Archive for the ‘Foreign direct investment’ Category

UN security council adopts sanctions banning imports of wide range of North Korean goods

Saturday, August 5th, 2017

Benjamin Katzeff Silberstein: 

On Saturday August 5th, the United Nations Security Council approved a resolution banning member states from importing North Korean export goods such as minerals and seafood products, and from hiring North Korean laborers. Wall Street Journal:

U.S. Ambassador Nikki Haley praised the council’s solidarity, saying more days like this one were needed at the United Nations. She also personally thanked China for helping move the resolution from talk to action. The U.S., which had drafted and put forward the resolution, negotiated for more than a month with China over the text and final measures targeting Pyongyang.

“This resolution is the single largest economic sanctions package ever leveled against the North Korean regime,” said Ms. Haley, adding the council had put the country and its leadership “on notice” and “what happens next is up to North Korea.”

President Donald Trump said on Twitter, “The United Nations Security Council just voted 15-0 to sanction North Korea. China and Russia voted with us. Very big financial impact!”

Both China and Russia urged a return to talks with North Korea and told the Security Council that the U.S. must abandon its military exercises with South Korea and dismantle the missile-defense system in South Korea known as Thaad because North Korea perceived that as a threat and it undermined the security of the region.

“We stress that additional restrictions cannot be an end to themselves, they need to be a tool to engage in dialogue,” said Russia’s new ambassador to the U.N., Vassily Nebenzia.

The nine-page resolution steps up trade restrictions with Pyongyang by aiming to cut off a third of its $3 billion annual export revenue. It bans North Korea from trading coal, iron, lead, iron and lead ore, and seafood.

The resolution also prohibits countries from hiring North Korean laborers and bans countries from entering or investing into new joint ventures with Pyongyang.

Diplomats and sanctions experts have long warned that export revenues, even remittances from foreign workers, are cycled back to North Korea’s military and nuclear programs.

A Security Council diplomat offered this estimate on North Korea’s foreign revenue earnings in 2017: $295 million from seafood; $251 million from iron and iron ore, and $400 million from coal trade.

North Koreans work in China, Russia and the Arab countries in the Persian Gulf in a variety of businesses ranging from factories to restaurants and nightclubs and are estimated to send home several billion dollars in revenue, a large portion of which the government claims, according to U.N. sanctions experts.

The new resolution restricts North Korea’s technology trade and tightens enforcement of sanctions on North Korean vessels by banning violators from entering ports around the world.

Under the resolution, North Korea’s Foreign Trade Bank, which handles foreign exchange, will be added the U.N.’s sanctions list that freezes the assets of targeted entities.

It remains to be seen whether the new sanctions will deter North Korea’s pursuit of advanced ballistic missiles and nuclear weapons or bring its leader Kim Jong Un to the negotiating table.

North Korea’s economy has managed to stay afloat largely because China, its main trade partner, and Russia and some African nations haven’t fully enforced existing U.N. sanctions. The U.S. Treasury in June sanctioned Chinese entities—primarily banks and shipping companies—and individuals for violating sanctions and conducting trade that contributed to North Korea’s military and nuclear program.

China’s Ambassador Liu Jieyi said his country denounced unilateral sanctions by the U.S. and said action against North Korea must be through the U.N. mechanism. Mr. Liu told the council he welcomed the U.S. position that it wasn’t seeking regime change in North Korea.

“China has always been firmly opposed to chaos and conflict in the [Korean] peninsula,” Mr. Liu said.

Although China and Russia have pushed for a resumption of the six-party talks with North Korea, disagreement remains on how to bring Washington and Pyongyang to the table. China and Russia have called for a freeze-for-freeze plan under which North Korea would halt any more military or nuclear action and the U.S. would end its military exercises with South Korea.

Full article here:
North Korea Hit by $1 Billion Sanctions After Missile
Farnaz Fassihi
Wall Street Journal
2017-08-5

 

The UN summary of the resolution reads as follows:

The Security Council today further strengthened its sanctions regime against the Democratic People’s Republic of Korea, condemning in the strongest terms that country’s ballistic missile launches and reaffirming its decision that Pyongyang shall abandon all nuclear weapons and existing nuclear programmes in a complete, verifiable and irreversible manner.

Unanimously adopting resolution 2371 (2017) under Article 41, Chapter VII of the United Nations Charter, the 15-nation Council decided that the Democratic People’s Republic of Korea shall not supply, sell or transfer coal, iron, iron ore, seafood, lead and lead ore to other countries.

Expressing concern that Democratic People’s Republic of Korea nationals working abroad were generating foreign export earnings to support the country’s nuclear and ballistic missile programmes, it also decided that all Member States shall not increase the total number of work authorizations for such persons in their jurisdictions, unless approved by the Security Council Committee established pursuant to resolution 1718 (2006).

Through the text, the Council decided that States shall prohibit the opening of new joint ventures or cooperative entities with the Democratic People’s Republic of Korea entities and individuals, or expand existing joint ventures through additional investments.  In addition, it decided that Pyongyang shall not deploy or use chemical weapons and urgently called for it to accede to the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and Their Destruction.

Also through the resolution, the Council named nine individuals and four entities to be subject to a travel ban and asset freeze already in place, as well as to request that the International Criminal Police Organization (INTERPOL) issue special notices with respect to designated individuals.

