North Korean Economy Watch

DPRK watchers are generally familiar with the Korean Friendship Association (KFA) and its president, Alejandro Cao de Benos.  Alejandro has joined the rest of the DPRK blogging community and launched his own blog (in Spanish).  His blog is here.

He only has a few posts so far, but he has several pages typed up on an argument he is having with a journalist from the Spanish television station, Cuatro (4).  Apparently, Alejandro took some Spanish journalists on a recent KFA delegation, and like other journalists/film makers he has delt with (here and here), he did not like their final product.

The entire show “Love the Leader of all Things” can be seen on YouTube, but it is in Spanish: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6.

Here are Alejandro’s comments about the show.

Korea Times
Ryu Jin
9/12/2007

More than 50,000 people are expected to visit Mt. Geumgang in North Korea in October, breaking the record for visitors in a single month, according to Hyundai Asan, the South Korean operator of the tourism business, Wednesday.

Hyundai Asan said that the number of people who have made reservations for the tour program for October has already exceeded 54,000, some 10,000 more than the previous record of 44,000 set in August 2005.

“All tickets for the Chuseok holiday from Sept. 22 to 26 have already been booked,’’ a Hyundai Asan spokesman said. “An average of 1,500 people will cross the border to visit the North Korean resort area around the Korean version of Thanksgiving Day.’’

In the meantime, Hyundai Asan also said that it plans to hold various cultural events including an ocarina performance by East Kimura Ocarina Band from Japan on Sept. 15 to greet the advent of autumn.

The Mt. Geumgang tourism project was launched in 1998 amid thaws between the two Koreas. The cumulative number of tourists exceeded 1.5 million in early June, boosted by the reconciliation process since the first inter-Korean summit in 2000.

Daily NK
Kim Yong Hun
8/29/2007

In 2005, the South Korean Buddhist Cheontaejong and North Korea collaborated to begin restorations at Yongtong Temple and as of June this year, an agreement was made permitting tourists to visit the area of Kaesung with the focus of visiting the sacred land. Though the tour is limited, it still has symbolic meaning as it is the only region of North Korea that South Koreans can legally visit in addition to Geumgang Mountain. The following is a report on Kaesung from the eyes of the reporter.

Tourists not only visit the sacred land of Yongtong Temple but the Sunjukgyo located in the regions of Kaesung and the Korean Folk Museum. Visitors arrive at Yongtong Temple via a road which workers and laborers take on their way to work at Kaesung Industrial Complex. Then, tourists visit the traditional folk inn, Sunjukgyo and Korean Folk Museum.

Excluding the ruins, photography is prohibited at all times. The path to the holy land, the people and the urban area of Kaesung as well as the country scenery on the outer skirts of Kaesung may only be captured just by the eye.

There were many people clustering in groups within the city of Kaesung. Most of the people wandering on the streets wore dark colored short sleeved t-shirts and black pants. The main form of transportation is the bicycle.

The people cautiously watched the tour bus which travelled on the road to the holy land but showed very little response. Every so often, soldiers stood at attention gazing at the tour bus and the guards observed and cautioning that the no contact was to be made with the people.

However, every so often, people and children wove in a friendly manner while eyeing the guards.

On arriving at the centre of Kaesung city, I noticed that people were sitting in groups. I saw some people sitting in two’s and three’s leisurely smoking and chatting, some aged people carried bundles with difficulty, and 10 or so students attentively listening to a person that seemed like their teacher.

Complete control over contact with Kaesung citizens

Once we had just reached the outer skirts of Kaesung city, you could see hundreds of acres of fields. Here, groups of North Korean workers had been mobilized to work. There were even quite a lot of young students. Just like the children, they watched the South Korean tourists but did not wave their hand. On the whole, there are more rice paddies rather than corn and bean fields in Kaesung.

The urban areas of Kaesung was cleaner and more organized than I had expected. Propaganda slogans idolizing Kim Jong Il and Kim Il Sung were visible sporadically. Kim Il Song’s statue alone made it clear that this was North Korea. In addition, barbers, clothes alteration and shoe stores were located within a building for convenience as well as prominent trade names for a ‘Wedding Photo Gallery’ and ‘Hair Salon.’

All the homes around Kaesung were either one-storey or apartment blocks. However, whether the buildings were old or not, paint was peeling and some buildings even used plastic as a window shield instead of glass.

In order to go to Yongtong Temple, you must pass through Kaesung’s urban area, only then will you be permitted to enter the outer skirts and rural districts of Kaesung. The scenery outside of Kaesung was of endless fields. Though the mountains were dense with trees, there weren’t many outstanding tall trees. Rather all the trees stood at around 1m.

