North Korean Economy Watch

Yonhap
8/31/2007

North Korea’s foreign minister Friday met with a U.S. delegation bringing emergency medical supplies to help North Korean victims of recent floods, the North’s official news outlet said.

The reclusive country has appealed to the international community for assistance to cope with massive flooding caused by heavy downpours that left at least 600 people dead or missing and about 100,000 people homeless in early August. The United Nations is seeking US$14 million to provide North Korea with food, medicine, drinking water and other emergency goods.

“Foreign Minister Pak Ui-chun met with guests from the United States who visited with emergency medical aid equipment donated by the U.S. administration and the non-governmental organization Samaritan’s Purse with regard to flood damage at the Mansudae Assembly hall,” said the one-sentence report carried by the Korean Central News Agency. It did not identify the U.S. guests.

Washington has so far pledged US$100,000 for the U.N. initiative, equally distributing the funds to two non-governmental relief organizations, Mercy Corps and Samaritan’s Purse, to deliver emergency aid to North Korea.

The heaviest rain in 40 years swept North Korea, which is poorly equipped to cope amid wide-spread deforestation. The severe damage caused the second inter-Korean summit to be postponed from late August to early October.

Choson Ilbo (Hat Tip DPRK Studies)
8/30/2007

Three South Korean terrestrial TV stations agreed in July to pay tens of millions to North Korea annually for footage from North Korea’s state-run Korean Central Broadcasting Station. An SBS executive said South Korean TV stations have used TV pictures aired by KCBS for free, but in July, the Korean Foundation for South-North Economic and Cultural Cooperation, as a proxy of the North Korean TV station, concluded negotiations with three TV stations whereby SBS will pay about W20 million every year to KCBS through the foundation. MBC will pay slightly more than that, and KBS will pay about W30 million.

The foundation, chaired by United New Democratic Party member Im Jong-seok, was established in 2004. It held talks with the three terrestrial networks for a year and a half. In the talks, the three argued it was unreasonable for South Korean TV stations to pay for North Korean footage in programs that aim at promoting mutual understanding, and they generally rejected the idea of unilaterally paying North Korea when the North does not pay South Korean broadcasters for footage.

Yonhap
8/29/2007

The labor union of Hyundai Motor Co. decided to provide aid to North Korea to help a South Korean humanitarian group expand a corn-noodle plant in North Korea, union officials said Wednesday, despite the union’s steps to stage a possible strike next week.

The workers at Hyundai, South Korea’s largest automaker, are scheduled to vote Thursday on whether to launch a walkout over higher wages and better working conditions, almost an annual ritual for the 44,000-strong union.

In a statement, the union said it will provide the aid worth 500 million won (US$530,786), including noodle-processing machines, a minibus, a truck and a power generator, to the corn-noodle plant in the North Korean capital of Pyongyang.

The aid will be provided via the Seoul-based humanitarian group Movement for One Korea, an official at Hyundai’s union said by telephone from Ulsan, a port city on the nation’s southeast coast where Hyundai’s main plant is located.

“We decided to provide the aid to help North Korea recover from its food shortage and to implement the union’s corporate social responsibility,” said the official, refusing to give his name.

The timing and other details have yet to be decided, he said.

It is the first time that a union of a private company has decided to give aid to North Korea.

The North has had to rely on international humanitarian aid for the past decade, due to floods, drought and economic mismanagement.

Earlier in the day, conservative newspapers questioned the Hyundai union’s rationale, criticizing it for deciding to give aid to the North as the strike looms.

“It’s an inappropriate time for Hyundai Motor’s union to do this as public criticism is mounting over its 13th consecutive annual strike,” Bae Son-geun, a professor at Korea University, was quoted as saying by the daily Dong-a Ilbo.

Hyundai and its union have had 10 sessions of formal negotiations. The union is demanding an 8.9 percent increase in monthly basic salary, after rejecting the company’s offer of a 5.4 percent rise.

The strike vote will be held on Friday and the outcome is to be announced later in the day or early Saturday, union officials said.

So far this year, Hyundai workers staged a 13-day partial strike over a bonus dispute and a proposed free trade agreement with the United States which they argued could hurt the livelihoods of farmers and factory workers.

Hyundai’s union has held walkouts every year except 1994 since its foundation in 1987. In the past 20 years, the union has gone on strike for 313 days, costing the company 8.94 trillion won (US$9.53 billion) in total lost sales, according to the automaker.

For several months I have been meaning to post a review of Stephen Haggard and Marcus Noland’s book, Famine in North Korea, but for thousands of reasons it was always pushed back.

Stephen Haggard and Marcus Noland wrote the definitive book on the DPRK’s Arduous March, and it is required reading for any serious North Korea watcher.

Now…Joshua at One Free Korea has written the definitive review of the book, so I will just put links to his posts: Part One, Part Two, Part Three.

Yonhap
8/26/2007

South Korea will likely lose 2.2 trillion won (US$ 2 billion) in its food loan to North Korea, because the price was set by international market standards, an opposition lawmaker said Sunday.

