North Korean Economy Watch

According to the Daily NK:

The North Korean authorities have ordered the formation of ‘Day of the Sun Gift Preparation Committees’ at the provincial Party level and subordinate ‘Day of the Sun Gift Subcommittees’ at the city and county scale, Daily NK has learned.

A Yangkang [Ryanggang] Province source who spoke with Daily NK on the 6th explained, “The ‘Day of the Sun Gift Preparation Committee’ was formed at the start of this month by the provincial Party Committee to prepare for the Suryeong’s birthday, and groups of areas were banded together to form the ‘Day of the Sun Gift Subcommittees’.”

“There was no distribution for February 16th,” the source recalled. “Possibly because the central Party received reports of popular discontent about this and asked some searching questions of provincial cadres, now they are running around trying to get ready for April 15th holiday distribution.”

“Enterprise traders are mostly bringing in soy bean oil, soap and towels via Chinese customs. They are printing ‘Day of the Sun 100th Anniversary’ on the towels,” he added.

The formation of the committees has also reportedly had a noticeable influence on levels of public expectation of the April 15th festivities, representing as it does the first time that ‘Gift Preparation Committees’ have been formed since they disappeared without a trace in the mid 1990s.

“They are already saying that each household is going to receive a huge gift for this Day of the Sun, so people are really expecting a lot,” the source said, adding, “The rumor among jangmadang traders is that every house is going to get a DVD player made by Hana Electronics in Pyongyang.”

As the source noted, the move comes following significant public discontent at the lack of gifts on February 16th (Kim Jong Il’s birthday).

On February 21st, Daily NK reported new of that discontent, citing a Yangkang Province source as saying, “There was a flood of criticism about the total lack of holiday distribution for Gwangmyungsung Day, so they began telling every organ, enterprise and people’s unit meeting, ‘That is because we are close to the 100th anniversary of the Suryeong’s birth, and the Party is preparing big gifts for that.’”

North Korea began giving snacks, rice and other foodstuffs to the people every year on the birthdays of Kim Il Sung and Kim Jong Il, along with things like school uniforms and blankets every 5th and 10th year, in the 1970s. However, the system ceased to function in the 1990s as the country was gripped by famine and economic disintegration.

Meanwhile, sources also report that with the arrival of the early spring lean season, a time when many people on the Korean Peninsula have traditionally struggled to find sufficient sustenance, prices in the market are beginning to creep up.

According to the Yangkang Province source, “Until late last week the Yuan price was 607 won, but now it is up to 635 won. The price of rice has also gone from 3,300 won to 3,800 won.”

Read the full story here:
North Forms Party 4.15 ‘Gift Preparation Committees’
Daily NK
Lee Seok Young
2012-3-5

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

According to the Daily NK:

The North Korean authorities are expediting the issuance of exit permits for people wishing to visit relatives in China but who agree to return to the country with one ton of food within 40 days. A considerable number of people have obtained permits on this basis in the last week, according to a source who spoke with Daily NK yesterday.

The source, from North Hamkyung Province, told Daily NK, “At the start of last week, my people’s unit head advised us, ‘Anyone able to return to the country with a ton of rice before April 5th should apply for a short-term exit permit to the National Security Agency now.’”

The source added, “More than 20 people per day are crossing over into China via Namyang Customs House after getting prior approval this way in Chongjin, Myongchon and Kilju. Others are finding lodgings in Onsung to wait their turn.”

The permit issuance policy is being implemented nationwide, according to information received by Daily NK. Many people are said to be departing via customs facilities both in Hyesan and further west in Shinuiju under the same deal.

Provincial branches of the Party are keen to issue the permits because they are under pressure to provide special food distribution for the 100th anniversary of Kim Il Sung’s birthday on April 15th, a responsibility Pyongyang is said to have passed on to the provinces in its entirety.

According to the source, the NSA’s provincial anti-espionage head has been telling travelers attending a briefing at the border control office there that their trips “have been made possible by the compassion of Kim Jong Eun,” and threatening that anybody minded to overstay their permit or who is unable to meet their food quota upon their return will be barred from leaving the country indefinitely.

Usually, exit permits are granted on the following basis: ▲ a maximum of 5 degrees of separation between inviter and applicant; ▲ a maximum stay of 3 months; ▲ a minimum of one year between permits. However, this time the authorities are reportedly allowing travelers who have already visited China within the last year to reapply.

