Archive for the ‘Sea shipping’ Category

Russia and DPRK discuss economic opportunities

Saturday, March 29th, 2014

What are the opportunities? Rason port, Iron Silk Road (Rail), Kaesong Industrial Complex, gas pipeline.

According to RIA Novosti:

Russia and North Korea have signed a new protocol to transition to using the ruble for payments between the two countries as part of an effort to boost annual bilateral trade to $1 billion by 2020, Russia’s Far East Development Ministry said Friday.

The announcement came as Russian officials have expressed a desire to explore new markets for the country’s businesses, following the introduction of sanctions by the West in reaction to Moscow’s stance over Crimea. Russian leaders have simultaneously reassured international investors the country remains open for business, and there are no plans to restrict international commerce.

The protocol announced Friday came following a visit of a Russian delegation to the Asian country for a meeting of a standing bilateral commission, timed to mark the 65th anniversary of a cooperation agreement between the Soviet Union and North Korea.

The parties agreed to move towards settling payments in rubles as well as adopting further measures to boost bilateral trade, including easing visa procedures and providing for Russian access to proposed special economic zones in the country, the ministry’s statement said.

The ministry reaffirmed the countries’ mutual interest in joint projects with South Korea, including international connections for railways [Iron Silk Road], gas pipelines and power lines.

The Russian delegation also proposed the entry of Russian businesses into the Kaesong Industrial Park, a special economic zone in North Korea just north of Seoul where South Korean companies are allowed to employ northern workers.

The two sides identified areas for further cooperation, including a transshipment complex at the port of Rason and technical cooperation for the modernization of North Korea’s mining sector, automobile industry and electric power plants.

According to the statement, during the talks Russian Far East Development Minister Alexander Galushka emphasized that achieving such goals would only be possible if stability is maintained on the Korean peninsula.

The next meeting of the bilateral commission is scheduled for June in Russia’s far eastern Vladivostok.

Here is what Yonhap reports:

North Korea and Russia have agreed to boost economic ties by pushing for trilateral projects involving South Korea, including a plan to support Russian companies’ entry into an inter-Korean industrial complex, a media report said Saturday.

The agreement between the two was made earlier this week when Russia’s Far East Development Minister Alexander Galushka visited the North for a five-day run until Friday to explore ways to boost bilateral economic cooperation, according to the Russian news agency RIA Novosti.

“The Russian delegation proposed the entry of Russian businesses into the Kaesong Industrial Park, a special economic zone in North Korea just north of Seoul where South Korean companies are allowed to employ northern workers,” the RIA Novosti reported, citing the ministry.

Officials of Seoul’s unification ministry, which handles inter-Korean affairs, welcomed the agreement between the North and Russia, while stressing the importance of Russia’s prior consultation with the South.

“Russian companies’ making inroads into the Kaesong park is desirable in terms of the internationalization of the complex … It would also prevent the North from unilaterally reversing its agreement with Seoul over the Kaeesong operation,” the ministry official said, requesting anonymity.

Internationalization of the enclave, a symbol of inter-Korean detente, is one of the key topics for inter-Korean meetings aimed at ensuring its normal operations and further invigorating the complex. The Kaesong park resumed operations in September, more than five months after the North unilaterally closed it in anger over Seoul-Washington joint military exercises.

“But it is crucial for Russia to discuss the matter with our side first as it is basically operated by the South Korean authorities,” he added.

A handful of companies from China, Australia and Germany have so far expressed interests in making an investment in the Kaesong complex, prompting the Seoul government to review holding joint presentation sessions with the North to lure investors from overseas, according to another ministry official.

Here is additional information from Yonhap on recent shipments from Russia to the DPRK:

Russia exported US$21.16 million’s worth of jib cranes, machinery used mostly for cargo handling at ports, to North Korea last year, accounting for nearly 22 percent of its total exports to the North, according to the report by the Korea Trade-Investment Promotion Agency (KOTRA). The amount surpasses that of Russia’s traditional export goods such as coal, petroleum and bituminous oil.

There were no records of the machines being exported to North Korea the year before, with the 2011 amount standing at $139,000.

North Korea and Russia maintain economic relations that include a project that would make North Korea’s northeastern port city of Rajin a logistics hub by connecting it to Russia’s Trans-Siberian Railway. North Korea is said to have agreed to a long-term lease of the No. 3 dock at Rajin port to Russia and that it is modernizing facilities there. The cranes may be for such modernization efforts, the KOTRA report said.

Also noteworthy is Russia’s exports of ambulances to the North, amounting to approximately 10.1 billion won ($9.45 million), the fourth largest in terms of value. Ambulances are a relatively new product on the trade list.

KCNA’s reporting of the meeting was much more muted:

DPRK Premier Meets Minister of Development of Far East of Russia

Pyongyang, March 26 (KCNA) — Pak Pong Ju, premier of the DPRK Cabinet, met Alexandr Galushka, minister of the Development of Far East of Russia who is chairman of the Russian side to the Inter-governmental Committee for Cooperation in Trade, Economy, Science and Technology between the DPRK and Russia, and his party.

He had a friendly talk with them who paid a courtesy call on him at the Mansudae Assembly Hall on Wednesday.

Minutes of Talks between Governments of DPRK, Russia Signed

Pyongyang, March 26 (KCNA) — Minutes of talks on cooperation in trade, economy, science and technology between the governments of the DPRK and Russia were signed here Wednesday.

Present at the signing ceremony were Ri Ryong Nam, minister of Foreign Trade who is chairman of the DPRK side to the Inter-governmental Committee for Cooperation in Trade, Economy, Science and Technology between the DPRK and Russia, and officials concerned, Alexandr Galushka, minister for the Development of Far East who is chairman of the Russian side to the Inter-governmental Committee, and his party and Alexandr Timonin, Russian ambassador to the DPRK.

Ri Ryong Nam and Alexandr Galushka signed the minutes of the talks.

Read the full story here:
Russia, North Korea Agree to Settle Payments in Rubles in Trade Pact
RIA Novosti
2014-3-28

N. Korea, Russia to discuss supporting Moscow firms’ advance into Kaesong park
Yonhap
2014-3-29

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Choe Hyon Chol on Rason development

Wednesday, March 26th, 2014

According to Naenara, Choe Hyon Chol is the section chief of the State Economic Development Commission (SEDC). He has previously been identified as a director of the Korean Association of Economic Development. In a recent interview with Naenara, he discusses the benefits of investing in the Rason Economic and Trade Zone.

Before getting to the interview, however, it is worth noting that the Rason Economic and Trade Zone was set up before the creation of the State Economic Development Commission and it was “controlled” by Jang Song-thaek. Since Jang’s purge, it appears that Rason (and probably Hwanggumphyong) have been moved to the SEDC’s portfolio–that is, under the control of the cabinet.

Here is the interview:

Reporter: Would you please give me a briefing on the Rason Economic and Trade Zone that is now under development.

Choe: As you know, northeast Asia becomes one of the global development regions with a great potentiality, for the countries in this region have comparative advantages in respect of availability of production factors such as economic conditions, natural resources and economic and trade relations.

The Rason Economic and Trade Zone, situated on the western shore of the lower Tuman River in the northeastern part of Korea, borders on China and Russia, and Japan with the sea on the east. Its geographical location offers immense economic and traffic advantages as a transportation hub as well as a bridgehead of the continent.

Occupying an area of 470 km2, it has Rajin Port with an annual handling capacity of 3 million tons of cargoes, Sonbong Port with a handling capacity of 2 million tons of oil and Ungsang Port with a handling capacity of 600 000 m3 of timbre. The sea off the ports is deep and not frozen even in winter.

Rajin Port, in particular, has favourable conditions for creating cargo handling capacity of over 100 million tons without building a breakwater thanks to the Taecho and Socho islands in front of it.

The zone has also advantageous traffic connections with neighbouring countries.

Rajin-Wonjong class-B road (51 km), Rajin Port-Tumen railway (158 km) and Rajin Port-Khasan railway (51 km) are under construction or nearing completion.

The Rason Economic and Trade Zone is endowed with abundant tourist resources such as beautiful seascape, lake and bathing resorts, and 20-odd islands including Pipha, Taecho, Socho and Al islands.

In view of these favourable geopolitical and economic conditions, the DPRK government declared Rason city as an economic and trade zone on December 28, 1991 and held an international investment seminar with participation of entrepreneurs from 27 countries under the sponsorship of the UNDP and UNIDO in September 1996. It also raised Rason city to the status of special city on January 4, 2010 and agreed with China on the issue of joint development and management of Rason Economic and Trade Zone and Hwanggumphyong-Wihwado Economic Zone in May 2010.

In November 2010 the DPRK and the Chinese governments signed the Agreement on Joint Development and Management of Rason Economic and Trade Zone and Hwanggumphyong-Wihwado Economic Zone and organized the DPRK-China Joint Guidance Committee. The second session of the committee was held in June 2011 in Yanji, Jilin Province, China and its third session in August 2012 in Beijing. Besides, both governments concluded the agreement on establishment and operation of management committee for Rason Economic and Trade Zone, the master plan for DPRK-China joint development of the zone, the framework agreements on investment in ports, industrial districts and power transmission within the zone and investment and cooperation for construction of a new border bridge between Wonjong and Quanhe, the agreements on investment and cooperation for a high-efficiency agricultural model district and investment and cooperation for building-materials industry and the master plans for Sonbong-Paekhak industrial district and Rajin port industrial district.

The development of the zone in which a hundred and scores of businesses from different countries of the world are now active is in its initial stage but the number of potential investors with exceptional interests in the zone is increasing as days go by.

Reporter: How is the present state and prospect of the zone?

Choe: I shall begin with the progress of city construction.

The city is divided into residential quarters, industrial district and traffic junction district. The residential quarters consist of economic and trade area and peripheral area; the economic and trade area is subdivided into Rajin, Sonbong, Ungsang, Kulpho-Uam and Chonghak areas and the peripheral area into Tumangang, Hongui, Wonjong and Huchang areas. The industrial area embraces Changphyong, Yokjon, Chonggye, Sinhung, Tongmyong, Namsan and Andong areas.

The traffic junction district includes Rajin, Sonbong and Ungsang ports, Rajin, Ungra and Sonbong railway stations and Chongjin-Wonjong and Chongjin-Tuman River roads.

The Rajin Port, a transit trade port, is the hub of international cargo transit transportation and transport of exports and imports of entrepreneurs who invested in the zone.

