North Korean Economy Watch

Los Angeles Times
Barbara Demick
7/4/2005

For most of her life, Kim Hui Suk had spouted the sayings of North Korea’s founder Kim Il Sung and never for a moment harbored a doubt: Capitalists were the enemy. Individualism was evil.

But then disaster rained down on her hometown, Chongjin, on North Korea’s remote east coast. Factories ran out of fuel. Food rations stopped. Watching her family slowly succumb to the famine — her mother-in-law, husband and son eventually would die of starvation — Kim realized she had to change.

Once a stickler for following the rules, she bribed a bureaucrat so she could sell her apartment. Then, with no business skills other than the ability to calculate on an abacus, she used the proceeds of the sale to set herself up in a black market business, hawking biscuits and moonshine she brewed from corn.

Kim could have been sent away for life for such crimes. But obeying the rules would have meant a death sentence.

“The simple and kind-hearted people who did what they were told — they were the first to die of starvation,” said Kim, a soft-spoken grandmother who now lives in South Korea and has adopted a new name to protect family members still in the North.

The famine that killed 2 million North Koreans in the mid-1990s and the death of the nation’s founder, Kim Il Sung, in 1994 sparked vast changes across the secretive communist country.

Markets are springing up in the shadows of abandoned factories, foreign influences are breaching the borders, inflation is soaring and corruption is rampant. A small nouveau riche class has emerged, even as a far larger group has been forced to trade away everything for food.

This is the picture of life in North Korea as painted by more than 30 people from Chongjin, the nation’s thirdlargest city. Some are defectors living in South Korea. Others were interviewed in China, which they had entered illegally to work or beg. Accounts of aid workers and videos taken illegally in Chongjin by disgruntled residents were also used to prepare this report.

Although the North Korean regime has a reputation as the ultimate Big Brother, people from Chongjin say the public pays less and less heed to what the government says. There is little that might be called political dissent, but residents describe a pervasive sense of disillusionment that remains largely unspoken.

“People are not stupid. Everybody thinks our own government is to blame for our terrible situation,” said a 39-year-old coal miner from Chongjin who was interviewed late last year during a visit to China. “We all know we think that, and we all know everybody else thinks that. We don’t need to talk about it.”

Kim Sun Bok, a 32-year-old former factory worker who came to South Korea last summer, said the country was “changing incredibly.”

“It is not the same old North Korea anymore except in name.”

Just a decade ago, when people in Chongjin needed new trousers, they had to go to government-owned stores that sold items mostly in drab browns or a dull shade of indigo. Food and other necessities were rationed. Sometimes the government permitted the sale of home-grown vegetables, but even a hairbrush was supposed to be purchased from a state-run shop.

Today, people can shop at markets all over Chongjin, the result of a burst of entrepreneurship grudgingly allowed by the authorities. Almost anything can be purchased — ice cream bars from China, pirated DVDs, cars, Bibles, computers, real estate and sex — for those who can afford the high prices.

The retail mecca is Sunam market, a wood-frame structure with a corrugated tin roof that is squeezed between two derelict factories.

The aisles brim with fresh cucumbers, tomatoes, peaches, scallions, watermelons and cabbage, as shown by rare video footage taken last year by the Osaka, Japan-based human rights group Rescue the North Korean People. Everything else comes from China: belts, shoes, umbrellas, notebooks, plates, aluminum pots, knives, shovels, toy cars, detergents, shampoos, lotions, hand creams and makeup.

Each of Chongjin’s seven administrative districts has a state-sanctioned market. Sunam, the city’s largest, is expanding, and some say it has a wider variety of goods than the main market in Pyongyang. Many vendors wear their licenses pinned to their right breasts while the obligatory Kim Il Sung buttons remain over the heart.

Although markets have been expanding for more than a decade, it was only in 2002 and ’03 that the government enacted economic reforms that lifted some of the prohibitions against them. Most of the vendors are older women such as Kim Hui Suk, a tiny 60-year-old with short, permed hair and immaculate clothing.

She was working in the day-care center of a textile factory in the early 1990s when production ground to a halt. Men were ordered to stay in their jobs, but Workers’ Party cadres at the factory started whispering that the married women, or ajumas, ought to moonlight to provide for their families.

“It was clear that the ajumas had to go out and earn money or the family would starve,” Kim said.

She first tried to raise pigs, locking them in a shed outside her downtown apartment building and feeding them slop left over from making tofu. But the electricity and water were too unreliable to keep the business going.

In 1995, Kim sold her apartment in the choice Shinam district and bought a cheaper one, hoping to use the proceeds to import rice from the countryside. But that too failed when she injured her back and couldn’t work.

The family’s situation became dire. Her husband’s employer, a provincial radio station, stopped paying salaries, and food distribution ended. In 1996, her mother-in-law died of starvation, and her husband the following year.

“First he got really, really thin and then bloated. His last words to me were, ‘Let’s get a bottle of wine, go to a restaurant and enjoy ourselves,’ ” Kim recalled. “I felt bad that I couldn’t fulfill his last wish.”

In 1998, Kim’s 26-year-old son, who had been a wrestler and gymnast, grew weak from hunger and contracted pneumonia. A shot of penicillin from the market would have cost 40 won, the same price as enough corn powder to feed herself and her three daughters for a week. She opted for the corn and watched her son succumb to the infection.

But Kim did not give up. She swapped apartments again and used the money to start another business, this time baking biscuits and neungju, a potent corn moonshine. If buyers didn’t have cash, she would accept chile powder or anything else she could use.

“We made just enough to put food on the table,” said Kim.

Much of Chongjin’s commerce is still not officially sanctioned, so it has an impromptu quality. Money changes hands over wooden carts that can be rolled away in a hurry. Those who can’t afford carts sell on tarpaulins laid out in the dirt.

Fashion boutiques are slapped together with poles and clotheslines, enlivening the monochromatic landscape with garish pinks and paisleys. Some clothes have the labels ripped out and vendors whisper that these items came from araet dongne or the “village below,” a euphemism for South Korea, whose products are illegal in the North.

Shoppers can buy 88-pound sacks of rice emblazoned with U.S. flags, and biscuits and corn noodles produced by three factories in Chongjin run by the U.N. World Food Program — all intended to be humanitarian handouts.

Some people cut hair or repair bicycles, though furtively because these jobs are supposed to be controlled by the government’s Convenience Bureau.

“They will bring a chair and mirror to the market to cut hair,” Kim said. “The police can come at any moment, arrest them and confiscate their scissors.”

Another new business is a computer salon. It looks like an Internet cafe, but because there’s no access to the Web in North Korea, it is used mostly by teenagers to play video games.

More products are available, but inflation puts them out of reach for most people. The price of rice has increased nearly eightfold since the economic reforms of 2002 to 525 won per pound; an average worker earns 2,500 won a month — about $1 at the unofficial exchange rate.

World Food Program officials in North Korea say the vast majority of the population is less well off since the economic changes, especially factory workers, civil servants, retirees and anybody else on a fixed income. But there are those who have gotten rich. Poor Chongjin residents disparage them as donbulrae, or money insects.

