Archive for the ‘Statistics’ Category

North Korea’s economic growth – from Pyongyang’s perspective

Monday, October 15th, 2018

By Benjamin Katzeff Silberstein

Has North Korea’s economy been growing under sanctions? That’s what an economist in Pyongyang claims. In a recent interview with Kyodo (published here by Japan Times), Ri Gi Song at Pyongyang’s Institute of Economics at the Academy of Social Sciences, claimed that North Korea’s GDP per capita grew by 3.7 percent in 2017, a year during which the country was virtually banned from selling its most crucial export goods, and faced very harsh conditions for importing crucial resources such as oil and fuel. When factoring in population growth, the GDP-growth-figure diminishes somewhat to 3.2% (see below), but it’s still firmly in the same range.

Strange as it may sound, it is possible to imagine that North Korea’s economy wouldn’t contract severely during a year of sanctions. GDP growth alone is a poor way of measuring long-run, sustained economic growth and progress. While it may sound counter-intuitive, the sanctions, while depressing the economy in certain ways, may have boosted it through other mechanisms. The ban on coal imports from North Korea, for example, may well have boosted certain industries, as this blog has covered in the past. Because exports have dwindled drastically, the price at which North Korean coal can sell – domestically as well as internationally – gets much, much lower than when it could be sold in greater quantities on a somewhat competitive market. So with lower prices for factors of production, industry could certainly experience growth in the short-run. But this would only be a temporary and meaningless boost, since the losses from unsold goods abroad would be much greater.

In other words, Ri may be partially right, but numbers are also likely inflated for political reasons. Here’s an excerpt from the interview, annotated with comments:

North Korea’s economy grew 3.7 percent in 2017, a professor of a think tank in Pyongyang said in brushing aside the view that the country has faced an economic contraction against a backdrop of international sanctions.

Even though North Korean economic data has become somewhat more public and plentiful in the past few years, there are still undeniable political imperatives in publishing data that makes the country appear resilient in the face of sanctions. After all, if sanctions aren’t “working” (whatever that may mean), what’s the point in keeping them? That, of course, doesn’t mean that such figures are accurate, wholly or partially.

Ri Gi Song, a professor of the Institute of Economics at the Academy of Social Sciences, said in a recent interview with Kyodo News that North Korea has achieved economic expansion without depending on other nations.

Well, he would say that, since that is how Juche is spoken. That doesn’t mean it comes from a place of literal belief; it’s simply what you say if you’re a North Korean economist speaking from your official position, and shouldn’t be read as an expression of delusion or the like.

Ri said gross domestic product totaled $30.70 billion in 2017, up from $29.60 billion in 2016. It is very rare for North Korea to disclose its GDP and also the first time that the country’s GDP data in the past two years have been unveiled.

But it is impossible to verify the accuracy of the figures, as the professor did not make public other economic indicators such as consumer spending, investment and inflation rate.

Although a report released by South Korea’s central bank showed in July that the North’s economy shrank 3.5 percent in 2017 from the previous year, Ri shrugged it off, saying Seoul’s calculation is “only an estimation.”

Ri is right that South Korea’s figures are only estimates, albeit careful ones based on models developed and refined (presumably) through years of experience. But the thing is, Ri’s official North Korean figures, too, are only an estimate. Even in the best of situations, no GDP-figure is exactly certain and precise. To calculate as vast of an “object” as a country’s economy, some assumptions inevitably have to be made. One of them is that various forms of reporting is generally accurate.

In the case of North Korea, however, this problem is incomparably worse than in open, democratic free market-economies. Let’s assume for a moment that the North Korean government genuinely is eager and willing to generate real, trustworthy and truthful economic statistics, which in many ways does seem to be the case. Even so, how do you generate accurate accounts reporting in an environment when the going principle for a long time has been that planning targets must be met regardless of actual conditions? And with so many different forms and models of enterprise in action throughout the country, seemingly with little but perhaps improving consistency across the board, how would it be reasonable to expect the North Korean government to be able to calculate a reasonable GDP-figure? That’s not even getting started on the investments-portion, a crucial variable to determine growth. Private investments into partially private enterprises is still technically illegal in North Korea, but there are many signs to suggest that it’s taking place on an increasingly substantive scale.

So, even if the North Korean government’s statistical authorities have all the right intentions, I don’t envy their working conditions one bit.