The port has assignments to transport marine products for export from the East Sea of Korea and every kind of cargoes from and to northeast area of China and Far East Region of Russia.

The Rajin Port consists of three wharves; wharf No. 1 is designed to be renovated and operated by China Dalian Chuang Li Co., Ltd. and wharf No.3 by Rason International Container Transport J. V. Company to be set up according to the contract with Russian Rail Trade Co., Ltd.

The project of Rajin-Wonjong road started in April 2011 and completed in October 2012, and the power transmission project is now under way.

Currently, three railways run through Rason.

In the whole section of the Pyongyang-Tumangang line, standard gauge track

(1,435 mm) is laid from Pyongyang to Rajin and combined-gauge track with standard gauge and broad gauge (1 520 mm) from Rajin Railway Station to Tumangang Railway Staion, leading to Khasan Railway Station.

The updating project of Rajin-Namyang railway has been agreed with China in October 2012 and the construction of Sonbong-Paekhak industrial district, building materials industrial district, high-efficiency agricultural model district and Wonjong-Quanhe border bridge is in full swing.

When the construction projects of power line, railways, ports and border bridge are brought to completion, the Rason Economic and Trade Zone will be turned into a promising economic and trade zone of the world standard.

Next, tourism is booming in this zone.

Rason has eight bays and 21 islands, big and small.

There are Pipha, Chujin and Kalum Headland tourist attractions furnished with hotels, restaurants and sea bathing grounds along the coast.

Rason abounds in natural monuments, mineral water, spring water and marine products, and sea birds and coastal scenery strike tourists with admiration.

As mentioned above, the Rason Economic and Trade Zone is a special economic zone equipped with all conditions favourable for preferential trade and investment, transit transportation, tourism and financial and service businesses.

The DPRK government is constantly encouraging foreign investors to invest in intermediate trade, industry, agriculture, construction, transport, communications, science and technology, tourism, service and finance.

Today the development prospect of the zone is optimistic.

We are looking forward to an active investment in development projects of the zone, promising high profit with small investment.

Reporter: Thank you for kind explanation.

State Economic Development Commission of the DPRK

PDF of the interview here.

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North Korean oil tanker in Lybia (UPDATED)

Thursday, March 13th, 2014

UPDATE 4 (2014-3-17): US Navy Seals have boarded the Morning Glory.According to the BBC:

The raid by Navy Seals took place in international waters south of Cyprus, said spokesman Rear Adm John Kirby.

The Morning Glory’s evasion of a naval blockade at the eastern port of Sidra prompted Libya’s parliament to sack Prime Minister Ali Zeidan last week.

The oil terminal has been under the control of militia wanting autonomy for eastern Libya since July 2013.

Meanwhile, there has been a deadly attack on the barracks in the main eastern city of Benghazi.

This was their first attempt to export oil from rebel-held areas. It is not clear where the tanker was headed.

Adm Kirby said the operation had been authorised by President Barack Obama and that no-one had been hurt.

“The Morning Glory is carrying a cargo of oil owned by the Libyan government National Oil Company. The ship and its cargo were illicitly obtained,” he said, adding that it would now be returned to a Libyan port.

The vessel was flagged in North Korea but officials in Pyongyang said it had been deregistered because of the incident.

It was said to have been operated by an Egyptian company.

More in the Washington Post here.

See Marcus Noland’s comments here.

UPDATE 3 (2014-3-13): Morning Glory is on the run! According to The Diplomat:

…The Libyan government didn’t take kindly to this and threatened to attack the tanker, threatening airstrikes against it. Eventually, the tanker was intercepted and taken to Misrata where it was held by Libyan warships.

Remarkably, the North Korean tanker managed to escape its capture by the Libyan fleet in the middle of the night. It made its escape when the weather forced the smaller Libyan warships and patrol boats to sail close to the coast, leaving a gap in the convoy guarding the tanker. The Morning Glory made a run for the open seas and is now confirmed to be back in international waters according to Mohammad Hitab a spokesman for Libya’s al-Waha Oil Company, the state-run company running the Es Sider port.

It remains unknown the extent to which North Korea is communicating with Libya’s federalist rebels. In the case of the oil sale, the rebels were looking for buyers willing to purchase risky oil at rates far below the asking market price. Given North Korea’s energy situation, it appeared to be one of the few buyers interested in the deal. A report from the Libya Herald earlier this week noted that members of the federalist rebels were spotted on board the Morning Glory prior to its attempted departure from Es Sider port.

The tanker’s escape resulted in a no confidence vote on Prime Minister Ali Zeidan’s leadership in Libya. Zeidan lost the vote and had his travel barred. Libyan Defense Minister Abdallah al-Thinni was sworn in on Tuesday evening, according to Reuters.

The United States Department of State issued a statement where it said it was “deeply concerned by reports that a vessel sailing under the name Morning Glory is loading a cargo of illicitly obtained oil at the Libyan port of As-Sidra.” The statement does not mention North Korea but notes that the Morning Glory‘s ”action is counter to law and amounts to theft from the Libyan people.” The Italian Navy had reportedly assisted the Libyans in intercepting the Morning Glory but has since withdrawn from attempting to prevent the ship from leaving the Mediterranean.

UPDATE 2 (2014-3-12): Here is the full statement from KCNA on the tanker:

Spokesman for Maritime Administration of DPRK on “Oil Tanker Incident” in Libya

Pyongyang, March 12 (KCNA) — A spokesman for the Maritime Administration of the DPRK Wednesday gave the following answer to the question raised by KCNA in connection with the recent DPRK-flagged “oil tanker incident” which occurred in Libya:

On March 8 the government of Libya informed the DPRK of the fact that the DPRK-flagged oil tanker Morning Glory made an oil contract with an individual armed group in Libya and illegally entered a port under the control of the group in the eastern part of Libya, and urged the DPRK to take a necessary measure for settling it through a formal channel.

As far as the oil tanker is concerned, it is a ship run by the Golden East Logistics Company in Alexandria, Egypt and is allowed to temporarily use the DPRK flag for six months in accordance with the contract made by the company with the DPRK at the end of February.

Right after being informed of the fact by the Libyan side, the DPRK strongly blamed the company side for the violation of the contract and demanded it let the ship leave the port at once without loading oil.

In addition to it, the DPRK formally notified the Libyan government and the International Maritime Organization that it cancelled and deleted the ship’s DPRK registry and invalidated all the certificates as the ship violated the DPRK’s law on the registry of ships and the contract that prohibited it from transporting contraband cargo and entering the warring, dispute-torn or natural disaster-affected areas.

Therefore, the ship has nothing to do with the DPRK at present and it has no responsibility whatsoever as regards the ship.

What matters is that some foreign media are making much fuss, deliberately linking the case with the DPRK, claiming that “the north Korean ship tried to purchase oil from Libya in an illegal manner” and “the government force of Libya opened fire on the north Korean flagged oil tanker.”

Some forces are misleading the public opinion, persistently linking the issue with the DPRK. This is obviously aimed at achieving a sinister political purpose to tarnish its image.

They should clearly know that with neither false propaganda nor mud-slinging can they damage the image of the dignified DPRK.

The AP reports on proof the DPRK provided to the western media to back up its claims:

North Korea offers its flag to foreign-owned ships in the same way as a number of other countries do.

Jon provided a document he said was the official deletion of the Morning Glory from the Maritime Administration’s registry. He also showed email correspondence he said was from IHS Maritime in London, a company that manages shipping information, that purportedly acknowledged the deletion of a vessel from the North Korean registry.

UPDATE 1 (2014-3-12): The DPRK has denied it owns the ship. According to the Wall Street Journal:

North Korea denied on Thursday it was illegally exporting oil from rebel-controlled eastern Libya, claiming that an Egyptian company was operating a North Korean flagged oil tanker in the center of an armed standoff since Saturday.

North Korea said it had revoked the registry of the tanker, named “Morning Glory,” and demanded that Alexandria-based Golden East Logistics Company leave al-Sidra port without loading oil.

The tanker, carrying at least 234,000 barrels of crude oil, sailed from a rebel-controlled port into international waters on Tuesday.

A contract signed by North Korea with the Egyptian company prohibits the tanker from transporting contraband cargo and entering war or disaster zones, North Korea said through a report in its state media.

“The ship has nothing to do with the DPRK at present and it (North Korea) has no responsibility whatsoever as regards the ship,” the report said, using the abbreviation of country’s official name Democratic People’s Republic of Korea.

The Golden East Logistics Company couldn’t be immediately reached for comment.

The presence of a North Korean-flagged vessel in the Mediterranean is very unusual, although the country has been involved in trading arms in the region. Cheong Seong-chang, a senior analyst at Seoul-based think tank Sejong Institute, said the rebels may have offered oil to North Korea at a fraction of market prices.

ORIGINAL POST (2014-3-6): According to IBT:

A North Korean oil tanker has tried to dock at Libya’s Es-Sider port which has been seized by armed protesters, Reuters reports.

It has not yet been confirmed whether the tanker wanted to take oil from the protesters, who have threatened to sell it independently unless they get political autonomy from Tripoli and a greater share of oil revenues, according to Libyan officials.

“The tanker came to Es-Sider but did not load oil,” said an official at the state-owned Waha Oil Co, which operates the port and connecting oilfields.

An official at National Oil Corp (NOC), which owns Waha, said he did not know whether the protesters, led by former militia leader Ibrahim Jathran, had tried to attract buyers with the tanker but said: “We know they have been trying to sell oil.”

It is extremely unusual for a North Korean-flagged oil tanker to operate in the Mediterranean region, shipping sources said.

Jathran’s group seized three oil ports which accounted for 600,000 barrels per day of export, before the protests started in 2013.

The Libyan government has tried to end the protests but little progress has been made so far.

Libya’s defence minister held talks with protesters blocking the 340,000-bpd El Sharara oilfield in the south, but NOC has not confirmed whether it will reopen in the near future.

The strikers are also demanding national identity cards and a local council; the ministers have promised to meet the requests.

Jathran’s group declined to comment.

The Libyan navy fired on a Maltese-flagged tanker which allegedly tried to load oil from the protesters in the port in January.

Libya’s oil output has fallen to little over 200,000 bpd from 1.4 million bpd in July when protests started across the country.

“The financial situation of the government is difficult,” Culture Minister Habib al-Amin, who acts as a government spokesman, said in February.

“Some ministries have been unable to pay for expenditures due to a lack of budget and liquidity.”