I felt a sort of loss, having only seen no more than 10 people while riding the tour bus that was traveling the regions of Kaesung that had been disconnected to South Korea for over half a century. Above all, I was most disappointed at the fact that I could not capture any photos of Kaesung which I had never before laid eyes on.

Two North Koreans accompany the tour as “guides” to the South Korean tourists, though these people were there to assert control over taking photos.

“The problem is South Korea’s conservative press who criticize North Korea”

Whether or not these “guides” had met many South Koreans in past, they freely took photos with the tourists without hesitation and casually socialized with the South Koreans. Further, they were the ones to open discussion on South Korean people, Kaesung Industrial Complex and the South Korean presidential election. The two guides on our bus showed quite an interest on the South Korean media.

One guide began by saying, “I cannot understand why Southern conservative media criticizes North Korea” and used this as a point to continually criticize the South Korean press. Further, the guide even named a particular reporter, expressing anger and complaints against the reporter for distorting the news.

Though you can capture some of Kaesung city through your eyes on the tour, it is difficult to capture the hearts of the people. This Kausung tour must be a “confined tour” which prohibits all contact with the people.

Visitors are prohibited from taking any photos outside the ruins and Yongtong Temple. While taking photos of the people is completed forbidden, conversation with the people whom the guides did not permit to talk is even more difficult. Even the average citizen is surely not permitted to approach us.

At the North Korean immigration office, all cameras owned by South Korean tourists are inspected. This is to regulate any photos that were taken without the guides’ permission. Any photo that is not of the ruins or remains is deleted.

One tourist said, “I took a few photos of North Korean transportation because it was so interesting. I was rather surprised when a North Korean official made an issue of this and made me delete the photos.” If any photos are taken without consent, the camera is confiscated and the person fined $100.

The 500 or so visitors to the Yongtong Temple all carried one or two souvenir bags. There are more than 2 souvenir stores at both the folk village and Korean Folk Museum which sells special gifts such as Kaesung ginseng, alcohol and other special products.

These two stores displayed goods produced at Kaesung including alcohol, honey, medicinal herbs, ginseng, fans, stamps, stamps and books. In particular, the books were on Kim Il Sung and Kim Jong Il propaganda, and others beautifully decorated idolizing the two people. They had also been published in English. An expensive book would set you back about $100, though on average, the books cost $10~$50.

There is only one reason why North Korean authorities strictly regulate contact with the people and capturing of photos. It is to do with money. This was clearly evident throughout the whole Kaesung tour.

The Kaesung tour costs 160,000 won (around USD 172) per person. When you calculate the tour costs of 500 or so people and the average amount of money they spend purchasing souvenirs, North Korea can earn more than $100,000 through one Kaesung tour.

My heart raced as I visited Kaesung in person, a place I had only known on the map. It was probably because of my high expectations and excitement, however, my expectations were greatly disappointed. On the tour, I merely saw scenery and was unable to meet any people. I wonder how much longer it will be until the North Korean regimes continues to enforce control and venture on this dangerous ride of foreign money.

The most authoritative, publicly available map of North Korea
Version 4: August 29, 2007

Download it here 

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the fourth version.

Additions to the latest version of “North Korea Uncovered” include the city of Manpo along the Chinese border, KEDO, Kumgang Resort expansion, Kaesong Industrial Zone, as well as a few more parks, antiaircraft sites, dams, mines, canals, etc. I have also added more links in the menu which will tell the viewer a bit about the locations themselves. I have also changed the color scheme to make the collage easier to view.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your additions to this project.

Institute for Far East Studies (IFES)
NK Brief No. 07-8-22-1

The Bank of Korea released a report on August 17 that details economic estimates on a variety of sectors in North Korea. Overall, North Korea’s Gross Domestic Product (GDP) fell 1.1 percent during 2006, the first time since 1999 that the North has failed to increase its GDP. Inclement weather was one factor that played into a fall in agricultural production, and there also appears to have been little progress in the construction of public works in the country. Overall, North Korean GNI was 2.9 percent of that in the South, with per capita GNI at 1,108 USD, 6 percent of the 18,372 USD per capita GNI in South Korea.

The entire economy of the DPRK is approximately 1/35th that of the South, with the Gross National Income (GNI) a mere 1/17th the level seen in the ROK. This shows a growing divide between the two Koreas, as the comparisons in the previous year were 1/33rd and 1/16th, respectively. Due to the North Korean nuclear issues and other foreign relations problems faced during 2006, a worsening of diplomatic relations with other countries, energy shortages and other economic woes befell the North, putting the entire economy in a difficult situation.

