North Korean Economy Watch

This time the shipment was headed for Eritrea.  According to the Sudan Tribune (2011-5-11):

NATO Naval forces have reportedly captured a heavy weapon carrying cargo ship destined to Eritrea in the international waters of the Indian Ocean.

…

A UN monitoring group report this week revealed that the cargo originally shipped from North Korea was carrying 15 tonnes of rockets, surface to air missiles and explosives worth $US15 million.

In December 2009, the UN Security Council imposed sanctions against Eritrea, which include an arms embargo, travel restrictions and a freeze on the assets of its political and military leaders for an alleged involvement in training and supplying weapons to Al-Qaida and links Somali Islamic rebels.

It also turn out that there is a UN arms embargo on the DPRK as well, which I suppose  is not as big a deal in the Sudanese press.

Here are previous posts on the DPRK’s arms shipments.

Aidan Foster-Carter writes in the Asia Times:

I can only assume March 11 was a slow news day in Israel – though there was plenty going on in the neighborhood. Otherwise, why would that distinguished daily, the Jerusalem Post, deem it worthwhile to devote quite a long article, in its International Section, to the exciting, world-shattering news that Israel now boasts a North Korea friendship group?

The moving spirit is one Shmuel Yerushalmi: originally from Ukraine, now of Beersheba. Many former Soviet Jews who moved to Israel are conservative, but not Shmuel. An avowed Marxist-Leninist, he’s quoted as saying that the true dictators of the modern world aren’t the likes of Kim Jong-il of North Korea – he also cites Libya’s Muammar Gaddafi and Belarus’ Alexander Lukashenko – but the leaders of the US and “Western empires”. Whatever you say, comrade.

Alejandro Cao de Benos, who runs the Korea Friendship Association, confirmed that KFA has an Israeli branch, with a mailing list of around 60, and a Hebrew section of its website. He added that they have “two major responsibilities”: translating information about North Korea into Hebrew, and creating an Israeli support base that can lead to cultural exchanges. Turning the turgid works of the Great Kims into Hebrew: that should keep Shmuel busy.

For any readers unfamiliar with the KFA, its site claims to be the “Official Webpage of The Democratic People’s Republic of Korea.” Actually it is a fan site. Cao de Benos dresses like Kim Jong-il, and touchingly refers to North Korea as “We” (as in the Jerusalem Post article). He can be seen online declaring: “I Will Be A Soldier of Marshal Kim Jong-il” – but hurry! For some reason the video is to be pulled on April 29. I do hope Cao de Benos will post it elsewhere.

On KFA’s true status, the article quotes a leading British expert: Hazel Smith of Cranfield University, who lived and worked in Pyongyang for two years. Professor Smith briskly dismisses KFA as “extreme” and of “no influence … they are a bunch of individuals who are a mixture of the curious, the naive and those who just want a free trip somewhere”. Ouch. But true.

Intriguingly, Cao de Benos told the Jerusalem Post that he planned to travel to Pyongyang shortly, taking with him “American Jewish lobbyists linked to Israel, some of whom live in Tel Aviv”. But he refused to name these. A tall story? Not wholly implausible, as we shall shortly see.

As for Yerushalmi, he hasn’t actually made the pilgrimage to Pyongyang yet – but there is nothing to stop him. Apparently worried whether all this was politically kosher, the Jerusalem Post asked the foreign ministry. Spokesman Yigal Palmor called it “a particularly misplaced form of friendship expression, but it’s not illegal and not something we are going to interfere with”.

You can read the rest below the fold:

(more…)

UPDATE 1 (2011-4-15): Andrei Lankov reminds us of some historical lessons when it comes to Pyongyang-ology.  According to his article in the Asia Times:

Last week, world media reported that two key North Korean officials were executed a few months ago. One was Kim Yong-sam, the former minister for railways. Reportedly, he was held responsible for a mysterious explosion that in 2004 wiped out the entire railway station of Ryongchon a few hours after the armored train of Dear Leader Kim Jong-il had passed through – a suspected assassination attempt.

The other North Korean official was Mun Il-bong, the finance minister. His alleged crime was the inability to handle the currency reform that in late 2009 nearly brought the North Korean economy to a complete standstill.

This news was first broken by the major South Korean newspaper Chosun Ilbo, which cited its North Korean sources. The newspaper has good connections among the North Korean refugee community, whose members are in touch with officials in North Korea.

These reports were widely discussed in the media, and produced the usual wave of speculation about supposed factional disagreements in the North Korean leadership. However, such speculation might be premature. There is no way to verify with sufficient confidence whether the alleged executions actually took place. We do not know – and, in all probability, are not going to know anytime soon – whether the North Korean ex-ministers indeed met their ends.

Those who do not deal with North Korea seldom realize how little outside observers know about its high politics. North Korean media stretch the definition of state secret to an extent that would likely appear excessive even to Joseph Stalin. There have been numerous cases where North Korean media chose not to report some very important (and, interestingly, very public) events that had a profound impact on the lives of every North Korean.

