North Korean Economy Watch

According to Kang Hyun-kyong in the Korea Times:

As a veteran aid worker, Wolfgang Gerstner was weary of a vicious circle of escalating tensions between South and North Korea after the latter was found to be responsible for the sinking of the warship Cheonan on March 26.

According to the German consultant working for international aid group Caritas Germany, North Korea’s bellicose acts have led those outside the country who have tried to help it to harden their attitudes.

This has resulted in a decrease of donations, causing children there to live without vaccinations for example.

Gerstner, 53, went on to say that children and ordinary people living in the impoverished North, whose living standards couldn’t be worse, suffer the unintended consequences of the regime-led provocations.

“It is difficult for people living outside North Korea to separate ordinary people living in the North from the regime,” Gerstner, who oversees Caritas’s humanitarian aid program to North Korea (the CI-DPRK program), said last Thursday in an interview with The Korea Times at a hotel in Seoul.

Caritas relies on donations from individual and corporate members to sustain their humanitarian aid to less developed nations in Africa, Asia, and Latin America.

The aid organization also receives funds from the German government and Catholic churches here in Korea for the vaccination campaign for North Korean children.

North Korea is one of the nations where the rate of child mortality is alarmingly high.

According to United Nations Children’s Fund (UNICEF), 55 of every 1,000 children in North Korea die before they turn five.

Child mortality can be largely preventable if young children are vaccinated.

The North issuing a threat, however, is a stumbling block to the international effort to save children there.

When recipient governments make threats, it is natural for people living outside those nations to harden their view toward them, making donors or potential donors rethink their contribution.

“I don’t have the exact figure regarding the loss in donations after the provocation, but it certainly does have an effect on the amount,” Gerstner said.

“Escalating tensions make it difficult for aid workers like me to convince our donors to contribute to humanitarian assistance for the people there.”

Catastrophic security

The German aid worker sat down with the reporter days after wrapping up his recent visit to North Korea from June 8 to 12 this year for the regular vaccination program.

During the four-day field trip, Gerstner and August Stich, a medical advisor working with the Medical Mission Hospital Wuerzberg in Germany, visited the Sadong Tuberculosis Center, the new national laboratory at the Pyongyang Tuberculosis Hospital.

The two-man delegation also met with officials from the North Korean Ministry of Public Health and experts in medical institutes in Pyongyang and in the neighborhood of the North’s capital.

They made the June visit after about 500,000 North Korean children aged from seven to 16 years old were vaccinated in three rounds from February to April, thanks to the Caritas program.

Since March 2007 when he was first called upon to handle the CI-DPRK program, Gerstner has been to the North approximately 20 times for talks with his North Korean counterpart — the Ministry of Public Health.

His most recent trip came at a time when tension on the Korean Peninsula has shown little sign of subsiding after a multinational investigation team concluded last month that a North Korean torpedo was responsible for taking the lives of 46 sailors.

The North has denied it.

In an attempt to teach North Korea a lesson that any criminal acts will invite punishment, South Korea referred the Cheonan case to the U.N. Security Council (UNSC) in early June, calling for retaliatory measures against the North for the unacceptable act.

North Korea has claiming it is “innocent” and further threatened to take “counter-measures” if the UNSC sides with the multinational team over the probe results and comes up with punitive measures against it.

The two Koreas’ engaging in a game of chicken in the wake of the sinking of the ship has led to international media headlines featuring the peninsula on the verge of a war.

A vicious circle

The security standoff has spillover effect on humanitarian assistance to the North.

Disappointed, individual and corporate donors have become skeptical about contributing money or goods for the improvement of living conditions in the North.

Lesley-Anne Knight, secretary general of Caritas, expressed her concern over the unintended consequences of rising tensions last Tuesday during a news conference held in Seoul.

“This tension, of course, makes it much more difficult for us as humanitarian actors to maintain a neutral and impartial interest at the international level for North Korea,” Knight said.

