North Korean Economy Watch

Writing in the Wall Street Journal, Evan Ramstad notes the following information about Rimjingang and Imjingang:

Japanese publisher Jiro Ishimaru has gotten a lot of attention over the past month for his new English-language book of articles from Rimjingang – the magazine about North Korea that’s written by North Koreans.

Over the past six years, he’s worked closely with a few dozen North Koreans to get insiders’ stories published.

Less well known is the North Korean defector in Seoul, Choi Jin-i, who worked closely with him until recently. She published a Korean version of the magazine while he handled Japanese.

They split earlier this year over funding differences. Mr. Ishimaru’s magazine is commercially-funded while Ms. Choi’s is supported by charitable contributions. Ms. Choi’s magazine now has a slightly different name. It’s called Imjingang.

Their writers are mainly North Koreans with the political and financial ability to visit China, where they can communicate freely.

For both Ms. Choi and Mr. Ishimaru, the biggest challenge is getting contributors to verify the information they report.

Mr. Ishimaru’s favorite scoop came last year. It was a video report that showed a 20-year-old textile factory in the North Korean city of Suncheon, long touted as a showplace industrial plant by North Korea’s state media, is actually unused and crumbling.

“The factory might have only run on opening day when the Great Leader (Kim Jong Il’s father Kim Il Sung) was there,” Mr. Ishimaru says. “There had been rumors inside the country that the factory never ran, but nobody outside the nation confirmed that. Our reporter went there and for the first time filmed the factory in ruins.”

Ms. Choi says her favorite article appeared in the magazine’s first issue in 2007. It was an analysis of North Korea’s economic situation by a high-ranking government official. She said she worked for more than a year to persuade the official to give an interview.

The quality of information in that interview surprised North Korea watchers. “Many South Korean scholars said they didn’t know there was an intellectual in North Korea,” Ms. Choi said.

And the surprise for me: The factory in Sunchon mentioned in the story is the Sunchon Vinalon Complex (not to be confused with the 2.8 Vinalon Complex in Hungnam).  I actually used the video mentioned in this story and matched it up with Google Earth Satellite imagery to confirm it was shot in the DPRK.  You can see the blog post and video here.

Read the Wall Street Journal article here:
North Korea by North Koreans; How the Magazines Work
Wall Street Journal
Evan Ramstad
11/8/2010

Andre Lankov writes in the Korea Times:

Recently one cannot help but notice an important change in the mood of Pyongyang watchers ― well, some of them. Over last year one began to hear again talk which has not been heard for 15 years or so ― serious people, many of whom are potential or actual decision makers, once again are discussing the probability of North Korea’s collapse.

Back in the early 1990 such a collapse was widely ― almost universally ― expected. Indeed, the communist bloc was falling apart, so it seemed only logical that North Korea, arguably the least efficient of all communist states, would go the same way as East Germany or Rumania. To a large extent, in the early 1990s the U.S. policy towards North Korea was based on assumption that its days were numbered. However, the much anticipated collapse did not happen, and since then the idea of it was discredited, so among the experts talks of collapse came to be seen as a sign of non-professionalism. Only in recent years has this talk begun anew.

The reason seems to be clear: the botched 2009 currency reform produced a serious crisis. The irritated North Koreans began to express their dissatisfaction even when talking to foreigners ― an unprecedented development. For a while in February it seemed that the situation was getting out of control ― so, even the habitually cautious Chinese for a while privately expressed their concerns about North Korea’s future.

On one hand, this revival of collapse theory is good news. It seems that in the long run a regime collapse is indeed highly probable, almost unavoidable, and it is good that decisions makers at least discuss such a probability, since it will prompt them to do some useful contingency planning. However, the present author is afraid that these recent talks are, above all, another example of wishful thinking. An immediate collapse is not impossible, no doubt, but it does not look very likely.

There are seem to be two reasons which might trigger the regime’s sudden disintegration ― a popular uprising and an open power clash within the elite, and neither appears likely right now.

The North Korean elite understand perfectly well that unity is the major condition for their survival (“if we do not hang together, gentlemen, we would be hanged separately” seems to be their most favorite dictum). In the peculiar case of a divided Korea, a clash within the elite is likely to trigger the disintegration of the state. Of course, there must be powerful internal rivalries and feuds within the elite, but their shared fear of instability helps to keep these disagreements under control. It is possible that Kim Jong-il’s death will create a new situation, and some of the old feuds will surface, but as long as the “Dear Leader” remains in control, this is not likely.

