Daily NK
Kwon Jeong Hyun
5/16/2007

National Safety Agency rounds up an arrest

On the 11th, robbers raided the Haeju Historical Museum in Haejoo, North Hwanghae, stealing golden statues of Buddha and ancient Korean pottery worth a large amount, an inside source disclosed.

The source said, “On the night of 11th, golden statues of Buddha and ancient Korean pottery were stolen from Haeju Museum. The exact identity of which Buddha statues and rare artifacts were stolen has not been revealed, however, it appears the goods were rather important considering a special order was given to the border guards and the National Safety Agency has become involved.”

Haeju Historical Museum opened in 1949 and has maintained its heritage for 60 years. The museum displays a collection of ancient Korean pottery from the area and a variety of golden Buddha statues. This museum falls under the same category as the top 5 museums located in North Korea including the Central Historical Museum in Pyongyang and Kaesong Museum, Sariwon Museum and Chongjin Museum.

“If the thief escaped Hwanghae on the day of the raid, then he will be difficult to catch. However, if that is not the case, there is a high chance that the thief will be caught within the next couple of days,” said the source.

He said, “An order has already been made to strictly control the smuggling routes around the border of Shinuiju.” He added, “Stealing historical artifacts and exporting them out of the country is a crime punished with death.”

Following the food crisis in the 90s and early 2000, there were many cases where military officials, security agents and the elite frequently stole historical artifacts. The whole city was affected especially if there were many people living in the area who had inherited historical artifacts from ancestors.

However, for the past 3~4 years, there was a decrease in stolen articles as the number of ancient artifacts had been depleted and furthermore because authorities immediately punished those who stole and sold the goods overseas with capital punishment.

However, as this case shows, stealing a number of articles from museums has continued. In particular, imitations of artifacts have been sold outside the country, and North Korean authorities are facing complaints from foreign buyers. Consequently, there have been cases where affiliated persons have also been executed.

A defector who has experience in selling antiques said, “In 1993, a picture of a Great Monk Seosan was sold in Hong Kong but then returned to North Korea after it was discovered to be a fake. Parties concerned were punished.”

He said, “Precious artifacts are either sent to Pyongyang to be exhibited at the Central Historical Museum or stored separately. A curator affiliated to Mansudae Art Institution then makes a copy and sends it to either the country or, in most cases, puts it on display in Pyongyang.”

He said, “Even if the Japanese buy $10,000 worth of Nihontou (Japanese swords) with the carved seal of a Japanese Emperor, there are still many people who want to possess artifacts from the Chosun Revolutionary Museum. Even I went around until my feet were worn out carrying antiques to make money. However, most of these goods were imitations copied by Mansudae Art Institution.”

Last year, there was one case where a group of 22 people were caught stealing tombstones off royal tombs. Though it is difficult to transport these tombstones, since they weigh a minimum of 500kg and as much as 2-3tons, once they are secretly transported to China, the tombstones sell at a very high price.

The moment North Korean authorities discovered the case, Chinese authorities were contacted and a cooperative investigation begun. The tombstones were redeemed from a storage area in Dandung. At the time, the Chinese dealers were given a heavy fine and the organizer of the North Korean exports, a national security agent, was known to have committed suicide.

Korea Times
Andrei Lankov
5/10/2007

Since the mid-1990s antique dealers in Seoul have uncovered a new source of quality items: North Korea. Indeed, around that time, antiques secretly excavated in North Korea began to arrive in Seoul in ever increasing quantities.

By the late 1980s, the antique trade in South Korea was going through hard times. Most of the important sources had been used up, and the state had established a fairly efficient control over excavations. Supply was shrinking, and prices kept growing. This was just when the antique items from North Korea hit the market.

This was a result of three important transformations. First, the famine and near collapse of the state bureaucracy in the North meant that many people were ready to do whatever it took to earn some money, and that officials, if given sufficient bribes, would not interfere much, if at all.

Second, the same combination of corruption and collapsing border controls essentially opened the Chinese border with North Korea.

Third, the adjacent areas of China became popular with Korean tourists who frequented the areas, and were on occasion ready to do some small and profitable, if illegal, business.

