North Korean Economy Watch

According to the Daily NK:

A spate of car thefts over the last few months in Chongjin, North Hamkyung Province is said to have been done by military drivers trying to cling onto their posts, according to a source.

The source said some of the thieves were apprehended in an intensive crackdown on car theft carried out from late January to early February by the People’s Safety Ministry (PSM), and subsequently revealed the details.

According to the source, the drivers, in collusion with civilians, stole “servi-cha”, or service cars, and sold the parts, apparently in order to purchase gas and other things they needed to keep their own vehicles running.

Service cars are vans, trucks or buses used to transport people and cargo in lieu of an adequate public transport system.

Even though the PSM in the province apparently launched an investigation into the case, it was apparently unsuccessful because base Party cadres protected the drivers, so now the issue has developed into a tug of war between the military and the provincial PSM.

Speaking on the 7th, the source explained, “The drivers, who are part of a platoon which manages private cars for cadres under the 45th Division of the 9th Corps, which is stationed in Chongjin, hid the stolen cars in a parking lot on-base and sold the parts.”

He explained, “Agents from the Criminal Investigations Section of the PSM tried to access the corps, but 9th Corps cadres including the political commissar and the base National Security Agency head instructed soldiers not to allow them to get onto the base under any circumstances.”

One of the arrested men apparently admitted, “We utilized the fact that the security forces cannot search military bases.”

According to the source, their dire situation drove the drivers to car theft. He said, “An official’s cars projects his pride, so if a driver cannot run his car properly even on condition of having no gas or parts, it is difficult to hold on to that position.”

“The authorities used to turn a blind eye to the military earning money for fuel by supporting foreign currency earning companies or individuals by helping them carry their cargo. However, the military police’s crackdown even on military vehicles has recently been reinforced, so drivers found themselves in that difficult situation,” he concluded.

Following the Arduous March, drivers have played a role of growing importance in the North Korean economy.  Here are some previous posts on the DPRKS transporters and transportation market: Story 1, Story 2, Story 3, Story 4, Story 5.

Read more here:
Military Drivers Involved in Car Theft
Daily NK
Im Jeong Jin
3-8-2011

Bertil Linter, who is probably the most prolific author when it comes to illicit DPRK/Myanmar relations, has published an interesting piece in the Asia Times on cargo shipping between the two countries. The whole piece is well worth reading.

The only comment I have on the article is in regards to his economic reasoning for why trade between the two countries makes sense:

All this seems to confirm what diplomatic observers have long suspected: that Myanmar and North Korea, two countries with limited access to bank and other international financial trade facilities, are engaged in barter trade. Myanmar’s ruling generals want more weapons but often don’t have the foreign funds handy to pay for them – or at least they don’t want such transactions to show up in their bank records. North Korea, meanwhile, is starved for food and likewise lacks the finances to pay for imports.

The DPRK does appear to be suffering a shortage of food, but the government does have the funds to pay for food imports–it just prefers to spend those funds in other ways.  Below is a chart of the DPRK’s estimated trade balance from 2000-2008 published by the Congressional Research Service:

As you can see from the bottom line of the table, the DPRK has been running a substantial trade deficit (as a % of its total trade) for nearly the last decade.  This trade deficit must be paid for with hard currency inflows of one kind or another (“aid”, investment, illicit exports). Where these funds are coming from and to whom specifically within the DPRK they are going is a mystery to me, but we do know they are importing (as a group) much more than they are exporting.

Below is the article in the Asia Times:

With the Middle East and North Africa in turmoil, North Korea risks losing some of its oldest and most trusted customers for military hardware. Pyongyang has over the years sold missiles and missile technology to Egypt, Libya, Yemen, the United Arab Emirates, Syria and Iran, representing an important source of export earnings for the reclusive regime. The growing uncertainty among those trade partners could explain why North Korea is now cementing ties with a client much closer to home: military-run Myanmar.

