North Korean Economy Watch

Here is more commodity price information courtesy of Open Radio for North Korea:

Agricultural and houselhold commodities:
1) Rice
-Shin Eui Joo: The price rose from 850 won/kg (18th) to 900won/kg (31st)/ whole sale price: 620won/kg
-Bak Chun Gun: October: 1000won/kg, November 800won/kg (trading rice was banned in October with resumption of food distribution system, which caused the rising price.)
-Pyeongyang: Honammi 800won/kg Annammi 680won/kg

2) Corn
-Shin Eui Joo: 400won/kg (December)
-Bak Chun Gun: 350won/kg (November)

3) Pork
-Shin Eui Joo: 3,300won/kg (December)
-Bak Chun Gun: 3,500won/kg (November)

4) Beef: 7,000won/kg (Beef is seldom sold at markets, but was temporarily out in the black market for new year’s holiday season.)

5) Cooking Oil
-Shin Eui Joo: 2,300 won/kg (November)/Yellow Oil 
-Bak Chun Gun: 2,500won/kg (November)/Yellow Oil

6) Seasoning
-Same in the region of Shin Eui Joo, Sah Ree Won, Bak Chun Gun: 2000won/bag(200g)

7) Underwear
-Bak Chun Gun: Brassiere: 4,000~6,000won, Children’s underwear: 5,000~6,000won
-Shin Eui Joo : Underclothes: 10,000~15,000won/piece, 20,000~30,000won/set

8) Socks
-Bak Chun Gun: 500~2,000won/pair (socks for winter)

9) Shoes
– Bak Chun Gun: high quality: 15,000won, poor quality: 3,000~4,000won/ Handmade: 2,500won 

10) T.V
-Shin Eui Joo: the same as November

11) Price of house and rent
-Shin Eui Joo: One storied house (1 Room, 1 Kitchen): $600, Apartment (2 Rooms, 1 Kitchen): $1,500, Well-located apartment (3 Rooms, 1 Kitchen): $10,000~15,000(able to bargain), 100 Sq.m- apartment: $12,500 (90,000~100,000 Chinese Yuan)
-Sa Ree Won: 100 Sq.m apartment $8,750 (70,000 Chinese Yuan)
-Bak Chun Gun: One storied house (2 Rooms, 1 Kitchen): around $100, Three storied apartment: around $150~200

Footnotes:
1.  A middleman receives 10% of the purchase as compensation. If one moves to a purchased house, one needs to receive a certificate which records that you are allowed to live in the house from a police officer in charge of registration in the neighborhood, usually the payment is one mal(10du/15kg) of rice.
2.  Expense for making Kimchi(Bak Chun Gun): Chinese cabbage 200won/head, Red pepper powder 2500won/kg, garlic 3,000won/100heads, ginger 300won/kg, salt 350won/kg, sugar 1,000won/kg, salted anchovies 1,500won/kg, scallion is raised at home.  Approximately 40,000~45,000won is expended for making 150 heads of Kimchi (usually consumed with rice, and is made with pepper, scallion and salted anchovies), for family of four.

Local Fees and Markets:
1) Electricity- Bak Chun Gun: 10won/lightbulb, 70won for black and white TV (per quarter)

2) Water- Bak Chun Gun: flat rate of 200won per house (per quarter)

3) Tax on land – Bak Chun Gun: 200won/2.5 Sq.m (per month)

4) Payment for spot at markets (Bak Chun Gun)

5) Exchange rate for Renminbi and US dollar
Shin Eui Joo: 2,900won/$ (November 1: 2,715)/ Rinminbi 360won/yuan (November 1:320)/ 3600won/Euro

Footnotes:
1.  No payment at markets, but general tax is imposed. 20won/day for agricultural products, and tax for industrial products vary according to the goods.
2.  Spots in Markets are rarely traded. For people starting their business at the market, relationship with the manager is important. When business with the manager was successful, managers make a spot for them by making others’ spots smaller.

Health Care and clothing:
1) Medicine for cold and antibiotics (Bak Chun Gun)
-Medicine for cold: Chung Yeong Poong 10won/pill (Adults consume 2 pills)/ Antibiotics: Penicillin 100won per ampoule/ Distilled water: 30won
-Antibiotics: when one receives an injection of 1 ampoule of Penicillin mixed with distilled water, the doctor is paid 100won aside from the price of medicine.

2) Bribe paid for medical examination and basic treatment (Bak Chun Gun)
-5000won for releasing a medical certificate, 350won for 1 injection (ex, glucose 500g), 100won for Penicillin

3) Stationaries (Bak Chun Gun)
-Won Joo Pil( Ball Pen): 250won, Notebook (paper made of straw): 5won/20pieces, Hand-made bag in North Korea, 2,000~3,000won, Uniforms used to be purchased at a flat rate set by the government with a coupon, but uniform is seldom sold at a shop these days. People usually purchase fabrics of appropriate color and size, and hand made the uniforms. (official state rate for elementary school uniform used to be 1,500won)

Monthly tuition and expense (Bak Chun Gun) :
-No monthly tuition is officially required, but some parents give some money to the teachers privately and school requires the students to prepare various materials.
– Club activity: the students need to pay 5,000won every month. (If one participates in cell activity, he/she is exempted from external labor or social labor ).
– Monthly payment is 10 bundles of firewood/Iron 3kg/Vinyl 1kg/Rubber 1kg
– -Students who fail to bring the materials are returned home without being allowed into the class.

Electricity:
-Shin Eui Joo: same as November
-Bak Chun Gun: Electricity was provided throughtout all day despite frequent blackouts occurred in the summer. / Since the beginning of the winter, electricity was provided only between 10:30pm~ 4am due to poor supply. (Mostly, candles are used at night. Candles are 40won each).
–  Pyeongyang: electricity is provided for 24 hours, but blackouts occur often. Sometimes, 3~4 hours of blackout occur. 

Water Supply:
-In case of Bak Chun Gun downtown, water pipes freeze in the winter. People dig wells for water.
-In case of Pyongyang, peripheral area is provided with water only once or twice a week. (The time when water is supplied is not announced beforehand. People have to watch the faucet on all the time).

Railway system and transportation fee:
-The fare for train from Bak Chun~ Won San with a transfer at Gaema Highland (Where Pyong Buk Sun and Gang Won Sun meets) is 35won, but most of the officials at the station hide the tickets and sell them for 1,000won.
-In order to buy train tickets, one needs to make a reservation a day ahead and stand in line to buy the ticket on the day. However, honored soldiers, soldiers on service and school teachers have priority, and it is hard for common people to buy tickets.
-What is interesting is that a lot of people take the train without paying the fare when moving from Bak Chun Gun to Ahn Joo Gun by Shin Eui Joo-Gae Sung train. It is because no body checks the tickets in this block.

Cars, buses and car fare between major cities:
-Pyongyang: same fare of 5won for subway, train without track
-Bus between Bak Chun ~ Shin Eui Joo runs once a day, and the fare is 2,500~2,800won. Additional 1,000won needs to be paid for one luggage.
-Shin Eui Joo~Nampo/ Roundtrip, once a day, 10,000won
-Shin Eui Joo~Won San/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
-Shin Eui Joo~Sa Ree Won/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
Footnote: No departure time is designated. The train leaves when the train is full.

Lodging:
-Shin Eui Joo: Same as before. Some of the private inns are as well organized as hotel. Chinese Koreans usually use them, and it costs 5,000won per night.
-Bak Chun Gun: State owned inns lacked heating system and was filled with lice, which is why they rarely exist now. Individuals run lodging facilities now (similar to lodging at a private residence)/ they come out to the station in order to invite guests, and it costs 100won per night.