“When there is a bellicose act, when people start to feel concerned about conflict escalating, international attention and the sympathy perhaps of the international humanitarian community for the plights of the (North) Korean people tends to diminish, tends to wane.”

Knight went on to say that “that is the extreme concern for us.”

Caritas, which has spent a total of $33 million on humanitarian aid and development in North Korea since 1995, called for a continuation of assistance.

The reaction came weeks after the South Korean government’s halt of assistance to the North in retaliation for its torpedo attack on the ship.

“(Humanitarian assistance) is absolutely essential for us. The situation of the majority of the North Korean people is that most of them are struggling to get their daily basic needs. Most specifically, food and health,” Knight said.

‘N. Korean kids are brave’

In his previous visits to the North in March, Gerstner had opportunities of taking a closer look at the facilities of clinics, institutes, and primary and secondary schools, while monitoring the North’s implementation of Caritas’s vaccination programs.

“Compared with South Korean hospitals and their amenities, hospitals in the North are less modern. Doctors there have to rely more on traditional medicine as they don’t have necessary facilities and medicine,” he said.

He called North Korean children “very brave.”

“It happens in other countries that school age children cry when they wait for their turns in line for taking vaccination shots. But North Korean children never cried even when they took the shots,” he said.

Previously, Gerstner was involved in several emergency relief programs in Africa, Latin America and the former East Germany. He helped organize rehabilitation programs in the local community.

Gerstner said North Korean teachers and children were “friendly and open-minded” when meeting with him, although they never spoke.

He said the most difficult part when implementing the aid program to North Korea was access to information and communication.

“For planning, we need information and have to communicate with our counterpart. The ministry has no email account, making it more difficult for us to execute the program,” he said.

Read the full article here:
Donors turn their back on N. Korea for provocation, putting kids at risk
Korea Times
Kang Hyun-kyung
6/28/2010

According ot the Daily NK:

South Korea has granted permission for an aid shipment of anti-malarial medication, the seventh shipment of aid to North Korea since the Cheonan sinking.

An Ministry of Unification said today, “We have decided to allow a shipment of anti-malarial medication worth $335,000, which was requested by the Korean Sharing Movement.”

Korean Sharing Movement is a well-known aid organization targetting North Korea.

The Korean Sharing Movement says it plans to send malaria diagnosis kits, mosquito nets and vaccines for pregnant women among other things to Jangpung, Geumcheon, Tosan and Kaesong, which are areas of North Korea adjacent to Gyeonggi Province, the province which surrounds Seoul.

Funding for the project has been provided by the government of Gyeonggi Province.

Most previous, post-Cheonan shipments have been aid for infants and children. Earlier this month, two aid consignments of infant-related aid were sent.

The Unification Ministry in Seoul, upon granting permission for the previous shipments, explained, “While South Korea will hold off on inter-Korean business projects on principle, we will continue providing purely humanitarian aid for the weak, such as infants and children.”

Including today’s shipment, the total cost of aid sent since punitive measures against North Korea were announced on May 24 has been approximately $603,000.

The current shipment of anti-malarial medication is being sent, the Ministry of Unification explained today, because malaria has the potential to spread into South Korea during the summer months.

Read the full story here:
Rok to send malaria medication to DPRK
Daily NK
Chris Green
6/24/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-17-1
6/17/2010
 
As North Korea’s food shortages worsen and reports of starvation continue to grow, the Workers’ Party of Korea have acknowledged the failure of the central food ration program. Since the end of May, the Party has permitted the operation of 24-hour markets, and the regime has ordered the people of the North to provide for themselves.

