North Korean Economy Watch

The Congressional Research Service (CRS) is the research branch of the US Congress and the number one information source for congressional staff. CRS is responsible for maintining updated research publications on numerous policy concerns and this year they have published two reports on the DPRK:

North Korea’s Nuclear Weapons: Technical Issues (PDF)
Congressional Research Service
Mary Beth Nikitin
February 29, 2012

North Korea: US Relations, Nuclear Diplomacy, and Internal Situation (PDF)
Congressional Research Service
Emma Chanlett-Avery
January 17, 2012

I have archived these and many other CRS reports on the DPRK here.

Radio Free Asia published an article on North Korean demand for overseas training.  Since the article is only available in Korean, however, a very helpful colleague has translated it for me to post here:

It is noted that North Korea is sending government officials and field specialists abroad for training with the purpose of reconstructing the economy following the inauguration of the Kim Jung-un era. Five North Korean technology inspectors recently visited a coal-chemical factory in Shanxi, China. The inspectors observed the process of creating different chemicals using coal and they showed particular interest in the factory’s systematic settings.

Also, early last month, the Energy Preservation Technology Inspection Team, including director-level officials of Science Technology Committee, underwent field training in China on construction materials and architectural technology to enhance energy efficiency.

Agape International of Switzerland (NGO), which facilitated the training, said North Korean government officials observed a Chinese insulation factory, construction company, etc. over the course of 10 days.

Additionally, a team of 30 North Korean railroad specialists participated in a commissioned training program at a Railroad institution in Russia. Recently there has been a great increase in North Korea’s request for training arrangements mediated by International and Nongovernmental Organizations.

According to a source which wished to remain anonymous, the increase is notable since North Korea has had a reputation for declining or canceling overseas training programs even after they have been arranged.

Whether the recent demand and interest for overseas training in economic fields reflects an attempt to improve the fallen economy or not remains to be seen.

Read the full story (in Korean) here:
북, 김정은 등장 후 해외연수에 적극적
Radio Free Asia
2012-3-14

Institute for Far Eastern Studies (IFES)
2012-3-15

The economic trade between China and North Korea has been robust since early this year. China’s Ministry of Commerce announced on February 29 that bilateral trade between the two countries just in January 2012 reached 418 million USD, an 18 percent jump over the same period last year. North Korea’s exports to China increased 7 percent to 139 million USD, while imports also increased 24 percent to $278 million USD.

Coal is North Korea’s largest export item to China — totaling almost half of total exports — and the total export sales are roughly worth 70 million USD. In contrast, crab and seafood exports to China were greatly reduced. This can be analyzed as one of North Korea’s measures to stock up on food to provide to its residents for the upcoming centennial birthday celebration of Kim Il Sung on April 15 (otherwise known as the Day of the Sun in the DPRK).

However, North Korea’s rice imports from China this past January plummeted 90 percent against the previous year. China’s Ministry of Commerce announced in the January 2012 Agricultural Import-Export Statistical Report that North Korea imported 614 tons (236,000 USD) in January compared to 18,140 tons (630 million USD) the same month last year, a drop of more than 94 percent. On the other hand, corn imports — the most popular grain import from China — tripled to 1,809 tons (596,000 USD) compared to last year’s import figure of 600 tons (174,000 USD).

Upon evaluation, China’s exports to North Korea appear to have increased one billion USD every three years. Based on the data collected from Chinese customs, the Korea Trade-Investment Promotion Agency (KOTRA) analyzed that China’s exports to North Korea were reported to have steadily increased from 1.08 billion USD in 2005, 2.03 billion USD in 2008, to 3.10 billion USD in 2011.

The major export items of China were crude oil and minerals, machinery, electrical equipment, vehicles and parts, and plastic products. These five categories showed steep growth from 30 to 60 percent against the previous year. Last year, China exported crude oil worth 518 million USD and petroleum products valued 192 million USD, which is a 59.1 percent and 83.4 percent rise, respectively.

In addition, 46.8 million USD of aviation kerosene and 58.31 million USD of aviation gasoline were exported to North Korea. Other export items such as fertilizers (134.4 percent) and grains (71.2 percent) steadily increased every year. KOTRA also confirmed China’s trade with North Korea peaked both in exports and imports last year, and the total trade volume towered at 5.64 billion USD. Last year, China’s exports to North Korea totaled 3.17 billion USD and imports from North Korea were 2.47 billion USD.

