North Korean Economy Watch

According to the Choson Ilbo:

A strong underground earthquake registering a magnitude of 6.9 on the Richter scale occurred about 21 km from the Russian border with North Korea around 10:13 a.m. on Thursday, the Korea Meteorological Administration announced based on data by the U.S. Geological Survey.

The epicenter was 42.7 degrees northern latitude and 130.9 degrees eastern longitude 110 km southwest of Vladivostok near the border of North Korea, China and Russia.

The KMA said the quake was strong but the actual surface wave magnitude was a mere 2 because it happened 562.5 km below from the surface. “It’s the kind of situation where objects hanging from the ceiling swing a little and parked cars shake slightly, so almost no damage seems to have been done to people or buildings in North Korea and elsewhere,” a spokesman said. “The quake was a natural result of the subduction of the Pacific plate under the Eurasian plate. There always exists the possibility of strong quakes occurring on the Korean Peninsula as quakes stronger than magnitude 6 occur in the region every two years.”

Quakes are becoming more frequent. According to Chosun Ilbo’s analysis of the KMA data, 157 quakes occurred in both Koreas in the 1980s, but the frequency soared to 259 in the 1990s to 436 in the 2000s. Sixty quakes were reported last year, the most in the 31 years since the KMA began observation. Eight already occurred this year, similar to last year’s monthly average of five.

South Korea has far outdistanced North Korea both in frequency and magnitude of quakes. A total of 279 quakes have been reported on the peninsula since 1978, with 199 in the South and 80 in the North. Of the five quakes stronger than magnitude 5 since 1978, four occurred in South Korea. The South also led in terms of frequency of quakes with magnitudes between 4 and 5 with 28 of all 33.

A Unification Ministry official said, “We’re checking what effects the latest quake had on North Korea alongside related agencies.” Nothing has been reported yet by North Korean media, he added.

Sources in Najin Sonbong in North Korea and Hunchun in China, which are near the epicenter, said they have not been informed. Kim Sung-min, the director of Radio Free North Korea said their source in Hoeryong in North Hamgyong Province heard nothing about the quake.

Commenting on rumors that it was an artificial earthquake caused by a nuclear test, a South Korean government official said, “It would be realistically impossible for them to have dug 562 km down. Chances that it was caused by a nuclear test are extremely slim.” He said it was also unlikely that the North would conduct a test in a place close to the border plus the quake was too strong to be caused by an explosion.

Further information:

Here is the USGS data on the quake.

Here is the quake’s epicenter.

On October 22, 2008, a 4.8 earthquake struck off the coast of Chongjin.

And the fun–The US Geological Service has earthquake readings for both of the DPRK’s nuclear tests:

*Here is the USGS earthquake report for the DPRK’s October 09, 2006, test - a 4.3. 

*Here is the USGS earthquake report for the DPRK’s May 25, 2009, test - a 4.7.

According to the AP (Via Boston Herald):

President Barack Obama’s top intelligence official said Tuesday that North Korea relies on its nuclear weapons program because of a crumbling military that cannot compete with South Korea.

Director of National Intelligence Dennis Blair described in testimony before the U.S. Congress a North Korean army that struggles with aging weapons, poorly trained, out-of-shape soldiers, inflexible leaders, corruption, low morale and problems with command and control.

North Korea, Blair said, has little chance of reversing a huge gap in military capabilities with South Korea and so “relies on its nuclear program to deter external attacks on the state and to its regime.”

…

Officials from South Korea, the U.S., Japan, Russia and China have been working to get North Korea back to nuclear disarmament talks after Pyongyang walked away from the negotiations last year. For more than a decade, the North has gained energy and aid concessions from the talks and then backed away from nuclear agreements.

Blair said the United States does not know whether the North had made nuclear weapons but that it has that capability. He said that while a 2006 nuclear test was a “partial failure,” the May test of last year was more successful.

Blair said North Korea has shipped missiles to Iran and Pakistan and helped Syria build a nuclear reactor.

The North is thought to have enough weaponized plutonium for at least half a dozen atomic bombs. North Korea argues that it was compelled to develop nuclear weapons to cope with a military threat from the United States, which has about 28,500 troops in the South.