In addition, it reaffirmed that its provisions were not intended to have adverse humanitarian consequences for the civilian population of the Democratic People’s Republic of Korea, and that the Security Council Committee established pursuant to resolution 1718 (2006), on a case-by-case basis, exempt from sanctions those activities that would facilitate the work of international and non?governmental organizations engaged in assistance and relief activities for civilian benefit.

Furthermore, through the text, the Council called for the resumption of the Six-Party Talks between China, Democratic People’s Republic of Korea, Japan, Republic of Korea, Russian Federation and the United States towards the goal of a verifiable and peaceful denuclearization of the Korean Peninsula.

Speaking after the resolution’s adoption, the representative of the United States said the Council had put the Democratic People’s Republic of Korea’s dictator on notice by increasing the penalty of its ballistic missile activity to a whole new level.  All Member States must do more to put more pressure on that country, she said, adding that the United States would take defensive measures to protect itself and its allies, including through joint military exercises.

China’s representative said that, while today’s resolution had imposed further sanctions, it did not intend to negatively impact such non-military goods as food and humanitarian aid.  Calling on all parties to implement the resolution’s provisions fully and earnestly, he recalled that China and the Russian Federation on 4 July had put forward a road map to resolve the issue through two parallel tracks — denuclearization and the establishment of a peace mechanism.  Recalling that the United States had recently indicated that it was not pushing for regime change or for the Korean Peninsula’s reunification, he said an escalation of military activities would be detrimental to all countries of the region.

Japan’s delegate said the sheer number and frequency of the Democratic People’s Republic of Korea’s nuclear and ballistic missile tests “show how unprecedented and unacceptable these provocations are”.  Not only was the quantity outrageous, but the qualitative advancements were alarming.  Noting that today’s resolution would reduce the Democratic People’s Republic of Korea’s revenue by approximately $1 billion, he said all Member States must demonstrate renewed commitment to implement the Council’s decisions.

The Russian Federation’s representative, while calling on the Democratic People’s Republic of Korea to end its banned programmes, said progress would be difficult so long as it perceived a direct threat to its security.  Emphasizing that military misadventures risked creating a disaster, he said sanctions must be a tool for engaging Pyongyang in constructive talks rather than to seek the country’s economic asphyxiation.

The Republic of Korea’s delegate said that Pyongyang’s missile provocations on 4 and 28 July, together with its nuclear programme, posed a grave threat to international peace and security.  Indeed, such reckless acts of defiance should be met with stronger measures, he said, adding that additional sanctions contained in resolution 2371 (2017) would significantly cut off the inflow of hard currency that would otherwise have been diverted to illicit weapons programmes.

Full article:
Security Council Toughens Sanctions Against Democratic People’s Republic of Korea, Unanimously Adopting Resolution 2371 (2017)
United Nations Meetings Coverage
2017-08-05

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New Chinese investment in the Yalu bridge

Wednesday, August 2nd, 2017

Benjamin Katzeff Silberstein 

In 2010, North Korean and Chinese authorities decided to build a new bridge across the Yalu River, which is currently estimated to carry 70 percent of all trade between the countries. I recently spoke with a diplomat who was previously based in North Korea, who told me that the current bridge is rather decrepit, and particularly so on the North Korean half. The new bridge was partially built due to an expectation that trade would increase between the two countries, an expectation that seems to have been true for the past few years, including 2016 when North Korea was supposedly under harsh sanctions by the international community.

North Korea, however, has not yet constructed roads to cities on its side of the bridge, making it largely useless. Now, a Chinese businessman has decided to invest in the project — unclear if this is for any expectations of financial gain. Daily NK reports:

Anticipation for the opening of the new Amrok (Yalu) River Bridge connecting Dandong (Liaoning Province, China) with Sinuiju (North Pyongan Province, North Korea) has risen after a Chinese businessman decided to invest money in the project’s infrastructure.
The construction of the new Yalu River Bridge was initiated in December 2010 with the expectation that it will bring an expansion of the trade volume between China and North Korea. The bridge was completed in 2014 after overcoming significant issues. However, the construction of roads on the North Korean side slowed to a halt, delaying further progress.
Recently, a Chinese businessman has announced his decision to invest in North Korea’s road construction efforts, which have remained the biggest obstacle to the opening of the bridge.
A source familiar with North Korean affairs in China told Daily NK on July 24 that according to North Korean traders in Sinuiju, a Chinese businessman has committed 300 million RMB (about US$44.7 million) to the road construction project.
The construction of the new bridge was first proposed due to safety concerns regarding the existing Sino-Korean Friendship Bridge, which although derelict, has been responsible for more than 70% of bilateral trade. The bridge was repaired twice last year alone, highlighting its significant structural issues.
Aware of the situation, China sponsored the construction of a two-way (four-lane) road in the area, paying for the entire construction expenses totaling 2.2 billion RMB (approx US$327 million).
However, the source noted that North Korea suspended the construction of roads between the bridge and North Korean cities, demanding further investment from China.
“North Korea has been continuously demanding investment from Chinese businessmen, threatening them with a suspension of trade unless they invest. It seems that these efforts have produced results,” he said.
But actual construction has yet to start. When asked about this, the source said it is presumably due to the tense bilateral relations between China and North Korea, as well as international sanctions and overall political climate.
Full article:

Chinese investment breathes new life into new Yalu River Bridge
Daily NK
2017-08-02

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What about the Chinese companies that depend on trade with North Korea?