The major attractions are the Goryeo-era tombs which have been intensively excavated in the last decade (the major centers of the Goryeo Kingdom were located in what is now North Korea). These illegal diggings produced a flood of Goryeo items on the Seoul antique markets. Actually, the amount of antiques that have appeared makes archaeologists wonder about the scale of damage inflicted on the Goryeo sites in recent years. If rumors are to be believed, tomb raiding usually involves North Korean officials, people whose job would be to protect the historical site.

Apart from Goryeo “grave goods,’’ smuggled items include Buddhist images of all kinds, old books, furniture and stoneware. Some of these items originate from the Unified Silla Kingdom (7-10th century) while others are relatively new and can be dated to the early 20th century.

In most cases, the items are “mined’’ on the spot, but there have been a number of confirmed or nearly confirmed instances of books and other works which clearly have been stolen from museums and libraries in the North.

Then the items are transported to the border and smuggled into China. This might require bribing customs and immigration officials, but for a few hundred dollars one can purchase an uncontrolled passage (and, as a merchant told a South Korean journalist in an interview, well-paid custom officials can even help to move heavier items across the border).

The border city of Dandong plays the role of the major illegal market for the smuggled North Korean antique items. In China, some antiques go to the local buyers, but far more frequently the items are smuggled again, this time to Seoul, to appear in the antique shops in the Korean capital.

Some items are bought by rich collectors, while others end up in private museums. However, the Kookmin Ilbo journalists, who investigated the trade in 2005, discovered that museums are very secretive about such acquisitions, being uneasy about the legal implications of provenance, and the likely influence on relations between the two Koreas.

A major role in the business networks is done by two ethnic groups: the Joseonjok, or ethnic Koreans in China, and the hwagyo (huaqiao), the ethnic Chinese in Korea. Members of both groups have ample opportunities for legal cross-border travel, have money and connections, and are fluent in both languages.

They transport the booty, and also provide the North Korean diggers (not exactly experts in Goryeo celadon or early Joseon books) with instructions regarding the most preferable items at any given moment.

This is a risky business, and in the late 1990s the North Korean authorities attempted a number of crackdowns, with few high-level officials arrested for involvement in antique smuggling. However, people take risks.

A good piece of Goryeo-era ware would easily sell for tens of thousands of dollars in Seoul. Only a fraction of this money will go to the grave robbers, of course, with intermediaries and bribe-taking officials along the route pocketing the lion’s share of the profit.

Still, we can presume that a good piece would bring a successful digger a few hundred dollars. In a country where the average salary has fluctuated between one and five dollars a month, this is still a fortune, even for a minor official, and the more high-ranking policemen and security guys are making good living out of this.

It is somewhat difficult to judge these people too harshly, especially those who are driven to tomb raiding by the real threat of starvation, but there is no doubt that extensive and chaotic diggings are wiping out an important historical heritage. When archeologists arrive at the sites, sooner or later as they will, they will have to deal with the havoc produced by the illegal diggers, and many important traces of the past will be lost forever.

In tandem with the antiques, the forgery industry has also developed, with North Korean artisans learning the techniques used by South Korean experts. They know how to make a vase of a bottle from a few small pieces, how to imitate the old patterns on the ceramics, as well as many other tricks of an experienced forger. It seems that the North Korean forgers enjoy some competitive advantages over their South Korean colleagues. At any rate, the boom is not yet over.

American Enterprise Institute Book forum
4/17/2007

A couple of weeks ago, I had the opportunity to attend a book forum at the American Enterprise Institute on Nicholas Eberstadt’s new book, The North Korean Economy: Between Crisis and Catastrophe.  It was very informative to hear three different perspectives on the direction of North Korea’s economic reform.

Panelists included:

Nicholas Eberstadt, AEI
Andrei Lankov, Kookmin University
Deok-Ryong Yoon, Korea Institute for International Economic Policy

In summary, Mr. Eberstadt and Mr. Lankov are pessimistic about the North Korean leadership’s desire to enact reforms–knowing that information leakages will undermine their political authority.  As Mr. Lankov pointed out, the North Korean nomenklatura are all children and grandchildren of the founders of the country who are highly vested in the current system.  They have no way out politically, and as such, cannot reform.

