North Korean Economy Watch

According to Yonhap:

The North Korean currency has recently gained 20 percent against the Chinese yuan, a rare development blamed on rumors of the North’s counterfeiting, a source familiar with the issue said Friday.

The North Korean won was traded at 1,000 won to 1 Chinese yuan a week ago, but 1 yuan is now worth only 800 won in the country’s major northeastern city of Chongjin.

The source said, on condition of anonymity, that the demand for foreign currencies has surged on rumors a week ago that a lot of North Korea’s currency being circulated in the market was counterfeit.

The rumor quickly spread across the country via merchants who have mobile phones. However, it later turned out to be groundless, which helped the North Korean currency regain strength against yuan.

North Koreans favor Chinese yuan and U.S. dollars over their own currency after a botched currency reform as they believe foreign currencies are more stable, according to the Unification Ministry, which handles inter-Korean affairs.

China is the North’s key ally, economic benefactor and diplomatic supporter.

In 2009, the North carried out a massive currency reform to try to rein in galloping inflation, squash free market activities and tighten state control over the economy. However, the measures failed to halt massive inflation and worsened food shortages and public backlash.

A North Korean defector in South Korea said there are several big shots in Pyongyang who manipulate exchange rates in the market by starting rumors such as the banning of foreign currencies.

In recent years, mobile phones have emerged as tools for spreading news in the isolated country where the communist regime tightly controls its 24 million people.

The number of mobile phone users in North Korea has jumped to more than 535,000 as of March, up 420 percent from the same time last year, according to Orascom Telecom, Egypt’s cell phone service provider in the North.

Read the full story here:
N. Korean currency sustains steep fluctuations
Yonhap
2011-12-16

The German newspaper Die Welt published a story which claims North Korea supplied Syria with a maraging steel and technical support which it has used to upgrade an underground missile factory that produces M-600 missiles.

Maraging steel is on the the Nuclear Suppliers Group (NSG) and the Missile Technology Control Regime (MTCR) monitoring lists, and its export is prohibited to sanctioned countries. North Korea is also prohibited from such activities under UNSC resolutions 1718 and 1874.

The Syrian missile factory, as identified in Haaretz,  can be seen on Google Earth at 35.006089°,  36.827331°, Google Maps, and Wikimapia, but below I have posted a couple of screen shots:

Above (left) is an overhead shot of the underground facility. Above (right) is a closeup of the facility entrance. Assuming the floor plan of the factory is a simple square, it could be 1,000m x 1,000m in area–and that is just one floor! The oldest Google Earth imagery of the facility is from 2003-7-12.

Additional information:
1. Joshua Pollack recently published a paper on the demand for conventional North Korean military output.  If you have not read it, you should. Click here for a link to the paper.

2. The International Institute for Strategic Studies (IISS) published North Korean Security Challenges: A Net Assessment. It presents a thorough analysis of the range of threats emanating from the DPRK. In addition to an assessment of military hardware and posture, the 216-page book looks at state criminality and behaviour relating to human security.

3. Joeseph Bermudez wrote about a North Korean missile factory here.

4. Previous posts on the DPRK and Syria are here, including nuclear proliferation.

Read the full stories below:
Syrien rüstet Raketen mit Nordkoreas Hilfe auf
Die Welt
2011-11-24

North Korea supplying Syria, Iran with prohibited nuclear technology, report says
Haaretz
Yossi Melman
2011-11-28

Pyongyang, November 18 (KCNA) — The governments of the DPRK and South Sudan established diplomatic ties at an ambassadorial level.

A joint communique on the establishment of bilateral diplomatic relations was made public in Ethiopia on Nov. 16.

The communique was signed by Kim Hyok Chol and Arop Kuol Deng, ambassadors of the DPRK and South Sudan to Ethiopia, upon authorization of the governments of their countries.

The two countries agreed to open their diplomatic ties from the very day of their signature to the joint communique, on the basis of the principle of respect for sovereignty, equality, reciprocity and non-interference and in line with the April 18, 1961, Vienna Convention on Diplomatic Relations.

Since all North Korean embassies must self-finance their operations, it is not likely that they will open an embassy in South Sudan until there are sufficient business contracts to maintain the office overhead. In the meantime, many of their diplomatic and consular functions will probably be held out of the Ethiopian embassy.

What kind of business opportunities await the DPRK in South Sudan? South Sudan is the world’s newest oil-producing nation, so it is likely that the DPRK will try to pursue oil contracts there. As a new nation, South Sudan also has an interest in building up its military capabilities. The DPRK has long supplied military equipment to the African continent, so they will probably look for opportunities in this new nation as well.