Sunday, July 9th, 2017

Benjamin Katzeff Silberstein

Domestic conditions within China are often underestimated as a factor when it comes to the country’s enforcement of sanctions against North Korea. In the grand scheme of things, they may not be a major constituency, but it is difficult to imagine that for a government that values economic growth and social stability as much as China does, it would not factor in the sentiments and demands of domestic businesses who depend on trade with North Korea.

Indeed, when one travels to Dandong, the border town most central to trade between China and North Korea, one can begin to appreciate the magnitude of the trade ties between local businesses and their neighbors on the other side of the Yalu river. I have posted some pictures here. Parts of the city are almost wholly dominated by businesses and stores that cater to North Korean customers, some that are clearly tailored for private and large-scale buyers of goods like cars, machinery, kitchen items such as refrigerators, et cetera. Many companies along the border deal in export-import with North Korea. Southern China Morning Post has an interesting story out today about some of these businesses, often an underestimated constituency in the sanctions analyses:

Su Nan, a trader along the China-North Korea border, used to be a busy man. He used to wake early in the morning, fill his schedule with endless phone calls, and in a good year close deals worth millions of US dollars. But now, all of that has gone.

“We have no revenue so far this year,” Su told This Week in Asia. “In fact, we have been struggling since 2016, with fewer and fewer orders coming.”

Although his company hasn’t lowered his salary or laid off workers, Su said he can’t help but worry. After all, “we just sit in the office and do nothing”, he said.

Su works at Dandong Sevsuns Trading, an export firm located in Dandong, a stone’s throw from North Korea. China’s 1,420km-long border with North Korea has fostered many cross-border businesses – Dandong alone hosts 600 such firms by some estimates.

[…]

Since attempts to halt North Korea’s nuclear tests through diplomacy have fallen flat and Beijing doesn’t want a war near its soil, “curbing North Korea’s nuclear ambition through tougher economic sanctions has become the only choice”, Cheng said.

But that worries the many Chinese whose livelihoods rely on trade with North Korea. For Su, the trader in Dandong, such a move could be “a killer blow”.

Su’s firm helps international organisations purchase and deliver supplies of humanitarian aid to North Korea. International relief to North Korea has almost dried up in recent months, and Su said his company had likewise been struggling to stay in business.

“If China suspends more trade activities, then we will have no choice but to shut down,” he said.

Other Chinese traders share his concern.

“Selling fruit to North Korea is the only source of income for my family. What shall we do for a living if China will no longer trade with North Korea?” said Wu Xiuhua, a middle-aged Chinese woman in Tumen, a border city an hour’s drive from North Korea.

Like other traders, Wu used to drive her produce straight over the Tumen River; now all must apply for permits to take their goods across the border.

Since the summer months are traditionally a low season for fruit sales, Wu is able to cope with the financial losses – for now. But other Tumen traders recently took to the street, she said, angry about the costly and time-consuming change.

The local authority in Tumen declined to comment.

It is unclear how many Chinese traders living along the border have been, or will be, affected by the sanctions, but Wu is not optimistic.

“Many people here are running cross-border businesses,” she said, adding that some of her friends had even invested in North Korea, building warehouses equipped with industrial cooling systems to store imported seafood.

“All these investments will go down the drain if China cuts off economic ties with North Korea,” she said.

Besides traders, any business that deals with North Korea, however indirectly, is also at risk.

At a garment factory in Fengcheng, another city near Dandong, an executive told This Week in Asia that although his company did not sell to North Korea, it had hired at least 100 North Korean workers to make clothes – ironically – for customers in Europe and the US.

“If Beijing expands its sanctions to include the hiring of North Korean workers, that would have a negative impact on our business,” said the executive.

“North Koreans work for a lower salary,” he said. “It is also hard to find enough Chinese workers, as Fengcheng, like many cities in China, faces a labour shortage.”

Labour exports are considered a major source of income for North Korea.

Nearly 80,000 North Korean working overseas send up to US$2.3 billion back home annually, according to a report by the North Korean Strategy Centre, a defector group. The report said more than half of them work in China and Russia.

The factory has yet to receive any official notices that restrict hiring, but some residents say changes are already underway. “A restaurant here used to have a lot of North Korean waitresses, but many have disappeared in the past few months. Nobody knows why they left or where they went,” said one resident.

The only businesses that remain unaffected, and at least in some respects optimistic about the future, are Chinese companies that arrange cross-border trips to North Korea.

In fact, an agent at Dandong China International Travel Service said their business had been going so well that the company now ran the tour daily.

“Many Chinese are curious about North Korea,” said the travel agent, who gave only her surname, Wang. “We now send more than 30 tourists to North Korea every day, with some clients coming all the way from Hong Kong and Macau.”

