North Korean Economy Watch

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

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

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

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

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

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

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

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

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

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

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

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

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

Having a bad influence throughout the economy … Skyrocketing prices

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

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

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

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

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

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

From the Korea Times:
Park Song-wu

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

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

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

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

From the Daily NK:

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

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

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

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

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

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

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

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

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

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

Chosun
7/21/2006 (not sure of year)

Mammoth Underground Square and Road in Pyongyang

The Pyongyang subway has two generally-unknown facilities: a mammoth “underground square” in preparation against war, and an “underground road” between the subway stations, linking the Mount Kumsu Memorial Palace and the Sunan Airport in the suburbs of Pyongyang.

The underground square, built as a bunker command post for the Supreme Command of the People’s Armed Forces and a space for storing manpower and equipment during a war, is located in Anhak-dong, near the Nakwon Subway Station, famous for the Central Zoo at the foot of Mount Taesong. The square is said to be comparable in area to the Kim Il Sung Square, which can accommodate a rally of over 100,000 people.

The underground square is learned to have been constructed by the General Military Engineer Corps of the People’s Armed Forces in the 1970s when the second phase of the Pyongyang subway was built, linking the five stations of Hyoksin, Chonsung, Samhung, Kwangmyong and Nakwon. The command post in the underground square is said to be replete with state-of-the-art communications equipment and billeting facilities, and a host of 10-ton trucks including Soviet-made Zils and Japanese Isizus are kept in the square to transport troops and arms to be shipped by the subway under an emergency.

The underground road between subway stations connects the late national founder and president Kim Il Sung’s palace and the current Mount Kumsu Memorial Palace, with the Sunan Airport. It was said to have been built in case Kim Il Sung had to be evacuated by plane. The Mount Kumsu Memorial Palace is connected to the Kwangmyong Subway Station. The underground road is said to have been maintained even after the death of president Kim Il Sung in 1994 under the judgment that it can be of use in the event the North Korean military leadership, headed by Kim Jong Il, should need to move to Sunan Airport from the underground square in the case of a war.

This is weird.  (Hat tip to Lost Nomad)

China sends the DPRK food aid via train.  The DPRK keeps the train and sends the crew back across the border  sans-train.

[F]ood and fuel supplies sent to North Korea have been halted, not to force North Korea to stop missile tests or participate in peace talks, but to return the Chinese trains the aid was carried in on. In the last few weeks, the North Koreans have just kept the trains, sending the Chinese crews back across the border. North Korea just ignores Chinese demands that the trains be returned, and insists that the trains are part of the aid program. It’s no secret that North Korean railroad stock is falling apart, after decades of poor maintenance and not much new equipment. Stealing Chinese trains is a typical North Korean solution to the problem. If the North Koreans appear to make no sense, that’s because they don’t. Put simply, when their unworkable economic policies don’t work, the North Koreans just conjure up new, and equally unworkable, plans. The Chinese have tried to talk the North Koreans out of these pointless fantasies, and for their trouble they have their trains stolen. How do you negotiate under these conditions? No one knows. The South Koreans believe that if they just keep the North Korean leaders from doing anything too destructive (especially to South Korea), eventually the tragicomic house of cards up north will just collapse. Not much of a plan, but so far, no one’s come up with anything better.

Korea Herald
Jin Hyun-joo
6/20/2006

A senior United Nations official expects that North Korea will join the U.N.’s initiative to connect rail links between the Korean Peninsula and Europe by November.

Kim Hak-su, executive secretary of the United Nations Economic and Social Commission for Asia and the Pacific, told The Korea Herald that Pyongyang has recently shown positive signs of joining the Trans-Asian Railway Network project.

A test run of container trains on the transcontinental route is possible if North Korea signs the agreement this time during a ministerial conference on transport slated for Nov. 6-11 in Busan, South Korea, said Kim.

The communist nation’s possible participation in the “modern Silk Road” could add momentum to the currently stalled inter-Korean railways projects, observers say.

“North Korea will be expected to sign this one. Every sign shows that they’ll participate. Hopefully in November this year if it is concluded, we are planning a container demonstration run starting from Busan, Seoul, Pyongang, Shinuiju, Beijing and to the West,” he said in an interview with The Korea Herald.

The trans-Asian railway network consists of about 81,000 kilometers of rail routes connecting 28 countries from Asia to Europe. Of the five routes needed for the railway, only the trans-Korean leg is missing. The conceived route’s four other railways run through China, Siberia, Mongolia and Manchuria.

