Archive for the ‘Political economy’ Category

Red Cross warns of heatwave threatening North Korea’s food production

Friday, August 10th, 2018

Benjamin Katzeff Silberstein

Full press release:

Beijing/Geneva, 10 August 2018 – A heatwave in the Democratic People’s Republic of Korea (DPRK) will have serious health consequences for children and elderly people unless urgent action is taken.

There has been no rainfall in DPRK since early July and temperatures are averaging 39 degrees C (102.2 degrees F) across the country. The next rain is expected in mid-August. Any threat to food security will have a serious effect on an already vulnerable and stressed population – a similar dry spell in 2017 caused a 7.2 per cent drop in food production at a vital point of the harvest cycle.

Joseph Muyambo, Programme Manager for the International Federation of Red Cross and Red Crescent Societies (IFRC) in Pyongyang, said: “This is not yet classified as a drought, but rice, maize and other crops are already withering in the fields, with potentially catastrophic effects for the people of DPRK.

“We cannot and must not let this situation become a full-blown food security crisis. We know that previous serious dry spells have disrupted the food supply to a point where it has caused serious health problems and malnutrition across the country.

“It’s children aged under 5 who will suffer the most. High levels of malnutrition can cause impaired physical and cognitive growth, and this is completely unacceptable. The lives of elderly people and those already suffering from illnesses are also at risk during this heatwave.”

Today, IFRC released 213,474 Swiss francs from its Disaster Relief Emergency Fund to help the DPRK Red Cross to support more than 13,700 of the most vulnerable people at risk from the heatwave.

The Red Cross has deployed emergency response teams and 20 water pumps to irrigate fields in the hardest-hit areas, while staff and volunteers are helping to raise awareness of the signs, symptoms and treatment of heat-related illnesses.

Even before the current crisis, more than 10 million people – 40 per cent of DPRK’s population – needed humanitarian assistance. This worrying situation has been exacerbated by the impact of international sanctions on DPRK, which have made it difficult for aid and supplies to get into the country and to reach people who desperately need support.

The press statement can be found here, on the IFRC website.

International bodies have previously warned of looming food shortages and poor harvests in North Korea, only to later see crop yields come out larger than expected. Let’s hope that’s the case this time as well. It’s also worth remembering that it’s not bad weather per se that threatens North Korean food production, but poor institutions and bad agricultural policies that lay at the core of the problem.

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North Korean state security agents fine Chinese visitors for making phone calls abroad

Thursday, August 9th, 2018

Benjamin Katzeff Silberstein

Daily NK:

North Korean Ministry of State Security (MSS) agents have been ramping up the issuance of monetary fines for Chinese business people and drivers in the country for various infractions.

“Chinese business people and truck drivers are being fined for taking calls from China while they are in North Korea,” a source in China close to North Korean affairs told Daily NK on August 7. “A surveillance agent stationed near the Wonjong Border Customs Office is stopping vehicles driven by Chinese business people and truckers who are detected receiving calls and issuing them with fines.”

“Chinese tourists have their phones confiscated by travel agencies so they cannot make calls, but business people and truck drivers are under no such restrictions and could previously receive calls from China without issue,” he continued, adding that international calls to China are permitted within a radius of one kilometer of the customs office.

Chinese nationals affected are responding with incredulity at the 1,000 yuan fines for taking calls from China but “they are forced to pay the fine, however, because they depend on good relations with the North Korean authorities to conduct cross-border business.”

MSS agents have long forced North Koreans to pay bribes in exchange for letting them off the hook for making international calls. But these agents are now more pressed than ever to find ways to earn money and it appears that Chinese nationals are now in their crosshairs.

The North Korean government keeps a watchful eye over the activities of its agents, but corruption has such deep roots within the MSS that agents have no qualms with taking advantage of Chinese nationals.

One of the driving forces behind the push to earn more money is the nationwide requirement to pay “loyalty funds,” which is aimed at supporting development of the Wonsan-Kalma marine tourist zone and the Samjiyon area.

On top of their surveillance of cellphone users, MSS agents are also fining Chinese vehicles that carry North Korean passengers.