Trade regions that demonstrate robust economic activities include not only Dandong and Shinuiju but Hunchun, Rajin-Sonbong (currently being jointly developed) and Yanji (China)-Namyang (North Korea) areas. Trade volumes are increasing centered around these areas with expansion of bilateral economic cooperation projects and import of North Korean underground resources. Yanbian Prefecture put forth construction plans to build a new Tumen River Bridge connecting the two countries from this year, announcing the desire to continue to promote trade and economic cooperation with North Korea.

According to the AFP:

North Korea’s main nuclear negotiator on Wednesday held talks with US academics in New York as part of a private visit amid new hopes of disarmament progress after the isolated state agreed to freeze its weapons program.

Ri Yong-Ho, a vice foreign minister and chief envoy to international nuclear talks, held talks with the academics at a New York hotel.

The talks were part of a forum organized by Syracuse University which South Korea’s nuclear envoy Lim Sung-Nam was also to attend. No details on the talks have been given.

It was not immediately known, however, whether Ri would go to Syracuse in New York state or what other meetings he would have. Ri has been the North Korean lead negotiator at six nation talks on North Korea’s nuclear weapons program, which have been suspended since April 2009.

His three-day visit, however, comes after a breakthrough agreement that will provide US food aid to the North in exchange for the suspension of its nuclear program.

North Korea and the United States are discussing the delivery of 240,000 tons of food aid after Pyongyang agreed to freeze nuclear and missile tests and its uranium enrichment program.

The Hankyoreh offers more information.

Read the full story here:
N. Korea nuclear negotiator meets US academics
AFP
2012-3-8

Sheena Chestnut Greitens writes in the New York Times:

What kind of deal do you make with a 20-something who just inherited not only a country, but also the mantle of one of the world’s most sophisticated crime families? When Kim Jong-un, who is thought to be 28 or 29, became North Korea’s leader in December after the death of his father, Kim Jong-il, he became the de facto head of a mafia state.

(more…)

UPDATE 7 (2012-4-18): The IAEA now states that it is not likely to send an inspection team to the DPRK. According to the Voice of America:

The International Atomic Energy Agency says it is now unlikely to send a delegation to North Korea, after Pyongyang stated it is no longer bound by an agreement with the United States not to test missiles and nuclear devices.

Spokeswoman Gill Tudor made the announcement late Tuesday, ending hopes for the visit for which IAEA officials began negotiating with North Korea in March.

Earlier in the day, Pyongyang said it was breaking off a bilateral agreement to halt its nuclear activities and allow IAEA inspectors to enter the country after the U.S. suspended much needed food aid. Washington said North Korea did not keep its end of the bargain when it carried out its failed missile launch on Friday.

North Korea’s Foreign Ministry vowed to continue trying to fire a long-range rocket into space to place what it said was a weather satellite into orbit. It also vowed unspecified retaliation now that the agreement with the U.S. is no longer in place.

State Department spokesperson Mark Toner said Tuesday that Pyongyang’s statement was “not surprising, given their recent behavior.” He said he could not predict whether North Korea is laying the ground work for a future nuclear test, as some fear.

UPDATE 6 (2012-4-17): North Korea announced that it has scrapped the “Leap day deal“. According to KCNA (2012-4-17):

Thirdly, as the U.S. violated the Feb. 29 DPRK-U.S. agreement through its undisguised hostile acts, we will no longer be bound to it.

UPDATE 5 (2012-4-17): Following the launch of the Unha-3 rocket in April of 2012, the US has scrapped the “Leap Day Deal” to provide food aid for a suspension of the DPRK’s nuclear program. According to the Los Angeles Times:

The Obama administration announced shortly after the launch Friday that it was scrapping a Feb. 29 agreement to send 240,000 metric tons of food to North Korea, a promise made as inducement for Pyongyang to abide by previous U.N. resolutions and suspend its nuclear programs.