UNESCAP is spearheading the ambitious project as part of its efforts to promote economic and social development in the region.

In 2001, North Korea did not sign a multinational agreement on the implementation of test runs of container block-trains on some routes of the trans-Asian railway.

“If it (the plan) materializes, I will volunteer at the moment to ride on the train first,” the 68-year-old Kim said.

He said other countries’ active participation in the project will pressure the North to join in the move.

“There is what we call a peer countries’ group. Other countries sign, then DPRK will (feel) the pressure.”

Regarding Kim’s optimism for the North’s participation in the project, Na Hee-seung, an adviser with the presidential committee for Northeast Asian cooperation initiatives, said, “Chances are half and half. Hopes are raised, however, as railway issues were actively discussed between the North and other countries this year.”

The multilateral efforts to draw the North to the trans-Asian network will also pave the way for the inter-Korea railway to run, Na added.

“The multilateral action can help resolve the inter-Korean (railway) issue,” he told The Korea Herald.

Late last month, North Korea abruptly cancelled test runs on cross-border railroads which were reconnected in 2003. The railway has been left idle because of the North Korean military’s objection to a test run.

Kim visited Korea last weekend to attend the inauguration ceremony of the first U.N. agency set up in Korea. UNESCAP is headquartered in Bangkok, Thailand.

UNESCAP opened its first Information and Communication Technology for Development Training Center in Incheon, South Korea, with the aim of bridging the gap between IT haves and have-nots in the Asia-Pacific region.

The center will provide training to policy makers, ICT professionals and others from 62 member countries while sharing best practices in the area of ICT development.

Microsoft Corp. also signed a memorandum of understanding with UNESCAP pledging $1 million in support, including software, equipment and cash contributions.

From the Korea Times:

South Korea’s chief delegate for the inter-Korean economic talks yesterday reaffirmed the North will not be getting any new economic support unless it pushes ahead with the railways test-run.

In a radio interview, Vice Finance Minister Bahk Byong-won said, “We created a structure in which the additional economic cooperation is only possible after the railways test-run.”

The two Koreas closed their 12th Economic Cooperation and Promotion Committee meeting in Jeju on Tuesday with a nine-article agreement on support for light industries, natural resources development and others.

The two sides concurred such agreements will only be implemented when “conditions are met,” which they verbally confirmed referred to the cancelled cross-border test-runs.

North Korea abruptly cancelled the scheduled testing last month, prompting an angry response from the South.

The South, remaining steadfast to its policy of engaging more economically with its communist neighbor, believes staunch military authorities to be behind the cancellation.

“(The North’s) military authorities are closely connected with the procedures of implementing many of the inter-Korean agreements. And the (preconditioning) clause refers to just that,” Bahk said, emphasizing that the North Korean military must take visible measures such as preparing a military guarantee for the railways operation.

The two railways, on the east and west of the Korean Peninsula, run through heavily fortified borders. It would be the first time in over five decades that the trains run.

“Although we said ‘conditions’ in the agreement, both sides made clear when we read out the agreement that the conditions referred to the railways test to avoid any conflicting interpretations in the future,” Bahk said.

(angiely@heraldm.com)

By Lee Joo-hee

From the Joong Ang Daily:

South Korean delegates at the inter-Korean economic talks here won a victory of sorts early yesterday morning; North Korea agreed to Seoul’s linkage of the completion of test runs of the newly reconnected railroads across the Demilitarized Zone to its offer of raw materials for the North’s light industries.

But in what apparently was a face-saving gesture to the North, the linkage was not made explicit in the joint announcement of the results of the four-day meeting. South Korea agreed to supply a package of raw materials for the North’s shoe, soap and textile industries worth $80 million, which will be delivered “when necessary conditions are met.” The agreement said nothing more about the conditions, but the rail tests, most recently cancelled by North Korea the day before they were to be conducted last month, were clearly the point at issue. Kim Chun-sig, the Seoul delegation’s spokesman, made that explicit. “The trial train runs are linked with the supply of raw materials, and the agreed announcement was issued with that understanding by the North.” He said agreement to the linkage was not easily won from the North; Seoul’s delegates stressed the uproar that would break out here if that condition were not attached.

The aid will be in the form of a loan to be repaid in kind ― North Korean natural resources ― over a 15-year period with an interest rate of 1 percent. The two delegations met the press to announce the agreement, saying they had signed a nine-point agreement and a 10-point supplemental document dealing with the aid package.