To date, the DPRK maintains embassies in the following African countries: Benin, Burundi, Cape Verde, DR Congo, Côte d’Ivoire, Equatorial Guinea, Ethiopia, Ghana, Guinea, Guinea-Bissau, Libya, Madagascar, Mali, Niger, Nigeria, Rwanda, Somalia, South Africa, Tanzania, Uganda, and Zimbabwe.

According tot he AFP (2011-11-16):

Greek authorities seized almost 14,000 anti-chemical weapons suits from a North Korean ship possibly headed for Syria but did not disclose the find for nearly two years, diplomats said Wednesday.

The seizure was reported to the UN Security Council, which discussed the monitoring of nuclear sanctions against the isolated North, diplomats said.

The Greek operation was carried out in November 2009 but only reported to the United Nations in September, a diplomat told AFP on condition of anonymity in confirming the number of suits to protect against chemical weapons involved.

“It seems the shipment was headed for Latakia in Syria,” a second diplomat said, noting that the Greek report to the council did not mention Syria.

“There is increasing concern because more and more of the violations before several sanctions committees seem to involve Syria.”

Syria has already been linked to breaches of an arms embargo against Iran.

Both diplomats spoke on condition of anonymity as the report by the chairman of the North Korea sanctions committee, Portugal’s UN Ambassador Jose Filipe Moraes Cabral, was given behind closed doors.

The UN Security Council ordered tough sanctions against North Korea after it staged nuclear weapons tests in 2006 and 2009.

The North pulled out of nuclear talks with China, the United States, Japan, Russia and South Korea in 2009 and efforts to kick start negotiations are struggling, with the United States and its allies saying that North Korea is not serious about disarmament.

In a comment sent on an official Twitter account, a British diplomat said it was “clear that North Korea (is) still violating” Security Council resolutions.

“Strong concerns in council about the ongoing proliferation efforts,” added a German diplomat. Neither mentioned the seizure of the anti-chemical weapons suits.

Additional Information:

1. Here and here are the two UN panel of Experts reports on the DPRK which detail other UN embargo violations.

2. The Security Council this morning extended the mandate of the Panel of Experts helping monitor sanctions on the Democratic People’s Republic of Korea for an additional year, until 12 June 2012.

3. Here are links to embargo violations which I previously posted.

UPDATE (2011-10-10): According to the Jordan Times, the Bank denies any involvement:

The Arab Bank on Sunday stressed that it has never dealt with the government of North Korea or Tanchon Bank, which the US has accused of being the primary financial agent behind Pyongyang’s weapons programmes. “Based on a review of its customer account and transaction records, Arab Bank does not believe that it has conducted business with the government of North Korea or Tanchon Bank,” a spokesperson from the Arab Bank said.

In a diplomatic cable sent by the US State Department to the US embassy in Amman in August 2007, officials warned that the Arab Bank could be unwittingly assisting proliferation-related transfers between Iran, Syria and North Korea. “We are concerned that Iran, Syria and DPRK [Democratic People’s Republic of Korea] proliferation entities are using the Arab Bank network to process what may be proliferation-related transactions,” read the cable, released by WikiLeaks on its website at the end of August and viewed by The Jordan Times.

According to the cable, the US knew that as of 2007, North Korea’s Foreign Trade Bank mission in Tripoli, Libya (FTB Libya) had expanded its role in North Korea’s banking network and was helping Tanchon Commercial Bank, the banking arm of North Korea’s primary weapons trading firm, KOMID, to move funds from both Syria and Iran.

It added that in 2007, FTB Libya provided assistance to Tanchon in making remittances from funds from the sale of unspecified, probably proliferation-related goods in Syria.

“Our information indicates that Tanchon is establishing this new arrangement because Tanchon could no longer remit funds through a route it had previously used. FTB Libya arranged remittance routes for Tanchon from Syria and other locations via intermediary banks… We have information that Tanchon’s financial transfers are conducted surreptitiously by using either aliases or front companies,” the US State Department said in the cable.

The US reportedly claimed that the transfers, which were probably proliferation-related, occurred inside the Arab Bank network and involved both Arab Bank branches and the Arab Tunisian Bank, of which, according to the US, the Arab Bank is a 64.2 per cent stakeholder.

“By processing these transactions, Arab Bank could be unwittingly assisting proliferation-related activities,” read the cable.

In the cable, the State Department called on Jordan to maintain vigilance with regard to Syrian, Iranian and North Korean financial transactions in its jurisdiction to prevent these countries from using deceptive financial practices to further their proliferation-related activities, urging appropriate authorities to investigate such transactions.

The Arab Bank spokesperson told The Jordan Times that the bank has not found any records indicating that Jordanian government officials provided it with information concerning surreptitious efforts by North Korea to move funds through its network.