‘There are cases where Chinese truck drivers take on North Korean passengers to make a little extra cash, but MSS agents are cracking down on this activity and fining the drivers 500 KPW for each male passenger and 1,000 KPW for each female passenger. Chinese drivers are now increasingly ignoring hitchhikers on the road,” a source in North Hamgyong Province added.

“The fines are causing Chinese business people to be more watchful of their activities in North Korea. Some are even questioning whether they should even be doing business in the country.”

Article source:
MSS agents fine Chinese nationals for infractions to earn money
Mun Dong-hui
Daily NK
2018-08-09

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Daily NK interviews a state security agent on sanctions, defectors, and life in North Korea

Wednesday, August 8th, 2018

Benjamin Katzeff Silberstein

Daily NK:

As changes to the political situation on the Korean Peninsula continue in the wake of the inter-Korean, US-DPRK (abbreviation for North Korea’s formal name) and Sino-DPRK summits, Daily NK recently met with an official from North Korea’s Ministry of State Security (MSS) in China to talk about international sanctions toward North Korea and the inter-Korean relationship. The MSS officer displayed a clear anti-American bias with his own ideological convictions, but also offered some objective evaluations of the North Korean regime.

Following is a transcript of the full interview.

Daily NK (DNK): International sanctions are still in effect for North Korea, as you know.

Ministry of State Security official (MSS): They are hard to accept. I’m not sure whether South Korea is trying to make itself look good in the eyes of Trump as it accepts the continued sanctions against North Korea, but in any case, they [the sanctions] are an irritant. There are many [North Korean] restaurants in China. The sanctions have made it impossible for new workers for these restaurants to enter China, and those who are here must return to North Korea next year.

I can understand [the international community] criticizing North Korea for not living as well as capitalist countries after moving away from socialism and operating in the international market like other countries. However, I’m angry that China, Russia and the South have come together to sanction us and that the US makes us a very poor country by preventing our goods from entering the international market.

If you ask anyone in North Korea – young or old – they will respond that North Korea must fight and drop a nuke on America. I think that Chairman Kim Jong Un got rid of nuclear weapons so that the sanctions would be lifted and our lives would improve, but personally speaking, I think we should drop a nuke on New York or Washington, D.C.

Why are South Koreans so angry about us making intercontinental ballistic missiles? We are seeking peace by destroying our [nuclear] underground facilities, but the US has simply stopped its military exercises. They could restart them again [at any time]. They claim they will get rid of the sanctions eventually but it’s hard to believe that.

DNK: The inter-Korean atmosphere, however, is focused on continuing exchanges and cooperation.

MSS: The sanctions must be lifted first for anything to really happen. With the sanctions still in effect, I could accept that President Moon Jae-in is the “trailblazer of the Korean people,” but he continues to look to America for guidance. We could ask South Korea to lift the sanctions, but they just do what America tells them to do. We are a brave people made up of the worker class, who form the basis of the socialist revolution. We have nothing to lose from a war. South Korea would hate to go to war, but the majority of us [North Koreans] would go to war without hesitation.

DNK: Have you ever watched South Korean dramas before?

MSS: Yes, I’ve watched them in secret in China. I have seen defectors on South Korean dramas like ‘Now on my way to meet you’ and ‘Moranbong Club.’ They don’t necessarily lie about everything; they get some things right. It is true life in North Korea is hard and that there are almost no rations from the government. There are some places that only give two-weeks worth of rations and people make up for the lack of food by going into business and cooking corn porridge, and some people even die due to the lack of food.

However, some defectors say that residents just walk by dead bodies on the street. How could that even be possible in a place inhabited by human beings? Even during the Arduous March [widespread famine of the mid-1990s], that wasn’t the case. Soldiers and inminban [neighborhood watch-like units] dug graves to bury the dead. That [walking by dead bodies] wouldn’t have even happened in Korea’s feudal period.

When I asked someone why the defectors lie like that, I was told that they are given money to appear on such TV shows. They received free education and healthcare in North Korea, but now they turn around and spit on their own country. They talk trash about their own country. I can acknowledge that life is tough in North Korea, and that people are hungry and there is no electricity so it’s difficult for factories to operate. But they [defectors] exaggerate too much.