“There are people who started trading early and figured out the ropes,” said a 64-year-old retired math teacher who sells rabbits at the market. “But those of us who were loyal and believed in the state, we are the ones who are suffering.”

If Chongjin’s economic center is Sunam market, its political heart is Pohang Square, a vast plaza dominated by a 25-foot bronze statue of Kim Il Sung.

The grass here is neatly mowed, the shrubbery pruned and the pavement in good repair. Even when the rest of the city is without electricity, the statue is bathed in light. Across the street, a tidy pink building houses a permanent exhibit of the national flower, a hybrid begonia called Kimjongilia, named for current leader Kim Jong Il.

Since the practice of religion is barred, Pohang Square stands in as a spiritual center. Newlyweds in their best clothes pose for pictures, bowing to the statue so that their union is symbolically blessed.

When Kim Il Sung died on July 8, 1994, half a million people came to Pohang Square to pay their respects in the pouring rain and stifling heat. But among the adoring multitudes, there were malcontents.

One was Ok Hui, the eldest daughter of entrepreneur Kim Hui Suk. Though she dutifully took her place in the throng, any sadness she felt came from a foreboding that Kim Jong Il would be worse than his father.

“I went day and night along with everybody else. You had to…. But there were no tears coming from my eyes,” recalled Ok Hui, now 39, who did not want her family name published.

Ok Hui worked for a construction company’s propaganda unit, a job that entailed riding around in a truck with a megaphone, exhorting workers to do their best for the fatherland. But she didn’t believe what she preached.

Her father had taught her to doubt the regime. As a reporter and member of the Workers’ Party, he knew more about the outside world than many people and realized how far North Korea lagged behind South Korea and China.

“He and his friends would stay up at night when my mother was out, talking about what a thief Kim Jong Il was,” Ok Hui said.

Her mother, though, remained a firm believer. “I lived only for the marshal. I never had a thought otherwise,” said Kim Hui Suk. “Even when my husband and son died, I thought it was my fault.”

Ok Hui and her mother frequently clashed. “Why did you give birth to me in this horrible country?” Ok Hui remembers taunting her mother.

“Shut up! You’re a traitor to your country!” Kim retorted.

“Whom do you love more? Kim Jong Il or me?” her daughter shot back.

The regime was probably less beloved in Chongjin than elsewhere in North Korea. Food had run out in its province, North Hamgyong, earlier than in other areas, and starvation rates were among the highest in the nation.

Chongjin’s people are reputed to be the most independent-minded in North Korea. One famous report of unrest centers on the city. In 1995, senior officers from the 6th army corps in Chongjin were executed for disloyalty and the entire unit, estimated at 40,000 men, was disbanded. It is still unclear whether the incident was an attempted uprising or a corruption case.

Chongjin is known for its vicious gang wars, and it was sometimes difficult to distinguish political unrest from ordinary crime. There were increasing incidents of theft and insubordination. At factories, desperate workers dismantled machinery or stripped away copper wiring to sell for food.

Public executions by firing squad were held outside Sunam market and on the lawn of the youth park, once a popular lover’s lane.

In a village called Ihyon-ri on the outskirts of Chongjin, a gang suspected of anti-government activities killed a national security agent who had tried to infiltrate the group, former kindergarten teacher Seo Kyong Hui said.

“This guy was from my village. He had been sent to inform on a group that was engaged in suspicious activities,” she said. “They caught him and stoned him to death.”

Work crews went out early in the morning to wash away any anti-regime graffiti painted overnight, according to human rights groups, but most people were too scared to express their discontent. Badmouthing the leadership is still considered blasphemy.

To discourage anti-regime activity, North Korea punishes “political crimes” by banishing entire families to remote areas or labor camps.

“If you have one life to live, you would gladly give it to overthrow this government,” said Seo, the teacher. “But you are not the only one getting punished. Your family will go through hell.”

Even as Kim Jong Il’s regime weakens, many of its stalwarts are growing richer. Many of Chongjin’s well-to-do are members of the Workers’ Party or are connected to the military or security services. In the new economy, they use their ties to power to trade with China, obtain market licenses, extract bribes and sell bureaucratic favors.

“Those who have power in North Korea always figure out ways to make money,” said Joo Sung Ha, 31, who grew up in Chongjin and now works as a journalist in Seoul.

Joo was the pampered only son of a prominent official, and his family lived in Shinam, in the city’s northern hills overlooking the ocean. By the standards of South Korea or China, the single-family homes with lines of fish and squid drying from the roofs are nothing special. But for North Koreans, these are mansions.

The Joo family had a 2,000-square-foot cement-block house and a walled garden about twice that large. The garden proved crucial in protecting the family against the famine, though they had to contend with hungry soldiers who would scale the walls and steal potatoes and cabbages.

North Korean families like to measure their status by the number of wardrobes they own, and Joo’s family had five — plus a television, a refrigerator, a tape recorder, a sewing machine, an electric fan and a camera. They didn’t have a phone or a car — at that time those were unthinkable even for a well-off family — but they did have a bicycle.

“The appliances were of no use after the electricity ran out,” Joo said. “The bicycle was the most important thing, because the buses and trams stopped running.”

Joo attended the best elementary school in Chongjin, the city’s foreign language institute, and eventually the country’s top school, Kim Il Sung University in Pyongyang. He never met a native English speaker in the North, or any foreigner for that matter, but he trained his ear with videotapes of the BBC and banned Hollywood films.

“I sometimes watched ‘Gone With the Wind’ twice a day. Anybody else would have been arrested for watching Hollywood movies,” he recalled.

Joo’s glimpses of Western culture eroded his loyalty to the system. “I saw myself 20 years down the road in the prime of my career and North Korea would be collapsing,” he said.

While many of his classmates went to work for the regime’s propaganda news service after graduating, Joo arranged to return to Chongjin, where he taught high school until he escaped in 2001.

“The people from our neighborhood couldn’t understand,” said Joo, who stays in contact with his family. “They thought I had everything.”

Kim Hye Young, an actress, was also a child of privilege. Her father, Kim Du Seon, was an official of a trading company that sold mushrooms and fish in China. He learned how to navigate the bureaucracy, using his connections with the army and security services.

“If one of [the officials] had a wedding in the family, they would come to me for a couple of cases of wine,” the older Kim said.

As trade with China became more important, the family prospered. They took drives in a company car and ate at Chongjin’s nicest restaurant.

Growing up, Kim showed a flair for theater, and through her acting became a member of the elite in her own right. Her best-known role was in a play called “The Strong and the Righteous,” in which she portrayed a spy who sacrifices her life for North Korea.

When the production won first place in a Pyongyang drama festival in 1996, she got to meet Kim Jong Il. Still breathless with the memory, she said the leader shook her hand and gave her a fountain pen.

“I knew that I, as an actress, had an important role to promote the ideology of my country,” Kim said.

Kim and her sisters were largely oblivious to the famine, and their mother said she took pains to shelter them.

“My daughters don’t know to this day how many children in our neighborhood starved to death,” said her mother, Choe Geum Lan. She also didn’t tell them that their father, as a result of his business trips to China, had become increasingly pessimistic about North Korea’s future.