Blair said North Korean leader Kim Jong Il wants recognition of his country as a nuclear weapons power, something he said the United States will not do.

Dennis Blair’s Annual Threat Assesment of the US Intelligence Commuity can be read here. Here is what it had to say about the DPRK:

North Korean WMD and Missile Programs

Pyongyang’s nuclear weapons and missile programs pose a serious threat to the security environment in East Asia. North Korea’s export of ballistic missiles and associated materials to several countries including Iran and Pakistan, and its assistance to Syria in the construction of a nuclear reactor, exposed in 2007, illustrate the reach of the North’s proliferation activities. Despite the Six-Party October 3, 2007 Second Phase Actions agreement in which North Korea reaffirmed its commitment not to transfer nuclear materials, technology, or know-how we remain alert to the possibility North Korea could again export nuclear technology.

The North’s October 2006 nuclear test was consistent with our longstanding assessment that it had produced a nuclear device, although we judge the test itself to have been a partial failure based on its less-than-one-kiloton TNT equivalent yield. The North’s probable nuclear test in May 2009 supports its claim that it has been seeking to develop weapons, and with a yield of roughly a few kilotons TNT equivalent, was apparently more successful than the 2006 test. We judge North Korea has tested two nuclear devices, and while we do not know whether the North has produced nuclear weapons, we assess it has the capability to do so. It remains our policy that we will not accept North Korea as a nuclear weapons state, and we assess that other countries in the region remain committed to the denuclearization of North Korea as has been reflected in the Six Party Talks.

After denying a highly enriched uranium program since 2003, North Korea announced in April 2009 that it was developing uranium enrichment capability to produce fuel for a planned light water reactor (such reactors use low enriched uranium); in September it claimed its enrichment research had “entered into the completion phase”. The exact intent of these announcements is unclear, and they do not speak definitively to the technical status of the uranium enrichment program. The Intelligence Community continues to assess with high confidence North Korea has pursued a uranium enrichment capability in the past, which we assess was for weapons.

Pyongyang’s Conventional Capabilities. Before I turn the North Korean nuclear issue, I want to say a few words regarding the conventional capabilities of the Korea People’s Army (KPA). The KPA’s capabilities are limited by an aging weapons inventory, low production of military combat systems, deteriorating physical condition of soldiers, reduced training, and increasing diversion of the military to infrastructure support. Inflexible leadership, corruption, low morale, obsolescent weapons, a weak logistical system, and problems with command and control also constrain the KPA capabilities and readiness.

Because the conventional military capabilities gap between North and South Korea has become so overwhelmingly great and prospects for reversal of this gap so remote, Pyongyang relies on its nuclear program to deter external attacks on the state and to its regime. Although there are other reasons for the North to pursue its nuclear program, redressing conventional weaknesses is a major factor and one that Kim and his likely successors will not easily dismiss. Six Party Talks and Denuclearization. In addition to the TD-2 missile launch of April 2009 and the probable nuclear test of May 2009, Pyongyang’s reprocessing of fuel rods removed from its reactor as part of the disablement process appears designed to enhance its nuclear deterrent and reset the terms of any return to the negotiating table. Moreover, Pyongyang knows that its pursuit of a uranium enrichment capability has returned that issue to the agenda for any nuclear negotiations. The North has long been aware of US suspicions of a highly enriched uranium program.

We judge Kim Jong-Il seeks recognition of North Korea as a nuclear weapons power by the US and the international community. Pyongyang’s intent in pursuing dialogue at this time is to take advantage of what it perceives as an enhanced negotiating position, having demonstrated its nuclear and missile capabilities.

…

North Korea and Venezuela possess more limited intelligence capabilities focused primarily on regional threats and supporting the ruling regime. North Korea continues to collect information on US technologies and capabilities. Venezuela’s services are working to counter US influence in Latin America by supporting leftist governments and insurgent groups.

According to Yonhap:

Lianxing Wen, a geophysics professor at the State University of New York in Stony Brook, and his graduate student, Hui Long, located the epicenter of the second nuclear test on May 5 last year with a margin of error of only 140 meters, compared with 3.8 kilometers achieved by the U.S. Geological Survey.