UPDATE 4 (2012-3-31): The DPRK attacks the US decision to suspend food assistance. According to Bloomberg:

North Korea criticized a U.S. announcement that it would suspend food aid if the Asian country carries out a planned “peaceful” satellite launch, calling it an overreaction “beyond the limit.”

Suspending food aid “would be a regrettable act” scrapping the entire Feb. 29 agreement between the two nations, North Korea’s state-run Korean Central News Agency said, quoting a foreign ministry spokesman it didn’t name.

North Korea drew rebukes from nations including the U.S. earlier this month when it revealed plans to launch an “earth observation satellite” in April to mark the 100th anniversary of the birth of state founder Kim Il Sung.

U.S. President Barack Obama, who visited Seoul for a Nuclear Security Summit this week, warned North Korea that its plan to fire a long-range rocket undermined prospects for future negotiations, while South Korea’s military said Kim Jong Un’s forces had moved the missile to a launch site.

North Korea’s announcement of a mid-April launch will make it difficult to move forward with the aid deal and broader efforts to get the regime back to negotiations on its nuclear weapons program, Obama said.

UPDATE 3 (2012-3-28): Food aid deal will be suspended if DPRK goes through with April rocket launch.  According to the American Forces Press Service:

Concerns that North Korea would resume provocative behavior on the international stage in 2012 have proven true, so the United States has suspended plans to provide nutrition aid to the impoverished nation, senior defense officials told Congress today.

“Our suspicions … were confirmed when North Korea announced on March 16 that it plans to conduct a missile launch between April 12th and 16,” Peter R. Lavoy, acting assistant secretary of defense for Asian and Pacific security affairs, told members of the House Armed Services Committee. “This grand launch is highly provocative, because it manifests North Korea’s desire to test and expand its long-range missile capability.”

Army Gen. James D. Thurman, commander of U.S. Forces Korea, testified alongside Lavoy in a hearing examining the security situation on the Korean Peninsula.

After a series of U.S.-North Korean discussions in late February, the North Korean government agreed to implement a moratorium on long-range missile launches — then announced plans for the launch just two weeks later, Lavoy explained.

The United States had agreed during the February talks to provide nutritional aid to North Korea. The World Food Program in November 2011 recommended targeted high-nutrition aid as critical to 3 million North Koreans most at risk for starvation.

Lavoy and Thurman both confirmed the United States will not deliver the planned nutrition aid.

“During those discussions, the United States made it very clear that a satellite launch would be a deal-breaker,” Lavoy told the panel.

Both men said U.S. officials have worked to “delink” humanitarian aid and political concerns, but defended the decision to suspend nutritional aid.

“The fact that North Korea so brazenly violated commitments that it just so recently agreed to … indicates that they’re not reliable,” Lavoy said. “We cannot expect them to meet … the commitments that they’ve agreed to that are associated with the provision of nutritional assistance to the needy population in their country.

“It’s regrettable that the food aid is not moving forward,” he added. “The North Korean population really needs nutritional assistance. And we’re prepared to provide that to North Korea.”

Thurman said officials are working closely with allies and other partners in the region to try to discourage North Korea from launching the missile. Meanwhile, the general added, “we have been forced to suspend our activities to provide nutritional assistance to North Korea.”

Lavoy said the threatened launch would be in direct violation of U.N. Security Council resolutions 1718 and 1874, which prohibit North Korea from conducting any launches that use ballistic missile technology.

The launch would involve a North Korean-made Kwangmyongsong-3 polar-orbiting Earth observation satellite to mark the 100th birthday of late President Kim Il Sung, a spokesman for the Korean Committee for Space Technology said in a statement.

The late president’s birthday is April 15.

Lavoy said North Korea’s authoritarian government, founded by Kim Il Sung and subsequently led by Kim Jong Il and Kim Jong Un — his son and grandson, respectively — seeks to provoke other nations militarily as a means of demonstrating power to its people.

“Political successions are extraordinarily difficult when you don’t have a representative government, which is the case there, of course,” he noted. Kim Jong Un took power after his father’s death in December.

“What we’re seeing now and what we anticipate is provocative behavior, because, unfortunately, this seems to be the only way that the North Korean regime can try to demonstrate its bona fides to a population that is suffering terribly,” Lavoy added.