In 1998, when Kim was home from Pyongyang on vacation, her parents told her the family was going to visit an aunt in Musan, a city near the Chinese border. It was not until they had crossed to the other side that Kim and her teenage sisters, were told they had defected.

Kim, now 29 and advertising toothpaste on South Korean television, is one of the few defectors who says she didn’t want to leave.

“I was content with my life,” she said.

Today, North Korea’s elites are even better off, buying telephones for their homes and even cars.

“For $4,000 or $5,000, anybody can buy a car now. It used to be that you weren’t allowed to register your own car. We couldn’t dream of it,” said Kim Yong Il, a defector from Chongjin who lives in Seoul.

Recently, he arranged to have a computer smuggled from China to his relatives in Chongjin. North Korea’s state-run companies don’t have computers, so they’re eager to hire people who do. “If you have a computer, you can get a job,” he said.

Visitors have been shocked to glimpse the new conspicuous consumption in Chongjin.

Jeung Young Tai, a South Korean academic who was in Chongjin delivering South Korean government aid, noticed a paunchy man standing in front of the Chonmasan Hotel next to a new Lexus.

And at a hot spring in Kyongsong, on the city’s outskirts, he saw a woman carrying a lap dog — a striking sight in a country where there is so little food that the only pets usually are goldfish.

“You get the sense that there is a tremendous gap between rich and poor and that the gap is growing,” Jeung said.

The flip side, of course, is that the poor are getting poorer.

In Chongjin, those at the very bottom of the heap can be found at the train station.

The cavernous building boasts a large portrait of Kim Il Sung above the entrance and a granite-faced clock that rarely tells the right time. In front is a vast plaza crammed with people waiting for trains — sometimes for days, because the trains have no fixed schedules — and people waiting for nothing at all.

These are the homeless, many of them children. They’re called kotchebi, or swallows, because they wander the streets and sometimes between towns in search of food. Many gravitate to Chongjin station, because it is a major hub and the travelers have more to give.

A video shot last year by a military official and sold to Japan’s NTV television captured barefoot children near the station in torn, filthy clothing fighting over a nearly empty jar of kimchi. One boy scooted along the pavement on his buttocks; the narrator said his toes had been eaten away by frostbite.

Kim Hyok knows how easy it is for a child to end up at the station; he spent the better part of two years living there.

“If you can’t find somebody or they left their home, chances are you can find them at the station,” said Kim, now 23 and resettled in South Korea.

Kim’s mother died when he was a toddler, and he was raised by his father, a party member and an employee of a military unit that sold fish in China. During his early childhood, Kim, his father and elder brother lived in relative comfort in a high-rise apartment in the Sunam district.

When the government stopped handing out rations in 1993, Kim’s father used his connections to place his sons in an orphanage 60 miles away.

Kim, who was about 12 at the time, wasn’t sorry to be sent away. It was considered a privilege because the orphanages had food.

In 1997, just before his 16th birthday, Kim “graduated” from the orphanage. He caught a train back to Chongjin, but when he got to his neighborhood, things looked unfamiliar. The electricity was off. Many apartment buildings had no glass in the windows and appeared vacant.

Climbing the eight flights in pitch dark to his family’s unit, he heard a baby crying and wondered whose it might be. Confused and scared, he knocked on the door.

A young couple opened the door and told him his father had moved long ago but left a message: Look for him at the train station.

The phenomenon of vagrancy is testament to how much North Korea has changed. Before the famine, the government controlled people’s movements so strictly that they could not dream of visiting a relative in a nearby town without a travel permit, let alone selling their homes. Not showing up for work could bring a visit from police.

But as people embarked on increasingly desperate hunts for food, families broke apart. With few telephones and a barely functional postal service, parents and children became separated.

“People just started wandering around because they were hungry,” Kim said. “They would sell their apartments for a few bags of rice.”

Kim never found his father. He also never found his brother, who had left the orphanage a year earlier.

With no place to go, Kim ended up at the train station. By night, he slept squeezed into a narrow space designed for a sliding iron gate. By day, he loitered near the food vendors on the plaza. He often worked with a gang of other kids — a few would topple a vendor’s cart and the others would scoop up whatever spilled.

“If you’re not fast, you can’t eat,” said Kim, who even today in South Korea bears the signs of chronic malnutrition, with a head that looks oversized on a shockingly short frame.

Kim began hopping the slow-moving trains that pass through Chongjin on their way to the Chinese border. Once on board, Kim would scramble up to the top of a car, flatten himself to avoid the electric lines above and, using his pack as a pillow, ride for hours.

At the border, he would wade across the river to hawk the items in his pack: household goods on consignment from Chongjin residents, who were selling off their possessions.

In 1998, Kim was arrested by Chinese authorities, who do not recognize North Koreans as refugees. He was sent back to North Korea and spent two years in a prison camp before escaping again in 2000 to China, where he was eventually taken in by missionaries and brought to South Korea.

For every homeless person who survived, many more likely died. Kim Hui Suk recalled a particularly ghoulish scene at the train station.

“Once I saw them loading three bodies into a cart,” Kim said. “One guy, a man in his 40s, was still conscious. His eyes were sort of blinking, but they still were taking him away.”

Although the ranks of the homeless have thinned since the height of the famine, North Korean residents say their numbers are still considerable.

“If somebody disappears, you don’t know whether he dropped dead on the road or went to China,” the coal miner said.

About 100,000 North Koreans have escaped to China in the last 10 years. Many have ended up returning to North Korea, either because they were deported or because they missed their families. They often bring back money, goods to trade and strange new ideas.

Smugglers carry chests that can hold up to 1,000 pirated DVDs. South Korean soap operas, movies about the Korean War and Hollywood action films are among the most popular. Even pornography is making its way in.

This is a radical change for a country so prudish that until recently women were not permitted to ride bicycles because it was thought too provocative. Seo Kyong Hui, the kindergarten teacher, said that when she left North Korea in 1998, “I was 26 years old, and I still didn’t know how a baby was conceived.”

Even today, women are prohibited from wearing short skirts or sleeveless shirts, and both sexes are forbidden to wear blue jeans. Infractions bring rebukes from the public standards police.

But it is a losing battle to maintain what used to be a hermetic seal around the country. Just a few years ago, ordinary North Koreans could make telephone calls only from post offices. Dialing abroad was virtually impossible. Now some people carry Chinese cellphones and pay for rides to the border to pick up a signal and call overseas.

Smugglers also bring in cheap Chinese radios. Unlike North Korean radios, which are preset to government channels, the Chinese models can be tuned to anything, even South Korean programs or the Korean-language broadcasts of Radio Free Asia.

In the past, being caught with such contraband would land a person in political prison. Nowadays, security personnel will more likely confiscate the illicit item for personal use.

When a policeman caught Ok Hui, the entrepreneur’s daughter, with a Chinese radio in 2001, the first question he asked was, “So how do you work this thing?”

She wrote down the frequencies for South Korean radio stations.

“Don’t you have earphones so you can listen without anybody hearing you?” the officer then demanded.