“We locate the 2009 test at 723 meters north and 2,235 meters west of the 2006 test,” the scientists said in the study, which was published in the January-February edition of Seismological Research Letters of the Seismological Society of America.

Identifying the coordinates of the 2009 test site as 41°17′38.14″N latitude and 129°4′54.21″E longitude, the scientists said their findings should help Asian monitors to pinpoint the location of another nuclear test should North Korea ever decide to go ahead with one.

“The location of any future nuclear test around this particular test site will be pinpointed in real time, with a similar precision,” Wen said in a separate email interview. “With its exact location known, the wave propagation effects due to location geology can be accurately accounted for, leading to a more accurate determination of yield.”

North Korea conducted its first underground nuclear test in Oct. 9, 2006 in Punggye-ri in its northeastern county of Kilju, according to U.S. and South Korean officials.

Wen and Long said they analyzed the seismic waves from the first nuclear test to understand the geological complexities of the earth in the region, and used the data to reduce the uncertainty involved in determining the ground zero of the second test.

“The strategy is not to try to fully understand the complexities of the jungle (earth), but to take advantage of the forensic evidence of the jungle complexities that are imprinted in the recordings” of the first nuclear test, the scientists said in a separate introduction to their thesis.

The waveforms from the first test were obtained from nine seismic stations based in Japan, South Korea and China, the study said.

North Korea conducted its second nuclear test amid a deadlock in international talks aimed at stripping it of its nuclear ambitions, raising tensions and inviting harsh U.N. sanctions.

“High-precision location would reveal, in real time and at great accuracy, an increasingly complete view of the geographic network of a nation’s nuclear test infrastructure,” the paper said.

“Logistically and economically, it is convenient to use the same facilities to do multiple tests. Environmentally, it would confine nuclear wastes in a particular site,” Wen said in the email.

Their paper, “High-precision Location of North Korea’s 2009 Nuclear Test,” can be found here PDF.

Here is the location on Wikimapia.

According to the Joong Ang Ilbo:

North Korea has reused equipment and materials left from the halted construction work on light-water reactors, breaking a prior agreement with a multinational organization that oversaw the botched construction project.

According to the Unification Ministry and other sources, North Korea has taken 190 vehicles from the site in Kumho, South Hamgyong Province, and 93 pieces of heavy equipment, including cranes and excavators, and is likely using them for military purposes.

Sources said thousands of tons of steel bars and cement and communication devices are also being used by the North.

In late 2005, the Korean Peninsula Energy Development Organization, also known as KEDO, stopped construction of non-military nuclear reactors in the North. The work had begun in August 1997 as part of the 1994 Agreed Framework between the United States and North Korea. Under the terms of the agreement, Washington said it would build two reactors in the North in exchange for Pyongyang’s agreement to freeze all nuclear weapons activities.

But in October 2002, the United States said it had obtained intelligence that the North had been operating a clandestine program to produce highly enriched uranium to develop weapons and the U.S. State Department said North Korea admitted to doing so. By January 2003, the North withdrew from the Nuclear Non-proliferation Treaty. KEDO suspended its construction in November 2003.

Two years later, the KEDO’s board decided to terminate the construction project, which was about 30 percent complete. In December 2005, North Korea asked KEDO workers to leave the country and said they would not be allowed to repatriate equipment and construction materials.

At the time, KEDO and North Korea had agreed to leave materials at the site. Most belonged to South Korean subcontractors, and they had planned to sell off some of it to make up for financial losses stemming from the halted work.

In 2003, after the KEDO first suspended construction, the North said it would not allow the transfer of equipment unless it received compensation. A government official here said, “The North moved the equipment before we could even address the compensation issue, and that’s clearly in violation of our agreement. It can even be regarded as stealing.”

In January 2006, the Roh Moo-hyun administration in Seoul said the North had pledged to store the materials and that it expected the North to honor its word. Despite suspicions that the North had used some of the equipment in preparation for their second nuclear test this year, the current Lee Myung-bak administration has also remained silent.