For example, the 2009 currency reform which, if the above-mentioned reports are to be believed, led to the lethal downfall of Mun Il-bong, one of its major planners. Generally speaking, the reform emulated the Soviet currency reform of 1947 that for decades has served as a prototype of currency reforms in all communist countries. There was an important difference, though.

In 1947, all major Soviet newspapers ran lengthy front-page stories about the currency reform, extolling its timeliness and explaining the need to improve the lives of the good common Soviet citizen by wiping out the ill-gotten cash holdings of shameless profiteers.

In 2009, no North Korean media even mentioned the planned reform, which was by far the most important news of the time and had a dramatic impact on the lives of every North Korean. Information about the changes and their conditions was delivered via public notices pinned to the doors of banks, as well as through confidential messages to local authorities.

Foreign embassies were notified by a short official letter. Finally, the Pyongyang-sponsored Korean newspaper in Japan ran a couple of stories about the reform. But mainstream media within North Korea remained completely silent about the dramatic upheaval.

Those who keep a track of North Korean affairs might remember the so-called “July 1 reforms” of 2002. These were once heralded (wrongly, as it turned out) as a sign of Pyongyang’s willingness to emulate the Chinese reformist policy. Few people are aware, though, that North Korean media first mentioned the ongoing reform in September, a few months after its launch.

This is especially relevant in regard to promotions and demotions, as well as purges and persecution of the regime’s top officials. The North used to stage open show trials in the 1950s, but this Stalinist tradition was discarded. In subsequent decades, disgraced officials simply ceased to be mentioned in media and disappeared from the public view, so the general public – including the lower reaches of the elite – could only guess the reasons behind the sudden disappearance of some powerful minister or, say, a Central Committee secretary.

The disappearance of a dignitary is nearly always interpreted as a sure sign that he or she has been purged. The North Korean public inevitably starts to circulate a rumor that the hapless official was not just removed from office, but arrested or even executed.

After some time these rumors reach foreign media, often through the North Korean refugee organizations that have good networks inside the North. Consequently, the world’s media run another story about a North Korean minister who was allegedly executed for his wrongdoings or as a result of alleged factional strife.

Very often, impressive details are added – for example, it is frequently stated that the alleged execution was public or, at least, held in the presence of other top dignitaries (as a matter of fact, the present author has never seen any reliable evidence of a public or semi-public execution of a former dignitary – this type of brutal show seems to be reserved only for humble folks).

There have been a number of cases, to be sure, when these rumors were eventually confirmed. For example, we now know for certain that the state security minister Kim Pyong-ha, who disappeared in 1982, was either executed or committed suicide during his arrest (his downfall was followed by a large-scale purge of the North Korean secret police).

There is little reason to doubt that So Kwang-him, the party secretary for agriculture, was indeed executed in 1997. The aging bureaucrat was accused of espionage and subversion. The charge was that he had deliberately ruined the North Korean agriculture sector and provoked a disastrous famine, being on the payroll of the US Central Intelligence Agency and other foreign intelligence agencies.

However, things are not that simple. There have been numerous cases when prominent dignitaries first disappeared and were universally believed to be arrested and executed – but then made a comeback and re-entered North Korean politics. A good example of such political resurrection is the fate of Pak Chong-ae, a Soviet Korean who was dispatched to Korea for intelligence gathering and subversion in the early 1930s.

After 1945, she became a prominent member of the North Korean leadership. Unlike a majority of Soviet Koreans, Pak Chong-ae survived a mass purge of pro-Soviet elements in 1956-1961, but suddenly disappeared in 1985. At the time, everybody, including the Soviet diplomats, were certain that she had been shot or probably died in prison – and this is what the rumors confidently told. However, in 1986, Pak Chong-ae re-emerged in the Korean political scene, albeit in secondary roles.

Even more interesting is the case of Ch’oe Kwang, a former chief of staff. Ch’oe Kwang disappeared in 1969, and rumors held that he was shot soon afterwards. This was hardly the case, since in the late 1970s, Ch’oe Kwang first appeared in secondary positions, then re-launched his career and in 1988 was again appointed chief of general staff!

So how should one treat the reports about the execution of Kim Yong-sam and Mun ll-bong? With caution. There is no reason to reject the reports completely – they might indeed be true. There is no doubt that rumors about the execution of ex-ministers are now circulating widely among North Korean officials. The 2009 currency reform was indeed a disaster, arguably, the worst prepared currency reform in the entire history of communist countries.

The 2004 Ryongchon explosion also was an exceptional event, irrespective of whether it was an assassination attempt targeting the Dear Leader, or a result of bad luck and remarkable negligence. Therefore, one may well expect the severe punishment of people who were responsible for both disasters. However, the experiences of previous decades demonstrate that such rumors be taken with healthy skepticism.

