Archive for the ‘Political economy’ Category

North Korea’s 2018/2019 harvest and food shortage

Thursday, March 7th, 2019

By Benjamin Katzeff Silberstein

The UN has officially compiled and published the estimated harvest figure for North Korea during the 2018/2019 marketing year, and as we already knew, it lands at 4.95 million tonnes. AFP:

North Korea recorded its worst harvest for more than a decade last year, the United Nations said Wednesday (Mar 6), as natural disasters combined with its lack of arable land and inefficient agriculture to hit production.

The isolated North, which is under several sets of sanctions over its nuclear weapon and ballistic missile programmes, has long struggled to feed itself and suffers chronic food shortages.

But last year’s harvest was just 4.95 million tonnes, the United Nations said in its Needs and Priorities assessment for 2019, down by 500,000 tonnes.

It was “the lowest production in more than a decade”, the UN’s Resident Coordinator in the North Tapan Mishra said in a statement.

“This has resulted in a significant food gap.”

As a result 10.9 million people in the North needed humanitarian assistance – 600,000 more than last year – with a potential for increased malnutrition and illness.

It is equivalent to 43 per cent of the population.

But while the number of people needing help rose, the UN has had to cut its target for people to help – from 6.0 million to 3.8 million – in the face of a lack of funding.

Only 24 per cent of last year’s appeal was met, with Mishra describing it as “one of the lowest funded humanitarian plans in the world”.

Several agencies had been forced to scale back their programmes and some faced closing projects, he said, appealing to donors to “not let political considerations get in the way of addressing humanitarian need”.

“The human cost of our inability to respond is unmeasurable,” he said, adding that sanctions had created unintended delays and challenges to humanitarian programmes, even though they are exempt under UN Security Council resolutions.

[…]

It was hit by a heatwave in July and August last year, followed by heavy rains and flash floods from Typhoon Soulik. As a result, the UN said, rice and wheat crops were down 12 to 14 per cent.

The figure is significantly larger than in the South, where rice production was down only 2.6 per cent last year, according to Seoul’s statistics, even though it experiences similar weather and climate.

The North’s soybean output slumped 39 per cent and production of potatoes – promoted by leader Kim as a way to increase supplies – was 34 per cent down, the UN said.

Last month Pyongyang told the UN that it was facing a shortfall of 1.4 million tonnes of food this year.

Full article and source:
North Korea food production ‘lowest for a decade’: UN
AFP
2019-03-06

A few thoughts on this:

The UN figures must have been updated and adjusted over the past few years, because according to the data I have at hand, 4.95 million tonnes is not nearly the worst production figure in a decade. I’m assuming that the 4.95-figure refers to the “milled tonnes equivalent” number. According to the World Food Program’s November 2011 estimate, for example, the equivalent figure for 2011/2012 was 4.66 million tonnes. But again, the numbers might have been adjusted since they were first calculated.

Like I wrote a few weeks ago, there is little to suggest a true food emergency of massive proportions. Market prices for rice, for example, have barely moved over the past few weeks, and are actually down quite a bit in the latest observation, from 4,600–4,870, to 4,200–4,210 won/kg. This might not mean much, but still, these prices tell us something. Usually, prices seem to only climb in reaction to shortages as the market gets closer to the next harvest season, and food availability becomes increasingly scarce. Expectations aren’t easy to calculate or project. It may be that the market as such isn’t even fully aware of the shortages.

While current prices alone aren’t necessarily a sufficiently certain indicator of the food situation, however, were the situation completely disastrous, we should have seen prices rise already, as farmers and others hoard grains to store up for worse times to come. Instead, prices remain stabile.

Again, that’s not to say that things aren’t bad. A ten percent decrease in the harvest, even though not disastrous, is still a notable decrease. The view from the ground in North Korea seems to unequivocally be that yes,  this year’s harvest is much worse than those of the past few years, mainly due to the dry, hot weather in the summer and fall of last year. News outlets with sources inside North Korea, such as Daily NK, have also reported – independently of the North Korean government, unlike the UN – that harvests have been notably poor.

Conditions also vary a lot between different regions and socio-economic groups. Though there’s been no wide-spread starvation in North Korea since the early 2000s, some particularly vulnerable groups do likely rely on humanitarian assistance for their sustenance.

