North Korean Economy Watch

Most of the big papers got into Kaesong back in February.  The NY Times got it in July.  Better late than never.  I am adding it to this blog so I can reference it later:

South Brings Capitalism, Well Isolated, to North Korea
By NORIMITSU ONISHI

KAESONG, North Korea — Just north of the demilitarized zone dividing the Korean Peninsula, in possibly the world’s most heavily guarded special economic enclave, 500 managers from the South and 7,000 workers from the North are engaged in a capitalist experiment that is anathema to the United States.

The South Koreans recently gave a tour of the enclave, the Kaesong Industrial Park, to 200 foreign business executives, diplomats and journalists. The hosts expressed optimism that it would bring peace to the peninsula, then they led the visitors through factories churning out goods for markets in the South and elsewhere.

In one of the 15 factories, Taesung Hata, a cosmetics company, about 500 workers wearing dark blue uniforms and white hats operated machines that produced plastic cosmetic containers. Next door, 1,500 workers sat in rows of desks with sewing machines, below ceiling fans and decorative red flowers, making orthopedic shoes called Stafild that were described as “Shoes for Unification.”

To hear the South Korean hosts tell it, when the special economic zone is completed in 2012, it will be bigger than Manhattan, house 2,000 companies and employ 700,000 North Koreans. Yet Kaesong’s significance is larger still, they say, because it will nudge the North toward embracing economic reforms and opening up to the world, the way Shenzhen did in China two decades ago, and open the path, as the shoes suggest, toward reunification.

[The hosts also said they had considered canceling the June 22 tour, which coincided with rising tensions over North Korean preparations for a missile test on July 5, but decided against it.]

Kaesong is South Korea’s biggest project in what some here call unification by “small steps,” or “de facto” unification. The South does not want formal unification for a few more decades, but its strategy is to narrow the yawning gap of half a century of division through various projects, from manufacturing here in Kaesong to uniting the two Koreas’ different Braille characters for the blind and sign language for the deaf.

“It’s de facto unification,” said Ko Gyoung-bin, who oversees the 18-month-old Kaesong project at the Ministry of Unification in Seoul. “It’s already under way. Unlike the German model, it won’t happen suddenly.”

The two Koreas agreed on building Kaesong in June 2002 when the South Korean president at the time, Kim Dae-jung, and the North’s leader, Kim Jong-il, met in Pyongyang. Since then, the exchanges have become so routine that sports authorities on both sides are moving toward fielding a unified team for the 2008 Beijing Summer Olympics.

With cultural, academic, business, political or military exchanges going on between the Koreas nearly every week, 80,000 South Koreans visited the North last year. That did not include South Korean visitors to Kumgang Mountain, a North Korean resort opened to foreigners eight years ago. Kumgang has been visited by 1.25 million South Koreans.

South Korean regional and local governments, regardless of political leanings, have also undertaken projects with counterparts in the North. More than 60 private organizations now send South Koreans north to assist on agricultural, health and other projects.

“We go to North Korea, where we work with our counterparts to show them how to use certain agricultural machines or how to breed better cattle,” said Kang Young-shik, director of the Korean Sharing Movement, a private group that has undertaken the Braille and sign-language projects. “They need help from us, though they also feel the need to compete with us.”

Cho Yong-nam, a director general in the Unification Ministry, said South Korea had projects in 27 of 206 cities and counties in the North. The common theme, he said, is to raise standards in the North so that, in a unified Korea, North Koreans would not constitute “a displaced, misfortunate minority group.”

Companies that have come to Kaesong, which is managed by Hyundai Asan, a private company, have received tax breaks and other support from the South Korean government.

A new highway and railroad traverse the DMZ before reaching Kaesong, about 40 miles northwest of Seoul. Soldiers stand watch on either side of the demilitarized zone, with its barricades, barbed wire fences and land mines.

In working with North Koreans, South Koreans have said, they have encountered the sometimes unexpected effects of their division: North Korean construction workers, for example, were rated only one-third as efficient as their counterparts from the South; many North Koreans, with little experience handling machines, have required extensive training.

Sometimes, South and North Koreans had trouble communicating because the language spoken on either side of the DMZ has changed significantly. (One project supported by the South is a unified dictionary with new words that have appeared, or words whose meanings have changed, since the division of the peninsula after World War II.)

Last year, the activity here expanded trade between the Koreas to more than $1 billion for the first time, though only a few companies here are believed to be profitable.

Kaesong has also become an obstacle in negotiations between South Korea and the United States over a free-trade agreement. The South wants products made here to be included in the agreement, arguing, so far in vain, that most of the materials derive from the South.

The Bush administration, which has tried to isolate the North instead of engaging it, recently criticized Kaesong after long withholding judgment. It accused the South of economically propping up the North, as the United States was financially squeezing the North elsewhere.

In a recent op-ed piece in The Wall Street Journal, Jay Lefkowitz, President Bush’s special envoy for human rights in North Korea, said projects like Kaesong strengthened Kim Jong-il by pumping “hundreds of millions of dollars into the North, with more to come.” Mr. Lefkowitz also said he had doubts about whether the North Korean workers actually got their wages.

Mr. Ko, of the Unification Ministry, rejected such accusations, saying the North Korean workers had to sign their names when they received their wages. The wages average $57 a month, nearly triple the average in the North, he said.

According to Hyundai Asan, employees work 48 hours a week. They were picked by North Korean officials, then approved by South Koreans. About 80 percent are high school graduates.