In April 2007, North Korea and Myanmar resumed diplomatic relations. Those ties were after North Korean agents planted a bomb in the then capital of Yangon in October 1983, killing 18 high-ranking South Korean officials who were on a visit to the country. Only days after the restoration of diplomatic ties, a North Korean freighter, the MV Kang Nam I, docked at Thilawa port, 30 kilometers south of Yangon.

Officials claimed at the time that the ship docked to seek shelter from a storm. However, two local reporters working for a Japanese news agency were turned back and briefly detained when they went to the port to investigate, indicating that there could have been other, more secret reasons for the Kang Nam I’s arrival.

The same ship was put on global radar in June 2009 when it was pursued by the USS John S McCain and then reversed course. It was believed that it was on its way back to Myanmar with more unspecified cargo. Military observers tied the Kang Nam 1 incidents to the arrival of another North Korean ship, MV Bong Hoafan, at a Myanmar port in November 2006 before the resumption of diplomatic relations. Curiously, it was also reported to have been “forced” to seek shelter at a Myanmar port because of “adverse weather conditions”.

An Asia Times Online investigation has found that those were not isolated incidents. Shipping records from Myanmar show that North Korean ships have been docking regularly at Thilawa and Yangon ports for almost a decade. Even the ill-fated Kang Nam 1 had docked in Myanmar long before the 2007 and 2009 incidents. The ship made its first voyage to Myanmar in February 2002, carrying what was declared as “general cargo,” according to the shipping records.

North Korean shipments are almost invariably specified as “general goods” and sometimes “concrete”, but both in and outgoing cargo is usually handled by Myanmar’s Ministry of Heavy Industry 2, which supervises the country’s defense industries, the armed forces’ Directorate of Procurement, and the military’s own holding company, the Union of Myanmar Economic Holdings (UMEH).

When the MV Bochon, another North Korean ship, arrived at Thilawa in October 2002, the Myanmar military’s high command sent a document marked “top secret” to the port authorities, requesting them to clear the entire docking area for “security reasons”. They were also advised, according to the shipping records, that some “important cargo” would be offloaded within 36 hours.

When the MV Chong Gen approached Thilawa on April 12, 2010, it asked for permission to fly a Myanmar flag instead of its North Korean one, according to the shipping records. The captain also requested a Myanmar SMC card (smart media card) for a mobile phone, along with coastal charts. These were odd requests for a ship that was officially carrying 2,900 tons of cement and 2,105 tons of “general goods” from the North Korean port of Nampo.

Bizzare barter
Indeed, the requests made by North Korean ships traveling to Myanmar have often been outright bizarre. MV Du Man Gang appears to be one of the most regular North Korean visitors at Thilawa. On one of its many trips to Myanmar, in July 2009 it asked for 150 crates of Myanmar brandy. In March 2010, when another North Korean ship, the MV Kan Baek San, arrived in Myanmar, the North Korean ambassador asked for an unspecified quantity of Myanmar vodka to be sent to the ship, according to the shipping records.

The involvement of North Korean diplomats in these shipments is otherwise more convoluted. In September 2009, the MV Sam Il Po docked at a smaller terminal in Yangon and both the North Korean ambassador Kim Sok Chol and defense attach้ Kim Kwang Chol were present to inspect the cargo along with Lt Col Thein Toe from the Myanmar military. The unspecified cargo was received by UMEH, which in return supplied 1,500 tons of rice which was taken back to North Korea.

That was not the only incident when North Korean freighters returned with Myanmar rice. The MV So Hung arrived in November 2008 with 295 tons of material for the Ministry of Defense and left with 500 tons of rice. When the MV Du Man Gang docked in July 2009 it left with not only brandy but also 8,000 tons of rice. In June 2010, the MV An San arrived with 7,022 tons of what was alleged to be “concrete” and left in July with 7,000 tons of rice.

All this seems to confirm what diplomatic observers have long suspected: that Myanmar and North Korea, two countries with limited access to bank and other international financial trade facilities, are engaged in barter trade. Myanmar’s ruling generals want more weapons but often don’t have the foreign funds handy to pay for them – or at least they don’t want such transactions to show up in their bank records. North Korea, meanwhile, is starved for food and likewise lacks the finances to pay for imports.