The North showed a weakening of the agricultural and forestry industries, increasing production by a mere 2.4 percent, 2.6 percent down from 2005. Corn and other cereal production grew by 7 percent, but rice was down 6.4 percent, and bean production was down 6.6 percent from the year before, leaving overall grain output down 3.6 percent. On the other hand, shellfish and crustacean harvests grew by 1.5 percent, while timber and livestock harvests remained unchanged.

On the mining front, coal and other non-metal mined resources showed promising increases, but production of lead, zinc, and copper fell by 1.7 percent, compared to the 3.5 percent growth posted in the previous year. Despite promising increases in production of manufactured goods and growth in the chemical and heavy industries in 2005, last year North Korean production growth rates in these fields fell flat at a mere 0.4 percent, increasing production rates of fibers, clothing and shoes, but turning out less kitchenware and food-related products. Coal and fuel products looked favorable, but fabricated metals and machine parts, as well as nonferrous metal products grew at a rate of 1.1 percent, down from 5.4 percent.

Gas-fired electrical generation was up 17 percent, while hydroelectric power grew only 2.7 percent, falling from 4.4 percent in 2005. Other infrastructure projects were also on the decline, with only 49 km of road paved in 2006.

The number of foreign tourists declined, with visitors to Kumgang Mountain falling from 366,000 in 2005 to only 265,000 last year, adding to the 21.8 percent decline in the food and lodging sector, but the transportation and communication sector grew by 5.1 percent, leading to an overall gain of 1.1 percent in the service industry.

The gap in overseas trade between the two Koreas increased from 182-fold to 212-fold as North Korean foreign trade fell off 5.2 percent. Imports in the North were up 2.3%, although seafood imports were down 48.4 percent. The slack was made up by a 34.1 percent increase in the import of plastics, a 31.2 percent increase in imported chemical goods, and a 12.4 percent increase in imported machinery.

During 2006, inter-Korean exchanges grew 27.8 percent, reaching 13.5 billion USD. South Korean exports to the North grew 16 percent as Seoul increased rice and fertilizer aid, and exports to the Kaesong Industrial Complex grew. On the other hand, North-South cooperative projects grew 52.7 percent as South Korea increasingly imported North Korean zinc, sand, and other natural resources.

In order to give some perspective to the North Korean economic data, the Bank of Korea offered the following comparisons:

DPRK/ROK/Ratio
Population (thousand) 23,079/48.297/2.1
Economic Growth (2006) -1.1%/5.0%
Nominal GNI (100 million USD) 256/8,873/34.7
Per Capita GNI (USD) 1,108/18,372/16.6
Exports (100 million USD) 9.5/3,254.6/343.8
Imports (100 million USD) 20.5/3,93.8/151.0
Coal Production (10,000 tons) 2,468/280/0.11
Electrical Use (10,000 kW) 782/6,551/8.4
Electrical Production Capacity (100 mill. KW) 225/3,812/16.9
Petroleum Imports (10,000 bbl) 384/88,843/231.4
Cereal Production (10,000 tons) 448.3/530.0/1.2
Rice Production (10,000 tons) 189.4/468.0/2.5
Seafood Harvest (10,000 tons) 92.3/303.3/3.3
Iron Ore Mining (10,000 tons) 504.1/22.7/0.05
Nonferrous Metals Mining (10,000 tons) 8.6/187.7/21.8
Automobile Production (10,000) 0.44/384.0/872.8
Steel (10,000 tons) 118.1/4,843.3/41.0
Cement (10,000 tons) 615.5/4,920.9/8.0
Fertilizer (10,000 tons) 45.4/318.3/7.0
Chemical Products (10,000 tons) 2.9/145.7/50.2
Railways (km) 5,235/3,392/0.6
Roads (km) 25,544/102,061/4.0
Port Loading Capacity (10,000 tons) 3,700/69,213/18.7
Shipping Capacity (10,000 tons) 90.4/1,180.2/13.1

Asia Times
Sunny Lee
8/8/2007

Hurry if you’re in the mood to travel to one of the least traveled countries on the planet. North Korea says it will admit foreign tourists this year only until October 10.

That’s the latest schedule Walter Keats received from Pyongyang. Keats heads Illinois-based Asia-Pacific Travel, the only travel company in the United States authorized by Pyongyang. The reclusive country opens itself to foreign tourists only for a limited period of the year. Restrictions on Americans are even stricter. In fact, Americans are allowed into North Korea only during the Arirang Festival, a birthday party for the late leader Kim Il-sung.

As a US citizen who is not part of a diplomatic or humanitarian aid mission on North Korea, Keats has had the rare experience of visiting the secretive country 10 times in the past 12 years, starting in 1995. During the period, Keats saw the country “definitely” changing.