Visitors were allowed to speak freely to the North Korean workers, but the presence of supervisors and North Korean guides on the tour discouraged anything but innocuous answers.

Peter M. Beck, who is the Northeast Asia director for the International Crisis Group in Seoul and took part in the tour, said that he was impressed by the facilities but that it was still unclear how much of the wages went to the workers.

At Shinwon, a garment manufacturer, 300 North Korean workers were cutting and sewing shirts, dresses and blouses in a large, brightly lighted, air-conditioned factory.

“I’ve seen factories of this type in Kenya, Bangladesh, India and Papua New Guinea, and the conditions here compare very favorably,” said Frank Gamble, a retired banker and an official with the Australia-New Zealand Chamber of Commerce in Seoul, as he toured the Shinwon factory. “What South Korea is trying to do here in Kaesong, we’ve already seen in China and Vietnam and elsewhere. The United States was against investing in Vietnam, but now they’re beating down doors to get there.”

A North Korean official accompanying the visitors expressed anger at criticism from Americans.

“I think they’re ignorant,” he said, refusing to give his name. “They just criticize everybody, including China on human rights. They just want to impose their standards on the world.”

From the Korea Times: 

Two Koreas Discuss Setting Up Weather Center at Mt. Kumgang
By Lee Jin-woo

Tourists visiting North Korea’s scenic Mt. Kumgang resort are likely to be presented with more accurate weather forecasts as early as this fall, officials at South Korea’s Unification Ministry said Wednesday.

South and North Korea are in negotiations to open a weather forecasting center at the mountain to provide tourists with more accurate meteorological information in the region, notorious for its unpredictable weather, said a ministry official, who asked not to be identified.

“Negotiations between the two Koreas are currently under way to open a weather center. There are still some areas that the two sides need to agree upon,” the official said. “Pyongyang is showing a positive response to the plan though.”

In May, a survey team comprised of officials from the ministry, Hyundai Asan Corp. as well as the Korea Meteorological Administration (KMA) was dispatched to the area to gather information prior to beginning construction, sources said.

Hyundai Asan has led the tourism project under which more than 1.2 million South Koreans have visited the resort area since the communist state opened the outer part of Mt. Kumgang on its east coast in 1998. Last year, the annual number of South Korean visitors to Mt. Kumgang reached over 300,000 for the first time.

“It was early last year when we first requested local broadcasting companies to add weather forecasts for Mt. Kumgang and its adjacent areas,” said Kwon Kee-seob, who is in charge of public relations at Hyundai Asan. “The broadcasters, however, told us to discuss the matter with the KMA and the Unification Ministry to set up some facilities to gather information there.”

Kwon added over 2,000 South Koreans, including some 1,000 travelers, visit or stay in the North Korean territory on average everyday.

“We’ve got many phone calls from those who plan to make a trip to Mt. Kumgang, but have not been able to give them good weather information,” he said.

South Korean officials once considered making use of weather forecasts by the North Korean meteorological agency, but later gave up the plan due to the poor quality of weather information from the North, sources said.

From Joong Ang:

Hyundai Asan Corp., a Korean company spearheading inter-Korean economic projects, said yesterday it is pushing to expand its tour program for a scenic North Korean mountain resort open to South Koreans.

North Korea has opened the outer part of Mount Keumgang on its east coast to South Koreans since 1998. Hyundai officials said the North has agreed to consider opening the inner side as well to South Koreans.

Before developing full-fledged tours to the inner side of the mountain, or Naegumgang, Hyundai Asan plans to hold an experimental tour to the area on May 27.

Hyundai Asan hopes that the new tours will help it bring more South Korean tourists to the North. More than 1 million South Koreans have visited the resort since 1998 but it was not enough to break even.

Hyundai Asan executives, including Hyundai Group chairwoman Hyun Jeong-eun, and North Korean officials will join the test tour.

The new tours to be developed cover 50 kilometers of trails dotted with ancient temples and valleys that would give visitors a new sense of the beauty of the craggy resort, Hyundai Asan officials said.

It will be interesting to see if the DPRK takes this laying down.  After all, this sacred mountain is the birthplace of the Dear Leader.

From the Donga:

The Japanese daily Mainichi Shimbun reported on May 9 that a private airport will be completed by the end of next year in Baisan, Jilin Province, the area with access to Mt. Baekdu (Chang Bai Shan in Chinese) located between China and North Korea.

As a result, competition will become intense between China and the two Koreas to attract tourists to the mountain and boost the image of the mountain as their own territory.

China seeks to take the upper hand in the development of Mt. Baekdu tourism by constructing the airport. South Korea, for its part, is rushig to kick off Mt. Baekdu tours via North Korea.

There is a growing concern in South Korea that Mt. Baekdu, a symbol of Koreans, might be registered as cultural heritage of China because China wants to put Mt. Baekdu on the list of World Heritage sites before the 2008 Beijing Olympics.

I Updated the information on Kimsoft:

The DPRK UN Mission in New York does not issue any visas at all under an agreement reached with the United States. Visas to Americans are issued by the DPRK Embassy in Beijing. You may contact Mr. Kim Ryong Hwan (A representative in Beijing of the Korea International Travel Company, Fax 011-86-1-532-4862) for visa or travel information.
Non-Koreans can reach Pyongyang by train or air by way of Moscow or Beijing. Some Japanese and Koreans resident in Japan are allowed to come to Wonsan by ship.