When money is involved in North Korea-Myanmar trade, transactions are always done in cash and thus untraceable. Like all other ships, North Korean ones have to pay port fees in Myanmar. The MV Du Man Gang, for instance, asked to pay US$30,994 in cash rather than make a bank transfer. Other ships have made similar requests which has led to speculation about the kind of currency the North Koreans, notorious for counterfeiting US dollars, may be using.

Large quantities of counterfeit US notes have recently shown up in areas around Myanmar. In July and August 2009, a customer tried to change U$10,000 in fake notes at the State Bank of India’s main office in Imphal, Manipur. The fake bills were all of the US$100 denomination and of excellent quality, according to sources. It was the first such incident in Manipur. Although it is not clear whether the bogus notes were printed in North Korea, Imphal is located just over 100 kilometers from Moreh, an Indian town opposite Myanmar’s Tamu where a virtually unregulated border trade is booming.

Trade between North Korea and Myanmar is also apparently being done through front companies. In June 2010, the North Korean freighter MV Ryu Gong arrived with 12,838 tons of what was also described as “cement”. While the shipment was handled by the Ministry of Heavy Industry 2, the stated recipient was a little-known company known as Shwe Me, or “black gold” in Myanmar.

Port documents show that the company has nearly a million US dollars in assets but what it actually intended to do with all that cement is unclear. Just as puzzling is the involvement of Singapore-based shipping companies, which handle most of the cargo’s logistics and operate under innocuous sounding names including words like “maritime” and “services”. One of the companies has a distinct Korean name but is actually based in Singapore.

Port records point to a brisk trade between North Korea and Myanmar, all of which is handled by Myanmar’s military rather than civilian-owned private companies. In August last year, then prime minister and now president Thein Sein visited Pyongyang. According to the official Korea Central News Agency, he said that “the government of Myanmar will continue to strive for strengthening and development of the friendly and cooperative relations between the two countries.”

With those intentions publicly well-stated, Myanmar may well be on its way in overtaking Egypt, Libya and other traditional military trading partners in the Middle East and North Africa as North Korea’s main market for its military hardware.

Read the full story here:
Fog lifts on Myanmar-North Korea barter
Asia Times
Bertil Linter
3/4/2011

Institute for Far Eastern Studies (IFES)
2/24/2011

The trade volume between North Korea and China has steadily increased, reaching its record high of USD 3.4 billion in 2010. Total exports amounted to 1.19 billion USD while imports doubled that figure to USD 2.22 billion. Imports have continued to grow, increasing by 2.4 times over the previous year.

Since the Cheonan incident and the implementation of May 24 sanctions, inter-Korean economic cooperation has come to a halt, naturally resulting in rise in exports to China. In particular, a significant growth in anthracites exports was observed. The monthly anthracites exports that averaged around USD 10 million surpassed USD 70 million mark last August and maintained USD 50 million monthly average between September to November. In addition, cost-per-ton of anthracite in March which was USD 52.2, jumped to USD 82.8 in November, a climb of 60 percent. This boost is attributed to its increased export.

The current supply of electric power consists mostly of hydroelectric power — reaching over 60 percent– but during the winter season most of the hydropower plants are unoperational due to frozen facilities from harsh winter weather. Anthracites were the alternative resource to fill this gap. Sacrificing power production and exporting great amount of anthracites despite severe winter is a strong indication of the poor foreign currency situation in North Korea.

In its New Year’s joint editorial, North Korea placed heavy emphasis on its anthracite export that took up 60 percent of its total exports. In the statement, four vanguard sectors of coal, electricity, metals, and railroads were highlighted as important industries as “rich underground resources that will help with securing funds and resolving raw material problems.” This is the first time in 13 years – that is, since the Arduous March — for coal to be mentioned first in the New Year’s message.

North Korea also began to lift export restraints of mineral resources like coal and silver from the latter half of last year and ordered to increase imports of rice and corns in place of minerals.

The reason food procurement is placed first at the expense of its mineral resources is believed to be associated with the implementation of the succession involving Kim Jong Un, and to keep North Korean people’s dissatisfaction under control and manage the domestic situation.