They argue that the economic reforms enacted in 2002 were primarily efforts to reassert control over the de facto institutions that had emerged in the collapse of the state-run Public Distribition System, not primarily intended to revive the economy.  Lankov does admit, however, that North Korea is more open and market-oriented than it has ever been, and  Mr. Yoon was by far the most optomistic on the prospects of North Korean reform.

Personally, I think it makes sense to think about North Korean politics as one would in any other country–as composed of political factions that each seek their own goals.  Although the range of policy options is limited by current political realities, there are North Koreans who are interested in reform and opening up–even if only to earn more money.  In this light, even if the new market institutions recognized in the 2002 reforms were acknowledged only grudgingly, they were still acknowledged, and their legal-social-economic positions in society are now de jure, not just de facto.  The North Korean leadership might be opposed to wholesale reform, but that is economically and strategically different than a controlled opening up on an ad hoc basis–which is what I believe we are currently seeing. Anyway, dont take my word for it, check out the full commentary posted below the fold:

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Daily NK
Kwon Jeong Hyun
5/1/2007

Drug dealings have been occurring frequently amongst North Korea’s wealthy class which has led to an increase in people “taking medicine” an inside source recently informed.

Further, an underground casino for foreigners at Yangkag Hotel, Pyongyang, is known to have been openly circulating drugs. Yangkag Hotel is an elite hotel and was built in 1995 in co-partnership with France. Currently, the hotel operates a casino used by foreigners.

The source informed on the 30th, “Drug dealers directly approach the wealthy class who live around the borders of North Korea-China” and revealed, “People fall for the dealer’s trap and hence the number of addicted drug sellers and wealthy class is increasing.”

A few North Korean tradesmen even testified that a large number of the rich living in the border regions of North Korea, have in fact dealt with drugs in one form or another. Apparantly, about 3 out of 10 rich persons in North Korea have had some experiences with drugs and most of the long-distance drivers in North Korea take drugs.

One North Korean tradesman ‘H’ revealed, “Drug dealers con North Koreans with money by saying that the ‘medicine’ clears the head and acts as an aphrodisiac by giving you strength. Then they let the buyers taste-test the drug for free.” H said, “After a few times, the majority of these people become addicted and the dealer sets up a relationship to sell the drug for a long time.”

‘J’ who lives around the border regions expressed the seriousness of the drug issue by telling his own story. Through North Korea-China trade, J’s brother-in-law had accumulated a lot of wealth. One morning without any warning, he suddenly died in which J had thought was a hart attack. However, he later found out from his sister that drugs had been the cause.

For the past 2 years, J’s brother-in-law had been earning money and also spending it on drugs. He tried to quit on numerous occasions but was unable to escape from the persistent temptation by the drug dealer. As time passed, the symptoms of an addict surfaced which ultimately led to a drug overdose and death.

J said, “Never in my dreams could I have imagined that a good person like my brother-in-law would become a drug addict. Though authorities are enforcing regulations and punishment on the misuse of drugs, the problem is that there are no specific penalties or laws. If this keeps going, things could get worse.”

The source said, “North Korean authorities have made numerous decrees on various occasions stating that they will toughen punishment. But there are no specific rules or law and so there is no control over the offenders.” The source added, “The truth is, it will be difficult to penalize everyone according to the decrees set as many people throughout the regions of North Korea are now using drugs including the rich living in the cities.”

On the other hand, the district of Hamheung is receiving much focus as it is known to be the base for drug manufacture. Drugs sold on the black-market in Pyongyang, Chongjin and Shinuiju are considered of high quality and receive utmost trust if the drugs have been made in Hamheung.

Hamheung’s history dates back to when the chemical industry was first booming in North Korea. As a result, North Korea authorities began to produce medicinal drugs to attract more foreign currency. When the economic situation worsened, workers and the elite were known to have stashed drugs secretly in order to make money.

In addition to this, as lifestyles became more difficult, there were rumors suggesting that chemical analysts brought some raw materials of Philopon from China to secretly make drugs within the labs.

