North Korean Economy Watch

UPDATE 2: Well apparently the World Council of Churches is in bed with the North Korean Ministry of Foreign Affairs.  According to their most recent press release:

Nearly 140 leaders from the world’s churches, North and South Koreans among them, have called for the formation of an inter-Korean confederation even before complete reunification of Korea can take place. Agreement was reached at the close of a three-day meeting in Tsuen Wan, Hong Kong where the Christian leaders expressed unrelenting hope for peace and reconciliation among Koreans, despite the stark realities of the ongoing division of the Korean peninsula.

The call for a confederation came in a communiqué developed by the group at the end of their international consultation on Korean reunification. The “Tsuen Wan Communiqué” says the confederation option would involve progressive steps such as peaceful co-existence and the furthering of economic cooperation between the two Koreas.

The proposal for an inter-Korean confederation was presented to the group jointly by church leaders from North and South Korea on the final day of deliberations.

The “confederation system would respect both governments”, said the Rev. Kang Yong Sop, chairman of the Korea Christian Federation of North Korea, in a presentation to the group on Friday morning.

“North and South Korea must first recognize each other’s systems and engage in cooperation in any field possible, and institutionalize the results,” said Suh Bo Hyug, a member of the National Council of Churches in Korea’s reconciliation and reunification committee: “Only then will they move closer to reunification.”

The communiqué was the outcome of a consultation on peace, reconciliation and reunification of the Korean peninsula held 21 to 23 October 2009, sponsored by the World Council of Churches (WCC) and the Christian Conference of Asia (CCA).

Of course the confederation plan was raised by Kim Il sung years ago and the DPRK is still pushing that vision as an intermediary step towards reunification.

And if there was any doubt remaining:

They also called for all sanctions against North Korea imposed by the United Nations Security Council to be lifted, for immediate bilateral talks between the United States and North Korea, and for North and South Korea to implement fully the 15 June 2000 North-South Joint Declaration and the 4 October 2007 Declaration, both of which spelled out a number of goals and steps toward reunification.

UPDATE 1:  The WCC issued an interesting press release following their visit to the DPRK.  Here is an excerpt:

Visiting North Korea at the invitation of the Korean Christian Federation of North Korea, Kobia and the delegation visited three churches on Sunday 18 October.

In addition to visiting the Bong Soo Church the delegation also visited the Chilgol Church in the capital, Pyongyang, and a house church of 12 members in the town of Sunam which is near Pyongyang.

Continuing with the Corinthian example Kobia told the Bong Soo congregation that no church is more important than the other. “The body is whole when all the parts cooperate with each other,” he said. “Therefore in his letter to the churches in Corinth, Paul appeals to the community to recognize each other as being a very important part of the body.”

The Bong Soo Church was constructed in 1987 with funding from the North Korean government and the Presbyterian Church of Korea. The church is thoroughly modern with a full sound system, balcony and music text on a large screen in front of the church, a video camera system, a high-lofted ceiling and an area for a large choir.

Bibles and songbooks line the seating areas for the congregations. Within the church compound is a recently constructed theological seminary where 12 students are now enrolled to earn degrees in evangelism.

The Bong Soo worship service overflowed with music from the choir, soloists and several women’s groups, mostly singing traditional hymns. Asked if the abundance of music was especially for the WCC delegation, a congregation member said no, “this happens every week.”

The smaller congregation at the Chilgol Church, which the WCC delegation also visited, has been in existence since the late 1800s. The current building is relatively new, as the original building was destroyed in the Korean War by the U.S. bombing of Pyongyang.

A WCC delegation member asked the congregation about the noticeable absence of children in the churches. While acknowledging this is a challenge within North Korean society, they said the children are involved in a broad range of other activities and some will at a later age come to church. They said it was their job to teach their children at home about Christianity.

On Sunday afternoon the WCC delegation visited a house church of 12 members who meet in a home in the community of Sunam outside of Pyongyang. They said the house church movement within North Korea is growing.

The church meets on Sundays, sitting on the floor of the living room of a member’s home. One member brings an accordion to accompany the singing. The singing in the North Korean church tends to be extraordinarily rich and is a key part, along with prayer and teaching, of any worship service.

Read the full press release here.