Though rare, the policy shift is not unprecedented. For example, a similar pact with would-be permit recipients was offered by the authorities immediately after Kim Jong Il’s trip to China in May, 2011.

Such a loosening of border controls comes with a number of side-effects, not least that it brings down prices in the jangmadang, offering a valuable boost to individual purchasing power.

As such, kilo of decent rice was selling for 3,200 North Korean won early last week in Chongjin, a source from the city told Daily NK yesterday, but as of Monday this had fallen to 3,000 won, with 1 Chinese Yuan dropping from 605 to 600 North Korean Won.

“Given the situation, ordinary people are happy that the price of rice has fallen,” the source commented. However, he added, there is a high degree of skepticism in the market about how many of the travelers will actually return when the time comes.

Read the full story here:
NK Trading Exit Permits for Rice
Daily NK
Lee Seok Young
2012-2-28

UPDATE 1 (2012-2-24): The Choson Ilbo reports that the UN WFP is not extending its DPRK mission. According to the article:

The World Food Programme plans to end its emergency aid mission to North Korea in March as originally scheduled.

Citing officials from the WFP, Radio Free Asia reported Thursday that its emergency operation for the most vulnerable groups in the North, including children, pregnant women and the elderly, will end next month.

The organization said once the emergency program is over it will switch back to its smaller-scale assistance program, which provides food to roughly 3.5 million women and children in need of immediate nutritional support.

Meanwhile, the report added that the UN-affiliated organization had only raised about 30 percent of the funds needed to support North Koreans as of Wednesday.

ORIGINAL POST (2012-2-22): According to the Korea Herald:

The U.N. World Food Programme is planning to extend its Emergency Aid mission to North Korea beyond the original deadline of March.

The Emergency Operation, which started in April, aimed to address a dangerous and worsening food crisis in North Korea. It focused on the most vulnerable groups, women and children, of which there were 3.5 million in need of immediate support to prevent starvation.

The WFP has been able to work with North Korea in carrying out the operation, under very stringent rules.

Although the WFP has experienced some successes, a difficult 2011 has meant that the mission was unable to fully address the growing crisis, and an extension of the emergency operation is needed.

“We are currently finalizing plans for the operation beyond this point, but it will certainly continue to focus on the provision of nutritional assistance to the most vulnerable women and children,” WFP Asia spokesman Marcus Prior said.

Despite making progress in the latter stages of 2011, the WFP was unable to fulfill the goals of the original mission.

“Because of relatively slow funding at the outset, and the time taken to purchase and ship the food to the DPRK, distributions were at a very low level through the lean season months of May to August,” Prior said. DPRK stands for the Democratic People’s Republic of Korea, North Korea’s official name.

“At one point in the middle of 2011, production of specialized nutritious foods at factories supported by WFP came to an almost complete standstill,” said Prior. WFP documents say that during that time “much of the population of DPRK suffered prolonged food deprivation.”

The WFP says there is a “chronic gap” between the daily nutrients needed and the nutrients North Koreans have access to, with the situation more crucial for women and children.

Recent studies have shown that malnutrition in the first 1,000 days from conception can have permanent consequences for both physiological and intellectual development.

With a recent U.N. estimate that one-third of North Korea’s children under 5 are malnourished, the continuing crisis could have catastrophic implications on their future and not just their immediate food needs.

The WFP also reported through interviews with health officials that there was a 50 to 100 percent increase in the admissions of malnourished children into pediatric wards compared to last year.

The latest WFP DPRK report has called for more international aid that will be needed for the continued efforts, as the food from the original mission begins to reach its limits.

“We continue to have supplies available to see us through the next three to four months, but will require significant new funding to ensure these distributions can continue through the later, most difficult, lean season months of this year.”

Although the WFP does not collect data on the death toll caused by the 2011 food shortage, the latest report did say that another year of the same prolonged food deprivation will have a serious impact on the North Korean population.

My compendium of DPRK food stories in 2011 is here.

Read the full story here:
WFP to extend emergency mission to North Korea
Korea Herald
Hamish Macdonald
2012-2-22

UPDATE 1 (2012-2-13): Thanks Dr. Seliger we now have some photos of the interior of the newly opened Viennese Coffee Restaurant:

And if you don’t feel like coffee, they have more “traditional” drinks on offer:

The sign on the front door reads “Helmut Sachers Kaffee,” but the menu shows another name: Ryongwang Coffee Shop (련광). Perhaps this is the name of the Korean Join-Venture company, but I cannot find any additional information on it.