Generally speaking, the women that go to South Korea end up living fairly well and the reality is that people [North Koreans] go to South Korea. However, half of them have committed some type of crime. They have fled because they have the police on their tail. At least half of them are in this situation. They have run away because they have committed a crime like borrowing money from people, and being unable to pay the money back, they have run away before getting caught by the police and being sent to a labor camp.

It is these types of people who come out on TV, crying and telling lies. I would be extremely upset if I lived [in the type of country they are describing]. There are difficulties in North Korea, but real people live there.

DNK: Does the North Korean state still have ironclad control over the country?

MSS: It is still difficult for people to move around freely. Nobody can go from the provinces into Pyongyang. You must have a pass to do that. I hope that the country will soon become like China where you only need a residence card to travel. We have a lot of problems. I hope that these problems will be resolved.

In China, people can send instant messages to those living in Germany or England. North Koreans can take pictures with their cellphones, but cannot use the internet. North Koreans cannot make international calls, either. They couldn’t even dream of it.

The state is worried about the impact of bringing in ‘capitalist-related things’ into the country because they could dampen the people’s ideological stance. I think in some ways the state’s restrictions on foreign things has helped keep North Korea’s ideological stance free of contamination.

Article source:
North Korean state security agent shares thoughts on sanctions, defectors and life in North Korea
Kim Song Il
Daily NK
2018-08-08

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Regime takes two thirds of worker’s salaries for ‘loyalty funds’

Wednesday, August 8th, 2018

Benjamin Katzeff Silberstein

Daily NK:

As the North Korean authorities shift the financial burden of preparing for the anniversary of North Korea’s establishment on September 9 and the development of the Wonsan-Kalma Marine Tourist Zone, residents are increasingly voicing their complaints over the inherent unfairness of the situation.

“Employees at a joint Sino-North Korean enterprise [name redacted for the safety of the source] located in Rason usually receive 300 yuan (around 50,000 South Korean won) per month, but this month they were only paid 100 yuan,” said a source in North Hamgyong Province on August 6. “Without any prior notice, 200 yuan was taken out of their salaries to be used as funding for regime projects.”

The North Korean authorities have placed great importance on the development of the Wonsan area along with events surrounding the 70th anniversary of the establishment of the nation on September 9. State officials are forcibly taking money from the pockets of ordinary citizens to pay for these projects, according to the source.

“In the past, the state took some money from people’s salaries but never a full two-thirds,” he said. “It’s difficult enough surviving on 200 yuan, so people are very worried about how to survive off a measly 100 yuan.”

One family working at the enterprise typically earns 400 yuan a month but received just 200 yuan this month, he said, explaining that “it’s not enough to even get them through the month […] They have no money saved up and are worried that more money will be taken out of their salaries next month as well.”

Overseas workers are also being forced to contribute part of their salaries to what is referred to as a “loyalty fund.”

“There is money that we have traditionally given to the state each month, but now they have told us we need to give them 2,000 yuan more per month […] Business is difficult these days, which forces us to take money out of our employees’ salaries to pay state officials,” the manager of a North Korean restaurant in China’s Liaoning Province said.

The manager also noted that the authorities were asking for more money to be paid at ever more frequent intervals of time. “Our employees are usually forced to give money [to the loyalty fund] each month, but our employees are up in arms about the amount taken out by the state this month,” the manager said, expressing concern that feelings of discontent among their employees could lead to them running away or even defecting to South Korea.

Full article and source:
Regime takes up to two-thirds of salaries from workers for ‘loyalty funds’
Ha Yoon-ah
Daily NK
2018-08-08

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North Korea exports coal as ‘Russian’ to get around sanctions

Tuesday, August 7th, 2018

Benjamin Katzeff Silberstein

Reports Radio Free Asia:

In a move aimed at evading U.N. sanctions, North Korea is exporting coal to foreign buyers by sending shipments first to Russian ports, where the coal is falsely labeled as Russian-origin, North Korean sources say.

The export of North Korean coal is strictly banned under international sanctions punishing Pyongyang for its illicit nuclear weapons program, but North Korea has now opened new routes for trade with Russian help, a trade worker in North Pyongan province told RFA’s Korean Service.

“As sanctions on North Korea came into effect a couple of years ago, export routes for coal were blocked,” RFA’s source said, speaking on condition of anonymity.