The human rights organization Good Friends reported this move on June 14. According to Good Friends, the Workers’ Party organization and guidance bureau handed down an order on May 26 titled ‘Relating to Korea’s Current Food Situation’ that allowed markets to stay open and ordered North Koreans to purchase their own food. This order, recognizing that the food shortages in the North have continued to worsen over the last six months, since the failed attempts at currency reform, acknowledged the difficulty of providing government food rations. It calls on those who were receiving rations to now feed themselves, while also calling on the Party, Cabinet, security forces and other relevant government agencies to come up with necessary countermeasures. Now, authorities officially allow the 24-hour operation of markets, something that most had already tacitly permitted, and encourage individuals, even those not working in trading companies, to actively import goods from China.

It has been reported that government food rations to all regions and all classes of society, even to those in Pyongyang, were suspended in April. The last distribution of food was a 20-day supply provided to each North Korean on April 15, the anniversary of the birth of Kim Il Sung. Because of the difficulty of travelling to markets, the suspension of rations caused many in farming communities to starve to death. When Kim Jong Il’s recent visit to China failed to secure expected food aid, the Workers’ Party had no choice but to hand down the ‘May 26 Party Decree’. While the suspension of rations has considerably extended the economic independence of North Korean people, the regime has significantly stepped up other forms of control over society. Public security officers have begun confiscating knives, saws and other potential weapons over 9 centimeters long in an effort to stem murder and other violent crimes. Additionally, state security officials are cracking down on forcefully resettling some residents of the age most likely to defect, while sending to prison those thought to have contacted relatives in South Korea.

According to Daily NK, North Korean security officials are pushing trading companies to continue trading with China, while calling on Chinese businesses to provide food aid. It also appears that North Korean customs inspections along the Tumen River have been considerably eased, and there is no real attempt to identify the origin or intended use of food imported from China. Sinheung Trading Company has asked Chinese partners investing in the North to send flour, corn and other foodstuffs. The Sinheung Trading Company is operated by the Ministry of State Security, and is responsible for earning the ministry foreign capital. It appears that food acquisition is now a matter of national security, as North Korea is expecting South Korea and the rest of the international community to economically isolate the country.

According to National Public Radio:

Conventional wisdom holds that the people of North Korea are trapped in a world of rigid conformity, totalitarian discipline and complete isolation from the rest of the world.

But increasingly another picture is emerging: North Koreans are far more aware of the outside world, according to evidence provided by North Korean refugees, South Korean humanitarian aid workers, Chinese traders and others.

It is rare for an American to travel to North Korea, and even rarer for an American to spend much time there. Steven Linton has done both.

“In general I think North Koreans are clearly growing in their awareness of the rest of the world. I think there’s no question about that,” Linton says.

Linton has been going to North Korea for many years. He is engaged in a campaign to combat tuberculosis there, and he says North Koreans are soaking up information about the rest of the world.

“One of the most underrated realities about North Korea is its very dynamic relationship with China, and the amount of information that flows across that border. Students; business people; it’s a continuous stream of traffic,” he says.

With that traffic come thousands of DVDs, CDs, cellular telephones, used computers and videotapes — many of them from China and South Korea.

Traders Fill Information Gap

Kim Heung Kwang came to South Korea from the North six years ago and created a group called North Korea Intellectuals Solidarity. He has his own network of people in both Koreas. Kim says market-oriented traders and smugglers in the provinces of China bordering on North Korea are filling the information gap.

He says that many Koreans in China make a living by setting up satellite TVs at their homes to receive South Korean media. Then, they burn CDs and DVDs of the programs and sell them to North Koreans — for a profit, not propaganda.

These media are so prevalent inside North Korea now that knowledge about South Korea has become commonplace, says Yoo Ho-yeol, a professor at Korea University in Seoul. Yoo regularly talks to students and refugees from North Korea.

“They are telling us that those people living along the border area, all of them know well about South Korean society or daily life,” he says.

Groups such as North Korea Intellectuals Solidarity also have managed to send cell phones across the Chinese border, and now thousands of people can call to South Korea, via cell phone systems in China, to provide news of developments inside North Korea. And they can receive text messages, photos and music via cell phones.