ORIGINAL POST: According to the press release on their web page (written before departure):

The visit is at the invitation of and being organized by the Korean Christian Federation (KCF) of North Korea and will take place 17 to 20 October.

“We will be meeting with the churches, government officials and learning about the life and witness of churches in North Korea,” said Dr Mathews George Chunakara, director of the WCC Public Witness programme and the Commission of the Churches on International Affairs, who will be a member of the delegation travelling with Kobia. “We will be participating in the worship service at Bong Soo Church in Pyongyang, where the WCC general secretary will preach.”

The churches in North Korea are involved in social development and humanitarian aid assistance, and the members of WCC’s ecumenical fellowship have been supportive to the KCF for the past several years, said Chunakara.

The visit is taking place at a time when intense multilateral diplomatic efforts and negotiations are under way on issues related to denuclearization of North Korea and resumption of Six Party Talks, which were stalled for some time after North Korea withdrew from the talks.

Although North Korean leader Kim Jong-il is said to have made the announcement to Chinese Premier Wen Jiabao in Pyongyang last week during his three-day visit that North Korea would return to the Six Party Talks, it is also reported that Kim Jong-il said the return would be dependent on the progress of its planned bilateral talks with the US.

The WCC has been relating with the churches in North Korea for the past 25 years, with the first official visit having taken place in 1985. In the early 1980s the WCC Commission of the Churches on International Affairs initiated a process aimed at peace, reconciliation and reunification of the Korean peninsula and bringing church leaders from North and South Korea together.

This is the second visit of a WCC general secretary in ten years. In 1999, then general secretary Rev. Dr Konrad Raiser visited North Korea.

After the visit to North Korea, the delegation will travel to Hong Kong to participate in an international consultation on peace, reconciliation and reunification of the Korean peninsula, which will be held from 21 to 23 October.

The WCC general secretary will be accompanied by WCC staff members Mathews George Chunakara, Christina Papazoglou, Mark Beach and Peter Williams, as well as the general secretary of the Christian Conference of Asia, Dr Prawate Khid-arn.

Critics of the DPRK have long argued that the primary purpose of Korean Christian Federation is to attract aid from foreign religious organizations. This is probably true to some extent, but the organization has been around since the 1940s so it is likely that by this point its mission within the political system is more complicated than to function only as an aid magnet.

Here are a few older posts about the KCF.

According to Yonhap:

Inter-Korean trade grew for the first time in 13 months in September amid improving global economic conditions and eased cross-border tensions, customs data showed Monday.

According to data compiled by the Korea Customs Service, trade between South and North Korea amounted to US$173.17 million last month, up 2.6 percent from a year earlier when the global financial turbulence first began following the collapse of Lehman Brothers.

Also according to Yonhap however, the DPRK and RoK failed to agree on an aid-for-family reunions deal:

The two Koreas on Friday ended their day-long negotiations over further cross-border family reunions and other humanitarian issues without reaching any concrete agreement, with Pyongyang asking for resumption of aid by Seoul, officials said.

In the meeting arranged by Red Cross offices from both sides, South Korea proposed holding new rounds of reunions for families separated by the 1950-53 Korean War next month in both Seoul and Pyongyang, and again around February at the North’s Mount Kumgang resort.

But aid is not off the table.  According to the Korea Times today:

The government has been reviewing whether to subsidize non-government organizations through the inter-Korean cooperation fund in order to provide aid to North Korea, according to the Ministry of Unification, Monday.

“The government is mainly checking plans to offer health and medical care,” ministry spokesman Chun Hae-sung told reporters. “But details have yet to be determined.”

Chun reiterated that Seoul is sticking to its existing stance that it will provide North Korea with humanitarian assistance regardless of the political climate.

According to government sources, the subsidy would total less than 1 billion won (about $853,000).

The plan, however, is not related to North Korea’s request for humanitarian aid made during the inter-Korean Red Cross talks last Friday, the sources said.

Seoul has also been reviewing whether to provide the reclusive state with government-level support such as food and fertilizer aid, according to ministry officials.

The inter-Korean cooperation fund has served as a lifeline for cross-border business projects, including the Gaeseong Industrial Complex and the Mt. Geumgang tourism program, which has been suspended.

It is also a main source of South Korea’s economic aid to the impoverished North.

The cash pot was introduced in 1990 in order to boost personal exchanges, economic cooperation and trust-building between the two Koreas.