A reader notes the following:

Helmut Sacher is an Austrian coffee roaster (web page here). It is probably that Ryon’gwang buys beans from Sacher, and/or Sacher owns part of the joint company.

ORIGINAL POST (2011-12-4):

Pictured above (Google Maps): Korean Central History Museum on Kim Il-sung Square–site of the new coffee house.

According to a German reader:

A report published [2011-11-24] in the German Daily “Frankfurter Rundschau” reports on the opening of a “Viennese Coffe House” right on Kim Il Sung Square inside the Museum of Korean History (the one wih the “trumpet soldier”).

In brief: Austrian enterpreneur Helmut Sachers has opened this new Vienna style cofee house in October after training Korean service- and bakery staff. It says that it mainly serves the foreign community in Pyongyang, but alo an increasing number of Koreans appear to be able to pay EUR 2, the equivalent of 5000 Won, for a cup of cappucino.

Then reference is made to two older pizza-places and a a Swiss coffe house …. and various duty free shops serving the international community and wealthy North Koreans… which is contrasted with the children and young soldiers exercising on Kim Il Sung Square, who show indications of malnurishment.

You can read a PDF of the German article here. If a reader has the ability and inclination to provide an English-language copy of this article, I would appreciate it.

UPDATE: Thanks to Mr. Knoll I have a full English translation of the article:

Whipped Cream in Pyongyang

The heart of the North Korean capital Pyongyang now boasts a Viennese coffee house – a sign that the isolation of the country is showing cracks.

By Bernhard Bartsch

A cappuccino is not political, in most places in the world. But the milk foam coffee now being served on Pyongyang´s Kim Il Sung Square has an unmistakably political flavor – and some customers think that´s why it tastes so good. Right next to the parade ground in the heart of the North Korean capital, a Viennese café has opened its doors in late October – a sign the isolation of the arch-communist regime is slowly showing cracks.

The Austrian operator could hardly have asked for a more iconic building: the Museum of Korean History, a Stalinist representative structure, on its roof, a 10 m (30 ft) tall soldier is sounding the charge. Inside, you get a crash course in the history of the Korean revolution, and you´ll be served “Viennese coffee with whipped cream”, but only after passing through a door inconspicuously marked “café” in Korean. Only then the yellow coffeepot-shaped emblem marked “Helmut Sachers Kaffee” becomes visible.

“We have thirty to fourty customers per day” the young waitress says. “Most of them are diplomats or other foreigners living here”. She wears a black pantsuit, and like most North Koreans, she is rather tight-lipped when talking to foreigners. A couple sitting at one of the eleven tables is examining the room, a peculiar mix of Austrian gemuetlichkeit and North Korean drabness. Two fans with gaudily-colored lamps are hanging from the ceiling, there´s wood paneling to half height, pink blinds cover the windows. A large flat screen TV is showing Austrian scenery, waltz is being played as background music.

Payment in hard currency

Expensive coffeemakers can be seen behind the bar, a vitrine shows a variety of cakes: apple tart, cherry streusel, poppyseed-walnut-vanilla. They won´t win any prizes in Vienna, they might in Pyongyang, though. The coffee, the dishes, even the sugar packs are imported from Austria. A cappuccino is two euros, you pay in hard currency. The Koreans prefer euros, Chinese yuan, even US dollars, over their own currency. Two euros are worth about 5,000 Korean won on the black market. That´s about a month´s salary for the average North Korean, not counting food and clothing rations.

The man the café is named after is living in Oeynhausen, near Vienna. “We seem to have a monopoly on exotic export markets” explains Helmut Sachers, owner of a long-standing family-owned coffee-roasting establishment, now doing business in 25 countries. “There´s a Café Sachers in the Mongolian capital Ulan Bator, too”. The cafés, however, are not operated by Sachers himself, but by importers. The one in Pyongyang was the brainchild of Vienna entrepreneur Helmut Brammen. “In 2009 he told me he´s doing business in very unusual destinations”, Sachers says. The negotiations went on for two years, before Sachers and Brammen flew to Pyongyang in March, accompanied by an Austrian baker to train staff. They met very eager men and women, Sachers says. The North Koreans soaked up Austrian coffee culture like a sponge.
The fact that a Viennese coffee house can open its doors in Pyongyang shows that behind the rigid façade things are in a state of flux, a European diplomat says. “Ordinary North Koreans won´t come here, of course, but the elites know what life is like outside the country, and they want a part of it to enjoy at home.