It really is striking and strikingly problematic how little we know though. The fact that the international community isn’t even allowed to monitor the markets, the most important source of sustenance for most North Koreans, is problematic. To my knowledge, international humanitarian organizations are not allowed to survey the market system in any comprehensive way.

There’s also an important overarching question we should be asking: what about the long term? Food insecurity in North Korea did not arise with “maximum pressure” or the sanctions. It’s been a fact since the late 1980s. Humanitarian international institutions are,  I am sure, doing their best. Hopefully, they continuously to ask North Korean regime representatives what institutional, systemic changes the government is undertaking to alleviate the problem. Giving humanitarian aid without making demands for systemic change would be to let down the people in greatest need of help.

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While Kim goes to Hanoi, anti-corruption crackdown continues at home

Sunday, February 24th, 2019

By Benjamin Katzeff Silberstein

While Kim Jong-un is off to Hanoi, sources in North Korea report that the anti-corruption crackdown at home, on the ground, is becoming increasingly intense. Anti-corruption campaigns are nothing unusual in North Korea in general, and they certainly haven’t been under Kim Jong-un’s tenure. He’s talked publicly about the importance of eradicating corruption several times. But this campaign seems particularly intense and lengthy, according to Daily NK’s reports:

An inspection team from the Workers’ Party of Korea (WPK)’s Central Inspection Committee has been deployed to North Pyongan Province to investigate corruption among local government officials. The inspection will reportedly be longer and more comprehensive than previous investigations.

“The inspection team arrived on December 20 and is continuing to investigate local government officials,” said a source in North Pyongan Province. “The team is looking at officials working in customs bureaus, factories and enterprises, and even in storage facilities.”

The WPK Inspection Committee is tasked with investigating party officials who have committed offenses against the party or anti-revolutionary activities, or who have failed to follow policies and rules. The organization is run by former Organizational Guidance Department (OGD) First Director Jo Yon Jun, who is considered one of North Korea’s most powerful figures.

“The inspections being conducted by the central government are much more intense than those conducted by the provincial party apparatus,” said the source. “There’s a rumor that two customs agency officials in Sinuiju, the manager of a City Management Center, and the party secretary of an enterprise have been fired due to the inspection.”

“Most inspections last around 20 days, but this one has been going on for more than three months,” said the source. “It seems like the longest one of its kind.”

During his New Year’s Address, North Korean leader Kim Jong Un emphasized the “eradication of corruption” and an editorial published in the Rodong Sinmun in December labeled corruption a “traitorous act”.

North Korea watchers believe that Kim’s emphasis on eradicating corruption is due to its negative impact on his key goal of economic development.

Locals, however, are reportedly very tense due to the atmosphere brought on by the inspections in the area.

“People are saying to each other that the inspection is really intense and scary. They’re warning each other not to get caught,” said a separate source in North Pyongan Province. “Smugglers are making every effort possible to avoid getting caught up in the crackdown.”

Full article and source:
Elite inspection team to crack down on corruption in North Korea
Mun Dong Hui
Daily NK
2019-02-25

Now, there’s always an imperative for the North Korean government to crack down on corruption. Like the article mentions, the goal of economic growth and development is a sufficient reason alone. Corruption is probably also one of the most common causes of discontent among the citizens, while at the same time, it’s a crucial source of income for public officials at all levels of the system.

At the same time, one might speculate that at a time when foreign currency reserves are likely becoming increasingly scarce, the anti-corruption drive is also a way of tightening accounting. With closer inspections in the name of anti-corruption, the government will gain a better sense of what assets firms and other entities in the country have, possibly in order to demand that more of it be handed over. It’s too early to draw any conclusions, but in any case, these inspections are always done for a reason.

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Is North Korea’s food situation as bad as the government says? Probably not.

Friday, February 22nd, 2019

By Benjamin Katzeff Silberstein

(Updated 27/2: see below for clarification on the nature of the North Korean memo; the appeal was never meant to be publicized. Another minor clarification below done on 11/3.)

During the past week, both the UN and the North Korean government has made claims that its food situation is bad enough for the country to need international emergency aid. AP:

U.N. spokesman Stephane Dujarric said Thursday that food production figures provided by North Korea show “there is a food gap of about 1.4 million tons expected for 2019, and that’s crops including rice, wheat, potato and soybeans.”

