North Korean Economy Watch

According ot the DailyNK:

The North Korean authorities are conducting an extensive investigation into the actions of soldiers attached to border guard units, based on the presumption that such guards are frequently guilty of aiding and abetting defection. Those found to have done so are being arrested and severely punished.

A source from Yangkang Province explained the news yesterday, “For the third time they are conducting an investigation along the border in Kim Jong Eun’s name, but this time it is focused on the soldiers.”

“The decree says to arrest and severely punish soldiers who have aided and abetted in defection, to pull out the roots; so the investigation has been harsh from the very beginning.”

The two previous investigations into defection from the border region, both said to have been launched in the name of the successor, happened in February and April this year, as reported by The Daily NK. However, this is the first time that attention has turned away from defectors themselves and towards those soldiers who help facilitate a lot of the escapes.

“There are two members of an investigation team from Defense Security Command going to every guard post, and they are questioning the soldiers one by one,” the source said.

It is well known both within and without North Korea that border guards are commonly bribed to turn a blind eye to defection. Through very serious questioning and the threat of severe punishment, the authorities are presumably hoping to kill two birds with one stone; both hindering further defections and re-instilling military discipline.

However, the new investigation has already inspired at least two guards from one post to desert instead of face censure, according to the source.

“Two men from a guard post in the Hyesin-dong area of Hyesan took their weapons and deserted, so now they are in the middle of a house-to-house investigation,” the source explained, adding, however, “People are saying, ‘They’ve already fled to China, why the hell would they still be in the country?’”

Although nobody knows why the two men chose to desert, the source said he had heard that they were indeed involved in defections, and feared punishment.

Across the Tumen River in Changbai, China, meanwhile, there is also an unusually intense investigation going on, according to sources there. It is suspected that the two events are related.

A source explained, “Public security officers and soldiers are stopping and investigating cars one by one. I heard that soldiers from North Korea deserted with their guns, so maybe it is because of that.”

Of course, the investigation is hurting small traders, too.

“Big-time smugglers are not having problems,” the Yangkang Province source explained. “But day-to-day small scale smugglers are complaining about the investigation. Border guards are telling them to put up with it just a little more.”

Read the full story here:
Border Investigators Turned on Soldiers
Daily NK
Lee Seok-young
2011-6-3

Andrei Lankov recently wrote a paper on the rise of China and the implications for Korean unification for a Korean-language publication.

You can download a PDF of the paper in English here.

Abstract
The rise of China can be seen as the single most important strategic problem which Korea faces currently. In the late 1970s, China entered a phase of high-speed economic growth, which still seems to be almost unstoppable. According to World Bank estimates, the average annual increase in China’s GDP in the years 2000-2009 was 9.7%. This is the world’s highest growth rate. Perhaps for the first time in modern history, the country which has the highest growth rate is the country with the largest population.

The future of Korea depends on its ability to find how to handle the Chinese challenge. It is going to be difficult, but there are hopeful signs, too: Chinese political elite may be remarkably realist, even Machiavellian, in their outlook but also rational and averse to adventurism. This gives Korea some hope that compromises with China will be possible. Without such compromises no unification of Korea will be possible in a new world where China is bound to be a major player.

According to the Choson Ilbo:

North Korean Embassy officials in India are being investigated for involvement in a luxury car smuggling case worth W100 billion (US$1=W1,091).

Senior officials of the North Korean and Vietnamese embassies are suspected of smuggling luxury sedans and motorcycles, evading customs duties estimated at 5 billion rupees (approximately W120 billion) over the past years, the Indian Express reported Monday.

According to India’s Directorate of Revenue Intelligence, Sumit Walia, alias Sunny (32) imported stolen or second-hand foreign cars using the embassy officials as frontmen to evade customs duties and sold them as brand-new.

In India, second-hand foreign cars are subject to tariffs of 160 percent and new cars to 109 percent. But diplomats are exempt.

Walia bought stolen cars chiefly from the U.K, and forged their registration documents to disguise them as new cars. He imported them in the name of the diplomats and allegedly sold them to businessmen, politicians, and celebrities.

Indian authorities have confiscated 41 cars. Most of them are top brand cars such as BMW, Ferrari, Lexus, and Porsche.

The DRI estimated the amount of customs duties Walia and his gang have evaded at 5 billion rupees. The agency has asked the Indian Foreign Ministry for cooperation with the investigation to find out what role the North Korean and Vietnamese embassy officials played.

The more things change, the more they stay the same.  As regular readers are aware, North Korean embassies self-finance their operations through business opportunities in their host countries.  Sometimes these are legitimate business ventures…sometimes not.  Plenty of similar stories are archived on this web page.