An outbreak of a popular revolution is highly improbable, too. The North Koreans are poor, but people do not start revolutions simply because they are poor. Revolutions happen when people believe that there are better ways of living. Nowadays, thanks to the spread of information about the outside world, many North Koreans are beginning to suspect that life indeed might be better. However, the sheer dissatisfaction about the current system alone is not sufficient for a revolution. Two other conditions must be present in most cases: people should have some organization, even rudimentary, and they should believe that their efforts are not futile, that the resistance has at least some chance to succeed. Neither condition is met in North Korea so far.

To start with, the North Korean authorities are very good in breaking all horizontal connections between their subjects. Unlike other communist regimes, North Korea does not tolerate even the obviously non-political activities if such activities are not directly supervised by the authorities. So, people are isolated and very distrustful of one another.

The fear is great, too. People do not start rebellions if they are certain that their rebellion has no chance to succeed. But North Koreans still tend to believe that any resistance is futile, since the regime would crush it in no time. There are closet dissenters in North Korea, to be sure, but they have to keep their mouths shut, since any challenge to the regime means certain death.

Things are changing, no doubt. Kim Jong-il’s North Korea is more liberal and permissive than it was when Kim Il-sung ruled the place. The officials prefer to take bribes and are ready to overlook minor irregularities. The booming private markets create an environment where some interaction is possible and people began talking between themselves. However, it might take a long time before these changes will produce conditions suitable for a revolution. Talks of a coming collapse are not a complete fantasy but might be seriously premature.

Read the full story here:
Revival of ‘collapse’ theory
Korea Times
11/7/2010

According to the Choson Ilbo:

North Korea is pushing the implausible dream of turning the city of Rajin-Sonbong in North Hamgyong Province into an international freight brokerage, export processing and finance hub. A 3D video elaborating on a blueprint for the development of the city was made right after leader Kim Jong-il visited China in May.

The video, obtained by the Chosun Ilbo from a North Korean source in China, says the North worked out a plan in June to develop the city by giving distinctive roles to each of its six districts. “The video was made as material for reporting to Kim Jong-il,” the source said. “Discussion on the blueprint started right after Kim’s visit to the city in December last year and it was then hastily completed when people were talking about possible Chinese aid to the North after Kim’s visit to China in May.”

In December, Kim reportedly reprimanded senior officials there for making no progress in two decades since it was designated a development zone.

The regime upgraded Rajin-Sonbong to a special city in January. Rumor has it that Kim’s brother-in-law Jang Song-taek, the influential director of the Workers Party’s Administration Department, is pushing for development there.

The narrator in the video says, “In the future, Rajin-Sonbong will turn into a world-class economic and trade zone based on international freight brokerage, export processing and finance business and into a beautiful cultural port city in the era of the Songun (military-first) ideology.”

The narrator quotes regime founder Kim Il-sung as saying, “Rajin-Sonbong must become a better city than Singapore when you establish an economic and trade zone there.” Kim Jong-il is quoted as saying, “To build Rajin-Sonbong well, we must carry out the construction project according to an urban development plan.”

The video says the regime made a detailed plan to develop the city. A Kim Il-sung statue and public buildings such as an exhibition hall will be built in the Jungsim District. Changpyong District, which lies close to Rajin-Sonbong Port, will become a residential area. Anju District will become a finance center with hotels, banks and a department store will be built. High-risers including a 40-story office building will be built in Sosan and Dongmyong, and light industry will be built on both sides of Rajin Railway Station in Yokjon District.

Six design research centers in Pyongyang and Rajin-Sonbong were tasked with producing the blueprints.

But experts say chances that the project will come to fruition are near zero. “If Rajin-Sonbong is to be developed according to the blueprint in the video, the North would have to reform and open up. It can’t become an international trade and finance center without huge investment from South Korea, the U.S. and Japan,” a South Korean government official said.

So far, only a road linking the Chinese city of Hunchun with Rajin-Sonbong Port is being built in accordance with Chinese plans to ship goods from there.

