North Korean Economy Watch

UPDATE 2: According to Yonhap:

North Korea has inked a 10-year contract with British oil and gas company Aminex to explore and extract oil on the seabed off the country’s east coast, the Financial Times (FT) in London reported on June 1.

For the deal, North Korea presented Singapore-registered Chosun Energy as its representative to establish a 50-50 joint venture, Korex, with Aminex, the FT said, noting a filing with Singapore’s Accounting and Corporate Regulatory Authority.

Chosun Energy is an investment holding company operated by North Korea with a paid-up capital of US$1.2 million, according to the newspaper. But the newspaper did not elaborate further details on the company.

Korex will search for oil in an area of 50,681 square kilometers (20,272 square miles) in parts of North Korea’s east coast, Aminex said in a statement.

The contract with the British company, which is listed in London and Dublin, was signed around mid-May in London by officials from the North’s oil company and a head official for Aminex.

“Officials from North Korea’s state oil company traveled to London two weeks ago to conclude the 10-year contract. Lord Alton, chairman of Britain’s parliamentary North Korea group, says he showed the officials around parliament,” the FT added.

North Korea has contacted foreign companies and investors to attract foreign capital for searching for its rich natural resources, including crude oil. In 1997, the North claimed it had reserves of 5 to 40 billion barrels of oil.

North Korea has maintained ties with Animex since 1998. Aminex has been hunting for potential oil reserves in the North Korean portion of the Yellow sea since it signed with the country for joint oil and gas development in January 2005.

UPDATE 1: According to the AFP:

The head of a London-based energy firm that signed a deal to search for oil off North Korea said on Thursday he hoped to start exploring in a year but was closely monitoring tensions on the peninsula.

Aminex PLC executive chairman Brian Hall told AFP he expected “field work in about a year” off the communist nation’s east coast and aimed to “find substantial reserves”.

However, relations on the peninsula have become strained after North Korea was accused of carrying out a torpedo attack on a South Korean warship in March that left 46 sailors dead and stoked fears of an armed conflict.

Pyongyang has denied involvement in the sinking and threatened war in response to a trade suspension and other reprisals by the South.

Asked about the timing of the North Korea contract, Hall said “we have been working with (the) North Koreans for over a decade and an agreement such as the one we have recently signed takes many months to negotiate”.

He added: “Naturally we will keep a very close eye on the tensions on the peninsula, as we have done during previous incidents, but our project is of a long-term nature and well thought through.”

Aminex announced last week that an associate company had signed a 10-year contract with North Korea to search for oil in an area of about 50,681 square kilometres (20,272 square miles) in the Korean East Sea.

Hall declined to give an estimate of the potential deposits.

The contract was signed by Korex — a 50-50 venture between Aminex and Singapore-registered Chosun Energy — and the Korean Oil Exploration Company, the North’s state oil firm.

Victor Shum, an analyst with energy consultancy Purvin and Gertz, said there was every chance that oil would be found in the area but stressed the reserves must be of a significant size in order for exploration to progress further.

“The question is whether any oil reserves that may be discovered there are going to be economically viable to extract,” Singapore-based Shum told AFP.

“I think there has been interest certainly by oil companies so there is therefore a possibility of something there … So far the production isn’t large,” he said.

Aminex, with listings on the London and Irish stock exchanges, describes itself as an upstream oil and gas company with concessions in several countries including the United States, Kenya and Egypt.

According to a filing with Singapore’s Accounting and Corporate Regulatory Authority obtained by AFP, Aminex’s partner Chosun Energy is an investment holding company with a paid-up capital of 1.2 million dollars.

It listed its address as the German Centre in Singapore, a building that hosts small and medium-sized foreign companies, and named three directors — an American, one Briton and a Singaporean.

But staff at the German Centre told AFP the company had moved out.

Singapore is a major financial centre and corporate hub, attracting companies from all over the world because of the ease of doing business and access to funding.

North Korea, one of the world’s most impoverished countries, is starved of energy and foreign exchange after decades of isolation as well as economic sanctions, but is believed by US officials to have up to six nuclear weapons.

South Korea’s ban on most trade with North Korea in response to the ship sinking will cost the communist state hundreds of millions of dollars a year, according to figures from the Seoul-based Korea Development Institute.