Communist Pizza

The Viennese café is not the first international establishment in the city. A member of the Italian Communist Party opened a pizzeria in 2009, the second in Pyongyang, but the first that is partly owned by foreigners. Adra, an aid organization run by Swiss Adventists, opened a Swiss café a few years ago, serving cheese fondue to North Koreans. There are also several stores selling exclusive imported goods. At the “Pyongyang Shop”, where the clientele consists of embassy staff and members of international aid groups, Italian pasta, German jam, Swiss chocolate, and a large selection of wine and whisky are available.
“Those with money can buy almost anything they want in North Korea” the diplomat says. “It is remarkable that more and more customers are North Koreans.” Despite the egalitarian rhetoric in the Communist country, the real-life wealth disparities are much more blatant than in capitalist countries.

The scene outside the Viennese café on Kim Il Sung Square is no exception. Schoolchildren are rehearsing in the cold for the celebrations planned for April 2012, the 100th birthday of the country´s founder. A gigantic mass gymnastics show involving hundreds of thousands of participants is supposed to strengthen unity among the Korean people. By command, children turn cartwheels and do flic-flacs, a student band plays military marches. On the other side of the street, an army unit doing construction work has pitched its tents. Clothing has been left to dry on bushes, there are lines of cabbage leaves to be pickled by the unit´s chef, to make kimchi, the national dish.

Almost all of the young soldiers are stunted – a result of the famine in the 1990s that killed millions of North Koreans and left many survivors with permanent health problems. “The food situation is still very bad, but a catastrophe as in those days seems unimaginable today”, says a Western aid worker, who is almost a regular at Helmut Sachers`s. “The country is opening up, and this is irreversible.

According to UPI:

U.S. relief efforts targeting North Korea jumped about 500 percent in 2011, trade export figures from the Commerce Department show.

The department said the United States shipped $9.4 million worth of goods to North Korea in 2011, up from about $1.9 million the previous year and $0.9 million in 2009. In 2008, the United States sent about $52.2 million in goods to the communist country.

South Korea’s Yonhap News Agency said Radio Free Asia reported 95 percent of the 2011 total was some form of aid for North Koreans, such food or basic household items, sent by private organizations.

Read the full story here:
U.S. shipments to N. Korea grew in 2011
UPI
2012-2-11

Kim Jong-il Flies: Recently KCTV has broadcast many videos on the life and work of Kim Jong-il. One of these videos was on Kim Jong-il’s contributions to the theatrical and cinematic arts.  In this video, Kim Jong-il can be seen riding in a plane while he scouts out locations for movie sets:

I have watched more North Korean television footage than a healthy person should, but this was the first video footage I had seen of Kim Jong-il on a plane.

Alejandro Cao de Benos once told me that Kim Jong-il could fly fighter jets, though I have not seen any footage of that.

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Koryo Tours has a great Facebook Page.  Here are some of the gems that have popped up over the last few weeks:

Pasty, fast food (yum):

DPRK Tourist Card:

In the next few days Koryo Tours will be offering a brand new tourist route in the DPRK, from Rason down the East Coast to Chongjin and Mt. Chilbo, previously only accessible by charter flight from Pyongyang.

Take On Me by a-ha, North Korean Style (YouTube):

A-ha’s “Take on me” performed by young accordion players from the Kum Song School, filmed in Pyongyang, North Korea December 2011. Part of multi-genre project The Promised Land by director and artist Morten Traavik. Here is more information on the video.

Ceausescu’s visit to Pyongyang, North Korea in 1971:

I believe this clip comes from a feature film: The Autobiography of Nicolae Ceausescu (2010) (trailer here).

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DPRK Gatorade: North Korea is making its own-style sports drink. Here is a link to the report on KCNA (posted to YouTube):

This drink is manufactured in the Kumkop Combined Foodstuff Factory (금컵체육인종합식료공장) in Mangyongdae District. Satellite image and coordinates here.

In February 2011 I posted reports that the DPRK’s west coast was experiencing record-low temperatures and the ports were frozen. Unfortunately for the North Korean people, history is repeating itself.

Pictured above (Yonhap): two satellite images of the DPRK’s west coast

According to the Donga Ilbo:

North Korea`s fisheries and shipping industries, two key earners of foreign currency for Pyongyang, have effectively been shackled due to a prolonged cold wave that has frozen waters in the Yellow Sea.
With the temperature reaching minus 10 degrees Celsius for more than a month, more than 40 kilometers of sea water in the Yellow Sea off the North`s coast have been frozen. This is the first time in decades that about 200 kilometers of the North`s coastline from the mouth of the Yalu River to the North`s Hwanghae provinces have been frozen.

