North Korean Economy Watch

From the Donga:
U.S., All-Direction Pursuit on North Korean Ships
10/25/2006

It was [discovered] on October 24 that the U.S. is currently monitoring and tracking North Korean ships as a result of the resolution against North Korea and the Proliferation Security Initiative (PSI).

The South Korean government is known to have received intelligence from the U.S. government stating that it is tracking the route of North Korean ships which are suspected to be carrying either nuclear material or military equipment.

(more…)

From the Daily NK:
Kang Jae Hyok
10/19/2006

An inside source in North Korea told the Daily NK that operation of the railroads near Kilju area, where the U.S. and South Korean authorities suspected the nuclear test was conducted, was stopped due to fractures on the tunnels after the test.

And it is also informed that the cement sent by South Korea as part of the economic aid package was used to repair the cracked tunnels, indirectly contributing the nuclear test.

The source told the Daily NK in a telephone interview on Wednesday that “Railroad from Kilju to Baekam stopped carrying trains. And repair operation in the tunnels on the line started.” He said the train operation was interrupted because of fractures inside of tunnels, created after the nuclear test.

North Korean railroad tunnels are constructed strong enough to sustain shocks from trains moving through and earthquakes. Also tunnels are designed to provide shelters for trains in case of emergency.

According to the source, currently there are many tunnels in the Kilju area under repair and the cement aided by South Korea for reconstruction of flood damage is being used to repair the tunnels.

Kilju is located in the southernmost part of North Hamkyung Province. In the north, it borders with Ryangkang Province along the Mt. Mantap, which is indicated to be the site of nuclear test this month.

Also, Kilju is a transportation center at which railroads and highways cross; railroads include Pyong-Ra line from Pyongyang to Rajin, the northernmost port city in NK, and the Youth Baekdu line from Kilju to Hyesan. Near the Kilju station, there are many tunnels. In each railroad tunnel, KPA Railroad Guard is on sentry 24/7, and strangers are forbidden to enter into tunnels. The Railroad Guard is part of KPA organization and under authority of the National Security Agency, because Kim Jong-Il habitually rides train when inspecting the provinces.

BBC
10/16/2006

Australia is to ban North Korean ships from entering its ports in response to its claimed nuclear bomb test, the foreign minister has announced.

Alexander Downer told Parliament the move would help Australia make a “quite clear contribution” to other sanctions agreed by the UN on Saturday.

The UN resolution imposes both weapons and financial sanctions on the North, but despite the unanimous vote, disagreements have emerged between the members of the council.

Beijing has indicated that it still has reservations about carrying out the extensive cargo inspections that Washington says are called for in the resolution.

Ship inspections

Australia is one of the few countries to have diplomatic relations with North Korea, but its trade ties are limited. In 2005, imports amounted to A$16m ($12m).

“If we are to ban North Korean vessels from visiting Australian ports then I think that will help Australia make a quite clear contribution to the United Nations sanctions regime.”

Japan, which banned North Korean ships from its ports last week, is looking at whether it can provide logistical support for US vessels if they start trying to inspect cargo ships going to or from North Korea.

The restrictions imposed by Japan’s pacifist constitution may require the government to pass new laws to allow that to happen.

In a further diplomatic drive, US Secretary of State Condoleezza Rice is due to arrive in Japan on Wednesday.

She reportedly intends to reassure the country that Washington will provide adequate protection in the event that North Korea obtains a viable nuclear weapon – a message she will later take to South Korea.

‘Heavy responsibility’

The UN resolution against North Korea was agreed after lengthy negotiations.

It imposes tough weapons restrictions, targets luxury goods and imposes a travel ban on some North Korean officials.

It also allows the inspection of cargo vessels going in and out of North Korea for banned materials, although the resolution was weakened slightly at China and Russia’s insistence, to make this provision less mandatory.