“So North Korean trading companies have been shipping coal to the ports of Nakhodka and Vladivostok in the southern part of Primorsky Krai, in Russia. North Korean coal is then disguised as having come from Russia and is sent on to other countries under fake documents,” he said.

Loading ports for North Korean coal were formerly at Nampo and Songrim, on North Korea’s west coast close to China, but have now been moved to Chongjin and Wonsan, on the country’s eastern coast close to Russia, he said.

“When North Korean coal arrives at Nakhodka, a Russian company records its time of arrival, the length of the ship’s stay in port, and the amount of coal taken off. They then create false papers including a statement of the coal’s quality,” he said.

With these documents declaring the coal to be of Russian origin, “North Korea now has no problem exporting coal to other countries,” he said.

“The name of the Russian company that my company has been working with is Greenwich, and is located at the port in Nakhodka,” RFA’s source said. “They ask for two dollars per ton to disguise North Korean coal as Russian, and the North Korean trading company pays them right away.”

Still in demand

Also speaking to RFA, a North Korean trade worker based in the Chinese border city of Dandong said that North Korean representatives based in South and North Pyongan provinces collect information on countries needing coal and act as brokers for its export.

“Coal from these western-district mines is very high quality, so there is still a demand for it from other countries even though sanctions are in force,” he said.

A 30 percent deposit from the buying countries is required before the coal begins to move, with 30 percent of the balance due when the coal leaves its Russian port. The remaining 40 percent is then paid when the coal arrives at its final destination, the source said.

“For this three-step payment process, the money is deposited in a “borrowed” Chinese bank account, with the North Korean trading company paying banking fees,” he said.

Some of the coal sent from Russia now goes to South Korea and Japan, RFA’s source said.

“But North Korean company names don’t appear on the shipping papers, so the North Korean trading firms aren’t worried at all,” he said.

Resolve questioned

South Korea’s foreign ministry on Tuesday dismissed allegations that a foreign-flagged ship seen earlier at Nakhodka had delivered North Korean coal to South Korea’s southeastern port of Pohang, claiming the ship’s cargo was of Russian origin, according to an Aug. 7 report by the Yonhap news service.

“Critics here question the left-leaning Moon Jae-in administration’s resolve to curb the transport of North Korean coal,” a source of hard currency for the sanctions-hit Pyongyang regime, Yonhap said.

“But the government has stated that it remains committed to strictly abiding by U.N. mandates despite inter-Korean reconciliation,” Yonhap added.

The United States has meanwhile pointed to what it calls credible reports that Russia is in violation of U.N. sanctions against North Korea, with Secretary of State Mike Pompeo on Aug. 4 urging full compliance with measures aimed at forcing the North to give up its nuclear weapons program.

Article source:
North Korea Exports Coal as ‘Russian’ in Bid to Beat Sanctions
Hyemin Son
Radio Free Asia
2018-08-07

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The economics of coal trade, sanctions, and rice prices in North Korea

Monday, August 6th, 2018

By Benjamin Katzeff Silberstein

This may just be one piece of anecdotal evidence, but it’s interesting to note that sanctions haven’t necessarily leading to coal exports stopping – as we know from the multitude of evidence that North Korean coal ships have still been making their transport rounds – but primarily to drastically slashed prices, and surely to significantly smaller volumes being shipped as well. This reinforces the point that even if trade continues, sanctions put a large premium on trading with North Korea. Importers of North Korean coals, simply put, have to get charged less because of the risk they’re taking, and those exporting North Korea need to be paid more for the endeavor to be worth it.

(UPDATE on August 12th): I realized I may have misread the article – the source that Daily NK spoke with appears to be referring to domestic prices for coal, not export prices. Still, since we know that coal is in fact being exported through various evasion methods (albeit in fairly small quantities, perhaps), the point stands.

The article also makes an interesting point about the market prices for rice. It is remarkable how little prices have changed through the past year, when sanctions have been in place and enforced by China to a much greater extent than before. Still, according to this piece, prices aren’t dropping even though people’s incomes in fact are going down significantly, at least in parts of the country. So it may be that prices were already at or close to the “reservation price” for suppliers, i.e., the lowest point at which they’re willing to sell at all. Hard to confirm or check, but it is a plausible partial explanation for the strange dynamics of market prices in North Korea over the past year.