North had placed restraints on coal, gold, silver, lead, and zinc exports from 2007 through adopting export control of mineral resources.

In addition, North Korea and China will meet in Beijing to sign an agreement on joint development of underground resources. This agreement will include Musan Mine and rare-earth mines that POSCO (The Pohang Iron and Steel Company of South Korea) has shown interest in in the past for development. China’s moves in this sector are suspected as China’s attempt to monopolize the DPRK’s underground resources.

The DPRK’s Joint Venture and Investment Guidance Bureau and China’s Ministry of Commerce were expected to meet on February 15 to discuss agreements related to underground resources development. On the agenda was Musan Mine, abundant in gold and anthracite, and other mines rich in rare-earth elements. Other mines are also known to be specified in the agreement.

China is expected to bring private companies into the underground resources development project after reaching an agreement with the DPRK. According to our source, “both parties will establish a joint venture investment corporation in Hong Kong after signing the agreement.”

Construction of a highway connecting Heilong City of Yanbian Korean Autonomous Prefecture to Nampyong and Chongjin of North Korea and railway system linking the cities of Heilong, Nampyong, and Musan are currently underway, expected to be in operation by end of this year. Jilin Province and Ministry of Railways of China began construction of this railway system from October 2010 investing CNY 1.19 billion, which runs a distance of 41.68 km. However, it is expected to extend further onto Chongjin and is considered to become the major transportation hub, integrating economic cooperation between the two countries.

Musan Iron Mine is known as the largest outdoor iron mine in Asia and Tonghua Iron and Steel Group along with three other Chinese corporations acquired 50-year development rights of Musan Iron Mine. They are bringing in about 120 tons of iron ore each year and more is expected to be brought in once the Heilong-Musan rail link is completed.

UPDATE 1 (2/21/2011): The Korea Times has published a more recent (though lower resolution) image of Pyongyang and Nampho buried in snow–along with some information on the implications of the weather on the DPRK’s infrastructure.

According to the Korea Times:

Images obtained by the Korea Center for Atmospheric Environment Research (KCAER) show that a significant portion of the coast of (North) Korea Bay, located in the north part of the West Sea, has frozen over. The bay is also choked by abnormal amounts of drift ice.

The lower portion of the Daedong River, which flows into the bay, has turned into ice almost up to Nampo, the site of the country’s major harbor.

“Transportation of goods to Nampo Harbor has likely been extremely impeded for more than 45 days,” Chung Yong-seung, a KCAER expert, said in an email. “They could go to the Wonsan Port (in the southeast) instead, but it’s highly likely that sea transportation has been difficult.”

Further north, a significant portion of the Cheongcheon River appears to have been covered by thick ice.

According to KCAER, there has been less arctic ice worldwide this winter than in the past. But cold arctic air moved south, bringing a cold snap to many parts of the region and the rare freeze in Korea Bay.

The research center predicted that warmer air and water will flow into the bay in about 10 days, causing the ice to float away or melt.

The North’s state media reported last month that temperatures in December and January had been markedly colder than usual, causing hardship for “the people’s lives.”

South Korean humanitarian aid groups that maintain contact with the North said the harsh conditions had severely compounded existing malnutrition and shelter problems.

Pyongyang has reportedly stepped up its calls for aid from the international community in recent weeks amid what the aid groups consider a worsening humanitarian situation.

ORIGINAL POST (2/1/2011): DPRK experiencing record low temperatures

Image source: NASA

According to Yonhap:

The longest cold spell in six decades has hit North Korea, a report said Tuesday, allowing people to walk across the frozen river in Pyongyang while causing farmers to worry about their crop production this year.

Frozen along with the landmark Taedong River were ports on the west coast close to the capital, said the Chosun Sinbo, a pro-North Korean newspaper that has correspondents in the communist country but is published in Japan.

The temperature in North Korea stayed below the freezing point for 40 consecutive days this winter, a phenomenon only surpassed by a 62-day streak in 1945, the paper said, citing a North Korean meteorologist.