Expense for obtaining travel document:
-Travel document: it costs 10,000won to travel from Bak Chun to Pyeongyang (ten box of cigarettes branded “Cat”)/ if using other ways, 6,000won~8,000won (Jagangdo 7,000won/Chungjin 8,000won/Pyeongsung 6,000won)/ 500won from Bakchun to Shin Eui Joo (Within a province)
-Travel document is not supposed to cost any money, but Municipal adminisrative committee, county administrative committee and officials in charge of the process publicly asks for money/ Only expense for travel documents to Pyongyang is flat rate of 10,000won, and expense for other provinces differ by person.
-Travel document to cross the river: Valid for one month, and cannot be extended/ costs around $100~200, which is not much more than passport or visa. (more money paid, the document is more quickly issued)/ Fee for travel document to cross the river is set for 20,000won by the government.
-When Chinese citizen visited North Korea with the document, extension is only available with a cost of $100 a day. (When one has good relationship with people of National Security Agency or any other relevant organizations, he/she can pay $50 a day) Because of the fee, they rarely extend the document.
-Passport and visa: DPRK passport is valid for 2 months and Chinese visa is valid for 90 days (In North Korea, expiration date on DPRK passport is more important than that on Chinese visa)/ Extension can be made twice, but extension is rarely requested by anyone (Specific reason for extension needs to be provided, which is a lot of work)/ Also, certificate of health is only valid for 4 months, which means that the passport cannot be extended twice/ fee for issuance of passport is set by the government for 40,000won (Some people say 150,000won). But actual expense is $100~500, and the expense varies depending on the region, person (interpersonal skills, ability, relationship with others) and the waiting time to get the passport (1 month~1year)/ Passport is issued in 1~2 months with a payment of $500 for Pyongyang, and 2~3months with a payment of $300 for other regions. / DPRK passport is valid for 2 months, but it is actually issued 1 month after the issue date.
-When visiting China to visit relatives, applicants for passport and travel document to cross the river are classified separately. In case of crossing Yalu River, if the applicant intends to stay in Dandong Province (Dandong, Bongsung, Donggang, Gwanjun) they need to apply for travel document, and if they intends to go farther than Dandong Province and for example, visit relatives in Shenyang and Fushun, they need to apply for passport.
-A case of procedure to obtain travel documents to cross the river and visa (with purpose of visiting the relatives)
-Application and procedure -> Mid March, Fill out the application (Hand $200 to officials at the office of foreign works: Confirmation of the relatives at the office of foreign works, military security office, and military police office, confirmation by a chair of women’s committee, Approval from Provincial Police Office and National Security Agency) -> Issuance of travel documents to cross the river in the beginning of November -> Two-day education in the beginning of November (First day: Exhibition on battle against espionage/ Second day: special education by the deputy of military security offic / Lastly, write out the oath) -> entered China on 23 November

Price of a business spot at the market (Bak Chun Gun)
-In case of the market at Bak Chung Eup, they don’t have the price of business spots.

Food Distribution System
-Bak Chun Gun: Distribution was carried out twice in the beginning and the end of October/ Distribution was halted in November/ The amount distributed was 15kg and did not meet the assigned amount of 57kg/ Official amount: 700g for workers, 300g for housewives, 500g for 15 year old child, 400g for 13 year old child/ rice/other crops ratio is 3:7
-Pyongyang: Food distribution was not halted except for the three months period of April~June 2005./ The amount distributed is 485g(official: 700g) for workers, 300g for housewives, 200g for students (official amount 300~500g)/ ratio of rice and other crops was 5:5. The ratio was sometimes 7:3 when things are better than the usual/ The price was 36won for Annammi, 54won for Honam rice (received from South Korea)/ Price at Yangjungso(Place where rice is gathered) was 20won less than market price/ Everyone is supposed to purchase rice from Yangjungso, but because of poor quality of rice, some well-off people buy rice at market.
-Shin Eui Joo and Sa Ree Won is similar to Bak Chun Gun.

Events, accidents, things to pay attention to

1) Penalty for listening to foreign broadcasting or watching illegal recordings
Case1> There was a public trial and punishment in July~August 2004 for 5 people for watching illegal recordings at a conference room of Gun Management Committee of Bak Chun Gun, located in downtown. / The penalty was expulsion of the family of the involved party to the mountains.
Case 2> A person who sold and showed VCD in Pyongyang in November 2005 was arrested. During investigation, the person committed suicide using a string on his bag while the investigator was absent. Reason for the suicide was not to harm the rest of his/her family/In Pyongyang as well, when one gets caught while watching illegal recordings, the penalty is usually an expulsion.

2) Wire telephone and charge for phone calls
– Installation of wire telephone: $200 at Sa Ree Won and Bak Chun Eup, $300 at Shin Eui Joo for obtaining a phone number as well/ customer needs to purchase the wire separately
-User of private wire telephone: There are relatively a lot of users of private wire telephone at Bak Chun Eup because there are a lot of Returnees from Japan and traders. Among 120 households, there are 11 households with telephone./ When somebody want to use wire telephone in a neighborhood, around 500won is paid.
-Common people use telegram for communication. 10won is charged for one page, and .5won is charged for each additional word.

3) Others
-Bak Chun Gun: There was a rumor that private cultivation would be allowed starting from this year, but instead of private cultivation, a group farming was adopted. Each group pay the assigned amount to the government, and the rest was left for the individuals to take care of. However, the groups needed to take care of fertilizer and pesticides which caused decline of the yield/ Phrase including “Communism” is gradually decreasing (example, “Communist Ethics” was replaced with “Socialist Ethics” in textbooks for elementary, middle and high school. “Rice is Communism” was replaced with “Rice is Socialism” as well/General atmosphere is that people do not believe what government and the party says.

-Pyongyang: Broadcasting criticized the resolution on situation of human rights in DPRK at the UN, but it is heard that the criticism has caused side effects/ Many of the people think that the resolution must have been adopted because there is a problem of human rights in DPRK/People in Pyongyang are known to be unhappy with Kim’s regime but have no way to change it. So they try to be patient and endure.

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.

Daily NK
Kim Young Jin
12/28/2005

The DailyNK has reported North Korean news vividly with the help of the voices inside North Korea during the year 2005.

North Korea expressed farming as ‘the major front line for the construction of socialist economy’ in the joint new year editorial at the beginning of this year. In fact, it has made every effort to relieve its famine by mobilizing a number of people to farming for the entire year. In October, it also announced to its people that it would resume its ration system that had long been stopped.

The DailyNK met a citizen of Chongjin City of North Hamkyeong Province to fully grasp the recent situation of North Korea as a whole at this moment of seeing the old year out and the new year in. The interview is presented in the format of 10 questions and answers. The reader is expected to feel the reality of North Korea in mid-December, 2005 by reading the interview.

1.  How does the ration system work?
Workers in Giupso (State Owned Enterprise) receive a ration twice a month, the total ration being 700g a month. The government designated that the price of unglutinous rice is 46 won, while that of corn is 28 won. Those housewives who can work but stay home can buy 300g for 620 won. Children and the elderly, who are not able to work, can buy cereals at the government designated prices.

In short, the government has adopted a double price system. However, those who are rationed receive rice mixed with miscellaneous cereals whereas those who pay 620 won get unmixed rice.

Factories and Giupsos are assigned the farmland of No.112, and they have to produce cereals the quantity of which is equal to two month’s ration. In October, people were fully rationed, but since November, they have not been able to be fully rationed. People without the farmland of No.112 partly received their rations.