Experts say the frozen water will not only affect the North’s fisheries and shipping industries, both of which are major earners of U.S. dollars, but also the Stalinist country`s economy and newly launched Kim Jong Un administration.

Massive ice blocks cover 200 kilometers of N. Korean coastline

In Seoul, the Korea Center for Atmospheric Environment Research and the Korea Meteorological Administration said Thursday that based on analysis of satellite images, massive ice 40 kilometers wide was detected in North Korean coastlines spanning 40 kilometers from the mouth of the Yalu River to coastal waters off Pyongyang.

According to the analysis, Korea Bay located in between the North’s Cholsan and Changyon peninsulas has remained frozen since Jan. 10 due to the cold wave. Coastal waters of Unryul County in South Hwanghae Province, the Chongchon River flowing into Korea Bay, and the port of Nampo at the mouth of the Daedong River running through Pyongyang are also covered with ice.

Chung Yong-seung, director of the environmental think tank, said, “In the past, waters off the North Korean coast used to be frozen. But the formation of such large-scale ice is unprecedented.”

Experts blame arctic ice moving south due to global warming for the ice formation.

North Korea has been hit by a severe cold snap this winter. According to the South Korean weather agency, the North’s average temperature last month was minus 8.4 degrees, 0.7 degrees lower than in an average year.

The Chosun Shinbo, the official newspaper of the pro-Pyongyang Federation of Korean Residents in Japan, recently said, “Temperatures in Pyongyang remained below zero from Dec. 23 last year through Jan. 31, the most extreme cold since 1945,” adding, “North Koreans can even walk on the Daedong River.”

Temperatures in the North fell further this month to minus 11.1 degrees on average, down 4.6 degrees from an average year.

Big burden on N. Korean gov

The ice formation in North Korean waters is pressuring the Kim Jong Un administration economically, experts said. The combined share of fisheries and agriculture in the North`s GDP is 20.8 percent, eight times higher than for South Korea (2.6 percent). Fisheries also play a key role in sustaining the North`s economy with catch volume reaching 630,000 tons a year.

Pyongyang`s dollar earnings have also been hit hard due to the frozen sea that has prevented fishing boats from leaving ports. Goh Yoo-hwan, head of the (South)Korean Association of North Korean Studies, said, “The North should export primary products such as fisheries goods, but no fishing operations due to the frozen water will take a huge toll on the North`s dollar earrings.”

Waters near China’s Liaodong Bay and Russia’s Vladivostok have also been frozen, causing the North’s maritime transportation to go awry. Due to soured inter-Korean relations, the North`s trade with the South and Japan has declined and raised the Stalinist country’s dependence on China to 56.9 percent.

Kim Yong-hyeong, a professor of North Korean studies at Dongguk University in Seoul, said, “If the ice formation in waters wreaks havoc on the North’s maritime transportation, this will destabilize the North Korean economy.”

The problem is that ice at sea is growing thicker. The National Meteorological Satellite Center in Seoul said the boundaries between ice blocks and waters in the North’s section of the Yellow Sea were vague last month, but grew clear this month with ice getting thicker.

Director Chung of the environmental think tank said, “Given North Korea’s weather conditions, the ice in the sea will grow thicker through early next month,” adding, “North Korean society will be hit hard if its fisheries and shipping industries are grounded for more than two months.”

And just how productive is the DPRK’s fishing sector?  According to Yonhap:

Chung Yong-seung, head of the research institute, said it is rare for the port to freeze two winters in a row, a development he said could have a negative impact on the North’s fishing industry.

North Korea’s catch reached 663,000 metric tons in 2009, the latest year for which statistics are available, according to the South Korean government data.

Read the full reports here:
N. Korea’s largest port frozen for 2 straight winters
Yonhap
2012-2-10

Extended cold wave freezes key NK sectors of fisheries, shipping
Donga Ilbo
2012-2-10

According to the Daily NK:

At the beginning of last month, the North Korean authorities ordered local commercial management offices to strengthen oversight to ensure that products were being sold at official state prices, according to a source from Shinuiju on February 6th.