Daily NK:

As coal exports have slowed to a crawl due to international sanctions, North Korea’s coal country of Kaechon, South Pyongan Province, and Kujang County, North Pyongan Province, have been suffering under intense economic difficulties. Most residents in these areas were dependent on the export of coal and are directly feeling the effects of the trade stagnation.

“When coal was being exported, it went for up to 130,000 won (16 US dollars) a ton, but now due to the sanctions the price has fallen to 50,000 won (around 6 US dollars) a ton […] The coal must be sold for workers to get paid. The halt in  exports has even led to someone starving to death,” said Kim Woo Chul (alias, male resident of Kujang County), who was traveling in China on August 1.

“In April or May this year a fifty-year-old man died of starvation,” he said, nothing that while corn is provided by the government in July and August, “it lasts for less than two months.”

Kim also said that rice is being sold in the market but most people in the region can’t afford it. “Food is not scarce in the Kim Jong Un era, but people have no money so they can’t buy it,” he emphasized. Kim also noted that there were many empty food stands at the markets because demand has fallen due to the lack of money.

Another resident from Kaechon, South Pyongan Province, named Ri Sung Rim (alias) added, “There is a lot of rice at the markets, and people would buy it if they had money, but they don’t have money because coal is not being sold anymore […] People who ran private businesses selling coal are having a particularly bad time and are starving because they can’t even make corn porridge.”

She explained that a small amount of corn is given to those actually producing coal by the state, but teams that are not producing anything receive no food rations. “They have nothing to eat so there are even people who are taking their children and leaving the region,” she said.

The two interviewees also talked about the chronic electricity shortages in North Korea. While Pyongyang and other major cities are supplied with a relatively steady supply, the rural areas receive very little. People cannot watch television because of the lack of electricity, which means that many in these areas only recently found out that Kim Jong Un had met with the leaders of South Korea and the US.

“Electricity is only supplied for an hour or less in Pyongsong, while those who are wealthy siphon off electricity from factories or use car batteries,” said Kim. “Some of the wealthier people use car batteries to watch KCNA on television sets, but most cannot afford that.”

“Production teams get electricity, but residents don’t get electricity in their homes […] Car batteries need to be recharged to supply electricity at home, but there are no places to recharge them. People get them recharged if they know someone at the factories, but they are out of luck otherwise,” Ri said.

“I only found out about Chairman Kim Jong Un visiting China when I visited the country […] People need electricity to see the news and, since they can’t, they don’t know what’s going on.”

Article source:
Export sanctions lead to hard times for those in coal-producing regions
Ha Yoon-ah
Daily NK
2018-08-06

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WSJ on South Korean firms planning for business opportunities in North Korea

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein 

WSJ:

After months of rapprochement—including summit meetingsbetween North Korean leader Kim Jong Un and South Korean President Moon Jae-in, and one between Mr. Kim and President Donald Trump —hopes are rising for more open access to North Korea, a country of 25 million people with vast mineral reserves and lots of cheap labor.

Samsung C&T Corp . , the de facto holding company of South Korea’s biggest and best-known conglomerate, created a North Korea task force in May, staffed by an executive and three managers.

Samsung’s construction arm, which has built some of the world’s tallest skyscrapers and is building subway lines in Singapore and Riyadh, Saudi Arabia, sees opportunity in the North as economic growth slows in the South.

Full article here:
Companies See Glimmers of Opportunity in North Korea
Jonathan Cheng
Wall Street Journal
2018-07-23

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North Korea’s negative growth in 2017: things look bad, unsurprisingly, but take the numbers with a grain of salt

Friday, July 20th, 2018

By Benjamin Katzeff Silberstein

Bank of Korea (BOK) has put out their yearly estimate of North Korea’s GDP trends. This year, they estimate that the country’s GDP decreased by 3.5 percent. Off the top of my head, this seems a fairly reasonable estimate, particularly since sanctions were only in force for a minor part of the year (late fall and onward). Some quick thoughts below:

As always, remember: estimate GDP in North Korea is very, very hard. How do you evaluate, for example, the market sector versus the state sector? Given how complicated and partially opaque North Korea’s system for pricing it, how can a GDP figure even be reasonably estimated? That said, BOK has been doing this for many years, and their figures are, for all their faults and flaws, some of the most reasonable estimates among the few that exist. Still, as one of the leading experts in the field once told a class of grad students studying the Korean economy: if someone gives you a figure on the North Korean economy with a specific decimal number, you can be sure that it’s wrong.