Additional question: What is the farmland of No.112?

It is a part of a cooperative farmland which is difficult to cultivate. Every factory and Giupso is assigned one. If a Giupso is influential, it is usually assigned a fertile land. It is so named because the policy was established on either November 2nd, last year or January 12th this year. I don’t remember the date.

2. How do people obtain their food if they are not fully rationed?
They get cereals in black markets. Transferring cereals in large scale is strictly prohibited, but people are selling them to acquaintances or under the cover of a bribe. Trading a large quantity of cereals is stealthily accomplished in a private home. Restaurants are also forbidden to sell processed cereals.

The price of rice has not risen. It ranges from 800 to 820 won ($0.4-0.41). The price of corn is 300 won ($0.15) while that of potatoes is 150 won ($0.075). Because people in Chongjin City do not enjoy eating corn, it is cheap here.

3. How are farmers rationed, and how much is the government’s purchasing price of cereals?
The farmland of No.112 is divided by fertility. The worst class is the 12th. 1,500 won ($0.75) is collected from 9,917.4 square meters of 12th class farmland as a tax. It can be payed with corn. 1kg of corn is bought for 24 won($0.012).

I heard a squad leader of a cooperative farm located near Chongjin say, “Every person on my farm was supposed to receive the prize of some 17,000 won ($8.5) because the government sent the prize to the farm for good farming, but the farm has not given the prize out to the people, saying that it would be a better idea for the money to be used to buy trucks and farm equipment, and thus people are full of complaints. The farm distributes ordinary rations to the workers.

4. What are people’s reactions to the resumption of the ration system like?
Most people are pessimistic about it. They grumble, “We do not understand why the government does not sell cereals indiscriminately. It has just made things complicated.” On the other hand, those who do not have a means of making a living hope for the ration system.

5. Do you have something to talk about regarding companies and work place lives?
In former years, there were people belonging to the circle called ‘the rest’ in companies. These people could do their own business by giving some part of their profits to their Giupso. However, all people are required to come to the Giupso to work these days. If there are some surplus workers, they are fired.

Since it was said that every Giupso should ration its workers, those who are not able to do their own businesses, especially women, have made every effort to be employed by a Giupso.

Rich people are not interested in companies, but the poor are full of complaints because ‘the rest’ circle was eliminated. The poor are getting much more interested in job opportunities.

6. As far as I know, the rate of factory operation is 20% or so. Has there been any changes recently?
No, there is almost no change in the rate. Earning foreign money is active, but I’ve never heard that those factories that had stopped before resumed its operation, or that they changed their business category to be operative.

7. Can you come up with a concrete example that shows that the status of partisans is getting lower?
Factories and Giupsos are reluctant to employ partisans because it is difficult to lay them off. If one says he is a partisan during a job interview, he will probably be turned down. Non-partisans are definitely preferred.

8. Is the control over people getting tighter?
The control in matters of food is getting tight. Because controlling restaurants and processed cereals has been getting tighter, more and more stalls are being emptied in markets, and the price of stalls is decreasing. A stall 50cm wide and 1.5m long for selling apparel can be bought for 120,000 won ($60).

Food for a family of 4 members costs 120-130 thousand won ($60-65) a month. The family also has to spend money for housing and clothing.

Additional question: I heard that even though many people are moving from one place to another, and a number of people dare to complain, punishments are getting weaker and weaker. Can you give me some examples regarding that?

The security agents say that they no longer arrest blasphemers. They even say that they will enforce laws on the basis of scientific evidences. (Blasphemers refer to those who blaspheme the system of the Kim Il Sung or Kim Jong Il regime.)

Punishments for defectors, radio listeners, and other such crimes are considerably moderated.

A neighbor in his 70’s was arrested due to his acquaintance’ betrayal. He revealed that he had been listening to the radio, but he was just called names during the investigation and criticized publicly in front of a crowd of people. That was the punishment. Even though blaspheming is said to be forgiven, you cannot call Kim Jong Il’s name. Maybe it would be okay for you to say South Korea is rich.

Additional question: Recently, it has been reported that Kim Jong Il ordered that torturing be checked and human rights be respected. Have you ever heard from security agents such a story or instructions?

No, I’ve never heard that.

Additional questions: Because punishments are getting moderated, what kind of countermeasures do North Korea take to protect the regime?

The National Security Agency is said to employ and use many informants. It lets people watch each other. According to one of my acquaintances, those who have an experience of escaping from the North are especially encouraged to watch each other.

9. How is the electric power supply like?
Electric power is supplied for 3 to 4 hours a day from 11 p.m. to 3 a.m. Middle class people usually have both a black and white TV set and a color TV set. They use only batteries for the black and white TV. Electric power supply is poor for winter. It starts getting better in the spring and is best in summer.

10. Recently, North Koreans are said to widely use horse-drawn or cow-drawn carriages. Is that true?
They are widely used for carrying cargo. They are seen even in urban cities. Recently, individuals or Giupsos are trading cows. The price of a cow in black markets range from 400 to 700 thousand won ($200-350). Recently, the price for using such a carriage is determined in relation to the distance instead of the weight it should carry. 3 to 4km costs 2,000 won ($1), while anything more than 5km costs 3,000 won ($1.5). The weight of the cargo usually does not exceed 700kg.

If one uses a truck, he must pay for the fuel in addition to the fee. 1kg of diesel costs 2,000 won ($1).

Bloomberg
Bradley K. Martin
12/28/2005

A sign of North Korea’s fledgling moves toward a market economy can be found at the Pyongyang monument commemorating the 1945 founding of the Workers’ Party. Beneath a 50-meter-tall rendition of the party’s logo — a hammer, sickle and writing brush — sits a street photographer.

A handmade sign displays her price list and sample photos, mostly of groups of North Korean visitors, with the monument as background.

The photographer is one of countless sidewalk entrepreneurs – – most of them selling food and drink — who have set up shop in North Korea since 2002. Before that, they would have been hauled off to re-education camps for profiteering. In the late 1990s, North Korea’s Civil Law Dictionary described merchants as a class to be eradicated because they “buy goods from producers at a low price and sell them to consumers at a high price by way of fraud, deceit and spoils.”

Since then, the party newspaper, Rodong Shinmun, has quoted Kim Jong Il, who’s held supreme power since the 1994 death of his father, Kim Il Sung, as favoring profits under socialist economic management.

North Korea, one of the world’s last Stalinist regimes, has gradually begun permitting commerce. On a four-day visit to Pyongyang, the capital, in October — arranged and scripted by the government — a group of 17 Western journalists got a glimpse of the changes. Clean, new restaurants were packed with paying customers while the streets — almost empty in 1979 and only lightly traveled in ’89 and ’92 — bustled with bicycles, motorbikes and Japanese sedans.

Casino Pyongyang

In the state-owned Yanggakdo Hotel on an island in the Taedong River, a mostly Chinese clientele played slot machines, cards or roulette at the Casino Pyongyang. Since 1998, Macau billionaire Stanley Ho, through his Sociedade de Turismo e Diversoes de Macau SARL, has invested $30 million in the casino, whose staff is also Chinese.

Now some investors from farther afield are joining pioneering Chinese and South Koreans in plunging into a country once so isolated it was known as the Hermit Kingdom. In September, Anglo- Sino Capital Partners, a London-based fund manager, said it had formed the Chosun Development & Investment Fund, which plans to raise $50 million for investments in North Korea.

“It’s the last virgin economy,” says Colin McAskill, 65, a director of Anglo-Sino and chairman of Koryo Asia Ltd., which is investment adviser to the new fund.

