Archive for the ‘Energy’ Category

Uptick in North Korea’s Renewable Energy Production

Thursday, November 17th, 2016

Institute for Far Eastern Studies (IFES)

In North Korea, there are now three solar-powered ferries that sail the Taedong River: the Okryu 1, the Okryu 2, and the Okryu 3.

The North Korean government’s wire service, the Korean Central News Agency (KCNA), reported on November 4, 2016: “The ferries sail between Kim Il Sung Square and the Tower of the Juche Idea, guaranteeing that citizens can travel during the rush hour. . . . These solar powered-ferries provide ferry services both to workers and for guests from home and abroad in the form of tourist and chartered services.”

According to KCNA, the three ferries were built at Ryongnam Shipyard, each weigh 45 tons, have a maximum speed of 6 knots, and can take up to 50–60 passengers.

According to Yun Hyok, the captain of Okryu 1, “the ferry is powered by the energy of sun light . . . the driving system was created with the energy and skill of our engineers. The ship can run for around 8 hours when fully charged.”

Since the 1990s, North Korea has expressed determination to achieve energy independence, with Kim Jong Un pointing to resolving electricity difficulties as being a priority back in 2011. Subsequently, in 2013, a law was introduced to encourage research and the production of renewable energy, and at this year’s Seventh Party Congress it was announced that two hydropower stations had been opened. The importance of energy independence was also emphasized at the congress. It has also been confirmed that North Korea has been pursuing a long-term plan to raise the amount of energy produced from renewable sources to 5 million kW. In order to achieve this target, the plan envisages by 2044 that wind power will provide 15 percent of total energy demand.

This plan was discovered through internal materials on display at the Natural Energy Research Centre, formed in November 2014 as a result of an order issued by Kim Jong Un to develop energy resources that do not pollute the environment.

An overseas visitor to the Natural Energy Research Centre said that “the Centre in Pyongyang has a diagram of the 30-year plan to develop renewable energy with the title ‘The dream and ideal of Natural Energy Science development’. . . . The materials there also indicate plans to train specialists in the science of ‘natural energy’ development, and plans related to the development and trial sites for wind power, geothermal energy, and solar thermal energy.”

Such plans mean that North Korea plans to develop renewable energy, in addition to building hydroelectric power plants and/or using Chinese/Russian power to deal with energy shortages. In other words, they intend to attempt to reduce their consumption of fossil fuels and develop renewable energy. Since Kim Jong Un’s rise to power, a variety of measures have been put in place and investments made to broaden the use of renewable energy.

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Electricity and the five year plan

Tuesday, May 17th, 2016

According to Yonhap:

A pro-North Korean newspaper based in Japan said Tuesday that easing electric power shortages will be a prerequisite for North Korea to implement its new five-year plan for economic growth.

Without spelling out details, North Korean leader Kim Jong-un laid out a five-year strategy aimed at boosting the country’s moribund economy at the party congress which concluded its four-day run on May 9.

Kim stressed that resolving the shortage of electric power is critical to carrying out his vision for economic growth, saying that nuclear power generation needs to increase.

The Chosun Sinbo hailed the North’s economic plan, saying that if realized, the move will pave the way to improve the livelihood of people and boost balanced growth.

“North Korea is likely to focus on developing the defense industry…and to make efforts to tweak its advanced technology on the military and space programs to be applied into the improvement of North Koreans’ livelihood,” the newspaper said.

At the party congress, the North’s leader made it clear that he will “permanently” defend the pursuit of his signature policy of developing nuclear weapons in tandem with boosting the country’s moribund economy, commonly known as the “byeongjin” policy.

The newspaper said that the communist country is expected to lay out measures to back up the “dual-track” policy at the party level.

“As Pyongyang raised the issue of power shortages, the country is likely to focus on uses of nuclear power,” said Chang Yong-seok, a researcher at Seoul National University’s Institute for Peace and Unification Studies.

Kim’s vision for economic growth came after the U.N. Security Council slapped its toughest sanctions to date on North Korea for its fourth nuclear test in January and long-range rocket launch the following month.

Analysts said that Kim’s five-year economic development vision is too short on detail, especially when compared with his grandfather Kim Il-sung’s blueprint for economic growth which was unveiled at the party congress held in October 1980.

The North’s founder unveiled the 10-point plan to build a socialist country by setting special targets in economic sectors.

Here is a link to the Choson Sinbo article.

Here is the text:

김정은조선의 진로/당 제7차대회 보고에서(2)

2. 사회주의위업의 완성을 위하여

인민들에게 유족하고 문명한 생활을/자강력에 기초한 부흥전략의 추진

조선로동당은 사회주의시책에 따라 모든 인민들에게 유족하고 문명한 생활을 보장하는것을 목표로 삼고있다.(조선중앙통신)
조선로동당은 사회주의시책에 따라 모든 인민들에게 유족하고 문명한 생활을 보장하는것을 목표로 삼고있다.(조선중앙통신)

경제강국의 표상

조선로동당 제7차대회는 온 사회의 김일성-김정일주의화의 목표와 사회주의강국건설강령을 제시하였다. 그리고 경제강국건설을 현시기 조선로동당과 국가가 《총력을 집중해야 할 기본전선》으로 규정하였다.

세기와 세기를 이어 벌어진 조국보위전, 사회주의수호전에서 승리를 거둔 조선의 진로는 《개혁》, 《개방》의 기발을 들고 경제를 추켜세운 나라들이 걷던 길과는 다르다. 조선의 적대국들은 제재, 봉쇄의 해제와 외국자본의 류입이 없이는 조선경제의 회생은 불가능하다며 병진로선의 포기를 강요하고있지만 흘러간 세월을 자랑차게 총화하고 고귀한 희생우에 이룩한 승리를 자부하는 당과 국가가 이제와서 부당한 압력에 굴복하여 타협과 종속의 길을 택하리라고 생각하는것은 어리석다.

당 제7차대회 보고는 조선이 건설하려고 하는 경제강국의 표상을 밝혔다. 그 하나는 《자립경제강국》이다. 다시말하여 국방건설과 경제건설, 인민생활에 필요한 물질적수단들을 자체로 생산보장하는 나라, 인민의 자주정신과 창조정신, 과학기술의 위력으로 전진하고 발전하는 나라다.