He said North Korea’s population grew to 25,287,000 last year from 25,159,000 in 2016. Based on the figures, the country’s per capita GDP stood at $1,214 last year, equivalent to that of Myanmar.

This means that the actual growth rate claimed by Ri, factoring in population growth, is 3.2%. This, however, still isn’t the “real” growth rate. To get those numbers, we’d need to factor in inflation, and no reliable numbers are available to let us do that. But on the face of it, judging by the price trends for foreign currency and rice through 2016–2017, inflation wasn’t visibly large or out of the ordinary. Even so, we simply don’t know.

In an attempt to overcome the negative impact of international economic sanctions, North Korea has “developed various technologies” under the spirit of “self-reliance,” Ri said, adding the nation has implemented measures to save the utilization of crude oil, for example.

This is certainly true to an extent. Just look at the masses of North Koreans purchasing solar panels for electricity rather than relying on scantly available government supplies of power. And as mentioned above, there is some sense in this argument, if interpreted in a slightly broader manner, that North Korea’s economy may have experienced some gains in efficiency from sanctions, as people are forced to find new, creative ways to get around increasingly tricky conditions. And industry may have gotten a boost from lower energy prices, as may other consumption, since citizens can theoretically spend more on other items if energy prices fall.

Still, this boost would only be marginal, and temporary at best. It certainly wouldn’t create 3.2 percent growth rates, although it might have contributed.

[…]

Ri acknowledged that North Korea has suffered food shortages, but emphasized that the heavy and light industries as well as the chemical sector have been growing and electric power conditions have been improving.

Amid a thaw in inter-Korean relations, Ri expressed hope for economic cooperation with the South.

Full article:
North Korea’s economy grew 3.7% in 2017, Pyongyang professor estimates
Japan Times/Kyodo
2018-10-13

At the end of the day, as Andray Abrahamian points out, neither North nor South Korea publishes their methodology for calculating North Korea’s growth rates, so all we can do is speculate about the assumptions that go into the models.

Share

Moon: North Korea wants to join international financial institutions

Wednesday, September 26th, 2018

Benjamin Katzeff Silberstein

NK News reports some of the comments that Kim Jong-un made to Moon Jae-in on the topic:

Speaking at a discussion hosted by the Council on Foreign Relations (CFR), the Asia Society Policy Institute, and Korea Society, Moon said Seoul plans to support the DPRK’s national economic development should sanctions be lifted following “substantive denuclearization.”

“South Korea intends to take the initiative in putting its weight behind the North Korean economic development, including in the construction of infrastructure,” the South Korean President said. “I believe that will also provide fresh vitality and growth for the South Korean economy.”

The South Korean President said, however, that there would be “a number of limitations” should Seoul work to help Pyongyang’s national economic development, stressing the necessity for support from international financial institutions.

“I think international funds supporting North Korea’s infrastructure will need to be created,” Moon added. “Other international agencies including the WB (World Bank), the World Economic Forum, and the Asian Development Bank should aid North Korea.”

Pyongyang is willing to accept support from international organizations, Moon said, including the International Monetary Fund (IMF).

“I’ve confirmed that the North Korean side has the will to engage in reform and opening by joining several international organizations such as IMF and World Bank,” he said.

South Korean finance minister Kim Dong-yeon in May announced that Seoul was seeking shortcuts to allow North Korea to receive funding and support from International Financial Institutions (IFIs), including the European Bank for Reconstruction and Development (EBRD).

Full article:

North Korea wants to join IMF and World Bank, pursue economic reform: Moon
Dagyum Ji
NK News
2018-09-26

As I’ve written about elsewhere, North Korea joining the IMF and/or the World Bank would entail a number of structural reforms that should, at least in theory, improve the health of the economy. The requirements to improve transparency in economic data would also be crucial, not just for those outside of North Korea interested in its economic situation, but also for the North Korean government itself, which likely does not have a very full picture of many of the most important economic indicators in the economy.

Share

Dollar exchange rate on North Korean markets at high-point

Wednesday, September 5th, 2018

By Benjamin Katzeff Silberstein

One of the more puzzling issues through the “maximum pressure”-period and harsh Chinese implementation of international sanctions on North Korea has been the lack fo significant changes in the market exchange rate between the won and the dollar. For a number of apparent reasons – lack of inflow of hard currency being the most significant one, as North Korea’s exports have dwindled – we should have logically seen the exchange rate appreciating, and the dollar becoming more expensive. This largely hasn’t happened.