Full article:
SANCTIONS ARE FINE, BUT WHAT ABOUT THE CHINESE WHO DEPEND ON TRADE WITH NORTH KOREA?
Coco Liu
South China Morning Post
2017-07-09

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Ri Jong Ho, high-level defector and former official in Office 39, says North Korea gets much more oil from Russia than previously known

Saturday, July 1st, 2017

Benjamin Katzeff Silberstein

In a fascinating interview by Kyodo News’s Tomotaro Inoue, Ri Jong Ho, a former high-level official in Office 39 of the Korean Worker’s Party, makes several fascinating claims about the supply of fuel to North Korea:

North Korea secures up to 300,000 tons of oil products from Russia each year through Singapore-based dealers, a defector who formerly managed funds for the leadership has told Kyodo News, posing a challenge for the United States as it seeks to isolate Pyongyang.

“North Korea has procured Russia-produced fuel from Singapore brokers and others since the 1990s…It is mostly diesel oil and partly gasoline,” Ri Jong Ho, 59, a former senior official of Office 39 of the Workers’ Party of Korea, said recently in the U.S. capital in his first interview with media under his own name.

Ri also said North Korea relies more on Russia than China for fuel to keep its economy moving, indicating that the U.S. drive for Beijing to restrict oil supplies over Pyongyang’s nuclear and missile programs will only have a limited effect.

“It is a wrong perception that North Korea is completely dependent on China,” he said.

Petroleum products have been shipped to North Korea by tankers leaving Vladivostok and Nakhodka, both in the Russian Far East, with the fuel widely used for cars, ships and trains, helping to support the North’s economy, Ri said.

Other sources familiar with the fuel deals said the petroleum products ending up in North Korea are often purchased by brokers who claim they are destined for China, with the items procured using forged paperwork.

Ri, who defected to South Korea with his family in October 2014, provided details of the activities of Office 39.

The secretive entity, said to have been established by former North Korean leader Kim Jong Il in May 1974, is subject to international sanctions as the United States and other Western countries believe it is engaged in illicit economic activities and the management of slush funds for the leadership.

He said North Korea has been trying to reduce its economic reliance on China, Pyongyang’s most important benefactor, since leader Kim Jong Un issued an order to expand trade with Russia and Southeast Asian countries in August 2014.

The order followed Chinese President Xi Jinping’s visit to South Korea a month earlier, during which he and then South Korean President Park Geun Hye expressed opposition to North Korea’s nuclear weapons development. It was the first time for a Chinese president to visit South Korea before traveling to the North.

Ri said the North Korean leader was “infuriated” by the visit, going so far as to call China an “enemy state,” and began taking measures to boost trade with Russia.

According to Ri, Office 39 has five central groups and systematically acquires foreign currency by sending laborers overseas as well as through gold mining and exports.

“It is an organization that manages the supreme leader’s coffers and the party’s funds to rule the country. It also leads trade activities to earn foreign currency,” Ri said. The office has enormous power as it is directly linked to the leadership and is independent of other government organs, he added.

Ri admitted that Office 39 has evaded U.N. sanctions by asking Chinese and Russian contacts to allow the use of their names for the opening of bank accounts for trade settlement.

The activities of Office 39 require the involvement of hundreds of thousands of people, including those in rural areas who produce items for export. Ri said the bureau is now headed by Chon Il Chun, first vice department director of the party’s Central Committee and a former classmate of Kim Jong Il, the current leader’s father.

A native of Wonsan on North Korea’s east coast, Ri was told to work in Pyongyang by the Central Committee in the mid-1980s. He operated a shipping company at Office 39’s Daehung group and later headed a trade control section in the group between 1998 and 2004.

The Daehung group earns revenue through farm exports and shipping operations, among other means. With exclusive rights to trade “matsutake” mushrooms and snow crabs, it was actively shipping those products to Japan before Tokyo imposed a total ban on trade with the North about 10 years ago.

The four other central groups are Kumgang, which dominates gold export activities, Daesong, involved in the shipment of processed products and intermediate trade overseas, Daesong Bank, in charge of the office’s banking operations, and a group dispatching workers to other countries.

Asked about the possibility that the foreign currency earned by North Korea is being used for its nuclear and missile development programs, Ri only said, “It is up to the supreme leader how to use the funds.”

North Korea receives 500,000 tons of crude oil each year through a pipeline from China, resulting in around 70,000 to 100,000 tons of gasoline and about 100,000 tons of diesel oil after refining, but the oil products are exclusively used by the North Korean army and are not good enough for cars that carry the elite, Ri said.

He also said crude oil purchased from other countries is refined by foreign companies based in China, leading to the importation into North Korea of an additional 50,000 to 100,000 tons of gasoline.

Full article here:

N. Korea procuring Russian fuel via Singapore dealers: defector

Tomotaro Inoue

Kyodo News

 

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US sanctions of Chinese entities over transactions with North Korea

Friday, June 30th, 2017

Benjamin Katzeff Silberstein

Reuters reports:

The United States imposed sanctions on two Chinese citizens and a shipping company on Thursday for helping North Korea’s nuclear and missile programs and accused a Chinese bank of laundering money for Pyongyang.

U.S. Treasury Secretary Steve Mnuchin said the actions were designed to cut off funds that North Korea uses to build its weapons programs in defiance of U.N. Security Council and unilateral sanctions.

“We will follow the money and cut off the money,” he told a news conference.

A Treasury statement identified the bank as the Bank of Dandong and the firm as Dalian Global Unity Shipping Co Ltd. It identified the two individuals as Sun Wei and Li Hong Ri.