Read the full story here:
Libya: North Korea Oil Tanker Tries to Dock at Seized Es-Sider Oil Port
International Business Times
Ludovica Iaccino
2014-3-6

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DPRK as e-waste conduit

Thursday, March 6th, 2014

According to Bloomberg:

How did North Korea become the conduit by which thousands of tons of old junk moved from the developed world into China’s bustling e-waste recycling industry?

As with any smuggling story, the tale starts with a prohibition. In this case, Chinese laws and regulations prohibit e-waste — most commonly understood as old, non-working electronics like laptops, monitors and mobile phones — from being imported into the country. The reasons are several, including a government interest in keeping used foreign goods from competing against new ones, and environmental concerns about how some of those goods are recycled. Nevertheless, China’s national-level environmental and customs authorities have long struggled to maintain those prohibitions against local ports and authorities — especially in south China — who view e-waste recycling as a good source of jobs, tax revenue, and used components to drive local industry. Of the several conduits through which e-waste has traditionally been smuggled, the most common and long-standing was over the Hong Kong-China border.

That all changed in February 2013 when — for reasons that are still unclear — Beijing announced “Green Fence,” a high-level crackdown on the import of prohibited waste and recycling exports, including old electronics. Nonetheless, here and there, imported old electronics still turned up in Chinese recycling facilities (I personally saw them).

The likely means, as described in state media after the North Korea bust, was convoluted. A Hong Kong “gang” allegedly received containers of used electronics from abroad. They arranged for them to be placed them on smaller ships bound for a “country in Northeast Asia.” The culprit’s identity is clear from the awkward phrasing. Criticism of North Korea in the Chinese press is exceedingly rare and -– needless to say — connecting the country to an e-waste smuggling ring qualifies as criticism. Were the country Japan, or even South Korea, it would have been named.

In fact, North Korea has long been rumored to be an e-waste recycling center. Since January 2008 a Chinese company based in Liaoning Province along the border has advertised for scrap to feed its e-waste recycling operations in North Korea itself. The facilities are located, according to the ad, in the port of Nanpo, and “take advantage of North Korea’s environmental policies and inexpensive labor resources.” There, the ad promises, prohibited e-waste can be dismantled and transformed into a product acceptable for export to China.

The smuggling ring was allegedly doing something similar, although its “transformed” e-waste clearly did not meet environmental standards. In North Korea the bulky e-waste was dismantled (steel cases would be removed from old desktop PCs, for example), segregated into marketable components like computer chips for re-use, and then sent to Dandong, a Chinese city and port on the Yalu River, directly across from North Korea. From there, the goods were trucked south, to recycling and re-use centers in Guangdong Province, a straight-line distance of roughly 1,800 miles.

Read the full story here:
Did North Korea Recycle Your Laptop?
Bloomberg
Adam Minter
2014-3-6

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Iron Silk Road: South Korean involvement in Rason (UPDATED 2014)

Wednesday, March 5th, 2014

UPDATE 7 (2014-4-18): The DPRK has “sort of” invited the head of Korail to a conference in Pyongyang. According to Yonhap:

North Korea has invited the head of South Korea’s rail operator to an international conference to be held in Pyongyang next week, a source with knowledge of the matter said Friday.

However, the North made the invitation verbally, which is preventing Choi Yeon-hye, president and CEO of the Korea Railroad Corp., from formally applying for the trip to Pyongyang, the source said.

The rail conference in Pyongyang, scheduled for April 24-28, is meant to boost international cooperation between railway operators, the source said, adding that it is expected to bring together top rail officials from China, Russia and 25 other member states of the Organization for Cooperation of Railways.

South Korea’s Unification Ministry, which handles inter-Korean affairs, said no decision has been made yet on whether to allow Choi to travel to the North for the conference.

UPDATE 6 (2014-3-29): Russia and North Korea held talks on entry of the Russian firms into the Kaesong Industrial Complex and the railway project. According to Yonhap:

Also on the table in the Pyongyang-Moscow talks was how to boost cooperation among the two Koreas and Russia, with Pyongyang and Moscow making it clear that the two “share mutual interest” in the trilateral cooperative projects, according to the report.

“The (Russian) ministry reaffirmed the countries’ mutual interest in joint projects with South Korea, including international connections for railways, gas pipelines and power lines,” it said, adding that the minister stressed stability on the Korean Peninsula is key to achieving the goal.

Discussions of the project to connect the Trans-Siberian Railway (TSR) with the Trans-Korean Railway (TKR), dubbed the “Iron Silk Road,” have been under way for more than a decade, but geopolitical obstacles have hindered it, particularly given North Korea’s nuclear ambitions.

South Korea and Russia have also been in discussions to push for a project to build a gas pipeline linking the two via North Korea.

The next meeting of the bilateral commission is scheduled for June in Russia’s far eastern city of Vladivostok, according to the ministry.

You can read more about the gas pipeline here.

UPDATE 5 (2014-3-24): South Korea to import coal through Rajin by next year. According to Korea IT Times (note-I changed the South Korean “Najin” to the North Korea “Rajin”):

A pilot program to carry coal from the port of Rajin in North Korea to Pohang in the south is expected to bear fruit within the year. A high-ranking official at the Ministry of Oceans and Fisheries said on March 23, “We have finalized a plan to ship coal between Rajin and Pohang before the year’s end as part of the Eurasia Initiative.”

Once the coal shipment from Siberia arrives in Rajin through the Hasan train station on the Russian side, South Korean ships will move the cargo to POSCO in Pohang from the No. 3 wharf in Rajin.

The ministry official added, “In a visit to Rajin in February we found that the port facility is capable of handling coal load up to 4 million tons a year. We will send a due diligence team again within the first half to find out the depth of the water near the port.”

The pilot coal shipment program is undertaken as part of the Rajin-Hasan railway project. The 54-kilometer railway link is critical to connecting the rail lines in the south to Busan and the trans-Siberian railway to European destination. Earlier in 2000, Russian President Vladimir Putin and then-ruler of North Korea Kim Jong-il agreed to build the line at the cost of US$340 million.

Rajin is a port city located at the northernmost corner of North Korea bordering Russia. The Russian government has since 2010 been working on building berths capable of holding 70,000-ton vessels in Rajin’s No. 3 wharf. The Chinese government is also in talks with North Korean authorities over building container unloading facility as well as expanding the wharves No. 4 to 6. The problem, however, is the Russian side has not found coal mines big enough to supply the volume demanded by Korean companies including POSCO.

UPDATE 4 (2014-3-24): South Korea has joined the Organization for Cooperation Between Railways (OSJD) in Warsaw. According to the Choson Ilbo:

Korea has taken the first step toward connecting its railways to the Eurasian continent. The Korea Railroad Corporation on Sunday said it became an associate member of the Organization for Cooperation Between Railways (OSJD) in Warsaw, Poland.

In order to connect Korean railways from Busan to Europe, it is essential for KORAIL to register to the OSJD, which makes the rules on the Eurasian continent and overseas treaties amongst member states.

This makes a more realistic prospect of a planned “Silk Road” railway connecting the Korean Peninsula to Europe that lies at the core of President Park Geun-hye’s “Eurasia Initiative.”

The initiative, which was announced in October last year, aims to strengthen Eurasian economic cooperation and prompt an opening of North Korea to lay the groundwork for reunification with the South.

The OSJD invited KORAIL to a meeting of the heads of member states’ railways in Pyongyang next month.

UPDATE 3 (2014-3-5): South Korean companies could be operating out of Rason by next year. According to Yonhap:

South Korea may be able to use the North Korean port city of Rason for logistical purposes as early as early next year, the unification ministry said Wednesday.

“The flow of goods through the Rason region may become possible around next spring if things go smoothly,” Unification Minister Ryoo Kihl-jae said in a lecture to a group of former lawmakers.

“In early February, South Korean companies paid an on-site visit to the Rason area and if this (cooperation project) goes smoothly, major progress would take place around September this year,” the minister said of Seoul’s push to join the Rajin-Khasan development project between Pyongyang and Moscow.

The project is designed to develop Rajin, the northeastern North Korean port city now reintegrated into Rason, into a logistics center linked to Russia’s Trans-Siberian Railway.

The government is planning to link the North Korean port to two major South Korean southern ports of Pohang and Busan.

UPDATE 2 (2014-2-6): According to the Wall Street Journal:

…Seoul’s Unification Ministry said on Sunday that an 18-strong Southern business team will visit Rajin in North Korea’s northeast, near Russia and China, on Feb. 11-13. Three firms are going: steelmaker Posco; Hyundai Merchant Marine011200.SE -6.55%, a shipper; and state-owned monopoly Korail. The government isn’t sending anyone.

This follows a deal signed during Russian President Vladimir Putin’s one-day visit to Seoul in November. The plan is for the South Korean trio to acquire up to half of Russian Railways’ 70% stake in RasonKonTrans, a $340 million project which last fall, five years late, finished upgrading 54 kilometers of track from Russia’s border at Khasan down to Rajin, Asia’s most northerly all-year ice-free port. Harbor facilities are also to be modernised.

I was skeptical at the time. The companies sounded non-committal, and two big political reefs loomed. Had anyone asked North Korea, whose railways ministry owns the other 30% of RasonKonTrans? And wouldn’t this breach the ban Seoul imposed in 2010 on all trade and investments in North Korea, outside the Kaesong Industrial Complex? The Southern government says no.

This is just an inspection tour, but North Korea appears to have raised no objection – which is interesting, if scarcely consistent. Pyongyang plays politics with family reunions: a sadistic heartbreaker for elderly Koreans yearning to see their long-lost kin, if only once and briefly.

According to Xinhua (2014-2-9):

A group of South Korean company officials will visit the Democratic People’s Republic of Korea ( DPRK) to carry out field study for joining in Rajin-Khasan railway and port development project between Pyongyang and Moscow, South Korea’s unification ministry said on Sunday.

A total of 18 officials from South Korea’s state-run Korea Railroad Corp. (KORAIL), steelmaker POSCO and shipper Hyundai Merchant Marine are scheduled to visit DPRK’s northeastern port city of Rajin from Tuesday to Thursday.

The ministry said they will meet their Russian counterparts in Vladivostok and then departed for the DPRK.

South Korean President Park Geun-hye and Russian President Vladimir Putin agreed to cooperate in the Russian-led project during their summit in Seoul last November.

The Rajin-Khasan project aims to refurbish DPRK’s Rajin port and a railroad connecting it to the nearby Russian town of Khasan, paving the way for the Trans-Korean Railway and the Trans-Siberian Railroad reaching Europe.