Since 2002, South Korea has loaned 2.1 million tons of rice worth 2.86 trillion won to North Korea to help alleviate chronic food shortages in the impoverished communist country.

The loan was offered at international prices at the time of the shipments, although 2.1 million tons of the shipment were homegrown products, whose domestic price is four times higher than international prices, said Rep. Hong Moon-pyo of the Grand National Party.

Citing data from unification and agriculture ministries, Hong said the total monetary value of the South Korean food loaned to North Korea during the period comes to 2.86 trillion won.

North Korea is required to pay back the loan at international market prices, which currently stand at US$380 on the average, the lawmaker said.

“According to the terms of the contract, South Korea will not be able to recover about 2.2 trillion won, so the difference should be offset by taxpayers’ money,” Hong said, adding that the government should unveil the exact amount of the loan and its conditions.

Korea Herald
Ahn Hyo Lim
8/24/2007

An international vaccine agency and North Korea have agreed to launch a joint project to fight diseases common among children in developing countries.

The International Vaccine Institute, based in Seoul, said yesterday that they will cooperate to conduct pilot vaccinations against Japanese encephalitis and haemophilus influenzae type b, which causes meningitis, on some 3,000 North Korean children by early next year.

Their project will also involve the establishment of a reference diagnostic laboratory in the communist country.

“Creation of a reference laboratory for diagnosis of Hib and Japanese encephalitis should not only help improve clinical management of children with these infections, but should also assist DPRK health authorities to better estimate the burden of these diseases in the DPRK,” said Dr. John Clemens, IVI director general.

Officials of the global vaccine R&D organization will visit Beijing later in the month to meet with North Korean health officials and discuss details of how they will cooperate, including the provision of vaccines and equipment, and the opening of the lab.

Haemophilus influenzae type b is the leading cause of bacterial meningitis among infants and children worldwide, killing an estimated 386,000 children every year.

Japanese encephalitis, primarily infects children in endemic areas across Asia, leaving approximately 60 percent of those who develop clinical illness either dead or neurologically disabled.

The IVI is an international organization devoted exclusively to developing and introducing new and improved vaccines to protect the world’s poorest people, especially children in developing countries.

It was established in 1997 as an initiative of the United Nations Development Program.

Yonhap
Sohn Suk-joo
8/23/2007

South Korea made Thursday the first delivery of 7.1 billion won ($7.5 million) worth of emergency aid to North Korea to help the communist country recover from flood damage, officials said.

About 40 truckloads of instant noodles, blankets, emergency kits and mineral water were delivered to the border town of Kaesong via a reconnected road in the western section of the Korean Peninsula. The aid shipment will be completed by the end of this month.

On Tuesday, Pyongyang requested more help from the South, and the Seoul government is considering what to offer in response to the North’s plea for construction materials and heavy equipment, they said.

Devastating floods are believed to have destroyed a revised 14 percent of the North’s farmland, South Korean officials said. South Korea, other countries and international agencies are extending a helping hand to the North.

The number of dead and missing is estimated at more than 300, with the homeless numbering about 300,000. An estimated 46,580 homes of 88,400 families were destroyed or damaged, according to the North’s media.

“The total damage would be 10 times more than that of last summer in terms of money,” Cho Yong-nam, chief of North Korea’s flood damage control committee, said in an interview with the Choson Sinbo, a Japan-based pro-North Korean newspaper which usually reflects the views of the communist country.

The severe flood damage caused the two Koreas to postpone their second summit, originally scheduled for late this month, until early October. Their leaders are to meet Oct. 2-4 in Pyongyang.

According to North Korean officials, the expressway linking Pyongyang and Kaesong has been damaged by the heavy flooding, interfering with transportation. Roh plans to travel to Pyongyang via the overland route, and South Korean officials expressed hope that the expressway will be repaired before the summit takes place.

Yonhap
Sohn suk-joo
8/22/2007

North Korea’s most powerful organization is leading efforts to clean up damage from heavy floods and restore the country’s infrastructure, the North’s state media reported Wednesday.

The National Defense Commission (NDC), the highest decision-making body under the communist country’s constitution that was revised in 1997 to reflect its “songun” or military first policy, supervises relief operations involving military forces and equipment.

“We’ve achieved recovery and restoration by appealing to party, government and labor officials to go out to damaged areas under the guidance of the National Defense Commission,” Kim Kyong-san, a senior official of the Pyongyang Railway bureau, said in an interview with Radio Pyongyang.

According to North Korea watchers, North Korea’s cabinet has usually spearheaded flood relief efforts in the communist country in the past. The NDC’s involvement signifies the extent of the damage and is also meant to speed up restoration ahead of the summit between President Roh Moo-hyun and North Korean leader Kim Jong-il, who leads the commission, they said.

Meanwhile, North Korea is in the final stages of restoring the railway line in Pyongyang.

“The Pyongyang railway line is fundamental in connecting the country to the east and west. All workers have labored hard and are urged to do more at the final stage,” Kim Kyong-san said.

Devastating floods are believed to have destroyed a revised 14 percent of the North’s farmland, South Korean officials said. South Korea, other countries and international agencies are extending a helping hand to the North.