오늘 우리가 믿을것은 오직 자기 힘밖에 없다, 누구도 우리를 도와주려고 하지 않으며 우리 나라가 통일되고 강대해지며 잘살고 흥하는것을 바라지 않는다… 당대회 보고의 구절이다. 여기에는 현 국제정세와 세계경제질서에 대한 랭정한 분석과 판단이 깔려있다.

조선의 경제건설현장에 휘날리는것은 자강력제일주의의 기발이다. 당대회 보고는 자체의 힘과 기술, 자원에 의거하여 자기 력량을 강화하고 앞길을 개척해나간다는 주체적관점에서 모든 문제를 풀어나갈것을 강조하였다.

경제건설에서 사대와 외세의존을 배격하게 되는것은 조선의 지향이 일반적인 경제부흥이 아니라 사회주의경제강국의 건설에 있다는것과도 관련된다. 조선은 국내총생산이나 국민소득의 수치만을 높이는데 치우칠것이 아니라 사회주의시책에 따라 모든 인민들에게 유족하고 문명한 생활을 보장하는것을 목표로 삼고있다. 인민을 위한 인민의 나라, 사회주의경제강국의 건설은 자본주의방식으로 경제를 발전시켜온 나라들의 《선의》나 《원조》따위는 애당초 기대하지 말아야 할 전인미답의 길이다.

5개년전략의 수행

당 제7차대회는 2016년부터 2020년까지의 국가경제발전 5개년전략을 수행할데 대한 과업을 제시하였다.

사회주의계획경제가 실시되는 조선에서는 과거에 《5개년계획》, 《7개년계획》과 같은 전망계획이 수립, 실행되였는데 1990년대 이후는 국가경제가 난관에 처하여 전망계획을 세울 형편이 되지 않았다. 이번에 단년도가 아닌 5년간의 목표가 《국가경제발전전략》으로 정립되고 당대회 보고가 그 수행문제를 강조한것은 조선의 경제가 본연의 체계를 갖추어나가고있음을 보여주는 징표다.

국가경제발전5개년전략의 목표는 인민경제전반을 활성화하고 경제부문사이의 균형을 보장하여 나라의 경제를 지속적으로 발전시킬수 있는 토대를 마련하는것이다. 이 전략수행의 선결조건이 바로 전력문제의 해결이며 당대회 보고는 원자력발전의 추진 등 일련의 방도들에 대해서도 언급하였다.

조선경제를 둘러싼 환경은 사회주의시장이 존재하고 그를 전제로 하여 다년도에 걸친 경제발전계획이 수립, 실행되던 1980년대 이전시기와 다르다. 경제부흥의 출로는 외부가 아니라 내부에서 찾아야 한다. 당대회 보고는 과학기술을 사회발전의 추동력으로 삼을데 대하여 지적하고 과학자들이 남들이 걸은 길을 따라만 갈것이 아니라 민족적자존심을 폭발시켜 년대와 년대를 뛰여넘으며 비약할것을 호소하였다.

한편 당대회 보고는 무역구조의 개선, 경제개발구들에 대한 투자조건보장 등 대외경제관계를 확대발전시킬데 대해서도 강조하였다. 자강력제일주의는 《페쇄경제》와 무관하다. 세계 여러 나라들과의 교류, 협력의 추진은 조선의 경제부흥전략에서 변함없는 기둥의 하나다.

병진로선의 실효성

조선의 사회주의경제는 시대의 요구와 인민의 리익을 반영하여 부단히 변화발전하고있다. 지난 세기 마지막년대에 직면한 최악의 경제적시련을 극복한 다음부터 나라의 경제사령부인 내각의 역할이 더 강조되고 내각책임제, 내각중심제에 따르는 경제작전, 지휘의 질서가 세워졌다. 새 세기에 들어서서는 《우리식 경제관리방법》에 대한 탐구와 실천이 새 차원에서 이루어지고 최근년간은 사회주의기업책임관리제가 실시되여 은을 내고있다.

당중앙위원회 제7기 제1차 전원회의에서는 경제사령부의 책임자인 내각총리가 당중앙위원회 정치국 상무위원(5명)과 당중앙군사위원회 위원(11명)으로 선거되였다. 경제건설과 핵무력건설의 병진로선을 철저히 관철하여 그 실효성을 더욱 높이는 대책들이 당적차원에서 이루어져나갈것이다.

국방공업을 우선적으로 발전시키면서 경공업과 농업을 동시에 발전시키는 방도, 군사와 우주개발부문 등의 최첨단기술을 민생기술로 전용하여 인민생활향상으로 이어가는 방법론 등 조선의 국력에 걸맞는 경제정책이 구체화될것으로 보인다. 조선식 사회주의경제의 진면모는 앞으로 당대회에서 언급된 국가경제발전5개년전략이 수행되는 과정에 보다 뚜렷이 나타날것이다.

Read the full story here:
Easing power shortage critical for N.K.’s new economy plan: report
Yonhap
2016-5-17

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New power plants operational before KWP congress

Wednesday, May 11th, 2016

The Paektusan Hero Youth Power Station No. 3

Paektusan-youth-power-staiton-3-2016-5-11

Pictured above (Yonhap): The Paektusan Hero Youth Power Station No. 3

Paektusan-power-stations-1-3

Pictured Above (Google Earth): The dam is too recent to appear on Google Earth imagery as of publication, but here are the locations of Paektusan Hero Youth Power Stations Nos 1-3

According to KCNA (2016-5-21):

Paektusan Hero Youth Power Stations in Full Operation

The Paektusan Hero Youth Power stations, built in the Democratic People’s Republic of Korea as a symbol of youth power, are now running at full capacity to supply electricity to the area of Mt. Paektu.

Kim Hyong Dok, chairman of the Samjiyon County, Ryanggang Province, People’s Committee, told KCNA:

Now is the dry season, but the stations have generated much electricity for industrial establishments, public cultural establishments and residential quarters in the county.

They are greatly helpful to the county’s economic development and the improvement of its population’s livelihood.

Academician, Prof. and Dr. So Pyong Hwa of Hamhung University of Hydraulic Engineering, said:

Electricity from the stations is also supplied to its neighboring Pochon and Paekam counties and Hyesan City.