Cho Bong-hyun, a researcher at the Industrial Bank of Korea’s economic research center, said an estimated 5 million tons a year of grain, coal and timber from northeastern China are being transported to southern China, and China can save up to US$10 per ton or $50 million a year in transport costs if it uses Rajin-Sonbong Port instead of railways.

The port could also be of help to China for exports. There are also rumors of a joint industrial complex in the area where North Korea would provide the labor for Chinese firms.

But a Chinese businessman operating in the North said the North and China have different ideas about the development plan, so nobody knows if and when development will get under way.

The video can be seen at the Choson Ilbo web page below.

Read the full story here:
N.Korea Pursues Dream of Int’l Business Hub
Choson Ilbo
11/5/2010

According to Yonhap:

North Korea’s Cabinet premier is visiting northeastern China to meet with ranking officials there and speed up joint economic projects between the communist allies, sources here said Wednesday.

Choe Yong-rim arrived in the city of Harbin in Heilongjiang Province earlier this week and visited the city of Changchun in a nearby province on Wednesday, the diplomatic sources said.

Choe, promoted by North Korean leader Kim Jong-il at a parliamentary convention in June, is seen as trying to consolidate the ties between Pyongyang and Beijing as the two countries seek to develop a joint economic bloc that draws from resources in China.

His visit comes after Kim visited the area in late August. During a summit between the North Korean leader and Chinese President Hu Jintao, the countries promised to boost their political and economic cooperation.

Choe’s trip, also reported by a local daily here, comes after 12 of the highest-ranking North Korean mayoral and provincial chiefs visited the same region in October, touring food, chemical and agricultural factories along with other major facilities.

Believed to be a key aide to North Korea’s next leader, Kim Jong-un, the premier inspected electronics and medicine companies and a agricultural research center in Harbin on Tuesday, the sources said.

Choe, 79, formerly chief of the Pyongyang department for the ruling Workers’ Party, has been noted for his rise to power in the past several months. He gave a speech at a mass rally on May 30, where as many as 100,000 North Koreans reportedly denounced South Korea and the United States for blaming Pyongyang for the sinking of a South Korean warship in March.

Read the full story here:
DPRK premier in northeastern China for economic cooperation
Yonhap
11/3/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-11-01-1
11/1/2010

The North Korean Ministry of People’s Security (MPS) recently issued an order restricting the use of automobiles and warning that any car or truck used to earn private income would be confiscated by the State. There were a few cases of authorities cracking down on the use of private buses in the mid-2000s, but this is the first time there has been a widespread crackdown on the private use of all vehicles.

According to a report from the Daily NK, a source from North Hamgyeong Province has revealed that “on an order from the MPS, a crackdown on privately-owned cars, buses, and 1.5-2 ton small trucks began last month,” and, “all traffic police were mobilized and are checking all registrations, car-use permits, and driving licenses.” According to the source, each regional transportation authority is filing comprehensive situation reports, which show that with the exception of cars used by the elite, all illegally-used cars are being confiscated. Even cars used by military-run foreign capital organizations are subject to inspection by police.

In North Korea, the lack of electricity has led, since the mid~2000s, to the sharp drop in the use of trains and a rise in reliance on the so-called ‘service car’ as the primary method of moving people and goods around the country. This crackdown on service cars will be carried out in two phases: Phase 1 will run until the end of the year, then Phase 2 will be carried out until April 2011. The ownership and use of cars by organizations and businesses will also be investigated, while other cars will be inspected one at a time as they travel the roads. If any illegal use is discovered, the car will be impounded.

This kind of measure appears to be one aspect of North Korean authorities’ on-going battle against “anti-socialism.” Cars and other government property being put to private use is problematic, but a crackdown of this size indicates that organizations and government workers are abusing the rules on such a scale that the government can no longer tolerate their corruption. In order for these service cars to exist, authorities must break laws, forge documents, and pay bribes to get a car registered, purchase gas, and handle profits.

However, a crackdown on these cars is expected to have many side-effects. Service cars began replacing trains in 2004, but the people’s reliance on them grew so quickly that they are now the primary means of transportation throughout North Korea.

Ultimately, the North can not avoid significant aftershocks of the measure; without service cars, not only will businesses suffer production problems, those people who make their living through wholesale and retail markets will suffer, and the standard of living for people across the country will take a hit.