“It’s not only Hamheung. Drugs are easily available even in Pyongyang” the source said and, “Drugs are openly traded at the underground foreigners casino in Yangkag Hotel (for Hong Kong, Macau and Chinese tourists).”

The source continued, “The elite in Pyongyang often take drugs and this hotel is known for its stash of drugs” and added, “The Safety Agency and the Protection Agency must take action. Otherwise, the situation is only going to get worse.”

The Christian Post
Michelle Vu
4/29/2007

In a country described as a spiritual vacuum surrounded by the watchful eyes of a totalitarian regime and oppressed by a quasi religious cult centered on its leader’s family, North Koreans desperate to keep the Gospel alive have found innovative methods to smuggle in the Word of God.

Whether it is through human transport of Bibles or North Koreans risking their lives to testify to their families upon return or balloons filled with Christian tracts, the Word of God is penetrating the country where being openly Christian can result in execution.

From within the country, evangelism is taking place through disguised missionaries and North Korean Christians repatriated by China or returning on their own free will, according to North Korean defectors at the Open Doors USA panel discussion this past week on religious persecution in North Korea.

One North Korean defector, Ms. Eom Myong-Heui, said that she was evangelized through a Chinese-Korean missionary disguised as a businessman while still living in North Korea.

Eom – who is now an assistant pastor of a church in South Korea for North Korean defectors – said that she was desperate for food during the North Korea famine in the 1990s and had resorted to partnering with the disguised missionary businessman to earn money.

The Korean-Chinese missionary would teach her the Bible whenever they met and eventually Eom became a Christian.

Yet she and the other North Korean defector on the panel agreed that the best method to spread the Gospel in the closed society is through training North Korean refugees.

“The best and most effective way is using the North Korean refugees,” stated Eom, who said defectors can call their family and relatives in North Korea and share the Gospel.

Eom explained that she speaks to her two daughters still in North Korea through a cell phone from China that cannot be monitored by the North Korean government.

“We can train those North Koreans as strong believers and connect to relatives in North Korea … and conversations can spread [the] Gospel,” she said.

“Philip Lee,” a North Korean defector now living in South Korea. added that some North Koreans are even willing to return to the North and spread the Gospel. Lee, whose real name is withheld for security reasons, said that one of the main ministries in his church composed of North Korean defectors is to train strong Christian leaders who are willing to return to North Korea and witness.

But he noted that even refugees forcefully returned to North Korea can become powerful witnesses.

Lee recalled a repatriated North Korean Christian named Brother Luke who would daily urge his prison guards and officers, “You should believe in Jesus! You should accept Jesus!” Luke reportedly continued his exclamations even during torture and before a judge in court, according to Lee. Before his martyrdom one year later, one prison guard had accepted Christ.

Meanwhile, other North Korean defectors have found innovative ways to spread the Gospel in the North while still remaining in South Korea.

Lee Minbok, founder of North Korea Christian Association, began sending large balloons filled with thousands of Christian tracts across the North-South border about three years ago. Lee, previously a scientist in North Korea, is mostly joined by a small group of defectors or those who have worked with North Korean refugees. The balloons are said to land in North Korea within 20 minutes to 1 hour from its departure in the South.

“I’m proud that North Korea is angry,” said a grinning Choi Yong-Hun, a volunteer at NKCA and a South Korean who spent nearly four years in prison in China for helping North Korean refugees, to The Christian Post. “They ask, ‘Who sent it?’ We say that God sent it. It is a very effective way to send the Gospel.”

Other ways given to evangelize North Koreans include smuggling in Bibles, as Open Doors has done over the past ten years; Christian radio broadcast; and through organizations working with North Korean refugees along the border in China.

Last week’s panel discussion in Washington was part of North Korea Freedom Week, Apr. 22-29, which seeks to raise awareness of the brutal North Korean regime and to urge stronger actions by the U.S. government and international community to press North Korea on its human rights abuse.

The week mainly ended on Saturday with international protests against China’s violent treatment or North Korean refugees at Chinese embassies around the world.