Dujarric says the U.N. has “expressed and will continue to express our concern about the deteriorating food security situation” in North Korea.

He says the U.N. “at various levels” is consulting with the North Korean government “to further understand the impact of food security on the most vulnerable people, in order to take early action to address the humanitarian needs.”

A few days ago, North Korea’s UN ambassador distributed a memo (presumably to UN officials) saying that because of sanctions and unusually warm and dry weather last summer, this year’s harvest was worse than expected. NBC reported some of the contents:

Kim’s claims are difficult to verify, and his government has not always been a reliable source of internal statistics. He said a food assessment, conducted late last year in conjunction with the UN’s World Food Program, found that the country produced 503,000 fewer tons of food than in 2017 due to record high temperatures, drought, heavy rainfall and — in an unexpected admission — sanctions.

The food agency could not immediately confirm that the organization conducted an assessment with North Korea or the conclusions the country shared in the memo.

In a plea for food assistance from international organizations, however, the memo states that sanctions “restricting the delivery of farming materials in need is another major reason” the country faces shortages that has forced it to cut “food rations per capita for a family of blue or white collar workers” from 550 grams to 300 grams in January.

“All in all, it vindicates that humanitarian assistance from the UN agencies is terribly politicized and how barbaric and inhuman sanctions are,” the memo says.

The memo is worth reading in its entirety.

There are a lot of things that are strange about this memo and its contents. I’ll try to deal with as many of them as possible here. But first: how bad is the food situation, really?

This question is virtually impossible to answer accurately, because no one really knows how much food is being produced in North Korea. The World Food Program that works with the North Korean government to estimate harvest yields does what it can under difficult circumstances to accurately measure harvest yields in the country. But these measurements are severely restricted by the fact that much of food supply and production in North Korea still completely lacks transparency. For one, we know that most citizens get the majority of their food through state-administered private markets.

International agencies, however, still cannot survey these markets or study their role in food provision, because the government’s attitude to the market’s very existence remains somewhat ambivalent. The crop surveys conducted with the North Korean government simply cannot answer how much food is available throughout the system, because the markets, the most important node, cannot be assessed and studied accurately. Surveying the markets would let the WFP study the situation in its entirety,  since that way, they could take into account both imports, private plot farming, and the like.

But taking the numbers provided by North Korea and the UN at face value, it’s clear that if these numbers reflect reality, domestic food production is down since the past couple of years, but not by disastrous amounts. There’s no second “arduous march” lurking behind the corner, judging from these figures. In fact, harvests have been growing for several years, largely thanks to changes in agricultural management under Kim Jong-un.

Food production in North Korea, in millions of tons. Harvest data is usually given in “marketing years”; figures here partially based on full-year estimates earlier in the respective year. Data source: World Food Program/Food and Agriculture Organization. Graph by North Korean Economy Watch.

Moreover, and perhaps most importantly, market prices for rice have remained stabile. So the markets don’t seem to think there really is a true food shortage coming, even though things do seem to have gotten more difficult due to the drought. I cover this in more detail in this post, but the following graph speaks its clear language.

Average rice price for three North Korean cities, spring of 2017–early 2019. Data source: Daily NK.

At the very least,  had there been major signs of stark shortages, it would have been visible in the price data. Reports from North Korea do confirm that food production seems to be down overall, but remember, that’s from a fairly high level and after several years of increases. Over the past few years, the North Korean government and UN agencies have made similar appeals, but in the end, fortunately, no major crises seem to happen.

The strangest part about the North Korean memo is that it speaks of reduced rations of grains to  “a family of blue or white collar workers” as a result of the drought  and  sanctions. The thing is, only relatively few people and almost no civilians in North Korea actually get  their food through these government rations. The Public Distribution System (PDS, or 식량배급제도) essentially only operates for the military, shock work brigades (돌격대), and within the judicial administration (more accurate would be to say “government administration”; this is a rather nebulous category in North Korea, including large numbers of civil servants within both the central state, local government level, and policing organs). So this “white or blue collar worker” likely wouldn’t necessarily get her or his rations anyway. As far as we know, they’d go and buy their food at the market with cash instead, in most cases.