In the agreement, the aid is to be delivered in August. Mr. Kim said that meant that the necessary military-to-military agreement on safeguards required before travelers cross the Demilitarized Zone must be in place and the rails tests completed.

The strings attached to the aid package are something of a departure for the Roh administration, which has been tolerant ― far too tolerant, critics in the South contend ― of North Korea’s penchant for accepting aid donations while failing to keep promises it had made in return. Pyongyang’s cancellation of the railroad tests in late May was, apparently, too much for Seoul to stomach politically. The tests were cancelled the day before they were to take place, and the North blamed “political instability” in the South and the lack of a military safeguards agreement that the North itself has blocked.

A Seoul delegate said proudly, “Unlike in the past, we focused on enforcement of the agreement and secured some leverage over North Korea.” The two sides made some modest progress on other issues. They agreed to conduct negotiations on a joint project to mine gravel from the mouth of the Han River inside the Demilitarized Zone. They agreed that military-to-military agreements would be necessary for safety and security reasons. The project had been suggested by Seoul in April, and reflects the dwindling supply of such material here because of South Korea’s 30-year construction boom.

Other agreed meetings will address administrative procedures at the Kaesong Industrial Complex, flood control on cross-DMZ rivers and exchanges of weather data, especially on the yellow dust storms that originate in China’s Gobi Desert.

From the Korea Herald:

JEJU – The two Koreas yesterday agreed on a set of contracts to stimulate North Korea’s light industries and mining operations, but only when “conditions are met.” South Korean officials say the expression is a diplomatic term being used to describe the North’s obligation to allow the test run of trains on two cross-border rail links.

Economic delegates from Seoul and Pyongyang ended their four-day meeting on Jeju Island early yesterday morning, working out a nine-point agreement on various economic cooperation plans.

The talks were held against a background of hostility in the South following North Korea’s unilateral cancellation of the landmark testing of cross-border railways on May 25.

After marathon talks, the two sides managed to achieve a reluctant consensus on how to describe Pyongyang’s duty to revive the cancelled railway test-runs in return for a package of business cooperation deals.

The two sides resorted to indirectly referring to Pyongyang’s railway obligation by using the term “when conditions are met,” instead of using more direct language. Some observers said the “ambiguous” preconditioning leaves room for Pyongyang to pull out from the agreement later on.

The North apparently faces opposition from the military authorities who are apparently against opening the railways to the South. The North Korean military has demanded the two Koreas first conclude a full military guarantee.

“The implication of the agreement is that if there is no test run for the railways, there will be no economic support,” said Kim Chun-sig, spokesman for the South Korean delegation, during a press briefing.

Underscoring that the agreement is strong enough to encourage North Korea fulfill its part of the bargain, Kim said that the two Koreas would soon begin to discuss the military guarantees.

Based on the agreement, South Korea will provide some $80 million worth of raw materials needed for the destitute state to manufacture garments, shoes and soaps from August this year. North Korea will repay 3 percent of the loans in the form of minerals such as zinc. The interest rate was set at a low 1 percent.

The two Koreas also agreed to jointly develop North Korean mines and designate an organization to take charge of the project within one month from now.

Seoul officials argue that this agreement raises the level of inter-Korean cooperation to a mutual and commercial relationship from one-sided aid from Seoul to Pyongyang.

Other agreements included a joint excavation of aggregates in the Han River estuary that is located along the demarcation line, and to open working-level contacts from June 26-27 to discuss how to prevent the Imjin River from flooding nearby areas.

The two Koreas also saw eye-to-eye on advancing their joint businesses into third countries.

Another working-level meeting on the Gaeseong industrial park will be held from June 20-21.

The next Economic Cooperation and Promotion Committee meeting will be held in September in Pyongyang.

South Korean delegation was headed by Vice Finance Minister Bahk Byong-won and the North Korea team was led by Ju Tong-chan.

By Lee Joo-hee

From Yonhap:

The following is the full text of a joint press statement issued by South and North Korea at the end of their four-day economic cooperation meeting on the southern South Korean island of Jeju, Tuesday.

South and North Korea held the 12th meeting of the Inter-Korean Economic Cooperation Promotion Committee in Jeju Island on June 3-6, 2006.

During the meeting, the two sides discussed the issues to further develop the inter-Korean economic cooperation project in the interest of the Korean people in the spirit of the June 15 joint declaration, and agreed on the followings.