Some news outlets have made a big number of the fact that this contraction is the largest for over two decades, according to the BOK numbers. While that is true, the proportions are very different: in 1997, BOK estimates that the economy contracted by 6.5 percent, that is, almost double the contraction of 2017. So we’re not talking about any crisis nearly as significant as the famine of the 1990s.

BOK estimates a drop by 1.3 percent in agricultural and fisheries production. Notably, still, market prices for food have looked completely normal throughout the year, as this blog has noted several times before. It’s unclear how exactly agricultural production is estimated, and what the “sector” here really means – only what goes into the state-side of agricultural production and supply, or the sale of surplus production on the semi-private markets? The latter may very well be underestimated given how tricky it is to asses what share of agricultural production still lies firmly and solely within the state system.

It’s unclear how much of the shortfall in electricity production is compensated for by items like solar panels and other forms of electricity generation increasingly prevalent on the ground. Many have noted the various creative ways in which much of the North Korean population already adapts to the shortfall and unreliability of public supply of electricity.

The estimated trade numbers are very dire but also probably approximately realistic. Though the 37 percent shortfall in exports may be an overestimate given that they (presumably) don’t account for smuggling, it is undeniable that the economy is taking a very large hit from sanctions. People who recently visited the Chinese border speak of very low levels of activity in goods transports and the like. This gives cause for some skepticism toward the reports claiming that Chinese sanctions enforcement has gone much more lax lately: it may well have, but that hardly means the doors are flung open. At the same time, imports went up 1.8 percent. Either China is letting North Korea run a trade deficit which they assume they’ll get back once sanctions are eased, or the regime has much more currency stashed away to pay with the goods for than many have thought. The truth may lie somewhere in the middle there.

 

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Chinese oil exports to N Korea increased after KJU’s third visit to China

Thursday, July 19th, 2018

Benjamin Katzeff Silberstein

Says Chosun Ilbo:

Though the exact figure is not known, China sent an estimated 200,000 to 300,000 tons of fertilizer to the North, according to sources in China.

In 2013, China supplied the North with 200,000 tons of fertilizer. Kwon Tae-jin of the GS&J Institute, an agricultural think tank in Seoul, said, “There are different ways of calculating harvest rates for different types of fertilizer and soil. But in case of urea fertilizer, it’s possible to produce two tons of food more for each ton of fertilizer.”

[…]

China also dramatically increased oil shipments to the North. A source in Beijing said it nearly doubled crude oil supplies to the North through pipelines from Dandong since Kim’s recent visits.

“Some 30,000 to 40,000 tons of oil is enough in the summer to maintain the lowest possible flow of oil in the pipelines to ensure that they don’t clog, and about 80,000 tons in winter,” the source added. “Though it’s summer now China has recently increased flow to the winter level.”

Full article/source:
China Doubles Oil Shipments to N.Korea After Kim’s Visit
Lee Kil-seong and Kim Myong-song
Chosun Ilbo
2018-07-19

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NK News on the growing Naegohyang conglomerate

Wednesday, July 18th, 2018

Benjamin Katzeff Silberstein

NK News:

It began as a tobacco company, but has since widened its scope to the sporting goods industry, and reportedly became known in the North through a soccer match for the 2010 World Cup at Yanggakdo Stadium in Pyongyang on 6 June 2009, the state-run KCTV reported in a video released in October 2016.

Before the game, according to the narrator, unknown individuals handed out Naegohyang-branded sports t-shirts to spectators at the 30,000-seat Yanggakdo Stadium. On that day, “the t-shirts replaced tickets for the game,” the video said.

Even though state media praised them for their generosity and patriotic spirit, initial coverage appeared reluctant to reveal who they were.

“We could not know who they were,” the narrator said.

Sports t-shirts were given out again to waves of spectators in 2015 when North Korea played Uzbekistan at Kim Il Sung stadium, with locals seen wearing the company-branded t-shirts and caps.

Full article here:
Naegohyang: a North Korean company branches out
Tia Han
NK News
2018-07-18

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