It is very gratifying to see the safe conditions of hydraulic structures and generators at the stations. And it is better to read the mentality of their employees resolved to contribute to the province’s economic development and the improvement of its inhabitants’ livelihood with increased electricity production.

According to KCNA (2016-3-31):

Dam Project of Paektusan Hero Youth Power Station No. 3 Completed

Members of the youth shock brigade of the DPRK finished the dam project of the Paektusan Hero Youth Power Station No. 3 on March 31.

Members of the shock brigade and other builders vied with each other to mount the dam to greet the historic moment of the completion of the dam project.
At 10 a.m. they made a report on the completion of the dam project to supreme leader Kim Jong Un, looking up to the sky above Pyongyang.

The project started on January 13.

The completion of the dam project in a matter of less than three months represents a heroic epic which could be created only by the heroes of the youth power who grew up under the care of the peerlessly great men of Mt Paektu and a miracle they worked as young people of heroic Korea by bringing about a great leap forward by doing 10 years’ work just in one year.

Kim Jong-un visited on April 23.

Yonhap reports that its hasty construction meant the dam was not properly constructed, and it is already leaking.

The Paektusan Hero Youth Power Stations 1 & 2 were formally known as the Paektusan Songun Youth Power Stations. The Paektusan Songun Power Station No. 2 was submitted to the UNFCCC program.

It is still too early to tell, but it appears that power from these three plants will be going to Samjiyon and maybe Hyesan.

Wonsan Army-People Power Station

Wonsan-army-people-google-earth-2016-05-01

Above (Google Earth): The wonsan Army-People Power Station Dam, canal, and two hydro power stations.

Wonsan-army-people-Rosong-Sinmun-2016-05-01

Above (Rodong Sinmun)

According to Rodong Sinmun (2016-5-2):

Large-scale Wonsan Army-People Power Station has been built in Kangwon Province.

The power station has provided a foundation for generating the electricity necessary for developing the economy and improving the living standard of the people and solving the issues of household water, industrial water and irrigation water in the province.

An inaugural ceremony of the power station took place on April 29.

Present at the ceremony were Pak Pong Ju, O Su Yong, officials concerned, builders and working people.

A message of thanks from the Central Committee of the Workers’ Party of Korea (WPK) was delivered.

The message appreciated the builders of the power station and supporters for building another monumental edifice representing the era of the Workers’ Party by dint of self-development and self-reliance as a laudable present to the Seventh Congress of the WPK.

Pak Jong Nam, chief secretary of the Kangwon Provincial Committee of the WPK, in a speech called upon the officials, working people and builders of the province to create a fresh Mallima speed in their worksites in the same spirit as was displayed in the construction of the power station.

At the end of the ceremony the participants went round the power station.

This project was submitted to the UNFCCC for consideration.

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Gasoline prices in North Korea up by 52 pct in first week of April

Friday, April 8th, 2016

By Benjamin Katzeff Silberstein

Daily NK reports some interesting (albeit anecdotal) price data from North Korea:

Firm sanctions imposed by the UN on North Korea have now been in effect for over a month. Although rice prices and the exchange rate in North Korean markets have remained relatively stable, the price of fuel has skyrocketed.

On April 4, Daily NK spoke with a source in Ryanggang Province who confirmed these facts. The price of 1 kilogram [the kilogram is the standard measurement of gasoline and diesel fuel in North Korea, though the liter is often used colloquially] of gasoline, which was 7,000 KPW [0.86 USD] at the end of March, increased in the first week of April to 10,700 KPW [1.32 USD].

This represents a 52 percent price increase in just a week.

Sources in North Hamgyong Province and Pyongyang have corroborated this news, reporting that prices in their regions are reflecting the trends prevailing in Ryanggang Province.

Diesel fuel prices have increased in tandem with gasoline. In Hyesan, 1 kilogram of gasoline is going for 6,350 KPW [0.78 USD] at the markets, a 1,000 KPW [0.12 USD] increase over last month’s prices.

This is a much smaller prices change — an 18 percent increase — but still significant.

A major factor behind the price spike is thought to be the large-scale construction projects that are underway, the source said, further noting that, “Workers mobilized for construction projects are saying that their worries are increasing at the same rate as fuel prices.”

Concerns that these prices will only continue to rise are widespread. Of particular importance, because planting season is just around the corner, farmers are also trying to procure fuel supplies for themselves, increasing demand and further exacerbating the situation. This has been made more difficult by the fact that fuel previously supplied to the markets through smuggling is comparatively harder to come by due to intensified crackdowns on these activities.

Furthermore, April and May are the prime months for catching mackerel, and June is when squid season gets underway. In anticipation of this busy period, fishermen are anxious to get their hands on fuel. “As the saying goes,” the source said, “fishing is survival, and the fishermen anticipate huge losses this year if they fail to secure an adequate supply of fuel right now.”

Citizens are divided over whether or not the sanctions are responsible for driving the increase in fuel costs, the source added. Although some believe that this is the sanctions beginning to show their effects, others are blaming the military for siphoning off supplies, pointing out that prices for other goods have remained constant.

As is often the case, it seems the price increases cannot be attributed to one single factor such as the sanctions. Aside from the factors cited above, it would not be surprising if expectations play a role and hoarding has increased, out of anticipation that sanctions may sooner or later impact prices.

Full article here:
April brings fuel price hike
Kang Mi Jin
Daily NK
2016-04-07

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UNSC adopts new DPRK sanctions: UNSC Resolution 2270

Wednesday, March 2nd, 2016

UPDATE 7 (2016-3-24): The Daily NK reports that DPRK coal shipments are sitting in limbo outside of Chinese ports.

UPDATE 6 (2016-3-18): NPR discusses China’s interest in enforcing new sanctions:

Beijing has begun instructing Chinese banks, ports and shipping and trading companies doing business with North Korea to implement the U.N. resolution to the letter.

Adam Szubin, the Treasury Department’s acting undersecretary for terrorism and financial intelligence, tells NPR that China is taking this very seriously.

“I know from my meetings here in Beijing that my counterparts have very much taken the resolution to heart,” he says.

Szubin, who visited Beijing this week, says the new sanctions will hit hard enough to change Pyongyang’s “decision-making calculus.”