A double-track railway between Rajin and Khasan reopened last September after years of renovation. It is reported that if the trilateral program runs smoothly, the Rajin port will become a logistics center for South Korean and Russian firms.

The project is part of Park’s plan for building the “Silk Road Express” by linking roads and railways running from South Korea to Europe via the DPRK, Russia, China and other Eurasian nations.

According to Yonhap (2014-2-9):

Officials from South Korean companies set to participate in an economic project between Pyongyang and Moscow will visit North Korea this week for an on-site inspection, the government said Sunday.

The unification ministry said 18 officials from three South Korean firms will visit North Korea’s northeastern port of Rajin from Tuesday to Thursday. The companies are state-run Korea Railroad Corp. (KORAIL), top steelmaker POSCO and No. 2 shipper Hyundai Merchant Marine. No government official will join the trip, the ministry said.

Their inspection is part of South Korea’s participation in the Rajin-Khasan development project, the Russian-led rail and port development venture in North Korea.

It’s designed to develop Rajin into a logistics center linked to Russia’s Trans-Siberian Railway. Last September, a double-track railway reopened between Rajin and Khasan, the nearby Russian town, after years of renovation.

In their summit meeting in Seoul last November, South Korean President Park Geun-hye and Russian President Vladimir Putin agreed to help South Korean firms join the Rajin-Khasan project.

Also last year, Park unveiled her plan to expand economic cooperation with Eurasian nations, dubbed the Eurasian Initiative. The policy is built on the idea that exchanges between South Korea and Eurasian nations, in particular Russia, could help induce the reclusive North Korea to open up and alleviate tensions on the Korean Peninsula.

Chris Green of the Daily NK has translated an  interview with the executive director of POSCO Corporate Strategic Planning Dept, Jeon Woo-sik, wherein he offered details about the delegation visiting Rason?

Ha Joon-soo, “나진~하산 프로젝트 현장 실사단 내일 방북“ [Rajin-Khasan Project onsite inspection team to visit North Korea tomorrow], KBS News, February 10, 2014.

Q: What is the makeup of the inspection team?

Jeon: There are five people going from POSCO [포스코]: a ports expert, an investment expert, and staff. There are six from Korail [코레일], another five from Hyundai Merchant Marine [현대상선], and two from the inspection company [실사법인], which makes eighteen. Aside from that, twenty staff from Russian Railways [러시아 철도공사] will accompany [the group]. Meetings with the North Korean side will be conducted in English and Russian, so the Russian side will bring interpreters.

Q: What is an “inspection company”?

Jeon: There is the need for personnel to expertly verify accounting and tax documentation, so we incorporated a body [for that].

Q: There will be no [South Korean] government officials with the group?

Jeon: None. This is a purely private undertaking, and it was decided that if government officials were included it could have a negative impact. Therefore, we formed the entire team from the private sector, and the government accepted this position.

Q: What is the team’s schedule?

Jeon: We minimized it as far as possible. Given that experts from each sector will be doing the inspecting, we decided that three days would be sufficient. Today [February 10] they departed for Vladivostok in Russia, and tomorrow morning [February 11] they will set off by special train. After completing the border formalities at Khasan on the Russia-DPRK border, we expect them to arrive in Rajin at around 12. Construction at Rajin Port is currently underway, so they will conduct visual inspections of the state of the port, whether pier construction is being done properly, and what the state of the Rajin-Khasan railway is. It is also expected that they will get additional information from the Russian side.

Q: What was done in advance to facilitate this?

Jeon: We applied for the visit in the middle of January, and document checks took about three weeks. The North Korean government signed off on the visit on February 5, and [the South Korean] government approved it on February 7.

Q: Can you give a concrete breakdown of what the team is going to do?

Jeon: The port and railway inspections will be divided into areas of expertise. More concretely: they will check the state of the rail track bed, the width of the track and the spaces between the rails, as well as signaling systems and stations. In the Russian documentation it says that Pier 3 is 600m long, but this must be verified, along with the depth of the water, whether it freezes in winter, the state of the mobile port cranes, whether it will be possible to use the pier over the long term, its strength, and how much investment is likely needed for dredging. Once that has been done, we’ll be able to roughly assess the investment cost on the Russian side.

Q: Is it right that, according to the Russian side, construction at Pier 3 will be complete at around the end of 2013?

Jeon: Port construction progress is currently at 90 percent. It’s winter now so construction isn’t possible, but it should be 100 percent complete during the next quarter. We’ll check on the construction of the port distribution terminal during these inspections. As it stands, coal from Siberia is what is coming in, so as long as there is storage for coal it is enough.

Q: Why do you need to perform in-situ checks?

Jeon: As you will be aware, the “Rajin-Khasan Project” is a cooperative one between North Korea and Russia. It’s an integrated port and rail freight business, and is worth a total of $340,000,000. Of this, North Korea has invested 30 percent and Russia 70 percent.

However, around half the Russian stake is supposed to be supplied indirectly by this consortium of Korean firms; yet even last November when a MoU was adopted between Russia and Korea, decisions were made based on documents from the Russian side. We have never seen for real how the construction is proceeding. How much should be invested can only be decided once the precise reality has been seen.

Q: What will happen once the inspection has been completed?

Jeon: We need to know the results of the inspection before we can decide that. Investment sums will be decided within this calendar year.

Q: So, when can we expect boats loaded with coal to come from Rajin down to Pohang and Busan [in South Korea]?

Jeon: Russian Far East ports are at saturation point dealing with Russia’s natural resources. The best thing would be for the freight headed for South Korea to be taken out and sent through Rajin instead. However, for a South Korean vessel to come and go from Rajin Port requires an authorization process. This part is linked to the 5.24 Measures[1], meaning that it would become possible more rapidly if the 5.24 Measures were lifted.

According to the Hankyoreh (2014-2-11):

Explaining that the Rajin-Hasan Project is a “special case” that is going ahead despite the May 24 measures, Unification Minister Ryoo Kihl-jae said that North Korea would have to take meaningful steps before the May 24 measures could be revoked.

During a plenary session at the National Assembly on Feb. 10 on issues related to diplomacy, unification, and national defense, the minister said that the May 24 punitive measures against North Korea would not be lifted until the North took action showing its remorse for the sinking of the Cheonan warship.

The May 24 measures, instituted after the Cheonan was sunk in 2010, constitute a complete ban on economic activity, exchange, and cooperation with North Korea.

But when asked about the Rajin-Hasan project, in which POSCO, Korail, and other South Korean companies have recently received permission to invest, Ryoo said that the project is moving ahead because it has particular significance for South Korea’s national interest regarding relations with Russia. If the project makes progress in the future and material starts to move, Ryoo predicted, various discussions will take place. That is to say, South Korea is moving forward with the Rajin-Hasan project as an exception to the May 24 measures.

On Monday, South Korean Prime Minister Chung Hong-won also said that the Rajin-Hasan issue is a special case.

“What happened to the principles that President Park Geun-hye was talking about?” complained one businessman involved in economic cooperation with North Korea. “If you’re going to relax the restrictions, you should relax them for everyone. It‘s not fair just to relax them for large companies,” the businessman said on condition of anonymity.

Read the full stories here:
North Korea’s Rajin as Rotterdam? A Little Less Crazy Now
Wall Street Journal
Aidan Foster-Carter
2014-2-6

S. Korean firm officials to visit DPRK for Rajin-Khasan joint project
Xinhua
2014-2-9

S. Korean corporate officials to visit N. Korea as part of Pyongyang-Moscow venture
Yonhap
2014-2-9

Rajin-Hasan Project going ahead as a “special case”
Hankyoreh
Choi Hyun-june
2014-2-11

UPDATE 1 (2014-1-16): South Korea launches task force on railway and other projects. According to Yonhap:

South Korea is set to launch a task force on economic cooperation projects with North Korea and Russia, including a long-discussed plan for a trilateral rail link, Seoul officials said Thursday.

The move is the first follow-up step after President Park Geun-hye announced late last year her plan to expand economic cooperation with Eurasian countries for more trade opportunities.

Called the Eurasian Initiative, the policy is centered on the idea that exchanges between South Korea and Eurasian nations, especially Russia, will help induce an opening up in the reclusive North, which lies in between, thus allaying the long-running military and diplomatic tensions on the Korean Peninsula.

The task force, tentatively named the Trilateral South, North Korea, Russia Cooperation Task Force, will be launched as soon as February under the wing of the foreign ministry’s Europe division, according to the officials.

Under the task force, about five government officials will be charged with reviewing the feasibilities of various economic project ideas among the three nations, including much-discussed plans to link a railroad, gas and oil pipes, and electrical grids between South Korea and Russia through North Korea, according to them.

“All the issues concerning the trilateral cooperation among South and North Korea, and Russia can be subject to the task force’s reviews,” a foreign ministry official said. “Specific details about the projects will be known after the task force goes into operations.”

Discussions of the project to connect the Trans-Siberian Railway (TSR) with the Trans-Korean Railway (TKR), dubbed the “Iron Silk Road,” have been under way for more than a decade, but geopolitical obstacles have hindered it, particularly given North Korea’s nuclear and missile ambitions.

In a summit meeting held in Seoul last November, South Korean President Park and Russian President Vladimir Putin signed a memorandum of understanding to help South Korean companies join the Rajin-Khasan development project in North Korea, the Pyongyang-Moscow project to link their railways for better logistics.

ORIGINAL POST (2013-11-13): The Russians and South Koreans recently discussed and signed a MOU on investment in the Rajin-Russia railway link and port. According to Yonhap:

South Korea agreed Wednesday to take part in a Russian-led rail and port development project in North Korea that could help reduce tensions with Pyongyang and open up a new logistics link between East Asia and Europe in line with President Park Geun-hye’s “Eurasian initiative.”

The memorandum of understanding was the most tangible outcome from Park’s summit with Russian President Vladimir Putin. It calls for steel giant POSCO, Hyundai Merchant Marine Co. and Korea Railroad Corp. to participate in the Rajin-Khasan development project.

The project was designed to develop North Korea’s ice-free northeastern port of Rajin into a logistics hub connected to Russia’s Trans Siberian Railway. In September, a 54-kilometer, double-track rail link reopened between Rajin and the nearby Russian town of Khasan after years of renovation.

Once the project to modernize the port of Rajin is completed, the rail-connected port can be used as a hub for sending cargo by rail from East Asia to as far as Europe. South Korean firms can also ship exports first to Rajin and transport them elsewhere via Russian railways.