It’s often believed that North Korea doesn’t admit weaknesses such as food shortages out of political principle, but over the past few years, the government have been very public with claims of shortages on the horizon, and in asking for aid. Not because the state can’t afford to compensate for the shortfall, but because it simply has other priorities.

Reading the North Korean memo, it’s easy to suspect a connection with next week’s summit in Hanoi and the sanctions situation. By getting news stories out that civilians are starving because of sanctions – a highly questionable claim of causality – the North Korean government may be trying to create more bad press for the sanctions as such.* How can the US argue that they should be preserved, if they’re even preventing North Koreans from getting access to food? There are certainly troubling humanitarian aspects of the sanctions, but it’s difficult to imagine how they could have directly caused the harvest to dwindle.

None of this is to say that North Korea shouldn’t get food aid, that’s a different question. But the government’s basis for the appeal is rather dubious, to say the least. Hopefully, one day international humanitarian agencies will have good enough access to actually get to evaluate the country’s food situation, without constraints.

*Apparently, the memo from North Korea’s UN ambassador was leaked, not intentionally distributed. A person with insight into the issue and appeals process tells me the appeal was never meant to be publicized. This makes my interpretation above far less likely, though the direct impacts of sanctions on the harvest is still questionable.

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North Korea’s economic situation, going into Hanoi: a roundup of the data

Thursday, February 21st, 2019

By Benjamin Katzeff Silberstein

The Hanoi summit is under a week away, Daily NK recently put out new market price data, and I’ve finally had time to update my dataset. There seems like no better time than the present to take a look at some of the numbers we have available for the North Korean economy, thanks to outlets such as Daily NK and Asia Press/Rimjingang.

Currency

Let’s start with the exchange rate. A few weeks ago, the (North Korean) won depreciated quite significantly against the USD, which I wrote about here. At 8,500 won/1usd, the USD-exchange rate on the markets hit its highest point since the inception of “maximum pressure”. The graph below is shows the average market exchange rate in three North Korean cities for won-to-USD.

Graph 1. Average won-USD exchange rate on markets in three North Korean cities, spring of 2017–February 2019. Data source: Daily NK.

As the graph shows, the won rebounded somewhat after the initial spike in early January. According to the latest data point, the exchange rate stands at 8190 won, still somewhat higher than the average for the period, 8136, but barely.

What could have caused this spike? One possibility is that the government has started to soak up more foreign currency from the market, because the state’s foreign currency coffers are waning. After all, given the vast trade deficit, the continued necessity of spending hard currency on things like fuel (bought at higher prices through illicit channels to a greater extent) and other factors, it would make a great deal of sense. Currencies fluctuate all over the globe, sometimes based even on loose rumors that fuel expectations. One anonymous reader who often travels to North Korea for work heard from Korean colleagues that accounting conditions for firms had gotten stricter, likely because the government wants to be able to source more foreign currency from the general public.

It is also noteworthy that while the Daily NK price index reports that the USD-exchange rate has gone back to more normal levels, the Rimjingang index remains at very high levels. Its latest report (February 8th) has the USD at 8,500, and on January  10th, it registered 8,743 won, a remarkably high figure that the Daily NK index hasn’t been near since early 2015. The difference between the two may simple come from the figures being sourced from different regions, or the like. North Korea’s markets still hold a great deal of opportunity for arbitrage, not least because of the country’s poor infrastructure.

So, it does seem like there may be some unusual pressure on the won against the dollar. What it comes from is less clear, but the state demanding more hard currency from the semi-private sector and others may be one important factor. In any case, we shouldn’t be surprised if the trend continues, unless sanctions ease soon.

At the same time, while the RMB has appreciated against the won over the past few weeks, it hasn’t really gone outside the span of what’s been normal over the past few years.

Graph 2. Average exchange rate for won to RMB, average of three North Korean cities, late 2015–early 2019. Data source: Daily NK.

The average exchange rate for RMB since the start of Daily NK’s data series in late 2015 is 1228 won. The latest available observation gives 1241 won/RMB, and the RMB has appreciated against the won over the past few weeks. The Rimjingang data, here, too, gives a higher FX-rate for RMB than Daily NK, at 1250 won. Their index, too, shows the FX-rate for RMB going up over the past few weeks, but not to levels out of the ordinary. Still, if the won continues to depreciate against both the dollar and the RMB, it may be a sign of a more persistent foreign currency shortage.