Read the full story here:
N.Korean Diplomats in India Investigated for Car Smuggling
Choson Ilbo
2011-5-17

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

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

…

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

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

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

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

Marcus Noland has an interesting post on the plethora of obstacles the DPRK must navigate before it can take advantage of the full range of trade and development programs across the globe.

Read his post here.

According to Yonhap:

North Korea has not filed a single international patent application with the global patent governing body since last September, a media report said.

The U.S.-based Radio Free Asia (RFA), citing an official at the World Intellectual Property Organization (WIPO), reported on April 28 that North Korea has applied for 22 international patents since 1993 but new applications have dried up since September 2010.

North Korea’s previous patent filings included those on finger print-recognition technology and fuel-efficient engines and others. The country joined the United Nations patent body in 1974.

South Korea, meanwhile, has applied for 2,800 patents with WIPO in September last year, averaging about 700 per month.

Ham Yoon-seok, a Korean patent attorney working in the United States, said that North Korean law does not properly recognize the intellectual property rights of inventions and patents, attributing the notion to the weak patent applications.

Read the full story here:
N. Korea’s Int’l Patent Applications Dry up Since Late 2010: WIPO
Yonhap
2011-5-5

According to Yonhap:

The number of North Koreans officially visiting China reached 28,600 in the first three months of the year, up 35 percent from the same period last year, a news report said Wednesday.

More than half of them visited China to work in either factories or restaurants, while 6,000 people visited China for conferences or businesses, the Voice of America reported, citing Chinese government data.

The VOA also said 700 North Koreans toured China for sightseeing, while fewer than 100 North Koreans visited China to meet relatives or friends and 7,300 visitors had other purposes. The report did not elaborate.

The data did not include information on North Koreans staying illegally in China after defecting, the VOA said.

Tens of thousands of North Korean defectors are believed to be hiding in China, a major land route through which many North Korean defectors travel to Thailand and other Southeast Asian countries before resettling in South Korea.

According ot the Choson Ilbo:

Chinese tourists will start visiting Russian and North Korean cities without visas on Wednesday under a formal agreement between Beijing and the two countries. The tour course starts in the Chinese border city of Hunchun in the lower reaches of the Duman (Tumen) River and goes on to eastern Russia and the Rajin-Sonbong special economic zone in North Korea.

A group of 21 tourists left Changchun, the capital of northeast China’s Jilin Province, on Tuesday for the Hunchun. Travelers will then visit Slavyanka, Vladivostok and Khasan, the official Xinhua news agency said. They then go to North Korea by train and tour the cities of the Duman River and the Rajin-Sonbong area.

The four-day tour starts every Wednesday and costs 2,300 yuan (approximately W390,000). Only Chinese travelers are eligible for the visa-free arrangement.

Read the full stories below:
Number of N. Korean visitors to China rises in first quarter
Yonhap
4/27/2011

Chinese Tourists Visit Russia, N.Korea Visa-Free
Choson Ilbo
4/28/2011

Accordign to the Choson Ilbo:

Clams and other seafood from North Korea are openly being sold in the South despite a ban on all trade with the North after the sinking of the Navy corvette Cheonan last year. Insiders say that is because customers prize North Korean fisheries products.

Some 30 vendors in the Garak Market and 20 in the Noryangjin Fisheries Wholesale Market sell shellfish from North Korea, including large clams and scallops. “We have openly labeled shellfish that come from North Korea because customers think they taste better,” a vendor said. “They’re between W1,000 to W3,000 cheaper than domestic ones but the quality is good” (US$1=W1,081).

North Korean shellfish have been brought into the South labeled as Chinese since the end of March. “Before the sinking of the Cheonan, North Korean shellfish was directly imported” labeled as North Korean, an official at the Seoul Agricultural and Marine Products Corporation said. “But since the ban on North Korean imports they’ve been imported through Chinese traders.”

According to the National Fisheries Research and Development Institute, demand for fish and shellfish from North Korea is rising in the South because customers shun Japanese seafood products due to concerns over radioactive contamination, while there are suspicions over the quality of Chinese products.

You can read the Choson Ilbo piece here:
N.Korean Shellfish Sold Openly Despite Ban
Choson Ilbo
4/25/2011

UPDATE 2 (2015-9-9): The Justice Department has suspended Steve Park, importer of North Korean beer. According to UPI:

Steve Park, also known as Park Il-woo, is a veteran businessman and president of Korea Pyongyang Trading U.S.A. Radio Free Asia reported in 2011 Park received permission from the U.S. government to import North Korea’s Taedonggang Beer, but Park’s failure to file tax returns starting in 2008 was one of the reasons his agent status was recently terminated.