Daily NK
Kwon Jeong Hyun
4/26/2007

Since February, the Party began inspections at Shinuiju customs in an attempt to punish and prosecute customs officers that were requesting irrational demands to the people. In particular, authorities conducted strict investigations over customs officers in charge of rail cargo.

A source in North Korea said, “Authorities identified that an employee of a trading company in Shinuiju, Kim Jung Man (pseudonym) had secretly transported about 1000 tons of copper to sell in China over the past 3 years” and added, “It seems that organized groups incorporating Chinese customs officers have been engaging in smuggling.”

He said, “He (Kim) disappeared instantly. He is probably sentenced with a serious punishment. The atmosphere is melancholic as 6 other customs officers were also caught.” In addition to this, bag inspections are conducted and at the end of every day, customs officers must report the total amount of goods that passed through as well as receive feedback.

“Not only is the central authorities conducting inspections, the National Safety Agency has sent 3 pair teams to run investigations on customs at the station, ports and bridges” he said.

Inspections were conducted until April 15th, Kim Il Song’s birthday. Though the most part of North Korea’s social regime is corrupt, customs officers have received the greatest complaints and have the worst reputation for bribery. It seems that North Korean authorities have used inspections at Shinuiju customs as an example to set public order over the city of Shinuiju.

The moment inspectors enforced control over customs, the reduction of cargo trucks entering North Korea was quite noticeable. On average about 50-60 trucks passed through customs daily. Today only 20 are in operation of which Chinese cargo trucks are transporting the goods. Overall, the amount of trade has returned to the days of the past.

Further, investigations are being held throughout all of Shinuiju city. Authorities, the Safety Agency and investigating teams have united to confiscate items such as foreign CD’s, capitalist-style clothing and computer programs. Also, any devices that could be used as a means of foreign communication such as TV’s, radios and mobile phone are also being strictly regulated.

The source said, “Authorities are enforcing strict control over Shinuiju city to use it as a confrontation with capitalism and socialism” and “An order was made to protect the border gateway and that the former guard post (Shinuiju) must not be shaken.” The source confirmed that the goods caught at customs included computer software, CD’s, and foreign books including the bible.

Yonhap
4/24/2007

A senior North Korean diplomat who was deported from Zimbabwe a decade and a half ago for smuggling rhino horns out of the country has been named the country’s new ambassador to Italy, according to the North’s official media Tuesday.

In 1992, Han Tae-song, now a career diplomat in his mid-50s, was expelled from the southern African country on suspicion of being engaged in illicit trafficking in rhino horns.

Since then, Han has worked in the field of international organizations at the North’s Foreign Ministry, specializing in United Nations affairs, the Korean Central News Agency reported.

North Korea and Italy established diplomatic ties in January 2000.

Daily NK
Yang Jung A
4/19/2007

North Korea does not have a sex problem = North Korea, until 1980s, was not open about sex. A conservative aspect remained in their consciousness and under the socialist setup that emphasized rules, the problem of sex was not an important topic in everyday life. But recently, with exposure to much information from the outside world, a freer atmosphere regarding the issue of sex has been forming. However, North Korean women cannot be free in the midst of sex-related violence.

Ahn Mi Ran said women who go around the provinces alone for trade become targets of men’s sex crimes as well.

-Interviewees

Kim Young Soon (23)—defected in 2003, withdrew from Pyongyang High-Tech University
Ahn Mi Ran (43) – defected in 2003, born in Hoiryeong, North Hamkyung, escaped organ sales
Che Kyung Ja (35)—defected in 1997, born in Hamheung, South Hamkyung, married Korean-Chinese husband
Lee Eun Hee (39)-defected in 2000, born in Shinuiju North Pyongan, worked as a “runner” (broker)
Kang Soon Nhuh (40) – defected in 2002, born in Hyesan Yangkang, escaped organ sales

”One woman I knew worked as a runner from Pyongyang to Hamheung. According to her, women who ride trains experience a lot of incidents. Trains stop often and become delayed, so women frequently stay on the trains until the middle of the night, but there are no electric lights. So men come up to women who are around 50 years old and grope their bodies. When this became chronic, women just accepted this as how things were. When she told her husband, he told her to stop immediately, but there was no way to live if she did not trade, so she still runs. Women who run have to prepare themselves for such incidents.”