“I don’t know if that’s the question of being closed or open. Things are still very restricted. But the people we deal with, at least, are more flexible, more friendly, and more open now,” Keats said in an interview in Beijing before he was to fly with Pyongyang-bound American tourists last weekend.

North Koreans’ flexible attitude is reflected, for example, in the tour scheduling. In the past, the North Koreans decided every itinerary. But Keats told them some places are not really interesting for Americans, while some are more interesting. Now they are more willing to listen.

Besides, the North Korean guides are more willing to accommodate impromptu requests from foreign tourists now such as visiting a local elementary school, even if that was not part of the original travel itinerary.

The changes are also noticeable in the North Korean tour guides themselves as well. They used to be rather solemn and less spontaneous, but these days they even crack jokes in English. Keats sees it as a “nice” change.

“One of the purposes of this tour is to break down the barriers to show that we are human beings and they are also human beings. We’re not both devils fighting each other. So it’s nice to see the humanity in both sides. Humor is a good medium,” Keats said.

North Korea and the US are still technically at war with each other as a legacy from the Korean War. However, today American tourists in North Korea are not subject to any of the anti-American sentiment and rhetoric that Keats experienced during some of his previous visits.

However, all foreign tourists to the Stalinist nation must go on guided tours and must have their tour guides with them at all times. Photography is strictly controlled, as is interaction with the local people. Besides, tourists holding US passports are not usually granted visas. But exceptions were made in 1995, 2002, 2005 and this year.

Some observers are inclined to view the timing of these exceptions as coinciding with a softening in US relations with North Korea. But that actually may not be the case, because North Korea gave the green light for US tourists in 2002 – just after President George W Bush lumped it in with a group known as the “axis of evil”.

On his part, Keats has to remind his fellow American tourists that visiting North Korea is “very different” from visiting any other country in the world and tells them to be mindful of following a few rules. These include refraining from attempting to strike an unauthorized conversation with local people.

In general, the North Korean people would not appreciate foreign tourists coming up to them because “frankly, it endangers them”, Keats said. Somebody could later ask them why they talked to the foreigners, what they said to the foreigners, what the tourists gave to them.

“So I advise our people to refrain from such approach. Of course, you’d like to talk to somebody there. But most of them don’t speak English anyway. So, if you do so, you’d be putting them at risk for no reason.”

Unfortunately, Keats observed, it’s not just the country that has changed over the years, but the tourists themselves have shown some changes as well. In the early days, tourists came with some research, reading about the society before they visited North Korea. The early tourists were more knowledgeable and inquisitive. But “today’s tourists are more interested in making sure that they’ve been to this place”, Keats said.

Keats believes the idea of going to North Korea as merely going on an “exotic tour” should be discouraged. “We get phone inquiries from people who say they don’t want to be in a group, want to go out and meet local people in North Korea. If you’re so ignorant about how the society there works, you’d think you can just go and talk to somebody on the street. That’s very dangerous.

“I don’t think you have a right to create a situation where somebody there might get into trouble because of your need to go back home and brag that you talked with North Korean people. I think it’s immoral for somebody, particularly from our [US] culture, to do so.”

Keats said no American on his tour so far has been rejected an entry visa to North Korea, but added that people with certain professions would have difficulty getting in. He took an example of journalists. He said he was specifically told by the North Koreans that he would be fined a minimum of US$1,000 per journalist, if found.

For him, however, that’s not the only business risk he has to bear in dealing with the North Koreans. Last year, he suffered a financial setback after the scheduled trip was abruptly canceled after more than 200 Americans had signed up for it.

Understandably, he was not very happy about it. “The problem is that they make changes all the time,” he said. In fact, the travel-permit dates for this year were already a third revision.

Keats said the North Koreans would simply change the dates for foreign visitors and say the foreigners needed to change their arrival dates. “They don’t seem to understand that in some peak travel seasons, changing dates on the air tickets could cost additional money. I don’t think people at the top [in North Korea] really understand how the market works.”

These days, a tour to North Korea usually comes as a four-day-three-night package. That may sound reasonable for a country that is roughly half the size of Minnesota. But the devil is in the details. The first day counts from the day the tourists’ airplane departs from Beijing to Pyongyang. (Foreign travelers usually arrive in Pyongyang via Beijing.) And on the last day, the foreigners have to leave the country at 8am. But that is still technically counted as “one day”.

So, to save time, once arrived, going to the hotel usually becomes the last itinerary of the first day. After stopping by a few places on the way from the airport, tourists go directly to see the Arirang performance, which starts at 7pm.

The Arirang Festival, the high point of any visit to North Korea, is a performance by 100,000 synchronized gymnasts inside the world’s largest stadium, occasioned for a celebration of the birth of the late “Great Leader” Kim Il-sung. It depicts two separated lovers, symbolizing the two Koreas, culminating with their reunion.