Previous posts on this topic cna be found here and here.

According to the Daily NK:

The North Korean authorities consider both prostitution and drugs to be serious problems and are actively seeking ways to combat them, according to an internal document obtained by The Daily NK.

Obtained on the 28th, the document, “Measures against Young Women Earning Money through Prostitution,” produced internally by the People’s Safety Ministry (PSM), reveals that the PSM has instructed local offices to crackdown on prostitution and drug-related crimes more vigorously.

This document was reportedly distributed to provincial committees of the Party and local PSM offices in July this year.

According to the document, “Anti-socialist phenomenon, young women and college students taking part in prostitution included, are appearing,” adding, “Strong measures to overcome this situation must be prepared.”

“At commuting times, women in large groups have been seen taking part in prostitution around bus stops or train stations,” the document states. “Law enforcement officials must not yield to these actions.”

The PSM document also focuses on drug crimes, reporting that, “The circulation and use of illegal drugs is increasing. We must establish measures to overcome drug-related activities.”

The document represents a tacit admission by the PSM that both prostitution and drug use have expanded to the point of becoming social problems in North Korea, a fact which the authorities have never admitted publicly.

As in many other countries, economic difficulties in North Korea tend to lead to an increase in the number of young women entering prostitution, because it represents one of the few ways to make ends meet. Inside North Korea sources say that the March of Tribulation led to a significant increase in prostitute numbers, and last year’s confiscatory currency redenomination is said to have had a similar effect.

As a result, sources say that regardless of the authorities’ will to crack down on prostitution and other illegal activities, it will be impossible because they are now an ingrained part of North Korean society.

Furthermore, even though public trials of persons accused of prostitution-related offences are held regularly in provincial areas, the law is unable to reach the most powerful prostitution rings because they are tacitly protected by paid-off PSM officials.

Read the full story here:
PSM Admits to Seriousness of Social Ills
Daily NK
Shin Joo Hyun
11/1/2010

According to Good Friends:

Hyesan City police officers in the Ryanggang Province are still doing well amidst North Korea’s economic chaos which has been further exacerbated by the government’s recent currency reform. Illegal trade in Hyesan, which is close to the national border, is rampant and particularly connected to the sale of drugs as well as rare metals, such as gold, silver, copper, iron, et cetera that are under tight government control. While some smuggling operations are managed by individual venders, most are large-scale enterprises. Bribery has thus become customary since sending and receiving prohibited items requires the aid of police or security officers. As a result, obtaining such positions in Hyesan has become very competitive; in particular, many Ryanggang Province officers have been applying for transfers, with bribes being exchanged in the process.

In order to become police or security officer in Hyesan a candidate must offer a bribe of at least one million won in the new currency. This may be a large sum of money; however, it’s only a matter of time before officers recoup their investment by taking in bribes from the smugglers. A smuggling or drug case that may be considered big in other regions can be resolved fairly easily if the right security officials are involved. Last September, a reputed drug trafficker who was arrested on drug related offenses was released within days after being declared innocent of charges. Although an order for intensifying drug regulations had been issued across the country, money clearly had priority.

Such corruption is encouraged by a society-wide permissiveness that doesn’t make a big deal out of anything unless it has to do with ideology issues. Simply speaking, if an incident is not “related to espionage,” then it is not a big deal. Rather, releasing culprits in exchange for money is regarded as a way of surviving during difficult times. Since corruption has become routine, neither officers nor smugglers seems to have a sense that what they are doing is wrong. The same goes for the people at large. For example, although officers are prohibited from possessing and riding personal motorbikes, those who do not own their own are often looked down upon by citizens; they believe that such officers must be slow-witted for not having one being in the position that they are. Along with the jeering is a healthy dose of envy.

If the officers take bribes from smugglers to look the other way, the wives of officers use their husbands’ status to actually join in the fray. They send articles to and receive prohibited items from China; they money they earn from such smuggling activities actually surpass the amount their husbands earn through bribes. Even if the wives are caught, the husbands step in to make the problem go away. The money a husband-wife team earns in this way surpasses the imagination of ordinary people. In Hyesan, there is a saying that only police officers have withstood the currency reform tsunami without breaking a sweat. Others say that “all the laws enacted by the government only serve to fill the bellies of the police officers.”