Food prices

Rice prices remain as stabile as ever, in fact, even more so than this time last year. They continue to hoover between 4,500–5,000, with the latest observation being at 4,783.

Graph 3. Average rice price for three North Korean cities, spring of 2017–early 2019. Data source: Daily NK.

This should not necessarily be taken to mean that North Korea’s current food situation is not problematic. Even with increasing harvests in the past few years, it’s always been fragile. The past year’s drought reportedly took a toll on the harvest. Though market prices aren’t suggestive of any shortages as of yet, that could change in the months ahead. The latest harvest was likely lower than those of several previous years and difficulties in importing fertilizer may have contributed, but the dry weather was the main factor.

Even with a slightly lower harvest than in previous years, it seems that structural changes in agricultural management has improved agricultural productivity to such an extent that food safety isn’t severely threatened even with a reduced harvest.

Gasoline

Gas prices appear to have stabilized around a sanctions equilibrium, of sorts, since a few months back. The past year hasn’t seen any spikes near those of the winter in 2017, when prices went above 25,000 won per kg. For the past year, the price has mostly hovered between 13,000 and 15,000 won per kg. The last observation available from Daily NK, is at 15,200 won per kg. This is slightly higher than the average of the past 12-month period, 13,500 won per kg. A more recent report from Rimjingang puts prices at 13,750 won per kg, so perhaps prices have declined over the past few weeks.

What’s likely happened is that China has settled on a comfortable level of enforcement of the oil transfers cap, for now. (For a detailed look at fuel prices in North Korea and Chinese sanctions enforcement, see this special report.)

Graph 4. Average gasoline price, three North Korean cities, early 2018–winter 2019. Data source: Daily NK.

There is lots to be said about gas prices and their impact on the economy, but for now, it looks like supply of gasoline in North Korea is restricted, but stabile.

Hard currency reserves

I unfortunately don’t have any data to present on this issue, but it’s too important not to mention. We don’t know how large North Korea’s foreign currency reserves are, but all throughout “maximum pressure”, people have been speculating that they’ll soon run out. One South Korean lawmaker said in early 2018 that by October that year, North Korea would be out of hard currency. That clearly didn’t happen.

The lack of stabile foreign currency income may still be a problem for the regime, as mentioned above. It’s hard to imagine how it couldn’t be a huge headache. Look at the following graph for example, showing North Korea’s trade (im)balance with China, throughout 2017 and the first few months of 2018.

Graph 5. North Korea’s trade balance with China, in $1,000 terms. Data source: KITA.

Let’s assume that China is simply letting North Korea run a trade deficit, with only some vague future promise of payment in the form of cheap contracts for coal and minerals. Or, let’s say that China is even just sending North Korea a bunch of stuff without requiring any form of payment whatsoever. It seems highly unlikely to me that even a government like China would support the full extent of these imports. Even if North Korea is only paying in hard currency for a relatively small proportion of what it imports from China, that’s still a lot of money that’s just leaving the vaults, with virtually nothing coming in to replenish them. How long can this go on for? Probably longer than many estimated at the onset of “maximum pressure”, but certainly not forever.

Summary

In sum, judging by the numbers, North Korea’s domestic economic conditions appear stabile but quite difficult. No sense of widespread, general crisis is visible in the data. Nonetheless, the regime is likely under a great deal of stress concerning the economy. How much is hard to tell, but definitely enough for some form of sanctions relief and/or economic cooperation to be high on their agenda for Hanoi.

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The sanctions relief that North Korea might be asking for

Thursday, February 14th, 2019

By: Benjamin Katzeff Silberstein

Some interesting reporting by Hankyoreh, citing South Korean government sources familiar with the US-North Korea negotiations, suggests that North Korea is pushing for two concessions from the US:

According to a South Korean government source closely acquainted with the North Korea-US talks, Kim reaffirmed the North’s willingness to dismantle its Yongbyon nuclear facilities during the first round of working-level talks in Pyongyang on Feb. 6–8, while demanding the partial loosening of sanctions as a corresponding measure for allowing inspections of the facilities. The North Korean side said it “could offer more generous steps” if the US were to even partially loosen sanctions as a corresponding measure, the source reported.