The sanctions imposed on the two Chinese citizens and the shipping company blacklists them from doing business with U.S.-tied companies and people.

Bank of Dandong did not respond immediately to a request for comment. A staff member at Dalian Global Unity would not comment on the sanctions and subsequent calls to the firm’s office in Dalian went unanswered.

Mnuchin said U.S. officials were continuing to look at other companies that may be helping North Korea and may roll out additional sanctions.

U.S. foreign policy experts say Chinese companies have long had a key role in financing Pyongyang. However, Mnuchin said the action was not being taken to send China a message. “This wasn’t aimed at China. We continue to work with them,” he said.

China did not respond favorably:

Asked about the U.S. sanctions on Friday, Chinese Foreign Ministry Spokesman Lu Kang said that China consistently opposes unilateral sanctions imposed outside the U.N. framework.

“We strongly urge the United States to immediately correct its relevant wrong moves to avoid affecting bilateral cooperation on the relevant issue,” he said, without elaborating.

China’s ambassador to the United States, Cui Tiankai, said China opposed the United States using domestic laws to impose “long-arm jurisdiction” on Chinese companies or individuals, the official Xinhua news agency reported on Friday.

“If a Chinese company or individual has acted in a way that violates United Nations Security Council resolutions, then China will investigate and handle the issue in accordance with Chinese law,” he told an event in Washington on Thursday evening.

Full article here:
U.S. targets Chinese bank, company, two individuals over North Korea
Joel Schectman and David Brunnstrom
Reuters
2017-06-30

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Chinese officials telling companies not to hire North Koreans

Sunday, June 18th, 2017

By Benjamin Katzeff Silberstein

The sourcing for this story looks to be some quite thin gruel, but given the current context, it makes sense. Nikkei Asian Review:

According to a source who is familiar with China-North Korea diplomacy, Beijing began instructing Chinese businesses to refrain from hiring North Korean nationals in March 2016 — the month that the U.N. toughened sanctions on the country in response to Pyongyang’s fourth nuclear test.

The instruction has so far been given informally, and in some cases, orally. No formal notices have been issued, the source said.

The companies receiving the instruction are mainly in Jilin and Liaoning provinces, on the border with North Korea. Beijing appears to be gradually including more companies in its whisper campaign, the source said.

The informal sanction appears to contradict the Chinese foreign ministry’s position that the country should not impose any form of sanction against North Korea if it is not based on a U.N. Security Council resolution. At the same time, it is a means by which Beijing can register its displeasure with Pyongyang’s missile and nuclear testing.

Full article:
China telling companies not to hire North Koreans
Oki Nagai
Nikkei Asian Review
2017-06-18

This seems to be the pattern when it comes to Chinese sanctions enforcement against North Korea. Orders and directives are given in a vague, non-specific fashion, making them relatively easy to rescind and relax at a later time. In other words, news like this should not necessarily be taken as evidence of some grand Chinese push against North Korea. The way that policy directives like these are delivered, is itself indicative of their temporary nature. This current period is not the first (and probably not the last) time that China has restricted trade with North Korea, but that itself is not evidence of any long-term “squeeze”. It is probably safe to assume that these directives will be reversed or relaxed soon enough.

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No more North Korean labor in Bulgaria

Monday, May 29th, 2017

Benjamin Katzeff Silberstein

Reports Yonhap:

Bulgaria said Monday that it has suspended imports of workers from North Korea amid criticism that Pyongyang is extorting money earned by their people overseas.

The action was taken along with the Czech Republic and Romania, the Bulgarian Embassy to South Korea said in a press release.

“Bulgaria, the Czech Republic and Romania set a precedent by ceasing their labor imports after realizing the conditions of North Korean overseas laborers,” it said.

“The suspension of receiving North Korean laborers by these three East European countries is an example where states have actively taken measures against the extortions of the laborers’ remuneration,” it added.

Full article:
Bulgaria suspends labor imports from N.K.
Yonhap News
2017-05-29

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North Korea Sells South Korean Cookware Seized at Kaesong

Monday, February 6th, 2017

Benjamin Katzeff Silberstein

Reports Radio Free Asia:

South Korean cookware seized illegally by North Korean authorities after the Kaesong joint industrial park was closed last year are being found for sale in large quantities in Chinese cities near the North Korean border, sources say.

Formerly viewed as a symbol of cooperation between the two halves of the divided Korean peninsula, Kaesong was closed in February 2016 after North Korea ordered all South Koreans out of the complex, seized South Korean assets there, and declared the area under military control.

The move came a day after South Korea announced it was pulling out of Kaesong in retaliation for North Korean nuclear and long-range missile tests earlier in the year.

Now, electric rice cookers produced by South Korean firms in Kaesong are turning up for sale across northeastern China, a source in Kaifeng, in central China’s Henan province, told RFA’s Korean Service.

“North Korea began to sell South Korean products left behind in Kaesong starting in mid-December,” said the source, familiar with trade in the northeast and speaking on condition of anonymity.

“Their exact number is unclear, but it’s known to be in the hundreds.”

Electric cookers bearing the Kaesong markings “Made in Korea” are among the most popular items offered for sale in Korean stores located in cities in China’s northeast, sources said.