According to the Daily NK:

With North Korea’s domestic security forces having been engaged in inspecting and confiscating vehicles being used for private gain since October 18th, the question of whether the so-called “servi-cha” industry will stay the course has become a central issue for many. This is because the presence or absence of the “servi-cha” can make or break the North Korean domestic economy, much like last year’s currency reform.

What is a “servi-cha”?

There are two types of “servi-cha”. The first are vehicles, mainly buses and trucks, owned by state organs and enterprises, which transport people and supplies in exchange for money. Enterprises use the money earned from the service to provide rations for the workers, cover transportation costs or obtain further raw materials for production.

The second type of “servi-cha” is those owned by individuals but registered as being owned by an enterprise; they are used for private gain. Collusion among three parties; the owner of the vehicle, the driver and the enterprise under whose name the vehicle is registered, is necessary in such cases. The owner of the vehicle acquires a car from, predominantly, China or Japan, whereupon cadres of a certain enterprise or local unit register the vehicle under the name of the enterprise or unit. A driver is hired thereafter, who then gets a drivers’ license from the cadre and sets about earn a profit by providing public transportation to residents or moving supplies. A portion of the money earned is given to the cadre, who will usually take a fraction for personal gain and register the remainder as company profit.

In general, two people man a “servi-cha”; the driver and his assistant. Alongside them, the owner of the freight being transported is present, and thereafter empty seats are taken by other passengers. If the car meets an inspection on the way to its destination, there is no problem; on paper, the vehicle is legitimate; it belongs to a unit, and the owner of the freight carries a transportation permit that he/she has received from the car owner. With a bit of alcohol and tobacco on hand to bribe the inspector, even the people occupying the empty seats are free to pass.

A North Korean license plate contains information on the institution the vehicle belongs to. As most people do not have a travel permit, they tend to prefer “servi-cha” that display the license number of a powerful institution. Transportation fees differ according to the type of license plate on the “servi-cha”. “Servi-cha” with plates from powerful groups charge higher fees than those with plates from food factories and agricultural offices, for example.

Vehicles are assigned numbers based on certain rules; license plates that reflect an auspicious date are deemed best; either 216 (February 16th; Kim Jong Il’s birthday) or 727 (July 27th; Victory Day). The license plate of a car given as a gift by Kim Jong Il to someone on the Central Committee might be assigned a number such as 216-11-101.

Furthermore, each department of the Party uses its own license plate number in order to distinguish ownership of vehicles. For example, the Party’s Finance and Accounting Department uses the number 02; 11 and 12 is reserved for Party offices; 12 to 14 for administrative units; 15 to 17 for the People’s Safety Agency; 18 to 20 for the National Security Agency; 21 for judicial branches; 22 for a unit under Party Department No. 39, 90 for the Central Party liaison office, and 46 for passenger transport services.

Inspections are stricter for those “servi-cha” with less impressive license plates. Travel permit checks become more thorough, and the inspectors ask more questions about the cargo. Thus, vehicle owners with “weaker” plates tend to have to give more bribes.

Origins of the “Servi-cha”

Public transportation virtually stopped in North Korea during the economic collapse which began in 1995, bringing about shortages of fuel and electricity. The country was incapacitated to the point that the government issued a decree calling on cadres to walk.

The first people to break the logjam were from foreign-currency earning units. They were able to use imported fuel to transport freight for other companies, at a price. Many enterprises quickly spotted the rising demand for freight logistics services, and started earning considerable profits by importing Chinese Dongfeng or Japanese second-hand trucks.

Demand for this was not limited to institutions and enterprises. Vendors also wanted to move their supplies around the country. The importing of Chinese products to the Rajin-Sonbong Special Economic Zone beginning in 1997 was followed by a rise in long distance cargo transportation to cities as far as away as Pyongyang, Hyesan, Sinuiju, Kaesong and Haeju.

The Different Types of “Servi-cha”

In general, trucks are a popular choice. This is because they can transport cargo and people at the same time. Buses, which are more readily owned by institutions and enterprises than trucks, are also often utilized for long-distance trips. A regular 45-person bus will often be full to capacity, with the central aisle lined with makeshift seats.

Party and military cadres also use their vehicles as “servi-cha”. It is commonplace for them to order drivers to look out for long-distance travelers as a means of earning extra money when the car is not in use. This also applies to the case of military cadres.