Politically,  this makes a great deal of sense. Yongbyon dismantlement would make for great photo-ops and video clips, regardless of the actual substantive meaning of such actions. For North Korea, partially loosened sanctions would be highly beneficial for several reasons. For one, it could be a tacit signal to China and Russia that the US will no longer be as vigilant on sanctions monitoring as it has been in the past. Moreover, should North Korea push for the ceiling on its oil imports to be lowered, that would likely save the regime substantial amounts of hard currency that it now has to put towards more expensive, illicit transfers and the like. Gas prices in the country have stabilized over the past few months, but are still higher than in normal times. (I dig into this more in a new working paper published by the Stimson Center, click here to read it.)

And not least, any sanctions exemptions on Mt Kumgang and the like could – hopefully, from the regime’s point of view – be a first step to more South Korean investments and cash flows to tourism in North Korea, one of Kim Jong-un’s hallmark industries.

According to Hankyoreh, none of this is out of the question:

Biegun stated in no uncertain terms that the US would not be able to loosen or lift sanctions. At the same time, he reportedly suggested it may consider loosening sanctions if North Korea were to offer the Yongbyon dismantlement “plus something extra.”

And:

Accordingly, they suggested that if North Korea adopts a more forward-thinking approach on the Yongbyon dismantlement issue during negotiations, the US may grant priority consideration to projects involving inter-Korean cooperation, including partial resumption of the Kaesong Complex and Mt. Kumgang tourism. This prediction was based on the limited range of measures available to the US without touching the current sanctions framework. Indeed, many Korean Peninsula experts have noted that the Mt. Kumgang tourism venture individually would not be in violation of UNSC resolutions and suggested that it should be quickly resumed.

I’m no judicial sanctions expert, but I suspect that this might not be entirely accurate. If sanctions are strenuous enough to prevent South Korean reporters to bring in laptops into North Korea, it’s easy to wonder how large-ish-scale tourism to North Korea through Kumgangsan wouldn’t risk violating sanctions. In a way, the multilateral UN sanctions are easier to loosen in practice. A strong, even informal signal from the US to China could make the latter re-interpret its sanctions interpretations, and make monitoring and enforcement much more loose. Truck traffic has reportedly already increased across the border compared to a few months ago, and it’s a trend that’ll likely become increasingly more pronounced the less vigilant the US is about pushing for rigid sanctions implementation.

Article source:
N. Korea demands partial relaxation of sanctions in exchange for Yongbyon inspections
Kim Ji-eun
Hankyoreh
2019-02-14

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North Korea’s puzzling maternal mortality figures

Monday, February 4th, 2019

By Benjamin Katzeff Silberstein

South Korea’s Institute for Health and Social Affairs, using data from the UN Population Fund, claims that maternal mortality in North Korea has increased in the past few years, since 2008. (This was reported back in November of last year, but for some reason I only stumbled upon the article now.) I don’t have time to check out the data or the original source in question right now, but hope to later. It may well be Yonhap’s reporting that is off, because something sounds odd here (my emphasis in bold):

Amid the prolonged international sanctions on North Korea, the health of the North’s infants and pregnant women is in a very vulnerable state, a South Korean government think tank said Tuesday.

The Seoul-based Korea Institute for Health and Social Affairs said in a report that North Korea’s maternal mortality rate was 82 per 100,000 newborns, about eight times higher than the rate of 11 in South Korea, based on the United Nations Population Fund’s 2017 World Population Survey.

Of course sanctions likely have some degree of detrimental impact on the humanitarian situation in North Korea. But to blame current sanctions for what the situation looked like in 2017 – when most of the most effective, hard-hitting ones had just been put in place (or were not yet in place depending on when these measurements were done) is simply inaccurate.

The North’s maternal mortality rate marked a rise from 77.2 persons in 2008, the report noted. Maternal mortality rate refers to the proportion of women who die of pregnancy-related illness during or immediately after childbirth.

Source:
Report shows deteriorating health of N. Korean infants, mothers
Yonhap News
2018-11-20

It is surprising that data would show North Korea’s health situation declining from 2008 and nine years ahead, but there is actually quite a bit of other data, albeit from similar sources, saying the same thing. Again, I hope to take a closer look at some of this data soon, but for now, I’d say there are two possible conclusions one can draw from these figures.