Particularly, if these problems become publicly known, it impacts the women’s entrance to the Labor Party. Kang Soon Nyuh explained, “If women become admitted, they can become big leaders, so there are a lot of women who want to enter. If women stay at home, they get entangled with the Union of Democratic Women, which is exhausting. But they do not touch women who are admitted to the party for the most part.”

”But women, upon entrance, have to submit their bodies to the leaders. If women are admitted, it automatically means these women have undergone such incidences. After returning from the Army, they become automatically admitted. This is standard. It has become such a prevalent incidence, that anybody will acknowledge this.”

In North Korea, sex trade is prohibited in principle, but after the severe food shortage in mid-1990s, this practice has seriously spread, centering on stations in big cities. Prostitution can be the utmost survival method that women can select.

Lee Eun Hee said, “If you go to the Pyongyang station, old women will approach men and ask if they will not take up standby lodging. Standby lodging, in one word, means
homestay. Men, if they are interested, will point to a woman standing on the platform and inform, “this one for 10,000 won and that one for 25,000 won. Women are not gathered in one place, but stand scattered between people. The price is based on appearance and age, in that order. If the man selects a woman, they go together.”

She added, “Among these women, vagabonds are included. In the starvation period, there were news that female college students would go out to the streets to sell themselves.”

Additionally, secondary problems resulting from improper teaching of sex education is not insignificant. North Korean teenagers are hardly receiving what can be called, “sex education.” Female students are taught in applied subjects about women’s hygiene, health, and raising a baby, but male-female relationships are not taught.

Kim Young Soon heard a college friend’s petition one day, “Comrade, can you help me get rid of a baby?” In a North Korean college, if the pregnancy is revealed, the student is kicked out of school. But Ms. Kim did not know what to do because she had not yet received such an education.

“Chosun women have not received education even once since their birth. There are no contraceptives and they have not even heard of a condom. I went to the neighborhood clinic and gave the doctor the value of a cigarette and pleaded. Finally, I was referred to an obstetrician at the district’s hospital. But even there, you have to give money under the table to the doctor. Hospitals do not even give food, so we had to bring rice ourselves. After paying 30,000 won, my friend was able to safely undergo the surgery.”

“The doctor said many women receive such surgeries. But some women do not even have money and are ashamed, so they do not go the hospital but damage their bodies while using folk remedies. Chosun women do not have such an education, so they hear from their mothers to drink eggs diluted in vinegar or to fall from a precipice to abort the baby. The doctor said never to try such means, because of the damage to the body. But even at the hospital, you have to give adequate money to receive comfortable treatment.”

Daily NK
Kang Jae Hyok
4/16/2007

In commemoration of the anniversary of Kim Il Song’s 95th birthday (Apr. 15), North Korea has been preparing various spring festivities including the “Arirang” performance.

The number of foreigners visiting North Korea during this time is also expected to escalate.

Recently, the DailyNK confirmed through Chinese merchants that bribery and gifts had been exchanged between North Korean authorities. It is these during these seasons of Kim Il Song and Kim Jong Il’s birthday and the founding of the Workers Party and the Republic that bribes are most favorable.

For the past 4 years, Ma Il Su (pseudonym, 43) a Chinese merchant living in Jilian has been importing North Korean agricultural produce and herbal medicines to sell in China. In a telephone conversation with the DailyNK, he informed on the 12th, “I have prepared a special gift to give to North Korean authorities for when I enter the country on the 14th.”

He said, “On the whole, anyone trading with Chosun (North Korea) also offers gifts to them… The best offering is in the form of money.”

“Offering cash to the nation is the best but there are times when electronic goods are also given” he said.

Ma continued, “In order to trade in Chosun, you need the cooperation of authorities on your side” and said, “To charm the hearts of authorities, gifts must be given frequently. The best way to do this is by offering gifts at times of Kim Il Song and Kim Jong Il’s birthday.”

“You should go to the People’s Committee and offer the gifts to the chairman directly saying, ‘I sincerely pray for the Great Leader’s health and Chosun’s growth.’ Then they (the North Koreans) become ecstatically excited they do not know what to do” he said.