The new U.N. resolution is not just “adding a few new companies to a sanctions list or a few new North Korean officials,” Szubin says. Instead, it targets “every major aspect of North Korea’s access to international shipping, international banking [and] international trade to develop revenues for its missile and illicit nuclear programs.”

Although China appears committed, the sanctions put it in a tough spot.

First, says People’s University international relations expert Cheng Xiaohe, some Chinese companies are going to take a hit to their bottom line. China-North Korea trade was worth $6.86 billion in 2014.

“At the same time as we protect our national security interests, we must be prepared to sacrifice some of our own economic interests in order to accurately target North Korea with sanctions,” he says.

Cheng says the U.S. has its work cut out for it, collecting intelligence on the hundreds of Chinese firms doing business with North Korea, and on North Korean firms adept at concealing their business dealings behind fronts and shells.

And if Chinese firms are found to be violating the U.N. resolution, Cheng points out, they could themselves face sanctions.

“This could create new frictions between the U.S. and China,” he warns. “I hope that the U.S. will think carefully before it uses this big stick to crack down on Chinese firms.”

Cheng notes that China continues to supply North Korea with crude oil as humanitarian assistance. The sanctions allow this, even if North Korea may be able to refine some of the oil for military uses.

China says neither a humanitarian crisis nor regime collapse are acceptable outcomes for North Korea. But Zhang Liangui, a veteran North Korea watcher at China’s Central Party School in Beijing, says that at the end of the day, China cannot save North Korea from its fate.

“If North Korea is going to collapse,” he says, “no external force can prop it up. Frankly speaking, whether it collapses or continues to develop will mainly depend on its own domestic and foreign policies.”

UPDATE 5 (2016-3-15): According to UPI, the Philippines has searched a second DPRK ship.

UPDATE 4 (2016 3-10): Sanctioned North Korean ship, Gold Star 3, was turned away from Hong Kong port. According to Yonhap (via Korea Times):

Hong Kong has banned a North Korean freighter, which is blacklisted by new U.N. sanctions over the North’s latest nuclear test and rocket launch, from berthing at its port, a source with knowledge of the matter said Thursday.

The North Korean freighter Gold Star 3 arrived at the Hong Kong port on Wednesday to get fuel and supplies for its crew, but Hong Kong authorities did not allow the ship to dock at the port, the source said on the condition of anonymity.

The ship is among 31 vessels operated by a North Korean shipping company, Ocean Maritime Management, which is hit by the new U.N. sanctions.

For now, the ship is said to be staying in international waters, according to the source.

Media reports have said the Chinese port of Rizhao in the eastern Shandong province also barred another North Korean ship from docking at the port.

China has said it will “earnestly” implement the new U.N. sanctions, but the sanctions should not affect the well-being and humanitarian needs of North Korean people.

Still, China is unlikely to put crippling sanctions on North Korea because a sudden collapse of the regime could spark a refugee crisis at its border and lead to a pro-U.S., democratic Korea on its doorstep, analysts say.

UPDATE 3 (2016-3-6): North Korea ship impounded in Philippines. According to Yonhap:

A North Korean ship impounded in the Philippines last week was registered as being from Sierra Leone via a practice called flag of convenience, South Korea said Sunday.

Flag of convenience is a business practice of registering a merchant ship to a country other than its origin for the purposes of avoiding taxes and other regulations.

The Philippines seized the North Korean ship Jin Teng on Saturday, becoming the first country to enforce sanctions on the reclusive country since the United Nations Security Council passed a more comprehensive resolution last week.

Resolution 2270 subjects 31 ships belonging to North Korea’s Wonyang Shipping Corp. to an asset freeze and sanctions.

Despite being Sierra Leone-flagged, the Jin Teng was seized because the sanctions are imposed via the ship’s International Maritime Organization (IMO) number, not its country of origin, a South Korean official said.

Nine other ships on the list are registered as being from countries other than North Korea, including Tanzania and Cambodia, the official added.

Here is coverage in Xinhua.

UPDATE 2 (2016-3-4): Analysis of the sanctions by the European Council on Foreign Relations:

The case of sanctions against North Korea – where earlier resolutions were already adopted in 2006, 2009 and 2013 – provides a useful window into their efficiency and limits. All the more so because the debate on this latest round of sanctions has been long and hard (it has been nearly two months since the DPRK’s nuclear test of 6 January). As noted by ECFR’s Mathieu Duchâtel earlier this week, China and Russia have taken a big step towards tightening the noose around Pyongyang – by accepting to place limits on its external revenue, in areas that go much beyond the illicit activities directly targeted by the resolution. They have agreed to a ban on the export of coal, iron ore, rare earth and other minerals, as well as gold, and also to inspection of North Korean cargoes in other ports. The sanctions include North Korean diplomatic offices that harbour entities otherwise targeted by sanctions. All of these developments have the potential to be game changers. The fact that China – which received 90 percent of North Korea’s foreign trade given earlier sanctions – has agreed to the sanctions, certainly gives some indication of how vast the chasm between the Chinese and North Korean leadership is growing.

But more questions arise as a result of these sanctions, and on three different levels. Firstly, what are the limits of the resolution, secondly, how will it be implemented, and thirdly, what has been conceded or left out in order to secure this result at the United Nations Security Council.

The limits of these sanctions can be uncovered in the wording of the resolution itself. Almost all new sanctions can be overridden if the trade is being made for “humanitarian” or “livelihood purposes”. These exceptions only apply if they do not generate “revenue”, which would seem to reserve the provision of bona fide food or medical assistance. Alas, the resolution’s language appears to be contradictory in places. Point b of article 28 exempts trades which are “exclusively for livelihood purposes and unrelated to generating revenue for the DPRK’s nuclear or ballistic programs or other activities prohibited”. This clearly leaves the door open to other revenue streams. It is not clear whether the resolution will target North Korea’s export of indentured labour – not only in Russia, but in Poland and reportedly in Lithuania and Slovakia too. In these places there are North Korean workers remitting over 70 percent of their wages to the state – which leaves them with just $120 a month for living.

This loophole, along with the exclusion of oil imports from sanctions, has all the hallmarks of being imposed by China. There are many others too, such as the exclusion of coal re-exported from the port of Rason – a transit center for Mongolian coal towards Russia. Aviation fuel cannot be sold to North Korea but its planes can be fueled elsewhere on a return journey. North Korean financial institutions and firms elsewhere are subject to sanctions, with trade banned, but foreign firms already present in North Korea are not.