North Korea and Russia launched the US$340 million project in 2008.

“The two sides agreed to encourage the rail and port cooperation project that companies of the two sides are pushing for so that it can move smoothly forward,” said a joint statement issued after the summit.

The project fits into Park’s “Eurasian initiative,” which calls for binding Eurasian nations closely together by linking roads and railways to realize what she called the “Silk Road Express” running from South Korea to Europe via North Korea, Russia and China.

Wednesday’s agreement was seen as a first step toward the ambitious vision.

“We, the two leaders, agreed to combine South Korea’s policy of strengthening Eurasian cooperation and Russia’s policy of highly regarding the Asia-Pacific region to realize our mutual potential at the maximum level and move relations between the two countries forward,” Park said during a joint press conference.

“South Korea and Russia will join hands to build a new Eurasian era for the future,” she said.

The Korean consortium plans to buy a stake in RasonKonTrans, the Russian-North Korean joint venture carrying out the rail and port renovation project. A final decision on the planned purchase will be made after a due diligence study in the first half of next year, officials said.

State monopoly Russian Railways has a 70 percent stake in the joint venture, with the North holding the remaining 30 percent. News reports have said that the Korean consortium plans to buy about half the Russian stake.

The purchase could be in conflict with Seoul’s ban on new investments in North Korea, though it is an indirect investment via Russia. The ban is part of sanctions Seoul imposed on Pyongyang after the North torpedoed and sank a South Korean warship near their Yellow Sea border in 2010.

The project could pave the way for similar indirect investments in the North and help reduce tensions on the divided peninsula. Inter-Korean relations, which had shown signs of a thaw following months of high tensions, chilled again after Pyongyang unilaterally canceled reunions for separated families in September.

Putin arrived in South Korea from Vietnam earlier Wednesday on a one-day visit for his second summit with Park. They first met in September on the sidelines of a Group of 20 major economies meeting in Russia’s second-largest city of Saint Petersburg.

In Wednesday’s summit, the two leaders also signed an MOU to enhance cooperation in shipbuilding. Officials said the deal laid the groundwork for South Korea to win orders of at least 13 liquefied natural gas tankers from Russia on the condition of technology transfer.

Also discussed was a long-discussed project to link railways of the two countries via North Korea and through to Europe. The two sides signed an MOU on rail cooperation and agreed to study the project as a long-term venture. The rail project has been talked about for many years, but little headway has been made due to security tensions.

Other projects the two sides agreed to cooperate on as long-term ventures included building a natural gas pipeline linking Russia and South Korea via the North and developing Arctic shipping routes to reduce shipping distances and time between Asia and Europe.

In total, the summit produced 17 cooperation agreement, including a visa-exemption pact calling for allowing Koreans and Russians to visit each other’s nation without a visa for up to 60 days, as well as an accord to set up cultural centers in each other’s nation.

Other topics for the meeting included regional and global security issues, such as the North Korean nuclear standoff. Russia is a member of the six-party talks aimed at ending Pyongyang’s nuclear program and is also one of the five permanent members of the United Nations Security Council.

“The two sides confirmed they cannot accept Pyongyang’s policy of building independent nuclear and missile capabilities … and stressed that North Korea cannot have the status of a nuclear state,” the joint statement said.

They also emphasized the North should abide by international denuclearization obligations and commitments, and agreed to work together to create the right conditions for restarting the long-stalled six-party talks on ending Pyongyang’s nuclear program, the statement said.

In an apparent swipe at Japan, the statement said that the sides shared a concern that the strong cooperation potential in Northeast Asia has not been realized due to obstacles created by recent “retrograde acts and words on history.”

Putin’s visit to Seoul is the first by a leader from the four major powers that also includes the United States, Japan and China since Park came into office. The Russian president is also the sixth foreign leader to visit South Korea under the Park administration.

Yonhap also published this related but separate report:

The ministry, in charge of all inter-Korean relations, said plans by a South Korean consortium to buy a stake in RasonKonTrans, the Russian-North Korean joint venture, can strengthen ties between South Korea and Russia and create greater opportunities for all sides. The project, first launched in 2008, cost Pyongyang and Moscow US$340 million.

It said the memorandum of understanding, signed on the sidelines of summit meeting between South Korean President Park Geun-hye and Russian President Vladimir Putin earlier in the day, did not mean Seoul was abandoning its so-called May 24 blanket ban that prohibits all economic and personnel exchanges with the North.

The ban has been in place since 2010, after Seoul accused Pyongyang of sinking one of its warships near the sea border in the Yellow Sea. Seoul at present only permits humanitarian assistance exempt from the sanctions rule.

“This project is special, and efforts will be made to assist visits by South Koreans who have to go to the North to carry out due diligence,” said a ministry official who declined to be identified.

He added that while an investment does conflict to some extent with Seoul’s ban, it is slightly different, since companies will be buying stakes in the Russian company.

“It will be an indirect form of investment and not the direct kind that has been banned so far,” the source said. However, he conceded the move marks the first time that investments into a North Korean project have been authorized.

South Korean businessmen from steelmaker POSCO, Hyundai Merchant Marine Co. and Korea Railroad Corp. are expected to go on fact-finding missions to Rajin and check the rail line linking the port city with the Russian town of Khasan.

Under the project, aimed at utilizing North Korea’s ice-free port, Russia aims to transform Rajin into a logistics base linked to its Trans Siberian Railway (TSR). If the project makes headway, Rajin can be used by South Korean companies to send cargo by rail to Europe using the TSR.

On the controversy that may arise from “bending” the rules, the ministry official said the government is willing to review other indirect forms of investments involving other countries if proposed.

“If a proposal is submitted, it will be judged in terms of the nature of the project, the effect it will have on cross-border relations and North Korean attitude,” he stressed.

Additional Information:
1. Read more about the Russia-Rajin rail link here.

2. Read more about the Russia – South Korea gas pipeline here.

3. Read previous posts on the Rason SEZ here.

Read the full stories here:
S. Korea to participate in Russian-led rail, port development project in N. Korea
Yonhap
Chang Jae-soon
2013-11-13

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China acts to curb DPRK oil imports

Sunday, October 20th, 2013

According to the Asahi Shimbun:

China is holding petroleum that was heading to North Korea from Iran in an apparent attempt by Beijing to maintain its control over Pyongyang, sources said.

According to Chinese sources, the petroleum was part of North Korea’s contract to import about 500,000 tons of condensate, a light oil, from Iran. North Korea, seeking to diversify its energy sources, started discussions on the deal last year.

The agreement was reached with the cooperation of a major Chinese state-run petroleum company.

The condensate is believed to have been shipped from Iran over a number of occasions on tankers registered to a third nation. But Chinese authorities ordered the tankers to stop when they reached the Chinese coast in the Yellow Sea this spring.

The ships were then towed to ports in Dalian, Liaoning province, and Qingdao, Shandong province. Sources said the condensate remains in those ports, which have restricted access to outsiders.

China is believed to have asked North Korea to pay about $2 million (about 196 million yen) for storage expenses.

“Once China realized that North Korea was beginning to depend on Iran for petroleum, China began using various measures to remain engaged so it can maintain its influence over North Korea,” a diplomatic source knowledgeable about relations between China and North Korea said.

Under the North Korea-Iran contract, Pyongyang is to pay Tehran for the condensate, but the condensate itself must be first sent to a Chinese state-run petroleum company.

“Because North Korea does not have the most advanced refineries, it had to ask China to refine the condensate,” a source in the petroleum industry said.

It is unclear what legal basis China is using for holding up the shipments because condensate and other petroleum products needed for daily living are not banned under U.N. economic sanctions imposed against North Korea.

However, one source involved in the transaction said, “As part of the economic sanctions that were imposed against military actions taken by North Korea, inspections were carried out by Chinese authorities, which asked that the petroleum be kept at the port.”

Until now, China is said to have provided about 80 percent of the petroleum used in North Korea. The main means of transport were through a pipeline that runs along the Yalu River between the border of the two nations as well as by ship.

According to Chinese customs statistics, the export volume was about 520,000 tons a year.

“Not only has a ban on petroleum export shipments been imposed by China, but the total import volume through the pipeline has also been reduced to one-third the level of the same period of the previous year,” a source involved in trade between China and North Korea was told by a North Korean government source in September.

China remains North Korea’s biggest backer, even with the contract with Iran.

Read the full story here:
China holding up shipment of Iranian petroleum to North Korea
Asahi Shimbun
Koichiro Ishida
2013-10-20

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Russia – Rason railway opening (RasonKonTrans)

Tuesday, September 24th, 2013

Pictured above (Google Earth): A map of the Khasan-Rajin Port rail service.

UPDATE 14 (2014-4-9): According to the International Railway Journal:

RUSSIAN Railways (RZD) has commenced testing of freight traffic on the reopened link from the Khasan border station of the Trans Siberian Railway in western Siberia to the port of Rason, North Korea.

Two freight trains consisting of 65 wagons containing Kuzbass coal are taking part in the trials, which are intended to test the recently redeveloped railway infrastructure, as well as customs practices and freight handling at the port.

The project is being carried out by the RasonKonTrans joint venture, which was formed in 2008, and is held by RZD Trading House (70%) and the port of Rason (30%). Work involved the reconstruction of the Tumangang – Rason railway in North Korea, which included the introduction of 54km of dual-gauge (1520mm and 1435mm) track, as well as the reconstruction of 18 bridges, 12 culverts, and three tunnels with a total length of more than 4.5km.

The railway was officially opened on September 22 2013, and was funded through RasonKonTrans’ authorised capital and loans. The joint venture has also invested to improve capacity at the port, including the addition of connecting tracks, dredging and construction of a new quay wall.

RZD says the project will attract additional traffic to the Trans-Siberian Railway, with around 4 million tonnes of freight expected to use the Khasan – Rason link per year.

UPDATE 13 (2014-4-8): According to the Moscow Times:

A joint venture between Russian Railways and the North Korean Ministry of Railways has rebuilt one of the port’s wharfs and a rail link connecting it to Russia in a rare example of foreign involvement in the economy of the isolated dictator state. The joint venture, RasonKonTrans, where Russia holds 70 percent, sought to relieve the congestion at Russia’s Pacific ports.

Russian Railways chief Vladimir Yakunin traveled to Rajin for a grand opening of the rail service and the wharf in September. The company invested 9 billion rubles ($250 million) to upgrade both. Russian engineers supervised the work, while Koreans largely contributed with unskilled labor.