ORIGINAL POST: According to the Financial Times:

Aminex, listed in London and Dublin, has formed a company, Korex, to pursue the project jointly with Chosun Energy, a Singapore-listed company that identifies James Passin as one of its directors, according to a filing with Singapore’s Accounting and Corporate Regulatory Authority.

Mr Passin is a New York-based fund manager. His Firebird Global Master Fund II half owns Chosun Energy and targets resource deals in frontier markets.

Officials from North Korea’s state oil company travelled to London two weeks ago to conclude the 10-year contract. Lord Alton, chairman of Britain’s parliamentary North Korea group, says he showed the officials around parliament.

Brian Hall, chairman of Aminex, acknowledged the contract had been concluded at a sensitive time given the rising tensions between Seoul and Pyongyang, but stressed he had opened ties with energy-starved North Korea in 1998. Since then, securing output rights from an exploration block had been “stop-go”.

Additional Information/thoughts: 
1. Here is a previous short post on Aminex.

2. The economics literature overwhelmingly suggests that natural resource windfalls are generally bad news for weak states/developing countries—often fueling corruption, repression, and violence.  The windfall almost never translates into better general working conditions or increases in general income (Botswana being an exception).  There are plenty of papers out there making this point (“Natural Resource Curse”), so feel free to refer to your favorite.

3. I would be weary of building an offshore oil rig in the DPRK.

4.  If oil is discovered in Korea’s East Sea, look for Japan, South Korea, and Russia to begin “drinking from their milkshake”.

Read the full stories here:
Oil firm says N.Korea exploration to start in a year
AFP
Bernice Han
6/2/2010

Anglo-Irish group seeks North Korean oil
Financial Times
Christian Oliver, Kevin Brown
6/1/2010

According to the BBC:

A United Nations panel has accused North Korea of continuing to export nuclear and missile technology in defiance of a UN ban.

The experts said North Korea has used front companies and intermediaries to sell weapons and provide illegal assistance to Iran, Syria and Burma.

The preliminary report was compiled by a seven-member group that monitors Pyongyang’s compliance with sanctions.

…

The 47-page report outlined a broad range of techniques used by North Korea to evade sanctions imposed by the UN after the North’s nuclear tests of 2006 and 2009, the Associated Press reports.

The report said North Korea had moved quickly to replace banned individuals and entities with others to enable it to continue the nuclear trade.

Among a number of “masking techniques”, it said the North describes exports falsely, mislabels shipping container contents, falsifies information about the destinations of goods and uses “multiple layers of intermediaries, shell companies, and financial institutions”.

The report said North Korea has a range of legitimate trade offices but also sustains links with international criminal organisations to pursue the banned trades.

An unnamed diplomat told Reuters the findings were “not entirely surprising”.

“The point is that North Korea has been providing that kind of aid to Iran, Syria and Burma,” he said.

The report comes before a crucial day of talks in New York about the future of the Nuclear Non-Proliferation Treaty.

It also comes at a time of increased tension surrounding what international investigators say was a deadly North Korean torpedo attack on a South Korean warship in March.

Read the full article here:
North Korea ‘trading nuclear technology’ says UN panel
BBC
5/28/2010

UPDATE 2: Gordon Chang offers another theory in Forbes:

And the North’s ability to surprise gets us back to the mysterious release of the xenon. We know its technicians can make nuclear weapons with plutonium cores. After all, they detonated two of them–in 2006 and 2009–and Kim has a half dozen more in his arsenal.

Did he set off one of his stock in May? Because there was no artificial seismic activity at the time, Seoul ruled out a third North Korean underground nuclear test. Xenon is also released during a nuclear accident, a possibility.

Another possibility–the most disturbing one, actually–is that the North Koreans had been telling the truth when on May 12, just two days before South Korea detected the high levels of xenon, they announced they had created a nuclear fusion reaction, a step necessary to the building of a thermonuclear device. At the time everyone thought the claim was “sheer mystical flapdoodle,” as one American expert termed it. Maybe the boast was a fantastic fabrication, but any possibility that Kim’s regime was closer to the world’s most destructive weapon is obviously of concern.

To find out what really happened, we have to think like North Koreans. So here’s a theory: Pyongyang made the hard-to-accept claim about fusion so that we would be distracted from what it is really doing. Xenon is released whenever uranium is enriched, such as when it is enriched for the core of a nuclear weapon.