Citing the cable’s reference to “deceptive financial practices” by North Korea, the spokesperson emphasised that without knowing the details of these efforts by North Korea to conceal its financial transactions, it is not possible for Arab Bank or any other bank to address these allegations with any more specificity.

“As noted in the US State Department cable, Arab Bank is one of the ‘most respected banks in the Middle East’, with a network that spans 30 countries and five continents. The bank maintains a state of the art compliance programme, works closely with banking regulators in all countries where it operates, and has a long history of providing safe and secure banking services,” the spokesperson stressed.

A US embassy official in Amman told The Jordan Times last week that the embassy’s policy is not to comment on WikiLeaks cables.

ORIGINAL POST (2011-10-7): According to the Wall Street Journal:

As it sought to stop North Korea from spreading its nuclear technology, the U.S. uncovered signs in 2007 that the country was channeling funds through a major Middle Eastern bank based in Jordan, one of its closest regional allies, according to diplomatic cables posted online by document leaking website WikiLeaks.

In the cables, viewed by The Wall Street Journal, U.S. officials warned their counterparts in Jordan that North Korea was using Amman-based Arab Bank PLC to receive money from Syria and Iran, circumventing international sanctions.

The U.S. has said, apart from the cables, that it believes Syria purchased North Korean nuclear technology, including a nuclear reactor that Israel bombed in 2007. The U.S. also believes that Iran has acquired long-range missiles from North Korea.

“We are concerned that Iran, Syria, and DPRK [North Korea] proliferation entities are using the Arab Bank network to process what may be proliferation-related transactions,” read an August 2007 cable from the U.S. State Department to the U.S. Embassy in Amman.

The warnings provide a rare glimpse into U.S. efforts to stop North Korea from spreading arms and nuclear technology to its enemies. U.S. officials have said as recently as last month that North Korea is still aggressively establishing a network of front companies through which to secretly sell its weapons and evade sanctions.

“U.S. efforts have helped to spur isolation, but I think there is still a cat-and-mouse aspect to North Korean illicit financial activity,” Juan Zarate, a White House counterterrorism official until 2009, said Thursday.

In the cables, the U.S. said it was concerned that North Korea helped one of its lenders, Tanchon Commercial Bank, which it describes as the “primary financial agent behind the DPRK’s weapons programs,” to funnel money from Syria and Iran through Arab Bank.

The governments of Syria, Iran and North Korea didn’t respond to calls and emails requesting comment. A spokeswoman for the Jordanian Embassy in Washington declined to comment.

The cables said those transactions “have occurred through Arab Bank PLC, one of the oldest and most respected banks in the Middle East.”

Arab Bank said it didn’t believe it had processed any North Korean funds. “Based on a review of its customer account and transaction records, Arab Bank does not believe that it has conducted business with the government of North Korea or Tanchon Bank,” the bank said.

“In addition, Arab Bank has not found any records indicating that government officials provided information to the bank concerning surreptitious efforts by North Korea to move funds through its network,” it said.

The U.S. cables, which were posted at the end of August, suggest that Arab Bank may have processed the purported North Korean transactions unwittingly. They say that Tanchon was conducting its financial transfers surreptitiously using aliases and front companies.

In interviews, current and former U.S. officials said warnings such as those reported in the cables aren’t unusual and don’t indicate that they viewed Arab Bank as a particular cause for concern.

The bank was fined by U.S. banking regulators in 2005 for lacking adequate safeguards to stop money laundering and terrorist financing. Since then, a U.S. official said, Arab Bank has taken major steps to shore up its internal controls and has emerged as one of the more responsible lenders in the region.

The cables don’t say how large the purported transactions were, or their purpose. Nor do they say what, if anything, was done after the warnings.

Arab Bank is facing several civil lawsuits in a New York federal court dating to 2004 that allege it knowingly helped fund Palestinian terrorist attacks. The suits, brought by family members of those killed or injured in the attacks, allege the bank acted as a conduit for money from Saudi donors that went to families of suicide bombers and terror groups, a charge the bank denies.

In a statement, Arab Bank said it complies with banking laws in all 30 countries where it does business, including the U.S. “The bank abhors terrorism and has not done business with terrorists or terrorist organizations designated by these countries,” it said.

Jordan has interceded on Arab Bank’s behalf in the suits, arguing that the bank is being unfairly punished for failing to turn over what it says are confidential client records. In a November 2010 court brief, Jordan said a set of legal sanctions imposed by the U.S. judge hearing the case could destroy the bank. Because Arab Bank was a crucial cog in the regional economy, that outcome would be “potentially calamitous” for the economies of the Middle East, the brief said.

The appeals court has called a hearing on Nov. 14. However, Arab Bank has asked for it to be postponed as its lawyer cannot make it that day due to a conflict with another case.