North Korea instructs its citizens that the country is a socialist paradise, but the government knows outside influences can puncture its carefully crafted illusions.

“Bourgeois anti-communist ideology is paralyzing the people’s sound mind-set,” warns a Workers’ Party document dated April 2005. “If we allow ourselves to be affected by these novel ideas, our absolute idolization for the marshal [Kim Il Sung] will disappear.”

Among those who make it to China, many describe a moment of epiphany when they find out just how bad off North Koreans are.

Kim Ji Eun, a doctor from Chongjin, remembers wading across the partially frozen Tumen River in March 1999, staggering to a Chinese farmhouse and seeing a dish of white rice and meat set out in a courtyard.

“I couldn’t figure it out at first. I thought maybe it was for refrigeration,” recalled Kim, who now lives in South Korea. “Then I realized that dogs in China live better than even party members in North Korea.”

Many Chongjin residents who are caught trying to flee the country end up back in the city, behind the barbed wire of Nongpo Detention Center.

It sits near the railroad tracks in a swampy waterfront area. Prisoners are assigned back-breaking jobs in the nearby rice paddies or brick factory, where the workday begins at 5 a.m.

Ok Hui was one of those who served time in Nongpo. A rebel by nature, she had become fed up with North Korea and a difficult marriage.

In September 2001, during one of several failed attempts to escape, she was arrested in Musan and brought back to Chongjin by train. Guards tied the female prisoners to one another by tightly winding shoelaces around their thumbs.

In Nongpo, the inmates bunked in rows of 10, squeezed so tightly together that they had to sleep on their sides. Newcomers sometimes had to bed down in the corridor near overflowing toilets. Meals consisted of a thin, salty soup, sometimes supplemented by a few kernels of raw corn or a chunk of uncooked potato.

“The walls were very high and surrounded by wire,” Ok Hui said. “One woman tried to climb the wall. They beat her almost to death. You can’t imagine. They made us stand and watch.”

One day, when she was assigned to work in the fields, she spotted an old woman. She took off her underwear and offered it to the woman in exchange for sending a message to her mother. Underwear is scarce in North Korea, so the woman accepted and agreed to send a telegram to Ok Hui’s mother.

With her market earnings, Kim Hui Suk bought 10 packs of cigarettes for a security official to arrange her daughter’s release.

Some days later, the prison administrator came to talk to Ok Hui and other female prisoners who were picking corn. They were all due to be freed shortly, and the administrator urged them to resist the temptations of capitalism and imperialism, and to devote themselves to North Korea.

Then, he asked for a show of hands: Who would promise not to run away again to China?

Not a single woman raised her arm.

“We were all just thinking that our whole lives we had been told lies,” Ok Hui recalled. “Our whole lives, in fact, were lies. We just felt this immense rage toward the system.”

The prison administrator looked at the women squatting sullenly in silence in the cornfield.

“Well,” he said, “if you go again to China, next time don’t get caught.”

Forty days after her release, Ok Hui escaped again to China and made her way to South Korea. She used $8,000 in resettlement money from South Korea’s government to pay a broker to smuggle her mother out of North Korea. Today Ok Hui works in a funeral home and her mother as a housekeeper.

Asia Times
Andrei Lankov
12/4/2004

A creeping revolution, both social and economic, is under way in North Korea and it seems there’s no turning back. For decades, the country served as the closest possible approximation of an ideal Stalinist state. But the changes in its economy that have taken place after 1990 have transformed the country completely and, perhaps, irreversibly.

For decades, Pyongyang propaganda presented North Korea as an embodiment of economic self-sufficiency, completely independent from any other country. This image sold well, especially in the more credulous part of the Third World and among the ever-credulous leftist academics. The secret of its supposed self-sufficiency was simple: the country received large amounts of direct and indirect aid from the Soviet Union and China, but never admitted this in public. Though frequently annoyed by such “ingratitude”, neither Moscow nor Beijing made much noise since both communist giants wanted to maintain, at least superficially, friendly relations with their small, capricious ally.

But collapse of the Soviet Union made clear that claims of self-sufficiency were unfounded. From 1991, the North Korean economy went into free fall. Throughout 1991-99, the gross national product (GNP) of the Democratic People’s Republic of Korea (DPRK) nearly halved. The situation became unbearable in 1996, when the country was struck by a famine that took, by the best available estimates, about 600,000 lives. The famine could have been prevented by a Chinese-style agricultural reform, but this option was politically impossible: such a reform would undermine the government’s ability to control the populace.

The control on daily lives was lost anyway. What we have seen in North Korea over the past 10 years can be best described as collapse of what used to be rigid Stalinism from below. In the Soviet Union of the late 1950s and in China of the late 1970s, Stalinism-Maoism was dismantled from above, through a chain of deliberate reforms planned and implemented by the government. In North Korea the same thing happened, but the system disintegrated from below, despite weak and ineffectual attempts to keep it intact.

In the 1960s, North Korea was unique in being the only nation in the world where markets were outlawed. The retail trade in a strict sense almost ceased to exist since virtually everything, from socks to apples, was distributed through an elaborate public distribution system with money payments being rather symbolic. The rations depended on a person’s position in the intricate social hierarchy, which eventually became semi-hereditary. In Kim Il-sung’s North Korea, there was almost nothing that could be sold on market since production outside the state economy was almost non-existent.

Unlike governments of other communist countries, until the late 1980s the North Korean government did not even allow its farmers to cultivate kitchen gardens – the individual plot was limited to merely 20-30 square meters, hardly enough to grow enough chili pepper. This was done on purpose. In many other communist countries, farmers had bigger plots and made their living from them, ignoring their work obligations to the state-run cooperative farms. Without their own plots, farmers would work more for the state – or so believed the North Korean government. In the utopia constructed by Kim Il-sung, every single man or woman was supposed to work for the state, and was rewarded for his and her efforts with officially approved rations and salaries.

In 1969, Kim himself admitted that the anti-market policy had been a failure. Thus private markets were gradually legalized, but remained small and strictly controlled. However, as late as late 1980s, markets were still considered inappropriate for a “socialist paradise”. They were something to be ashamed of, so they were pushed to the margins of the city. Until the early 1990s, most markets were in places more or less hidden from view, inside residential blocks and behind high concrete walls. In Pyongyang, the main city market was set up under a huge viaduct at the easternmost part of the North Korean capital, as far from the city center as possible.

However, the economic disaster of 1991-95, and especially the subsequent famine, changed the situation. Markets began to spread across the country with amazing speed. From 1995-97, nearly all plants and factories ceased to operate. The rations were not issued anymore: in most areas people still received ration coupons but these could not be exchanged for food or other rationed goods. Only in Pyongyang and some other politically important areas did food continue to be distributed. But even there, the norms were dramatically watered down. In such a situation, the ability and willingness to engage in some private business became the major guarantee of physical survival.

The government also relaxed the restrictions on domestic travel. Since around 1960, every North Korean who ventured outside his native county was required to have a special “travel permit” (an exception was made for one-day travel to neighboring counties). However, in the mid-1990s, the authorities began to turn a blind eye to unauthorized travel. It is not clear whether it was a deliberate relaxation or just inability to enforce regulations when the state bureaucracy was demoralized. After all, a bribe of some US$5 would buy such a permit from a police officer.