It was through channels such as these that news leaked out of North Korea late last year of the disastrous currency reform the government had imposed and widespread resistance to it.

Impossible To Stop Flow Of News

It is still not risk-free to possess these materials. But, says Kim of North Korea Intellectuals Solidarity, while possessing a videotape from South Korea in years past might bring a three-year prison or labor camp sentence, now the materials are so common that local authorities appear to understand they’ve already lost this battle.

“The efforts are ongoing to inspect and collect everything that they can find. But because the demand is so big and the activities are [going on in the] black market, the government is feeling that it is fundamentally impossible to eliminate all sources. So I feel that they are just going through the motion now,” he says.

And there is word of mouth. Humanitarian workers from South Korea who have brought medicine or food to North Korea say simple conversation can be transformative.

Hwang Jae-sung has done agricultural work in North Korea for an aid group from the South called Korean Sharing Movement.

“They saw what we were, and what we do and what we brought. And they go back to [their houses] and they just tell their wives and children and so on. The word spreads, a thousand miles,” Hwang says.

Sanctions Undermine Efforts

Ironically, the policies of the United States can get in the way of the freer flow of information. Some economic sanctions imposed by the U.S. have created problems for the North Korea Intellectuals Solidarity group. It has been sending USB drives that carry books, news articles, music, teaching materials and computer games to North Korea.

But North Koreans need more computers to use them, says Kim, the group’s director.

“The prerequisite for this program is enough computers in North Korea. But there are several regulations in place blocking our efforts. So I think that the United States needs to change its regulations on these matters,” he says.

The number of used computers from South Korea and Japan is enormous. But sanctions make it more difficult to get even these computers and more information into North Korea.

Read the full story and hear audio below:
Awareness Of Outside World Growing In North Korea
National Public Radio
Mike Schuster
6/15/2010

According to Yonhap:

South Korea has approved four shipments of humanitarian assistance to North Korea, a government official said Tuesday, upholding its policy of supporting those in need of such aid despite the sinking of a warship blamed on Pyongyang.

The aid, worth slightly over 300 million won (US$245,000), comes after South Korea approved two shipments of infant food to North Korea on June 8. North Korea is one of the poorest countries in the world, and its children suffer from chronic malnutrition.

“The latest shipments will be delivered to a nursery, a tuberculosis clinic, a maternity hospital and a kindergarten” in four different North Korean areas, Unification Ministry spokesman Chun Hae-sung told reporters.

Wouldn’t it have been nice if he told us the names of the facilities and cities where the aid was going? Or if someone from the press asked him?

Read the full story here:
S. Korea approves additional shipments of humanitarian aid to N. Korea
Yonhap
Sam Kim
6/15/2010

According to the AFP:

North Korea has completely cut off state food rations after China failed to supply the impoverished communist country with extra cereals, a welfare group said Monday.

The ruling communist party announced in a directive on May 26 that there would be no state rations for a while, said South Korea’s Good Friends group which has contacts in the North.

People were authorised to buy food supplies through private markets, it said, adding the directive was due to delayed shipments of food from China.

“The directive was unavoidable” because China failed to send the aid which had been anticipated after leader Kim Jong-Il’s trip to Beijing in early May, group president Pomnyun, who uses just one name, told reporters.

Private markets are now open around the clock across the North, he said.

The North suffered famine in the mid-1990s which killed hundreds of thousands and it still grapples with severe food shortages. The UN children’s fund estimates one third of children are stunted by malnutrition.

The state food distribution system collapsed during the famine. Free markets sprang up and were condoned for a time.

Since 2005 the regime has been reasserting its grip on the economy, with controls or outright bans on the private markets.

A currency revaluation last November, designed to flush out entrepreneurs’ savings, backfired disastrously, fuelling food shortages as market trading dried up and sparking rare outbreaks of unrest.

The North was forced to suspend its campaign to curb the private markets.