1. Short-term teaching or other works in N Korea: A letter of recommendation or introduction from Graham Bell, the Eugene Bell Foundation, the Carter Center or a Christian church organization may enhance the chances. If you are a Korean compatriot, all you have to do is either to make a stopover at the UN Mission and identify yourself or to send a letter to the Overseas Compatriots Aid Committee in Pyongyang.

A. Contact the DPRK New York UN Mission by email or smail or phone or Fax or go to New York to visit the mission:

Permanent Representative of the Democratic People’s Republic of Korea to the United Nations
515 East 72nd Street, 38-F, New York, N.Y. 10021
Telephone: (212) 972-3106
FAX (212) 972-3154

B. Write a letter direct to his or her target university or institution in North Korea, offering to teach English, history, engineering and etc. Upon receiving a positive response or letter of invitation, you are to visit the North Korean Embassy in Beijing (Phone: 532-1186 visa section: 532-4148 or 6639).

2.  Travel to the DRPK:
*Koryo Tours: http://www.koryotours.com/
*I visited with the Korean Friendship Association: http://www.korea-dpr.com/

A. AIR KORYO, Flughafen Schoenefeld, D-12521, Berlin, Germany: Fax: +49 (0) 30 – 60 91 36 65.
B. Korea Publications Exchange Association, Ri Chang Sik, Fax: +850-2-3-814 632.
C. National Directorate of Tourism, Central District, Pyongyang, DPR Korea Tel: (2) 381 7201. Fax: (2) 381 7607.
D. Kumgangsan International Tourist Company, Central District, Pyongyang, DPR Korea, Tel: (2) 814 284. Fax: (2) 814 622.
E. General Delegation of the DPRK, 104 boulevard Bineau, 92200 Neuilly-sur-Seine, France, Tel: (1) 47 45 17 97. Fax: (1) 47 38 12 50. Telex: 615021F.
F. Regent Holidays UK, 15 John Street, Bristol BS1 2HR, Tel: (0117) 921 1711. Fax: (0117) 925 4866. 
G. David Hunter — Edwards and Hargreaves Holidays Ltd, Portland House, 1 Coventry Road, Market Harborough, Leicestershire, England LE7 7HG, Fax 01858 433427 Tel: 01858 432123
H. Mr. Pak Gyong Nam, Manager — SAM Travel Service, Korea International Travel Company, Central District, Pyongyang, DPR of Korea, Tel: 850-2-817201, Telex: 5998 RHS KP, Fax: 850-2-817607
I. North Asia Consultancy & Services Co, Ltd is in a position to organise business missions into NK for European businessmen.NACS is organising on a regular basis sectorial fact finding missions to North Korea on behalf of the European Union Chamber of Commerce in (South) Korea.

3. Information:
The European Union Chamber of Commerce : Tel : 822-543-9301~3; Fax : 822-543-9304; E-Mail : eucck@eucck.org

Young Koreans United of the USA, P.O. Box 12177, Washington, DC 20005-0677, tel. 202-387-2420

International Korean Alliance for Peace and Democracy, 2530 1/2 South Crenshaw Blvd., Los Angeles, CA 90016, tel. 213-733-7785.

Travel Time email, 1 Hallidie Plaza, Suite 406, San Francisco, CA 94102, USA ; phone +1-415-677-0799, fax +1-415-391-1856, 1-800-956-9327 (1-800-9-LOW-FARE) toll-free in the USA

Chugai (Phone: 81-3-3835-3654, Fax: 81-3-3835-3690) based in Tokyo. It is affiliated with Chongryun, the General Association of Korean Residents in Japan. It arranges package tours to Pyongyang every month.

The Kumgangsan International Group ( email or Web Page) handles investments in N Korea. This group also makes travel arrangements. It is operated by Ms. Park Kyung Youhn, a Korean-American woman, who is not associated with Chongryon.

Ryohaengsa Korea International, Pyongyang, Korea; Tel. (850) 2-817 201, Fax (850) 2-817 607

The DPRK Committee for the Promotion of External Economic Cooperation, Jungsongdong, Central District, Pyongyang. FAX 011-850-2-3814664 and Tel: 011-850-3818111,2,3 & 4.

4. Research and Other Scholarly Works: At present, no institution, center, school or university in the DPRK is ready for “official exchanges” with American counterparts. Such exchanges will likely come only after the two ‘enemy’ countries have signed a peace treaty and established diplomatic relations. However, Kim Il Sung University has established a sister rela tionship with Seton Hall University. American scholars and authors are allowed to examine North Korean archives on an individual basis. Contact the Society for Cultural Relations with Foreign Countries, Kim Il Sung University, the Party Revolutionaly History Institute or the Asia-Pacific Peace C ommittee.

5. Check with the DPRK UN Mission for the phone and fax number of other agencies: The DPRK UN Mission is not the only gate to North Korea. Americans and other foreigners are being invited to visit the DPRK by way of many other organizations in the States, Japan and other parts of the world.

North Koreans are being invited to visit the United States not necessarily through the good offices of the New York mission. Any American host can establish a direct access to North Korea by mail, fax, and phone or by personal courier.

Warning: There are ‘horror’ stories of bureaucratic bungling by the DPRK Beijing Embassy vis-à-vis invited American guests. They are partly true and partly untrue. A possible explanation is a poor communication between the prospective visitor, th e UN mission and the DPRK. The DPRK Embassy in Beijing makes it the iron rule not to issue a visa even to a carrier of a written invitation from a DPRK organization unless it has been instructed to do so by the Foreign Office in Pyongyang.