The tidal wave of small trade flooded the country, which once came very close to creating a non-money-based economy. People left their native places in huge numbers. Many sought places where food was more available while others enthusiastically took up the barter trade, including smuggling of goods to and from China. Women were especially prominent in the new small businesses. Many North Korean women were housewives or held less-demanding jobs than men. Their husbands continued to go to their factories, which had come to a standstill. The males received rationing coupons that were hardly worth the paper on which they were printed. But North Korean men still saw the situation as temporary and were afraid to lose the trappings of a proper state-sponsored job that for decades had been a condition for survival in their society. While men were waiting for resumption of “normal life”, whiling away their time in idle plants, the women embarked on frenetic business activity. Soon some of these women began to make sums that far exceeded their husbands’ wages.

The booming markets are not the only place for retail trade. A new service industry has risen from the ashes: private canteens, food stalls and inns operate near the markets. Even prostitution, completely eradicated around 1950, made a powerful comeback as desperate women were eager to sell sexual services to the newly rich merchants. Since no banking institution would serve private commercial operations, illegal money lenders appeared. In the late 1990s they would charge their borrowers monthly interests of 30-40%. This reflected very high risks: these lenders had virtually no protection against the state, criminals and, above all, bad debtors.

In North Korea, which for decades was so different, this meant a revolution. The new situation undermined the government’s ability to control the populace. People involved in the new market activities are independent from (or inured to) subtle government pressures that had ensured compliance for decades. One cannot promote or demote a vendor, transfer him or her to a better or worse job, nor determine his or her type of residence (though admittedly, most people still live in the houses they received when the old system was still operating).

The growth of new markets also undermined some pillars of old North Korean hierarchy. Of course, many people who became affluent in the new system came from the old hierarchy – as was the case in most post-communist countries. Officials or managers of state-run enterprises found manifold ways to make an extra won. These managers often sold their factories’ products on the market. But many hitherto discriminated-against groups managed to rise to prominence during this decade. The access to foreign currency was very important, and in North Korea there were three major groups who had access to some investment capital: the Japanese-Koreans, Chinese-Koreans and Korean-Chinese.

The Japanese-Koreans moved into the country in the 1960s (there were some 95,000 of them – with family members, children and grandchildren, their current number can be estimated at 200,000-250,000). These people have relatives in Japan who are willing to send them money. Traditionally, the authorities looked at Japanese-Koreans with suspicion. At the same time, since money transfers from Japan have been a major source of hard currency for Pyongyang, their activities were often tolerated. This particular group even enjoyed some special rights, being privileged and discriminated against at the same time. When the old system of state control and distribution collapsed, Japanese-Koreans began to invest their money into a multitude of trade adventures. It did not hurt that many of them still had the first-hand experience of living in a capitalist society.

Another group were people with relatives in China. The economic growth of China meant that the relatives could also help their poor relatives in North Korea. In most cases, this was not in the form of money transfers, but assistance in business and trade. The local ethnic Chinese were in an even better position to exploit the new opportunities. For decades, they have constituted the only group of the country’s inhabitants who could travel overseas as private citizens more or less at their will. Even in earlier times, the ethnic Chinese used this unique position to earn extra money by small-scale and part-time smuggling. In the 1990s, they switched to large operations. There is an irony in the sudden economic advance of these groups. For decades, their overseas connections have made them suspect and led to systematic discrimination against them. In the 1990s, however, the same connections became the source of their prosperity.

Until recently, the government did not try to lead, but simply followed the events. The much-trumpeted reforms of 2002 by and large were hardly anything more than the admission of the situation that had been existing for a few years by then. The official abolition (or near-abolition) of the public distribution system did not count for much, since this system ceased to operate outside Pyongyang around 1995.

But the North Korean economy has indeed come a long way from its Stalinist ways. Now the government has neither money nor support nor the political will to revive the Stalinist-style central economy. There is no way back, only forward. Stalinism is dead. Welcome to capitalism, comrades!

ROK Ministry of Unification (Via Global Security)
5/27/2004

1. Overview: North Korea is actively pursuing a project to expand and modernize Sungho-ri concrete tie factory in efforts to increase production of concrete railroad ties, the Central Broadcasting Station reported on May 9.

2. Main Points of the Report

 A. Within the very first several months of construction on expanding the Sungho-ri concrete tie factory, there has been great progress in the construction of the production building and various facilities such as a curing chamber, a boiler and a control room.

 B. The Railway Ministry, concerned about the overall progress of the construction work, designated experienced party officials for systematic management of construction operations.

   – The Pyongyang Railway Bureau is responsible for the construction of the control room and the curing chamber for concrete ties.

   – Chongjin/Hamhung/Kaechon Railway Bureaus’ task force teams are responsible for overseeing the construction of the steel reinforcing factory.

   – Various other factories including the Kim Jong Thae Electric Locomotive Factory and the September 18 Factory have made achievements in their technical support for the construction of facilities.

3. Analysis

 A. To supply parts and materials for railway facilities, North Korea has relied on some ten factories that manufacture parts and materials for railway vehicles, including the Kim Jong Thae Electric Locomotive Factory. 

   – However, due to lack of capital and raw materials, the supply chain has become inadequate for improving railway facilities, which are showing signs of aging such as abrasion of rails, corrosion of concrete ties, among others.

   – As a result, the risk for accidents has become high and the function of railways facilities is limited as a means of transportation.

 B. In a bid to overcome such serious problems associated with the transportation system and to pursue a project for connecting TKR/TSR:

   – Chairman Kim Jong Il paid inspection visits to the July 6 Railway Factory and the Rahung Concrete Tie Factory in Sept. 2001, immediately after his visit to Russia (Aug. 2001). Since then, North Korea has been actively engaged in the modernization of the aging railway facilities.

     It is necessary to modernize concrete tie factories to increase the production of quality products to reinforce railways.¡± (01.9.14, during Kim Jong Il’s inspection of the factories)

   – In order to improve the supply of railway materials to the factories, various efforts are underway such as the construction of power plants in order to supply electricity and a cooperative network among related factories and businesses in order to expand the railway materials supply capacity.

     Once the construction of the Sungho Railway Youth Power Plant, which is in the final stage, is completed, it can ensure the supply of electricity needed for concrete tie manufacturing-related factories,¡± reported Rodong Sinmun on Mar. 25.

     “The Sungho-ri Cement Factory is engaged in a massive campaign to increase the supply of cement to major construction sites,¡± reported Pyongyang Broadcasting Service on Mar. 25, 2003.

 C. The construction work on expanding the Sungho-ri Concrete Tie Factory seems to be aimed at the following:

   – To overcome problems in railway transportation by building a smooth operating supply chain for railway facilities

   – To prepare for the future connection of TKR/TSR, and to improve railway facilities.

These images are for Google Earth.  I took them from Global Security.

To map them to Google Earth on your computer, click here.