Thurman said North Korea’s “military first” policy diverts national resources away from food and essential services to the people.

“They maintain the fourth-largest conventional military force in the world, the world’s largest special operating force, and significant long-range artillery capabilities,” the general said. “Over 70 percent of their combat powers are arrayed within 90 miles of the demilitarized zone.”

South Korea, home to some 28,500 forward-based U.S. troops, is “a vibrant democracy, economic success and global security partner, currently serving beside us in Afghanistan and off the Horn of Africa,” Thurman said.

“In stark contrast, one of the world’s poorest, most closed and
most militarized countries, North Korea, lies less than 20 miles from the northern districts of Seoul, a city of over 24 million people,” he added.

The United States and South Korea have for 60 years maintained a close partnership aimed at deterring North Korean aggression and maintaining stability on the peninsula, Thurman noted.

“We are prepared to defend the peninsula and can do that,” the general said. “And we can repel any type of attack should the North Koreans decide to do that.”

UPDATE 2 (2012-3-23): North Korea has announced it will conduct another “Satellite” Launch (aka ICBM test).  Jeffrey Lewis writes about the unwinding of the “Leap-day deal” at Arms Control Wonk.

UPDATE 1 (2012-3-15):  The Choson Ilbo reports that the DPRK has agreed to allow more monitoring of food aid distribution:

The North apparently agreed during the latest meeting with U.S. officials in Beijing to increase the number of monitors to 70. Their task will be to check that the food reaches civilians who need it and is not diverted to the military. A diplomatic source in Seoul said the U.S. has decided to send monitors who are fluent in Korean to the North when it takes delivery of 20,000 tons of food aid per month over a year, as agreed.

Robert King, the U.S. special envoy for North Korean human rights, met on March 7 and 8 with An Myong-hun of the North Korean Foreign Ministry and agreed the terms, the source said.

North Korea accepted most U.S. demands, the source added. Washington apparently insisted that Pyongyang must accept U.S. requests to dispatch monitors to a particular regions at 24 hours’ notice.

After the talks, King said he was “very satisfied” with the results. The U.S. will brief the World Food Programme in Rome on the outcome on Thursday. The WFP then handles the provision of food aid along with five other aid groups based in the U.S. The aid, which takes the form of nutritional supplements rather than rice, will go to North Korean children between the ages of five and seven as well as pregnant women.

ORIGINAL POST (2012-2-29): According to the Associated Press (Via Washingotn Post):

The United States says North Korea has agreed to suspend uranium enrichment and agree to a moratorium on nuclear and long-range missile tests.

State Department spokeswoman Victoria Nuland also said Wednesday the North has agreed to allow International Atomic Energy Inspectors to verify and monitor the moratorium on uranium enrichment and confirm disablement of its nuclear reactor at Yongbyon.

Her statement says the U.S. will meet with North Korea to finalize details for a proposed package of 240,000 metric tons of food aid.

The Washington Post provides additional information:

The agreement is the result of talks between U.S. and North Korean negotiators late last week in Beijing — the first such negotiations since the death of North Korean leader Kim Jong Il and the elevation of his son Kim Jong Eun.

…

While U.S. leaders have insisted that the food aid for the impoverished country and nuclear disarmament are separate issues, North Korean officials have tied the two in past negotiation

Here is the official statement by the State Department:

U.S.-DPRK Bilateral Discussions

Press Statement
Victoria Nuland
Department Spokesperson, Office of the Spokesperson
Washington, DC
February 29, 2012

A U.S. delegation has just returned from Beijing following a third exploratory round of U.S.-DPRK bilateral talks. To improve the atmosphere for dialogue and demonstrate its commitment to denuclearization, the DPRK has agreed to implement a moratorium on long-range missile launches, nuclear tests and nuclear activities at Yongbyon, including uranium enrichment activities. The DPRK has also agreed to the return of IAEA inspectors to verify and monitor the moratorium on uranium enrichment activities at Yongbyon and confirm the disablement of the 5-MW reactor and associated facilities.