The number of dead and missing is estimated at more than 300, with the homeless numbering about 300,000. An estimated 46,580 homes of 88,400 families were destroyed or damaged, according to the North’s media.

This year, South Korea is providing 400,000 tons of rice to the North, while it plans to send 7.1 billion won (US$7.5 million) worth of relief goods to North Korea.

On Tuesday, Pyongyang requested more help from the South, and South Korea is considering what to offer in response to the North’s plea for construction materials and heavy equipment.

The severe flood damage caused the two Koreas to postpone their second-ever summit, originally scheduled to be held late this month, until early October. Their leaders are to meet Oct. 2-4 in Pyongyang.

According to North Korean officials, the expressway linking Pyongyang and Kaesong has been damaged by heavy flooding, interfering with transportation. Roh plans to travel to Pyongyang via the overland route, and South Korean officials expressed hope that the expressway will be restored before the summit takes place.

Reuters
Patrick Worsnip
8/20/2007

The U.N. ethics office found evidence that the United Nations Development Program retaliated against an employee who tried to expose its alleged wrongdoing in North Korea, a letter leaked on Monday said.

The letter sent on Friday by the office to UNDP chief Kemal Dervis is likely to lend fresh ammunition to the United States in a long-running dispute with UNDP over its North Korean operations, centering on claims of financial irregularities.

The agency has denied that it fired Artjon Shkurtaj, a native of Albania with Italian citizenship who was head of UNDP’s operations in North Korea from 2005-2006, because of his criticisms. It says his contract was not renewed.

The case came before the Ethics Office because Shkurtaj applied for U.N. whistleblower status under a two-year-old directive. But the office cannot launch a formal investigation without UNDP’s agreement because, as an agency with its own executive board, UNDP does not come under its jurisdiction.

In his letter, Ethics Office director Robert Benson told Dervis that the evidence it found would have supported a case against the UNDP if jurisdiction had applied.

UNDP has decided against waiving its right not to be investigated by the Ethics Office, but Benson urged the agency to do so, saying: “I believe this would be in the best interests of the United Nations and UNDP.”

His confidential letter first appeared on the Web site of Inner City Press, an independent blog on U.N. affairs.

The United States accuses UNDP of sloppy accounting, handing over cash to North Korean bodies without proper documentation and hiring staff hand-picked by the communist Pyongyang government.

OUTSIDE REVIEW

A U.N. audit published on June 1 said rule breaches had occurred but did not find systematic diversion of U.N. funding. UNDP quit North Korea in March after Pyongyang refused to accept changes ordered by its board of directors.

UNDP and U.S. officials have been unable to agree how much money Pyongyang, whose nuclear program has for years been the subject of international concern, received from UNDP.

Some of Washington’s information came from Shkurtaj, who has said publicly that UNDP violated “multiple rules and regulations” and engaged in “criminal conduct” in North Korea.

UNDP spokesman David Morrison told a news conference last month that Shkurtaj had been invited to submit evidence to back up his allegations but had so far not done so.

He admitted that UNDP barred Shkurtaj from entering the U.N. compound in New York after his contract expired in March, even though his U.N. pass was still valid.

Instead of agreeing to be investigated by the Ethics Office, UNDP has opted for an outside review — yet to be set up — that would look simultaneously at Shkurtaj’s allegations and other aspects of UNDP’s North Korea operations.

“UNDP believes that having multiple processes reviewing related or identical issues would not be the most effective way to achieve closure of this matter,” agency spokeswoman Christina LoNigro said.

U.N. spokeswoman Michele Montas said Secretary-General Ban Ki-moon was “very much concerned about this whole issue,” including the fact that Ethics Office jurisdiction did not cover UNDP, which has no such office of its own.

“There is no doubt that the Secretary-General is going to discuss ways of filling” the gap, she told a news briefing.

AFP
8/17/2007

The United States is providing 100,000 dollars in humanitarian aid to flood-stricken North Korea, the State Department said Friday.

The US Agency for International Development (USAID) would provide 50,000 dollars each to two US non governmental organizations operating in North Korea — Mercy Corps and Samaritan’s Purse, department spokesman Sean McCormack said.

“The intention is that the money would be used to provide blankets, shelter materials, water containers and other supplies to those in need,” he told reporters.

Almost 300 people were dead or missing in the North Korean floods, according to an aid agency quoting official figures in the nuclear-armed hardline communist nation.

Official media in the reclusive state has painted a grim picture of inundated crops and homes, flooded factories and mines and washed-out roads.

UN agencies said on Friday that half of North Korea’s main health centres have been submerged by floods and warned that the situation in the country could deteriorate unless aid arrives rapidly.

The United States, together with China, Russia, Japan and South Korea, have promised to provide the North Koreans aid and security and diplomatic guarantees if it scraps its nuclear weapons program.

But any flood relief provided by the United States would not be linked to a planned gradual shipment of one million tonnes of fuel or its equivalent to North Korea if it completely dismantles its nuclear weapons program, McCormack had said.

North Korea has already got 50,000 tonnes of fuel aid for closure of its key nuclear reactor under the six-party nuclear talks.