Incidentally, about a year ago, rumors persisted that another high-ranking official, the head of the party finance department, Pak Nam-gi, had been executed for his alleged mishandling of the currency reform. This story was universally believed, but so far no definite evidence of his sorry fate has emerged.

To complicate things further, a few weeks ago a well-informed defectors’ group reported that Pak Nam-gi, alive and well, was spotted in Europe where he is managing the personal funds of the Kim family. So, is Pak Nam-gi dead, with all his family shipped to a prison camp? Or is he running a multi-billion dollar business from a North Korean embassy in Switzerland? We know not. But this is another reminder of the many uncertainties a North Korean watcher has to deal with.

So, the rumors (and rumor-based reports) about Kim and Mun’s execution may well be true, but at the moment it is virtually impossible to talk about this with certainty. Things will become clear eventually, but this will happen, probably, only after several years. Sooner or later some relevant documents will be leaked.

Even before that, some trustworthy witness of their execution will emerge. It is also possible, though, that one day the allegedly executed ex-ministers will reappear, alive and healthy for their advanced age. However, by that time this entire story will be of greater interest for historians, not journalists or policy analysts.

ORIGINAL POST (2011-4-4): According to the Choson Ilbo:

The North Korean regime in June last year executed the ex-minister of railways Kim Yong-sam on espionage charges and ex-finance minister Mun Il-bong over a botched currency reform in late 2009, it has belatedly emerged.

A South Korean government official confirmed Kim’s execution but was not clear about Mun’s, saying, “We have relevant intelligence, which we are checking.”

According to a North Korean source, Kim, who was minister of railways between 1998 and 2008, was executed for involvement in a massive explosion at Yongchon Station in North Pyongan Province in April 2004 that allegedly targeted a special train carrying leader Kim Jong-il.

Kim Yong-sam was accused of leaking information about the timetable of the train, which was returning from China. Kim Jong-il’s travel itineraries are known only to his personal guards and secretaries and the railways minister.

Mun, who was finance minister between 2000 and 2008, apparently took the fall for the botched currency reform alongside then director of the Workers Party’s Planning and Finance Department Pak Nam-gi.

The regime executed Pak by firing squad on the same charges in April last year. “It seems Mun was executed because public discontent got worse even though, unlike Pak, he had nothing to do with the actual preparations for the currency reform,” the source said.

About 20 senior officials in the munitions industry ministry and the second economic committee in charge of munitions were also purged for embezzlement late last year. They had reportedly been caught by the State Security Department attempting to siphon off money from arms exports.

Another source said, “Rumor has it that the purge targeted long-serving senior officials in the military who have the authority to export arms overseas.”

The purge has been raging in Pyongyang since early last year, when Kim’s son Jong-un was named as the successor to his father and the currency reform was sweeping the North, a third source said. “It seems Kim Jong-il is trying to remove obstacles to the transition of power with his own hands.”

Regarding the suspected fate of Kim Yong-sam, I find it odd that the DPRK would execute him six years after his alleged offense.  There are only a couple of reasons I can guess as to why the situation was handled this way: 1. If he was executed, he was executed for another reason, 2.  If he was executed too soon after the April 2004 explosion, it would cast doubt on the DPRK’s official claim that the Ryongchon explosion was caused by an accidental train collision rather than an internal conspiracy to eliminate the leader.

UPDATE: A reader (in the comments) reminds me that Kim Yong-sam’s demise was also reported in the media back in July 2010.  At the time, his punishment was due to his failure to maintain locomotive trains that had been in store for wartime.  So maybe his death has nothing to do with Ryongchon at all but a failure to carry out his duties.

Regarding the execution of Mun Il-bong:  The DPRK allegedly executed Pak Nam-gi over the currency reform in early March 2010.  If Mr. Mun shared the same fate three months later, then the number of public officials executed over the country’s disastrous currency reform now stands at two.

Additional Information:

1. Last I heard, Jon Kil-su is the DPRK’s Minister of Railways, being named just before the last SPA elections.

2. Here are satellite images of Ryongchon from before and after the explosion.  Most of these can now be seen on Google Earth.

3. The story above mentions a purge in the munitions industry, but Kim Jong-il recently praised their efforts.

4. The Daily NK and Yonhap also reported on this story.

Read the full story here:
2 Senior N.Korean Apparatchiks Executed
Choson Ilbo
4/4/2011

According to the Choson Ilbo:

North Korea imported weapons and weapons components worth US$475 million from foreign countries between 1999 and 2008, Grand National Party lawmaker Lee Cheol-woo said Friday.

According to data Lee obtained from the government, the North bought helicopters and tank engines worth $90 million and aircraft parts and radars worth $110 million from China, Russia and Slovakia.

It also engaged in military exchanges with Cuba, Libya, Syria, Congo, Angola, Tanzania, and Uganda on a total of 101 occasions, Lee added.