The Foreign Agents Registration Act, which was passed in 1938, requires agents like Park to disclose information about their relationship with a foreign government.

…

Park, who was registered under FARA in December 2011, has been involved in other North Korea promotion projects in the United States. Park has been connected to tourism projects in North Korea’s Mount Kumgang region and investment proposals in the reclusive country.

Park was found in violation of FARA for not regularly reporting his income. Under the law, all foreign agents must report revenue and expenditures to the Treasury every six months, according to RFA.

In 2012, Park’s Korea Pyongyang Trading U.S.A. was shut down in New York State after receiving an order of dissolution.

UPDATE 1 (2011-4-22): Apparently extended/new sanctions announced by the Obama administration this week will not affect the import of Taedonggang Beer by Mr. Park.  According to KBS:

Following the latest sanction passed by the Obama administration, the United States importation of the North Korean beer brand Taedonggang was in doubt.

But a U.S. State Department official said that individuals or companies who gained import permits for North Korean goods before the order passed can continue with importation.

The official added that the new directive does not affect any North Korean imports that have been approved by the United States government.

U.S.-based firm Korea Pyongyang Trading U.S. has been given the green light to import 400-thousand bottles of Taedonggang beer this June.

ORIGINAL POST (2011-3-6): According to the Korea Times:

The VOA also confirmed that the U.S. government last year authorized the import of a North Korean beer, called “Daedonggang”.

“I received the final authorization on Sept. 30,” said Steve Park, a U.S-based importer. The first 2,000-2,500 cases of beer will be on sale this summer.

Steve Park first gained notoriety trying to import North Korean soju to the US. He was also prosecuted for being an unregistered foreign agent. You can read about these stories here.

But I wish him all the best in this endeavor.  Taedonggang beer tastes pretty good. It is a British lager after all.

Read the original story here:
N. Korean delegation to visit NY
Korea Times
Kim Se-jeong
3/4/2011

UPDATE 6 (2011-4-20): The DPRK is experiencing a new wave of foot and mouth outbreaks.  According to Yonhap:

A new outbreak of foot-and-mouth disease (FMD) occurred in four counties in North Korea last month and infected nearly 300 pigs and cows, a news report said Wednesday.

A total of 141 out of 298 animals died after being infected with the disease, the Voice of America said, citing a North Korean report submitted to the World Organization for Animal Health (OIE) on Monday. The news report said Pyongyang quarantined the infected areas in an apparent attempt to stem the spread of the disease.

The North confirmed its first case of the disease in December, and the virus has since spread to six other cities and provinces, Seoul’s Agriculture Minister Yoo Jeong-bok said in February.

Last month, the World Organization for Animal Health said North Korea urgently needed around US$1 million worth of equipment and vaccines to help stem outbreaks of the deadly disease.

The disease does not pose a direct health threat to humans, but affects cows, sheep, goats and other cloven-hoofed animals, causing blisters on the nose, mouth, hooves and teats.

North Korea has 577,000 heads of cattle, 2.2 million pigs and 3.5 million goats, according to the OIE.

The OIE data mentioned in the above Yonhap story can be found here.

The OIE provides the map below as well as details about the outbreaks:

Three of the four cases take place in North Hwanghae:

Sinphyong county, Myongri district (2011-3-21)

Sangwon county, Rodong-ri (2011-3-16)

Hwangju county, Ryongchon-ri (2011-4-4)

The final case is in Singyo-ri, Kumgang County, Kangwon Province. It reportedly took place on 2011-4-6.

The data is also available here.

UPDATE 5 (2011-3-24): UN FAO Press Release:

North Korea: FAO says urgent vaccine and equipment needed to contain Foot-and-Mouth Disease

Capacity of national veterinary services to manage animal disease must also be strengthened

24 March 2010, Rome/Paris – Around a million dollars of equipment and vaccines are urgently required to help stem outbreaks of deadly Foot-and-Mouth disease (FMD) in North Korea, followed by a more prolonged and concerted effort to modernize veterinary services in the country.

A joint FAO and World Organization for Animal Health (OIE) mission travelled to North Korea at the government’s request between 27 February and 8 March. The mission found that the country’s capacity and that of veterinary services to detect and contain FMD outbreaks need significant strengthening — in particular as regards implementing best-practices in biosecurity measures and improving laboratory infrastructure and capacity.