More important than these concerns is the undefined nature of “inspections” in foreign ports. In this respect, the US sanctions go much further by imposing checks on third parties. It will be interesting to see if the European Union, a champion of the “smart power” of sanctions, follows suit. Some, for example the French, who still suffer from the heavy fines imposed by the US on BNP Paribas because of its actions in Sudan, may beg to differ. In any case, the practical difficulties of checking, for example, on China’s immense export and re-export volume preclude an efficient implementation. What happens in Dandong, China’s notoriously opaque harbor that processes North Korea’s trade, is key. US sanctions will create moral hazard for traders, which is altogether a desirable but insufficient goal.

Which leads us to a third observation. The resolution has left a wide gamut of sanctions open to interpretation. In practice, these interpretations will be dictated by China, North Korea’s chief intermediary with the outside world. In some aspects, the resolution hands the key to North Korea’s economic fate to China, even if one might believe that North Korean diplomats are experts at circumventing restrictions, and creatively exploiting loopholes in “easy” third countries. After all, who will be checking the “humanitarian” nature of its relations with Namibia?

UPDATE 1 (2016-3-2):  Chinese banks halt transfer of yuan currency to N. Korean banks. According to Yonhap:

Chinese banks in the northern border city of Dandong have suspended the transfer of the yuan currency to North Korean banks, Chinese financial sector officials told Yonhap News Agency on Wednesday.

The move comes as the U.N. Security Council is set to vote on new sanctions against North Korea’s fourth nuclear test and rocket launch this year.

Employees of the Dandong branch offices of China’s top four state-owned banks, including Agricultural Bank of China and Industrial and Commercial Bank of China, as well as six commercial banks such as China Merchants Bank, told Yonhap that the suspension came after “orders” from their headquarters.

Since North Korea’s third nuclear test in 2013, the Dandong branches of the Chinese banks have halted the transfer of U.S. dollars to North Korean banks.

An employee of the Dandong branch of the Agricultural Bank of China said the order came down after North Korea’s fourth nuclear test in January.

Dandong is a border city between North Korea and China and a main conduit of bilateral trade between the two neighboring countries.

ORIGINAL POST (2016-3-2): According to the Washington Post:

The U.N. Security Council unanimously adopted harsh sanctions Wednesday against North Korea, imposing some of the strongest measures ever used to pressure Pyongyang to abandon its nuclear weapons program.

The new sanctions come two months after North Korea tested what it claimed was a hydrogen bomb and a month after it conducted what was widely described as a banned missile test under the guise of launching a satellite into space. But U.S. officials began drafting the measures three years ago, soon after North Korea conducted a previous nuclear test, in order to move swiftly the next time it happened. Negotiations to win China’s support began two days after North Korea’s January nuclear test, its fourth in a decade.

The resolution is far more sweeping than existing sanctions requiring a link to proliferation activities. That precondition has been removed, in effect erasing the presumption of innocence.

It mandates cargo inspections for all goods going in and out of North Korea by land, sea or air, chokes off supplies of most aviation fuel for its armed forces, and bans the sale of all small arms and conventional weapons to Pyongyang. It also prohibits transactions that raise hard cash for North Korea through sales of its natural resources.

The resolution doubles the blacklist of people and institutions already sanctioned and requires countries to expel North Korean diplomats involved in any sanctioned activities.

One provision was designed to prevent Pyongyang from sending taekwondo instructors to train foreign police forces. Another bars North Koreans from specialized training at any school or research center in the world if the learning can advance Pyongyang’s nuclear and ballistic missile programs.

President Obama welcomed the sanctions as a firm and appropriate response to North Korea’s attempts to develop weapons of mass destruction.

“Today, the international community, speaking with one voice, has sent Pyongyang a simple message: North Korea must abandon these dangerous programs and choose a better path for its people,” he said.

As soon as the sanctions were released, the Treasury Department and the State Department updated their blacklists of people and entities tied to the Democratic People’s Republic of Korea, the official name for North Korea, and its proliferation programs. The designation freezes their U.S. assets and bars Americans from doing business with them.

The U.N. sanctions, which target the country’s elites and avoid “adverse humanitarian consequences” for civilians, aim to accomplish what worked with less onerous sanctions on Iran by pushing the impoverished nation to quit pumping money into its nuclear program.

“The chronic suffering of the people of North Korea is the direct result of the choices made by the DPRK government, a government that has consistently prioritized its nuclear weapons and ballistic missile programs over providing for the most basic needs of its own people,” said Samantha Power, the U.S. ambassador to the United Nations.

“The North Korean government would rather grow its nuclear weapons program than grow its own children,” she added.

The resolution was presented by the United States with the support of China, a sharp reversal, given Beijing’s longtime support of its neighbor. Although the United States has long had an embargo on trade with North Korea, China has provided food and fuel and has been a key trading partner. In recent years, living conditions in North Korea have improved, thanks in large part to China.

In the past, China has been unwilling to tighten the screws on Pyongyang, in part out of concern for what an imploding, unstable North Korea might mean for China’s own border. But recently North Korea has continued testing new weapons and missiles, disregarding China’s warnings and personal envoys.

After North Korea on Jan. 6 detonated a new device — calling it a hydrogen bomb, although most experts say it was a smaller nuclear device — China’s ambassador to six-party talks, Wu Dawei, went to Pyongyang to urge restraint. Instead, North Korea announced while he was there that it would test a missile.

China’s about-face suggests it has started to realize that doing nothing would impose growing political costs internationally — the possibility of a greater U.S. presence in the region and weaker relations with South Korea, which Beijing has been cultivating.

“I expect there’s been a delayed recognition in China to the political price China was paying, with South Korea in particular, for its equivocation or outright silence about how to respond to North Korea and North Korea actions,” said Jonathan Pollack, a specialist on East Asian politics and security at the Brookings Institution.

During a visit to Washington last month, Chinese Foreign Minister Wang Yi hinted at the strains in policy toward North Korea.

“On the one hand, we’re saying to the international community . . . that the normal exchanges, especially those affecting the livelihoods of the North Korean people, should not be adversely affected,” he said at the Center for Strategic and International Studies. “On the other hand, in order to uphold the international nuclear nonproliferation regime for the sake of denuclearization, our exchanges will be affected to some extent.”