Read the full story here:
N.Korea Imported $475 Million Worth of Arms Since 1999
Choson Ilbo
4/11/2011

Each year the “intelligence community” in the person of the Office of the Director of National Intelligence (ODNI) reports to the US Congress on the status of potential threats from across the globe.

Below I have posted the texts of these reports as they relate to the DPRK.  I have also provided links to the reports themselves should you be interested in continuing your research.

FEBRUARY 10, 2011: Statement for the Record on the Worldwide Threat Assessment of the U.S. Intelligence Community for the House Permanent Select Committee on Intelligence

North Korea (p 6-7)
Pyongyang’s nuclear weapons and missile programs pose a serious threat to the security environment in East Asia, a region characterized by several great power rivalries and some of the world’s largest economies. North Korea’s export of ballistic missiles and associated materials to several countries, including Iran and Syria, and its assistance to Syria in the construction of a nuclear reactor, destroyed in 2007, illustrate the reach of the North’s proliferation activities. Despite the October 2007 Six-Party agreement in which North Korea reaffirmed its commitment not to transfer nuclear materials, technology, or know-how, we remain alert to the possibility North Korea could again export nuclear technology.

We judge North Korea has tested two nuclear devices. The North’s October 2006 nuclear test is consistent with our longstanding assessment that it had produced a nuclear device, although we judge the test itself to have been a partial failure. The North’s probable nuclear test in May 2009 is consistent with our assessment that the North continued to develop nuclear weapons, and with a yield of roughly two kilotons TNT equivalent, was apparently more successful than the 2006 test. Although we judge North Korea has tested two nuclear devices, we do not know whether the North has produced nuclear weapons, but we assess it has the capability to do so.

In November 2010, North Korean officials told US visitors that North Korea is building its own light water reactor (LWR) for electricity production. The claimed prototype LWR has a planned power of 100 megawatt-thermal and a target completion date of 2012. North Korean officials also told the US visitors in November that it had constructed and started operating a uranium enrichment facility at Yongbyon that they claimed was designed to produce low-enriched uranium (LEU) and support fabrication of reactor fuel for the LWR. The US visitors were shown a facility at the existing fuel fabrication complex in Yongbyon, which North Korea described as a uranium enrichment plant. North Korea further claimed the facility contained 2,000 centrifuges and was operating and producing LEU that would be used to fuel the small LWR. The North’s disclosure supports the United States’ longstanding assessment that the DPRK has pursued a uranium-enrichment capability.

We judge it is not possible the DPRK could have constructed the Yongbyon enrichment facility and begun its operation, as North Korean officials claim, in such a short period of time—less than 20 months—without having previously conducted extensive research, development, testing, fabrication, and assembly or without receiving outside assistance.

Based on the scale of the facility and the progress the DPRK has made in construction, it is likely that North Korea has been pursuing enrichment for an extended period of time. If so, there is clear prospect that DPRK has built other uranium enrichment related facilities in its territory, including likely R&D and centrifuge fabrication facilities, and other enrichment facilities. Analysts differ on the likelihood that other production-scale facilities may exist elsewhere in North Korea.

Following the Taepo Dong 1 launch in 1998, North Korea conducted launches of the Taepo Dong 2 (TD-2) in 2006 and more recently in April 2009. Despite the most recent launch’s failure in its stated mission of orbiting a small communications satellite, it successfully tested many technologies associated with an ICBM. Although both TD-2 launches ended in failure, the 2009 flight demonstrated a more complete performance than the July 2006 launch. North Korea’s progress in developing the TD-2 shows its determination to achieve long-range ballistic missile and space launch capabilities. If configured as an ICBM, the TD-2 could reach at least portions of the United States; the TD-2 or associated technologies also could be exported.

Because of deficiencies in their conventional military forces, the North’s leaders are focused on deterrence and defense. The Intelligence Community assesses Pyongyang views its nuclear capabilities as intended for deterrence, international prestige, and coercive diplomacy. We judge that North Korea would consider using nuclear weapons only under certain narrow circumstances. We also assess, albeit with low confidence, Pyongyang probably would not attempt to use nuclear weapons against US forces or territory unless it perceived its regime to be on the verge of military defeat and risked an irretrievable loss of control.

North Korea (p11-12)
We assess that North Korea‟s artillery strike on Yeonpyeong Island on 23 November was meant in part to continue burnishing successor-designate Kim Jong Un‟s leadership and military credibility among regime elites, although other strategic goals were also factors in the attack. Kim Jong Il may feel the need to conduct further provocations to achieve strategic goals and portray Jong Un as a strong, bold leader, especially if he judges elite loyalty and support are in question.

Kim Jong Il has advanced preparations for his third son to succeed him, by anointing him with senior party and military positions, promoting probable key supporting characters, and having the younger Kim make his first public appearances. These steps strengthened the prospects for the 27-year old Jong Un to develop as a credible successor, but the succession process is still subject to potential vulnerabilities, especially if Kim Jong Il dies before Jong Un consolidates his authority.