“Those buying the cookers are mainly South Korean businessmen.  Then resell them to Korean merchandise stores located in Shenyang, Yanji, and other places,” RFA’s source in Kaifeng said.

‘A complicated problem’

Speaking separately, the operator of a shop in China near the border with North Korea told RFA that he was approached in early December by four North Koreans he had never seen before.

“They asked if I would be interested in buying electric cookers made in Kaesong for a low price,” the source said, also speaking on condition he not be named.

“They said there were about 6,000 of these that they could sell.”

“At first, I thought that I could make a lot of profit by selling them, but then I refused the offer because I thought this could become a complicated problem for me later on,” he said.

While the same rice cookers are also made in Qingdao, in China, and labeled “Made in China,” those made in Kaesong are more popular with consumers because of their “Made in Korea” markings, he added.

 

Full article:
North Korea Sells South Korean Cookware Seized at Kaesong
Reported by Joonho Kim for RFA’s Korean Service. Translated by Soo Min Jo. Written in English by Richard Finney.
2017-02-06

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Summer trailings along the Sino-North Korean border, in search of sanctions: photo essay

Tuesday, December 20th, 2016

By Benjamin Katzeff Silberstein

This November, just like every  time that new sanctions are levelled on North Korea, the first question tends to be: what will China do? Unsurprisingly, the same question followed after UN resolution 2270 in March this year, when the international community adopted the strongest sanctions against North Korea to date, most crucially targeting its minerals exports. This time, some believed, would be different. China was finally fed up and would take measures to hit North Korea’s economy, and official; statements and some bureaucratic action reinforced this impression. Now, some hope that the “cap” measure on imports of North Korean coal will remove the loophole created by the “humanitarian exemption” in the previous sanctions.

By now, after the THAAD, other geopolitical developments and the sheer passing of time, the question of China’s degree of sanctions enforcement has almost faded into the background. As the Washington Post’s Anna Fifield showed in a dispatch from Dandong a few weeks ago, sanctions are at most one factor among many that impact trade between China and North Korea.

This summer, I visited Dandong, Yanji and Hunchun, three Chinese cities along the border. I got a very similar impression: sure, some people involved in border trade told me, things had gotten a little more complicated, though not much. But sanctions were rarely mentioned as the reason for any added difficulties or downturns in trade.  At the time, China’s enforcement of sanctions was very much a topic of debate, and most analysts were skeptical of any squeezing going on, while some claimed trade had virtually ceased. At my visit, on the contrary, I saw fairly vigorous trading activity, and few people I spoke to thought any changes had occurred since sanctions were enacted. Posting these impressions and pictures has been a project in the pipeline for a while, so while much has happened since this summer regarding China-DPRK relations and trade, I hope that the reader will find it interesting to see how things looked at a time when some concluded that China was finally squeezing North Korea in a way that hurt. To be clear: all impressions and pictures below are from late June of 2016.

Trailing the China-DPRK border, in search of sanctions

Dandong 

Entrance to the Dandong customs inspections area. Photo: Benjamin Katzeff Silberstein

Earlier this year, the UN Security Council adopted the strongest sanctions that North Korea has faced to date. As with previous rounds of sanctions, one of the major questions is China’s degree of enforcement. Going back a few months, some suggested that major shifts had taken place, and that trade between North Korea and China had declined radically.

By the actual border, this summer, things looked very different. In contrast to the image of a desolated trading environment, I encountered bustling traffic during a visit earlier in the summer. During one morning in late June, around 85 trucks crossed the border from North Korea into China in only about one and a half hours. Virtually all trucks were registered to northern Pyongan province, the home province of Sinuiju. In addition, 19 cars and buses, one long freight train and one passenger train crossed the bridge during the same time. After this first stint of traffic, the flow reversed and a steady flow of trucks began pouring into North Korea from China. Only during the 15 minutes when I observed the traffic going from China, into North Korea, 35 trucks and 13 buses and cars crossed the bridge.

The traffic flowed in sequences, one direction at a time. And this was only the morning traffic. The flow may have continued throughout the day, as the traffic moved in intervals. Walking back to the customs area from the bridge crossing in the early afternoon, what was previously a calm intersection by Chinese inner-city standards had turned busy: trucks lined the entire street leading up to the customs office and some flowed over into the adjacent street, waiting to drive into the inspection area. All in all, more than 80 trucks lined the roads waiting to cross into North Korea. Most carried Chinese license plates.

Trucks lined up on both sides of the street at one of the main intersections in central Dandong, waiting to go into the customs inspection area to cross into North Korea. Photo: Benjamin Katzeff Silberstein

Trucks, trucks and more trucks. Photo: Benjamin Katzeff Silberstein

Trucks lined up for customs inspection along the streets of Dandong before crossing into North Korea. Photo: Benjamin Katzeff Silberstein

Trucks lining up for customs inspection before crossing into North Korea from Dandong. Photo: Benjamin Katzeff Silberstein

The never-ending line of trucks. Photo: Benjamin Katzeff Silberstein

Truck driving into the Dandong customs area. Photo: Benjamin Katzeff Silberstein

Another picture of the never-ending line of trucks. Photo: Benjamin Katzeff Silberstein

North Korean trucks crossing into Dandong from Sinuiju. Photo: Benjamin Katzeff Silberstein

It is commonly estimated that around 200 trucks go between China and North Korea on a regular day. In sheer numbers, virtually nothing seemed to have changed regarding the traffic since the latest round of sanctions. Only the trucks observed in plain sight during this morning amount to a little under 200, and this merely during the first few hours of the day. At least 10–20, probably far more, were already in the customs inspection area waiting to cross. In short, things looked very regular and busy.