The United States still has profound concerns regarding North Korean behavior across a wide range of areas, but today’s announcement reflects important, if limited, progress in addressing some of these. We have agreed to meet with the DPRK to finalize administrative details necessary to move forward with our proposed package of 240,000 metric tons of nutritional assistance along with the intensive monitoring required for the delivery of such assistance.

The following points flow from the February 23-24 discussions in Beijing:

The United States reaffirms that it does not have hostile intent toward the DPRK and is prepared to take steps to improve our bilateral relationship in the spirit of mutual respect for sovereignty and equality.

The United States reaffirms its commitment to the September 19, 2005 Joint Statement.

The United States recognizes the 1953 Armistice Agreement as the cornerstone of peace and stability on the Korean Peninsula.

U.S. and DPRK nutritional assistance teams will meet in the immediate future to finalize administrative details on a targeted U.S. program consisting of an initial 240,000 metric tons of nutritional assistance with the prospect of additional assistance based on continued need.

The United States is prepared to take steps to increase people-to-people exchanges, including in the areas of culture, education, and sports.

U.S. sanctions against the DPRK are not targeted against the livelihood of the DPRK people.

Here is the statement in KCNA:

DPRK Foreign Ministry Spokesman on Result of DPRK-U.S. Talks

Pyongyang, February 29 (KCNA) — The spokesman of the Ministry of Foreign Affairs of the Democratic People’s Republic of Korea on Wednesday gave the following answer as regards questions raised by KCNA concerning the result of the latest DPRK-U.S. high-level talks:

Delegations of the Democratic People’s Republic of Korea (DPRK) and the United States of America (U.S.) met in Beijing, China on 23rd and 24th of February for the third round of the high-level talks between the DPRK and the U.S.

Present at the talks were the delegation of the DPRK headed by Kim Kye Gwan, the First Vice Minister of Foreign Affairs, and the delegation of the U.S. headed by Glyn Davies, the Special Representative of the State Department for the DPRK Policy.

The talks, continuation of the two previous DPRK-U.S. high-level talks held respectively in July and October, 2011, offered a venue for sincere and in-depth discussion of issues concerning the measures aimed at building confidence for the improvement of relations between the DPRK and the U.S. as well as issues related with ensuring peace and stability on the Korean Peninsula and resumption of the six-party talks.

Both the DPRK and the U.S. reaffirmed their commitments to the September 19 Joint Statement and recognized that the 1953 Armistice Agreement is the cornerstone of peace and stability on the Korean Peninsula until the conclusion of a peace treaty.

Both the DPRK and the U.S. agreed to make a number of simultaneous moves aimed at building confidence as part of the efforts to improve the relations between the DPRK and the U.S.

The U.S. reaffirmed that it no longer has hostile intent toward the DPRK and that it is prepared to take steps to improve the bilateral relations in the spirit of mutual respect for sovereignty and equality.

The U.S. also agreed to take steps to increase people-to-people exchanges, including in the areas of culture, education, and sports.

The U.S. promised to offer 240,000 metric tons of nutritional assistance with the prospect of additional food assistance, for which both the DPRK and the U.S. would finalize the administrative details in the immediate future.

The U.S. made it clear that sanctions against the DPRK are not targeting the civilian sector, including the livelihood of people.

Once the six-party talks are resumed, priority will be given to the discussion of issues concerning the lifting of sanctions on the DPRK and provision of light water reactors.

Both the DPRK and the U.S. affirmed that it is in mutual interest to ensure peace and stability on the Korean Peninsula, improve the relations between the DPRK and the U.S., and push ahead with the denuclearization through dialogue and negotiations.

Both sides agreed to continue the talks.

The DPRK, upon request by the U.S. and with a view to maintaining positive atmosphere for the DPRK-U.S. high-level talks, agreed to a moratorium on nuclear tests, long-range missile launches, and uranium enrichment activity at Nyongbyon and allow the IAEA to monitor the moratorium on uranium enrichment while productive dialogues continue.

Evan Ramstad analyses the differences be3tween the DPRK and US State Department statements in this Wall Street Journal article.

The New York Times offers some caveats:

North Korea has agreed in the past to halt its nuclear program only to back out, demanding more concessions or accusing the United States of reneging on its obligations. And the statement Tuesday from the North’s official Korean Central News Agency appeared to give the country’s leaders wiggle room again this time, saying that Pyongyang would carry out the agreement “as long as talks proceed fruitfully.”