While the leaked cables show the U.S. had concerns about illicit money transfers at Arab Bank two years after the 2005 punishment, they also include a U.S. expression of support for the bank. In a July 2008 cable, the U.S. Embassy in Amman said it saw no reason why the U.S. shouldn’t provide financing for Arab Bank and two other Jordanian financial institutions.

“The embassy does not have any information that these banks or their investors have known ties to terrorists, money laundering, corruption, or violations of the law,” it stated.

According to UPI:

A bank in Jordan, a strong U.S. ally in the region, may have unknowingly moved cash for the North Koreans to finance illicit weapons programs, cables suggest.

Sensitive cables distributed by WikiLeaks and reviewed by The Wall Street Journal suggest Jordan’s Arab Bank PLC was used by North Korea to get money from Syria and Iran to help with its proliferation activity.

An August 2007 cable from the U.S. State Department to Washington’s embassy in Amman expressed concern “that Iran, Syria and DPRK (North Korea) proliferation entities are using the Arab Bank network to process what may be proliferation-related transactions.”

Arab Bank, in a statement published by the Journal, said it “does not believe” it carried out business with the North Koreans. The bank was fined in 2005 by U.S. banking regulators for not having mechanisms in place to prevent money laundering and terrorist financing, the newspaper adds.

The cables suggest the Jordanian bank processed the North Korean activity without knowing about it.

The International Atomic Energy Agency, at its regular summer meeting with the board of governors in Vienna, expressed concern about the Syrian, North Korean and Iranian nuclear programs.

I have created  a wikileaks story index which you can see here.

Read the full stories here:
Cables Say Syria, Iran Illegally Moved Cash to North Korea
Wall Street Journal
Thomas Catan
2011-10-7

Jordanian bank tied to illicit weapons?
UPI
2011-10-7

UPDATE 1 (2011-8-17): The recently sanctioned bank denies it has ties to Iran and the DPRK. According to Lebanon’s Daily Star:

The Lebanese subsidiary of a Syrian bank sanctioned by the United States denied on Wednesday “unfounded political allegations” that it dealt with North Korea and Iran.

“Since the establishment of our institution, we have never had any operation with either a North Korean or an Iranian entity even before the existing sanctions,” the Syrian Lebanese Commercial Bank said.

“As a result, we deny all accusation of being involved in any illegal activity with any suspected country,” a statement added.

The United States Treasury has charged that the state-owned Commercial Bank of Syria allegedly supported Syria and North Korea’s efforts to spread weapons of mass destruction.

Washington last week imposed sanctions on the bank, the Syrian Lebanese Commercial Bank and telecoms company Syriatel over President Bashar al-Assad’s increasingly brutal crackdown on pro-democracy protests.

The move freezes the US assets of the businesses targeted and prohibits US entities from engaging in any business dealings with the two banks.

ORIGINAL POST (2011-8-14): The US has sanctioned a Syrian Bank for its involvement in DPRK proliferation activities.  According to Yonhap:

The Treasury Department said the Commercial Bank of Syria has provided financial services to North Korea’s Tanchon Commercial Bank and Syria’s Scientific Studies and Research Center, both of which were blacklisted for the proliferation of weapons of mass destruction.

The Syrian bank’s Lebanon-based subsidiary, Syrian Lebanese Commercial Bank, and Syriatel, the largest mobile phone operator in Syria, were also sanctioned under Wednesday’s measure.

“By exposing Syria’s largest commercial bank as an agent for designated Syrian and North Korean proliferators, and by targeting Syria’s largest mobile phone operator for being controlled by one of the regime’s most corrupt insiders, we are taking aim at the financial infrastructure that is helping provide support to (President Bashar) Asad and his regime’s illicit activities,” Under Secretary for Terrorism and Financial Intelligence David S. Cohen said in a press release.

The Commercial Bank of Syria also holds an account for Tanchon Commercial Bank, the primary financial agent for the Korea Mining Development Corp., North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons, according to the department.

The U.S. is stepping up efforts to isolate the Assad regime amid its brutal crackdown on anti-government protesters.

NTI has additional information here.

Other DPRK-Syria stories below:
1. Syria and the DPRK collaborated on the construction of Syria’s nuclear facility which was destroyed in 2007 by an Israeli air strike.

2. According to Joshua Pollock, over the last decade the DPRK and Syria have cooperated on missile development.

3. The UNSC was investigating a shipment of North Korean chemical safety suits to Syria.

4. Syria’s Tishreen War Museum was designed and built by North Koreans!

Pictured above: (L) Mangyongbong-92 in the Wonsan Harbor. (R)  American Budweiser Beer and dried fish served on the Mangyongbong-92

UPDATE 3 (2013-2-26): The Singaporean ship,  Royale Star, has been delivered to Rajin to handle tourist cruises. According to Google Earth imagery (2012-9-21), the Mangyongbong-92 has been returned to its primary port in Wonsan.