Trucks waiting to cross from North Korea into Dandong. Photo: Benjamin Katzeff Silberstein

Some of the trucks going into Dandong from Sinuiju looked empty. Photo: Benjamin Katzeff Silberstein

Of course, one must be careful not to draw too drastic conclusions from one day of observations. Things may have changed throughout the summer and surely during the fall, and channels such as ship transports are not visible from the border bridge area. Moreover, according to reports from inside North Korea, the authorities have expressed concerns about potentially shrinking trade volumes as a result of sanctions, and some traders now smuggle goods that are covered by the sanctions rather than transporting them openly, as they have in the past, according to Daily NK. In short, sanctions did appear to be having some degree of impact, even during the past summer.

Most North Korean trucks crossing into Dandong were registered to North Pyongan province ( 평안북도도, here abbreviated to 평북), the province bordering Dandong. Photo: Benjamin Katzeff Silberstein

Another truck registered to North Pyongan province. Photo: Benjamin Katzeff Silberstein

However, the truck traffic across the Chinese border through Dandong suggested that the picture was mixed. At the very least, observations from the border area showed that even though trade in certain goods may have gotten more difficult, North Korea was by no means economically cut off from China, and still is not. Prices for food and foreign currency on North Korean markets, too, remained relatively stable through the summer from when sanctions were put in place, indicating that the economy as a whole is not feeling any drastic impact of the sanctions.

Factory materials going into North Korea from China. Photo: Benjamin Katzeff Silberstein

Factory materials going into North Korea from China. Photo: Benjamin Katzeff Silberstein

Most trucks transporting factory materials into North Korea appeared to be Chinese-registered. Photo: Benjamin Katzeff Silberstein

Another Chinese truck transporting factory materials into North Korea. Photo: Benjamin Katzeff Silberstein

If the North Korean economic elite was worried about the sanctions, it certainly did not show at one hotel in central Dandong. Sinuiju in North Korea is only a few minutes drive over the Yalu River, on the bridge connecting the two countries. The hotel was packed with North Korean guests, many of whom have presumably come over for purchasing and meetings with Chinese business partners. They came and went in a steady stream, wearing luxury brand clothing, watches and carrying expensive bags and wallets.

They paid everything in cash, and at least one person per travel party spoke Chinese. One man held a car key with a logo from KIA, the South Korean car manufacturer. One woman sported a Hello Kitty handbag. As some got ready to depart, bags piled up in the lobby, seemingly filled with goods from shopping sprees around town. Some of it seemed to be meant for re-sale in North Korea. Many stores around the flood banks cater specifically to a North Korean clientele, and sell items like kitchenware that are not easily accessible across the river.

Many stores in Dandong cater specifically to North Korean consumers. The sign at the left bottom of the picture reads “ìĄ°ì„ ë°±í™”ì ,” translating into “Korea department store.” Photo: Benjamin Katzeff Silberstein

Travelling to Dandong, it was particularly apparent why the Chinese government would be reluctant to clamp down too hard on border traffic, even if it would want to do so. Political reasons aside, trade between North Korea and China matters for cities such as Dandong. One can see it in the flesh: the streets are packed with companies dealing in imports and exports to and from North Korea. One company trades steel; another sells construction equipment such as tractors. Several sell cars and buses, and others deal in refrigerators, dishwashers, washers and dryers. One, called “Pyongyang Tongshin (평양톔신),” judging by its name, offers cell phone services for traders travelling into North Korea. Should trade between the two countries drastically dive, the local economy would take a hit.

Advertisements for North Korean cell phone service Koryolink in Dandong. Photo: Benjamin Katzeff Silberstein

“Pyongyang Communications.” Sign in Dandong. Photo: Benjamin Katzeff Silberstein

One could turn these observations on their head: if so many trucks were lining up and only moving slowly into the customs area, could that not mean that inspections had gotten tighter? Was the line of trucks actually a sign that Chinese authorities did what they have promised to do?

Perhaps. But not according to people around the border crossing and customs area. I asked several individuals involved in the cross-border trade about the long lines and waiting times for border crossings. No one seemed to believe that the traffic commotion and lines were anything out of the ordinary. Both Chinese and North Koreans involved in import-export business said traffic had not changed at all during the past year or so. Overall trade had declined a bit, one person said. The trucks carried a little less than they did before, but only marginally. Coal was not traded as frequently as it was before the sanctions were put in place.

This sign lists services for one Dandong firm that offers, among other things, UPS transport services and solar-powered appliances, which have become popular in North Korea in recent years. Photo: Benjamin Katzeff Silberstein

But the timing of the early 2016 round of sanctions made such statements difficult to assess. China had in fact been decreasing its coal imports from North Korea at different points in time several years before the latest round of sanctions. Between 2013 and 2015, for example, the value of Chinese coal imports from North Korea shrank by almost 25 percent. Only between January and February 2014, the value of trade between the countries dropped by 46 percent. The statistics are often clouded by the fact that global market prices for commodities such as coal fluctuate heavily. There may also be a variety of seasonal factors at play. In sum, isolating sanctions as a variable is notoriously difficult, and often, numbers do not tell the full story. As of June this year, North Korean coal could still be ordered through the Chinese online shopping mall Alibaba.