The prospective visitor is advised to make it double sure with the host organization or the UN mission that the host organization has arranged for issue of a visa through the Foreign Office and that a visa is ready in Beijing (Phone: 011-86-1-6532-1186 or 1189, FAX: 011-86-1-6532-6056. Visa Section: 011-86-1-6532-4148 or -6639).

By Kwon Jeong Hyun, Dandong of China
From the Daily NK:

Hotels:
An anonymous Chinese who resides in Pakchun-gun or North Pyongan province said, “state still maintains the hotel business, but there is an increase private hotels with best facilities. The hotels are mainly for the Chinese customers and the cost is about 5000Won($2.5) a night.”

“The state run hotels does not have good heating systems and lacking management, customers rarely go there. There is also an increase of house lodging business,” he said and further described how those who do private house lodging business come out at night to call customers into their houses. The cost of lodging is 100Won($0.05) a night.

Travel Permits: They used to be free, but limited.  Now for sale.
1.  Pyongyang travel permit seems fixed at 10,000W ($5)
2.  Province to Province travel varies based on destination: Jagang Province 7,000W($3.5), Chongjin 8,000W, and Pyongsung 6,000W
3.  within a province, price is less.

Korea Times
Kim Rahn
12/30/2005

It has been eight years since South Koreans started visiting Mt. Kumgang, a scenic attraction in North Korea on a cruise program organized by Hyundai Asan.

Hopes and doubts about the success of the trips continue, as the tour program is strongly influenced by international and local developments. And many ups and downs have occurred over the past eight years.

The number of visitors plummeted during difficult times such as when a South Korean woman visitor was detained in 1999, when former Hyundai chairman Chung Mong-hun committed suicide in 2003, and when the North cut the quota of daily visitors by 50 percent last year.

Numbers rose when the government subsidized costs for students, the disabled and dispersed families in 2002, and when an overland bus route was developed in 2003.

Despite obstacles, the number of South Korean visitors to the scenic mountain resort passed the million mark last June.

Moreover, the communist country plans to open more tourist attractions to South Korea. Kaesong, the capital of the ancient Koryo Kingdom, Mt. Paektu on the border of North Korea and China, and maybe even the North Korean capital Pyongyang are on a possible list of tourist attractions for South Korean travelers.

Kaesong

At the end of last August, 500 South Korean tourists visited Kaesong, the old capital of the Koryo Kingdom (918 A.D.-B.C.1392), for the first time since the end of Korean War in 1953 on a one-day pilot trip.

It took only about two hours from central Seoul to the North Korean city, just above the Demilitarized Zone (DMZ) separating the two Koreas, by bus on an overland route including entry procedures. Its easy access is expected to be one of the attractive features for South Korean travelers.

“Kaesong has lots of attractions from the rich cultural heritage of 500-years of Koryo history,’’ Shin Hee-soo, executive director of the Korea Tourism Organization (KTO)’s inter-Korea tourism department, told The Korea Times.

The historic sites include Sonjuk Bridge, where high-ranking Koryo government official Chong Mong-ju was killed by Lee Song-gye, founder of the Choson Kingdom and the Confucian school of Songgyungwan. Parts of the school are now used as a Koryo museum.

Also located here are Kaesong Nasong, a fortress, and the royal mausoleum of King Wanggon, founder of Koryo. Natural resources such as Mt. Songak and Pakyon Falls are also popular.

“Travelers are also able to see North Koreans’ lives, as the tour buses pass Kaesong’s downtown. It will be another attraction, especially to the old people whose hometown was Kaesong,’’ Shin said.

Mt. Paektu

Last July, the KTO, Hyundai, and the North’s Asia-Pacific Peace Committee agreed to allow South Koreans to visit Mt. Paektu on the border of North Korea and China.

The KTO provided about 8,000 tons of asphalt pitch to the North to establish the tourism-based infrastructure on the mountain, including paving the runway of Samjiyon airport near the mountain.

The tour operators planned to conduct a pilot tour last year, but it was delayed until next April or May due to the dispute between the North and Hyundai over the dismissal of former Hyundai vice chairman Kim Yoon-kyu.

Last month, 15 delegates from the South inspected the repair work at Samjiyon airport.

The mountain is breathtakingly beautiful, comparable to the beauty of Mt. Kumgang. Some 20 peaks higher than 2,500 meters surround “Chonji,’’ the mountain-top crater lake.

Sunrise seen from the top, especially in August and September, is one of the must-sees of the trip to Mt. Paektu. Some 200 square meters of hot springs never freeze, even during winter.

“Mt. Paektu is more than a tourist attraction. It has a special meaning of the `spirit of Koreans.’ Many people have visited the mountain from the Chinese side, but the scene from the North’s side gives a different impression,’’ Shin said.

Pyongyang

The North Korean capital may not be opened as a separate tourist attraction but is likely to be visited if the tour program for Mt. Paektu includes Pyongyang as a stopover, a Hyundai Asan worker said.

In October last year, about 140 South Koreans visited Pyongyang on a pilot trip. The city has many historic sites from the ancient Koguryo Kingdom and Tangun, the legendary founding father of Korea.

Their visit was, however, mainly focused on Mt. Myohyang near the capital, which is famous for autumn foliage.

Shin pointed out that the reclusive regime is not likely to open its capital wide to South Koreans, adding that visits may be made in the case of big events, such as the “Arirang’’ mass games which were held last year to celebrate the 60th anniversary of the founding of the Workers’ Party.