UPDATE 12 (2013-9-23): Rajin-Khasan Railway Section Opens for Service. According to KCNA:

The Rajin-Khasan railway section has been successfully rebuilt in line with the DPRK-Russia Moscow Declaration, signed in August 2001. The section was opened for service on Sunday.

Its opening serves as a landmark in promoting the friendly and cooperative relations between the DPRK and Russia, strengthening the economic and cultural ties in the Asia-Pacific region and ensuring the common prosperity of regional countries.

In the first year of the new century, historic meeting and talks were held between Kim Jong Il, leader of the Democratic People’s Republic of Korea, and V.V. Putin, president of the Russian Federation, resulting in the adoption of the DPRK-Russia Moscow Declaration.

The declaration expressed the will of the two countries to make every possible effort to carry into practice a plan for opening railway transit linking the DPRK, Russia and Europe. Such plan was the first phase for wide-ranging cooperation between the two countries, which came under spotlight of the world.

At that time some forces criticized the plan as a “daydream”, displeased with significant cooperation between the two countries as well as peace and prosperity of the Korean Peninsula.

However, the project plan went into practice in October 2008 on the eve of the 60th anniversary of the establishment of the bilateral diplomatic relations thanks to the unshakable will of the two countries and the active cooperation of their railway workers.

At the ground-breaking ceremony for the project, which was held in front of the DPRK-Russia Friendship Pavilion in the area of Tumangang Railway Station in Rason City, V. I. Yakunin, president of the Russian Railways Company, said that the world would soon witness the longest railway transit, extending more than 10 000 km, through which 100 000 containers would be transported annually from 2013.

At last, the Rajin-Khasan railway section has been successfully rebuilt this year marking the 65th anniversary of the establishment of diplomatic relation between the DPRK and Russia. This would bring a large-scale cooperation project between the two countries into practice, ensuring their and regional development and interests.

The railway section from Rajin to Khasan will be helpful to the economy, transport service and people’s wellbeing of the two countries. It can also develop into an international transit between Asia and Europe.

The facts show the vitality of cooperation documents of the two countries, including the DPRK-Russia Moscow Declaration, and the noble idea carried in them.

The friendly and cooperative relationship between the DPRK and Russia will grow stronger with the geopolitical importance of Northeast Asia.

Choson Exchange offers additional detail and other news from Rason here.

UPDATE 11 (2013-9-22): It appears that Russia – Rajin rail service has been launched (again). According to KCNA:

Rajin-Khasan railway section has been successfully rebuilt and opened for service with due ceremony in Rajin on Sunday.

The opening of the section will greatly contribute to developing the friendly and cooperative relations between Russia and the DPRK.

Present at the ceremony from the DPRK side were Jon Kil Su, minister of Railways, O Ryong Chol, vice-minister of Foreign Trade, Ri Chol Sok, vice-chairman of the State Commission for Economic Development, Jo Jong Ho, chairman of the Rason City People’s Committee, Im Chon Il, consul general of the DPRK to Nakhodka, officials in the field of railways and people in Rason City.

Present there from the Russian side were V. I. Yakunin, president of the “Russian Railways” Company, Alexei Tsijenov, vice-minister of Transport, Sergey Sidorov, first vice-governor of the Maritime Territory Administration, Alexandr Timonin, Russian ambassador to the DPRK, Vyacheslav Tsupikov, consul general of Russia to Chongjin, and Russians including those concerned with the railways.

Diplomatic envoys to the DPRK also attended.

V. I. Yakunin in the opening ceremony said the section has opened for service under Russia-DPRK Moscow Declaration signed by the top leaders of the two countries in 2001.

To press for the renovation of the railways running through the land of Korea will be of great contribution to the development of economic cooperation in the Asia-Pacific region in the future, he stressed.

Minister of Railways of the DPRK in his speech said that the plan of linking DPRK-Russia railways serves as a model of wide-ranging bilateral cooperation which meets the common progress and interests of the two peoples.

He expressed the conviction that the operation of the opened railways section will be successful as it was made on the principle of mutual respect and cooperation between the railway transportation fields of the two countries.

There were congratulatory speeches.

The ceremony ended with the playing of national anthems of the two countries. It was followed by a reception.

According to Yonhap:

After years of work to directly connect railway tracks between Russia and North Korea, a 54-kilometer section linking border areas of the two countries reopened Sunday with a ceremony in Rason, a special economic zone in northeastern North Korea.

A special train carrying a group of reporters arrived at Rajin Port in Rason from Khasan in the Russian Far East, making it the first train to travel between the two countries without changing bogies at the border.

Trains had traveled on the section since the Soviet era. But given differences in track width between the Russian side and the North Korean side, workers had to change bogies every time a train crossed the border.

With the end of overhaul work, North Korea appears poised to promote the development of its special economic zone, while Russia seeks to revitalize the Trans-Siberian Railway by linking it, in the future, to a railway system that would run through the Korean Peninsula.

In 2008, the two countries started work to lay Russia-sized railway tracks from the Russian border area to Rajin Port after Russian President Vladimir Putin and then North Korean leader Kim Jong Il agreed in August 2001 to directly connect the two railway systems.

Moscow shoulders 70 percent of 8.3 billion ruble, or 25.8 billion yen, in costs to lay the new tracks and build the North Korean port, while Pyongyang covers the remainder.

The two countries conducted a trial run on the section using a freight train in October 2011. They initially planned to launch commercial runs in autumn last year, but the plan was delayed until now.

Bloomberg adds the following data:

Initially, the 54-kilometer (33-mile) line will transport Russian coal to markets in the Asia-Pacific region, OAO Russian Railways Chief Executive Officer Vladimir Yakunin said at the ceremony in Rajin. The second phase of the project will involve the construction of a container-handling facility and potentially an oil terminal at the North Korean site, he said.

“Our common objective is for this link and port to be a pilot scheme for the restoration of a single transport system in North and South Korea that would link the peninsula to countries that gravitate to this region, to Europe via Russia,” Yakunin said. The CEO said he hopes the plan will help promote peace between the two Koreas, which remain technically at war following the conflict 1950-53 that divided the countries.

The route is part of a larger project, dubbed the Iron Silk Road, that would connect Russia’s Trans-Siberian Railway to South Korea via the North for an overland route cutting transportation costs to Europe. Success depends on improved ties between South Korea and its isolated Communist neighbor.

Reuters adds the following data:

Yakunin said the railway and container terminal, a project worth 9 billion roubles ($283 million), would work at a capacity of 4 million metric tons a year within two years.

Here is some additional background information:

Practical implementation of the project began in 2008, when RZD and North Korea’s Ministry of Railways signed a cooperation agreement. In October of that year, Tumangan station saw the ceremonial laying of the first link of the rails and sleepers that marked the beginning of the reconstruction of the Khasan – Rajin railway section.

In 2009, a joint venture, RasonKonTrans, was set up by Russian Railways Trading House, a subsidiary of RZD, and the port of Rajin, in order to implement the project. RasonKonTrans has in turn concluded a 49-year leasing arrangement of the railway line between Tumen – Rajin with the Donghae company of North Korea’s Ministry of Railways. The work was financed from RasonKonTrans’ share capital, as well as by funds the joint venture was able to borrow based on the project’s business plan. More than 5.5 billion roubles had been invested in the reconstruction of the Khasan – Rajin railway line and 3.5 billion roubles in the port terminal.

The final construction phase to create a universal intermodal exchange terminal at the port of Rajin has now begun, including a range of measures ranging from dredging, building a new quay wall and equipping storage yards, through the construction of industrial and office buildings and facilities to laying railway lines within the terminal itself. Yakunin continued:

“The port is designed to handle transhipment volumes of 4 million tonnes of cargo, but that is not the limit. We are confident that the cargo base will expand and that containers will be shipped through the port. The construction of the port terminal is almost complete, and we are already seeing interest from international customers and partners.”

Officials from both countries say they are working together to finalise the timetable and the joint regulations which will govern the movement of trains on this section. To ensure the interoperability of the new line with both North Korea’s railway network and the Russian rail network, there are plans to create a single control centre with the participation of experts from the RasonKonTrans joint venture and the Donghae transport company of North Korea’s Ministry of Railways.

More from RT here.

UPDATE 10 (2013-6-25): It appears that regular rail service never materialized. According to Siberian Times:

Talks in Moscow between Vladimir Yakunin, President of Russian Railways, and Jeong Gil Soo, North Korea’s Minister of Railways (MOR) agreed the final details on the Khasas-Rajin link.

The project is being implemented in accordance with agreements reached in 2000 by Russian President Vladimir Putin and then North Korean leader Kim Jong Il. It is linked to cooperation between the two countries and forms part of a project to restore traffic on the entire Trans-Korean Main Line.

‘Over the long term, this will allow most traffic between South Korea, Europe, Russia and the CIS countries to be sent by rail by the Trans-Siberian Railway,’ said one report.

The new agreement allows for a single control centre ‘with the participation of experts from the joint ventures RasonKonTrans and ZHTK Donghae MOR from North Korea to handle traffic management and facilitate collaboration with the entire railway network in North Korea. The parties also agreed to develop instructions for the movement of trains and a train timetable’, stated RIA Oreanda.

The project involves reconnecting the combined dual-track railway with 1520 mm and 1435 mm gauges on the stretch from the Russian border to the port of Rajin in North Korea, a distance of 54 km. This includes the reconstruction of three tunnels, the repair a border railway bridge and construction of a freight terminal with an annual capacity of 4 million tons at Port Rajin.

The report continued:’The project is being implemented by the joint venture RasonKonTrans, which was specially set up in 2008 and is owned by OAO RZD Trading House and the port of Rajin.

‘The stretch between Rajin and Tuman stations is estimated at 99.8% complete. Work on commissioning the signalling, centralisation and blocking equipment has been completed along the entire section with the exception of Rajin station.

‘The tunnels are now fully ready. As of mid-May 2013, all the work to replace the timber on the Korean border bridge ‘Friendship’ has been carried out. Currently, work is underway to finish the bridge and install the railing.

‘At the port of Rajin, concrete is being laid and building foundations are being installed at the administrative and amenity building, repair shop and spare parts warehouse, work has begun on laying and ballasting the railway lines within the terminals and utility lines are being laid.

‘Equipment continues to be installed at the harbour wall. Work on installing outdoor lighting and fencing the port terminal’s territory is also ongoing’.