In North Korea, among the lists of “must-sees” is Mansu Hill, where a Korean War memorial and statue of Kim Il-sung is located. Others include the Arch of Triumph, Geumsu-san Memorial Palace and Kim Il-sung Mausoleum, a film studio in Pyongyang, and the Korean Central History Museum. Keats has found that these are the places American tourists find particularly interesting.

He said it’s also worth watching how the local people pay their respect to Kim Il-sung at his mausoleum, who is regarded as a deity there. “From a foreigner’s eye, that would be quite a cultural experience.”

Last year, the reclusive country accepted about 20,000 visitors from abroad. The majority were Chinese and South Koreans. Fewer than 2,000 Westerners visited North Korea last year.

So, at the end of having the rare opportunity to see the secretive country, “people are pretty amazed”, Keats said.

“North Korea is a unique system. I think most of the visitors leave with a positive view of the tour, which doesn’t necessarily mean that they get to have a positive view of the country. But they learn more about the country by being there. Seeing it first-hand gives them a much better sense of what is going on there.”

Korea Herald
Kim Yoon Mi
8.3.2007

Hyundai Asan, the South Korean operator of tour programs to North Korea, said yesterday it plans to spend $3 billion by 2025 to develop an area on the North’s east coast as a new tourist destination.

“We have submitted the final plan to the North in late June. The plan will be reviewed by the North by September,” Yoon Man-joon, Hyundai Asan’s chief executive officer, said at a press meeting in Seoul.

According to the company’s plan, Hyundai Asan will develop the area from Haegeumgang near Mount Geumgang to Wonsan, an eastern port city in the North.

As Hyundai’s relationship with North Korea has recently shown signs of recovery, Hyundai chairwoman Hyun Jeong-eun, widow of the late Chung Mong-hun, will visit Pyongyang as early as late August, Yoon said.

“I’m not sure whether she will be able to meet Kim Jong-il but I’m sure she will visit Pyongyang.”

Hyun will meet North Korean senior officials to discuss new inter-Korean commerce and the tour business to Gaeseong, Yoon said.

Meanwhile, the CEO hinted at legal action against former Hyundai vice chairman Kim Yoon-kyu. Yoon pointed to the possibility of Kim using confidential corporate information acquired by Hyundai to further the latter’s own inter-Korean trade corporation.

Kim, who was a key player in Hyundai’s inter-Korean business promoted by the late Hyundai Group founder Chung Ju-yung and his late son Mong-hun, was fired by the Hyundai Group in October 2005 for allegedly illegal use of corporate funds.

Recently, Kim has started his own business dealing with North Korea through his company, Acheon Global Corp., and announced last month that the company will trade agricultural and processed food products with the communist country.

“When I look into what businesses he is doing, I can say that he is doing exactly the same thing while he was working for Hyundai. Legal experts tell me that it could be a violation of confidential corporate information,” Yoon said.

Asked if he was willing to take legal action, Yoon did not directly reply but said he does not think Kim’s business is legitimate.

“I am closely watching over (what activities he is making). I hope he doesn’t do such business anymore,” Yoon said.

Hyundai to Spend $3 Bil.on NK Tourism Project
Korea Times
8/2/2007

A South Korean company operating businesses in North Korea said Thursday it plans to spend $3 billion by 2025 to develop an area on the North’s east coast as a new tourist destination.

Yoon Man-joon, chief executive officer of Hyundai Asan, the North Korean business arm of Hyundai Group, said the company submitted the proposal to the North’s authorities in June and that North Korea is expected to make a final decision as early as next month.

The new project calls for Hyundai Asan to develop the costal area from the North’s eastern port city of Wonsan to Haegeumgang near Mt. Geumgang, where the South Korean company built a mountain resort in 1998.

If North Korea approves the proposal, it would be Hyundai Asan’s third major economic project in the North, following the mountain resort and an industrial complex in the city of Kaesong near the inter-Korean border.

Hyundai Group Chairwoman Hyun Jeong-eun, who met North Korean leader Kim Jong-il two years ago, is preparing to visit the North as early as late this month to discuss the group’s North Korean businesses, including the new project, Yoon said.

“Hyun’s visit to Pyongyang is already confirmed,” Yoon told reporters.

It was uncertain whether Hyun will be allowed to meet the North Korean leader during the planned visit, Yoon said.

North Korea’s environmental experts are reviewing the new development proposal by Hyundai Asan, the executive said.

Mount Geumgang, located just north of the border between the two Koreas near the east coast, has attracted more than 1.5 million visitors since 1998, Yoon said.