Beijing’s UN envoy, Wang Guangya, said immediately after the vote that China urged countries to “refrain from taking any provocative steps that may intensify the tension”.

Both Russia and China are concerned that inspections could spark naval confrontations with North Korean boats.

But the US ambassador to the UN, John Bolton, told American television that China had voted for the sanctions and therefore “China itself now has an obligation to make sure that it complies.”

There was a great picture in the New York Times today.  The article was about the politics of a UN trade embargo in response to the nuclear test.  I was disappointed that the article was not about the story of the bikes being exported from Japan.  Who is importing them into the DPRK?  How are the funds transferred?  Is there a title? How are they being distributed in the DPRK?  Who is insuring them?  Who is buying them and where did they get the money?  This would have been a far more interesting article.  

Although stories of counterfitting currency and cigarattes, or exporting missles and drugs dominate news headlines, one story that never gets covered in the media, probably because it is so mundane, is how thousands of traders, motivated by nothing but self-interest and survival, are undertaking significant risks which are easing the hardships of the poor citizens of North Korea.  Will stopping this sort of trade make anyone better off? 

Image caption: Bicycles being loaded Friday onto a North Korean ship in Maizuru, west of Tokyo. A proposed Security Council resolution would restrict cargo. 10/14/2006

A Passport Worth 40 Years of Earning
9/25/2006
Choi Jeon Ho

On Sept. 15, in Bansi, Jilin Province of China, I was encountered by Mr. Choi, a 48-year old resident of Sariwon, North Hwanghae Province of NK. Mr. Choi had been visiting his relative in China for two months. As he was showing me his passport, Choi told me that the passport was worth what he earned for about 40 years.

According to Choi, ordinary residents have to save their earnings for 40 years to get passport; in other words, it is almost impossible for the North Korean people to travel abroad.

– What is the procedure to obtain a passport?

There are two required procedures; an unofficial one before submitting document and official document submission. Because we need permission of the security officer in charge to get out official documents passed, it is most important to have a ‘good relationship’ during the unofficial process.

Even during official process, it requires a ‘good relationship’ with local security office’s external affairs bureau official. Good relationship means bribery.

– How much does a security officer ask for bribery?

In my case, the officer in the National Security Agency suggested two terms of contract. One is to bring one million won (400 dollars) worth cash or home appliances. Another one is a letter of invitation from my relatives in China. In most cases, invitations to a wedding ceremony or 60th birthday banquet are acceptable.

Security officer in charge then submits the letter of invitation to the External Affairs Bureau (EAB) of local security office. Officials in the bureau would decide whether somebody is permitted to visit China or not.

The EAB official asked me one million one (400 dollars) worth bribe during decision process. If I don’t pay that, documents cannot be passed. So far is unofficial procedure.

Then, the official would give me an application form, in which I have to write about my relatives in China, my current job and family, specifically. EAB official verifies the form through People’s Safety Agency (NK police organization) registration office, and my company’s bosses and party secretary agree on, then local security chief permits my travel. To get permission, it requires vis-à-vis meeting with local security chief.

Afterward two visas, one from NK National Security Agency and the other one from Chinese embassy. Chinese embassy checks whether my relatives are currently living in China. After receiving the two visas, a passport is given.

Visa application fee is 30 euros, 240 thousands won (100 dollars). Since the average monthly wage for a (North) Korean worker is 2 thousands won, we have to save our wages for 12 years without spending a penny. And even the monthly wage is often delayed. 240 thousands won is obviously a huge amount of money. Moreover, security officers ask some bribes. Therefore, about 40 years earning is spent to get a passport.

– How long does it take to issue a passport?

At least 3 months to more than 6 months. And even this is impossible without bribery. (North) Korea is a Bribery Republic of Korea. Maybe that is why national elites don’t want the regime to be changed.

– What is the difference between the border area residents’ passports and the regular passports?