Meeting with Daily NK on a visit to Dandong, China, the source explained, “Friction has started up again between market managers and traders because of orders at the start of the year to make sure that everything is sold at the state-designated price. They do this every year, but this year they are confiscating products and transferring them for sale in state stores.”

Price-related orders are issued annually in North Korea, where the authorities are still reluctant to countenance market price autonomy despite fifteen years of ad hoc marketization. As such, the Ministry of Procurement and Food Policy sets the prices of key goods and posts them at the entrance to markets. These prices are approximately uniform across the country.

Only ‘regional’ items being treated differently; prices for these items are set by pricing bureaus established under provincial People’s Committees. Most obviously, the state price of seafood is cheaper in coastal areas than in inland parts of the country.

However, real price differentials make selling at these state prices untenable; for example, the market price of a kilo of rice in Shinuiju is currently hovering around 3,200 won, while that for corn is 2,200 won, yet the state prices are 1,600 won and 690 won respectively. Therefore, traders traditionally simply pretend to sell at state prices when inspectors turn up, before resuming trade at market prices once they have left.

But the problem this year is that enforcement is stricter than usual, with illegally priced products being confiscated, transferred directly to state stores and sold at state prices. According to the source, “In the past state prices were only symbolic and inspectors didn’t enforce them. Even if they confiscated something you could pay them a little and get it back. But now they are just selling those products directly at state prices, so a lot of people who have ignored the crackdowns are ending up in a real fix.”

Not only that. “People who are caught like this are banned from trading from a stall for a month,” the source added. “Traders are reacting very carefully now as a result.”

However, history has taught traders that the crackdown is unlikely to last too long, and anticipate a return to less strict oversight in due course.

Read the full story here:
Annual Market Crackdown Ensnaring the Careless
Daily NK
Park Jun Hyeong and Jeong Jae Sung
2012-2-7

According ot the Donga Ilbo:

About 10,000 tons of fruit have been exported every year to North Korea via the Chinese city of Dandong in Liaoning Province, which borders the North at the estuary of the Yalu River.

Fruit imports for the North`s elite have reportedly posted double-digit growth over the past five years despite severe food shortages in the Stalinist country.

An informed source in Dandong said Monday, “About 10,000 tons of fruit were exported to North Korea via Dandong Marine Center last year,” adding, “They were worth 100 million yuan (16 million dollars).”

Shipments to North Korea have grown about 15 percent per year on average over the past five years, the source said.

Fruits exported to the North include the different varieties available in China, including subtropical and tropical types such as bananas, pineapples, litchis, dragon fruit and durians as well as apples, tangerines and watermelons.

The source said fruit exports surge just before major North Korean holidays, including Feb. 16 (the birthday of the late North Korean leader Kim Jong Il) and April 15 (the birthday of North Korea founder Kim Il Sung).

“Fruit exports significantly increased ahead of Christmas Day in the past, but there was no notable change in exports last year due to the death of Kim Jong Il,“ the source said.

North Korea does not celebrate Christmas but fruit exports usually increased because Dec. 24 marks the birthday of Kim Jong Il’s biological mother Kim Jong Suk. The shipments are sent to Pyongyang for use at events or consumed by the power elite. Payment is made mostly with U.S. dollars, but the yuan is often used to settle accounts.

The Dandong city government also established an agency in charge of fruit exports to the North. Liaoning Province announced on its website Thursday that a center for market purchase of exported fruits for border area trading was set up in Dandong.

The purpose of the market is for Dandong to supply fruit to meet growing demand in North Korea, and assure the quality and safety of them.

Furthermore, the agency aims to manage chaotic fruit export markets for North Korea. In Dandong, a number of fruit stores targeting trade with the North rather than sale to residents are reportedly operating.

One fruit vendor said, “We`re shipping fruit via vehicles that regularly travel back and forth to and from Shinuiju and Dandong.”

The center is designed to control and manage the overall fruit export market to the North, including fruit exports by such small merchants. From now on, all fruit exports to North Korea will be reportedly be sent through this center.

The center is a subsidiary of Dandong Guopin Co. Ltd., a state-run company established by Dandong. It has a system worth 10 million yuan (16.4 million dollars) designed to enhance capacity in sorting, refrigeration, packaging, inspection and transport of fruits.

The center has taken charge of about half of fruit shipments from Dandong to North Korea every year, and its office is in Dandung Marine Center.

Read the full story here:
Chinese city exports $16 mln worth of fruit to N.Korea yearly
Donga Ilbo
2012-2-6