Moreover, even if Chinese authorities wanted to check all goods cross with minute rigidity, one can question whether it would even be practically feasible. The customs area is not particularly large and did not appear to be overflowing with staff. Checking around 200 trucks per day for their exact goods, and determining whether its revenues could be used to fund North Korea’s weapons program – the condition stated by the latest sanctions – seems like a gargantuan task in practice.

 

Hunchun

Tourists and a truck waiting by the Hunchun-Rason border crossing (Quanhae). Photo: Benjamin Katzeff Silberstein

The Dandong-Sinuiju is the main point of trade between China and North Korea, but not the only one. An one-hour drive from the Chinese city of Hunchun, trucks and people come and go to and from the North Korean northeast. At the border crossing, most seem to be going to the special economic zone in Rajin in North Korea. On one gloomy Thursday in late June, around 40 Chinese trucks waited to cross. One Chinese-Korean waiting for the gates to open to the customs area told the present author that business is going very well these days. He runs a hotel in Rajin, catering mostly to Chinese tourists and business people. He has seen no dip in customers over the past year – rather, more people are coming than before. This single testimony may not be fully indicative of trade as a whole, but it does suggest that Chinese tourism remains an important and fairly viable source of revenue for North Korean businesses in Rason.

The Quanhae border crossing from afar. Photo: Benjamin Katzeff Silberstein

Trucks lining up to go into North Korea. Photo: Benjamin Katzeff Silberstein

More trucks at Quanhae. Photo: Benjamin Katzeff Silberstein

Trucks at the border crossing. Photo: Benjamin Katzeff Silberstein

Chinese tourists lining up to have their passports checked before heading into Rason. Photo: Benjamin Katzeff Silberstein

This was certainly the way things looked at the border crossing. Chinese tourists came and went in great numbers, many carrying North Korean shopping bags. Trucks, too, continuously crossed the border throughout the afternoon. All in all, 80­­–100 trucks drove into North Korea during this afternoon. One was adorned with a logo from the Dutch shipping company Maersk. A few trucks came out of North Korea as well, many seeming to carry seafood destined for cities such as Hunchun and Yanji.

A truck adorning a logo from the Dutch shipping company Maersk having just crossed into North Korea from Hunchun. Photo: Benjamin Katzeff Silberstein

In addition, a large number of buses and minivans carrying tourists and traders went in from China. Many minivans carried driving permits for Rajin clearly visible through their front windows. Given the amount of truck traffic only during the afternoon, it seems a reasonable estimate that perhaps twice the amount of traffic went through during the day as a whole. One person with good knowledge of the border area estimated that around 200 trucks go through at this crossing on a regular day, though this figure is obviously neither exact nor certain.

Customs office on the North Korean side of the border crossing. Photo: Benjamin Katzeff Silberstein

Chinese tourists waiting to head into North Korea. Photo: Benjamin Katzeff Silberstein

The two bridges connecting Rason to China (particularly the newly constructed one in the back). Photo: Benjamin Katzeff Silberstein

These observations did not fully prove that China was not enforcing sanctions on North Korea during the summer of 2016. However, they did show that trade and traffic between the countries was still very much alive. Some goods may have be traded less, but neither sanctions nor souring relations between North Korea and China seemed to have reduced trade as much as some observers have claimed. The North Korean economy may be impacted by sanctions, but it is not and rarely has been fully isolated from the rest of the world.

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KCNA reports on Kangryong Green Zone

Friday, December 9th, 2016

The Kangryong Green Zone was first announced on a promotional VCD given to foreign participants of a SEZ conference in Pyongyang in October 2013. However, the project was not formally announced in KCNA until July of 2014. KCNA has not mentioned it again until today.

According to KCNA:

Pyongyang, December 9 (KCNA) — The DPRK has pushed ahead with the project to develop Kangryong County of South Hwanghae Province into an international green model zone.

Kangryong County has favorable conditions for the project, as it is bound on sea rich in marine resources like sea cucumber and scallop. And its beachfront is abundant in energy resources, including wind, solar and tidal powers.

The county has circumstances favorable for sustainable development of agricultural production by means of bettering its ecosystem with organic farming method and introducing ring-shaped rotation production system.

In this regard, Hong Kil Nam, director of the Secretariat of the Korea Green Research and Development Association, told KCNA:

The county is highly potential to be a world-level green zone for its excellent natural ecological environment and good conditions for the development of fishery and agriculture.

With an increasing interest of the government in the county, a master plan for developing the whole county into an international green model zone was well matured in keeping with the reality of the DPRK and the world trend of development.

The master plan regards it as its principle to protect and improve the county’s natural ecological environment, set up a system of ecological circulation featuring the green zone, raise the utilization of resources and energy to the maximum and achieve the sustainable economic development. To this end, the plan includes such detailed projects as construction of an industrial zone for production of green goods, infrastructure and tourist zones with populated, forest and other areas.

Meanwhile, it is gaining momentum to draw up detailed plans and create a favorable environment for investment.

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An affiliate of 38 North