UPDATE 9 (2012-4-2) : DPRK and Russia to start cross-border freight train service in October. According to KCNA:

Rajin-Khassan Cargo Train Service to Begin in October

Pyongyang, April 2 (KCNA) — A Rajin-Khassan cargo train service will run from October this year.

Kim Chang Sik, a department director of the DPRK Ministry of Railways, told KCNA that the laying of railroad and renovation of railway stations, tunnels and communications facilities are now under way in the section.

The railway project was highlighted in the historic DPRK-Russia Moscow Declaration, which was signed in August 2001, he said, adding:

In line with the declaration, a cooperation agreement between the DPRK Ministry of Railways and the Russia Railway Holding Corporation was concluded in April 2008 to be followed by an agreement on joint venture between Rajin Port and the Corporation.

A contract on the lease of the Rajin-Tumangang railway was made between the Ministry’s Eastern Railway Ryonun Company and the Rason International Joint Venture Container Terminal, under which the 54 km-section has been rebuilt into a mixed track from October 2008.
A trial train service took place in October 2011 between Rajin of the DPRK and Khassan of Russia.

At least 100,000 containers will be yearly carried along the line.

This section will serve as an international railway container transport line linking Northeast Asia with Europe.

KCNA also offered this video.

Yonhap also reported:

North Korea and Russia will start a cross-border cargo train service in October, Pyongyang’s state media reported Monday, in a move that could make a North Korean port a regional hub for Europe-bound shipments.

The announcement came more than three years after the two countries launched a project to rebuild two rail lines between Russia’s Far Eastern border town of Khasan and North Korea’s northeastern port city of Rajin.

The North designated Rason, which includes the Rajin port, as a special economic zone in 1991 and has since striven to develop it into a regional logistics hub close to both China and Russia.

In October, North Korea and Russia held a test run on the 54-kilometer-long railway line.

The proposed cargo service can handle 100,000 shipping containers each year, the North’s official Korean Central News Agency said in a dispatch.

The renovation project, if completed, will offer a new route of container transportation between Northeast Asia and Europe, the dispatch said, and could significantly reduce shipping time and costs.

The freight service could also help boost relations between North Korea and Russia, including their economic cooperation, the dispatch said.

The trade volume between North Korea and Russia stood at US$110 million in 2010, the latest year for which statistics are available, according to South Korea’s state-run Korea Trade-Investment Promotion Agency.

Russia maintains friendly ties with North Korea, though its leader Dmitry Medvedev has strongly denounced North Korea’s rocket launch set for sometime between April 12 and 16.

Medvedev made the remarks during summit talks with South Korean President Lee Myung-bak in Seoul last month on the sidelines of an international nuclear summit, according to Lee’s office.

Historical posts on this topic below:

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Cuba – DPRK military shipment intercepted in Panama

Sunday, August 11th, 2013

UPDATE 28 (2014-3-19): The Chongchongang is included in the third UN Panel of Experts report on the DPRK.

UPDATE 27 (2014-2-15): Chongchongang leaves Panama, headed back to Cuba. According to Business Insider:

A North Korean ship detained near the Panama Canal for smuggling Cuban weapons set sail back for the Caribbean island on Saturday with most of its crew on board after it paid a fine, the government said.

More in Reuters:

Crew members were informed they were free to go on Tuesday, Panama’s foreign ministry said in a statement.

The three highest-ranking people on the ship, including the captain, will remain detained in Panama, where they are being charged with weapons trafficking.

Panamanian prosecutors concluded the three had a “clear involvement” in smuggling the arms, including the two MiG-21 aircraft, 15 MiG engines and nine anti-aircraft missiles.

UPDATE 26 (2014-2-13): Media reports indicate that UN investigators have stated that the ship was violating sanctions. According to the Miami Herald:

A shipment of Cuban weapons to North Korea last summer violated a U.N. arms embargo on the Asian nation and showed a “comprehensive planned strategy to conceal” the cargo, a team of U.N. sanctions investigators have reportedly concluded.

Japan’s Kyodo News International news agency reported that the secret report submitted by the investigators to the U.N. Security Council states that the Cuban shipment constituted “sanctions violations.”

“The employment of so many role-players in support of the trip suggests a network of entities centrally managed working together to deflect scrutiny in order to evade sanctions by minimizing the DPRK’s visibility in transactions,” the U.N. investigators wrote.

UPDATE 25 (2014-2-8): The DPRK has paid the fine and most sailors freed. According to Reuters:

A North Korean ship detained near the Panama Canal for holding Cuban weapons is free to go after the ship’s representatives on Saturday paid a $693,333 fine to the Panama Canal Authority, the authority said in a statement.

The return of the Chong Chon Gang to North Korea would end part of a bizarre case involving the three countries that provoked international controversy.

The ship was seized in July for smuggling Soviet-era arms, including two MiG-21 aircraft, under 10,000 tons of sugar.

Since then, the ship has been moored at the Manzanillo International Terminal on Panama’s Atlantic side while the canal authority waited for the payment of at least two-thirds of the $1 million fine it imposed for trying to traffic illegal weapons through the waterway.

Panamanian prosecutors last week dropped charges against 32 of the 35 crew members and they were transferred into the custody of immigration officials.

The three highest-ranking crew members, including the captain, are being charged with weapons trafficking, prosecutors said.

They concluded the three had a “clear involvement” in smuggling the Soviet-era arms, including the two MiG-21 aircraft, 15 MiG engines and nine anti-aircraft missiles.

The prosecutors’ decision was based on interviews with the crew and translations of key documents found in the ship.

Panama’s Foreign Minister Francisco Alvarez de Soto did not immediately return calls or messages Saturday and it was not clear when the ship or the crew would leave Panama.

The U.N. Security Council has yet to decide on penalties against Cuba because of a seven-year-old ban against arms transfers to North Korea due to the country’s nuclear weapons program.

A preliminary report, presented by a panel of experts to the Sanctions Committee at the U.N. Security Council and given to Panamanian authorities last August, concluded the shipment “without doubt” was a violation of U.N. sanctions.

Panamanian officials have said the arms will likely be sold or given away and the sugar sold to companies interested in turning it into ethanol.

The North Korean crew sabotaged the ship’s electrical system and bilge pumps after Panamanian investigators stopped the ship near the Atlantic entrance to the Panama Canal on suspicion it was carrying drugs after leaving Cuba.

After the arms were discovered hidden beneath the sugar, Cuba acknowledged it was sending 240 tons of “obsolete” Soviet-era weapons to be repaired in North Korea and returned to Cuba. Cuban officials told Panama the cargo was a donation of sugar for the people of North Korea.

Here is coverage in Xinhua.

UPDATE 24 (2013-12-3): The DPRK has agreed to pay fine of $670,000 for boat’s return.  According to Infosurhoy:

North Korea has agreed to pay a reduced fine to ensure the return of a ship stopped near the Panama Canal that had military weapons from Cuba on board.

The settlement should end a protracted dispute over the Chong Chon Gang, the freighter intercepted by Panamanian customs officers on July 10 as it approached the canal.

Authorities uncovered 25 containers of military hardware, including two MiG-21 fighter jets, air defense systems, missiles and command and control vehicles, concealed under 200,000 sacks of sugar.

Panama, which is holding the North Korean ship’s 35-strong crew at a former U.S. naval base, previously said North Korea must pay a US$1 million penalty for the boat’s release.

But Julio Berríos, a lawyer for the crew, said a reduced fine of $670,000 had been agreed between local officials and a North Korean delegation that traveled to Panama to resolve the issue.

UPDATE 23 (2013-11-27): Panama appears to have reversed its decision and is keeping most of the crew detained.  According to ABC News:

A Panamanian prosecutor who reported the release of all but three of 35 crewmen of a North Korean ship seized for carrying Cuban weapons reversed his story Wednesday afternoon, saying all were still being held.

Organized crime prosecutor Nahaniel Murgas first said only the ship’s captain, first mate and a Korean official who watched the crew would continue to be detained and face charges of arms trafficking. He appeared later in the afternoon at the base where the crew members were being held and changed his version, saying only the ship was legally free to go. He left without further comment.

UPDATE 22 (2013-10-21): Panama claims it will release most of the crew. According to the New York Times:

The authorities in Panama said Monday that they would release 33 of the 35 North Korean crew members of a rusting freighter impounded more than three months ago for carrying a secret stash of Soviet-era Cuban military gear hidden under bags of brown sugar.

Neither the captain, who tried to slit his throat when the Panamanian marine police boarded the vessel, nor the captain’s aide is free to go, said a top official at Panama’s Foreign Ministry. The official, who spoke by telephone on the condition of anonymity because of ministry policy, said the two North Koreans had not cooperated and may still face criminal charges.

The Foreign Ministry official said that the other crew members had cooperated, and that all of them had asserted that they had no idea the vessel was carrying military cargo. Two North Korean diplomats have been granted visas, the official said, to travel to Panama and to complete arrangements for those crew members to leave the country.

UPDATE 21 (2013-10-11): The Christian Science Monitor offers some additional details on the shipment:

Two Cuban MiG-21 jet fighters found aboard a seized North Korean cargo ship three months ago were in good repair, had been recently flown and were accompanied by “brand-new” jet engines, Panamanian officials say.

“They had jet fuel still inside their tanks,” Foreign Minister Fernando Nunez Fabrega told McClatchy in an interview earlier this month. “They were not obsolete and in need of repair.”

One of the MiG-21s contained manuals and maintenance records that indicated it was flying just a few months earlier, said prosecutor Javier Caraballo, who’s handling an arms trafficking case against the 35 North Korean crew members. Mr. Caraballo declined a reporter’s request to see the records.

In publicly acknowledging the shipment after it was discovered, Cuban officials insisted that the ship was carrying only old aircraft and other parts that were being sent to North Korea for repair when Panamanian authorities, acting on a tip that it was carrying drugs, intercepted it.

Panamanian officials now think that the shipment was part of what Mr. Nunez Fabrega called “a major deal” between the two countries, though they aren’t certain of its scope.

Officials searching the vessel found the MiG aircraft in sealed containers hidden under 100-pound bags of sugar – 10,000 tons worth – in the ship’s hold. They also uncovered 15 jet engines and other weaponry.

“These are brand-new engines,” Nunez Fabrega said. He said Cuban officials in their public statement also “generalized over very specific items that could have gotten them in trouble,” such as a guidance system for anti-aircraft missile defense.

The UN monitoring team still seeks answers from Cuba about the arms shipment, and the team will provide a UN sanctions committee with a detailed report once it has those answers.