The won is still remarkably stabile, but over the past few weeks, it’s gone up to higher levels than at any point through 2017 and 2018. An average of the three cities reported in Daily NK’s four most recent observations show that the dollar trades for an average of about 8237 won, the highest observation that I can find in my dataset (based on Daily NK price reports) since the summer of 2016.

Won for US-dollars at market rates, 2017–September 2018. Data source: Daily NK. Graph: NK Econ Watch.

It’s doubtful whether this suggests any significant change in market conditions. Currencies, after all, fluctuate, and this change isn’t all that great. The won is up by less than 200 since the previous observation, from 8041 on July 31st. That’s not a massive change, or beyond the scope of normal currency fluctuations. In a bigger-picture perspective, things still look remarkably stabile, as the graph below shows. Looking at the won-USD-exchange rate since 2009, it’s still very much hovering around 8000, perhaps and highly speculatively a currency peg the North Korean government has chosen, and is able to keep up through means that remain unknown.

Won for USD-rates on the markets, 2009–September 2018. Data source: Daily NK. Graph: NK Econ Watch.

Still, a number of things may be happening here. The most obvious factor to consider is whether the current stall between the US and North Korea in negotiations is causing people to hoard dollars, anticipating further restrictions in trade and currency inflow. Off the top of my head, this seems unlikely. If the won-USD-market exchange rate didn’t move much when North Korea was being slapped with sanctions against all of its crucial export goods, I doubt that a lack of diplomatic movement could move the exchange rate to higher levels than during, say, the summer and fall of 2017, when tensions were really ramping up.

It is more likely that domestic conditions are behind the increase. For example, border controls on trade and smuggling reportedly tightened on the Chinese side around mid-August. On the North Korean side of the border, too, news reports indicate that security has tightened as the 9th of September approaches, North Korea’s 70th founding anniversary. It’s also possible that the government’s generally increased demand for resources around the holiday has impacted the currency market.

Alone, this increase says little. Should the USD consistently keep appreciating on the markets, however, that would suggest more serious and prolonged difficulties for border trade and economic conditions overall.

Share

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.

Share

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

Share

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

Share

North Korea warns of humanitarian disaster following heat wave

Thursday, August 2nd, 2018

Benjamin Katzeff Silberstein

Reuters:

North Korea on Thursday called for an “all-out battle” against record temperatures that threaten crops in a country already grappling with tough international sanctions over its nuclear weapons program.

North Korea on Thursday called for an “all-out battle” against record temperatures that threaten crops in a country already grappling with tough international sanctions over its nuclear weapons program.

Similar past warnings in state media have served to drum up foreign assistance and boost domestic unity.

“I think the message was a precautionary one to minimize any impact on daily life,” said Dong Yong-seung, who runs Good Farmers, a group based in Seoul, capital of neighboring South Korea, that explores farm projects with the North.

But the mention of unprecedented weather, and a series of related articles, suggest the heat wave could further strain its capacity to respond to natural disasters, said Kim Young-hee, a defector from North Korea and an expert on its economy at Korea Finance Corp in Seoul.

The warning comes after North Korean leader Kim Jong Un announced in April a shift in focus from nuclear programs to the economy, and held an unprecedented June summit with U.S. President Donald Trump in Singapore.

Since then, the young leader has toured industrial facilities and special economic zones near the North’s border with China, a move experts saw as a bid to spur economic development nationwide.

“He has been highlighting his people-loving image and priority on the economy but the reality is he doesn’t have the institutions to take a proper response to heat, other than opening underground shelters,” added Kim, the economist.

GOOD CROP CONDITIONS

Drought and floods have long been a seasonal threat in North Korea, which lacks irrigation systems and other infrastructure to ward off natural disasters.

Last year, the U.N. Food and Agriculture Organisation warned of the North’s worst drought in 16 years, but late summer rains and privately produced crops helped avert acute shortages.

There appear to be no immediate signs of major suffering in the North, with rice prices stable around 62 U.S. cents per kg through the year to Tuesday, a Reuters analysis of data compiled by the Daily NK website showed.

The website is run by defectors who gather prices through telephone calls to traders in the North, gaining a rare glimpse into the lives of ordinary citizens.

Crops are good this year because there was little flooding to disrupt the early spring planting season, said Kang Mi-jin of the Daily NK, based in Seoul.

“They say nothing remains where water flowed away, but there is something to harvest after the heat,” Kang said, citing defectors. “Market prices are mainly determined by Chinese supplies and private produce, rather than crop conditions.”