The North Koreans started to obtain Chinese-Pakistani enrichment technology in the early 1990s from the black-market ring headed by Dr. Abdul Qadeer Khan. They first boasted of a uranium enrichment program in October 2002. Most analysts think the North has not gotten very far even if it has been trying to build a nuclear weapon with a uranium core. The release of xenon gas in May throws the conventional view into doubt.

Bruce Bechtol of the Marine Corps Command and Staff College will deliver, next Monday at Brookings in Washington, a paper contending that North Korea is now or will soon be capable of building a uranium-core bomb. Not every analyst agrees with Bechtol’s conclusion, but doubters need to come up with a plausible explanation why xenon was wafting over the North Korean countryside last month. At least for now, he seems the one closest to the truth.

UPDATE 1: According to the Associated Press (6/21/2010):

Abnormal radiation was detected near the inter-Korean border days after North Korea claimed last month to have achieved a nuclear technology breakthrough, South Korea’s Science Ministry said Monday.

The ministry said it failed to find the cause of the radiation but ruled out a possible underground nuclear test by North Korea. It cited no evidence of a strong earthquake that must follow an atomic explosion.

On May 12, North Korea claimed its scientists succeeded in creating a nuclear fusion reaction — a technology necessary to manufacture a hydrogen bomb. The technology also one day could provide limitless clean energy because it produces little radioactive waste, unlike fission, which powers conventional nuclear power reactors.

South Korean experts doubted the North actually made such a breakthrough. Scientists around the world have been experimenting with fusion for decades, but it has yet to be developed into a viable energy alternative.

On May 15, however, the atmospheric concentration of xenon — an inert gas released after a nuclear explosion or radioactive leakage from a nuclear power plant — on the South Korean side of the inter-Korean border was found to be eight times higher than normal, according to South Korea’s Science Ministry.

South Korea subsequently looked for signs of a powerful, artificially induced earthquake — something that should have been detected if North Korea had conducted a nuclear test. Experts, however, found no signs of a such a quake in North Korea, a ministry statement said.

“We determined that there was no possibility of an underground nuclear test,” it said. The ministry did not mention any possible health hazard from the release.

Earlier Monday, South Korea’s mass-circulation Chosun Ilbo newspaper reported that North Korea may have conducted a small-sized nuclear test, citing the abnormal radioactivity. The paper cited an atomic expert it did not identify.

North Korea — which is believed to have enough weaponized plutonium for at least a half-dozen nuclear weapons, conducted two underground nuclear tests in 2006 and 2009, drawing international condemnation and U.N. sanctions.

The news of the detected radiation comes as tension is running high on the Korean peninsula over the deadly sinking of a South Korean warship blamed on a North Korean torpedo attack. North Korea flatly denies the allegation and has warned any punishment would trigger war, with the U.N. Security Council reviewing Seoul’s request to punish Pyongyang over the sinking.

A Science Ministry official said the wind was blowing from north to south when the xenon was detected.

But the official — speaking on condition of anonymity, citing department policy — said xenon could have come from Russia or China, not necessarily from North Korea, as South Korea was unable to find the reason for the high-level of the gas.

The official also said that there was no possibility that the xenon could have originated from any nuclear power plants in South Korea.

ORIGINAL POST: According to KCNA (May 12):

DPRK Succeeds in Nuclear Fusion
Pyongyang, May 12 (KCNA) — Scientists of the DPRK succeeded in nuclear fusion reaction on the significant occasion of the Day of the Sun this year, according to Rodong Sinmun Wednesday.

It goes on:

The successful nuclear fusion marks a great event that demonstrated the rapidly developing cutting-edge science and technology of the DPRK.

The nuclear fusion technology is called “artificial solar” technology as it represents a field of the latest science and technology for the development of new energy desired by humankind.

The nuclear fusion technology for obtaining safe and environment-friendly new energy the source of which is abundant draws great attention of world science at present.

Scientists of the DPRK have worked hard to develop nuclear fusion technology their own way.

They solved a great many scientific and technological problems entirely by their own efforts without the slightest hesitation and vacillation even under the conditions where everything was in short supply and there were a lot of difficulties, thus succeeding in nuclear fusion reaction at last.

In this course, Korean style thermo-nuclear reaction devices were designed and manufactured, basic researches into nuclear fusion reaction completed and strong scientific and technological forces built to perfect the thermo-nuclear technology by their own efforts.