Border area residents don’t need their passports to be approved by the National Security Agency. The rest of the procedures are same. Personal bribery differs depending on the region, too. Residents of Pyongyang, South Pyongan Province, North and South Hwanghae and Kangwon provinces pay much more for bribery.
Also, although my passport is officially valid for 3 months, in reality, I have to come back in two months. However, border area residents can stay in China for full three months.

– Is there any instruction before visiting relatives in China?

Of course there is. At local party committee’s Propaganda Bureau.

– What kind of contents?

They educate the possible visitors that even though China is richer than (North) Korea, we must not be blinded by money. China is differed from us, they teach.

And, we are taught not to meet the South Koreans in China. If we meet them, we are instructed to boast about our country (NK) and be proud of. It is emphasized not to accept any of their (South Koreas’) offers. And if there is an encounter with a South Korean, we are required to report that fact to the National Security Agency.

From the Daily NK:
Transportation Chaos in N.K… “1 Train Operating Every 10 Days”
9/6/2006

A dire source from North Korea informed on the 5th that the main railway Pyong-ra line (Pyongyang-Rajin) connecting east North Korea with the inland was suspended leaving people in extreme transportation chaos.

In a phone conversation with a reporter, Kim Min Chul (pseudonym, 47) of Hoiryeong, North Hamkyung province said “It took me more than 1 month to travel from Pyongsung, Pyongan province to Hoiryeong, North Hamkyung province.” Kim who went to Pyongsung and Suncheon in Pyongan province at the end of last July for trade revealed “I returned barely alive and having spent all my money on the road.”

Kim said “The passenger train that connects Pyongan and Chongjin, North Hamkyung province only operates once every 10 days and so the majority of people ride trucks or buses.”

The Shinuiju-Chongjin train service that departs Chongjin, North Hamkyung province for Shinuiju can only operate unto Kowon, North Hamkyung province as restorations for the railroad at Yangduk is not yet complete. The train that arrives at Kowon is then returned back to Chongjin, however this seems to take 10 days.

According to Kim, this past April an accident occurred on the railroad between Yangduk, South Pyongan province and Kowon, North Hamkyung province. A train was overturned and before any restorations could be made, the flood that coincided blocked the tunnel and the rail roadbed was washed away. In some parts of the region, 50m of the rail is warped and in mid-air.

On April 23rd 2006, a 13 carriage train collided with a freight train between the regions of Yangduk-Kowon on its way from Pyongyang to Pyonggang, Gangwon province. It was a large-scale accident where 270 soldiers and 400 civilians were concealed on the train. Kim supposes that at the time, North Korean authorities feared the accident would become public, therefore ceased railway operations for a period of time.

Kim said “At present, traveling long distances is particularly inconvenient as trains are not operating properly. As a result the main services between Yangduk, Pyongyang province, and the east with the inland have become virtually nonexistent.”

Train ticket cost a minimum of 5,000won ($1.67)

As trains are suspended ‘paying to car-pool’ is increasing, as costs rise dramatically.

One North Korean source said “It is becoming a custom that you automatically show a 5,000won($1.67) the moment you board a car. In the case you are carrying luggage, each baggage costs an additional 5,000won.” The cost of traveling from Wonsan, Gangwon province to Kowon, South Hamkyung province is 5,000won, from Wonsan to Pyongyang 20,000won($6.67) and from Wonsan to Hamheung, North Hamkyung province 10,000won($3.33).

The source said “People using trains ride cars between Yangduk to Wonsan and then board trains like ‘a relay race’ only barely returning home.”

The source relayed, unfortunate people travel by walking for over 10 days from Yangduk to Sudonggu, North Hamkyung province through the Bukdaeryeong mountain paths renown for it’s rugged terrain. These people climb over mountains eating stolen potatoes and corn in nearby fields, which has led to a rise in complaints by the people.