UPDATE 2 (2011-9-3): The Telegraph and ITN (UK) put together a humorous take on the cruise here.

UPDATE 1  (2011-8-31): According to the Associated Press:

The maiden voyage — a trial run — arrived Wednesday, carrying dozens of Chinese travel agents, international media and North Korean officials.

About 500 North Koreans lined up with military precision at the Rason port for a red carpet send-off Tuesday, waving small flags and plastic flowers while revolutionary marches such as “Marshal Rides a White Horse” blared over the loudspeakers. Streamers swirled and balloons spiraled skyward.

The Mangyongbong, a refurbished Japanese-built cargo ship with rusty portholes and musty cabins, was used for the 21-hour overnight cruise tracing the length of North Korea’s east coast. Some passengers slept on wooden bunkbeds while others were assigned mattresses on the floor. Simple meals were served cafeteria-style on metal trays.

A plaque on board commemorated a 1972 tour of the boat by North Korea’s founder, late President Kim Il Sung, and bright red posters emblazoned with his sayings decorated the walls.

Park promised a “more luxurious” ship capable of carrying up to 900 passengers, perhaps next year. He said the goal is to bring as many as 4,000 visitors a day from Rason to Mount Kumgang during the peak summer season, up from some 500 per week now.

“People from any country — Jamaica, Japan, Singapore, people from various countries — can come to Rason and don’t require a visa,” said Rason’s vice mayor, Hwang Chol Nam. “That’s the reality.”

But other restrictions remain. Hwang said visitors must book with approved travel agents and remain in their guides’ company throughout. Mobile phones must be left behind in China.

…

It remains to be seen how many Chinese tourists will be interested in the new tours. With incomes rising, Chinese are traveling abroad in rising numbers, thronging tour groups to Europe, Thailand, Japan and South Korea, with a small but growing number making the short trip to neighboring North Korea.

A rush of American visitors is unlikely. A long-standing U.S. State Department travel warning says North Korea strictly monitors visitors and harshly punishes law-breakers and reminds Americans that the two countries do not have diplomatic relations.

A senior South Korean official said North Korea would have trouble drawing investors and tourists after the way the North dealt with South Korean businesses.

South Korea’s Unification Ministry plans to send a letter to foreign embassies asking them not to cooperate with any new Diamond Mountain tours offered by North Korea, said the official, who spoke on condition that his name was not used.

North Korea’s latest moves are likely to upset Hyundai — but that might be the strategy of Pyongyang officials riding out conservative South Korean President Lee Myung-bak’s leadership, which ends next year, said Yoon Deok-ryong, an economist at the Korea Institute for International Economic Policy in Seoul.

“If they bring potential investors into the Mount Kumgang area, Hyundai would be upset and try to mobilize possible supporters in Parliament so the next government in South Korea will improve inter-Korean relations,” he said. “That is I think the design of the North Korean government.”

Wang Zhijun, a Chinese hotel manager from Jilin province who joined the trip free of charge, said it won’t be hard to sell the cruise to tourists in his region, which has a large ethnic Korean population and lacks coastline of its own.

But, he said, the price would have to stay low, suggesting around 2000 yuan (US$310) per passenger for an all-inclusive, five-day trip.

“It ought to be very popular. There are a lot of tourists already coming across to Rason,” Wang said. “People from China’s northeast would really like this kind of trip because it’s a cruise. You can enjoy the sea.”

The AFP also reported from the bosom of the Mangyongbong:

It has karaoke and fresh coffee, but the bathrooms on the lower decks are out of water and some guests sleep on the floor. Welcome aboard North Korea’s first cruise ship.

Keen to boost tourism and earn much-needed cash, authorities in the impoverished nation have decided to launch a cruise tour from the rundown northeastern port city of Rajin to the scenic resort of Mount Kumgang.

In a highly unusual move, the reclusive regime invited more than 120 journalists and Chinese tour operators on board the newly-renovated, 39-year-old Man Gyong Bong ship for a trial run of the 21-hour journey.

The vessel left one of Rajin’s ageing piers on Tuesday to the sound of rousing music, as hundreds of students and workers holding colourful flowers stood in line and clapped in unison.

“The boat was only renovated one week ago,” said Hwang Chol Nam, vice mayor of the Rason special economic zone, as he sat on the top deck at a table filled with bottles of North Korean beer, a large plate of fruit, and egg and seafood dishes.

“But it has already made the trip to Mount Kumgang and back. I told people to test the ship to make sure it was safe,” said the 48-year-old, dressed in a crisp suit adorned with a red pin sporting late leader Kim Il-Sung’s portrait.