In August, the ministry approved a plan to subsidize 10 civic groups with approximately 3.6 billion won ($3 million) from the fund for relief activities involving North Korean babies, pregnant women and other social minorities.

The government originally planned to distribute the money starting from April but North Korea’s provocations postponed the plan.

As reported before, the South Korean government has spent just 5% of the funds it budgeted for inter-Korean projects this year.

At the same time North Korea is soliciting aid from South Korean and Western religious origanizations.  See here, here, and here in just the last few days.

From Koryo Tours:

Throughout 2009 we have been raising money for 2 humanitarian projects in the DPRK. We are aiming to complete one of these – a project to buy braille dictionaries which have been previously unavailable in the DPRK – by the end of October.

The total amount needed for for the dictionaries is EUR 2400 and the amount raised so far is EUR 505. We only have 2 more weeks to complete this project so your help is needed. More information about this project can be found here.

If you would like to make a donation to this worthwhile cause please do contact us for details of how to send us the money. Any amount really makes a difference! Surplus funds will be put towards our second project to buy playground equipment for an orphanage in Wonsan. If we can complete both these projects by the end of this year it will be fantastic.

Many thanks to all of you who have already donated money and we will be in touch with the results.

Nick, Simon and Hannah
Koryo Tours Ltd

BOONE, N.C., Oct. 9, 2009—Franklin Graham, president of Samaritan’s Purse and the Billy Graham Evangelistic Association, is preparing to make another historic visit to the DPRK (North Korea) to meet with high-level government officials and visit his ministries’ humanitarian assistance projects.

“I believe it is important to make visits like this to help improve better relations and to have better understanding with each other,” said Graham. “I’m going as a minister of Jesus Christ with a message of peace and that God loves each one of us regardless of our borders or politics.”

This is Graham’s third trip to the country rarely visited by Americans, but his family has a long history in the DPRK, going back to 1934 when his mother Ruth Bell Graham attended a mission school in Pyongyang. His father Billy Graham visited in 1992 and 1994, meeting with President Kim Il Sung. Last year Franklin Graham visited the DPRK to oversee several aid operations and to preach at a newly constructed Protestant church in Pyongyang.

Samaritan’s Purse has been working in the DPRK since 1997, primarily with medical and dental programs, providing more than $10 million in assist ance. Next week, Graham will be making a presentation totaling $190,000 in equipment and supplies for a new dental center being built in Pyongyang. He will also visit a provincial hospital in the countryside where a generator system installed by Samaritan’s Purse in conjunction with USAID is now providing electrical power where none previously existed. Graham also hopes his limited time in the DPRK will allow visits to other hospitals and dental facilities where Samaritan’s Purse has offered assistance during the past twelve years.

Samaritan’s Purse has also recently been involved in several major projects in DPRK. In response to devastating floods in 2007, the Christian relief organization chartered a 747 cargo jet to deliver $8.3 million in medicine and other emergency supplies (and more here). That was the first private flight directly from the United States to the DPRK since the Korean War.

Following Graham’s visit to DPRK he will travel to China where in 2008 Samaritan’s Purse sent a Boeing 747 cargo plane filled with urgently-needed supplies to Chengdu in response to a 7.9 magnitude earthquake that killed 40,000 people. One year after the disaster the N.C.-based organization also airlifted 70 tons of Operation Christmas Child shoe box gifts which were hand-delivered to hurting children in that region.

According to the Associated Press:

A U.N. development agency has resumed operations in North Korea after a more than two-year pause following allegations of fraud.

The North’s Korean Central News Agency said a ceremony Wednesday marked the return of U.N. Development Program to the country.

UNDP withdrew its operations in March 2007 following allegations that the agency had left itself open to exploitation by the communist regime for money laundering and other illicit purposes.

A U.N. audit cleared UNDP of wrongdoing in June last year, saying the agency knew of no improper financial dealings.

Yonhap news agency reported that UNDP decided to restart its North Korea projects after Pyongyang guaranteed independent auditing and administrative changes to ensure the transparent use of funds.

1. Previous UNDP posts here.

2. Previous DPRK aid posts here.

Read the full article here:
Scandal-hit UN program resumes aid in NKorea
Associated Press
9/30/2009

According to Yonhap:

The North’s corn crop for this year is estimated to be less than 1.5 million tons, considerably down from the 2.5 million to 3 million tons it usually garners, said Kim Soon-kwon, a leading corn biologist and head of the International Corn Foundation. The forecast yield portends a severe food shortage in the country where corn is believed to make up 40 percent of the total food supply.