Natural Resources

Besides recent changes in the economic system, a 99 percent literacy rate and a minimum wage for workers in foreign-invested ventures of only $35 a month, McAskill says, he was drawn by North Korea’s rich natural resources — including iron ore, copper, lead, zinc, molybdenum, gold, nickel, manganese, tungsten, anthracite and lignite.

The fund will concentrate on North Korean companies that have been active internationally in the past, with track records as foreign currency earners, says McAskill.

He negotiated on behalf of North Korea with foreign bank creditors in 1987, when the country was unable to repay some $900 million in balance-of-payment loans that had enabled the regime in the 1970s to purchase Western industrial technology — Swiss watch-making machinery, for example — as well as such non-capital goods as 1,000 Volvo sedans from Sweden.

Oil Potential

The country’s petroleum potential lured Dublin-based Aminex Plc and its Korea-focused subsidiary, Korex Ltd., which in August announced the signing of a nine-year production-sharing agreement to explore and develop 66,000 square kilometers (25,000 square miles) of North Korean territory. The agreement covers areas in the Yellow Sea’s West Korea Bay and in the Sea of Japan as well as onshore.

While North Korea lacks proven petroleum reserves, according to the U.S. Energy Information Agency, the West Korea Bay in particular may contain hydrocarbon reserves, as it’s considered to be a geological extension of China’s oil-rich Bohai Bay.

More foreign investment may come, says Tony Michell, a Seoul- based consultant on North Korea. Michell, a 58-year-old Briton, says he has recently shepherded 20 senior managers of international companies, representing seven nationalities, to Pyongyang.

“They’re big players,” says Michell, declining to identify his clients by name or company. “They’re looking at everything, from services to manufacturing. They want to get the measure of the North Koreans and be ready if the six-party talks succeed.”

Six-Party Talks

The so-called six-party talks — between North Korea and China, Japan, Russia, South Korea and the U.S. — are aimed at ending the country’s pursuit of nuclear weapons. In September, the six countries agreed on a statement of principles to govern further talks. It called for a nuclear-free Korean peninsula, a peace treaty and economic cooperation in energy, trade and investment.

Seoul-based Hyundai Research Institute, an affiliate of the Hyundai Group, projected in September that a successful outcome to the talks would be worth as much as $55 billion to the economy in the North — and more than twice that in the South.

Optimism about the economy has boosted the prices of defaulted North Korean debt originally owed to hundreds of creditors, mostly European banks, which in the 1970s began meeting as a London-based ad hoc group to discuss restructuring options. In the 1990s, that so-called London Club turned a portion of the debt into Euroclearable certificates, securities that were denominated in Swiss francs and German marks.

The certificates are trading at about 20-21 percent of face value, up from 12 percent in 2003, according to London-based Exotix Ltd., a unit of Icap Plc, one of a few financial firms that make an over-the-counter market in them.

Excessive Optimism

The debt’s price has risen in the past on excessive optimism about the country’s future. In early 1998, the debt was trading at nearly 60 percent of face value amid rumors that North Korea would collapse imminently and be absorbed by wealthy South Korea, which would then make good on the entire outstanding debt.

That had not happened by the time of the crash later that year in global emerging-market securities, when the North Korean debt price sank to about 25 percent of face value.

Exotix estimates that North Korea owes the equivalent of some $1.6 billion in principal and interest to banks out of a total $14 billion in principal and interest owed globally to mainly communist and formerly communist countries.

Although a cease-fire was declared in 1953 in the war between North Korea and China on one side and the United Nations — under whose flag the Americans, South Koreans and others had fought — on the other side, no peace treaty has ever been signed.

The U.S. maintains sanctions under the Trading with the Enemy Act that restrict trade and financial transactions with North Korea — and apply to Americans and permanent residents of the U.S. and to branches, subsidiaries and controlled affiliates of U.S. organizations throughout the world.

China, Russia

North Korea’s flirtations with capitalism are belated compared with those of China and the former Soviet Union, which began opening their economies in the 1970s.

North Korea did pass a law legalizing foreign investment in 1984. The law, which permitted equity joint ventures between state enterprises and foreigners, attracted only $150 million in investment during the following decade, largely because investors were put off by the country’s poor roads, railroads, power systems and phone networks and by official interference in joint ventures’ recruitment, dismissal and compensation of workers, according to a 2000 thesis by Pilho Park, a postgraduate student at the University of Wisconsin Law School in Madison.

Vietnam Example

In contrast, Vietnam lured $7.5 billion in investment in the first five years after it opened its economy to foreign capital in 1988, Park wrote.

Following the collapse of European communism in the early 1990s, North Korea opened the Rajin-Sonbong Free Economic and Trade Zone on the northeastern border with China and Russia. A brief flurry of investor interest ensued and then fizzled out when a crisis over the country’s nuclear weapons program took North Korea to the brink of war with the U.S. and South Korea in 1994.

In the mid ’90s, catastrophic floods, combined with the collapse of the global communist system of aid and preferential trade, caused a severe energy shortage that crippled the economy. As much as 70 percent of manufacturing capacity went idle, according to the South Korean central bank.

Also in the mid ’90s, famine killed as many as 2.5 million North Koreans, by the estimate of the U.S. Agency for International Development.

Food Insecurity

Since then, food aid from abroad, an absence of large-scale natural catastrophes and a 2005 harvest that was the biggest in 10 years have kept North Korea from the massive starvation that’s taken place elsewhere, including Niger, says Richard Ragan, North Korea director for the United Nations World Food Program.

Still, “the country faces chronic food insecurity,” Ragan says. “One of the things that happened with the food shortages is that marginal lands became less controlled. You see people trying to farm on some of the most inhospitable plots of land you could imagine.”

In October, steep, unterraced hillsides were plowed outside Pyongyang. The crops can then wash down, rocks and all, during rainstorms, harming water supplies and damaging farmland – fertility.

A second nuclear weapons crisis boiled up in 2002 when the U.S. accused the North of conducting a secret uranium enrichment program — to replace a plutonium program that it had frozen as part of a settlement of the earlier crisis.

Economic Rules

That same year, the regime proceeded with what then Prime Minister Hong Song Nam described as dramatic new economic measures, which helped bring arbitrarily set prices and foreign exchange rates closer to those prevailing on the black market.

The North Korean won consequently dropped to 150 won to the dollar in December 2002 from 2.15 to the dollar a year earlier. The official rate is currently about 170 won, while on the black market, one dollar can bring about 2,000 won.

The government also introduced pay incentives aimed at boosting worker productivity. The system is in operation at enterprises such as the Pyongyang Embroidery Institute, where some 400 women stitch elaborate pictures for framing and sale.

Employees who don’t perform up to expectations aren’t fired; they’re denied raises, says spokeswoman Woo Kum Suk. Unable to live on their minuscule basic salary, equivalent at black market rates to something over a dollar a month, non-performers eventually quit and go elsewhere, Woo says. Good workers can see their salaries raised as much as fivefold.

Consumers

“In my opinion, it’s good to have this system,” she says. “Although the government supplies things to us, sometimes there’s something more we want to buy.”

North Korea has some way to go before many investors rush in. According to a UN report, net investment inflow for 2003 — the most recent year for which statistics are available — was a negative figure: minus $5 million.

Currently the country is constructing a new special economic zone at Kaesong, just north of the South Korean border, where several small companies from the South already employ North Koreans to make clothing, footwear and household goods. Authorities declined to let Western reporters visit it, permitting only a glimpse from a highway bridge a mile away.