The project is the brainchild of North Korea’s Taepung International Investment Group and the government of Rason, a triangular coastal area in the northeast that encompasses Rajin and Sonbong cities, and borders China and Russia.

Set up as a special economic zone in 1991 to attract investment to North Korea, it never took off due to poor infrastructure, chronic power shortages and a lack of confidence in the reclusive regime.

Now though, authorities are trying to revive the area as the North’s economy falters under the weight of international sanctions imposed over the regime’s pursuit of ballistic missiles and atomic weapons.

The country is desperately poor after decades of isolation and bungled economic policies, and is grappling with persistent food shortages.

In Rason, Hwang said authorities had decided to focus on three areas of growth — cargo trade, seafood processing and tourism.

North Korea has only been open to Western tourists since 1987 and remains tightly controlled, but more destinations are gradually opening up to tour groups keen to see the country for themselves.

Mount Kumgang, though, is at the heart of a political dispute between North and South Korea after a tourist from the South was shot dead by a North Korean soldier in 2008.

And Rason, where the cruise begins, is a poor area. The tours are tightly monitored, and the only brief contact with locals is with guides, tourist shop owners and hotel employees.

Visitors can expect only brief glimpses of everyday life through the windows of tour buses, as locals — many dressed in monochrome clothing — cycle past or drive the occasional car in otherwise quiet streets.

Small apartment blocks, many of them run down, are interspersed with monuments to the glory of the country’s leaders.

A portrait of current leader Kim Jong-Il and his late father Kim Il-Sung greets visitors as they walk through the vast lobby of the large, white hotel in Rajin.

“The book is a silent teacher and a companion to life,” reads a quotation from the late Kim, hung over glass cases full of books about North Korea, with titles like “The Great Man Kim Jong-Il” and “Korea — a trailblazer.”

The rooms are spartan but clean. But there is no Internet connection anywhere in the area, and the phone lines are unreliable and expensive. Foreign mobile phones are confiscated by tour guides as travellers enter the country.

Hwang said the government in Rason was trying to address communication problems and had signed a 26-year exclusive agreement with a Thai firm to set up Internet in the area, which he hoped would be running in September.

He acknowledged, however, that non-business related websites would likely be blocked, with the media tightly controlled in North Korea.

Many of Rason’s tourists come from neighbouring China. The area sees an average of 150 travellers from China every day during the summer peak season.

One Chinese national from the southeastern province of Fujian who gave only his surname, Li, said he had come to North Korea after a business meeting on the Chinese side of the border.

“We’ve come here mainly to see what changes there have been compared to our country… I like to go to places I’ve never been to before,” he said, standing in front of a huge portrait of Kim Il-Sung.

Simon Cockerell, managing director of Koryo Group, a Beijing-based firm that specialises in tours to North Korea, conceded that Rason may not be everyone’s idea of a holiday, but said its attraction lay in the unknown.

“A lot of people like going to obscure places. And this is the most obscure part of a very obscure country in tourism terms — the least visited part of the least visited country,” he said.

Back on the boat, Chinese tour operators sang karaoke in a dining hall decked out with North Korean flags as a waitress made fresh coffee, while guests drank beer and ate dried fish at plastic tables up on deck.

Inside, some cabins were decked out with bunk beds, while others just had mattresses laid out on the floor. The better rooms had tables, chairs and private washrooms.

Water in bathrooms on the vessel — used as a ferry between North Korea and Japan until 1992 when it started shipping cargo — was unreliable and when available, was brown.

But Park Chol Su, vice president of Taepung, said he had big plans for the tour if it attracted enough visitors.

He wants to invite more than 100 tourist agencies from Europe in October to sample the same trip, in a bid to attract travellers from further afield.

Authorities have promised no visas will be needed to go on the cruise and, if all goes to plan, the ship will be upgraded to a more comfortable one.

“Next year, we aim to get a bigger, nicer boat that can accommodate 1,000 people. We’d rent that from another country in Southeast Asia,” he said.

Some great photos of the trip are here.

A timeline of Kumgang stories from the shooting until today can be found here.

Read the full story here:
North Korea starts group tours from China to mountain resort formerly operated with South
Associated Press
2011-8-31

ORIGINAL POST (2011-9-7): The Mangyongbong-92 is going to be used for tourism. According to Yonhap:

North Korea appears likely to use a ferry to try to attract foreign tourists, a source familiar with the issue said Friday, in what could be an attempt to earn much-needed hard currency.

For decades, the Mankyongbong-92 served as the only shuttle between North Korea and Japan, which have no diplomatic relations, and was mostly used by pro-North Korean residents in Japan.

The 9,700-ton ship was later used to transport cargoes before Tokyo blocked its entry as part of economic sanctions over Pyongyang’s missile and nuclear tests in 2006.