The data may look this way because measurement methods and access got better, not because things on the ground actually got worse. UN institutions have gotten somewhat better access, in my understanding, since the earlier 2000s, and are able to survey places that could not be visited before. These may be localities where things are simply worse than in others, which may be why the government didn’t want to grant access in the past, leading to figures that are more accurate, but also show a trend that may not be consistent with reality.

The other alternative is that the recovery from the famine period, and economic growth of the past few years, has not been as consistent as often believed. (Update 5/2: It’s also possible that there simply hasn’t been any consistent path of recovery, but rather, that many indicators first improved vastly from the 1990s and early 2000s, only to decline again after a few years of an upward trend). Conditions are generally believed to have improved in the country as a whole over the past few years, and there is very little data to suggest otherwise. Institutional change combined with increased exports of natural resources, has spurred some degree of growth in the North Korean economy over the past few years, but we know fairly little about the degree to which different demographics of the population have actually seen their conditions improve. If maternal mortality has gone up while North Korea’s incomes from foreign trade have skyrocketed in relative terms, that would tell us something important about the distribution of economic gains.

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Gas prices down in North Korea after Kim’s China visit

Thursday, January 31st, 2019

By: Benjamin Katzeff Silberstein

A while back, I speculated that fuel prices in North Korea might go down after Kim Jong-un’s visit to China. This is precisely what happened, Daily NK reports. Causality is of course impossible to prove, but given circumstances (and the historical pattern of fuel price movements, which I write about in a forthcoming working paper), a connection doesn’t seem unlikely.

“The cost of 1 kg of fuel has fallen by around 2,500 KPW from 13,000 KPW two weeks ago,” said a North Hamgyong Province-based source on January 22. “The fall of 2,500 KPW per kg is a lot, so it’s being welcomed by merchants.”

The drop in fuel costs has impacted gasoline prices in the country’s northern region, with the source adding that truck drivers he spoke with have reported that the fuel prices in Pyongyang are similar.

Despite the restrictions on oil imports into the country due to international sanctions, smuggling across the country’s porous sea and land borders have kept gasoline supplies (including diesel) steady in the country, the source said.

The cost of fuel in North Korea last year fluctuated considerably due to sanctions pressure. News outlets reported last year that fuel prices reached 27,000 KPW per kg in early January 2017, a 60% spike from December 2016 prices.

The prices dipped back down to around 15,000 per kg, before settling at 15,500 KPW in December 2018. This suggests that gasoline prices in North Korea are more sensitive to international sanctions than other commodities like rice.

The recent fall in prices is likely due to a reduction in the price of smuggled fuel from China and the rising volumes of diesel fuel being refined and sold in the country.

Domestically refined diesel is generally supplied to the military and state-run factories, but also finds its way to the markets through different avenues. The source reported that there is now more diesel fuel being circulated in the markets.

Also, see this on the general ease of smuggling conditions/border controls after the visit.

Full article:
Optimism rising as fuel prices dip in North Korea
Kang Mi Jin
Daily NK
2019-01-28

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UN panel says North Korea is selling fishing rights

Thursday, January 31st, 2019

Benjamin Katzeff Silberstein

One of the many ways in which North Korea earns hard currency is sales of fishing rights to vessels from China. This is also supposedly one of the reasons for the North Korea “ghost ships” drifting to Japan. Because many fishings rights near North Korea are sold to Chinese vessels, North Korean boats have to go further out, often without adequate fuel supplies. Kyodo News reports that the UN panel of experts will soon publish their report detailing some of these fishing rights sales, which breach the sanctions currently in place:

The claim is based on information provided by two unnamed member states, though one has been identified as Japan, according to officials in Tokyo.

It is also expected to be reported that more than 15 Chinese fishing vessels were inspected and found to be carrying licenses from North Korea, officially known as the Democratic People’s Republic of Korea, during the reporting period of January-November 2018.

It is anticipated that information obtained from fishermen who were questioned will reveal that around 200 Chinese fishing vessels were operating in North Korean waters. Based on another interview, it was discovered that the price of a single fishing license cost about 50,000 yuan ($7,250) per month.

The fishing vessels apparently displayed fishing permit number plates that were attached to the outside of the vessels, flown on flags, or both in combination.