The successful nuclear fusion in the DPRK made a definite breakthrough toward the development of new energy and opened up a new phase in the nation’s development of the latest science and technology.

According to NTI Global Security Newswire:

Aspiring nuclear power North Korea claimed today that it was able to conduct a nuclear fusion reaction, a process that could be used to produce energy or a hydrogen bomb, Agence France-Presse reported (see GSN, May 11).

The state-run Rodong Sinmun did not say whether the fusion reaction, which no other nuclear program has yet successfully turned toward energy production, would be put to use in the country’s nuclear weapons program.

“The successful nuclear fusion marks a great event that demonstrated the rapidly developing cutting-edge science and technology of the D.P.R.K.,” the report asserted.

To achieve the reaction, “Korean-style thermonuclear reaction devices were designed and manufactured, basic researches into nuclear fusion reaction completed and strong scientific and technological forces built to perfect the thermonuclear technology,” said the report (Agence France-Presse I/Australian, May 12).

South Korea was skeptical today of the North’s nuclear fusion claim, the Xinhua News Agency reported.

An anonymous Foreign Ministry official told the Yonhap News Agency that Pyongyang’s assertion was “absurd” and said there was no evidence that the impoverished nation possessed the expensive nuclear infrastructure required to conduct fusion tests.

Should North Korea be telling the truth, though, it would have breached U.N. Security Council Resolution 1874, which prohibits Pyongyang from carrying out additional missile or nuclear tests, the official said (Xinhua News Agency, May 12).

The Stalinist regime, which is severely lacking in electricity generation capacity, compared the fusion reaction to an “artificial sun,” Reuters reported.

“Maybe if two suns show up in the sky tomorrow, then people could believe the claim,” Seoul National University nuclear expert Kune Suh said.

“This seems highly inaccurate and grossly exaggerated,” he said. “They probably conducted some small-scale experiment” (Herskovitz/Kim, Reuters, May 11).

The reaction was said to be conducted in honor of the April birthday of North Korea’s founder, Kim Il Sung, which is now a holiday known as the “Day of the Sun.” Pyongyang regularly makes questionable claims on days recognizing Kim or his son and successor, Kim Jong Il, the Associated Press reported.

Hyeon Park, a physics professor who works on fusion research in the South, said North Korea could have successfully built a plasma device and generated a hot mass of supercharged particles, which is one of the first steps n to create a nuclear fusion reaction.

To judge the validity of the assertion, foreign scientists would require information on the scope of the North’s fusion test and the steps it took to create the plasma, Park said (Kwang-Tae Kim, Associated Press/Google News, May 12).

Meanwhile, Washington’s lead negotiator for the multilateral talks aimed at ending the North’s nuclear weapons work, Sung Kim, was in South Korea today for talks with his South Korean counterpart, AFP reported. The talks also involve China, Japan and Russia.

Seoul’s deputy foreign minister and deputy defense chief are set to travel to Washington tomorrow for talks about matters on the Korean Peninsula and nuclear concerns, the South Korean Foreign Ministry said (Agence France-Presse II/Google News, May 12).

Daily NK
Min Cho Hee
5/11/2010

In a move sure to add weight to suspicions that North Korean industry is in the midst of a very serious funding crisis, a source has reported to The Daily NK that the Chinese partner has taken unprecedented power in a new mining joint venture in North Hamkyung Province.

The inside source reported on Sunday that when Saebyul Coal Mining Complex, a North Korean mining management organization, sealed a contract between Gogunwon Coal Mine, Ryongbuk Youth Coal Mine and a Chinese enterprise, it agreed to hand over an unheard of degree of discretion in affairs of personnel management, materials and working methods to the Chinese enterprise.

The source explained, “Now, the Chinese enterprise has authority over staffing, food distribution, wages and materials. Accordingly, it has reduced the administrative staff and drastically improved productivity.

According to the source, the Chinese are guaranteed operational independence free from the control and instruction of the Saebyul Party committee, and take 60% of net profits. If true, this is a new model of collaboration and cooperation in business between China and North Korea.

The source added, though, “The number of people in the Party committee has also been reduced, though it is unlikely to be got rid of completely due to the nature of the North Korean system.”

He said, “Since last year, North Korea has been trying to attract Chinese investment and three or four Chinese companies have been in negotiations over mine development in this way.”