Those who are investing are taking a long-term view. Singaporean entrepreneur Richard Savage was looking at least five years into the future in 2001, when he formed a joint venture tree plantation with the Ministry of Foreign Trade. The company, Evergreen Kormax Paulownia Ltd., is 30 percent-owned by the government, which has assigned Savage 20,000 hectares (49,000 acres) on a 50-year lease with an option to extend for 20 more.

Timber Business

Savage, 58, says he, family members, friends and a few other investors have put $3 million into the project so far. Savage says he hopes that by the time the paulownia trees mature — they grow as fast as 7 centimeters (2.85 inches) a day on his farm, and some may be ready for harvesting five years after planting — he’ll be able to sell the wood in a unified Korean market.

When the Northern economy takes off, the first beneficiary will be the building industry, he says. “That’s why I’m in timber,” he says, adding that his fallback plan is to sell the wood to China, Japan and South Korea.

It’s not the first venture in North Korea for Savage, who wears a cowboy hat and whose e-mail moniker is WildRichSavage. In 1994, he introduced North Korean officials to Loxley Pcl, a Thai telecommunications company. In 1995, an affiliate formed for the purpose, Loxley Pacific Co., signed a joint venture agreement with North Korea’s post and telecommunications ministry to create modern telecommunications in the Rajin-Sonbong special economic zone. The venture earns about $1 million a year, Loxley Pacific Chief Financial Officer C.C. Kuei, 56, says.

Mining for Gold

North Korea’s 1992 Foreign Investment Law guaranteed that foreign investors’ shares of profits could be repatriated, a promise that’s now being tested by Kumsan Joint Venture Co., a gold mining concern that’s half owned by a Singapore-led group of Asian investors and half owned by Hungsong Economic Group, a large trading, mining and manufacturing group in Pyongyang that’s controlled by North Korea’s military.

Roger Barrett, a Beijing-based British consultant, has helped arrange financing and technology for Kumsan. Barrett, 50, introduced Kumsan to the foreign investors, whom he declined to identify.

The company used its investment to buy secondhand mining equipment from Australia in 2004 for the venture’s mine 2,000 meters (6,562 feet) above sea level near the city of Hamhung. In the first year the new equipment was used, Barrett says, the mine produced about 100 kilograms (220 pounds) of gold, half of which the foreign investors took out of the country. He says doing business with North Koreans has proved to be absolutely normal. “It’s working very well,” he says.

Foreign-Run Bank

The business environment in North Korea is surprisingly welcoming, says Nigel Cowie, 43, a former HSBC Holdings Plc banker who was hired a decade ago by Peregrine Investment Holdings Ltd. to start North Korea’s only foreign-run bank.

When Peregrine collapsed in 1998, Cowie and the North Korean joint venture partner kept the local unit operating. He and three other investors bought Peregrine’s 70 percent stake in it from the firm’s liquidators in 2000. Cowie, who’s general manager of what’s now called Daedong Credit Bank, says the bank has about $10 million in assets and has only foreigners as customers, mostly Chinese, Japanese and Western individuals and institutions. Only North Korean-owned banks can do business with state enterprises and North Korean individuals.

Better Living Conditions

Living conditions for expatriates have improved significantly in the past three or four years, Cowie says over a meal of Korean barbecue in the capital’s Koryo Hotel. “For me, personally, it’s things like creature comforts, more shops, Internet, e-mail,” he says. While the Internet is available to foreigners, it is forbidden to most North Koreans.

Cowie says his biggest challenge at the bank comes from outside North Korea. In September, the U.S. Treasury Department barred U.S. financial institutions from dealing with a Macau bank, Banco Delta Asia, that it said had been “a willing pawn” in corrupt North Korean activities and represented a risk for money laundering and other financial crimes.

The bank and North Korea both denied the charges, but the Macau government took over the bank and announced it would provide no services to North Korea in the future. Cowie says the action tied up a big chunk of Daedong Credit Bank’s customers’ assets because Banco Delta Asia had been a main correspondent bank for North Korean banks.

The Treasury Department in October broadened its dragnet by ordering a freeze of the assets, wherever in the world the U.S. could assert its jurisdiction, of eight North Korean companies it suspected of involvement in proliferating weapons of mass destruction.

`WMD Trafficking’

The department explained its action in an Oct. 21 statement on its Web site: “The designations announced today are part of the ongoing interagency effort by the United States Government to combat WMD trafficking by blocking the property of entities and individuals that engage in proliferation activities and their support networks.”

North Korea sought to connect the Treasury actions to Washington’s position in the six-party talks. The country’s Korean Central News Agency, using the acronym for the Democratic People’s Republic of Korea, said on Dec. 2 that “lifting the financial sanctions against the DPRK is essential for creating an atmosphere for implementing the joint statement and a prerequisite to the progress of the six-party talks.”

Assistant Secretary of State Christopher Hill, the chief U.S. envoy to the talks, had said in a Nov. 11 press conference that the asset freeze wasn’t directly related to the talks.

Money Laundering Banned

Cowie says he doubts the U.S. action was intended to harm Daedong, which had already issued a manual prohibiting money laundering. He says he fears such U.S. actions could damp investor enthusiasm for North Korea. “It can cause the people doing legitimate business to just give up,” he says.

Cowie isn’t packing up to leave, though. Neither is Felix Abt, a Swiss native who heads a new European Business Association in Pyongyang. “I am very busy with visiting foreign business delegations,” Abt, 50, says. “Take it as a sign that the economy is developing and that more foreign business activities are under way.”

Outsiders’ investment on capitalism’s farthest frontier is gradually bringing benefits to North Koreans, too, says Savage, the tree farmer. “I can’t convert the whole country, but for the people who work for me, I’m giving them a better standard of living,” he says. “Slowly, people will prefer not to work for the government.”

If Savage and his fellow pioneers have their way, it’s only a matter of time before capitalism takes root in North Korea.

Nautilus Institute
Andrei Lankov
12/1/2005

The recent news out of North Korea leaves no room for doubt. After a decade of grudgingly allowing small-scale free markets, Kim Jong Il’s regime is seeking to reimpose total control. Ironically this turning back of the clock is being aided by the “no strings attached” aid policies of two countries, China and South Korea, which claim to be trying to encourage reforms.

From early October, all trade in grain has been forbidden in the small private markets that mushroomed across North Korea when the state-run food distribution system largely collapsed during the famine of the 1990s. North Koreans are now expected to rely on a revived public distribution system for supplies of grain. Special teams of officials have fanned out to check farming households for any “excessive” supplies of grain they might try to sell in the private markets, and ensure they are left only with their officially allowed ration of 700 grams a day.

Internal travel controls are also being tightened. During the famine, authorities turned a blind eye to violations of the regime’s tough restrictions on freedom of movement, as starving North Koreans crisscrossed the country in search of food. Now these are being enforced once again, with North Koreans required to obtain a travel permit from police before they can travel elsewhere in the country.

Pyongyang’s moves in this direction should not come as a surprise. Allowing even a minimal degree of private enterprise reduces the regime’s absolute control over its citizens — especially if they are no longer dependent on the state for their food — and provides firsthand evidence of the existence of a more successful economic system. The Kim regime has seen how economic reform preceded the collapse of Communist regimes across Eastern Europe. It’s no coincidence that one of the questions most commonly heard in private conversations with members of the Pyongyang elite these days is about the fate of Communist cadres in the former East Germany. To avoid reforms is the surest survival strategy for Pyongyang’s ruling elite.