The North has signaled it wants to return to a nuclear dialogue. The North probably wants to resume nuclear discussions to mitigate international sanctions, regain international economic aid, bolster its ties with China, restart bilateral negotiations with South Korea and the United States, and try to gain tacit international acceptance for its status as a nuclear weapons power.

Since 2009, Pyongyang has made a series of announcements about producing enriched uranium fuel for an indigenous light water reactor that it is building at its Yongbyon nuclear complex. In midNovember, 2010, the North showed an unofficial US delegation what it claims is an operating uranium enrichment facility located in the Yongbyon rod core production building.

North Korea‟s conventional military capabilities have eroded significantly over the past 10-15 years due to persistent food shortages, poor economic conditions, inability to replace aging weapons inventories, reduced training, and increased diversion of the military to infrastructure support. Therefore, Pyongyang increasingly relies on its nuclear program to deter external attacks on the state and to its regime. Although there are other reasons for the North to pursue its nuclear program, redressing conventional weaknesses is a major factor and one that Kim and his likely successors will not easily dismiss.

Nevertheless, the Korean People‟s Army remains a large and formidable force capable of defending the North. Also, as demonstrated by North Korean attacks on the South Korean ship Cheonan in March 2010 and Yeongpyong Island in November. North Korea is capable of conducting military operations that could potentially threaten regional stability. These operations provide Pyongyang with what the regime may see as a means to attain political goals through coercion.

The full 2010 report can be downloaded in PDF here.

FEBRUARY 2, 2010: Annual Threat Assessment of the Intelligence Community for the House Permanent Select Committee on Intelligence

North Korean WMD and Missile Programs (p14-15)
Pyongyang’s nuclear weapons and missile programs pose a serious threat to the security environment in East Asia. North Korea’s export of ballistic missiles and associated materials to several countries including Iran and Pakistan, and its assistance to Syria in the construction of a nuclear reactor, exposed in 2007, illustrate the reach of the North’s proliferation activities. Despite the Six-Party October 3, 2007 Second Phase Actions agreement in which North Korea reaffirmed its commitment not to transfer nuclear materials, technology, or know-how we remain alert to the possibility North Korea could again export nuclear technology.

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

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

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

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

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

The full 2010 report can be downloaded in PDF here.

FEBRUARY 25, 2009: Annual Threat Assessment of the Intelligence Community for the House Permanent Select Committee on Intelligence

North Korea’s Nuclear Ambitions (p24-26)
In addition to a possible India-Pakistan conflict, Pyongyang’s nuclear ambitions and proliferation behavior threaten to destabilize East Asia. The North’s October 2006 nuclear test is consistent with our longstanding assessment that it had produced a nuclear device. Prior to the test, we assessed that North Korea produced enough plutonium for at least a half dozen nuclear weapons. The IC continues to assess North Korea has pursued a uranium enrichment capability in the past. Some in the Intelligence Community have increasing concerns that North Korea has an ongoing covert uranium enrichment program.

Pyongyang probably views its nuclear weapons as being more for deterrence, international prestige, and coercive diplomacy than for warfighting and would consider using nuclear weapons only under certain narrow circumstances. We also assess Pyongyang probably would not attempt to use nuclear weapons against US forces or territory unless it perceived the regime to be on the verge of military defeat and risked an irretrievable loss of control. Progress was made, albeit painstakingly, last year in Six Party Talks; the DPRK has shut down three core facilities at Yongbyon and has completed eight of the eleven disablement steps. However, much work remains. At the latest round of talks held in December in Beijing, the DPRK refused to agree to a Six Party verification protocol needed to verify the completeness and correctness of its nuclear declaration. Since then, Pyongyang has issued hardline statements suggesting further challenges to denuclearization.

On the proliferation side, North Korea has sold ballistic missiles and associated materials to several Middle Eastern countries, including Iran, and, in our assessment, assisted Syria with the construction of a nuclear reactor. We remain concerned North Korea could again export nuclear technology. In the October 3 Second Phase Actions agreement, the DPRK reaffirmed its commitment not to transfer nuclear materials, technology, or know-how. We assess Pyongyang is less likely to risk selling nuclear weapons or weapons-quantities of fissile material than nuclear technology or less sensitive equipment to other countries or non-state actors, in part because it needs its limited fissile material for its own deterrent. Pyongyang probably also perceives that it would risk a regime-ending military confrontation with the United States if the nuclear material was used by another country or group in a nuclear strike or terrorist attacks and the United States could trace the material back to North Korea. It is possible, however, that the North might find a nuclear weapons or fissile material transfer more appealing if its own stockpile grows larger and/or it faces an extreme economic crisis where the potentially huge revenue from such a sale could help the country survive.

