North Korean Economy Watch

(Posted from Shanghai, China – I am on vacation, so this is just a quick note)

While in Beijing a few days ago, I ran into Glyn Ford giving a talk in conjunction with the release of his new book, North Korea on the Brink.

Mr. Ford was on his way to Pyongyang to pitch an idea he believes could resolve the HEU (Highly-Enriched Uranium) impasse, which is bogging down implementation of the most recent version of the Agreed Framework.

His idea is this:

Even if the North Koreans have an HEU program it would require a colossal amount of electricity delivered in a consistent fashion.  So one way the west could monitor if such a program was taking place would be to keep tabs on the North Korean power grid for suspicious activity, or to build in fluctuations to the power supply so that the machinery which does the enriching is not able to function.

If both sides can know that there is currently no HEU program underway, then maybe they can avoid the politicalty trecherous waters of determining whether such a program once existed–allowing us all to move on to the next phases of the agreement.

Writing in today’s Asia Times, Dr. Leonid Petrov analyses the complexity of Russia, Rok, DPRK, and Chinese relations:

Russia and North Korea:

Territorial claims, in one form or another, involve almost all countries adjacent in this region with the exception of Russia and Korea. The Joint Russian Federation-DPRK Commission for the Demarcation of State Borders has recently completed its work by documenting and marking the 17-kilometer frontier. This strip of uninhabited and swampy land in the mouth of the Tumannaya (Tuman-gang) River plays an exceptionally important geopolitical role. It not only provides the two countries with land access to each other, but also prevents Chinese access to the East Sea (Sea of Japan).

China and North Korea: 

Here, some 50km north of the small port that forms the core of North’s Rajin-Seonbong Special Economic Zone, the interests of Russia and China are now at stake. Russia is rapidly repairing the railroad track, and China (in a similarly speedy manner) is constructing a new automobile highway, both leading from their respective borders to the port of Rajin. Russia, investing at least 1.75 billion rubles (US$72 million) into this project, seeks to strongly connect Rajin (and the rest of northern Korea) to its Trans-Siberian Railroad. China, in turn, hopes to divert the growing cargo traffic to its own territory, offering the efficient network of railroads for delivery of South Korean and Japanese goods to Central Asian and European markets. What position will the government of North Korea take in this clash of ambitions?

Russia and South Korea (energy and trade):

In 2007, the volume of the export of “black gold” from Russia to South Korea reached 38.13 million barrels (2.7 times more than in the previous year). The relative proximity of the Russian oil and gas fields is an attractive factor for Korean companies who actively search for alternatives to Middle East oil suppliers. This year South Korea will for the first time start importing natural gas from Russia. The expected volume of delivery during 2008 is 1.5 million tons (or 5.1% of South Korea’s annual demand).

and

Trade relations between Russia and Korea are steadily growing. According to customs statistics, last year Russia recorded the sharpest increase of South Korean imports (56.2% more than in 2006). Due to the inflow of “petro-dollars” the new class of nouveaux riches in Russia began actively buying Korean automobiles, cell phones, television sets and LCD monitors. South Korea exported to Russia goods worth US$8.1 billion (including $3.296 billion of automobiles, $859 million of mobile phone equipment, motor vehicles and spare parts worth $659 million). As for trade with North Korea, in 2006 Russia occupied third place after China and South Korea and absorbed 9% of the total $3.18 billion spent by the North on imports.

More on Russia/South Korea energy talk here. 

The whole article deserves reading here:
Russia lays new tracks in Korean ties
Asia Times
Leonid Petrov
3/5/2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-3-3-1
3/3/2008

In the latest issue (February 3rd) of the DPRK Cabinet bulletin, “Democratic Chosun”, it was reported that the first extended cabinet meeting of the year opened in the beginning of February, with Premier Kim Young-il presiding. The bulletin stated that the issue of accomplishing this year’s economic plans was discussed.

At the meeting, Vice Premier Kwak Bum-ki stressed that accomplishing this year’s economic goals was “essential for opening the doors to a breakthrough for building an economically strong nation,” and that it was the “fundamental task laid out before the Cabinet.” He went on to reveal the tasks and directives needed to revitalize all realms of socialist construction, which he stated was necessary to create a powerful and prosperous nation by 2012, the centennial anniversary of the birth of the late Kim Il Sung.

In particular, he called for the production of the “lifeline of socialist construction”, and specifically, electricity, coal, metal, and railways, which he referred to as the “four lines for the advance of the people’s economy.”

Accordingly, the goal of carrying out overwhelming repairs to power generation facilities, and at the same time constructing new power plants in order to increase electrical production capabilities by several hundred thousand kilowatts, was proposed.

The meeting also stressed the need for concentrating efforts on geological exploration and exploitation industries in order to reasonably development and use natural resources, for a change in production of goods necessary for daily life, and for a resolution to the people’s ‘eating problem’ alluded to in the recent New Year’s Joint Editorial.