The October harvest would reveal any havoc wreaked by the weather, Kim Young-hee added.

Full article and source:
Sanctions-hit North Korea warns of natural disaster brought by heat wave
Hyonhee Shin
Reuters
2018-08-02

Share

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.

 

Share

Kim Jong-un and deforestation

Monday, July 16th, 2018

Benjamin Katzeff Silberstein

Kim Jong-un is clearly aware of, and engaged in, the forestry issue, which not least his visits in July show. North Korea’s forestry situation is dire and has vast environmental and economic consequences. He gave an interesting speech on it in 2015. Here’s a recent article by Daily NK on the role of the forestry issue, and what can reasonably be done:

Citizens of poorer countries typically focus their energy on subsistence agriculture in order to survive. In North Korea, this focus has widely occurred at the expense of environmental issues, with many in the country viewing environmentalism as a “luxury.”

However, there will likely be an increase in environmental awareness when the economy improves through reforms and opening. Increases in personal income levels will allow the population to pay more attention to and seek ways to address environmental issues.

North Korea has experienced severe environmental destruction over the past 70 years. Widespread logging has left barren vistas throughout the country, exemplifying the poor state of North Korea’s natural environment and serving as a stark reminder of the economic, technological and societal factors at play.

The Korea Forest Research Institute (KFRI) in South Korea has published satellite images showing the extent of North Korea’s environmental destruction. According to the data, forests once covered 9,160,000 hectares of North Korean territory, with 2,840,000 hectares of this forest area now destroyed. This means that 32% of North Korea’s total forest area has been wiped out, an area 46 times the size of the city of Seoul.

The regime has paid very little attention to environmental conservation and as a result the country frequently suffers massive loss of human life due to landslides and other natural disasters.

Recently, however, there are signs that the North Korean government is paying more attention to the fate of its forests. In early July, Kim Jong Un, during an on-site visit to a reed branch farm in North Pyongan Province and the Sinuiju Chemical Textile Factory, which produces paper and textiles with reeds, located around Sinuiju, commented on the insufficient supply of paper and called for support for paper companies making paper out of reeds (as opposed to wood).

North Korea’s paper industry is almost completely dependent on using pulp, which is made out of wood. Pulp is made by mixing water with wood sourced from coniferous trees. Pulp contains lignin and other elements which makes it relatively practical during the manufacturing process, but because it can easily change color it cannot be used for high-quality paper. Instead, it is commonly used for newspapers.

The Rodong Sinmun and other state propaganda materials are almost all made out of paper produced from pulp.

North Korea created the 121 Cooperative Enterprise under the management of the Korean Workers’ Party’s Financial Administration Department to produce paper for the Rodong Sinmun. This enterprise operates a network of tree harvesting companies based throughout the country that fell thousands of trees each year.

The trees are then transported from forests near the Amnok River, Chongchun River and Duman River to Kilju, Sinuiju and Anju where they are made into pulp and finally turned into paper for newspapers at the 121 Paper Factory in Anju, South Pyongan Province. Most of the wood harvested each year in North Korea is used for newspapers or other government projects and amounts to significant volumes.

The destruction of the country’s forests has increased annually and most of it is due to the activities of the North Korean government.

North Korea has recently paid more attention to the preservation of its natural environment, and a welcome sign is that the country is making more paper out of reeds than wood. However, the country lacks the technical ability to assess its own environmental issues and has not put in place the proper systems to take advantage of production methods that are cleaner and more efficient.

North Korea has long had notional policies to protect its environment. The country’s environmental protection agency was made independent from the Ministry of Security in the late 1980s and became the “Ministry of Land and Environment Protection.” In April 1998, as the rest of the government shrank in size due to the economic crisis, this ministry was expanded and turned into a full government ministry. The ministry was instrumental in helping environmental protection and management practices become more systematic through the establishment of forestry administration offices, nurseries, and forest monitoring centers under each of the country’s provincial governments.

These organizations designated a period of mass mobilization each spring and fall for citizens to plant trees and conduct activities related to the prevention of landslides and mudslides. Ironically, however, North Korea’s forests have been degraded even further despite these efforts. This is largely due to the fact that the government still relies heavily on wood products.

North Korea’s policy of self-sufficiency in the economic sphere has continued to raise the country’s dependence on wood and led to accelerating deforestation throughout the country, which in turn leads to greater destruction arising from natural disasters.