“Of all the corn harvests I’ve seen while visiting North Korea over the past 12 years, this year’s crop was the worst,” Kim said over the telephone from China where he was staying after last week’s trip to the North.

During the Sept. 12-16 trip, he surveyed corn farms on the outskirts of Pyongyang and around Mount Myohyang and found a widespread shortage of fertilizer had slowed corn growth. Also, a drought in July — a critical period for the crop — followed by heavy downpours further damaged corn fields, he said.

“Corn needs fertilizer more than any other grain,” Kim explained. “The fact that the fertilizer had not been provided appropriately because of the limbo in inter-Korean relations is a major factor in the bad crop.” said Kim, who spent 17 years in Africa helping develop higher-yield corn seeds and spreading farming technologies.

Since 1999, the South Korean government has provided an average 300,000 tons of fertilizer worth 96 billion won (US$77 million) to the North every year to help ease the country’s chronic food shortages. But the aid was suspended after conservative President Lee Myung-bak took office last year, linking inter-Korean aid to progress in North Korea’s denuclearization.

North Korea’s own fertilizer output is estimated at less than 500,000 tons a year, about a third of the 1.5 million tons the country needs for its grain farming, according to Seoul’s Unification Ministry.

Aid activists from World Vision, who visited North Korea last month, said rice paddies were more yellow than green this year due to a fertilizer shortage, which will equate to low yields in the harvest season.

Seoul expects the North will fall more than one million tons short of the 5.48 million tons of food needed to feed its population of 24 million this year.

Read the full story here:
N. Korean corn crop to fall by 40 percent: agronomist
Yonhap
9/22/2009

According to the AFP:

North Korean officials quietly visited Los Angeles last week to talk about resuming food aid, which the impoverished state cut off five months ago during a standoff, participants have said.

The move comes as tensions gradually ease with North Korea, which stunned the world by conducting a nuclear test earlier this year but in recent weeks has made overtures for dialogue.

Five North Korean officials received special US permission to visit Los Angeles where they met representatives of non-governmental organizations that provide relief worldwide, according to the groups.

Richard Walden, president of Operation USA, said the charity picked up the North Koreans at the airport as a goodwill gesture and took them on a tour of its warehouse stocked with medicine and medical equipment to be sent overseas.

“They were very open, very nice and very cordial,” Walden told AFP. “They looked like they were from any other aid ministry in any country.”

…

he delegation, which also met with other relief groups, included four members of the Korea-US Private Exchange Society, the North Korean body charged with handling relief goods from US non-governmental organizations.

A fifth delegation member came from North Korea’s mission at the United Nations and received special permission to travel beyond the New York area, Walden said.

I also read the North Koreans made a pit stop in Los Vegas

Read the full story here:
AFP
NKoreans on quiet US trip on food aid
8/29/2009

According to Yohap:

South Korea authorized state funding for 10 North Korea aid organizations Monday, resuming humanitarian operations that had been frozen since the North conducted nuclear and rocket tests.

But the rare softening move toward Pyongyang drew mixed reactions among aid organizations in Seoul, as 3.57 billion won (US$2.92 million) worth of funding will go to less than a quarter of 47 applicants. Some called the selection “arbitrary” and vowed to boycott it.

“The government selected projects that are aimed at helping disadvantaged groups like toddlers and infants, mothers and the disabled on grounds that they contribute to the people’s livelihoods, their urgency and effects,” the Unification Ministry said in a statement.

The funding shrank considerably from last year, when the ministry spent more than 10 billion won for 40 aid groups. Spending cuts in other North Korea projects were also evident, as South Korea executed only 2.8 percent of its yearly budget for economic and humanitarian aid to North Korea during the first half of this year, or 42.42 billion won out of 1.5 trillion won. Seoul officials cite international sanctions over North Korea’s nuclear and missile activity and the protracted stalemate in inter-Korean relations as reasons for the hardening aid policy.

An umbrella group of 56 Seoul-based aid organizations, the Korea NGO Council for Cooperation with North Korea, called an emergency meeting and vowed not to accept the funding unless its selection criteria is fully explained. Secretive selection only fuels internal rifts and rivalry, it said.