“Even last year’s winter, which had already been colder than before, did not freeze the Taedong River this completely,” the Chosun Sinbo said. “People are now walking across the Taedong river in the heart of the city.”

The chill has frozen soil up to 42 centimeters below, 10 cm deeper than last year, the paper said. The freeze may cause a delay in the plowing season, making farming more difficult although it does have the benefit of freezing harmful insects to death, it said.

“At present, a wave of phone calls are being made by workers in the fields of agriculture and city construction” to the local weather agency with concerns, the paper said.

South Korea also suffered a prolonged cold spell this year with temperatures even in the usually warmer southern regions dropping to their lowest levels in decades. Heavy snowfall and high waves also disrupted ground and sea traffic in those regions.

Ryu Ki-yeol, the North Korean scientist cited by the Chosun Sinbo, cited a difference in pressure at the highest latitudes known as the Artic Oscillation as the cause of the prolonged cold spell.

Read the full stories here:
N. Korea gripped by longest cold snap in decades: report
Yonhap
Sam Kim
2/1/2011

Deep freeze hits N. Korea’s west coast
Korea Times
Kim Young-jin
2/21/2011

Martyn  Williams, who is keeping a closer eye on the DPRK’s use of the internet than anyone else, informs us that the DPRK appears to be setting up a web page for a LRIT Maritime system (Long Range Information and Tracking of ships).

When I read Martyn’s blog post, I was lost–so I did some background research on LRIT. According to Wikipedia:

IMO – the International Maritime Organization – is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships. The IMO’s primary purpose is to develop and maintain a comprehensive regulatory framework for shipping and its remit today includes safety, environmental concerns, legal matters, technical co-operation, maritime security and the efficiency of shipping. IMO is governed by an Assembly of members and is financially administered by a Council of members elected from the Assembly. The work of IMO is conducted through five committees and these are supported by technical subcommittees. Member organizations of the UN organizational family may observe the proceedings of the IMO. Observer status is granted to qualified non-governmental organizations.

According to the IMO web page:

As part of the international maritime community’s wide-ranging response to the growing threat from terrorism world-wide, the International Maritime Organization (IMO) decided to establish a new system for the global identification and tracking of ships. Following a major effort to identify appropriate technologies, establish the necessary global legal regime and achieve political consensus concerning the collection, distribution and use of the data, IMO has established a system for the Long-Range Identification and Tracking of Ships (LRIT).

1.2 The LRIT system consists of shipborne LRIT information transmitting equipment, Communication Service Provider(s), Application Service Provider(s), LRIT Data Centre(s), the LRIT Data Distribution Plan and the International LRIT Data Exchange. Certain aspects of the performance of the LRIT system are reviewed or audited by the LRIT Coordinator acting on behalf of all Contracting Governments to the International Convention for the Safety of Life at Sea (SOLAS). IMSO has been appointed to be the LRIT Coordinator.

…

1.4 Under new SOLAS Regulation V/19-1, ships will be required to report their position (LRIT information) automatically, to a special shore data collection, storage and distribution system, at least four times a day. LRIT information is provided to Contracting Governments and Search and Rescue services entitled to receive the information, upon request, through a system of National, Regional, and Co operative LRIT Data Centres, using where necessary, the International LRIT Data Exchange.

So just to clarify, “LRIT is a recent amendment to Chapter V of the International Convention for the Safety of Life at Sea 1974 (SOLAS), which introduces new mandatory position reporting obligations for SOLAS vessels. It came into force on January 1st, 2008, with compliance required by December 31st, 2008. It demands that SOLAS vessels automatically transmit their identity and position with date/time at 6-hour intervals. They must also be capable of answering requests from member states and LRIT data centers for immediate position reports and be able to change the time interval between reports to a maximum frequency of every 15 minutes.”

Adopting the LRIT system helps the DPRK shipping industry when it comes to mitigating the risks of piracy in the Gulf of Aden and the Strait of Malacca.  I would have expected that the adoption of an LRIT system would financially handicap the DPRK’s illicit weapons shipments since tracking vessels will be made much easier, but the mere fact that the DPRK is developing the system probably means the  North Koreans do not see a financial threat from it.