Still, North Korea’s agreement to allow inspectors from the International Atomic Energy Agency to return to the country appeared to be a significant concession. After years of negotiations, North Korea expelled inspectors and went on to test nuclear devices in 2006 and 2009. American intelligence officials believe the country has enough fuel already for six to eight weapons.

If the North lives up to its agreement to stop uranium enrichment, it could help ease some anxieties in Washington over the program at a time when the administration, in an election year, is consumed with halting Iran’s nuclear program before Israel decides to stage an attack.

For the relatively young and inexperienced Mr. Kim, the agreement could be crucial to solidifying his hold on power and the backing of the powerful military, analysts in South Korea said. He needs to show in the early months of his rule that he is improving people’s lives after years of food shortages and a devastating famine. Bringing in 240,000 metric tons of food aid from the United States will surely help.

CNN reports (sorry, no link) that the details of this agreement were largely negotiated before Kim Jong-il passed away.

Additional Information:

1. Here are Scott Snyder’s thoughts on the agreement. Here are Joel Wit’s comments. Here are Gordon Flake’s.

2. Here is coverage in the Wall Street Journal, Los Angeles Times, The Guardian, and Stratfor.

3. Joshua Stanton (OFK) posted a transcript of the entire State Department briefing. Here is the State Department Briefing transcript from State.

4. I have kept a collection of significant news and satellite imagery of the DPRK’s nuclear facilities.  You can see the information here.

5. The DPRK lobbied very hard for food aid from the international community throughout 2011.

6. Here is a list of US – DPRK engagement in 2011. Fox News also reports that an American ship has arrived in North Korea to assist in the search for the remains of Korean War MIAs.

7. More on the talks that preceded the announcement of the deal here

Read the full stories here:
U.S. says N. Korea has agreed to suspend uranium enrichment, moratorium on nuclear, missile tests
Associated Press (Via Washingotn Post)
2012-2-29

N. Korea agrees to suspend uranium enrichment, nuclear tests
Washington Post
William Wan
2012-2-29

Institute for Far Eastern Studies (IFES)
2012-2-1

Since Kim Jong-un’s first election as the vice-chairman of the Korean Workers’ Party Central Military Commission (CMC) on September 28, 2010, Kim Jong-un was reported to have made 33 accompanied onsite inspections with Kim Jong-il and a total of 61 visits at industrial sites.

Out of the 61 total visits, Kim Jong-un inspected the following industries: power/electricity (5 times); metal (3 times), machinery (12 times); agricultural (4 times); light (5 times); food (14 times); and industrial (4 times). Construction sites of Huichon Power Stations were visited four times while the Huichon Ryonha General Machinery Plant and the Kanggye General Tractor Plant were also visited multiple times.

Kim Jong-un’s “economic learning” began while accompanying his late father Kim Jong-il on onsite inspections. Even when Kim Jong-il was alive, Kim Jong-un was most likely to have made preliminary visits to these industrial sites for a closer assessment as a part of his duty as the vice-chairman of the CMC.

The significance of the recent visits mainly lie with inspections to the Huichon Power Stations (located in Jagang Province) equipped with 300,000 kW of power generation capacity. Huichon Power Station was an important national strategic project which was often emphasized by Kim Jong-il, “The construction of the power plant must be completed before the centennial birthday of the Great Leader (Kim Il-sung) with great efforts from the entire party, military and the people.”

The electricity produced at the Huichon Power Station is likely to be distributed primarily in the Pyongyang area around the two national holidays, the Day of the Shining Star (Kim Jong-il’s birthday) and the Day of the Sun (Kim Il-sung’s birthday). Currently, power line constructions are still underway in Pyongyang.

At Huichon, constructions of additional terraced power plants are under planning using the currents from the Yangtze and Cheongcheo Rivers. The electricity produced from these plants is likely to be distributed to the industrial areas in Jagang Province, which is central to the machinery and national defense industries.