“This decision will only drive our aid projects, which continued cooperatively for nearly 10 years, to division and competition. I wonder if this arbitrary selection is a way of taming non-governmental organizations,” Park Hyun-seok from Rose Club Korea, a Christian group focused on medical aid, said in an emergency meeting between aid groups. Rose Club lost its bid for funding.

But signs of a rift emerged among the aid organizations, as some cited the urgency of their stalled missions in the North. Kang Young-shik of the Korean Sharing Movement, which emerged as one of the major beneficiaries with 540 million won in funding, said his organization will accept the money, as the umbrella organization has no binding force over its members.

“It is for each organization to decide. And we believe this fund should be released if there isn’t more expected anytime soon,” Kang said.

In a unanimous call, the aid groups urged the government to lift a ban on humanitarian aid shipments and to stop monitoring trips to North Korea, actions put in place after the North’s nuclear test in May. The restrictions have prevented not only aid from state coffers, but also private donations, from reaching North Koreans.

Sue Kinsler, a Korean-American and head of the Lighthouse Foundation, which helps orphans and the disabled in the North, said the living conditions there have notably deteriorated, with bread factories running short of flour and children wearing the same clothes her organization sent last year.

“We also wanted to bring underwear and some clothes for the children, but we were told those items are not allowed,” Kinsler, who visited North Korea last week with 18 tons of flour, soybeans, sugar and vegetable oil, said. “I saw with my eyes they are experiencing serious food shortages in the midst of the international sanctions.”

Kim Nam-sik, director general of the ministry’s Inter-Korean Exchanges and Cooperation Bureau who attended the aid groups’ meeting, said the government will consider expanding humanitarian aid and cross-border visits, but its efforts are limited by larger international circumstances. While U.N. financial and other sanctions are in place to curb the communist state’s nuclear and missile activity, the government cannot go against the international trend, he said.

Here is a previous post on South Korean aid to the DPRK this year.

Trade between the Koreas has also floundered this year.

Read the full artilce here:
Selective gov’t funding for N. Korea aid groups causes division, discontent
Yonhap
Kim Hyun
8/3/2009

Fox News
George Russell
7/27/2009

Is North Korea’s dictatorial regime quietly profiting from U.N. emergency food supplies delivered to its starving people, even as the regime squeezes those deliveries down to a trickle?

Documents produced by the World Food Program, the U.N.’s flagship relief agency, outlining its current emergency operations in the insular communist state, raise a number of touchy questions about the financing and logistics of the effort, which was originally intended to feed some 6.2 million of North Korea’s most vulnerable people, but which is currently providing limited rations only to 1.33 million.

The $500 million program was meant to run from September, 1, 2008 to November 31, 2009, to deliver nearly 630,000 tons of food aid to North Korea at a time when it is suffering from severe flood damage and fertilizer shortages that have led to local food price increases.

Currently, WFP says that only $75.4 million worth of food aid has been delivered under the emergency program, as international donors have recoiled at the Kim Jong Il regime’s recent nuclear detonation and provocative missile launchings toward Japan and Hawaii.

WFP emergency relief program documents obtained by FOX News show that from the outset the food agency planned to pay extraordinarily high transportation costs for sending relief supplies to North Korea from around the world–about a dollar for every two dollar’s worth of food aid shipped into the country under the program.

Moreover, enormous sums were involved: $130,334,172 for “external transport” of 629,938 tons of grain and other food relief supplies for the overall program. (The food supplies themselves are projected to cost $297,396,729.)

For comparative purposes, the “external” shipping costs planned by WFP for the aid program average about $206.90 per metric ton of food aid .

Those rates were described as “absolutely ridiculous” by an expert on bulk shipping consulted by FOX News, even for sending goods by international shipping carriers to the remote region that includes North Korea. Another international grain expert consulted by FOX News described them as “way out of line” with past and present international shipping rates for bulk grain and other basic food commodities.

What WFP has not revealed in its documentation until questioned by FOX News, however, is that a substantial, but unspecified, amount of that money is intended to move the emergency aid from China to its final North Korean destination via shipping firms owned by the Kim Jong Il government.

Nowhere in the WFP program documents, which appeared on WFP’s public website only after Fox News began raising questions about them, is there any mention of the North Korean shipping involvement.