But some analysts question the depth of China’s commitment to the latest round of sanctions.

“The real question going forward is whether China will enforce the new measures,” said Victor Cha, a professor at Georgetown University. “My guess is that China will squeeze for a little bit, but not too hard, while the U.S. will want China to squeeze harder and for a longer period of time.”

Sung-Yoon Lee, a Korean studies professor at Tufts University, said the U.N. sanctions, even if violated in the future, will become increasingly meaningful if ordinary citizens in North Korea are adversely affected.

“The fact the U.N. is involved will lend greater legitimacy to the effort to sanction North Korea and enable others, like Japan and Europe, to shoulder some of the blame if there are negative repercussions from sanctions, so the blame doesn’t just fall on the shoulders of the United States,” he said.

Preparatory work on the sanctions began in early 2013, immediately after the Security Council passed a sanctions resolution in response to North Korea’s third nuclear test, according to a State Department official who spoke about the sensitive negotiations on the condition of anonymity. U.S. officials concluded that incrementally ratcheting up sanctions was insufficient and that more restrictive measures were needed, the official said.

As technical experts from many government agencies met to share ideas, a contingency draft of sanctions was repeatedly updated to be ready for a fourth nuclear test by North Korea.

On Jan. 8, two days after North Korea announced the fourth test, diplomats from the U.S. mission to the United Nations presented a draft to the Chinese mission. There was little response during January as China studied the proposed sanctions, which dropped requirements to prove proliferation links, as China had insisted on previously.

China did not change its position during a Jan. 27 visit to Beijing by Secretary of State John F. Kerry or during a Feb. 5 phone call that Obama placed to Chinese President Xi Jinping.

But after the Feb. 7 missile test, the State Department official said, the Chinese came around to the U.S. point of view. Throughout much of February, U.S. and Chinese diplomats met several times a day to discuss provisions that had to be approved by Beijing, the official said.

“At 8 or 9 at night, diplomats at the U.S. mission would schlep to the Chinese mission,” the State Department official said. Then they would meet again the next day after Beijing had worked through the provisions overnight.

After a tentative agreement was reached early last week, U.S. officials had hoped for a quick adoption by the Security Council. But there were delays while Russia studied the sanctions to gauge their impact. Russia transports coal over a short stretch of railroad in North Korea to a port, and Moscow wanted reassurances it would not be banned, the official said.

In recent days, North Korea has boasted that more sanctions would not hurt. Now China, South Korea, Japan and the United States are awaiting its reaction. Early Thursday, hours after the sanctions were approved, the North fired short-range projectiles into the sea, South Korea’s Defense Ministry said.

“We’ve seen its reckless and unpredictable acts for years,” Power said. “We’ve seen threats directed at the continental United States and the Republic of Korea. We’ve seen cyberattacks on American companies costing hundreds of millions of dollars. We do not expect a change of behavior overnight.”

Read the full story here:
U.N. adopts sweeping new sanctions on North Korea
Washington Post
Carol Morello and Steven Mufson
2016-3-2

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China to halt half of coal imports from North Korea, according to Chinese newspaper

Wednesday, February 24th, 2016

By Benjamin Katzeff Silberstein

Dong-a Ilbo recounts the story from Global Times:

The Chinese government will suspend half of trade with North Korea, China’s official Huanqiu Shibao (Global Times) daily reported Tuesday. It said that China will stop importing North Korean coals, which account for 42.3 percent of the China-North Korea trade, next month. The Huanqiu Shibao is a sister paper of the Renmin Ribao, the organ of the Communist Party of China, with a circulation of 2.4 million copies.

The Huanqiu Shibao quoted a trader in Dandong, Liaoning Province that China’s coal trade with North Korea will be suspended, starting March 1 and that it is probably because of the financial sanctions following the North’s satellite launch. The trader was also quoted as saying that China’s Ministry of Commerce or the customs authorities sent an order to Liaoning Province about the trade ban and that half of China-North Korea trade will be halted.

The trade also stressed that while the China-North Korea trade will likely recover from May, it depends on Pyongyang’s attitude. An informed source on China-North Korea trade also told the Dong-A Ilbo in a telephone interview that a Chinese businessman attempted to remit cash to the North via a Chinese bank in Shenyang, Liaoning Province to pay for North Korean iron ores but was informed that he was not allowed to do so. It has yet to be confirmed whether Beijing actually put a ban on imports of North Korean minerals.

Full story here:
China halts half of imports of N. Korean coals
Dong-a Ilbo
2016-02-25

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Progress in North Korea’s renewable energy production

Monday, February 15th, 2016

Institute for Far Eastern Studies (IFES)

North Korea has announced long-term plans to raise energy production up to 5 million kilowatts (kW) in 30 years utilizing a variety of renewable energy. The plan includes to secure 15 percent of necessary electricity through wind power and to raise renewable energy generation capacity up to 5 million kW by 2044.

The production goal of 5 million kW is an ambitious plan considering North Korea’s total output of the recently constructed Chongchon power plant which took three years to complete and has a total output of 430,000 kW. This plan was revealed by the internal resources of the ‘Natural Energy Institute’ which was established in November 2014 to develop pollution-free energy resources under the instructions of Kim Jong Un.

This renewable energy plan appears as one part of Pyongyang’s active exploration into the development of renewable energy to help resolve the country’s power shortages, in addition to the current measures of adopting energy resources from Russia and China and construction of large hydroelectric power plants. The plan entails measures to reduce the consumption of fossil fuels such as coal and oil while expanding development of renewable energy resources.

North Korea has promoted various investment and measures to expand the use of renewable energy since Kim Jong Un came to power. First, North Korea enacted the ‘Renewable Energy Law’ to provide legal guarantee for the development and use of renewable energy in August 2013. The law aims to “revitalize the renewable energy industry to continuously improve the economy and to protect the environment of the homeland.”

The Renewable Energy Law consists of six chapters and 46 provisions. The law includes the definition, purpose and basic principle for research, development and use, as well as planning, promotion, and strengthening of material and technical basis of renewable energy. The law also stipulates legal requirements necessary for guidance and control of the renewable energy sector. The law defines renewable energy as energy sources with reduced environmental impact such as solar, wind, geothermal, biomass, and marine energy.