But intelligence sources tell a different story.

They said the North started using equipment almost immediately after KEDO’s withdrawal and that the North Korean military was involved.

“North Korea is trying to keep South Koreans or KEDO officials from going near the construction base,” one source said. “Recent satellite photos of the site show that hundreds of the black covers that were used to conceal materials are mostly gone.”

Sources estimate equipment and materials are worth about 46 billion won ($39 million). South Korea, one of the founding members of the KEDO, spent $1.1 billion on the construction project.

Here is a satellite image of the KEDO reactors.  Here is an image of the KEDO residential compound.

According to Yonhap:

North Korea has received some 2.7 trillion won (US$2.29 billion) from South Korea and international partners since 1994 in return for false promises to scrap its nuclear program, according to a lawmaker on Monday.

For the Geneva Framework Agreement reached in 1994, the North received $1.98 billion worth of support from South Korea, the U.S., Japan and the European Union, which was mostly used in building light-water reactors, Rep. Kwon Young-se of the ruling Grand National Party said, citing a report submitted by the foreign ministry.

Read the full story here:
N. Korea received US$2.3 billion through past nuke agreements: lawmaker
Yonhap
Tony Chang
10/5/2009

The third edition of the SAIS U.S.-Korea Yearbook chronicles important developments in North and South Korea that characterized their relations with their allies and enemies in 2008. Each chapter was written by SAIS students in the course, “The Two Koreas: Contemporary Research and Record,” in the fall of 2008. Their insights were based not only on extensive reading and study, but also on numerous interviews conducted with government officials, scholars, NGO workers, academics and private sector experts in both Washington and Seoul.

The Yearbook is divided into two parts: South Korea’s Foreign Relations and North Korea’s Foreign Relations. In the first part, student authors explore the dynamic foreign policy changes that were brought about by the Lee Myung-bak administration, and how these policies affected South Korean politics both at home and abroad. In the second part, student authors explore how shifting power dynamics both in the United States, as well as among the member states of the Six-Party Talks, affected North Korea’s foreign relations in 2008.

Here are links to the North Korea chapters:
Chapter 6:  The Torturous Dilemma: The 2008 Six-Party Talks and U.S.-DPRK Relations, by Shin Yon Kim.

Chapter 7:  U.S. Alternative Diplomacy towards North Korea: Food Aid, Musical Diplomacy, and Track II Exchanges, by Erin Kruth.

Chapter 8:  North Korean Human Rights and Refugee Resettlement in the United States: A Slow and Quiet Progress, by Jane Kim

The US Korea Institute has also published a New Working paper:

“State Over Society: Science and Technology Policy”
Download Here
ABSTRACT: Since the late 1990s, the Kim Jong Il regime has laid an explicit emphasis on the role of science and technology (S&T) as an instrument of national power. Facing external security challenges, domestic economic stagnation, and rising political uncertainty stemming from the succession issue, North Korea has sought greater scientific and technological development for national revival. Yet few analysts have interrogated the contours of North Korea’s S&T policy or explored its dilemmas for the regime in Pyongyang. Considered a means of modernization, S&T strikes at the heart of manifold dilemmas facing the North Korean leadership as technology poses formidable challenges to the maintenance of political control by introducing new pressures to the balance of power between state and society. In this paper, Rian Jensen, a former USKI Student Fellow, identifies the goals of North Korea’s S&T policy, outlines its mode of implementation, assesses how science and technology is recalibrating North Korean state-society relations, and identifies key policy implications for the US government.

According to the Dow Jones Newswire:

The U.S. Treasury Department Tuesday announced sanctions on the Korea Kwangson Banking Corp., a bank the department says is tied to North Korea’s nuclear and weapons trade.

Treasury alleges that North Korea used the Korea Kwangson Banking Corp., or KKBC, to hide nuclear proliferation activities.

The department accuses the bank of providing financial support to Tanchon Commercial Bank and a unit of the Korea Ryonbong General Corp., both of which have already been identified by the U.S. government as weapons of mass destruction proliferators.