We assess that poor economic conditions are fueling systemic vulnerability within North Korea. Public statements by the regime emphasize the need for adequate food supplies. A relatively good fall harvest in 2008, combined with the delivery of substantial US food aid—500,000 tons of grain have been promised and about one-third of this has been delivered—probably will prevent deterioration in the food security situation during the next few months. However, we assess North Korea is still failing to come to grips with the economic downturn that began in the early 1990s and that prospects for economic recovery remain slight. In addition to food, shortages in fertilizer and energy continue to plague the economy. Investment spending appears is negligible, trade remains weak, and we see little progress toward economic reforms. Pyongyang has long been in default on a relatively large foreign debt and we assess that badly needed foreign investment will not take place unless the North comes to terms with its international creditors and conforms to internationally accepted trade and financial norms, badly needed foreign investment will not take place.

Pyongyang’s strategic posture is not helping its economy. Trade with Japan has fallen precipitously since the nuclear and missile tests of 2006, and, while commercial trade with South Korea rose in 2008, South Korean aid and tourism to the North declined due to increased North-South tensions.

Despite this poor economic performance and the many privations of the North Korean public, we see no organized opposition to Kim Jong Il’s rule and only occasional incidents of social disorder. Kim probably suffered a stroke in August that incapacitated him for several weeks, hindering his ability to operate as actively as he did before the stroke. However, his recent public activities suggest his health has improved significantly, and we assess he is making key decisions. The state’s control apparatus by all accounts remains strong, sustaining the dismal condition of human rights in North Korea.

The full 2009 report can be downloaded in PDF here.

According to Reuters:

North Korea was the supplier of a cache of defective weapons sold to Burundi’s army by a Ukrainian firm, said Western diplomats familiar with the case that has riled Burundi’s anti-corruption body.

The weapons deal with Burundi appeared to be a violation of the international ban on North Korean weapons exports which the U.N. Security Council imposed on Pyongyang in June 2009 after its second nuclear test, the diplomats told Reuters on condition of anonymity.

The case involved the supply of some 60 Chinese-made .50-calibre machine guns to Burundi by a Ukrainian firm called Cranford Trading, the diplomats said. The weapons, which were defective, were sold to the firm by North Korea, they added.

Diplomats say Pyongyang continues to try to skirt the arms embargo. Last year South Africa informed the Security Council’s sanctions committee about a seizure of North Korean arms bound for Central Africa.

The expanded sanctions were aimed at cutting off North Korea’s arms sales, a vital export that was estimated to earn the destitute state more than $1 billion a year.

Some facts about the Burundi weapons deal became known late last year when the country’s anti-corruption watchdog went public about irregularities it found. It said that the arms had been defective and that Burundi had been overcharged.

A report on a state audit of the deal, seen by Reuters, concluded that Cranford Trading provided Burundi’s army defective military material with the complicity of former Defense Minister Germain Niyoyanka, current army chief Godefroid Niyombare and his deputy Diomede Ndegeya.

The auditors’ report said that the bidding offer was $3.075 million, while the amount in the contract was for $3.388 million. A further $1.186 million was paid in transport fees, even though such fees were not agreed in the contract.

The auditors concluded that the defense ministry had spent a great deal of money on defective material and recommended the prosecution of all people involved on suspicion of graft.

North Korea was not mentioned in the auditors’ report.

Several officials at Burundi’s U.N. mission in New York declined to comment when contacted by Reuters.

NO CERTIFICATE OF ORIGIN

“The weapons were transferred by China to North Korea, which then sold them to Cranford,” a diplomat said, adding that the official documentation for the deal had been incomplete.

“There was no certificate of origin of the weapons, which is necessary to comply with international conventions,” the diplomat added. Another diplomat confirmed the remarks.

The contract between Burundi’s defense ministry and Cranford Trading covered the period between October 2008 through 2010. It was not clear how much North Korea would have received when it sold the defective arms to Cranford Trading.

It was not possible to track down Cranford Trading in Ukraine, since the company was not readily accessible in any public lists. Ukraine’s U.N. mission did not respond to an e-mailed query about Cranford and the arms transaction.

It was not clear when China transferred the weapons to North Korea, or who in China was responsible, or whether the Chinese government had knowledge of the deal.

The U.N. arms embargo does not ban the sale of small arms to Pyongyang, though it does require exporters to notify the Security Council’s North Korea sanctions committee in advance about any small-arms sales to Pyongyang.

If the transfer took place after the latest round of U.N. sanctions were approved in June 2009, the exporter would have been required to notify the sanctions committee.

A spokesman for China’s U.N. mission was not available for comment.

The diplomats said the sanctions committee has not been notified about the Burundi case.