The bulletin also reported that there was discussion on creating a new five-year plan for the development of science and technology, going as far as to say, ”the role of science and technology in the building of an economically powerful nation is decidedly large, and in order to answer the very real calls for development, [the issue of] strengthening international economic projects” was brought up.

Premier Kim Young-il, Vice-Premier Kwak Bum-ki, Chairman Kim Kwang-rin, of the Committee on National Planning, Park Nam-jil, of the Power Supply Industry Bureau, and Kim Yong-sam, from the Railways Bureau, were among cabinet ministers present.

Institute for Far Eastern Studies (IFES)
Nk Brief No. 08-2-22-1
2/22/2008

The South Korean NGO ‘Good Friends’ has reported that government stores in North Korea are mourning the drop in sales of electrical appliance, which appear to be out of favor due to electrical shortages around the country. Good Friends, an organization focused on supplying aid to North Korea, printed in its latest newsletter, “From November of last year to this February electricity has not been available on a regular basis in Chungjin City. At one foreign goods store in the Pohang District, electrical appliances have been barely selling…not only have the store’s sellers have been unable to meet monthly sales targets for several months, sales in February are no different.”

In addition, the newsletter describes the seriousness of the North’s energy shortage, pointing out that “as it becomes more and more difficult for residents to see electricity, they are seeking out Chinese-made 12V batteries, car batteries, candles, and other alternatives.” According to the article, most well-off residents are using car batteries, while average laborers carry flashlights or small battery chargers to work, using electricity slated for industrial use to charge personal items. ”Authorities or people with relatively good jobs usually have around five rechargers in their offices, while some may have more than ten…people with no money or access to industrial-use electricity are buying candles for light.”

The article concluded with, “Electricity has not flown into Soonchun City since October of last year, and five hours of current provided for the people last January 1st, New Year’s Day, was practically the only [electricity]…when returning home after work in the evenings, there is no electricity and nothing to eat, making life difficult.” Along with this, the newsletter reported, “North Korean authorities will no longer permit private dummy corporations…in serious cases, public executions are carried out.”

Instutute for Far Eastern Studies (IFES)
NK Brief No. 08-1-24-1
1/24/2008

North Korean leader Kim Jong Il has started the new year by visiting a series of facilities and locations important to the economy in order to stimulate ‘Economic Revival’. DPRK media outlets reported on January 21 that Kim had examined the 18th national program performance and exhibition which opened last year, and that on the 6th, he visited the Ryesung Power Plant in North Hwanghae Province and dispensed on-location directives.

In North Korea, Kim’s new year’s traveling is indicative of the country’s national goals for the year, and Kim’s trip to economic facilities appears to indicate that DPRK authorities are focusing on rebuilding the economy this year.

On January 9, the Chosun Sinbo, a publication of the General Association of Korean Residents of Japan, reported, “In the changing face of the Northeast Asian political atmosphere emerging as the 6-Party agreement is implemented, [we] are preparing an advantageous atmosphere for the revival of the North Korean economy,” and called for “more active promotion of economic cooperation and exchange with each country in the world.” The article stressed promoting ‘21st century rehabilitation by one’s own effort’ by acquiring modern science and technology appropriate for the country.

Last year saw the beginning of improvement in U.S.-DPRK relations and resolution of nuclear issues, and the national strategy for this year seems to be economic expansion based on these developments. In particular, the symbolic significance of Kim Jong Il’s personal visits to two places of economic interest goes to show that North Korea is on a path intended for economic growth. In North Korea, on-location guidance by Kim Jong Il indicates national objectives and serves to focus national capabilities on that location.

According to North Korea’s New Year’s Joint Editorial, “The role of science and technology in the construction of an economically powerful nation must be decidedly elevated,” and went on to stress that, in line with the demands of the information industrial age, a revolution in education is necessary and a competent labor force that can participate in the creation of a strong and prosperous nation must be greatly promoted.

If Kim Jong Il’s inspection of the power plant is an indication of support for the construction of infrastructure and other electrical facilities necessary for economic development, the inspection program indicates what industrial sector the North will focus its energies on in the future. Through increased production in the light industrial and agricultural sectors, North Korea is expected to focus on improving the lives of the people first, and in the future, focus on development of the IT sector.

Daily NK
Moon Sung Hwee
1/11/2008

Rodong Sinmun, the official mouthpiece of the Chosun (North Korea) Workers Party, discussed the construction of new electrical infrastructure in Samjiyeon in a feature titled, “The New Legend from the Night-less City, Samjiyeon,” on December 26.

Rodong Sinmun praised Samjiyeon’s current condition, saying that “It is literally a night-less city where countless lights from houses and streetlights along the beltway shine like stars.”

The newspaper implied that providing electricity to hotels and other lodging for visitors was the reason for setting up the electrical infrastructure, noting that “Visitors who have completed long distance marches would want to take a rest, sing songs, and play accordions in the heated rooms of lodgings by the lake of Samjiyeon.”

The newspaper revealed, “The electricity produced by the Samsoo Power Plant, which was completed in May 2007, is now flowing to Samjiyeon.”