The Chinese enterprise plans to convey the lignite produced in the mines to China, process it there and sell it domestically.

The source noted, “North Korean workers are delighted with this method of collaboration. They get guaranteed wages and food, and the working environment has also improved thanks to new, stronger mining timbers, so productivity has increase.”

In the cafeterias at the mines, they serve 900g of rice to everyone, and pork and eggs, which workers like. According to the source, “Workers want to take meals served in the cafeteria home for their family members. In this worker-friendly mood, Party cadres are unable to complain.”

Gogunwon Coal Mine and Ryongbuk Youth Coal Mine are both located in the “Gogunwon Workers” district of Saebyul, North Hamkyung Province. They both contain good quality coal seams, and are among the best coal mines in North Korea.

Another source from North Korea suggested on Monday that North Korea is losing a lot of control of the economy in its northern provinces, saying, “The purse strings in the border regions of our country have basically been handed over to China, and ‘our socialist pride’ is in the hands of China. Any factory where they produce even a small amount of goods has been invested in by the Chinese”

UPDATE 2:  (5/19/2010) According to Offshore-mag.com:

LONDON — Aminex says a delegation from North Korea is in London negotiating a new production-sharing agreement (PSA) covering activity in the East Korea Bay basin.

Chosun Energy has become a 50% shareholder in Korex, Aminex’s subsidiary for the region, and will become increasingly involved in management of this project.

Assuming agreement for the PSA can be reached with the government of North Korea, work will start as soon as possible on the next phase of exploration in the area.

UPDATE 1:  A reader passes along a very helpful comment (Thanks!):

I think that some lazy journalism on behalf of the Irish paper has mistakenly linked Colin McAskill of the UK to this.

If you do a background check on Chosun Energy via Singapore Companies House, you will see that it is controlled by a.o. James Passin (an American) of Firebird. McAskill is not on the board and, as far as I can see, there is no connection to McAskill’s Chosun fund.

Interesting to see the Americans preparing to invest in NK!

DYOR of course, I may be entirely wrong of course:)

ORIGINAL POST: According to the Independent (Ireland):

Brian Hall’s AIM-listed resources firm Aminex has agreed to sell a 50 per cent stake in its North Korean interests to a fund fronted by one of the few westerners to have dealt with its erratic leader Kim Jong II.

Aminex received close to €600,000 for a 50 per cent stake in its Korex vehicle, which is currently trying to develop oil assets in the sea around North Korea.

Its new partner, Chosun Energy, is controlled by a fund backed by British businessman Colin McAskill.

Mr McAskill is one of the few westerners with access to the dictator, having advised the country on debt and banking issues.e a prisoner in some re-education camp”.

Read the full story here:
Aminex sells half Korean interests
Independent
Nick Webb
5/9/2010

According to KCNA:

Report on Implementation of 2009 Budget and 2010 Budget
 
Pyongyang, April 9 (KCNA) — Deputy Pak Su Gil, vice-premier and minister of Finance, delivered a report on the results of the implementation of the DPRK state budget for last year and its state budget for this year at the 2nd Session of the 12th Supreme People’s Assembly held on Friday.

According to the report, the state budget for last year was successfully implemented and, as a result, the state budgetary revenue was overfulfilled 1.7 per cent, an increase of 7 per cent over the previous year.

Ministries, national institutions, management bureaus and complexes overfulfilled the national plans for budgetary revenue and all provinces, cities and counties across the country also overfulfilled their plans for local budgetary revenue.

Last year’s plan for state budgetary expenditure was carried out at 99.8 per cent.

An investment from the state budget was focused on the development of metal industry while a huge financial allocation was made for the power and coal industries and the railway transport.

8.6 per cent more funds than the previous year were spent for capital construction and expenditure was increased for agriculture and light industry.

A 7.2 per cent greater financial disbursement than the previous year was made for the field of science and technology, surpassing the level of the latest science and technology in domains of space technology, nuclear technology and CNC technology and putting the key industries of the national economy on a high scientific and technological basis.

A large amount of fund went to the field of cultural construction and 15.8 per cent of the total state budgetary expenditure was spent for national defence.

The reporter said that the scale of revenue and expenditure in the state budget for this year has been set on the principle of improving the people’s standard of living to meet the requirements of the policy of the Workers’ Party of Korea on conducting a great offensive to bring about a decisive turn in the above-said work.