Sometimes, the seats of Japanese second-hand vehicles or Chinese second-hand jeeps are removed in order to take a maximum of eleven passengers.

Earning Money through “Servi-cha”

Use of “servi-cha” has vastly increased the quantity of goods and number of people crossing provinces, with goods smuggled in across the Tumen and Yalu Rivers in the north spotted in locations as far away as South Hwanghae and Kangwon Province, both of which border South Korea. Therefore, it can be said that production and trade between enterprises and vendors owes a great deal to the “servi-cha”.

For example, in 2001 the price of sweet potatoes peaked in the Rajin-Sonbong Zone. Demand for sweet potatoes was high in places north of Hamheung because climate conditions in that northern region are not favorable for cultivating the crop. While sweet potatoes were priced at 7 won per kilogram in South Hwanghae Province, in the Rajin-Songbong Zone the price exceeded 45 won per kilogram.

Vendors from Rajin-Sonbong were therefore able to increase profits 50% by selling Chinese everyday goods in Hwanghae province, and then make seven times more money selling southern sweet potatoes in the north.

It goes without saying that initial expenditure is required to pull this off. The cost of changing tires, of filling up the vehicle with gas, of bribing officials for travel permits and drivers’ permits, all added up to about 70,000 won. However, a round-trip could earn the “servi-cha” crew a net profit of 60,000 to 70,000 won. At the time, it was very good money.

Kim Kyung Hee’s “Servi-cha” Experiment

On her way to Kangkye in Jagang Province, Kim noticed a throng on the street, and approached, concealing her identity. They were people waiting for a “servi-cha”. Leaving her assistant and vehicle behind, Kim quietly stood in line with the other people.

Eventually, a 10-ton “servi-cha” arrived and people began scrambling for seats on the platform normally reserved for cargo. Paying her fare, 50 won, Kim also tried to board, but the driver noted her less than ordinary appearance and gave her the passenger seat.

After a few minutes of travel, a strange voice could be heard;

“Comrade, our time is up.”

The source of the sound was Kim’s watch. It was a message from her assistant, who was following the “servi-cha”. The driver, concerned for any number of reasons, immediately stopped and asked Kim to descend from the cab. In the end, the “servi-cha” left her behind on the road. It has been said that Kim went back to her vehicle and told her assistant that the “servi-cha’s are rather fun”.

Read the full story here:
Servi-Cha: the Lifeblood of the People’s Economy
Daily NK
Im Jeong Jin
10/28/2010

(via One Free Korea) Global Times reports (in Korean) that the DPRK is leasing two islands (황금평 and 위화도) to China.

Here is a satellite image of the two islands (highlighted):

According to the article:

South Korea’s Hankook Ilbo daily newspaper reported Thursday that North Korea has decided to extend the lease terms of two islands to Chinese companies for the establishment of a free trade zone.

However, analysts say the zone will more likely be developed as a trade area to facilitate business with China.

Both islands are located on the Yalu River, which constitutes the northwestern boundary between North Korea and the northeast region of China.

Hankook Ilbo reported that North Korean leader Kim Jong-il agreed to establish a free trade zone of 50 square kilometers on the two islands during his visit to China in May, and foreigners won’t need a visa to visit the islands.

The extension of the lease term by 100 years – starting this past May – to Chinese companies is unusual because Pyongyang generally leases land to foreign companies for 50 years, the report said.

By press time, state-run media in North Korea hadn’t confirmed the report.

South Korea’s Yonhap News Agency reported earlier this year that in order to attract foreign investment to North Korea, Pyongyang will set up a free trade area, located near the Sino-North Korean border city of Dandong, Liaoning Province, to be developed by a Chi-nese enterprise.

The report quoted an informed source as saying the scale of investment in the two islands will total $800 million.

“I don’t think North Korea will establish a free trade zone in the border areas that soon,” said Lü Chao, director of the Korean Research Center at China’s Liaoning Academy of Social Sciences. “But it is likely that the two islands will be developed into a border trade zone that can help improve the lives of the locals and be conducive to regional stability.”

Lü told the Global Times that developing a free trade zone in North Korea’s border areas with China might take longer.