   

The Economist
3/11/2004

So far as a visitor can tell in this secretive land, North Korea’s economic reforms are starting to bite. But real progress will require better relations with the outside

COMMUNIST North Korea has started to experiment with economic reform, and opened its door a crack to the outside world. Though its culture of secrecy and suspicion stubbornly persists, it was deemed acceptable for your correspondent to visit Pyongyang’s Tongil market last week. Here, stalls are bursting with plump vegetables and groaning with stacks of fresh meat. You can even buy imported pineapples and bananas from enthusiastic private traders.

But how about a photograph? Most foreigners think of North Korea as a famished nation, and the authorities are evidently keen these days to tell the world about the great strides their economy has made since reforms were introduced in July 2002. Logic might seem to suggest that a snap showing the palpable result of the reforms would be acceptable too. But it is not. The officials were friendly but firm: no pictures of fat carrots.

The July 2002 reforms were ground-breaking for North Korea: the first real step away from central planning since the dawn of communism there in 1945. The government announced that subsidies to state-owned enterprises were to be withdrawn, workers would be paid according to how much they produced, farmers’ markets, hitherto tolerated, would become legal and state enterprises would be allowed to sell manufactured products in markets. Most of these enterprises, unless they produced “strategic items”, were to get real autonomy from state control.

Almost two years on, how to assess the success or failure of these reforms? That climate of secrecy makes it deeply frustrating. Even the simplest of statistics is unavailable. Li Gi Song, a senior economist at Pyongyang’s Academy of Sciences, says he does not know the rate of inflation. Or maybe he is not telling. After all, he says, “We can’t publish all the figures because we don’t want to appear bare before the United States. If we are bare then they will attack us, like Afghanistan or Iraq.” So what follows can be little more than a series of impressions.

The indications are that the reforms are having a big impact. For a start, North Korea has recently acquired its first advertisement (pictured above)—for foreign cars, assembled locally by a South Korean majority-owned company. Or, to be more basic, take the price of rice, North Korea’s staple. Before the reforms, the state bought rice from state farms and co-operatives at 82 chon per kilo (100 chon make one won, worth less than a cent at the official exchange rate). It then resold it to the public through the country’s rationing system at eight chon. Now, explains Mr Li, the state buys at 42 won and resells at 46 won.

North Korea’s rationing system is called the Public Distribution System (PDS). Every month people are entitled to buy a certain amount of rice or other available staples at the protected price. Thus most North Koreans get 300g (9oz) of rice a day, at 46 won a kilo. According to the UN’s World Food Programme (WFP), that is not nearly enough. Anything extra has to be bought in the market.

In theory, even in the market the price of staples is limited. Last week, the maximum permitted rice price was marked on a board at the entrance to Tongil as 240 won per kilo. In fact, it was selling for 250. WFP officials say that in January it was selling for 145 won, which points to significant inflation, for rice at least. This is not necessarily a bad thing, since it means that the price is coming into line with the market.

The won’s international value is also adjusting. Since December 2002, the euro has been North Korea’s official currency for all foreign transactions. In North Korean banks, one euro buys 171 won. In fact, this rate is purely nominal. A semi-official rate now exists and the price of imports in shops is calculated using this.

Last October, according to foreign diplomats, a euro bought 1,030 won at the semi-official rate. Last week it was 1,400. A black market also exists, in which the euro is reported to be fetching 1,600 won—which implies that the won is approaching its market level. It also means, however, that imported goods have seen a big price-hike. For domestically-produced goods, like rice, prices may well go on rising for a good while longer.

What about earnings? Before the 2002 reforms, most salaries lay in the range of 150-200 won per month. Rent and utilities, though, were virtually free, as were (and are) education and health care. Food, via the PDS, was virtually given away. Now, pay is supposed to be linked to output, though becoming more productive is not easy for desk-bound civil servants or workers in factories that have no power, raw materials or markets.

Rents and utilities have gone up, though not by crippling amounts. A two-bedroom flat in Pyongyang including electricity, water and heat costs just 150 won a month—that is, about a tenth of a euro.

Earnings have gone up much more: a waitress in a Pyongyang restaurant earns about 2,200 won a month. A mid-ranking government official earns 2,700. A worker at a state farm earns in the region of 1,700, a kindergarten teacher the same, and a pensioner gets between 700 and 1,500. A seamstress in a successful factory with export contracts can earn as much as 5,000 won a month. Since that seamstress’s pay equates to barely three euros a month, wages still have a long way to adjust.

The prices of food and other necessities, to say nothing of luxuries, has gone up much more than rent has. According to the WFP, some 70% of the households it has interviewed are dependent on their 300 gram PDS ration, and the WFP itself is targeting 6.5m vulnerable people out of a total population of some 23m. Not all suffer equally: civil servants in Pyongyang get double food rations from the PDS.

There are some encouraging stories. In Pukchang, a small industrial town 70km (40 miles) north-east of Pyongyang, Concern, an Irish aid group, has been replacing ancient, leaking and broken-down water pipes and pumps, and modernising the purification system. This has pushed the amount of clean water available per person per day from 80 to 300 litres. Kim Chae Sun is a manager at the filtration plant, which is now more efficient. Before July 2002 she earned 80 won a month. Afterwards she earned 3,000 won. Now she earns 3,500.

As Mrs Kim speaks, three giant chimneys belch smoke from the power station that dominates the town. All workers have been told they can earn more if they work harder, but certain groups have been told they will get even more money than everyone else. In energy-starved North Korea these include miners and power workers. Mrs Kim says her husband, who works in the power plant, earns an average of 12,000 won a month. Her rent has gone up from eight to 102 won a month, and in a year, she thinks, she will be able to buy a television or a fridge.

A lot of people, in fact, are buying televisions. The women who sell the sets from crowded Tongil market-stalls get them from trading companies which they pay after making a sale. The company price for an average set is 72,000 won, the profit just 1,000 won. After they have paid for their pitch, the traders can expect an income of 10,000-12,000 won a month.

Mystery sales
Which makes for a puzzle. Who can afford a good month’s salary for a locally made jacket in Tongil, costing 4,500 won? How come so many people are buying televisions, which cost more than two years of a civil-servant’s pay? How come the number of cars on the streets of the capital has shot up in the past year? Pyongyang still has vastly less traffic than any other capital city on earth, but there are far more cars around than a year ago. Restaurants, of which there are many, serve good food—but a meal costs the equivalent of at least a white-collar worker’s monthly salary. Many of these restaurants are packed.

Foreign money is part of it. Diplomats and aid workers say many new enterprises seem to have opened over the last year. Nominally they are state-owned, but sometimes they have a foreign partner, often an ethnic Korean from Japan. The majority are in the import-export business. Some have invested in restaurants and hotels and some in light industry. Thanks to the 2002 reforms, these firms have a degree of autonomy they could not have dreamed of before. An unknown number of people also receive money from family abroad, but there are still no North Korean-owned private companies.

Farmers are among the other winners: they can sell any surpluses on the open market. But two out of three North Koreans live in towns and cities, and only 18% of the country is suitable for agriculture. The losers include civil servants, especially those outside Pyongyang who do not get double food rations and have no way to increase their productivity.