Read the full story here:
Defective Burundi weapons came from N.Korea
Reuters
Louis Charbonneau
2/1/2011

The Choson Ilbo reports:

The [Wikileaks] cables say that North Korea received the arms payments through the Seoul branch of Iran’s Bank Mellat and that the U.S. government urged the South Korean government to investigate the matter. According to a cable dated March 24, 2008, a company in Iran called Hong Kong Electronics wired $2.5 million in three separate payments from Parsian Bank in Iran to the Seoul branch of Bank Mellat in November of 2007. Hong Kong Electronics is a paper company owned by North Korea’s Tanchon Commercial Bank. The money was wired entirely in euros, and $1.5 million worth of the payment was then wired to accounts in China and Russia.

Following a U.S. request to investigate, the South Korean government probed the Bank Mellat branch in December 2008 but did not take any punitive measures. Washington then demanded that the branch’s assets be frozen, according to a cable dated May 12, 2009.

The Iranians deny the accusations.  According to the Joongang Ilbo:

Iranian Foreign Ministry Spokesman Ramin Mehmanparast rejected allegations that Iran transferred a large sum of money via the Seoul branch of Iran’s Bank Mellat to buy North Korean arms.

In an exclusive interview with the JoongAng Ilbo on Friday at the Iranian Embassy in Seoul, Mehmanparast stressed that Bank Mellat’s Seoul office ran its business “under the supervision of South Korean financial authorities.”

Iran’s new ambassador to South Korea, Ahmad Masoumifar, sat in on the interview.

Mehmanparast was in Seoul with seven Iranian journalists to improve relations with the Korean Ministry of Foreign Affairs and Trade.

The South Korean government in September slapped tough sanctions on Iran for its nuclear program, with penalties including the suspension of virtually all financial activities at the Seoul branch of Iran’s Bank Mellat.

The South Korean government said its actions complied with United Nations Security Council resolutions.

Q. Cables released by WikiLeaks suggested that North Korea likely received payment for weapons sold to Iran through Bank Mellat’s Seoul Branch.

A. I think there’s someone behind the allegations in regard to Wikileaks’ information on Iran. Bank Mellat operates abiding South Korean law. There’s nothing wrong with the bank. We do maintain diplomatic ties with the North Korean government. But Iran doesn’t damage (diplomatic) relations with one country for the sake of relations with another country.

Q. What about allegations that Iran and North Korea are cooperating on nuclear technology?

A. Iran and North Korea aren’t in a military alliance. Frankly speaking, when it comes to nuclear weapons, Iran doesn’t need other countries’ assistance.

Iran’s young scientists are in the process of successfully developing technology to use nuclear power in a peaceful manner.

Q. What’s Iran’s official position on North Korea’s attacks on the South Korean warship Cheonan and Yeonpyeong Island?

A. It was heartbreaking when I heard the news about the Yeonpyeong attack. I hope peace is maintained in Asia. I want to again stress peace through dialogue.

Q. Iran is an oil rich country. Why does it need nuclear power?

A. The Western media also questions why Iran needs nuclear power. But when you look at the world’s latest economic trends, nuclear power is (increasingly important) when used in a peaceful way. Even the United Arab Emirates began nuclear cooperation with the South Korean government.

Crude oil will be depleted in the future. Nuclear power is an answer to that, and it’s necessary for environmental reasons, too.

Q. Former Iranian Ambassador to Korea Mohammad Reza Bakhtiari said in a previous interview with our paper that Iran won’t sit back and watch if the South Korean government joins international sanctions against Iran.

A. That’s an uncomfortable question to answer. South Korea and Iran have lots in common as Asian nations. I hope for South Korean companies’ prosperity in Iran and I also hope for the success of Iranian companies in South Korea.

I hope short-term political pressures won’t hurt our bilateral relationship.

Read the full stories here:
N.Korean Arms Payments ‘Passed Through Seoul’
Choson Ilbo
1/18/2011

‘Bank Mellat didn’t pay for arms from North Korea’
Joongang Ilbo
Chun Su-jin
1/24/2011

According to The Australian:

The use of an Australian-owned cargo ship to smuggle weapons from North Korea to Iran has been highlighted in a report to the UN.

It was one of several breaches of UN sanctions against Kim Jong-il’s regime detailed in a report to the Security Council.

The report, which was submitted to the council recently after months of obstruction from China, found the North was making $US100 million a year through illegal arms sales to Syria, Iran and Burma.

Pyongyang used shadowy webs of front companies, false manifests and complex routes to try to get around sanctions aimed at stopping its arms proliferation, the investigation found.

The report flags the 2009 interception of the ANL Australia in Sharjah as one of at least four occasions that North Korea was caught out exporting arms or defence equipment.

The report said weapons were seized from the ANL Australia in the United Arab Emirates on July 22, 2009.

The cargo is thought to have included up to 10 containers of arms, including rocket-propelled grenades and trigger mechanisms and propellant, although this is not detailed in the report.

The cargo was packed and sealed in North Korea and shipped to China, where it was loaded aboard the ANL Australia en route to Iran.

The Bahamas-flagged vessel was owned by ANL Container Line at the time.