Pictured Above: Pongchon Coal Mine (Google Earth)

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-01-18
1/28/2011

The DPRK Workers’ Party’s newspaper, the Rodong Sinmun, recently featured a front-page editorial urging the North Korean people to increase coal production. On January 26, the KCNA reiterated the call, reporting that the newspaper editorial highlighted fertilizer, cotton, electricity, and steel as products suffering from a lack of coal, and that “coal production must be quickly increased in the Jik-dong Youth Mine, the Chongsong Youth Mine, the Ryongdeung Mine, the Jaenam Mine, Bongchon Mine [Pongchon Mine] and other mines with good conditions and large deposits.”

The editorial also emphasized that “priority must be placed on the equipment and materials necessary for coal production,” and, “the Cabinet, national planning committee, government ministries and central organizations need to draft plans for guaranteeing equipment and materials and must unconditionally and strongly push to provide,” ensuring that the mines have everything they need. It also called on all people of North Korea to assist in mining endeavors and to support the miners, adding that those responsible for providing safety equipment for the mines and miners step up efforts to ensure that all necessary safety gear is available.

In the recent New Year’s Joint Editorial, coal, power, steel and railways were named as the four ‘vanguard industries’ of the people’s economy. Of the four, coal took the top spot, and all of North Korea’s other media outlets followed up the editorial with articles focusing on the coal industry. On January 15, Voice of America radio quoted some recent Chinese customs statistics, revealing that “North Korea exported almost 41 million tons of coal to China between January and November of last year, surpassing the 36 million tons exported [to China] in 2009.” It was notable that only 15.1 tons were exported between January and August, but that 25.5 tons were sent across the border between August and November.

North Korea’s coal exports to China earned it 340 million USD last year, making the coal industry a favorite of Pyongyang’s economic and political elites. Increasing coal production is boosting output from some of the North’s electrical power plants, while exports to China provide much-needed foreign capital. However, even in Pyongyang, where the electrical supply is relatively good, many houses lack heating and experience long black-outs. Open North Korea Radio, a shortwave radio station based in the South, reported on January 24, “As electrical conditions in Pyongyang worsen, now no heating is available.” Farming villages can find nearby timber to use as firewood, but because prices are so high in Pyongyang, even heating has become difficult. Some in the city even wish for rural lifestyles, just for the access to food and heat.

Andrei Lankov writes in the Korea Times about the state of the North Korean economy.  Excerpt below:

The existing statistics are remarkably untrustworthy, being essentially educated guesses by analysts. Nonetheless, these statistics indicate a moderate growth of the North Korean economy.

But the present author talks to North Koreans quite frequently. So I don’t need statistics to confirm what becomes clear from my talks with refugees, smugglers, migrant workers and those Koreans who have illegal Chinese mobile phones. Throughout the last ten years the economic situation in the country has improved, even though this improvement was very moderate.

What does “improvement” in this context exactly mean? First of all, few if any North Koreans now face the threat of starvation, though malnourishment remains a widespread problem. Many (perhaps, a majority) of North Koreans don’t have enough to eat in spring. This has a seriously negative impact on their health and is especially bad for children. Nonetheless, unlike the 1990s, it seldom leads to death.

The average North Korean meal is a bowl of boiled corn with a few pickles. Meat or fish are eaten only on special occasions or by affluent people.

Indeed the last decade was a time when material inequality increased in leaps and bounds. Some of the new rich are officials who take advantage of their positions while others are successful entrepreneurs running all kinds of private businesses.

A successful North Korean entrepreneur nowadays might even openly own a car. For instance in a relatively small borderland city with a population of some 90,000 people there are officially three private cars. Much more frequently well-to-do North Koreans prefer to register their cars with state agencies. At any rate, ten years ago a private car was almost unthinkable.