Having a bad influence throughout the economy … Skyrocketing prices

As the belt between the east and inland is disconnected, adverse affects are impacting throughout North Korea’s economy and the lives of the people. Even North Hamkyung province which encountered little flood damages is facing restraints as goods cannot be delivered. The people in the majority live off trade are in a situation where they cannot even embezzle goods from each other as trains have been suspended.

The railroad is a critical means of transportation to the point it is called the ‘Economy’s Artery.’ As an important railroad such as this has been suspended, the whole economy has recoiled and signs of shortage in food prevalent.

Accordingly prices at Jangmadang are escalating. In a phone conversation with Kim Sun Mi(pseudonym, 35) of Onsung district, North Korea, confirmed this fact. Kim said “As roads and railways throughout the country are becoming immobilized, prices are skyrocketing.”

Kim said “The cost of rice has risen at Jangmadang at 1,300won ($0.43) per kilo, corn is 300won ($0.1), corn oil is 2,800won ($0.93) a bottle, bean oil is 3,200won ($1.07) and pork 3,300won ($1.1).”

Kim said “At present, Kotjebi (street children) are becoming more prevalent in the districts of Chongjin, North Hamkyung and Dancheon, South Hamkyung province. With an obscure thought that ‘You can only live if you go to the borders’ they are drawing to the districts near China and the border areas such as Hoiryeong, Musan and Onsung.”

In the mid-90’s, as the country faced difficulties due to lack of power and old equipment, trains operated once every 10~15 days. In those days, when a train stopped briefly, people would detach windows and chairs putting them to fire.

From the Korea Times:
Park Song-wu

The National Intelligence Service (NIS) said in a report to the National Assembly on Monday that the death toll from heavy rain and flooding in North Korea totaled around 900.

In addition the flooding destroyed 40,000 homes and left 24,000 families homeless, a lawmaker quoted the report as saying.

The report also noted that 105 kilometers of railways and 378 kilometers of roads were either inundated or washed away.

NGOs in Seoul have argued that the floods killed around 10,000 North Koreans.

From the Joon Ang Daily:

Ties sour at North’s China border

Signs of discontent between those two closest of allies, China and North Korea, have begun to appear. Last month, despite Chinese urging, North Korea fired off a test salvo of seven missiles. Although the tests were generally considered to be a bid for international attention, they provided Japan with more domestic ammunition to change its constitutional bar on warfare as an instrument of national policy, a development China does not see as in its interests.

Some suggestions of those cooling ties can be seen in this Chinese border city. Recently, about 40 North Korean women were waiting in front of the customs office in preparation for returning to North Korea. One of the women said Chinese authorities had order the women, who had worked at a stuffed-toy factory, out of the country.

“We received a three-year approval originally to work there, but after less than a year we are going back,” the woman said. Customs officials said the women were working illegally, but other people here were skeptical. One noted that many Russians have no problems because of a lack of work papers. “When relations between China and North Korea were good, there were no problems,” one said. “These incidents are in line with the cooling ties in light of the North Korean missile launch.”

In all, about 300 North Koreans have been told to leave Dandung for their homeland. The head of a trading company here, who has been dealing with North Korea for 10 years, said another 300 North Koreans will be sent home from Dandung within a month.

A source in Beijing said the Labor Ministry headquarters told its subordinate offices earlier this month not to issue work permits to North Koreans who carry passports and visas issued to government officials. “In the past, these people were allowed to work, and given the fact that they already have a visa, this measure is probably a retaliatory move by Beijing,” this source said.

A South Korean trader with ties to the North and China said that custom checks at the border have been increased, resulting in longer delays in shipping goods. The Dandung Customs Office said concerns about drug trafficking was the reason for stepped-up measures, an explanation that some residents here say has no precedent.  

From the Daily NK:
8/17/2006

National Defense Commission’s Inspection Task Force Dispatched to Sino-Korean Border
By Kim Young Jin, Yanji of China
 
An inspection task force under the National Defense Commission (NDC) is deployed on the Sino-Korean border in order to review border security and to check defection from North Korea to China.