This year’s plan for state budgetary revenue is expected to grow 6.3 per cent over last year. The revenue from the profits of state enterprises, the main source of state budgetary revenue, is expected to go up 7.7 per cent over last year, that from the profits of cooperative organizations 4.2 per cent, that from the fixed asset depreciation 2.5 per cent, that from real estate rent 2 per cent and that from social insurance 1.9 per cent.

This year’s plan for state budgetary expenditure is expected to show an 8.3 per cent increase over last year.

The spending for the light industry is expected to go up 10.1 per cent, that for agriculture 9.4 per cent and that for metal, power and coal industries and railway transport 7.3 per cent as compared with last year.

The expenditure for the machine-building industry is expected to go up and an 8.5 per cent bigger financial allocation will be made for scientific researches and the introduction of new technologies.

A 6.2 per cent bigger financial disbursement than last year is expected to be made to more successfully enforce the popular policies, a proof of the advantages of Korean-style socialism centered on the popular masses.

15.8 per cent of the total state budgetary expenditure for this year is expected to be spent for national defence.

It is expected that a large amount of educational aid fund and stipends will be sent for the children of Koreans in Japan this year, too.

In order to successfully implement this year’s state budget, all domains and units of the national economy should work out enterprising and realistic business strategy and management strategy and tenaciously carry them out by relying on a high degree of mental power of the producer masses and thus fulfill the plans for budgetary revenue without fail, stressed the reporter.

And according to the Choson Ilbo:

North Korean leader Kim Jong-il can freely dispose of 20 percent of his country’s budget, a former secretary of North Korean Workers’ Party has said that. Hwang Jang-yop told the Asahi Shimbun, “Only 30 percent of the budget is spent on public services, while 50 percent is earmarked for military spending.” Hwang defected to South Korea in 1997.

Hwang was interviewed by the daily during his visit to Japan on April 4-8. “Kim Jong-il’s dictatorship is 10 times worse than his father’s. People have a painful life,” he said.

Asked if the North is likely to abandon its nuclear weapons program, he said, “There is no such possibility. But the North won’t use the weapons. They’re a means to maintain the regime.”

To the question why Kim’s eldest son Jong-nam was passed over for the succession, he said, “At first, Kim Jong-il thought of choosing his eldest son as his successor. But he seems to have changed his mind as he fell in love with Ko Young-hee, the mother of Jong-un, his third son, after Jong-nam’s mother Song Hye-rim died.”

Commenting on the North’s bizarre abductions of Japanese citizens in the 1970s and 80s, he said, “The North needed native Japanese to train agents who would work in Japan.”

Read the full story here:
Kim Jong-il ‘Gets 20% of N.Korea’s Budget for His Own Use’
Choson Ilbo
4/12/2010

Daily NK
Yoo Gwan Hee
4/5/2010

In North Korea, April 1st is commemorated as “Tax Abolition Day.” Ever since the law, “On Completely Abolishing Taxes,” was ratified through the Supreme People’s Assembly on March 21, 1974, North Korea has claimed both within and without to be the only country in the world that does not collect taxes. However, their claim is only for propaganda purposes, for North Koreans labor under a list of state-imposed taxes and duties which grows longer day by day.

Take the example of electricity. Power distribution center members in every city and town visit households in their region alongside the chairperson of the local People’s Unit, whereupon they collect electricity payments according to the number of electric bulbs and electronic equipment therein. This process is done quarterly. In the late 1990s, the quarterly electricity bill per household in Pyongyang was about 20 won. To reduce costs, of course there were people who removed electric bulbs and hid electronic equipment such as irons whenever the power distribution center had workers in their neighborhood.

Since the 2002 economic management reforms were announced on July 1, however, electricity bills have increased greatly. For families living in luxurious apartments in the Jung-district of Pyongyang with televisions, refrigerators and electric fans, households pay as much as 800 or 900 won per quarter.

After the so-called July 1 Reform Measure, troubles between the power distribution center and the people increased. The North Korean people were understandably displeased with the power distribution center, for it was trying to collect money for a utility whose availability was and remains far from regular.

Next, let’s look at reserve food and organizational expenses. North Korea has nine levels of food distribution. From 100g to 900g is supposed to be distributed per day depending on the level, but for the purpose of stocking up reserves, up to 100g is collected from the people instead. Additionally, people are forced to submit approximately two percent of their salary for organizational expenses.