Separately, Japan’s Yomiuri Shimbun newspaper reported Monday that Kim Jong-un, the third son of Kim Jong-il, recently said his country needs food more than bullets.

“In the past, it was all right to have bullets and no food, but now we must have food, even though we don’t have bullets,” the newspaper quoted him as saying.

The paper said Kim Jong-un made the remarks during a visit to Kimchaek city in Ham-gyong Province in late September, and the comments are confirmed in documents recently disseminated to party officials.

Kim Jong-un was promoted to a four-star general and vice chairman of the ruling Workers’ Party’s Central Military Commission last month during an important meeting of the party.

The White House said Thursday that North Korea appeared to be in the early stages of a leadership transition, and it would still take some time to discern the final outcome.

“We’re watching the transition closely,” Jeff Bader, US President Barack Obama’s Asia adviser, told reporters.

The idea of building a special economic zone near Sinuiju has been proposed several times but it never seems to take hold.  Given the level of economic growth in Dandong over the last five years, and China’s growing clout in the DPRK, maybe things will be different this time.

Read the full aticle here:
NK leases islands to Beijing: report
Global Times
Wang Zhaokun
10/29/2010

UPDATE (10/31/2010): According to CTV News:

The head of the Canadian Security Intelligence Service quietly told a crowd of insiders he’s worried about North Korea and Iran surreptitiously trolling Canada for components to build an atomic bomb.

In a speech to academics and former intelligence officials, CSIS director Dick Fadden spoke of the spy service’s “active investigations” of people trying to procure nuclear materials.

The threat of weapons of mass destruction is an “area where we have to worry far more than we did not too long ago,” Fadden said.

“North Korea and Iran being people that we worry about the most.”

Fadden made the unusually candid comments in a previously unreported — and still partly secret — address to a late May gathering in Ottawa of the International Association for Intelligence Education.

The CSIS director also elaborated on his concerns about foreign interference in Canadian politics, as well as the threat of cyberterrorism. In addition, Fadden mused aloud on whether simply jailing homegrown terrorists is a real solution to the problem of radicalization. And he told the audience India has more influence in Afghanistan than Canada and its major coalition partners combined.

ORIGINAL POST: According to CTV:

Canada is adopting tough new sanctions against North Korea intended to demonstrate to Pyongyang that “its aggressive actions will not be tolerated.”

Foreign Affairs Minister Lawrence Cannon announced the new restrictions Thursday.

Under the new controlled engagement policy Canada’s relations with North Korea will be restricted to just a few areas, Cannon said.

Regional security concerns, human rights and humanitarian issues, inter-Korea relations and consular issues are now the only acceptable topics of contact between the two countries, Cannon said.

“All government to government co-operation or communication on topics not covered under the controlled engagement policy have now stopped,” Cannon said.

Cannon also announced new economic sanctions that will soon be put into place.

He said all imports from and exports to North Korea will be halted, apart from certain humanitarian exceptions.

There is also a ban on investment in North Korea by Canadians or people in Canada.

The sanctions also restrict the provision of financial services and the transfer of technology to North Korea.

All North Korean ships and aircraft are also banned from either landing in Canada or passing through its airspace, Cannon said.

“Canada takes a principled stand against those who recklessly commit acts of aggression in violation of international law,” Cannon said.

“The adoption of a controlled engagement policy and the imposition of special economic measures send a clear message to the North Korean government that its aggressive actions will not be tolerated.”

Canada has taken a tough stance with North Korea following the sinking of the Cheonan, a South Korean navy ship, earlier this year.

Forty-six sailors were killed when the ship went down. A multi-national investigation concluded the warship was sunk by a North Korean torpedo.

In the wake of the attack, Ottawa announced tougher diplomatic and trade restrictions, suspended high-level visits from officials and joined in the international condemnation of the attack.

Cannon on Thursday called on Pyongyang  to “improve its behaviour in complying with its obligations under international law.”

“These sanctions are not intended to punish the North Korean people. The sanctions we are announcing today are aimed directly at the North Korean government,” he said.

The level of trade between the DPRK and Canada is minimal, so these actions are more symbolic than anything else.

Though the two countries exercise diplomatic relations, there is no DPRK embassy in Canada and vice-versa.

Read the full story here:
Ottawa drafting ‘tough’ new sanctions for North Korea
CTV
10/28/2010