The less successful entrepreneurs or craftsmen are still doing quite well as indicated by significant increase in the number of consumer durables owned by North Koreans. Fifteen years ago a fridge was a sign of exceptional luxury, almost as rare as a private jet in the U.S. Now it’s a bit like a luxury car, an item that 10-20 percent of households can afford.

What is also interesting is the spread of computers, including privately owned ones. In most cases these are old, used computers which are imported or smuggled from China. They are quite outdated but they are computers nonetheless. Recently I interviewed a group of school teachers from the countryside, and they said that nowadays every high school, even in remote parts of the country, is likely to have at least one computer (admittedly, this wonderful contraption is seldom switched on).

This does not mean of course that North Korea has become a consumer paradise. In spite of some improvements, the gap between the North and its successful neighbors continues to widen. However in absolute terms the North Korean economy is not shrinking any more.

There have been serious setbacks, the currency reform early last year is a perfect example. For a while, this failure almost paralyzed the economy and created serious food shortages across the country.

But what brought about this moderate growth? It seems that there are three major contributing factors.

First, North Korea has been quite good at begging and blackmailing the outside world into providing aid. The aid was initially provided by South Korea and the U.S., but now it comes almost exclusively from China.

Second, North Korea’s technocrats have learned how to run the country in its new situation. They are not very efficient at this, but, to quote Marcus Noland, “they are muddling through.”

The present author is inclined to believe that it is the third reason which is the most important of all. Over the last decade a relatively powerful private economy has developed in North Korea. North Koreans did not merely learn how to trade privately, they now produce privately as well and this growth of industry invisibly and privately, seems to have contributed to the growth described above.

The growth is moderate, and no breakthrough is likely. Nonetheless, it is real and palpable.

Read the full story here:
Between myths and facts
Korea Times
Andrei Lankov
1/30/2011

According to the Korea Times:

Radio Free Asia (RFA) of the United States reported Friday that a North Korean ship has been detained for the 10th consecutive month by Somali pirates.

“The Chilsanbong Cheonnyeonho of the North was hijacked near Somali waters on March 31 last year and has since been detained,” the Washington-based shortwave radio reported, quoting a report on ships taken by pirates in 2010 published by the International Maritime Bureau (IMB). “Nine sailors suffered wounds from armed pirates, while resisting their attack.”

Another North Korean freighter, Limho, was hijacked on its voyage through the Bay of Aden on Feb. 3 last year and was released after four months of negotiations, according to the report.

A total of nine North Korean merchant ships were captured or attacked by pirates since 2006 _ one each in 2006 and 2008, five in 2008 and two in 2010.

During the same period, as many as 12 South Korean ships suffered similar fates _ four in 2006, three in 2008, one in 2009 and four in 2010.

“Close international cooperation is urgently needed to cope with growing damage from pirates,” said RFA. “However, North Korea, which joined the International Maritime Organization (IMO) in 1986, has failed to pay annual fees of 30,000 euros since 2009, saying, ‘It is hard to actively work due to a change of diplomats at the embassy.’”

Links to previous Somali pirate stories here.

Read the full story here:
‘N. Korean ship detained for 10 months by Somali pirates’
Korea Times
1/28/2011

According to The Australian:

The use of an Australian-owned cargo ship to smuggle weapons from North Korea to Iran has been highlighted in a report to the UN.

It was one of several breaches of UN sanctions against Kim Jong-il’s regime detailed in a report to the Security Council.

The report, which was submitted to the council recently after months of obstruction from China, found the North was making $US100 million a year through illegal arms sales to Syria, Iran and Burma.

Pyongyang used shadowy webs of front companies, false manifests and complex routes to try to get around sanctions aimed at stopping its arms proliferation, the investigation found.

The report flags the 2009 interception of the ANL Australia in Sharjah as one of at least four occasions that North Korea was caught out exporting arms or defence equipment.

The report said weapons were seized from the ANL Australia in the United Arab Emirates on July 22, 2009.

The cargo is thought to have included up to 10 containers of arms, including rocket-propelled grenades and trigger mechanisms and propellant, although this is not detailed in the report.

The cargo was packed and sealed in North Korea and shipped to China, where it was loaded aboard the ANL Australia en route to Iran.