Next, to support for the construction of historical sites. North Korea emphasizes the “voluntary participation” of the North Korean people under the Party apparatus and workers’ organizations. Construction of historical sites for the idolization of Kim Il Sung and Kim Jong Il is frequently organized. Also, officials often collect money from people in order to support those construction projects of which the cabinet is in charge.

Then there is free education. It is officially called “free education,” but school administration expenses are all covered by students and parents. Students have to collect waste paper, waste iron and waste rubber, or raise rabbits and submit the pelts to school. After 2000, there have even been students engaging in business around markets in order to provide supplies for submission to the school.

Onwards, then, to market stands rental fees. After the July 1 Reform Measure, the amount of tax collected at markets suddenly increased. Market stand rental fees already existed before the July 1 Reform Measure but, after 2002, market management centers started collecting market management tax as well, basing it on each product sold. Noodle sellers paid ten won per day, while soybean curd sellers paid three won.

Market stand rental fees became more systematic as well after general markets opened in late 2003. According to the product being sold and daily sales figures, market management centers charged rental fees. In present-day Nammun Market, Hoiryeong, the stand rental fee is said to have been fixed at 100 won per month.

Separate from the stand rental fee, monthly tax is charged on products for sale in the markets. For example, Nammun merchants pay additional taxes of 300 won for industrial goods, 180 won for pork, 150 for cigarettes, alcoholic drinks and fish, 120 won for food and 100 won for general merchandise.

So, while the North Korean media deliver their diet of propaganda promoting North Korea as the world’s only taxless country, be wise to the reality of the North Korean people suffering under an increasing tax burden.

UPDATE: According to Michael Rank:

Two power stations are under construction on the Yalu river between China and North Korea, a Chinese website reports.

They are both small plants with an installed capacity of 40,000 kilowatts and both are situated near the border town of Ji’an 集安 in southwestern Jilin province, near the border with Liaoning.

The dams are set to be finished in 2013. Negotiations concerning construction have been protracted: a preliminary agreement was reached in July 2004, followed by a further agreement in August 2008 and a final accord last January.

The Wangjianglou or Lintu 望江楼（林土）dam will be based on the Chinese side of the river with investment totalling 600 million yuan ($88 million), while the Wenyue or Changchuan 文岳（长川）dam will be based on the North Korean side with investment put at $500 million ($73 million). The report did not say how power, or costs, would be shared between the two countries.

A ceremony marking the beginning of construction was held on March 31, attended by North Korean vice-minister of electricity industry Kim Man-su and Jilin vice-governor Chen Weigen.

The plants will each produce 154 million kilowatt-hours per year. The Wangjianglou dam is 397 metres long and 16 metres high, while Wenyue is 602.7 metres long and 15.5 metres high. They are 36 and 24 km from Ji’an, respectively and are 1.5 and 5.5 km from North Korean railway stations (Rinto린토 and Mun’ak 문악 – these are the Korean names of the dams).

These dams are very small scale compared with the world’s largest dams, which run into thousands of megawatts (440 kW is just 0.44 MW).

ORIGINAL POST: According to the AFP:

China and North Korea will build two hydro-electric dams on the Yalu River that marks their border, Chinese state media reported on Thursday.

The dams will cost a total of 1.1 billion yuan (161 million dollars) and generate a combined 308 million kilowatt hours of electricity when completed, China Central Television reported.

The announcement came amid reports that North Korean leader Kim Jong-Il would soon visit China in a trip that could revive talks on ending Pyongyang’s nuclear drive.

Xinhua news agency said one dam would be built at Wangjianglou in China’s northeastern Jilin province and the other at Changchuan.

Electricity from the dams would help “drive economic growth in Jilin and North Korea,” it added.

It was not immediately clear how the two sides would share the cost of the projects or the electricity.

Construction would begin this year.

North Korea, desperately poor after decades of isolation and Stalinist economic policies, is heavily dependent on China for trade and aid.

South Korea’s government said this week there was a “high level of possibility” that Kim would pay a visit to China, the reclusive regime’s closest ally.

The South’s Yonhap news agency cited diplomatic sources saying he might leave for China as early as Thursday or Friday.

China’s foreign ministry declined to confirm the reports.