Read the full story here:
N.Korea completely cuts off state rations: aid group
AFP
6/14/2010

According to AFP:

The unification ministry, which must authorise all cross-border exchanges, said the shipments from private groups of milk and other items totalling 320,000 dollars would be sent late this month.

The South cut off most trade with the North after accusing its neighbour of firing a torpedo to sink the ship in March with the loss of 46 lives. It exempted humanitarian aid.

The impoverished North suffers severe food shortages. The UN Children’s Fund says one in three of its children is stunted by malnutrition.

And according to KBS:

The Unification Ministry is prohibiting South Koreans from going to North Korea to celebrate the tenth anniversary of the signing of the June 15th Joint Declaration.

The ministry recently rejected a South Korean group’s request to travel to the North to attend the ceremony marking the signing in Pyongyang.

The ministry said it could now allow the trip due to heightened inter-Korean tensions over the sinking of the Cheonan.

Representatives from South and North Korea and overseas Korean communities had planned to hold a joint ceremony in Pyongyang after holding working-level contacts in the North Korean border city of Gaeseong in May. 

Read the full stories here:
S.Korea to ship aid to North despite tensions
AFP
6/9/2010

S.Koreans Banned From Attending 6.15 Event in NK
KBS
6/9/2010

According to the Choson Ilbo:

The United Nations Children’s Fund has announced plans to spend close to US$130 million to support children and pregnant and nursing mothers in North Korea from 2011 to 2015.

According to Yonhap News, UNICEF has submitted a proposal to its board of directors outlining plans to provide some $128 million worth of humanitarian assistance to North Korean mothers and children.

Some 66 percent is expected to be spent on improving health and nutrition, while the rest will be used to finance medication for malaria and tuberculosis as well as lowering the mortality rate of newborns and mothers.

Read the full story here:
UNICEF to Spend $130 Mil. on Aid in N.Korea
Choson Ilbo
6/3/2010

According to CanKor Report #323, 2 June 2010:

North Korea began opening up to nongovernmental organizations in the 1990s, when severe food shortages forced it to seek outside aid. While both the famine of the mid-90s and the efforts to alleviate it got a good deal of press at the time, attention to this aspect of North Korea has fallen off in recent years as most press coverage now deals with the nuclear issues or questions of leadership succession. But while NGO activities may have dropped off over the last decade, a select few groups continue in their efforts to better the lives of ordinary North Koreans, despite all the limitations and difficulties they face in doing so.

CanKor has collected a partial list of nongovernmental organizations from the non-six-party talk countries currently engaged in humanitarian activities in North Korea. While some have been left out at their own request due to the politically sensitive nature of their work, we will endeavour to present regular updates on current or new projects in the DPRK. Readers are encouraged to write in and inform us of any activities we may report.

Featured Project:  Mennonite Central Committee

MCC has been engaged in the DPRK since the mid 1990s, the earlier years through the Canadian Food Grains Bank (CFGB) in partnership with other organizations to support the Food Aid Liaison Unit (FALU), and also together with other non-resident NGOs such as Caritas International, American Friends Service Committee (AFSC), and Foods Resource Bank/Church of the Brethren Global Foods Crisis Fund to support sustainable agriculture and provide humanitarian assistance. Between 1995 and 2006, approximately $15 million in food and other material resources was sent to the DPRK by MCC.

Since 2006 and the dissolving of FALU, MCC has worked in the DPRK through its MCC NE Asia office. MCC has continued to send food and material resources to orphanages, initially via First Steps, and eventually in direct relationship. Soymilk production equipment was also provided to assist orphanages and soymilk production facilities to increase production of their own nutritional needs. MCC also sends food and material resources to tuberculosis hospitals and rest homes through its partnership with Christian Friends of Korea. Greenhouses have also been provided to enable these facilities to raise more of their own food needs.