In the first seven months of this year, some 150,000, mostly South Korean guests, visited the scenic mountain.

Yoon said the company will make efforts to meet this year’s target of 400,000 visitors as the North recently opened an inner side of the mountain.

The North’s approval to open a wider part of Mount Geumgang and its surrounding area to tourists “indicated a normalization in relations between Hyundai and North Korea,” Yoon said.

Hyundai’s business with North Korea was started by its late founder, Chung Ju-yung, in the early 1990s.

Hyun took the helm of Hyundai in 2003 after her husband, Chung Mong-hun, the late founder’s son, committed suicide by jumping from the window of his high-rise office in Seoul, apparently under pressure from a lobbying scandal involving the North Korean mountain project.

Joong Ang Daily
Seo Ji-eun
8/3/2007

Hyundai Group Chairwoman Hyun Jeong-eun, who has been spearheading inter-Korean commerce, will visit Pyongyang for business talks with high-ranking North Korean officials. The visit, scheduled for as early as late this month, comes two years after she met with North Korean leader Kim Jong-il in Pyongyang.

Yoon Man-joon, president and chief executive of Hyundai Asan, which owns exclusive rights to inter-Korean investment, said in a press conference yesterday, “Chairwoman Hyun will be talking about pending business deals, including launching tourism in the Kaesong Industrial Complex.”

Yoon said the company submitted a proposal to the North two months ago for further development of Mount Kumgang, as the relationship between the two is now in “pretty good shape, although there have been misunderstandings and difficulties.”

Hyundai Asan’s inter-Korean business was previously led by former Vice Chairman Kim Yoon-kyu, who had the trust of late Hyundai Group founder Chung Ju-yung and his late son Mong-hun, the former president of Hyundai Asan. Chung Mong-hun, Hyun’s late husband, committed suicide in 2003 amid a prosecution investigation into the company’s secret transfer of money to the North. Hyun took the helm from her deceased husband. Kim was forced to step down in late 2005 over allegations of diverting corporate funds. North Korea, which had built strong ties with Kim, threatened to sever business with the firm in protest.

According to Yoon, Hyundai Asan plans to spend $3 billion to develop land between the Hageum River and the city of Weonsan, and North Korea is expected to respond to the proposal in late September. He added that the recent launch of tours of the inner part of the Mount Kumgang resort area has been positively received, and will help the company meet its annual goal of 400,000 visitors this year.

Hyundai Asan and North Korea are also in talks regarding opening up Birobong, the highest peak on the mountain, to South Korean tourists, Yoon said.

UPDATE 1 (2007-8-2): I have just completed reading Andrei Lankov’s North of the DMZ.  One chapter discussed the history of preserving communist leaders in mausoleums so their remains can be venerated for years to come.  Quoting Lankov:

Kim Il Sung’s body has been embalmed and left on public display in a special glass-covered coffin. Actually, in this regard, Korea follows an established — if bizarre — Communist tradition. Like many other Communist traditions, this one originated from the USSR.

In 1924, the body of Vladimir Lenin, the founding father of the Soviet Union, was laid in a specially constructed mausoleum where it was kept in a glass-covered coffin. This mausoleum became a place of mass pilgrimage. Initially most visitors may have been driven by sincere devotion, but in later decades the major impulse bringing visitors was, more likely than not, just bizarre curiosity. Nonetheless, passions sometimes ran high. In the Soviet times, there were two known attempts to damage Lenin’s mummy in an act of symbolic resistance against the regime. On the other hand, the post—Communist Russian government has not dared to close the mausoleum, being aware that such an act is certain to spark large-scale protests and riots of the Russian Left.

In the Soviet times, a special and highly secretive research institute with a generous budget was responsible for the maintenance of Lenin’s body. Over the decades, its research staff gained unique expertise. In due time this expertise was in demand for new generations of the venerable dead.

In 1949, the Bulgarian Communist leader Dmitrov became the first person to be embalmed by the personnel of Lenin’s mausoleum. After Stalin’s death in 1953 the body of the Soviet dictator was also treated with this proven technique and put alongside Lenin’s mummy. However, in 1961 Stalin’s corpse was hastily removed from the mausoleum, to be buried below the Kremlin wall.

Meanwhile, Soviet experts were sent to take care of a number of politically important corpses across the world. They embalmed the bodies of a number of other Communist rulers: Choibalsan of Mongolia, Gottwald of Czechoslovakia, Ho Chi Minh of Vietnam, Netto of Angola (Mao’s body was treated by the Chinese themselves).

Thus, when in 1994 Kim Il Sung died, few people doubted that his body would be put on display as well. The Russians confirmed that they had taken part in treating Kim Il Sung’s body. According to unconfirmed reports a group of Russian biologists and chemists worked in Pyongyang for almost a year.