Obstacles to Trip to North Korea

The trip to the North has obstacles to overcome. The tours mainly target people whose homes were in North Korea or whose family members are still there.

But the numbers of such people are limited. The tours need other kinds of visitors to be successful. Besides the attraction of entering a `forbidden’ land, North Korea lacks features of interest to visitors.

A survey showed that 95 percent of the travelers to Mt. Kumgang were traveling there for the first time, indicating the small number of returning visitors. “Establishing golf courses and opening a beach at Mt. Kumgang are part of the efforts to increase repeat tourists,’’ Shin said.

Restrictions by North Korea also dampen the enjoyment of South Korean visitors, Shin pointed out. Visitors’ activities are strictly regulated, and the trips are limited to special times and places.

The trips to the North require harmony between the two governments, the people’s support, and a sense of duty as a “plus alpha’’ factor, he stressed.

Perils of Investing in N. Korea Become Clear to a Pioneer
By Anthony Faiola and Joohee Cho
Washington Post

Hyundai Group pioneered South Korean economic development in North Korea, building hotels and restaurants and sending busloads of tourists across the DMZ. At the time, company officials argued that they were giving their communist northern kin a lesson in capitalism.

Now Hyundai is attempting to resolve a dispute with the North Korean government that has jeopardized more than $1 billion worth of investments. The dispute began in August after Hyundai Asan Corp., the subsidiary in charge of North Korean tourism operations, fired a top executive for allegedly misappropriating more than $1 million in company and South Korean government funds.  The dismissal was considered a heavy offense in Pyongyang, the North Korean capital, because the executive in question had been granted several rare meetings with North Korean leader Kim Jong Il. Top Communist Party officials last month abruptly announced a review of all concession rights purchased by the company while secretly courting one of Hyundai’s rivals, South Korea’s Lotte Group, to take over Hyundai’s North Korean operations. Lotte officials, concerned about North Korean business practices, decided they did not want to take over Hyundai’s business.

The dismissal was considered a heavy offense in Pyongyang, the North Korean capital, because the executive in question had been granted several rare meetings with North Korean leader Kim Jong Il. Top Communist Party officials last month abruptly announced a review of all concession rights purchased by the company while secretly courting one of Hyundai’s rivals, South Korea’s Lotte Group, to take over Hyundai’s North Korean operations. Lotte officials, concerned about North Korean business practices, decided they did not want to take over Hyundai’s business.

The actions by North Korea raised serious questions about the wisdom of investing there. Despite the dispute, however, the governments of both South and North Korea are lobbying foreign companies to move into a jointly developed industrial park opened earlier this year in the North Korean border city of Kaesong, where more than 20 South Korean firms employ 8,000 North Koreans. The governments describe the industrial park as an experiment with market reforms. The countries also held a joint trade fair at the economic summit of world leaders last week in the southern city of Pusan.

But since South Korea opened up friendly relations with the North in the late 1990s, more than 1,000 South Korean firms have gone bankrupt or lost significant investments in North Korea, according to South Korea’s Unification Ministry.

Most were small, low-tech enterprises involved in textile-making and rudimentary housewares. But the problems at Hyundai have shown that the fortunes of even the largest investors are linked to the whims of the North’s government.

If you visit Kumgang:
The resort has lost millions of dollars and was constantly hampered by North Korean activities. In 1999, for instance, North Korean agents arrested a vacationing South Korean woman after she suggested that the capitalist South — the 11th-largest economy in the world — enjoyed a higher standard of living than the impoverished North.

Asia Times
Andrei Lankov
11/23/2005

It was a fine night in Pyongyang in mid-October as I walked a deserted street under the unusually bright stars of the North Korean sky (no industry means no pollution), accompanied by a knowledgeable expert on North Korea.

“Well, I do not understand what the hell they are doing,” said the expert, a former student of mine. “You should not be here, frankly. And those South Koreans, they are even more dangerous. The commander-in-chief is making a mistake, but it will take months before they realize how destructive the impact of the Arirang Festival is for their regime.”

The North Korean capital from August to late October hosted the Arirang Mass Games, a pompous and kitschy Stalinist festival for which 50,000 participants (largely students) were trained for months. The festival was attended by an unprecedented number of foreigners and South Koreans.

Pyongyang’s international hotels, usually half-empty, were completely booked, and five or six flights left the city’s international airport every day. This might not appear a particularly large number, but in more ordinary times the airport, by far the least busy capital airport in East Asia, serves merely four to five flights a week.

There were many Westerners. But most unusual and striking, perhaps, was the powerful presence of South Koreans. For the first time since the division of the country in 1953, pretty much every South Korean who wished to do so could travel to Pyongyang for a short stay.

Seoul tourist companies widely advertised a two-day trip to Pyongyang for the equivalent of US$1,000. This is expensive for a two-day, one-night package. But in Seoul where the average monthly salary is about $2,500, it is certainly feasible. Hence, between 500 and 800 South Koreans flew to Pyongyang daily. In mid-November the South Korean unification minister proudly stated that “about 100,000” South Koreans visited the North this year, and it seems a large number consisted of short-time visitors to the Arirang festival.

North Korean leader Kim Jong-il personally approved admission of the unprecedented numbers of foreigners. Nothing like this has been seen since the World Youth Festival of 1989, and even then no South Koreans (and only a few citizens of developed Western countries) were allowed in.