The ferry has also been suspected of being used for trafficking drugs, counterfeit money and other contraband goods.

North Korea is now preparing to use the vessel as a cruise ship for Chinese and other foreign businessmen during an upcoming international fair in Rason, the country’s special economic zone near China and Russia, the source said.

The North plans to use the ship to take the businessmen on a sightseeing trip in waters off the economic zone at the end of the international fair later this month.

The move is widely seen as the North’s attempt to use the ship for its tourism project.

“It is meaningful in that the Mankyongbong-92 would set sail as a cruise ship for the first time,” said Cho Bong-hyun, a researcher at the IBK Economic Research Institute, noting the North seems to be revitalizing tourism in the economic zone and attempting to attract Chinese tourists to earn hard currency.

The North designated Rason as a special economic zone in 1991 and has since striven to develop it into a regional transportation hub, though no major progress has been made.

…

Read the full story here:
N. Korea pushing to use ferry to attract foreign tourists
Yonhap
Kim Kwang-tae
2011-8-5

Pictured above (Google Earth): Korea Computer Center

According to the Associated Press (Via Washington Post):

South Korean police said Thursday they have arrested five people who allegedly collaborated with elite North Korean hackers to steal millions of dollars in points from online gaming sites.

The five, including a Chinese man, were arrested and another nine people were booked without physical detainment after they worked with North Koreans to hack South Korean gaming sites, the Seoul Metropolitan Police Agency said in a statement.

Members of the hacking ring, which included North Korea’s technological elite, worked in China and shared profits after they sold programs that allowed users to rack up points without actual play, police said.

The points were later exchanged for cash through sites where players trade items to be used for their avatars. The police said the ring made about $6 million over the last year and a half.

A police investigator, who declined to be identified because the investigation was under way, said North Korean hackers were asked to join the alleged scheme because they were deemed competent and could help skirt national legal boundaries.

The police pointed to North’s Korea Computer Center as the alleged culprit. Set up in 1990, the center has 1,200 experts developing computer software and hardware for North Korea, the police said.

The National Intelligence Service, South Korea’s spy agency, was heavily involved in the investigation, the police said. Investigators suspect the hackers’ so-called “auto programs” could be used as a conduit for North Korean cyberattacks.

South Korean authorities have accused North Korea of mounting cyberattacks in the past few years. Prosecutors said earlier this year that the North hacked into a major South Korean bank’s system and paralyzed it for days. The North is also accused of mounting attacks on U.S. and South Korean websites. Pyongyang has denied the charges.

The New York Times adds the following details:

In a little less than two years, the police said, the organizers made $6 million. They gave 55 percent of it to the hackers, who forwarded some of it to agents in Pyongyang, the capital of North Korea. “They regularly contacted North Korean agents for close consultations,” Chung Kil-hwan, a senior officer at the police agency’s International Crime Investigation Unit, said during a news briefing.

Mr. Chung said the hackers, all graduates of North Korea’s elite science universities, were dispatched from two places: the state-run Korea Computer Center in Pyongyang and the Korea Neungnado General Trading Company. The company, he said, reports to a shadowy Communist Party agency called Office 39, which gathers foreign hard currency for Mr. Kim through drug trafficking, counterfeiting, arms sales and other illicit activities.

Read the full story here:
South Korean police say they’ve cracked down on ring working with North Korean hackers
Associated Press (Via Washington Post)
2011-8-4

UPDATE 3 (2011-9-27): The Center for Nonproliferation Studies hosted a panel discussion on Mr. Pollack’s report.  You can see all the presentations here.

UPDATE 2: The Washington Post has recently covered this study.

UPDATE 1: 38 North has published an article by Mr. Pollack which provides an interesting narrative of the market for North Korean missiles.

ORIGINAL POST: The Choson Ilbo published the following:

Forty percent of ballistic missiles developing nations have imported since 1987 came from North Korea, VOA reported Thursday.

The claim comes in a report titled “The Evolution of North Korea’s Ballistic Missile Market” by Joshua Pollack, a nuclear proliferation expert at the U.S. Science Applications International Corporation, who says, “More than 40 percent of the roughly 1,200 theater ballistic missile systems supplied to the developing world between 1987 and 2009 came from North Korea.”

During this period Iran, Egypt, Syria, Libya, Yemen, the U.A.E., and Pakistan imported missiles from the North. The North topped the list of ballistic missile suppliers, followed by Russia (400) and China (270).

But the North’s missile export began declining rapidly in 1994.

North Korea’s time as supplier of “complete missile systems” to the Middle East at large ended because the Middle East no longer had the need for rapid arms buildup and missile stockpiles after the end of the Iran-Iraq War, Pollack said.

The North proved “adaptable to shifting market and security environments” by “turning instead to the export of missile components and materials.” But missile importers had less demand for North Korean missiles as they built their own production capabilities, he added.