Throughout the past decade, the regime had no choice but to tolerate some degree of private economic activity, because of the collapse of its state-distribution system. But now that the North Korean economy has bottomed out and the famine appears to be over, largely due to generous aid shipments from the outside world, the Kim regime is in a position to get rid of changes that it never wanted in the first place. In addition to trying to curb the activities of private markets, it’s ordered most of the representatives of the international aid agencies that it reluctantly allowed into the country during the famine to leave by the end of the year.

The Kim regime can afford to act in this way because it knows that food aid from its two key patrons, South Korea and China, will keep flowing come what may. These now exceed shipments from elsewhere in the world. According to a recent report to the U.S. Congress, North Korea received 350,000 tons of food aid from South Korea and China in 2004 — compared with 325,000 tons from the World Food Program. Seoul also provides the North with much needed fertilizer, while China takes care of most of its energy needs.

China and, especially, South Korea claim to be supplying aid as part of a strategy of encouraging North Korea to embrace economic reform. That’s the ostensible aim of Seoul’s “sunshine policy” of one-sided concessions to the North, while Chinese leaders have shown visiting North Korean leaders around Shanghai and Shenzhen in an effort to encourage it to follow the same path. But, far from encouraging reform, North Korea’s recent actions show that it can take advantage of such unconditional aid to move in the opposition direction.

While Western countries insist on their aid being monitored by international relief agencies to try to prevent its diversion to the military, South Korea and China take a much more forgiving stance. Beijing wants stability on its borders, and would not be happy to see another nominally Communist regime collapsing. South Korea also wants to avoid the collapse of the Kim regime, since it would then have to foot the bill for an expensive and socially ruinous German-style unification. This means that both governments are ready to ship aid without asking too many awkward questions or demanding that it be closely monitored. Although ostensibly encouraging economic reform in North Korea, in reality both China and South Korea share the same short-term goal of preserving the status quo. They tacitly understand that means the regime must be able to continue to rely on its police and elite army units, and so needs to keep them well fed. That means turning a blind eye to the diversion of aid to the military, police and other members of the Pyongyang elite, even at the expense of the long-suffering North Korean people.

In the long run, this creates a paradox. Unless Seoul and Beijing are willing to foot the ever growing bills from Pyongyang indefinitely, they need to promote reforms there. However the North Korean regime has shown it has no interest in implementing reforms except when it is the only way to survive.

That creates an uneasy dilemma, which is shared by other foreign aid donors to North Korea. Stopping all aid could lead to renewed famine, especially in those areas of the country closed to foreigners. But excessive and unconditional aid is likely to halt all reforms, since the Pyongyang government would simply reverse to its old policies, using foreign aid to pay for the system’s inherent inefficiencies (and perhaps for a bit of luxury for Kim and his cronies). And recent events have clearly demonstrated have how counterproductive showering North Korea with aid can be.

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.

From the Asia Times:
By Michael Rank
11/18/2005

Chinese companies are venturing into North Korea, and both countries hope to reap the rewards. North Korea’s heavy industry is in a desperate state, but Pyongyang is hoping that Chinese investment will come to its rescue, while China sees the North as a convenient source of minerals, from coal to gold.

China’s increasing investment also means that North Korea is casting off its rigid juche, or self-sufficiency, policy and overcoming its deep historical suspicion of its giant northern neighbor.

Border trade in consumer items from televisions to beer has been booming since the 1990s, but now the focus is turning to the industrial sector. Deals are being reached on mines, railways and leasing a North Korean port to a Chinese company, but North Korea is notoriously secretive and few details have been published outside China. The deals include an agreement to “completely open” North Korea’s railways to a Hong Kong millionaire, as well as moves to revive ailing coal, iron and gold mines.

Tumen-Chongjin rail link rumored
Hong Kong businessman Qian Haomin is reported to have reached a US$3 billion deal with North Korea that also involves the Chinese Railways Ministry building a new rail link between the Chinese border city of Tumen and the North Korean port of Chongjin. The agreement marks an end to long-running tension between the Chinese and North Korean state railway authorities over North Korea’s retention of up to 2,000 Chinese goods wagons and reluctance to repay loans.

The Hong Kong news magazine Yazhou Zhoukan recently reported that these issues had been resolved and that Qian’s grandly named company Hong Kong International has agreed to provide the North Koreans with 500 to 1,000 freight wagons. Qian told the magazine that “after six months of effort, there are now hopes of solving the railway transport bottleneck between China and North Korea”, and this would help to integrate the economy of the entire northeast Asian region.

Qian’s ambitions are not limited to railways. Not only has he expressed interest in investing in a North Korean coal mine, but Yazhou Zhoukan also reported that he hopes to set up a special economic zone in the North Korean border city of Sinuiju. He has clearly not been deterred by the unhappy case of Yang Bin, a Dutch-Chinese multi-millionaire who was made head of a similar development zone in 2002. Before Yang could take up his post, he was arrested by the Chinese authorities for tax evasion and other economic crimes and jailed for 18 years.

Qian, aged 41, is originally from the southern Chinese province of Guangdong and moved to Hong Kong in 1993. He has been involved in North Korea since the early 1990s, and has apparently established a fruitful relationship with Prime Minister Pak Pong-ju. He has said that “to invest in North Korea has been my dream” because three of his uncles fought in the Korean war; one was killed and one was seriously wounded. The Hong Kong investor has signed a plastics, tire and battery recycling agreement with North Korea and has expressed interest in investing in the country’s largest anthracite coal mine, which now produces only 1 million tons a year, compared with 3 million tons at its peak.

Tonghua Steel looks North
Meanwhile, state-owned Tonghua Steel or Tonggang, based in the northeastern city of Tonghua, expects to sign a 7 billion yuan ($865 million), 50-year exploration rights deal with the Musan iron ore mine, said to be North Korea’s largest iron deposit. Tonggang, Jilin province’s largest steelmaker, hopes to receive 10 million tons of iron ore a year from Musan as part of its plans to increase steel production from a projected 5.5 million tons in 2007 to 10 million tons in 2010.

The planned deal reflects China’s immense and growing appetite for steel. Although the country already produces 30% of global output, it is heavily reliant on imports and is concerned about rising prices. A Jilin provincial trade official said importing iron ore from North Korea was attractive because of low transport costs, which would increase Tonghua’s competitiveness.

Tonggang officials say they expect the deal to be signed soon, and that of the 7 billion yuan (US$866.1 million) pledged, 2 billion yuan will be invested in transport and power lines. Company president An Fengcheng said agreement had already been reached with China Development Bank on 800 million yuan worth of soft loans and 1.6 billion yuan of hard loans, while “the remaining investment will come in in stages”.

Rajin deal to give China Sea of Japan access
China’s export boom is one of the great economic success stories of the past 25 years, but it is constrained by a lack of suitable ports. In particular, the country lacks a port on the Sea of Japan, but after attempted deals with Russia came to nought, the inland Chinese border city of Hunchun has reached an agreement for a 50-year lease with the nearby North Korean port of Rajin.

The ceding of Rajin, an ice-free port with a handling capacity of 3 million tons a year, will give access to the sea to inland areas of northeast China which, at present, must send freight long distances by rail to the port of Dalian on the Bohai gulf. The agreement also provides for the construction of a 5-10 square kilometer industrial zone and a 67 kilometer highway, and envisages that the Rajin area will become a processing zone for Chinese goods which will then be re-exported to southeast China.

A Hunchun economic official stressed that the leasing of the port is “a business deal and not a government deal”. The South China Morning Post reported from Hunchun that the man behind the deal is Fan Yingsheng, a property developer from Hunan province who put up half the initial capital investment of 60 million euros (US$70 million). The sum could not be denominated in dollars for political reasons.