In the l950s and 1960s Moscow did not charge its clients and allies for treating the bodies of their deceased rulers. But this is not the case any more. After the collapse of the Communist system in Russia, the research center has had to survive on a very tight budget, and it is not willing to provide its unique know-how for free. Incidentally, these laboratories’ major income source is now the bodies of Mafia bosses or new Russian capitalists (it was not really easy to distinguish between the former and the latter in the Russia of the 1990s).

The fees for treating the earthly remains of the Great Leader, the Sun of the Nation, were never disclosed, but the Russians reportedly charged North Korea one million dollars. Frankly, this was a steal: Kim Il Sung died at the time when the former USSR was in the middle of its severest crisis, and ex—Soviet scientists were ready to accept meager rewards for their work.

Nonetheless, this deal was made at the time when North Korea was on the eve of the worst famine in Korea’s history. The final result of the scientists’ efforts was the mummy of Kim Il Sung which, incidentally, cannot be referred to as a “mummy” but only “the eternal image of the Great Leader.”

However, the million-dollar fee is only a fraction of the ongoing cost of keeping Kim Il Sung’s body well preserved. A few years ago a high-level North Korean bureaucrat mentioned to visiting Indonesians that North Korea paid about 800,000 dollars annually for these expenses. On might surmise that at least a part of this money goes to the budget of the same Soviet research centre which once did the embalming.

In one respect the North Koreans did not emulate other Communist countries. The bodies of Lenin, Mao, and Ho Chi Minh were laid in mausoleums specially constructed for that purpose. The North Koreans did not erect a new structure but renovated a pre-existing building, the Kumsusan Palace. This large structure was erected on the outskirts of Pyongyang in the mid—1970s. In subsequent decades it served as the residence and office of Kim Il Sung. Now this building’s huge central hall became the Great Leader’s resting place.

Unlike the USSR, where visits to Lenin’s tomb are essentially voluntary acts, the North Koreans are picked by their party secretaries to visit the Kumsusan Palace. Most of them, admittedly, do not mind going—partially out of curiosity and partially out of sincere reverence to the deceased strong- man.

For the past few years, crowds of North Koreans have passed by the body of the Great Leader who, for better or worse, ran their country for almost half a century. The visitors are required to stop for a while and bow to the glass- covered coffin containing the embalmed body. The dim lights and quiet music emphasize the quasi-religious nature of the entire scene. The visitors pay their tribute to a person who once started the worst war in Korean history, killed at least a quarter of a million people in prisons and ran what even in the Communist world was seen as an exceptionally repressive state.

Indeed, many (I would say, most) North Koreans more or less believed in what the official propaganda told them about the Great Man. All Koreans younger than 70 have spent their entire life listening to stories about Kim Il Sung’s greatness. He is supposed to be the person who defeated the Japanese in 1945, then repelled U.S. aggression in 1950 and, by keeping the cunning imperialists at bay for decades, saved North Koreans from the sorry fate of their enslaved Southern brethren. Of course, outside the North it is common knowledge that Kim Il Sung did not fire a single shot during the liberation of Korea, that the Korean war was started by him and nearly lost due to his miscalculations, that South Korea had one of the fastest growing economies of the 20th century while the North became an international basket case. But these things remain largely or completely unknown inside the North, where many people still believe in the deceased Great Fatherly Leader.

And just where did the communists get the idea of preserving their leaders in perpetuity? One hypothesis can be found in Paul Froese’s, The plot to kill God: findings from the Soviet experiment in secularization.  He claimed that many Soviet cultural practices were based on religious ones.

ORIGINAL POST (2007-6-10): My traveling comrade at Knife Tricks points to an interesting claim by an L.A. Times Journalist that the body of Kim il Sung on display in Kamsusan Memorial Palace is actually made of wax.

There are currently four communist leaders on display in this manner (Vladimir Ilyich Ulyanov (Lenin), Ho Chi Minh, Chairman Mao Zedong, and President Kim il Sung), and claims that they are not the actual bodies have been part of travel folklore for some time.  Joseph Stalin’s body was on display next to Lenin, but was later removed.  Chairman Mao’s body is reportedly swapped out with a wax duplicate occasionally, and people in the former Soviet Union have all sorts of stories about individuals winning “Lenin look-a-like” competitions and then promptly disappearing.