1. South and North Korea agree to adopt an accord on South-North Cooperation in Light Industry and Natural Resource Development and enforce it at the earliest possible time in favorable conditions.

2. South and North Korea agree to discuss and then implement a project to extract sand from the Han River’s estuary as military safety measures are taken.

3. South and North Korea agree to make necessary conditions for making the Kaesong Industrial Park globally competitive. To that end, the two sides will hold the second meeting of working-level officials for Kaesong industrial park construction and discuss ways of introducing an ID system, simplifying customs and passage procedures, securing a stable source of workers and building dormitories and convenient facilities to solve problems stemming from an increase in the number of workers.

4. South and North Korea agree to hold the first working-level meeting in Kaesong on June 26-27 to prevent flooding in shared areas near the Imjin River to review each other’s survey reports, discuss joint survey plans and ways of establishing a flood warning system.

5. South and North Korea agree to cooperate actively in preventing such natural disasters as flood, forest fires and yellow dust storms and discuss concrete issues at a working-level meeting in Kaesong sometime in July.

6. South and North Korea agree to discuss their advance into third countries in the field of natural resource development at a working-level meeting in Kaesong sometime in July.

7. South and North Korea agree to exchange economic observation delegations when an accord on South-North Cooperation in Light Industry and Natural Resource Development takes place.

8. South and North Korea agree to discuss and finalize the schedules of working-level meetings for fishery, science and technology cooperation, as well as a timetable for business arbitration committee talks, visits to Kaesong and Mount Geumgang and exchange of lists and other things, in the form of exchanging documents.

9. The 13th meeting of the Inter-Korean Economic Cooperation Promotion Committee will be held in Pyongyang in September 2006 and the date will be determined after consultation in the form of exchanging documents.

Korea Times
6/6/2006

Nearly 700 North Koreans, including 270 soldiers, were killed in April when two trains collided in the isolated communist country, an Internet news provider reported on Tuesday.

The accident took place in Kowon, South Hamgyong Province, when a freight train collided head-on with a six-car passenger train, the Seoul-based Daily NK said, quoting a North Korean railway official in Chongjin, the administrative seat of the province.

Most railways in North Korea have a single track, which forces all freight trains to wait at the closest station for passenger trains to pass by.

That rule was not observed in Kowon, allowing the two trains to run on the same track and collide head-on, the Daily NK quoted the North Korean railway official as saying.

It said one passenger car carried army conscripts and another carried soldiers who were just discharged from active duty, while four other cars carried civilian passengers.

Daily NK
6/6/2006

The Train collision in April which caused the death of hundreds of soliders originated from chronic problems in North Korea, such as abnormalities in communication and lack of electricity.

It also has been revealed that 270 soldiers and 400 passengers died of the accident.

An official working at locomotive office at the railroad department at Namyang under Department of Railways in Chongjin said in a phone conversation with a reporter at DailyNK on the 4th, that “A delayed departure of a freight train from Kowon station to Buraesan station collided with a passenger train, which caused the accident”.

North Korean railways only have single railroad tracks; all the freight trains must wait at the closest station for the passenger train coming toward them to pass by first. However, the operation of communication between Kowon station and Buraesan station was abnormal, which caused the accident.

The official said, “According to what I heard from the Department of Railways at Chongjin, the passenger train involved in the collision had six passenger cars. Soldiers discharged were in one car, enrolled soldiers were in another car, and the passengers were in four cars”.

He also said, “Since it was a head-on collision, many soldiers in the cars right behind the locomotive died. I heard that 270 soldiers and approximately 400 passengers died”.

He added, “Because of lack of emergency aids and inefficiency in the delivery of victims to the hospital, more people lost their lives. As far as I know, the officials at the railroad office in Kowon lost their jobs and were imprisoned because of the inefficient response”.

Mr. Choi Gil Yong who is in charge of maintenance of the trains under Hoeryong railway office met with DailyNK at Sanhe in China, and conjectured that the cause of the accident was electricity.

Mr. Choi said, “There is a problem with communication, but the delay of departure because of lack of electricity seems to be the main cause. There is a possibility that the train which departed from Kowon stopped because of lack of electricity, and the passenger train collided into it”.

Mr. Choi turned down flat the rumor about compensation, saying, “There are tens of big and small train accidents every year. It does not make sense for the country to compensate for the accident. It would only be possible when there is a special order from the government”.