Pollack’s report was carried in the July issue of The Nonproliferation Review published by James Martin Center for Nonproliferation Studies at Monterey Institute of International Studies.

Mr. Pollack’s full report can be found here (PDF). It is well worth reading. Mr. Pollack is also a blogger at ArmsControlWonk.com.

It has been a couple of years since we heard from Sean Garland, but the Irish Times reports that the alleged purveyor of alleged North Korean “supernotes” is fighting his exztradition to the US at Ireland’s high court.  According to the story:

A veteran republican handed over almost $250,000 in Russian hotels in an international plot to spread the notes across Europe, a court heard.

Authorities in the US have accused Sean Garland of being the ringleader of a massive forgery racket that distributed the top grade counterfeit $100 bills.

The former IRA leader is fighting his extradition to the US at the High Court in Dublin, which heard Garland met a co-conspirator twice in Moscow with the fake cash.

Garland, 77, also the ex-president of the Workers’ Party of Ireland, denies the allegations.

In an affidavit to the court, Brenda Johnson, assistant US attorney, said: “This case involved a long-standing and large-scale supernotes distribution network (the Garland organisation) based in the Republic of Ireland and headed by Sean Garland, a senior officer in the Irish Workers’ Party.”

The US Secret Service (USSS) discovered the ‘supernotes’ were sourced in the Democratic Republic of North Korea, she said, and were transported around the world by North Korean officials travelling under diplomatic cover.

They also allege Garland and six co-conspirators used couriers to transport supernotes and payments to avoid detection themselves.

The international probe, which also involved the UK’s National Crime Squad (NCS) – now the Serious and Organised Crime Agency (Soca) – and the interior ministry of Russia (MVD), found the high-grade counterfeit bills were in worldwide circulation from the late 1980s until at least July 2000.

Ms Johnson alleged one of Garland’s alleged co-conspirators, Hugh Todd, later told investigators he purchased more than $250,000 of supernotes from “the Garland organisation” which were redistributed into the world economy through currency exchanges across Europe.

He maintained he first met the Irishman in the Radisson Hotel in Moscow in April 1998, where Mr Garland emptied a leather bag packed with approximately 80,000 dollars of counterfeit US notes on to a bed for $30,000 in genuine notes.

Two months later, the pair met in the Savoy Hotel in Moscow, where between $160,000 and $180,000 of counterfeit US currency was handed over, it is claimed.

Records with Scandinavian Airlines prove Mr Garland was in Russia on both occasions, she added.
An undercover NCS officer infiltrated the group in 1999 and met with members in several pubs and hotels around Birmingham, where they discussed the counterfeit notes and how their boss ’Sean’ sourced them in Russia.

Ms Johnson’s affidavit states Garland knew the Federal Reserve notes were counterfeit, that he travelled circuitous routes and met with other conspirators to discuss the supernotes operation and engage in transactions.

“Some members who were apprehended in possession of or passing notes have admitted that Garland was the source and leader of an illegal supernote distribution organisation and that (Christopher) Corcoran was his direct contact, communicator and negotiator,” she said.

“Their statements are substantiated by documentary evidence, physical and electronic surveillance and other witness accounts.”

Garland, of Beldonstown, Brownstown, Navan, Co Meath, was a former IRA leader in the late 1960s and early 1970s. He was a key figure in securing the official IRA ceasefire of May 1972.

He was initially arrested by the PSNI on foot of an extradition warrant by the US authorities in October 2005 at the Workers’ Party annual conference in Belfast. He fled to the South when released on bail.

He was later arrested outside the Workers’ Party in Dublin in January 2009 and released on strict bail conditions, which included surrendering the title deeds to his family home.

Barristers for Garland maintained the pensioner should not be extradited as the alleged offence happened in Ireland and was based on hearsay.

Michael Forde, senior counsel, argued his client had been accused of a complex, sophisticated trans-national conspiracy, but that the charge fell under Ireland’s own forgery or money-laundering laws.

“The rationale is very simple,” said Mr Forde. “If the offence was committed against Irish law, and a substantial part committed in the State, then the State should prosecute.”

His legal team also argued Garland’s fundamental rights have been infringed, that there had been a delay is making the second extradition order and that the extradition was connected with a political offence.

Mr Forde also claimed the application was hearsay based on hearsay and had not established a prima facie case.

“The question this court has to ask itself is there enough admissible evidence here to justify putting Mr Garland on trial,” he added.

The extradition hearing before Mr Justice John Edwards is listed for four days.

Stories related to the DPRK’s alleged counterfieting activites can be found here.

Read the full story here:
Ex-IRA man Garland ‘led fake dollars plot’, court told
Irish Examiner
2011-7-18