Kim Choon Il (a false name), a 36-year-old defector living in South Korea since 2003, said on Wednesday that in a telephone conversation with his family in North Korea on Tuesday, he was told that NDC’s inspection team came to the border area since the end of last July and inspection became much tighter.

Kim also said that the inspection task force, cooperating with local Workers’ Party office, National Security Agency, and police, blocked the Sino-Korean border.

This inspection task force is under the control of the highest state organ NDC, which surpasses the power of other previous inspection squads organized under the lesser authority.

Since the task force is directly responsible to Kim Jong Il, it is expected that the task force is granted some specific inspection guideline.

The NDC inspection squad was deployed after the UN resolution on North Korean missile crisis was passed. Also it was immediately after a flood killed thousands and created hundreds of thousands victims who lost their homes.

Dispatch of the inspection team is a measure against infiltration of outside ideology and culture and also to prevent massive defection due to recent internal and external crises.

North Korean authority sent a party inspection team to the border area in 1992 after China and South Korea normalized diplomatic relationship. Also, as the number of defectors increased since then, another inspection team under the combined control of five departments (army, security agency, prosecutor’s office, police and party) was sent.

NDC’s dispatch of an inspection task force represents the highest authority’s distrust of previous inspection teams’ activities. It’s been pointed out that due to corruption and bribery previous inspection squads were unable to root out crimes.

According to inside sources, NDC inspection task force’s primary mission is to thwart defection, leak of documents, infiltration of outsiders, guns trafficking and any other anti-socialist activities. It is confirmed that in Sino-Korean border area not only drug and counterfeit dollar bills but also guns and ammunition are smuggled.

The informant also reported that it is ordered illegal defectors and their families to be deported, and infiltrators from outside and missionaries to be executed publicly.

According to Han, a defector living in Inchon, South Korea, who is aiding North Korean refugee in China, among those who suffered flood, an increased number of them wants to escape to China or South Korea.

From the British Government:

A TU-154 operated by Air Koryo from Beijing to Pyongyang crash landed at Pyongyang airport on 15 August 2006.

From the Daily NK:

“Regulation of People Due to Concern over Flooding”
Newspapers will not report the real conditions 

The North Korea support organization ‘Good Friends’ alleged that the aftereffects of the recent flood in North Korea seem more severe than the flood of the late 1990’s. However, North Korean authorities are attempting to regulate people so that the truth does not become public.

Good Friends recently reported that “Each town and province in North Korea is taking measures not to authorize travel certificates until further directions are given.”

The restrictions have not only suspended railway operations, but have affected flood victims as well. During the period of unrest due to the current quasi-war, these restrictions have been enacted in order to prohibit flood victims from spreading the news of damage as they go from place to place looking for food.

In addition, military bases in Yangduk, Maengsan, Shinyang, Yoduk and Gumkang were most severely affected. However, as the country remains in a state of tension, newspapers have not been reporting details of the damage, in an attempt to lessen feelings of anxiousness.

The newsletter also reported that North Korea does not seem to be taking any countermeasures against the flooding.

Following the flood in late July, many elderly citizens and children in areas of North Korea such as Kowon, Dancheon, and Wonsan have contracted diseases and more are dying everyday. As there is no medical support or preventative measures against such epidemics, the number of deaths continues to rise.

Moreover, as the North Korean regime has been thrust into a “situation of quasi-war”, it has neglected to support those in need.

Although action has been taken to begin reconstruction, there is little machinery and equipment, so people have resorted to manually rebuilding. In addition, as roads and railroads are disconnected it is difficult for emergency equipment to be delivered to disaster areas. Currency is also not circulating easily, and it is predicted that the cost of market supplies and the price of food will rise.

Good Friends reported that approximately 130,000~150,000 people have suffered damages due to the flood, and that at present, 4,000 people have been reported missing. The number of deaths and missing persons totals more than 10,000.