It added, “The June 18 Shock Brigade and workers form the Ministry of Electric Power pursued the lofty goals of the great General to expand the electrical infrastructure of the Mt. Baekdu region. They provided materials and equipment for the construction of power-transmission wires and towers and built them.”

To accomplish the goal of the North Korean authorities, in there words: “to improve the hometown of the General to meet global standards” – the Propaganda and Agitation Department organized the “Shock Brigade for the Propagation of the Party Ideology” (June 18 Shock Brigade) and made the brigade tear down houses and start reconstructing the city.

Although North Korean authorities said that they redeveloped the Samjiyeon district for the purpose of restoring Kim Jong Il’s hometown, a rumor is spreading among cadres that this reconstruction project was actually carried out in preparation for the commencement of Mt. Baekdu tours for South Koreans, according to inside sources.

In 1998, when the North and Hyundai Asan started Mt. Geumgang’s tour business, they agreed that Hyundai would offer 942 million dollars to the North in return for the right to use the tour site and to run the tour business for 30 years. Similar preparations to the ones being made in Samyijeon were completed prior to the opening of the Geumgang site.

It appears that North Korea has been carrying out construction work in Samjiyeon since 2001. Experts point out that reconstruction of the houses in the area was inevitable because these sites would soon be revealed to South Korean tourists.

North Korean authorities stressed that the newly-built houses are on par with international standards but residents complain of insufficient electrical supplies, according to the inside sources.

Sources said that the power situation was so dire that residents are forced to cook outdoors and bring heated stones in their houses for heating.

Yonhap
12/27/2007

South Korea plans to develop two resource rich regions in North Korea that can benefit both countries and fuel cross-border economic cooperation, the government said Thursday.

The blueprint calls for more funds to be funneled into North Korea so prospective developers can conduct geological surveys and compile detailed data for future reference, the Ministry of Commerce, Industry and Energy said.

Resource-poor South Korea imports most raw materials to operate its heavy industry-centered economy. Lack of social infrastructure and mining knowhow have prevented North Korea from fully developing resources.

(more…)

The most authoritative map of North Korea on Google Earth
North Korea Uncovered v.7
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the latest version of “North Korea Uncovered” include: A Korean War folder featuring overlays of US attacks on the Sui Ho Dam, Yalu Bridge, and Nakwon Munitians Plant (before/after), plus other locations such as the Hoeryong Revolutionary Site, Ponghwa Revolutionary Site, Taechon reactor (overlay), Pyongyang Railway Museum, Kwangmyong Salt Works, Woljong Temple, Sansong Revolutionary Site, Jongbansan Fort and park, Jangsan Cape, Yongbyon House of Culture, Chongsokjong, Lake Yonpung, Nortern Limit Line (NLL), Sinuiju Old Fort Walls, Pyongyang open air market, and confirmed Pyongyang Intranet nodes.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

Korea Times
Jung Sung-ki
11/19/2007

South Korea is considering directly supplying electricity to Anbyeon on North Korea’s east coast, where a South Korean-funded ship block plant is to be constructed next year, to help ease the power shortage there, a government source said Monday.

“The government has concluded after a recent on-site inspection that without resolving the electricity issue, the plan to build a shipbuilding complex (in Anbyeon) would not be successful,” the source said, asking not to be named.

“So the government is considering taking the initiative to resolve the problem, so that the private sector can stably invest in the inter-Korean business program,” he said.

The two Koreas are to break ground for a shipyard in Anbyeon, Gangwon Province, during the first half of next year as part of large-scale cross-border economic projects agreed upon at the second inter-Korean summit last month.

A group of South Korean officials and shipbuilding businessmen visited the town early this month.

South Koreas plans to propose North Korea the option of a direct supply of electricity next month when a second inspection team visits Anbyeon, the source added.

Experts say the project will cost a sizable amount.

It will require hundreds of billions of won to build steel pipes, transmitters and transmission roads from the northeastern town of Goseong in the South to Anbyeon, a 130-kilometer route, they say.

In case of the Kaeseong Industrial Complex, just a few kilometers north of the inter-Korean border, South Korea spent 35 billion won ($38 million) to build electricity supplying facilities.

The electricity supply will require consultation with countries involving in multinational talks aimed at ending Pyongyang’s nuclear ambition, as energy aid is one of the key incentives for the communist state in return for its denuclearization efforts.

The two Koreas, the United States, China, Japan and Russia have engaged in six-party talks to scrap North Korea’s nuclear weapons program.

The most authoritative map of North Korea on Google Earth
North Korea Uncovered: Version 6
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the newest version of North Korea Uncovered include: Alleged Syrian nuclear site (before and after bombing), Majon beach resort, electricity grid expansion, Runga Island in Pyongyang, Mt. Ryongak, Yongbyon historical fort walls, Suyang Fort walls and waterfall in Haeju, Kaechon-Lake Taesong water project, Paekma-Cholsan waterway, Yachts (3), and Hyesan Youth Copper Mine.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.