Even though WFP has not revealed how much of the $130-plus million in planned “external transport” money Kim Jong Il’s shipping firms are in line to receive, an analysis of the current costs involved in getting such supplies to their second-last destination reveal that the amount slated to pay for the last leg of the journey to North Korea could be huge.

A WFP spokesman blamed the overall high cost on “ the remote geographical location of [North Korea] from place of procurement (normally Black Seas, South Africa and South America).”

All WFP food aid, he added, was first shipped to the northern Chinese port of Dalian, before moving on to the North Korean port of Nampo.

But the spokesman then added that high costs were also due to “the lack of competition of transporters for transshipment” between Dalian and Nampo.

In fact, shipments to and from Dalian, China, one of the major centers of China’s huge export sector, are commonplace and hardly expensive by international standards. Data kept by the U.S. Department of Agriculture, for example, shows that grain shipments from Brazil to China between April and June of this year have varied from $32.50 to $42 per metric ton.

Moreover, those international shipping rates have been on a precipitous downward slide since June, 2008-three months before the WFP aid program began. Even allowing for higher rates from the Black Sea and South Africa, international shipping experts told FOX News that the rates would come nowhere near $206 per ton-especially as there is currently a surplus of international shipping capacity.

The same, however, apparently can’t be said of transport between Dalian and Nampo-a distance of 210 nautical miles.

There, the WFP spokesman said, WFP relies entirely on “feeder vessels belonging to the [North Korean] government.”

Asked late last week by FOX News to provide specifics of the rates charged by North Korean vessels for carrying international food aid home, the WFP spokesman did not provide an answer before this article was published.

However much the Kim Jong Il regime charges for bringing food to its people, it is not the only money that WFP provides to Kim for humanitarian assistance.

The WFP documents show that the government was to receive an additional projected $5,039,504 as a transport fuel subsidy if the relief program gets back into full swing. The “fuel reimbursement levy” amounts to $8 per ton of aid delivered, and according to the WFP spokesman, is normally not provided to countries that receive food aid-they are expected to chip in for this cost on their own–except under a waiver that North Korea has been granted.

So far, the Kim regime’s National Coordinating Committee, a subsidiary of the Ministry of Foreign Affairs, has received $1.16 million under this waiver since September 2008, with the promise of an additional $361,400 to come. The WFP spokesman emphasized that the money was not paid in hard currency.

The same apparently applies to $4,409,566 intended by WFP to enhance a “capacity building strategy of government counterparts” envisaged in the relief plan. According to the WFP spokesman, this means management training and information systems upgrades for the Kim government to handle the new food aid. WFP is also paying for warehouses and equipment to handle the aid. So far, the regime has only $103,200 of the projected total, with another $155,000 committed.

Amid all the fuzzy math of the WFP relief program, there is a final quirk: the inexplicably high transportation costs work to the benefit not only of the Kim regime, but also to the benefit of WFP.

As a matter of standard practice, WFP charges a standard 7% management fee against “direct operational costs” of such relief efforts to support its worldwide operations, over and above the costs it incurs in the specific relief exercise. These, in WFP-speak, are known as the organization’s “indirect support costs.”

Based on direct operational costs in North Korea of $445,033,971-including the $133.3 million in “external transport” costs– WFP expected to reap $32,948,811 as its 7% share of “indirect support costs.”

Its 7% “indirect support” levy on the extraordinary $130.3 million transport bill would amount to about $9.1 million.

From YouTube:

(Click on image to see video)

According to the video description:

This was PyongSu’s introduction to donor organisations and individuals that have been purchasing pharmaceuticals abroad and shipped them to North Korea. PyongSu’s promotional presentation explained to them why they should place their orders with PyongSu rather than with pharmaceutical companies abroad.

As PyongSu had no budget to mandate a professional advertising company with the task its managing director Felix Abt made the concept, the script and produced it in-house towards the end of 2005, with the help of North Korean IT and designing students and their Canadian trainer Ian Lee as well as teacher Michael P. Spavor, then giving language courses in Pyongyang, who was the “voice” in this clip. Thus, this unique advertising clip was made in its entirety in Pyongyang (and by people who are not advertising professionals). Check it out and add your comment!

Longer videos on investments in the DPRK can be found here.