Outbreaks of Type-O FMD have been reported in diverse locations in eight of North Korea’s 13 provinces. To bring the situation under control, the team recommended the following steps:

• Thorough surveillance to locate and map disease clusters
• Protecting unaffected farms through movement controls and biosecurity measures
• Adequate sampling in order to correctly identify the virus strain or strains involved
• Improving biosecurity measures to prevent further spread of the disease
• The strategic use of the appropriate vaccines to contain and isolate disease clusters

FAO estimates around $1 million is required immediately for training, supplies and infrastructure, vaccine acquisition and the setting up of monitoring, reporting and response systems.

The FAO-OIE mission visited several collective farms as well as the national veterinary laboratory and various animal health field stations.

Virus identification

FAO and OIE provided guidance to North Korean veterinary authorities on taking and handling of FMD samples — new samples will be collected by North Korea and sent to an international reference laboratory for testing.

Only by accurately typing the virus or viruses involved in the outbreaks will it be possible to identify the most effective vaccine to use against it.

Food security bulwark

FMD does not pose a direct health threat to humans, but affected animals become too weak to be used to plough the soil or reap harvests, suffer significant weight loss, and produce less milk. Many animals are dying from the disease.

Farm animals are crucial to food security in North Korea. Cows and oxen are primarily used for dairy production and are a key source of draft power in agricultural production. Goats and pigs, also susceptible to FMD, are important source of dairy products and meat.

Current North Korea’s livestock population consists of 577,000 head of cattle, 2.2 million pigs and 3.5 million goats.

FMD affects cattle, buffaloes, sheep, goats, swine and other cloven-hoofed animals. It is highly contagious and spreads through mucus, saliva or body fluids that can contaminate materials such as clothing, crates, truck beds, and hay and be transmitted to other animals.

UPDATE 4 (2011-3-22): Pork prices rising with FMD meat on sale.  According to the Daily NK:

With North Korea seemingly unable to bring an outbreak of foot-and-mouth disease centered on the Pyongyang region under control, inside sources have revealed that the price of good pork in the markets is skyrocketing as a result of diminishing supplies, while infected meat is being sold on the quiet for lower prices.

Speaking with The Daily NK on the 22nd, a source from North Pyongan Province explained, “Pork is right now selling for 6,000 won per kilo in the market. The price, which was 2,600 won in the market last December, is climbing all the time, and now is at the point where the average person has no chance of being able to buy it.”

According to sources, the situation is similar in Nampo, where pork was selling for 3,500 won in December, but had reached 6,500 won by February. In Sariwon in North Hwanghae Province, the price had hit 5,000 won by the end of February.

The news of an emerging foot-and-mouth disease problem in North Korea first emerged through sources earlier this year, but the authorities only confirmed it officially and reported control measures via Chosun Central News Agency on February 10th.

According to an official report submitted by the North Korean authorities to the World Organization for Animal Health (OIE) at around the same time, the outbreak had by then spread to 48 places across much of south and central North Korea, with 15 of those places falling within the Pyongyang administrative region.

The report outlined how North Korea first attempted to combat the outbreak with an indigenously produced vaccine, but this was of limited use. It also noted that official North Korean policy is to bury those animals that die from the disease and quarantine those that are infected.

However, inside sources say that in reality people are digging up buried animals in order to sell the meat in the market at a lower price.

The North Pyongan Province source explained, “Meat infected with foot-and-mouth disease is being sold in the market tacitly; the price of it is somewhat lower. The work of burying pigs with foot-and-mouth disease is being done, he said, but it is said that animals continue to be dug up and are sometimes being sold in the market.”

The source gave the example of a pig farm in Pyongsung, where 6 people dug up previously buried pigs last December to sell in Pyongsung Market. They were selling the meat for 2,000 won/kg, he said, but were caught by the authorities.

The source also revealed that on December 30th, 2010, 500 pigs were buried near Pyongyang, but two days later had disappeared, while in Sinuiju it is said that “If it is buried in the daytime, people say that by that very evening it will appear in the market.”

Of course, the fact is that the North Korean authorities are unable to put in place an efficacious policy to combat the outbreak of foot-and-mouth disease or the selling on of infected meat, not least because persons caught for selling infected meat can simply navigate their way out of trouble and go back to their activities.

UPDATE 3 (2011-3-2): A UN FAO team is in the DPRK to inspect the foot-and-mouth outbreak.  According to the Joongang Ilbo:

An official at the FAO was quoted by RFA as saying that the scale and variety of the aid would be determined after discussions with North Korean government officials. The exact itinerary of the group was not released.

The UN food agency also said that along with the team that arrived in North Korea last month, additional officials, including an expert on contagious diseases, would be sent to the area.