After an October visit to Pyongyang by Chinese Premier Wen Jiabao, Kim said his nation would rejoin the six-nation denuclearisation talks which the North stormed out of in April of last year.

The talks group hosts China, the two Koreas, Japan, the United States, and Russia.

Adam Cathcart offers a translation of the Xinhua dispatch:

中朝两国在鸭绿江新合建的两座水电站开工   // China and North Korea to Begin Construction on Two New Shared Hydroelectric Plants

Huanqiu Shibao, April 2, 2010 [translated by Adam Cathcart]

新华网吉林频道3月31日电(记者李双溪)31日， 中国与朝鲜在界河鸭绿江上共同建设的两座水电站开工。这两座电站总投资为11亿元人民币 ，建成后年发电量达3.08亿千瓦时。其中，望江楼(朝鲜称林土)电站计划投资6亿元，发电厂位于中方一侧，电站主要由混凝土重力坝、泄水闸、电站厂房及变电站等部分组成。On Jilin’s newschannel on 31 March, Xinhua’s reporter Li Shuangxi broadcast that China and North Korea would start joint construction on two hydropower plants in the border areas of the Yalu River. Investment on these two power plants will total 1.1 billion yuan, and the year after completion, they are projected to have a power generation capacity of 308 million kilowatts.  Among these plants are the Wangjiang Station (called Lintu by the Koreans), which is slated for 6oo million RMB of investment.   The power plant on the Chinese side will be a concrete gravity dam with a sluice gate and substation components.

[Lots of details follow on dam dimensions, projected electric output…It seems clear that China will bear all of the cost, though.]
2004年7月中朝双方审查通过了两座电站的初步设计，2006年中国有关部门批准了建设方案。2010年1月，双方在朝鲜签署了《中朝建设鸭绿江望江楼和文岳电站第九次会议纪要》，一致同意两电站开工建设。 In July 2004, China and the DPRK jointly reviewed the preliminary design of the two power stations.   In 2006, the Chinese authorities approved the construction plan.  In  January 2010, the two sides signed an agreement in North Korea known as the “Minutes of the Ninth Meeting on Sino-North Korean Construction of Yalu River Dams at Wangjianglou and Wenbing,” in which it was agreed to commence with the construction of the two power stations.

发源于长白山主峰、总长约795公里鸭绿江水能资源丰富，流经过吉林省和辽宁省。 目前在吉林省境内中朝双方已建有云峰、渭源两座水电站。 望江楼、文岳电站将成为双方共同受益的水电站，对开发鸭绿江、拉动吉林省和朝鲜的经济增长将起到积极的促进作用。Originating in the main peak of the Changbai Mountain range, with a total length of 795 km, the Yalu River is a rich resource flowing through Jilin and Liaoning provinces.  Currently, on the borders of Jilin Province, China and the DPRK have already built two jointly benefitted-from hydropower plants called Yunfeng and Weiyuan.  The Wangjianglou and Wenbing power stations will be built for of mutual benefit, developing the Yalu River, driving forward continued economic development between Jilin province and North Korea, playing a positive role.

I am not sure where these dams are going just yet.  The DPRK and China already share 4 dams across the Yalu. Here are satellite images of them (Dam 1, Dam 2, Dam 3, Dam 4).  Unfortunately I do not know the names of most of them, but Dam 2 is now known as the Suphung Dam.  It used to be called the Suiho Dam and it was bombed during the Korean war:

Read the full story here:
China, N.Korea plan Yalu hydropower dams: reports
AFP
4/1/2010

According to the Choson Ilbo: 

Chinese-made solar reading lamps are selling like hot cakes in North Korea. According to a North Korean source, the reading lamps sell for 10,000 to 20,000 North Korean won, a price several times the average monthly wage.

The customers are chiefly parents with children preparing for college entrance exams. Due to do the poor power supply, North Korea except for some parts of Pyongyang is plunged into pitch darkness every night, making it impossible to study. The solar-powered reading lamps provide a measure of independence from the power grid.

In the North, background determines if youngsters can enter college, and not all parents can afford to concentrate their energy on their children’s education. But relatively well-to-do families provide tutoring for their children by employing students of prestigious universities, such as Kim Il Sung University or Pyongyang University of Foreign Studies, in efforts to prepare their children for college entrance exams.

Read the full article here:
N.Korean Parents ‘Zealous’ About Children’s Education
Choson Ilbo
3/8/2010

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.