Factory workers have it the hardest. A large proportion of industry is obsolete. Though Pyongyang has electricity most of the day, much of the rest of the country does not. Despite wild talk of a high-tech revolution, the country is not connected to the internet, though some high-ups do have access to e-mail service. In the east of the country lies a vast rustbelt of collapsing manufacturing plants.

Huge but unknown numbers of workers have been moved into farming, even though every scrap of available land is already being cultivated. The extra workers are needed because there is virtually no power for threshing and harvesting and no diesel for farm vehicles. This requires more work to be done by hand. Ox-carts are a common sight.

The innocent suffer
Markets are everywhere. But this does not mean that there is enough food everywhere. In Pyongyang, where there are better-off people to pay for it, there is an ever-increasing supply. Outside the capital, shortages are widespread.

No one knows how many died during the famine years of 1995-99; estimates range from 200,000 to 3m. In Pukchang, officials say that 5% of children are still weak and malnourished. In Hoichang, east of Pyongyang, schools and institutions tell the WFP that about 10% of children are malnourished. Masood Hyder, the senior UN official in North Korea, says that vulnerable households now spend up to 80% of their income on food.

And yet some things are improving. Two surveys carried out in 1998 and 2002 by the North Korean government together with the WFP and Unicef showed a dramatic improvement in children’s health between those years. The proportion of children who fail to reach their proper height because of malnutrition fell from 62% to 39%, and the figures are thought to be still better now. However, Unicef says that though children may no longer die of hunger, they are still dying from diarrhoea and respiratory diseases—which are often a side-effect of malnutrition.

To a westerner’s eye, a class of 11-year-olds in Hoichang is a shocking sight. At first, your correspondent thought they were seven; the worst-affected look to be only five. Ri Gwan Sun, their teacher, says that apart from being stunted some of them still suffer from the long-term effects of malnutrition. They struggle to keep up in sports and are prone to flu and pneumonia. They are also slower learners.

Pierrette Vu Thi of Unicef says that North Korea’s poor international image makes it hard for her agency, the WFP and others to raise all the money they need. The country is in a chronic state of emergency, she says, and to get it back on its feet it would need a reconstruction effort on the scale of Afghanistan and Iraq.

Such bleak talk is echoed by Eigil Sorensen of the World Health Organisation. He says that health services are extremely limited outside the capital. Medicines and equipment are in short supply, large numbers of hospitals no longer have running water or heating and the country has no capacity to handle a major health crisis.

None of this is likely to change very fast. With no end yet to the nuclear stand-off between North Korea and the United States, American and Japanese sanctions will remain in place. And nukes are only part of it. Last week the American State Department said it was likely that North Korea produced and sold heroin and other narcotics abroad as a matter of state policy. North Koreans who have fled claim that up to 200,000 compatriots are in labour camps. North Korea denies it all.

Reform, such as it is, has plainly made life easier for many. But rescuing the North would take large amounts of foreign money, as well as measures more far-reaching than have yet been attempted. At present, there is no way for the government to get what it needs from international financial institutions like the World Bank. Such aid as comes will be strictly humanitarian, and investment in so opaque a country will never be more than tentative. Domestic reform on its own cannot fix an economy wrecked by decades of mismanagement and the collapse of communism almost everywhere else.

BBC
Charles Scanlon
9/15/2003

A hundred South Koreans are visiting the North Korean capital, Pyongyang, for the first time since the peninsula was divided in 1945.

They left on the first commercial flight between the two Korean states.

South Korean tourists have already travelled to an isolated mountain resort in North Korea in recent years, but this is the first time they have been able to see the capital of the communist state.

Nearly 120 people signed up for the five-day tour, at nearly $2,000 a head.

For that they will be able to see monuments to the ruling Kim dynasty, visit a model farm, the railway station and see a state-run kindergarten.

A company official said the idea was to let South Koreans see how Northerners live.

But they are not expecting to be allowed much contact with ordinary citizens.

Despite growing economic links, the North Korean regime goes to extraordinary lengths to block outside ideas and information.

One of the tourists said she had not been able to see relatives in the North for half a century, and did not expect to be allowed to see them during the visit.

Another, a professor of North Korean Studies, said he hoped the visits would help unification.

The travel company, Pyeonghwa, is an affiliate of the Unification Church of Moon Sun-myung, which recently opened the first car assembly plant in North Korea.

It hopes to take 2,000 visitors to Pyongyang before the end of the year.

from a great story in the Economist:

benefits of reform:

• The electricity supply has slightly improved in Pyongyang, as well as on the east coast in Hamhung and Chongjin. Apartment-block lights are now on for much longer.
• Second-hand bicycles, from Japan and China, are numerous, particularly in cities on the poor, industrial east coast.
• Farmers are allowed their own small gardens, and farmers’ markets are now referred to simply as “markets”, because, as well as food, they sell consumer goods. Significantly, these markets have been given official approval. In June, the government appealed for help from other countries in running them. As Marcus Noland of the Institute for International Economics in Washington, DC, explains, one immediate effect of the reforms is that there are now products available for hard currency, such as video players and movies like “The Lion King” dubbed in Korean, which were previously unobtainable. The government is also encouraging foreign investment in industries such as mining, energy, agriculture and information technology
• The leadership recently gave its approval for a South Korean company that assembles cars in North Korea to launch a marketing campaign.
• Mobile-phone services have been started in the country’s main cities and along its motorways.
• North Korea’s tourism authority claims that 2,000 Motorola and Nokia mobile handphones were sold in Pyongyang between November 2002 and August 2003. This in a country where barely a million land lines exist, out of a total population of 23m.
• The Hermit Kingdom recently announced plans to develop broadband internet capabilities to improve the business environment. The plan is to link the domestic intranet, called Kwangmyong, to the internet. The North’s national domain designation, “.kp”, is still not in use, but the government has reportedly been testing e-mail addresses incorporating it. There is even an internet café in Pyongyang, though at $10 per hour it is affordable only to the few tourists, diplomats and journalists who visit the city. Currently, only Mr Kim and a few privileged others can use the optical communications lines supplied to North Korea by China’s China Telecom. Contrast this to the state of affairs in the south, which has the world’s greatest penetration of high-speed broadband connections and where more than 65% of households now have internet access.

These observations say little about how the economy as a whole is doing. The sad truth seems to be that the leadership in the North undertook its partial reforms out of necessity, not because it had understood or embraced the market. Rather, for the past 15 months, according to a Korea expert, Kongdan Oh, at the Institute for Defence Analyses in Virginia, the country has been “creatively muddling through”. While the average North Korean has more economic freedom, the economy is near collapse.

Nicholas Eberstadt of the American Enterprise Institute, in Washington, DC, estimates that, if anything, economic decline has accelerated, not reversed. Last year’s price and wage increases saw prices rise 10 to 20-fold and wages rise by 20 times or more, the idea being to bring them more into line with market rates. But the increases have not been matched by measures to boost output, so inflation has spiralled out of control. The price of staple foods, for instance, has risen by as much as 400%, and the country continues to rely on foreign handouts to feed its people.