Second, North Korea seems to be making considerable progress in developing its own industry-specific technology. The Green Energy Joint Venture company displayed solar panels at the Pyongyang Autumn International Trade Fair held last year and at the 15th May 21 Architectural Festival, North Korea released the design plans of green homes that utilized solar, wind, and geothermal energy sources. In addition, solar energy-powered buses and small passenger ships were unveiled at the festival.

The Natural Energy Research Institute of the National Academy of Sciences was established in 2013 as a specialized research institute to develop technology for alternative energy resources such as wind, geothermal, solar, biomass, methane hydrate and hydrogen. In 2014, Natural Energy Research Institute Director Lee Myong Son revealed that, “among the wind turbine currently in use, 71.4 percent are in the 300w range while 28.6 percent are above that range,” indicating that most products used in solar and wind power generation are domestically produced.

In addition, North Korea established the Kwangmyong LED and Solar Cell Factory to domestically produce solar energy products. Since the enactment of the ‘Energy Management Law’ in 1998, North Korea has placed the development of wind, solar, tidal, biomass, fuel cell power as a top research priority and appears to have made considerable advancement over the years.

 

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How bad is the Kaesong shutdown for the North Korean Economy?

Wednesday, February 10th, 2016

By Benjamin Katzeff Silberstein 

The Ministry of Unification in Seoul announced today that the industrial park in Kaesong be closed as a form of retaliation for North Korea’s recent rocket launch, alleging that funds from the park have been used to finance the north’s arms buildup. Wall Street Journal (with my emphasis):

A representative of South Korea’s Unification Ministry said that the move to shut down Kaesong was an effort by South Korea, “as a key party, to show leadership in taking part in these moves.”

Kaesong is an important source of income for Pyongyang. The regime received $120 million last year, and a total of $560 million since 2004, in workers’ wages directly from the South Korean side, according to the Unification Ministry. Those payments are made directly to the regime, which is then charged with paying the workers themselves, a system that critics say allows the regime to pocket most of the money.

“It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles,” the Unification Ministry said on Wednesday.

Naturally, this is bad news for the North Korean economy. But how bad exactly?

Here are a few other figures to give some sense of the proportions:

  • The volume of trade between North Korea and China only in the January-May period of last year totalled $1.1 billion, with North Korean exports accounting for $954 million.
  • Between January and November last year, the value of North Korea’s exports to China was $2.28 billion.
  • Textile exports to China from North Korea brought in around $800 million in 2014.
  • North Korean guest workers in China’s border provinces are estimated to be raising between $140-$170 million per year.

In the overall context, it seems like losses from the closure of Kaesong could be potentially bad, but not catastrophic.

 

 

Full reference to the Wall Street Journal article quoted above:
South Korea, Japan Take Steps to Penalize North Korea
Wall Street Journal 
Jonathan Cheng
02-10-2016

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North Korea considers nuclear test a driving force of economic development

Thursday, January 21st, 2016

Institute for Far Eastern Studies (IFES)

Following North Korea’s self-proclaimed hydrogen bomb test on January 6, 2016, which highlighted the fact that North Korea is a nuclear-armed state, daily mass rallies have been held in order to stimulate economic development and cement national unity. The Korean Worker’s Party (KWP) mouthpiece Rodong Sinmun proudly announced on January 8th that the fourth nuclear test had been a ‘success’. It has been reported that mass rallies were held in North Phyongan Province, Jagang Province, Kangwon Province, North Hamgyong Province, Ryanggang Province, Rason City, and other regions as part of the effort to continue building a strong and prosperous nation.

Each of these mass rallies included discussions on how to develop the economy so as to “achieve a golden age through the building of a strong and prosperous nation.” The purpose behind these daily mass rallies can be interpreted as both taking advantage of the opportunity provided by the nuclear test to strengthen solidarity of the people while also paving the way to maximize economic productivity ahead of the upcoming 7th Party Congress that is scheduled for May.

In fact, the North Korean media is asserting that the recent nuclear test was a measure to deter war in order to bring about a domestic economic revival. A front page editorial in the Rodong Sinmun encouraged the nation, saying “We will go full-speed ahead to raise North Korea’s human dignity, vigor, and glory, which are already well-known in the international community. With the success of our hydrogen bomb test as the main driving force, we will show off the mighty power of our nation, and we must aggressively take on the struggle of improving the lives of the people and building an economically strong nation.”

The Chosun Sinbo, which is the mouthpiece of Chongryon (the General Association of Korean Residents in Japan) serving as the representative for North Korea in Japan, emphasized that, “We must have a powerful deterrent to endless warfare in order to have a peaceful environment that will enable us to build up our economy. Focusing all of our efforts on building an economically powerful nation and creating a new paradigm shift in which to develop our economy and improve the lives of the people is the most important task of this year.”

Meanwhile, North Korea’s propaganda outlets are stating that food processing plants and other sectors are producing a flood of globally competitive products. North Korea’s propaganda website aimed at the outside world (Chosun Today) stated on January 7th that “Recently, many North Korean food processing plants have been modernizing their manufacturing processes to produce foodstuffs that meet global quality standards, actively contributing to the improvement of the living standards of the Korean people.”

The Sonhung Food Processing Plant was introduced as a model case example. According to North Korean media, the foods produced at this plant are all globally competitive goods, and the best products of the country. Although the plant has only been in operation for 10 years, the media claims that current annual net operating profits per employee are a staggering 350 times higher than those of their first year of operation, and the plant is known for this remarkable record-setting achievement.

These formidable efforts also encompass the development of approximately 90 health products with high nutritional value over the past four years, including healthy danmuk. The news outlets also boasted that nine North Korean factories have received ISO 22000 (food safety management system) certifications.

In addition, 60 products were registered as ‘February 2nd products’, and not long ago five food products, including fruit bread, coffee sweetener, and healthy danmuk, received ‘December 15th quality medals’.

Supreme Leader Kim Jong Un’s New Year’s Address emphasized “improving the lives of the people” and encouraged various factories to achieve success. The propagation of these successes through the North Korean media outlets demonstrates Kim Jong Un’s intentions of inspiring loyalty from the people through intensive efforts to increase the quality of their diets.