The South Korean government has said that it has been monitoring the development of the outbreak. However, the South Korean Ministry of Unification said after North Korea’s official report on the disease that Pyongyang has not made any requests for aid nor did Seoul have plans to offer any assistance.

North Korea announced on Feb. 10 that over 10,000 pigs and cattle had been infected with FMD, prompting North Korean officials to alert the UN of the outbreak.

The North struggled with FMD cases in 2007 and 2008, which led to the culling of thousands of pigs and cattle. During those episodes, the FAO and the South Korean government provided aid.

UPDATE 2 (2011-2-27): The Daily NK reports that the OIE report shows animals are not being culled:

Unlike in 2007, when North Korea reacted swiftly to an outbreak of the disease by culling animals, this time the authorities appear to have reacted poorly despite the fact that the disease has now been found at more than 48 locations in Pyongyang City and Pyongan, Hwanghae and Kangwon Provinces.

According to an OiE report derived from the letter, in which the North finally confirmed the rumored outbreak after a month of silence, Pyongyang has apparently tried to address the situation using a combination of disinfection measures and a domestically produced vaccine, but this has met with little success.

“Given the number of livestock which have died of foot-and-mouth disease, it is uncertain just how far the infection has spread,” Korea Rural Economic Institute Vice-President Kwon Tae Jin explained to The Daily NK. “The small number of infected heads of cattle reported by North Korea is also difficult to accept at face value.”

“If the North Korean authorities have not destroyed the infected cows and pigs in the hope that they will recover, then it is a serious problem. It means we have no idea how far the disease has spread,” Kwon added.

15 of the existing locations in which the disease has so far been detected are in Pyongyang and surrounding areas. In order to combat the spread of the disease to other regions, the authorities are said to have implemented across-the-board restrictions on movement into and out of the city.

However, news of the disease has still not been reported officially, and domestic sources have told The Daily NK that they have not heard anything about it to date.

UPDATE 1 (2011-2-18): DPRK report (below) shows extensive damage from foot-and-mouth disease.  According to Yonhap:

North Korea has reported to a global animal health agency that it had suffered a total of 48 outbreaks of foot-and-mouth disease (FMD) since Christmas last year.

The impoverished communist state made the report to the Paris-based World Organization for Animal Health (OIE) on Feb. 8, saying about half of 17,522 “susceptible” pigs had died from the disease.

Only 3 percent of 1,403 cows suspected of being infected had died from the disease, according to the report posted on the OIE Web site, while none of the 165 susceptible goats had died.

At the time the report was filed, no livestock were yet culled as a preventive measure, according to the report created by Ri Kyong-gun, a quarantine director for the Ministry of Agriculture. A map of outbreaks showed the disease had spread out over almost half of North Korea.

“Vaccination has been applied with a locally developed vaccine but was not effective to control the disease,” the report said, adding that the origin of the outbreak remains “unknown or inconclusive.”

North Korea has banned the inflow of pork and beef from South Korea since late last year for fear that the disease — rampant south of the heavily armed border — may spread there.

Despite the measure, the North, which suffers serious food shortages, reported the outbreak to the United Nation’s Food and Agriculture Organization earlier this year.

The country said in the OIE report that it has restricted movement and conducted “disinfection of infected premises and establishments” to fight the spread of the animal disease.

In 2007, North Korea suffered similar outbreaks, prompting South Korea to dispatch a team of animal health experts amid a mood of reconciliation.

FMD is highly contagious and affects cloven-hoofed animals like cattle, pigs, deer, goats and sheep. The disease causes blisters on the mouth and feet of livestock and leads to death. It is rarely transmitted to humans.

ORIGINAL POST (2011-2-18): Below is a map and list of reported foot and mouth disease outbreaks in the DPRK:

The World Organisation for Animal Health (OIE) has reported 48 outbreaks of foot and mouth disease (FMD) in Democratic People’s Republic of Korea.

The outbreaks are located in:

–Kangwon (Anbyon, Kimhwa, Phangyo, Phyonggang)
–Kumgang
–Pyongyang (Sadong, Ryokpo, Rakrang, Kangdong, Mangyongdae)
–Nampho (Nampho and Kangso)
–North Hwanghae (Kangnam, Sangwon, Hwangju, Yonsan, Sinphyong, Suan, Songrim)
–North Pyongan (Thaechon, Pakchon)
–South Hwanghae (Chongdan)
–South Pyongan (Anju, Phyongwon)

The OIE posted a report developed from an official letter sent by the DPRK dated 7 February 2011 and received on 8 February 2011.  You can see the OIE report here.