In a recent paper, Mr Noland argues that those with access to foreign exchange, such as senior party officials, do not feel the effects of inflation as severely as salaried workers who have no access to foreign exchange. So for urban residents with access to hard currency, in some respects things are much better. But for the bulk of the population, things are quite grim. As much as 80% of an average family’s income now goes towards food.

Just how committed is the regime of Kim Jong Il to its programme of market reform? Probably not very. It shows no sign of embracing reforms that could potentially undermine the state’s control. It continues to emphasise “military-first” policies, reserving the best of everything for the army it depends on. And even if greater economic reform were undertaken, it is far from certain that it would be successful any time soon.

The economy continues to suffer from a lack of energy, transport infrastructure and basic foodstuffs. Many factories—all of which under the reforms now have to pay their own way—have been shut down, leaving people without jobs and therefore no money to buy food. And since the North admitted last year to its illicit nuclear programme, aid flows have diminished and oil deliveries by the Korean Peninsula Energy Development Organisation have been suspended.

Foreign investors still stay away and the few companies that have been bold enough to invest in the North, such as Hyundai Asan, have lost millions of dollars. So, though much has changed in North Korea over the past 15 months, the probability is that more will stay the same

Washington Post Foreign Service
Anthony Faiola
September 14, 2003

Notes on the DPRK’s new Fiat:

The first commercial billboards (ever) are going up in Pyongyang.  Fiat is in the Hermit Kingdom.  The billboards are part of what is dubbed the first corporate media blitz to hit North Korea.

Pyeonghwa Motor Corps., a South Korean firm with ties to the Unification Church, coaxed the DPRK government into allowing the campaign.  Pyeonghwa began assembling cars in North Korea 18 months ago using imported Fiat parts.

Creating the ad campaign was not easy, said John Kim.  The government rejected many billboard proposals.

The company began publishing asd in government sponsored trade magazines showcasing the “Whistle” (The name of the car in the DPRK.  Named after a famous song).  Also a SUV model was launched.  Commercials have also appeared on TV.

Cars cost $14,000 and it would take a north Korean 15 years of labor to save up enough money.

When Pyeonghwa opened its $20m factory about 40 miles west of Pyongyang last year, the company hoped to sell 1000 cars in 12 months, but it has unloaded only half that number in 18 months.  Most have gone to government officials and diplomats.

There are only two gas stations in Pyongyang, and the company does not offer financing 

Notes on Politics:

Pyongyang’s news agency recently described new markets as desigend to “dramatically improve the country’s standard of living.”

This month, the North Korean’s announced a cabinet reshuffle that raised Pak Pong Ju, a former chemical industries manager, to the loftier position of Premier.  He is seen as being interested in reforms.

Kim Jong Il has been working to give the authority to fire a worker to factory managers, as opposed to Party officials.

BBC
6/14/2003

North and South Korea have held a symbolic ceremony to re-link cross border railways severed by war more than 50 years ago.

Engineers from both sides tightened the screws on the railway tracks that will, it is hoped, eventually carry passenger trains between the two countries.

The event came a day before the third anniversary of an historic inter-Korean summit in which the then South Korean President Kim Dae-jung made a euphoric visit to the North Korean capital, Pyongyang.

Reconciliation has since stalled, and tension has heightened over North Korea’s nuclear weapons programmes.

“Removing barbed-wire fences and mines, the nation’s artery has been re-linked,” said South Korea’s chief delegate Cho Myong-kyun, speaking inside the four kilometre (2.5 mile) demilitarised zone that separates the two countries.

His North Korean counterpart Kim Byong-chil said: ” “If we continue moving forward, with our hands linked together, we will be able to tear down the barbed wire of division and achieve national unification.”

The ceremony was supposed to have taken place in March, but was delayed because of the war in Iraq and the standoff over North Korea’s nuclear ambitions.

Despite Saturday’s ceremony it will be some time before trains run between the two Koreas, which were divided at the end of World War II.

The last train crossed the border shortly before the 1950-53 Korean War. The two countries remain technically at war, as there was a ceasefire but no formal treaty.

Two railways links are planned, but more work is needed.

Nuclear tensions

Both sides have said they want to complete the restoration of the western line by September. This will run between Seoul and Pyongyang, and extend to North Korea’s border with China.

If work goes to schedule, a rail link along the eastern coast will be ready by the end of the year.

But despite the progress on rail links, the BBC’s Charles Scanlon in Seoul says North Korea’s nuclear weapons programme is increasingly threatening reconciliation between the two countries.

On Monday, North Korea threatened to develop a “nuclear deterrent” unless the United States ends its “hostile policy”.

It was the closest North Korea had come to publicly admitting that it was working on nuclear weapons.

Our correspondent says it has put a growing strain on South Korea’s policy of reconciliation – what used to be known as the sunshine policy.

The United States and Japan have agreed on tougher measures – meaning sanctions – if the North continues to build nuclear warheads.

South Korean officials stress that dialogue is the only solution to the confrontation.

BBC
6/13/2003

Woo Ik-hwan, the last train driver to leave North Korea before the border was shut as a result of the war, told the BBC of his final journey.

In 1950 the Korean War started. I was hired to drive a hospital train that would bring wounded South Korean soldiers down from North Korea.

When the Chinese troops invaded, there was a major retreat, and that was when I was ordered to bring the remaining wounded soldiers down to South Korea.

That was the last time a train came down South from North Korea.

It was in the evening when I started the train. It was around 7 o’clock because it was already getting dark. Everyone was retreating and there was an air of sadness hanging about.

I can still remember how sad the telephone bell ringing sounded when I received the final order to come back home.

When people learned that the last train out of the North was about to leave, everyone started to gather around the station.

The passenger cars were full of wounded soldiers so people started to climb on to the steam locomotive.

There were people with bags and children.

Some went on to the roof and others found space where we stored the coal. Soon the locomotive was packed with people clinging on to anything they could grasp. People who couldn’t hang on had to let go of the train. It was a such a tragic sight.

It’s been 50 years since the Korean War. When the war ended and the track got disconnected, I thought to myself that the two sides would stay separated forever.

A railroad track is like the artery of a person.

Look what happens when the blood flow of the two countries come to a halt. Over the years the South received help from Western countries and we managed to develop ourselves.

But look at the North. Millions have died in hunger and their economy is about to collapse. If the track had been connected and if our resources were able to flow into the North, that wouldn’t have happened.

After 50 years of living in isolation, the North have now realised the importance of the track and they’ve finally agreed to reconnect it.

All this time, whenever I had a chance to go to the end of the track at the border, I’d hoped that the track would some day get reconnected.

When I think of my parents and my siblings in North Korea, my heart aches and tears come out. But now that I hear that the track will once again get reconnected, I can’t express how happy I am.

I really want to go North Korea. Over the years I’ve driven steam, diesel and electric trains. I’ve experienced them all.

If the track gets reconnected and if I were asked to drive the first train back to the North, even at this age I’m sure I could do it, if I were to live that long.

When I close my eyes, I still can see the tracks stretching in front of me. If I’m on that first train, that means that I could return to my home town as well. Nothing could get better than that.