When asked whether or not gifts had to be offered to individual authorities Ma said, “You cannot trade if you do not offer bribes to authorities… Officials prefer cash as well as watches or electronic goods such as widescreen TV’s. In particular, they like watches made from South Korea.”

“I have already arranged for sheets of Chinese currency to give to individual authorities in timing with Kim Il Song’s birthday” he said and added, “Nowadays, offering bribes has become a norm in North Korea. There would be chaos if a gift was not offered.”

Ma said, “I am aware that my fellow tradesmen are offering gifts of similar nature” and estimated, “If we collect the amount of gifts offered by the Chinese, there should be quite a lot.”

Money given by Chinese merchants to the People’s Committee first reaches the respective local authorities of the Party → higher party authorities → central authorities in Pyongyang, and finally is offered as a bribe to Kim Jong Il. In the end, the money is donated into Kim Jong Il’s private fund and used for his personal pleasures.

Following the July 1st measures in 2002, North Korea-China trade has expanded significantly with hundreds of Chinese merchants filtering into North Korea everyday. In accordance with Ma, the number of people offering bribes to North Korean authorities seems to be considerably large.

[NKeconWatch: Exit the government, enter the mafia?]

Daily NK
Han Young Jin
4/10/2007

South Korean court recently ruled to nullify any contract between defectors and brokers. Brokers help North Korean defectors to sneak into South Korea and get paid in return.

On Sunday, Seoul Metropolitan West District Court ruled against plaintiff, a broker, who sued former defector, a forty-five year old female A. In a ruling, the court stated “H (the broker) exploited A’s inexperience and hastiness to profit exorbitant amount.”

H made a complaint against A to pay five million won (roughly 5,400 US dollars), the amount A made a contract to do so in China for helping her to defect to Seoul.

Such controversy between brokers and defectors have been ongoing problem for a long time. And many have argued the contracts between defectors in China and brokers to be illegal.

The court ruling is based on South Korean civil code article number 104, in which ‘any legal activity lack of fairness due to one’s inexperience or hastiness is nullified.’ However, as the district court ruled, is brokerage of defection really an ‘act of exploiting defectors to profit exorbitant amount?’

There are many different types of brokers; somebody who profit from helping defectors, and others who receive minimal amount of compensation, barely enough to take defectors to Seoul, with somewhat humanitarian intention.

The decision by court on Sunday, however, might cause all those “contracts” between brokers and defectors invalid, which would definitely reduce the number of brokers and extent of their rescuing activity.

As of now, most of defectors who entered South Korea are helped by those brokers. Defectors, who lack information and legal status, often find it extremely hard to find safe area or a route via a third country to South Korea. Until they are in safe area or Seoul, brokers provide them protection and ways to escape.

South Korean government no longer offers protection for defectors at first hand for various reasons. Whatever the reasons may be, North Korean defectors are willing to pay a certain amount of money, which most of them do not have, in exchange of their freedom to go to Seoul. So defectors sign a contract with brokers to promise to take some of the government subsidy for settlement to reimburse.

An Inchon-based broker J said in an interview “Brokers are taking high risks because there’s no collateral but a piece of signed contract.” According to J it costs two million won to get a defector out of China safely. The cost includes food, transportation from northeast China to a country in Southeast Asia and bribe.

Since defectors do not have any money beforehand, brokers usually borrow money from bank with high interest. Thus, total cost could rise up to three million won to even five million.

Another broker K called the price “completely market price.” “This is not a risk-free business. If court nullify contract between defector and broker, there will be no more brokers, the only ones that defectors could ask for help.”

A broker from Busan, Y, told his experience. Y also went to court with a “contract” on his hand. In this case, the judge decided to let defectors pay at least some of the money.

Even defectors view the cash for entering Seoul as fair and legitimate.
Another K, a defector, said “I didn’t think even ten million won was too much to go to South Korea when I was in China. If there was no broker, I could’ve never escaped to South Korea.”

The district court’s decision might make in sense on the code. However, given harsh condition of defectors in China and South Korean government’s indifference toward them, brokers are necessary in rescue of wandering defectors.