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The economy in Kim Jong-un’s New Year’s address: what’s there and what isn’t

Sunday, January 10th, 2016

By Benjamin Katzeff Silberstein

The supposed hydrogen bomb test has come to dominate the news on North Korea over the past few days, for obvious reasons. Kim Jong-un’s New Year’s Address has naturally ended up in the shadow of the nuclear test, but it is worth going back for a closer look. Overall, it is a speech that appears to contain few major announcements or indications. Perhaps more surprising than what themes are there, are the themes that are absent.

Stephan Haggard pretty much sums up how economic matters are treated in the speech, as they often are in North Korean rhetoric on economics: “As usual, the economic components of the speech rely more on exhortation than any clear policy message, confusing results with the means of achieving them.”

That is, in much of the speech, Kim simply talks about what will be achieved but leaves out how to get thereTake the following paragraph, for example (my emphasis added):

The Cabinet and other state and economic organs should decisively improve their economic planning and guidance. Leading economic officials should fully equip themselves with Party policy, work out plans of the economic work in an innovative way and give a strong push to it on the principle of developing all the sectors at an exponential speed by relying on the inexhaustible creative strength of the working people and by dint of modern science and technology. They should accurately identify the main link in the whole chain of economic development and concentrate efforts on it while revitalizing the overall economy, especially when the conditions are not favourable and many difficulties arise. They should be proactive in organizing and launching the work of establishing on a full scale our style of economic management method which embodies the Juche idea, thus giving full play to its advantages and vitality.

And:

All the sectors of the national economy should set ambitious goals and maintain regular production by tapping every possible internal reserve and potentiality.

Those who are more savvy at reading between the lines and interpreting rhetorical symbolisms can perhaps draw out meaningful signals from quotes such as these. But at face-value, they seem to give little indication of policy changes. Or of any policy at all, for that matter.

What are the areas that Kim hold up as economic priorities, then? Stephan Haggard points out heavy industry as one such theme. It is also the one mentioned first in the speech. Infrastructure and power supply also features fairly prominently (and is mentioned early on), with specific references to several power station construction projects. Kim also mentions IT and the “knowledge-driven economy” (emphasis added):

Our working class, scientists and technicians, true to the instructions of the great leaders, made a big stride in making the metallurgical industry Juche-based, built model, standard factories of the era of the knowledge-driven economy in various parts of the country and put production lines on a modern and IT footing, thus opening a new road of advance for developing the overall economy and improving the people’s standard of living.

Presumably, this is what North Korean media mean when they talk about the H-bomb test as an economic boost: that such capabilities show North Korea’s strength as a knowledge-based economy.

Domestic production capabilities are highlighted all the way through. This theme isn’t new. Kim Jong-un has often emphasized the importance of goods diversity and local production. This lies well in line with the basic economic tenets of the Juche doctrine. Here is one example of how domestic production capacity is highlighted in the speech (emphasis added):

The flames of the campaign to implement the Party’s ideas and defend its policies have unfolded a proud reality of our indigenous plane flying in the sky and our indigenous subway train running under the ground, and rich fish and fruit harvests were gathered, their socialist flavour bringing pleasure to the people.

One theme that features relatively prominently is construction. In one paragraph, Kim even states that “Construction is a yardstick and visual evidence for the strength of a country and the quality of its civilization”, and continues to urge the country to build more:

The construction sector should launch a general offensive to implement the Party’s construction policy and grand plan. By doing so, it should build important production facilities, educational and cultural institutions and dwelling houses on the highest possible level and at the fastest possible speed, so that they serve as standards and models of the times. In this way it can make sure that the great heyday of construction continues without letup.

Perhaps this is an indication that the building boom in Pyongyang of the past few years will continue. Priorities such as this one primarily benefit those political classes that live in Pyongyang. With few exceptions, as far as I’m aware, most other cities have seen little of the construction boom that the capital city has experienced.

There is also a reference to the coal mining industry. On the one hand, it may be interesting because North Korea’s main export destination for coal is China, and these trade flows have been volatile over the years, and there have been signs that North Korea isn’t getting a good deal in this trade. But on the other hand, this may be reading too much into one small reference in the speech (emphasis added):

In order to achieve breakthroughs for a turning point in building an economic giant the electric-power, coal-mining and metallurgical industries and the rail transport sector should advance dynamically in the vanguard of the general offensive.

Later, coal mining appears only in reference to the domestic power supply (emphasis added):

All sectors and all units should wage a vigorous campaign to economize on electricity and make effective use of it. The sector of coal-mining industry should raise the fierce flames of an upsurge in production to ensure enough supply of coal for the thermal power stations and several sectors of the national economy.

There are two themes that are surprisingly absent. One is agriculture. Agricultural policy is barely present, and when it is, management methods aren’t mentioned. For example:

The agricultural sector should actively adopt superior strains and scientific farming methods, speed up the comprehensive mechanization of the rural economy and take strict measures for each farming process, so as to carry out the cereals production plan without fail.

This is a little surprising, because regime sources have claimed that agricultural production has been boosted during the year, and management reforms with greater incentives for farmers have been touted as the reason. (A close look at the numbers indicates that agricultural production has declined slightly during 2015, moving it towards the average of the 2000s.) If agricultural reforms have indeed been a central tenet of Kim Jong-un’s economic policies, one could at least have expected a reference to these reforms in the speech.

The second theme that is strangely absent is forestry policy. It is only mentioned in one sentence:

The whole Party, the entire army and all the people should buckle down to the campaign to restore the forests of the country.

During the past year, Kim Jong-un has highlighted forestry policy as a key area. He has talked openly and frankly about the role of tree felling in causing floods and subsequent food shortages, and promoted reforestation, albeit not in a way that is likely to work very well. North Korean media has singled out tree nurseries for not doing their job properly. In sum, forestry has been relatively high on the agenda, but the topic still barely made it into the speech.

All in all, from an economic policy standpoint, this year’s New Year’s Address did not contain any major bombshells. The fact that economic issues appear right after the section on the upcoming party congress may be a hint that such issues will be high on the agenda, but then again, it might not mean much at all. Moreover, it is unclear how much can really read into the New Year’s Address for hints about regime policies and priorities. After all, the speech contained virtually no allusions to the H-bomb test that was to come only days later.

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