The reason for this openness is clear: tourists bring money. Obviously, earnings from the Arirang festival were very good, and Kim decided to use the opportunity to fill state coffers. The foreigners were allowed in without too many questions being asked, and the show was extended for a few additional weeks. It looked like easy money; the grandiose show would have taken place with or without fee-paying foreigners.

It is possible that Kim Jong-il was persuaded to open the doors so wide by officials who might have had hidden vested interest in the matter: the days of religious devotion to the official ideology are long gone, and bureaucrats are learning fast how to make their jobs profitable.

It seems, however, that in the long run opening the door will have serious political consequences. For me, on my first visit to Pyongyang in 20 years, it was quite clear that life in North Korea has changed, even if on the surface everything appeared almost the same as in 1985.

My first impression was that Pyongyang was frozen in time, remaining unchanged from the mid-1980s. Very few new buildings, all very moderate in size and design, have appeared over those two decades. Pyongyang still reminds me of a relatively poor Soviet provincial city of the 1970s and presents a striking contrast with booming Beijing, let alone Seoul.

Even the street crowd has not changed that much. Many people are still dressed in Mao jackets or worn military outfits, and there seems to be even less traffic than in 1985. The veteran expats say nowadays there are far more vehicles than in the late 1990s when the famine reached its height, but for me the reference point is 1985, not 1999. All visible changes were minor, such as the introduction of bikes, which until the 1990s were banned from the “revolutionary capital”.

The much-discussed private business was nowhere to be seen, since municipal authorities “cleaned” the city on the eve of the festival, driving away all private vendors along with their stalls and canteens. This was a part of the new political line of re-imposing state controls and cracking down on the non-official economy, but it also destroyed what might be the only serious visual difference between Pyongyang of 1985 and today. Markets continued their activity, but behind high walls and strictly off limits to foreign visitors (but not for expats).

At the same time, Pyongyang does not look destitute. It is a poor city, but not more so than many towns in the less-successful Chinese provinces. This confirms what defectors from North Korea often say. However, the defectors see this “moderate poverty” in an altogether different light, as “great prosperity”. As one recently said, “Pyongyang people are rich, this city lives very well, almost as good as some cities in [Chinese] Manchuria.”

The gap between privileged Pyongyang and countryside is wide. This was clear from a short countryside trip even though our destination was the city of Kaesong, a semi-privileged location. We traveled about a 100 kilometers on a relatively good highway that connects the two major cities, but encountered no more than two dozen vehicles. A couple of decades ago one could see mechanization in the fields, but now all work is done manually.

However, the impression that Pyongyang is “unchanged and unchangeable” is completely wrong. The material environment has not changed much, but the spirit is very different from what it was in 1985.

The most remarkable aspect was the relative freedom with which North Koreans talked to foreigners, particularly about their great interest in everything that happens outside the state borders. This does not necessarily mean that my North Korean interlocutors rushed to say something critical about the authorities – on the contrary, from time to time most of them murmured the ritual phrases about superhuman wisdom and omniscience of the commander-in-chief.

However, back in the 1980s no North Korean dared talk to a foreigner for more than a few minutes, and under no circumstances could the topics stray from the weather and, sometimes, the greatness of the leader. My impression of North Korea in 1984-85 when I lived there was that of a country where not everybody supported the government, but where everyone was scared to death to say otherwise. It would be an overstatement to say that nowadays the fear has gone, but it has certainly waned.

It was important that my interlocutors were ready to ask thorny questions about life in other countries and in particular about South Korea. They asked about salaries in Seoul, about changes in the former Soviet Union after the collapse of communism (“Are people better off or not?”), about the fate of East German bureaucrats after the German unification (“They went to prison, did they?”), and about the reasons for Chinese success.

Sometimes it seemed some of my interlocutors suspected that the South was well ahead of the North in terms of living standards. This suspicion is dangerous to the regime whose claims of legitimacy are based on its alleged ability to deliver better standards of living. The actual gap between the two Koreas is huge. Still, North Koreans are told they are lucky to live in the North, in the prosperous state of juche (self-reliance), and not in the South, which is a destitute colony of the US imperialists.

Since the 1980s, an increasing number of better-informed North Koreans are uncertain about these official claims. However, in the past it would have been unthinkable to ask a stranger such dangerous questions after just a few minutes of conversation. It was also risky to demonstrate interest in the outside world, but this seems not to be the case any more.

One of the most unexpected and important encounters occurred when I was visiting the Chinese embassy. A small crowd attracted my attention. People were carefully studying something inside a large window on the wall; some finished and went away, only to be replaced by others. Of course, I went closer, only to discover that the people’s attention was attracted by pictures hanging in the embassy’s “information window”. The pictures were large and colorful, but otherwise absolutely unremarkable. The photos and captions were no different from the stuff cultural attaches across the globe put on the walls of their embassies – the usual boring fare about growth of shrimp production, new computer classes and state-of-the-art chicken farms. However, in North Korea of 2005 such mundane matters attract a crowd. Those pictures gave a glimpse of outside life.

This small episode was a sign of what now is in the air in North Korea: people are eager to learn more about the outside world. They are less afraid to show their interest in what once was forbidden knowledge, and they are increasingly uncertain about the future.

It seems the arrival of the foreigners has provided North Koreans with far more food for thought. Among the visitors there were younger South Koreans influenced by the left-wing nationalism, which has become increasingly popular in Seoul. These visitors were sometimes willing to cheer the anti-US slogans, and this was discussed in the right-wing South Korean media as yet another sign of North Korea’s ideological penetration. However, it seems that the actual influence is going the other way.