Here   is a story on MCC’s partnership with First Steps in sending soybeans to orphanages in the DPRK and

Here   is a story on MCC’s cooperation with Christian Friends of Korea in sending food and other material resources to TB facilities.

Beginning in 2009, MCC is partnering with the Ministry of Agriculture in the DPRK on a three- year food security project. Given the success of conservation agriculture in other climatically-similar districts around the world, including Asia and Canada, this project aims to build longer-term food security at three cooperative farms and surrounding areas by increasing the scale of conservation agriculture practiced on each farm.

This is being done through the provision of technical support, training, specialized equipment and inputs. The program will benefit 12,287 residents on the three project farms. The total budget for the 3-year project is U.S.$1 million, with approximately 75% of the funding provided through CFGB and the remainder through individual donations to MCC. Click here   for a news release about the conservation agriculture project. In the interest of further engagement, MCC has also hosted delegations from the DPRK in both the U.S. and Canada, most recently an agricultural delegation to Canada in the fall of 2008. MCC also looks for ways to advocate DPRK engagement with Canadian and American governments. MCC seeks to share its resources in the name of Christ with those in need, placing emphasis on people-to-people relationships.

CanKor has more on NGOs here.

According to Bloomberg:

Japan tightened controls on sending money to North Korea and authorized the Coast Guard to search the communist regime’s ships in response to the deadly attack on a South Korean naval vessel.

The cap on undeclared cash transfers will be lowered to 3 million yen ($32,800) from 10 million yen, Chief Cabinet Secretary Hirofumi Hirano said today in Tokyo. Parliament passed a bill allowing the boarding of ships in international waters suspected of carrying North Korean nuclear or missile technology.

The toughened sanctions come a week after an international report concluded that a North Korean torpedo sank the 1,200-ton Cheonan in March, killing 46 sailors. Japan banned almost all trade with Kim Jong Il’s regime last year in response to a second nuclear weapon test and several missile launches.

“The cabinet has decided to take these new measures prompted by the unforgivable torpedo attack,” Hirano said. Japan also reduced the amount of money an individual can legally take into North Korea to 100,000 yen from 300,000 yen, he said.

Prime Minister Yukio Hatoyama will hold a two-day summit with South Korean President Lee Myung Bak and Chinese Premier Wen Jiabao starting tomorrow on South Korea’s Jeju Island. Japan and the U.S. are pushing Wen to acknowledge and condemn North Korea’s role in sinking the ship.

Koreans in Japan

Japan is home to about 589,000 Korean nationals, based on 2008 data, most of them the descendents of forced laborers brought back from the peninsula during Japan’s 1910-1945 occupation. South Koreans number almost 400,000 and North Koreans about 40,000, according to the Korean Residents Union, a pro-South group in Tokyo. Chosensoren, a Japan-based group that supports North Korea, doesn’t disclose its membership numbers.

North Korean residents in Japan have sent billions of yen in money and goods back home to relatives since the 1953 end of the Korean War, much of it derived from their operation of pachinko gambling parlors. Sanctions imposed last year and in 2006 have reduce the amount.

“Japan has imposed so many sanctions in the past that the new measures won’t have much impact,” said Pyon Jin Il, author of the “The Truth of Kim Jong Il” and chief editor of the Tokyo-based monthly Korea Report. “This is more symbolic, to show the world that Japan is doing something.”

In the 11 months through February, 55 million yen was wired or brought to North Korea from Japan, down from 280 million yen in the April to March 2006 fiscal year, according to Ministry of Finance data.

Trade between Japan and North Korea fell 97 percent to 793 million yen in 2008 — all in Japanese exports — from 21.4 billion yen in 2005. Last year’s sanctions added to a previous ban on exports of luxury goods imposed in 2006 following the communist nation’s first nuclear test.

Read full story here:
Japan Tightens Control on Sending Cash to North Korea
Bloomberg
Takashi Hirokawa and Sachiko Sakamaki
5/28/2010