Important policy implications can be found from Kim Jong-un’s past accompaniment to the Huichon Ryonha General Machinery Plant with Kim Jong-il. This plant is currently emphasized as Kim Jong-un’s accomplishment and revered as, “the industrial revolution of the new era,” and a “site of CNC (Computer Numerical Control) breakthrough.” In addition, Kim Jong-un’s economic leadership is acclaimed for placing prominence on the state-of-the-art technology and “knowledge-based economy.”

Kim Jong-il visited the Huichon Ryonha General Machinery Plant on October 28, 2011 with Kim Jong-un and inspected the CNC assembly line, CNC processing plant, and CNC machineries. He stressed, “Modernization must be promoted in all sectors and levels founded on the state-of-the-art technology. The achievements in the CNC technology should serve as the stepping stone to move forward toward a higher level of science and technology.”

Similarly on October 27, 2011, Kim Jong-il visited the Yangtze River Machinery Plant* with the younger Kim and stressed, “Powerful economic nation that we are seeking is knowledge-based economy which is only possible when CNC technology and automation is realized that can create material wealth through little resources, efforts, and energy.”

The “knowledge-based economy” will likely become the trademark of Kim Jong-un and esteemed as following the “teachings of Kim Jong-il.” Kim Jong-un’s recent industrial site visits were concentrated on the cutting edge production facilities equipped with modernized and automated production processes.

* NKeconWatch: I believe this name is an error and the correct location is the Jangjagang Machine Plant.

According to Yonhap:

A U.S.-led international consortium plans to renew its call this month for North Korea to compensate for losses incurred from scrapping a project to build two light-water reactors for the communist state, a senior Seoul official said Tuesday.

The move, which is likely to irritate North Korea after the death of Kim Jong-il, had been originally decided upon just weeks before Kim died of a heart attack in December last year. The Korean Peninsula Energy Development Organization (KEDO) decided not to drop the demand for compensation from the North.

“The KEDO will send an official letter this month to North Korea, demanding it compensate US$1.89 billion for the termination of the light-water reactor project,” the official at Seoul’s foreign ministry said.

The KEDO, which also includes South Korea, Japan and the European Union, officially shut down the multi-billion-dollar project in 2006 after North Korea was caught by the U.S. pushing a second nuclear weapons program based on enriched uranium in addition to its widely known plutonium-based program.

The consortium has since been asking North Korea to return the money it poured into the project. Prospects for the call have remained dim, however, given the North’s economic hardship and belligerency.

The $4.5 billion project, which was about 35 percent complete, dated back to a 1994 deal linked to North Korea’s promise to denuclearize. In return, the KEDO agreed to build two 1,000-megawatt light-water reactors.
In September last year, amid renewed diplomatic efforts to resume the six-party talks on ending the North’s nuclear drive, Pyongyang abruptly demanded $5.7 billion in compensation, claiming that failure by the KEDO to build the reactors caused it heavy financial and other losses.

“The KEDO’s renewed call for compensation would be an official reply to counter the North’s demand last September and has nothing to do with the passing of Kim Jong-il,” the official said on the condition of anonymity, brushing off concerns about possible irritation at the North.

The official believed that North Korea demanded compensation last September as part of its “negotiating ploy” to raise the issue of the halted project if the six-nation talks resume.

The death of Kim left many policymakers and analysts wondering if his youngest son and chosen heir, Kim Jong-un, will be able to successfully consolidate power in Pyongyang.
Shortly before Kim died, the United States and North Korea were apparently poised to announce a breakthrough toward the resumption of multilateral talks, which has been dormant since late 2008. Other members of the talks include South Korea, China, Russia and Japan.

South Korea, the U.S. and Japan have insisted that the North must accept a monitored shutdown of its uranium enrichment program before the aid-for-disarmament talks can resume.

Read the full story here:
Consortium to renew call for Pyongyang to reimburse reactor project losses
Yonhap
2012-2-7

Two stories out with similar themes:

The first is from the Daily NK:

Many of the residents of luxury apartments in Pyongyang are leaving their homes for the heated homes of relatives or other warmer locations.

An inside source who visited Pyongyang at the end of last month said in a phone interview with the Daily NK today, “People previously had no supplies of water so didn’t have drinking water and could not go to the bathroom without difficulty, but now that there are heating problems too the people are inevitably leaving their homes. This year, many people are locking their homes and leaving for warmer places.”