The Bahamas-flagged vessel was owned by ANL Container Line at the time.

ANL, once Australia’s national shipping line, was taken over by French company CMA CGM.

Despite the breach of sanctions, an Australian government investigation found ANL was not responsible because the ship was chartered by a foreign company at the time.

“The Australian government’s inquiries into this matter indicated that at all relevant times the vessel was not under the operational control of its owner, but was rather being chartered by a non-Australian company,” a Department of Foreign Affairs and Trade spokesman said.

“No conduct relevant to the shipment can be attributed to an Australian person or body corporate,” he said.

ANL declined to comment.

The report found that while no ballistic missile or nuclear-related materials emanating from North Korea had been intercepted since sanctions were applied, evidence suggested “continuing DPRK (North Korea) involvement in nuclear and ballistic missile-related activities in certain countries, including Iran, Syria and Myanmar (Burma)”.

“To supplement its foreign earnings, the DPRK has long been involved in illicit and questionable international transactions (including) the surreptitious transfer of nuclear and ballistic missile-related equipment, know-how and technology,” it says.

The panel received government reports suggesting North Korea had helped build Syria’s Dair Alzour nuclear facility (destroyed in 2007 by an Israeli attack) along with details of Japan’s arrest in June 2009 of three individuals trying to illegally export a magnetometer, a device with potential missile-related uses, to Burma.

The report cited in the story is the “Panel of Experts” report to the UNSC.  You can read (and search) it here (PDF).

Read the full story here:
UN cites ANL in N Korea arms smuggling
The Australian
Rick Wallace
1/10/2011

According to the Hankyorey:

A report on major North Korean indicators released by Statistics Korea on Wednesday revealed that South Korean products are becoming increasingly popular in North Korea, and that there are hardly any North Korean urban youth who do not watch South Korean TV dramas or movies.

In the report, Statistics Korea said it is becoming a fad for young people in major North Korean cities like Pyongyang and along the border with China to watch South Korean television dramas and films using MP3 players or laptop computers. Statistics Korea said MP3 players with 1G of memory cost 60,000 North Korean Won (estimated $419), while a used laptop costs about 2 million North Korean Won. A memory chip with two or three movies costs 10,000 North Korean Won if it is an original, and 5,000 North Korean Won if its a copy.

The report also said many South Korean products are in circulation in North Korea, including blenders, portable heaters, gas ranges, butane cans, lunch trays, gas heaters, rice cookers, dishrags and gloves. According to the report, South Korean shampoo and conditioner is popular with the wives of high-ranking North Korean officials in Pyongyang. Some 470g bottles of South Korean shampoo and rinse go for 40-50 yuan (8,000-10,000 South Korean Won) in Pyongyang. The report said the popularity of South Korean products was also reflected in other goods. South Korean necklaces are sold for about $500 and earrings for about $70-80, while South Korean products like perfume, deodorant, car air fresheners, refrigerator deodorizer and bathroom air fresheners are also selling well.

South Korea’s nominal GNI in 2009 was $837.2 billion, 37.4 times that of North Korea’s $22.4 billion. North Korea’s economic power, all told, is no more than the level of the South Korean city of Gwangju (about 22 trillion Won). South Korea’s per capita income of $18,175 was 17.9 times that of North Korea’s $960. South Korea also conducted $686.6 billion in total trade, 201.9 times that of North Korea, which conducted only $3.4 billion. The only sectors in which North Korea topped South Korea were production of iron ore and coal and length of railroads. North Korea’s iron ore production was 4.955 million tons, ten times that of South Korea (455,000 tons), and its coal production was 25.5 million tons, 10 times that of South Korea (2.519 million tons). North Korea also had 5,242km of railroads, 1.4 times that of South Korea’s 3,378km. North Korea is also believed to have 7 quadrillion Won in underground mineral wealth.

I have been unable to locate the original on the Statistics Korea page.  If any readers can find it, please let me know.

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In limited N.Korean market, furor for S.Korean products
Hankyoreh
Hwangbo Yon
1/6/2011