The paper quoted the United Nations Development Program as saying this sum would only be enough to build the road to Rajin, and far more would be needed to rejuvenate the port. The deadline for final agreement is December 30, 2006, and it remains to be seen if a final deal will be reached in time.

An unusually frank North Korean trade official noted the possible pitfalls as well as the advantages of such deals. Kim Myong-chol, head of the Korean Council for the Promotion of Foreign Trade, said the deals would have to involve importing “highly advanced technology and equipment”, and added: “These agreements are not easy to put into actual practice and can run into many problems so far as funding and bilateral cooperation are concerned.”

“Because the amount of money involved in these cooperative projects is quite large and [North] Korea will be investing ports, roads, etc, there are rather great risks in such investment, and in addition because the domestic Korean economy and its policies, laws and regulations, etc, are unclear, many problems are likely to arise in carrying out these plans,” Kim told a Chinese website.

Coal and gold
Such concerns may have been in the mind of the president of China Minmetals Corp, Zhou Zhongshu, when he signed “an agreement on setting up a joint venture in the coal sector of the DPRK” [North Korea]. The deal was signed in October when Chinese deputy premier Wu Yi visited Pyongyang, and is said to be the first of its kind. North Korean Vice Minister for Foreign Trade Ri Ryong-nam urged the Chinese side to “provide advanced technology and set up a good model for other joint ventures and cooperation between the two countries”.

North Korea also has substantial gold deposits, and a Chinese company plans to invest in a “semi-paralyzed” North Korean gold mine and refine the metal at its base in Zhaoyuan in Shandong province. Guoda Gold Co Ltd reached a preliminary agreement last year with Sangnongsan gold mine, which is said to have gold deposits totaling at least 150 tons.

Guoda deputy manager Lin Deming said his company was attracted to North Korea because of low labor, energy and transport costs as well as the “highly favorable” investment terms offered, but gave no details. Chinese investment in North Korea is certainly increasing, but final agreement on a number of deals has not yet been reached, and political factors such as uncertainty over Pyongyang’s nuclear weapons program may well discourage Chinese companies from moving too fast.

Michael Rank is a former Reuters correspondent in China, now working in London.

Korea Times
Andrei Lankov
10/4/2005

During the 50-odd years that followed the armistice of 1953, both Korean states have been locked in an intense rivalry. It was a local cold war, a minor version of the global Cold War, but much more emotional since it was a war between the same people. During some periods, this cold war became very hot. Indeed, those decades were an era of daring raids, complicated intrigue, botched and successful assassinations and, of course, of covert naval warfare.

The major role in this quiet warfare was played by North Korean infiltration craft, used to land agents on the South Korean coast. There are three major types of vessels used by the North Korean navy for this purpose. Throughout the history of quiet naval warfare, two ships of each type were lost due to enemy action.

The most unusual and imaginative contraptions are the semi-submersible boats. These can be described as a poor navy’s submarines. They are small boats, with a displacement of some 5-10 tons and a top surface speed of 40-50 knots. They have ballast tanks, and when these tanks are filled with water, the craft submerges almost completely with only the small conning-tower visible above the water. In this semi-submerged state, the craft is much slower, but it is also almost invisible both to both human eyes and radar. Perhaps it is not as good as a real midget submarine, but it is much cheaper and easier to maintain, and it can carry up to six people.

The first battle with such a craft took place in December 1983, when one was discovered not far away from Pusan, and after a chase was sunk by the South Korean navy.

Another semi-submersible was lost in action in 1998. The South Korean signal intelligence discovered the semi-submersible near Yosu in the early hours of the morning of Dec. 18. The South Korean Navy mobilized a number of planes and ships, which approached the boat, demanding that the crew surrender. But North Korean special forces are famous for their unwillingness to give themselves up alive, so they opened fire using small arms. There was no possible doubt about the outcome: the boat was hit by artillery shells and it sank, to be salvaged the following year.

A semi-submersible infiltration boat cannot operate at a great distance from its base, and in most cases it is carried close to the target destination aboard a specially designed mother ship. Such ships are disguised as fishing boats, but they have powerful engines and a built-in dock for a semi-submersible or a more conventional speedboat. The dock is equipped with outward-opening double doors on the stern, allowing the boat to be safely hidden inside the hull.

There have been two cases in which such a ship has been discovered and sunk by hostile forces. The first incident of this kind happened in August 1983, when a South Korean patrol boat discovered just such a ship operating near Ullung-do Island. The ship was sunk after a short shootout.

Another incident took place in December 2001, and this time, the ship was found by the Japanese navy near the Japanese coast. This was not the first discovery of this kind, but on previous occasions, the North Koreans ships managed to flee using their superior speed. This time, however, the ship could not move fast enough _ perhaps the disintegration of economy has influenced the navy as well. As to be expected, the ship’s crew refused to surrender and opened fire, injuring two Japanese sailors. They returned fire and in less than four minutes the ship sank with its entire crew.

The North Korean Navy also possesses a number of submarines, including the Yugo class vessels. These are specially designed midget submarines whose major task is infiltration. The Yugo boats are small, with a displacement of merely 70 tons when submerged.

Such a submarine was caught in a fishing net near Sokcho on the east coast on June 24, 1998. Its propeller and periscope had been fouled. The vessel was captured by the South Korean navy but sank while being towed. The submarine was soon salvaged but all crew and commandos (nine of them – more than usual for a submarine of this type) were found dead after committing group suicide.

Larger Sango class submarines are also sometimes used for infiltration. It was this submarine that was involved in the most high-profile case of military confrontation between the two Koreas in the 1990s. In mid-September 1996, a North Korean Sango submarine was on a routine infiltration mission: a group of commandos were to conduct surveillance of the military installations on the east coast. However, in the early hours of Sept. 18, the submarine ran ashore and was discovered by a taxi driver. The crew and commandos attempted to breakthrough to the DMZ. A long spy hunt ensued, with heavy losses of life on both sides (among the victims there were farmers whom the commandos killed as dangerous witnesses) as well as with the usual group suicide of the North Korean soldiers.

Indeed, one of the most remarkable features of this quiet war is the unwillingness of the North Korean soldiers to surrender. Few sailors and commandos have ever been taken alive. Does this reflect the exceptional valor of the North Korean warriors? To some extent it may, but also there are other reasons behind such behavior. But that is another story…

Korea Times
Andrei Lankov
8/23/2005

The North Korea of the 1960s or 1980s was not a society of complete equality. It had its rich and poor. But the affluent people were affluent either because the party-state bureaucracy chose them, such as government officials and a handful of the most prominent scholars and writers, as well as people who were allowed to work overseas and were paid in hard currency, or allowed them to be affluent. For example, this was the case with the repatriates from Japan. From the late 1980s, the situation changed. Some people began to make money not because they were paid and showered with privileges, but because they learned how to use market capitalism.

The markets began to grow explosively around 1990, and North Korean “black capitalism’’ was conceived around this time. The first really rich people began to appear, even though they had to hide their success both from the authorities and their fellow countrymen. And one had to use whatever advantages one had, as competition was tough. In the late 1990s, the North Koreans used to say “there are only three types of people in North Korea: those who starve, those who beg and those who trade.’’