The source said, “When I went to Pyongyang just three years ago, the people still stayed in their apartments even without heat, but now half of them are gone, they went to East Pyongyang where the pre-1980s homes are heated with charcoal briquettes.”

The source added, “Even until last year, the residents in these apartments spent the whole winter season there with cotton blankets on the floor all day long, filling pint bottles with hot water to warm their blankets when they slept; however, as the situation has gotten worse this year whole families cannot take any more and have chosen to leave their homes behind.”

The 20-40 storey apartments on Gwangbok and Tongil Streets, which are boasted of by the North Korean authorities for their modernity, are among those falling into dilapidation.

The source explained, “If the rooms had just enough lukewarm water that they wouldn’t freeze we could live, but now they are not even able to do that. Nobody knows when heat will come.”

Among many North Korean people, the situation is such that the letter ‘ㄹ’ has come to be ridiculed, with people saying that they suffer from a particular lack of words that have the letter ‘ㄹ’ in them, for example, water (‘물’), fire/electric (‘불’), and rice (‘쌀’).

The second story is from Reuters:

North Korea’s capital faces its worst electricity shortages in years just as a new leadership takes power in the impoverished state and pushes ahead with lavish building projects to celebrate the centenary of its founder’s birth.

The Pyongyang-based diplomat, who asked not to be named, said the city of 3 million and home to the leadership elite, has seen daily power supplies almost evaporate as freezing winter temperatures bite.

“Embassies and others with generators are using them most of the time to compensate both for poor quality and cuts, and I can tell you that power problems are a main issue of discussion,” said the diplomat, one of a small number of foreigners allowed to live in the country.

“We certainly assess that there is more darkness on the streets and in the residential blocks in the evening than before/during the mourning period (for Kim Jong-il).”

The young Kim Jong-un has been declared the country’s new “supreme leader” following the death of his father Kim Jong-il in December.

Fuel shortages have long been a chronic problem in North Korea which is heavily sanctioned by the outside world for a series of nuclear and missile tests.

Temperatures in the capital on Wednesday hit -19 Celsius (-2 Fahrenheit).

This winter’s outages have coincided with Pyongyang’s building spree to mark the 100th anniversary this year of the birth of founder Kim Il-sung — the current leader’s grandfather — including building 100,000 new homes in the capital.

The North is also struggling with chronic food shortages, with United Nations’ food agencies estimating nearly 3 million people will need food assistance this year.

Read the full stories here:
No Electricity, No Water, No Patience
Daily NK
Choi Song Min
2012-1-13

North Korea Power Cut: Pyongyang Diplomat Says Capital Faces Worst Electricity Shortages In Years
Reuters
2012-2-1

Pictured Above: The DPRK’s two most famous waterways are the Paekma-Cholsan Waterway (see here and here) and the Kaechon-Lake Thaesong Waterway. A third waterway in the Miru Plain is too recent to appear on Google Earth.

 According to KCNA (2012-1-26):

Waterway to Be Built in South Hwanghae Province, DPRK

Pyongyang, January 26 (KCNA) — A gravity-fed waterway will be built in South Hwanghae Province.

It is another gigantic nature-remaking project in the era of Songun as part of the far-sighted nature-harnessing plan of leader Kim Jong Il and the dear respected Kim Jong Un.

The completion of the waterway will help sufficiently irrigate tens of thousands of hectares of farmland and tideland-turned rice fields including those in Ongjin, Kangryong, Pyoksong and other several counties to ensure a safe and high yield of grain.

It will also help save tens of thousands of kilowatt of electricity and make a great contribution to the economic development and improvement of people’s living standard by preventing the damage by flood in the area along Jaeryong River.

A ground-breaking ceremony took place in Haeju City on Thursday.

Present there were Choe Yong Rim, Kim Ki Nam and other senior officials and officials of ministries and national institutions, builders and working people.

As the DPRK’s “rice bowl”, South Hwanghae Province is home to at least three additional large-scale agricultural projects at the moment: Pujiman Tideland Reclamation (Ongjin), Ryongmae Island (룡매도) land reclamation project, and the Sohae-ri-Nunggum Island Tedeland Reclamation.