Mountainous areas and those near rivers suffer the most from deforestation. Areas without trees can experience massive mudslides, even after only receiving light rainfall.

Daily NK sources recently reported that significant loss of human life and destruction of property occurred during a landslide following rainfall near a dam construction site in North Pyongan Province. The sources said that deforestation that had occurred near the construction site was to blame.

The construction of power plants and roads typically leads to the complete deforestation of mountains nearby. The state is unable to provide the wood required for construction, and so construction workers must find a way to handle the lack of materials themselves. They have little choice but to cut down trees near the construction site.

North Korea is now focusing on the construction of massive dams as a way to increase its energy supply. This construction is leading to the deforestation of nearby forest areas.

Deforestation enacts a heavy toll on North Korea’s economy and its population is becoming more concerned about its effects. Many complain that the deforestation is damaging their own ability to lead happy lives.

North Korea is faced with a whole slew of issues: lack of energy for its citizens; the lack of economic power to deal with its environmental problems; and a planned economy that has only hampered economic development. The country must, however, implement more environmentally-friendly economic policies before further damage occurs.

The North Korean government must address the social, technological, economic and market-related factors that drive deforestation. They must also be open to assistance from abroad so that their attempts to prevent further deforestation and protect existing forests are successful.

Article source:
Kim Jong Un wants to stop deforestation, but can he?
Jo Hyon
Daily NK
2018-07-16

Share

Fuel prices are dropping in North Korea, and that’s a little odd

Tuesday, July 10th, 2018

Benjamin Katzeff Silberstein

As in the rest of the country, gas prices continue to fall in Pyongyang, data from NK Pro shows, but remains much higher than the closest available month of 2017.

At the same time, recent figures from China state that its exports of refined fuel products to North Korea continues to remain well below the ceiling mandated by UN sanctions. Asia Press reports a slight increase of diesel prices in Yanggang and North Hamgyong provinces, but it’s a fairly minor one and the data by NK Pro and Daily NK still represents more data points. So what’s a plausible explanation here?

My best guess is that it’s a combination of increased smuggling, perhaps aided by China’s declining vigilance in enforcing sanctions and restrictions against illicit trade across the border. Gas prices shot up last spring when China decided to drastically cut sales of fuel products to North Korea, citing financial reasons (that North Korea wouldn’t be able to pay), but the decision was very likely influenced by political considerations as well. Now with the multitude of summits between Kim Jong-un and Xi Jinping, and Kim and Trump, China’s willingness to enforce sanctions with the same vigor as it did through the second half of 2017 and the first half of 2018 has likely waned, impacting matters like fuel prices as well. It also seems plausible that fairly small changes in supply could change prices quite drastically, since North Korea already consumes a relatively small amount of gasoline and diesel on the whole.

Another possibility is that Chinese flows of unrefined oil through the pipeline in northwestern North Korea, through Dandong and Sinuiju, have increased. These aren’t monitored in the same way as Chinese sales of refined fuel to North Korea, and as far as I know, could be increased without the international community easily noticing. These oil flows also aren’t part of regular trade between the countries, and should be regarded more as Chinese financial support to North Korea.

My best bet would be on a combination of these two factors, but there’s obviously much we don’t know about the development.

Update 2018-07-15: NK News reports some US government data seeming to hint at what’s been going on. At least 89 hip-to-ship transfers occurred between January and May, in violation of UNSC sanctions:

North Korea likely conducted at least 89 ship-to-ship transfers to illicitly obtain refined petroleum products between January 1 and May 30, U.S. data provided to the United Nations and seen by NK News on Friday claims.

Pyongyang may have illegally imported up to 1,367,628 barrels of refined petroleum as a result of the transfers, upper-end estimates suggested, over double the 500,000 barrels authorized for export to North Korea each year by current UN sanctions.

Consequently, the U.S. recommended that the UN 1718 sanctions committee issue a “public note verbale to all UN Member States to inform them that the DPRK has breached the UNSCR 2397 OP5 refined petroleum product quota for 2018,” and that all countries should “order an immediate halt to all transfers of refined petroleum products to the DPRK.”

Since the May 30 data cut-off, the Japanese government has revealed details surrounding three extra cases of North Korean vessels caught conducting likely ship-to-ship transfers, with two on June 21 and June 22, and one on June 29.

Article source:
N. Korea likely conducted 89 illicit ship-to-ship transfers in 2018: U.S. data
Chad O’Carrol
NK News
2018-07-13

Share