ANL, once Australia’s national shipping line, was taken over by French company CMA CGM.

Despite the breach of sanctions, an Australian government investigation found ANL was not responsible because the ship was chartered by a foreign company at the time.

“The Australian government’s inquiries into this matter indicated that at all relevant times the vessel was not under the operational control of its owner, but was rather being chartered by a non-Australian company,” a Department of Foreign Affairs and Trade spokesman said.

“No conduct relevant to the shipment can be attributed to an Australian person or body corporate,” he said.

ANL declined to comment.

The report found that while no ballistic missile or nuclear-related materials emanating from North Korea had been intercepted since sanctions were applied, evidence suggested “continuing DPRK (North Korea) involvement in nuclear and ballistic missile-related activities in certain countries, including Iran, Syria and Myanmar (Burma)”.

“To supplement its foreign earnings, the DPRK has long been involved in illicit and questionable international transactions (including) the surreptitious transfer of nuclear and ballistic missile-related equipment, know-how and technology,” it says.

The panel received government reports suggesting North Korea had helped build Syria’s Dair Alzour nuclear facility (destroyed in 2007 by an Israeli attack) along with details of Japan’s arrest in June 2009 of three individuals trying to illegally export a magnetometer, a device with potential missile-related uses, to Burma.

The report cited in the story is the “Panel of Experts” report to the UNSC.  You can read (and search) it here (PDF).

Read the full story here:
UN cites ANL in N Korea arms smuggling
The Australian
Rick Wallace
1/10/2011

According to the New York Times:

Suppliers of Precision Machinery
North Korea needs supplies and machinery to make its missiles. The cables indicate that precision metal machinery like hydraulic presses has been supplied by Taiwanese companies; tons of specialized steel has been routed from China; unspecified goods came from Japan; and computerized lathes were sold by a Swiss company.

Suppliers of Parts
North Korea cannot provide all the components its missile customers need. The cables outline how North Korea sought to sell a mobile missile launcher to Yemen. It arranged for a MAZ-543 engine and a ZIL-131 truck from a Russian company, which was to be shipped from Odessa, Ukraine, to Al Hudaydah, Yemen.

Markets for the Missiles
North Korea’s customers for missiles and other weaponry include countries mainly in the Middle East, Africa and Asia. They have included Iran, Egypt, Uganda, Yemen and Sri Lanka. The cables also outline the tracking of a North Korean ship suspected of carrying weapons, possibly for Angola or the Democratic Republic of Congo.

The Money Flow
The cables outline how the United States suspects money has flowed through bank accounts in well-established financial institutions so North Korea can buy supplies, and customers can pay for missiles. These have included bank accounts in Germany, Hong Kong and Japan.

Regarding the hydraulic presses, these could be domestically sourced. The DPRK media regularly features innovations in press machines.

The government of Myanmar is also a purchaser of conventional weaponry. Here is a post on one of their shopping trips in the DPRK.

Read the full story here:
Untangling a North Korean Missile Business
New York Times
12/6/2010

According to the AFP:

North Korea is forging trade documents and changing the names of its trading firms to try to dodge international sanctions, a Seoul intelligence official and a media report said Wednesday.

Pyongyang changed the name of the Korea Mining and Development Corp to Kapmun Tosong Trade after the UN Security Council blacklisted the firm following the North’s missile test in April 2009, Dong-A Ilbo newspaper reported.

The communist state also renamed weapons trader Tangun Trade as Chasongdang Trade when the company was put on the sanctions list after the North’s second nuclear test in May 2009.

The tests prompted the Security Council to impose tougher sanctions targeting Pyongyang’s weapons exports and blacklisting companies suspected of such dealings.

The sanctions also called on UN member states to inspect ships and planes suspected of carrying banned cargo to or from the North.

Since then, the North has mostly used China to transport its arms exports, Dong-A said.

It had forged trade invoices on military products, for instance by labelling torpedoes as fish processing equipment and anti-tank rockets as oil boring machinery, the paper added.

A spokesman for Seoul’s National Intelligence Service confirmed the report but declined to give details.

“Intelligence authorities in South Korea and the United States are trying to crack down on the North’s forging of company names and export invoices, but it is becoming increasingly difficult since the North keeps coming up with new schemes,” the paper quoted one South Korean official as saying.

The impoverished North faces multiple sanctions imposed by the UN and the United States and targeting its illegal trade in arms, drugs and luxury goods.

The US Treasury Department announced Monday it was imposing sanctions on four people and eight organisations accused of aiding the communist government through illicit trade.

Of course these games are nothing new. About this time last year DPRK sanctions enforcement was in the news.  Marcus Noland referred to the task as “Whac-a-mole”.

Read the full stories here:
N.Korea forges trade documents to dodge sanctions
AFP
9/1/2010

N. Korea Fakes Trade Documents to Export WMDs 
Donga Ilbo
9/1/2010