Obviously, the decision to open the doors wide was made suddenly, so North Korean police and security were caught unprepared by the sudden influx of South Koreans. I witnessed the arrival of a new South Korean group to the Yanggak Hotel, and could not help but be impressed by the scene. Remarkable was the lack of the usual North Korean regimentation and the absence of segregation, which is the basic principle in handing all foreigners, especially South Koreans. The unruly and noisy South Korean tourists, fresh from the airport, virtually stormed into the hotel where many North Korean guests (obviously of high social-standing) were staying as well. The chaos created manifold opportunities for short-time encounters. Such encounters likely took place with the North Koreans learning a thing or two about the South.

Most of the South Korean tourists were in their 50s and 60s, obviously many had some personal connection to the North. (Between 1945 and 1953 about 10% of entire North Korean population fled south, and a much smaller but still significant number of leftist South Koreans escaped to Kim Il-sung’s would-be socialist paradise, leaving family members back home). Those of that era are most likely to look for contacts, and also are far more realistic than the young intellectuals who have been brainwashed by the leftist-nationalist ideologues.

The scale of the tourist mini-boom meant that for the first time in their lives many thousand of North Koreans could observe South Koreans closely, even often getting the opportunity to talk to them. This might have grave consequences to the regime. In past it was possible to explain away the good dress and fat complexion of the few South Korean visitors by insisting that they came from the elite. But now North Koreans saw the well-dressed, well-fed, self-assured South Koreans coming to the festival in droves, day after day, week after week? This was what drivers, guides, sales clerks and other North Koreans saw. It was what participants in the Arirang festival saw as well when they had a few minutes to look at the audience.

North Koreans could not help but conclude that the South has an unusually large supply of rich capitalists. And their presence at the Arirang games obviously means that South Koreans cannot be badly off: after all, the “running dogs of the US imperialism” are not supposed to come to such events.

Of course, most encounters were necessarily short, but dress and looks speak volumes and sometimes a few casual words are enough to change a North Korean’s world view dramatically. It is easy to imagine a South Korean woman in her 50s, whose husband is a skilled worker, complaining that her family has been unable to change a car for more than six years – and even easier to imagine the impact such a matter-of-fact remark would have on a North Korean to whom private cars are a symbol of ultimate luxury, something akin to the role of private jets in Americans.

Of course, the people who interacted with the South Koreans and foreigners overwhelmingly came from the elite. Good examples were our three interpreters – the granddaughter of the founding father of the political police, the granddaughter of a prominent negotiator who dealt with the Americans, and a daughter of an ambassador.

However, the arrival of so many South Koreans meant that a large number of less-privileged North Koreans also had access to the visitors, and at least overheard them talk. By North Korean standards a bus driver working for a tourist company holds a good job. Such a man (women are never allowed to drive in North Korea as it is believed to be dangerous for the public) is by no means a member of the inner circle of power, but he has friends and relatives with whom he can share his experience.

So, was my former student right? Was opening the door so wide to foreigners a mistake by Dear Leader Kim Jong-il, a master of survival who felt the allure of easy money and forgot the number one rule of his own policy – “stability is more important than development”?

Or perhaps he was misled by some officials who pocketed some of the revenues? Only time will tell how dangerous the entire affair was for the regime, which survives on isolation and myth-making. It seems the first conclusions are an indication: North Korea decided in early November to close its borders to all tours from mid-December until probably mid-January.

One might assume that they will use this break from tourists to reeducate their tour drivers and explain to them that South Koreans only look rich while really they are poor. Will this work? I doubt it.

Los Angeles Times
Barbara Demick
11/20/2005

A South Korean activist gives birth while visiting Pyongyang for an anniversary event. Some in the South suspect the timing was contrived.

While watching child gymnasts tumbling in unison across the field of Kim Il Sung Stadium in a performance heralding the miracle of the North Korean economy, Hwang Seon felt a sharp cramp in her abdomen.

Within minutes, the 32-year-old South Korean tourist was whisked by ambulance across town to Pyongyang’s maternity hospital. There, doctors delivered a 7-pound, 6-ounce girl who has become an instant celebrity and rare source of optimism in this often-forlorn North Korean capital.

The baby is the first born in the North as a South Korean citizen. Her birth Oct. 10 has been hailed as a mystical sign that the half-century-long division of the Korean peninsula is coming to an end.

“Our precious unification baby girl,” is how North Korea’s official KCNA news agency put it.

Hwang, who was more than eight months pregnant when she traveled to North Korea, spent two weeks recuperating in the maternity hospital, where she was treated without charge to around-the-clock nursing care. Her meals included seaweed soup, a Korean traditional postpartum treatment.

North Koreans suggested naming the baby Tongil, or “Reunification”; but that sounded like a boy’s name, so the parents instead opted for Kyoreh, meaning “One People.”

“Everybody said her birth was a lucky omen for the Korean people,” said Hwang, a left-wing political activist who favors rapprochement with the North.

Hwang and her daughter are the best-known South Korean visitors to Pyongyang recently. But from late September until early this month, visitors from the South came in unprecedented numbers to view mass games marking the 60th anniversary of North Kore&s ruling Workers’ Party.

During October, 7,203 South Koreans flew to North Korea on nearly 100 nonstop flights connecting the estranged neighbors.