I suspect that all four bodies are at least real bodies.  I have seen three of the four  myself, and the only reason that I am not four-for-four is because Ho Chi Minh was in Russia getting touched up when I visited Hanoi in 1996.  Several years later I had a conversation with an ABC reporter based in Asia who told me that there was in fact a secretive Russian firm that exclusively serviced these corpses. (If anyone knows anything about this firm, please let me know).  This seems like a lot of trouble to go through if all they were doing was re-sculpting wax.  If this was the case, then I doubt that they would go through all the risk and expense of shipping the bodies so frequently unless–as game theory teaches us–going through all the trouble makes their organic composition seem more likely.  Occam’s Razor applies unless someone can give me a reason to believe a more complex scenario.

I have read (although forgotten the cite–so disregard if necessary) that Kim il Sung was supposed to be buried in Kim il Sung Square in the pavilion that is now used for viewing parades and dancing.  After his death, plans were developed to construct what is now Kamsusan Mausoleum.  One other thing to note, which the LA Times and most other travel accounts fail to mention, is that the softball-sized tumor which grew on the left-hand side (facing him) of Kim il Sung’s neck (which is why official portraits are taken from a slight angle on the right side) was removed (or hidden by the pillow) so that it is not visible at all to the millions who have visited the presidential mausoleum.

Joong Ang Daily
Jo Dong-ho
8/1/2007

The environment for economic relations between South and North Korea has changed.

In 1998, when the Sunshine Policy was started, South Korea’s national per capita income was $7,355, while North Korea’s stood at $573. At the time, South Korea’s export volume was $132.3 billion, and North Korea’s was $600 million. In a nutshell, South Korea’s national per capita income was 13 times higher and its export volume was 220 times bigger than North Korea’s.

Since then, South Korea’s national per capita income has rapidly increased, to $18,372 as of 2006. Meanwhile, according to an estimate by the Bank of Korea, North Korea’s national per capita income hovers at around $900.

South Korea’s exports are worth $325.6 billion, nearly triple 1998 numbers, but North Korea’s export volume is merely $900 million.

Accordingly, the gap between the two Koreas’ economies has widened. Now, South Korea’s national per capita income is 20 times higher than North Korea’s. South Korea’s export volume is 325 times larger than North Korea’s.

In particular, South Korea’s economy has developed and matured a great deal in terms of quality because it opened its doors more widely after the financial crisis 10 years ago.

But North Korea still cries out for an independent, self-sufficient economy, leading to a wider discrepancy in the economies of the South and North.

In the meantime, economic cooperation between South and North Korea has developed a great deal. In 1998, trade volume between South and North Korea was worth around $200 million. In 2006, it was more than $1.3 billion. Today, large-scale projects by both the private and the public sectors are in progress, something that was unthinkable back in 1998.

Examples of these are a building project at the Kaesong Industrial Complex and the government’s project for social overhead capital, such as railways and highways between the two Koreas. A variety of agreements have already been prepared, such as one protecting investments.

As a result, South Korea is North Korea’s largest export market, its second-largest trade partner and largest investor. South Korea also provides support and more assistance to North Korea than other countries.

The number of visitors to North Korea has increased as well. In 1988, 3,317 people went to North Korea, but last year more than 100,000 people visited there.

The reason why I included these lengthy statistics is to underscore the change in South and North Korea’s economies as wellas their economic relations.

In the past, South Koreans wanted to buy products made in North Korea out of curiosity, but now an item from North Korea is simply commonplace.

A small project involving North Korea made headlines in the past, but now many go unnoticed.

However, the Sunshine Policy, which has been in place since the Kim Dae-jung administration, has not changed at all.

The Sunshine Policy was aimed at inducing North Korea to change and expanding contact and exchange with North Korea was a means to achieve that goal.

That is why we did our utmost to cooperate economically with North Korea and to increase assistance to the country. As seen in statistics, these efforts have produced significant achievements on the outside.

But in the process, we became preoccupied with the means and forgot about the original goal of the policy. We continued economic cooperation with North Korea even though it carried out a nuclear test. We wanted a summit meeting with North Korea even though it meant we had to put a tremendous amount of money under the table. The Donghae line is not of much use because the railway does not run northbound from Gangneung. We connected it because North Korea wanted us to.

Maintaining contacts and exchange with North Korea has become the ultimate goal of the policy. Because of the Sunshine Policy, in which the means have become the goal, North Korea receives assistance even though it sticks to its old-fashioned ideology.

Thus, now we need to straighten out the means and the goal. The environment for economic relations between South and North Korea has changed. We can’t define the Sunshine Policy as either a failure or a success.

We have long since passed the stage where we have to pour all our efforts into the means, but we have not changed our direction to focus our energy and attention on a new goal. It is meaningless that presidential hopefuls discuss whether they will embrace or abolish the Sunshine Policy in its entirety.

In the past, starting economic relations with North Korea was the top priority even though it meant “shoveling aid across the border.” The time has come to steer the policy in the right direction.