These early capitalists came from backgrounds that gave them advantages over other people who also took up trade. Most of them were officials who had useful connections. In the 1990s, a person who could command a truck easily made a huge amount of money by moving merchandise around the country and exploiting the large differences in prices between the regions. Managers of state enterprises could sell the production of their factories on the market. This was technically stealing, of course, but it was in an increasingly corrupt society there was a fairly good chance of not getting caught. Retail personnel at all levels channeled the goods through the “back doors’’ of their shops, away from the disintegrating public distribution system. Military and security personnel also had advantages, since for decades they had lived in what can be described as a “state-within-the-state,’’ beyond even the most nominal control of outsiders. Finally, “hard currency earning’’ officials made a lot of money: they have been running quasi-market operations from the 1970s and had both the necessary expertise and resources. After 1990, they began to use these resources for their own ends.

In addition to officials, generals and police officers, there were other groups of people who found themselves in an advantageous position in those early days of North Korea’s capitalist revival. These included the repatriates from Japan whose relatives back in the “capitalist hell’’ have always been encouraged to transfer money to the North. The repatriates had money, and some of them retained vestigial experience of operating in a market economy. Another group included ethnic Chinese, some of whom were Chinese citizens, and Koreans who had close relatives in China. For decades, both of these groups have been engaged in small-time cross-border commerce, and after the collapse of state control, they greatly increased the scale of their operations.

Even some humbler professions found themselves in relatively good times. Drivers, for instance, could take money for moving passengers and merchandise _ especially, after the quiet breakdown of the travel restriction system around 1997. They also augmented this money by selling and buying goods themselves and became a major source of income for train conductors.

Fortunes were made in trade, not in manufacturing, which remained largely controlled by the state. Money lending also provided good profits. In the mid-1990s, private lenders charged their borrowers with a monthly interest of some 30-40 percent. The associated risks were high, too; these private lenders had virtually no protection against the state or criminals, or above all, bad debtors.

The growth of grassroots capitalism had another unexpected effect: the empowerment of women. Like their counterparts in most other Communist countries, the North Korean authorities expected every able-bodied male to be employed in some state enterprise. It was illegal for men to remain unemployed. However, for married women, the approach was different. All Communist countries grudgingly admitted that a woman has at least a theoretical right to remain a full-time housewife. In the North, the share of housewives was unusually high: no precise data is available but it appears that some 30-40 percent of married women of working age stayed at home.

When economic disaster struck, this arrangement had unintended consequences. The men kept going to their factories and offices, even if their wages were becoming meaningless. They were afraid of the still formidable state machine, they wanted to keep the status traditionally associated with proper jobs and they also needed the rations _ as long as the rations were forthcoming. Women, especially housewives, were free to pursue completely different economic strategies. They took up market commerce with great enthusiasm and soon comprised a majority of North Korean vendors. This also meant that the women’s earnings became the major source of income in many Korean families.

This did not mean that women became prominent at the highest reaches of the new capitalist market. To occupy the key positions and make really good money, one had to have connections, capital and connections. Most of the people who had all of these things were male, but at the lower levels of the new semi-legal capitalist class, women came to play a significant role.

Daily NK
Kim Young Jin
7/20/2005

Demand for Wire Telephones after the Government Confiscation of Cellular Phones

Recently in North Korea, demand for house phone skyrocketed and as the government confiscated personal cellular phones, people have also be increasingly using public phones.

It is known that setting a wire telephone for a household costs more than 450,000 Won and it is difficult to get one even after 4-5 months longs reservations.

Even Cellular Phones of Government Officials Confiscated

Park Young Chul (pseudo name, age 45) whom The DailyNK met in Tumen of China testified, “As the government completely banned the use of cellular phones after the Ryonchon Incident, demand for wire phones has been skyrocketing.”

Is the use of cellular phones still banned?

“It is hard to see cellular phones in North Korea. Not in local places, even in cities, people holding cellular phones cannot be seen.”

How about the Party cadres and managers of the state enterprises?

“The government confiscated all the cellular phones after the Ryongchon accident. They are still strictly banned. Even the provincial party cadres, National Security Agency, People’s Safety Agency officials are not allowed to use cellular phones.”

There are two kinds of cellular phones used in North Korea.

One kind is the official one acknowledged by the government, the GSM method of European style, which was used since 2002. Although it costs more than $1300 only to register and it is only usable in the city, it is known that more than 20,000 people are using this kind. Most of the users are foreigners and among the North Korean people, Party cadres and special government officials possessed it as the symbol of their special right.

The other kind is the Chinese wave, which the people use in secret along the Sino-Korean border areas. Although the number of users is unverifiable, it is known that the main purpose of their cellular phone use is to communicate with their family members in China and South Korea or with the dealers for their businesses. Due to the limitation in reach of the wave, these phones cannot be used extensively in inland. They are especially targeted by the government for control.

Then after the Ryongchon accident was known to the outside world by the cellular phones, the government of North Korea confiscated all the cellular phones last May. Although the foreigners are free from prohibition, there is no way for North Korean people to legally possess cellular phones.

Wire Phone Lines Still Hard to Get Even with Money

Then how do the people in North Korea communicate with each other?

“Usually by the wire phones (house phones). People who run business with other sellers and buyers in other verify their deals through phone. Those who have enough money seek to obtain their own phone line.”

Due to the limited means of transportation and communication, price differences between the regions varied much. For example, in Huiryeong of North Hamkyung province, the price of rice was low and the price of pollak pretty high while in Chungjin the opposite. People could take advantage of such price difference and earn money in between, for instance, by buying pollak in Chungjin and selling them in Huiryeong and buying rice from Huiryeong and selling it in Chungjin.

In the past such business were done only with guesses on price, but now phones are used to check the price differences. Recently dollar dealers are known for checking exchange rates through phone calls to China and even across the nation everyday.

How much does it cost to obtain a phone line?

“In the past it was not so difficult if you had money. Now, it is pretty difficult even if you had money. It cost about 450,000 to 500,000 North Korean won. That is a lot of money in North Korea. However, it is not a matter of how much it costs. The problem is that the government does not have enough of IC block necessary for switchboard of the Ministry of Communication to set up the phone line, so even if you had requested for a phone line, you are not guaranteed to get one.

Does that mean that someone has to withdraw a line for another person to get?

“Precisely. In the end, the cost of setting a phone line is actually the cost of selling and buying the IC block. The cost also includes the expense of laying phone line from the place where switchboard is located to the designated house. That is why it is so expensive.”

After the 7.1 Economic Management Improvement Measure in 2002, the average monthly wage of a North Korean worker ranges between 1500∼2500 won, thus 450,000won is the amount which an average worker has to save for 20 years without spending a penny, but the fact that “many people are willing to obtain” shows that there is a significant number of rich people present in North Korea.

Personal Identification and Deposit Money Required for the use of ‘Public Phones’

How is the situation of the public phones?

“They are called “common phones,” and two or three of them are located in each communications office or branch office in each area (district). There is a communications office in every 8km~12km and in the city about 4km.”

How much does it cost?

“It costs 10won for one local call. Before it was 50 jun (half of 1won) but recently the price increased. Of course the price varies for long distance called, they are more expensive. You have to leave your personal identification and 40-50won of deposit at the office prior to your make the call and when you are done you get them back after you pay.”

Why do you need personal identification and deposit money?

“They made this procedure because of some people who ran away without paying”

Are there many people using the public phones?

“There was a communications office about 4km away from my house, usually if I go, I had to wait about 30 minutes to make a call. Sometimes you have to waste as long as half of the day for your turn. Still, there are many people in line waiting.”

Park sighed and said, “Only if the transportation system were a little bit better, the living of the people would be much better. When one thing gets better, the government soon turns it down.” What we see is a scene of discord between the people who are already living in capitalistic style and the government that tries to deject it.