For the first time, planes bearing the insignia of South Korea’s leading carriers, Korea Air and Asiana Air, became regular sights on the tarmac of Pyongyang’s seldom-visited Sunani airport; North Korea’s national carrier, Air Koryo, likewise was a frequent visitor to Incheon. Previously, there were only occasional charter flights between the airports for special events.

South Koreans in Pyongyang stood out in their colorful Gor-Tex jackets like exotic birds against the monochsomatic North Korean landscape. Almost all carried digital cameras, a rarity in the North.

While North Koreans trudged through the empty boulevards on foot, the South Koreans were transported in fancy tour buses, some of which sported color television monitors and video recorders.

The South Koreans were not permitted to go out unescorted and had to wear large nametags around their necks. At one point, a disoriented man in his 80s, born north of the border, tried to wander out of a Pyongyang hotel in search of his home village, but was blocked by a courteous but insistent North Korean doorman, said a South Korean visitor who witnessed the encounter.

Overall, the South Koreans said, they got the impression that North Korea was on a charm offensive. For example, when some tourists complained about a scene in the mass games that showed North Korean helicopter commandos battling what seemed to be South Korean soldiers, the material was promptly cut out.

The mass games were blatantly designed to tug at the heartstrings of South Koreans. Named “Arirang” after a popular Korean folk song, the program was replete with sentimental tunes and operatic skits about separated families reaching for one another across barbed wire. The show used more than 100,000 performers, many of them holding colored cards to make up intricate mosaics.

Keeping on message, the finale used a backdrop of doves with a message: “The last wish of the father [referring to the late North Korean founder Kim Ii Sung] is reunification of the fatherland.”

When North Koreans speak of reunification, their meaning is radically different from what Americans might think in recalling the collapse of the Berlin Wall in 1989 and the absorption of the communist East by West Germany. Instead, the North Koreans describe a loose confederation under which their nation would keep its own system of government while receiving massive economic aid from the South.

“We don’t want what happened in Germany,” tour guide Pak Gyong Nam said as he showed visitors a 185-foot-high stone arch portraying two women in traditional Korean dress (one representing each Korea) touching hands across a broad thoroughfare known as Reunification Street. “We would be one country, but two governments.

“If Korea is reunified, South Korea will bring in technology and investment. We have great confidence in the future. If we are reunited, no problem.”

The sentiment explains in large part why North Koreans were so enthusiastic about the so-called unification baby.

“Have you heard about the South Korean woman who gave birth?” asked Kim Kyoung Kil, a North Korean lieutenant colonel who was escorting tourists at the demilitarized zone the day after Hwang and her newborn crossed on their way back to Seoul. “It means reunification is near. Only the Americans are preventing it.”

The reunification baby’s birth — which took place on the exact date of the 60th anniversary of the Workers’ Party founding — fits so perfectly into North Korean propaganda that many suspect it was contrived.

Hwang has issued a denial, saying that her due date was 20 days away when she made the trip and that she had scheduled a caesarean section in Seoul for the following week because of complications from a previous birth.

“Even my friends think it was planned, but it’s not so,” said Hwang, who lavished praise on the medical care and nursing she received. “They were very impressive…. Everybody was wonderfiul to me.”

Other South Korean tourists, most of whom were visiting on a two-day tour that cost $1,000, expressed mixed sentiments about their experience.

Student activists and union members who marched onto the field with a pro-reunification flag were greeted by wild applause from North Koreans in the audience.

But some of the southerners were dismayed by what they saw as an unabashed celebration of totalitarianism.

“Rather than being impressed by the extravagant brightness and precision of the mass games, I was shocked at how mechanical those people were and realized how oppressed they are,” said Lee Yong Hoon, a 62-year-old businessman from Suwon. “I realize we can’t rush into reunification until North Koreans can accept concepts of freedom and individuality.”

More than 1 million South Koreans have visited North Korea since 1998, but most have gone only to Mt. Kumgang, in a border-area enclave open to tourists.

The visits last month were the first mass influx of tourists to the North Korean capital. They coincided with a period of rapidly accelerating economic and cultural exchanges between the Koreas.

South Korea’s national assembly is expected Dec. 1 to approve a humanitarian and economic aid package for the North worth $2.5 billion — nearly double last year’s allocation. And the two announced this month that they might field a joint team for the 2008 Olympics in Beijing.

South Korea’s largesse has come under some criticism because of the North’s nuclear program, the subject of six-nation talks. The Bush administration, along with the conservative establishment inside South Korea, has taken the position that rewards should be deferred until the Pyongyang regime dismantles its nuclear weapons.

“Our government is in collusion with North Korea, creating the false illusion that all is quiet on the northern front, when it is not,” said Lee Dong Bok, a former South Korean intelligence official and assemblyman. By allowing its citizens to visit Pyongyang for mass games, he said, “South Korea is helping North Korea promote its propaganda.”

Technically, South Koreans need waivers from their country’s National Security Law — which prohibits support of North Korea— to visit Pyongyang.

Hwang Seon, the baby’s mother and a former student radical, served 34 months in South Korean prisons largely because she made an unauthorized trip to North Korea in 1998.

“The last time I came back [to South Korea] from North Korea, the National Intelligence Service was waiting for me to arrest me,” Hwang recalled. “This time, I held my baby in my arms and was welcomed back with flowers.”

Hwang’s husband was not able to meet his wife and new daughter upon their arrival home. He is in hiding, wanted by South Korean authorities on charges of pro-North Korean activities.