These actions violate a Security Council resolution adopted in December 2017 in response to Pyongyang’s ballistic missile launch the previous month. In it, the 15-member council clarified that any sale of fishing rights by North Korea was strictly prohibited.

Last September, Japan’s Foreign Minister Taro Kono highlighted concerns about the sale of fishing rights as well as ship-to-ship transfers of petroleum products as two examples of the North’s “sophisticated efforts to evade and circumvent” past resolutions.

The resolutions were imposed on the country in escalating fashion as it carried out a total of six underground nuclear tests and numerous missile launches using banned equipment.

Each year, the panel prepares its report based on information analyzed by its eight members, who have expertise on a variety of issues such as nuclear nonproliferation and export trade control.

Full article:
N. Korea likely to be accused of illegally selling fishing rights
Kyodo News
2019-01-31

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North Koreans swamped with state-mandated work after Kim’s New Year’s Speech

Friday, January 18th, 2019

Benjamin Katzeff Silberstein

Daily NK:

A source in North Hamgyong Province told Daily NK on Janaury 16 that “people are busy carrying out the social tasks that began earlier this year.” The tasks focus on manure collection and material support in an effort to boost production numbers in time for Kim Il Sung and Kim Jong Il’s upcoming birthdays.

“Members of the Socialist Women’s Union of Korea who conduct business in the markets rather than a formal workplace have to contribute a total of 1 ton of manure, or 150 kilos each per day,” she added. “Those working in companies have to meet their own manure targets of each collecting 10 kg of human waste, 30 kg of dog/cow/lamb or other animal droppings, and 50 kg of humus soil.”

If they fail to meet their quotas, they are forced to work night shifts. Many are having to continue working in their day jobs while also trying to meet their ‘manure battle’ quotas.

That being said, the total amount of manure authorities are targeting for collection this year is 200-500 kg (per adult). This marks a reduction from last year, and is a development that residents have expressed some relief about.

Even Socialist Women’s Union of Korea members are noting that the “situation has improved.” In the past, the government set quotas for specific types of manure to be collected, but this year it has only presented a total quota requirement. The government may be aiming to prevent any interruptions in the market activities of union members.

A separate source in South Pyongan Province said that while high school students were each given 300 kg and middle schoolers 100 kg manure collection quotas, elementary students were not given any quotas to fulfill despite previously being “unconditionally mobilized” into such drives in the past.

“Carrying sacks or backpacks, inminban leaders are going around and collecting two eggs and 7,000 won from each person within their districts for the manufacture of gifts to be handed out to children on Kim Jong Il and Kim Il Sung’s birthdays (February 16 and April 15, respectively),” he added.

In some cases in the past, residents would avoid opening their doors to the inminban leaders, anticipating that the officials were going to request donations.

Full article:
North Koreans swamped with “state-sponsored tasks” in the new year
Ha Yoon Ah
Daily NK
2019-01-18

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South Korea and the US consider what incentives to offer North Korea in negotiations

Wednesday, January 16th, 2019

Bloomberg reports that sanctions relief may be used as an incentive for North Korea in the current negotiations, by South Korea and the US. The better question is, how could it not…?

Foreign Minister Kang Kyung-wha told a news conference Wednesday in Seoul that the allies were reviewing various packages of incentives that Washington could bring to the table in the meeting. While Kang provided few details other than to say restarting stalled business projects were being discussed, the term can cover everything from sanctions relief to moves to formalize the end of the 1950-53 Korean War.

[…]

Negotiations between the U.S. and North Korea have sputtered since Trump and Kim Jong Un signed an agreement during their first meeting in June to “work toward complete denuclearization of the Korean Peninsula,” without defining the phrase or setting any deadlines. North Korea argues the deal implied a step-by-step approach, where each of its actions are met by U.S. responses, while Trump administration officials assert that Kim Jong Un accepted his country’s “final, fully verified denuclearization.”

Kim Jong Un warned in his New Year’s address this month that he could be forced to take a “new path” in talks if Trump didn’t relax sanctions pressure. He pressed for U.S. concessions to reward his decisions last year to halt weapons tests and dismantle some testing facilities, without offering additional steps.

Full article:
U.S., South Korea Mulling Incentives for Kim in Nuclear Talks
Youkyung Lee
Bloomberg News
2019-01-16

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