“North Korea’s use of a little-known bank, KKBC, to mask the international financial business of sanctioned proliferators demonstrates the lengths to which the regime will go to continue its proliferation activities and the high risk that any business with North Korea may well be illicit,” Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey said in a statement.

According to the Associated Press:

The sanctions mean bank accounts or other financial assets found in the United States that belong to the firm are blocked. Americans also are prohibited from doing business with the bank. It is based in North Korea and has operated at least one overseas branch in Dandong, China.

Further information:
1. Here is an earlier post that contains information on other sanctions imposed this year.

2. Aside from the US and UN, China has also ”sanctioned” the DPRK this year.  See here and here.  No doubt they will react to the Dandong branch of KKBC as well. 

3. Stephan Haggard Marcus Noland call these kinds of actions ”Whac-a-Mole.” Read their analysis here. 

4. Joshua notes that this company was one of the North Korean banks listed in Treasury/OFAC’s June 18th advisory about North Korean financial institutions engaging in money laundering activities.

Nearly two weeks ago, the UN Security Council sanctioned five North Korean organizations. One of them was the Hyoksin Trading Corporation.  I believe they even have a web page here.

Today, the US imposed financial sanctions on this company.  According to the The Associated Press  (Via the Washington Post):

The Obama administration on Thursday imposed financial sanctions on a North Korean firm accused of involvement in the country’s missile programs.

The Treasury Department’s action covers Korea Hyoksin Trading Corp. It means any bank accounts or other financial assets found in the United States that belong to the company must be frozen. Americans also are prohibited from doing business with the firm.

It is the latest move by the United States to keep pressure on Pyongyang, whose nuclear ambitions have ratcheted up global tensions.

The department alleges that Korea Hyoksin Trading is owned or controlled by another North Korean firm, Korea Ryonbong General Corp., which the United States says is involved in the development of weapons of mass destruction. Korea Ryonbong supports Pyongyang’s sales of military-related items, the department said.

Read the full story here:
US tightens financial noose on North Korea
The Associated Press
Jeannine Aversa
7/30/2009

For the last several years there has been intense debate among “North Korea watchers” over whether the DPRK was enriching uranium.  Strong cases were made on both sides of the debate, but if we are to believe the North Koreans, the debate is over.  According to the Associated Press:

After repudiating negotiations on dismantling its plutonium-based nuclear program, North Korea admitted this month to having an even more worrying way to make bombs.

Following nearly seven years of adamant denials, North Korea announced it can enrich uranium - a simpler method of building nuclear weapons than reprocessing plutonium. Uranium can be enriched in relatively inconspicuous factories that can better evade spy-satellite detection, and uranium bombs may work without test explosions.

The admission - made in a threatening response to a June 12 U.N. Security Council resolution punishing Pyongyang for an underground plutonium bomb test last month - poses a new challenge to the U.S., China, South Korea, Russia and Japan as they seek to stem the reclusive country’s atomic ambitions.

Read more here:
Uranium gives NKorea second way to make bombs
Associated Press (via the Washington Post)
Kwang-tae Kim
6/28/2009

North Korea Uncovered version 18 is available.  This Google Earth overlay maps North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks.

This project has now been downloaded over 140,000 times since launching in April 2007 and received much media attention last month following a Wall Street Journal article highlighting the work.

Note: Kimchaek City is now in high resolution for the first time.  Information on this city is pretty scarce.  Contributions welcome.

Additions to this version include: New image overlays in Nampo (infrastructure update), Haeju (infrastructure update, apricot trees), Kanggye (infrastructure update, wood processing factory), Kimchaek (infrastructure update). Also, river dredges (h/t Christopher Del Riesgo), the Handure Plain, Musudan update, Nuclear Test Site revamp (h/t Ogle Earth), The International School of Berne (Kim Jong un school), Ongjin Shallow Sea Farms, Monument to  “Horizon of the Handure Plain”, Unhung Youth Power Station, Hwangnyong Fortress Wall, Kim Ung so House, Tomb of Kim Ung so, Chungnyol Shrine, Onchon Public Library, Onchon Public bathhouse, Anbyon Youth Power Stations.