A senior aide to the foreign minister, Tomas A. Cabal, said the deal had been arranged at a meeting June 29 in Havana among Cuban leader Raul Castro, Cuban Revolutionary Armed Forces Gen. Leopoldo Cintra Frias, and Kim Kyok Sik, who was then the chief of the Korean People’s Army general staff. Mr. Kim was dismissed from his post in August, a month after the ship was seized.

Mr. Cabal said “friends overseas” had told Panama that the two MiG-21s were part of a larger deal between Cuba and North Korea for 12 jet fighters. That assertion couldn’t be independently confirmed.

Meanwhile, the 35 crew members from the Chong Chon Gang are biding their time at a former US military base near the Panama Canal. It’s not exactly hard time, officials say. In fact, it’s better than living aboard the vessel, which reeked of poor hygiene when it was seized.

Caraballo said the crew members, while under armed guard, were enjoying conditions that were “10 times better than where they were.”

“They are quite comfortable,” Caraballo said. “They’ve been given clean clothing, food, cigarettes to smoke. . . . They have a television. They can play soccer each afternoon.”

They live in air-conditioned quarters, a physician attends to them, and a telephone is available for them to communicate with the North Korean Embassy in Havana, he said. Panama doesn’t have diplomatic relations with North Korea.

While the ship’s crew and captain have offered statements through Korean translators brought in from Mexico, they’ve refused to sign the depositions, Caraballo said.

It hasn’t been decided what will happen to the weaponry that was aboard the ship.

Panama is treading lightly in the case, wary of angering Cuba, which Nunez Fabrega said was “one of the biggest customers of the free zone” in Colon, where it buys abundant goods as a consequence of the five-decade-old US embargo on the island. A ship travels weekly from Colon to Havana to supply Cuba’s tourist hotels.

Caraballo, a drug prosecutor who was summoned to handle the seized ship because initial reports said it was carrying narcotics, said the captain had affirmed that he knew containers were in the hold but “didn’t know what was in the containers.”

The North Koreans have been charged with arms trafficking, which could carry up to a 12-year term, Caraballo said.

But Nunez Fabrega said Panama was eager for the crew and ship to be on their way once North Korea settles a fine of up to $1 million imposed by the Panama Canal Authority for endangering the waterway by transporting undeclared weaponry.

“We have no interest in keeping that boat here,” Nunez Fabrega said, noting that it’s the largest freighter in North Korea’s merchant fleet.

As for the seized sugar, it’s being kept in silos in Penonome in central Panama’s Cocle province, Caraballo said. What will happen to it is unclear. “This sugar may last there another 10 months without it being damaged,” he said.

UPDATE 20 (2013-9-26): Panama fines DPRK ship. According to the AFP:

The Panama Canal Authority announced Thursday that it slapped a $1 million fine on a North Korean cargo ship caught with an undeclared shipment of Cuban weapons in July.

The canal administrator, Jorge Quijano, said the ship was sanctioned because “it put our canal and our people at risk to a certain point.”

The fine was delivered to the freighter’s captain and owners, he said, adding that the boat is barred from unmooring until they pay at least two-thirds of the penalty, or around $650,000.

He said the penalty could change depending on the response of the ship’s owners, but they have not replied.

The Panamanian government said last month that a United Nations report found that the shipment was a violation of UN sanctions against arms transfers to North Korea’s communist regime.

The Wall Street Journal has more here.

UPDATE 19 (2013-9-25): Panamanian President says ship violates UNSC resolutions. According to Yonhap:

Panamanian President Ricardo Martinelli told the United Nations on Wednesday that the “undeclared war material” onboard a North Korea-bound ship his country seized in July was a clear violation of past Security Council sanctions.

“An enormous amount of war material that, by definition and destination clearly violates Security Council Committee mandates, were discovered hidden under 200 tons of raw sugar,” he told the annual gathering of world leaders in New York and the 68th General Assembly.

The president said that authorities stopped the Chong Chon Gang, which was coming from Cuba, before it entered the Panama Canal on reports that the ship was carrying drugs.

North Korea and Cuba have said that the ship was carrying “aging” or “obsolete” weapons to be overhauled and sent back to Cuba.

The U.N. committee that oversees the North Korean sanctions is awaiting a final report about an August trip to Panama where experts on a panel were sent to investigate the cargo.

UPDATE 18 (2013-8-30): Cuban and DPRK military staff purged. Possibly related to botched operation.

Earlier this week, the head of the Cuban Air Force, General Pedro Mendiondo Gomez, died in a mysterious car wreck.

North Korea’s Army Chief, General Kim Kyok-sik, was mysteriously purged and disappeared.

UPDATE 17 (2013-8-27): The DPRK is sending a delegation to Panama. According to AFP:

A North Korean delegation is expected to visit Panama to see 35 sailors who were detained there after their ship was impounded and Cuban arms were detected aboard.

“We issued them visas so they could enter and they will receive” them tomorrow, Wednesday, Panamanian Foreign Minister Fernando Nunez said on Tuesday.

The sailors have been held on arms trafficking charges that carry maximum sentences of up to 12 years in prison.

The ship, the Chong Chon Gang, was boarded and searched July 10 on suspicion it was smuggling drugs through the Panama Canal.

Authorities instead uncovered 25 containers filled with military hardware, including two stripped down Soviet era MiG-21s, air defense systems, missiles and command and control vehicles, buried under tons of sugar.

Havana said they were obsolete Cuban arms being shipped to North Korea for refurbishment under a legitimate contract.

The sailors are being held at Fort Sherman, a former US military base.

Nunez said their fate depended on Panama’s legal process. The Latin American country has no diplomatic relations with North Korea.

A team of UN experts traveled to Panama to inspect the weapons and determine whether the shipment violated a ban against arms transfers to North Korea.

UPDATE 16 (2013-8-27): The latest from Hugh Griffiths and Roope Siiritola at 38 North, “Full Disclosure: Contents of North Korean Smuggling Ship Revealed.”

UPDATE 15 (2013-8-16): Panama states its intention to sanction DPRK vessel. According to the Straits Times:

The Panama Canal authority said on Thursday it will impose a fine of as much as US$1 million (S$1.27 million) on the North Korean freighter caught with an undeclared shipment of Cuban weapons.

“It is a flagrant violation of safe passage through the Panama Canal and we have little tolerance for this kind of activity,” canal administrator Jorge Quijano said.

“It is going to be sanctioned,” he said, adding that the authorities were still mulling the size of the fine.

“It’s obvious that there were containers that had not been declared, not to mention what was inside them.” The ship, the Chong Chon Gang, was boarded and searched July 10 on suspicion it was smuggling drugs.

UPDATE 14 (2013-8-14): North Korean crew likely to be returned to DPRK and UN inspectors in Panama. According to Reuters:

Panama likely will return the 35-member crew of a North Korean ship detained for smuggling Cuban weapons under 10,000 tons of sugar to their native country in about a month, a government official familiar with the incident said on Tuesday.

“They’re going to leave soon, like in a month, most likely they’ll go back to Korea,” the official said on condition of anonymity. “There is another possibility that they’re returned to Cuba and from there go to Korea.”

The Central American country will not respond to a request from Pyongyang seeking a “diplomatic manner” to resolve the future of the ship, the Chong Chon Gang, until the U.N. Security Council determines whether the shipment breached a wide-ranging North Korean arms embargo.

The crew have been charged with threatening Panama’s security by seeking to move undeclared weapons through the Panama Canal. The Panamanian government official did not say why the crew likely would be released or how the charges would be resolved.

A team of six U.N. Security Council experts arrived in Panama on Monday and will issue a report on whether the weapons violate a 7-year-old U.N. ban on arms transfers to North Korea because of its nuclear weapons and missile development.

UPDATE 13 (2013-8-11): Panama announces end of search of North Korean ship. According to the AP (via USA Today):

Panamanian officials say they’re ending their search of a North Korean ship that was detained as it carried weapons from Cuba.

Public Security Minister Jose Raul Mulino tells the Associated Press that Panama removed the ship’s last unopened container, which was buried under sacks of sugar, and found it held equipment for launching missiles.

Panama has unloaded and searched 25 containers, finding a variety of weapons systems and parts. Cuba says it was not violating sanctions meant to halt sophisticated arms sales to North Korea because the ship contained obsolete weapons being sent back for repair.

But some of the containers were loaded with undeclared live munitions, and United Nations experts will be in Panama in the coming days to prepare a report on whether the shipment violated sanctions.

UPDATE 12 (2013-8-11): Panama finds explosives on North Korea-bound ship. According to the Straits Times:

Authorities in Panama say they have found more explosives aboard a North Korean-flagged ship detained in the Panama Canal for carrying undeclared arms from Cuba.

Anti-drug prosecutor Javier Caraballo said on Saturday that inspectors found a kind of “anti-tank RPG (rocket-propelled grenade)” explosive when they opened one of five wooden boxes on the Chong Chon Gang. He said the other boxes were not opened because of security fears.

UPDATE 11 (2013-8-2): Panama finds munitions in the ship. According to the Associated Press:

Explosive-sniffing dogs found ammunition for grenade launchers and other unidentified types, said prosecutor Javier Caraballo, who did not specify the amount of munitions.

As of Friday, crews had only unloaded two of five cargo holds in the ship. Besides the munitions, they had found radar and control systems for launching missiles, two Mig-21 aircraft and 12 motors.

The weapons discovery triggered an investigation by the U.N. Security Council committee that monitors the sanctions against North Korea. The council is sending a team to see if the discovery violates U.N. sanctions. Panama earlier this week asked to postpone the visit to Aug. 12 because it is taking so long to unload the ship.

Panama has filed charges against the crew for transporting undeclared military equipment.

UPDATE 10 (2013-8-1): Melissa Hanham has done thorough research into this story for 38 North.

UPDATE 9 (2013-7-31): Panama uncovers fighter jet engines from seized North Korean ship. According to the Straits Times:

Panamanian investigators unloading the cargo of a seized North Korean ship carrying arms from Cuba under sacks of brown sugar have found 12 engines for MiG-21 fighter jets and five military vehicles that officials said resembled missile control centers.

Investigators earlier this month had found two MiG-21 fighter jets and two missile radar systems on board the Chong Chon Gang, which was bound for North Korea when it was stopped by officials.

Panamanian Security Minister Jose Mulino said on Tuesday the cargo appeared to fall within what Cuba had said was a range of “obsolete” arms being sent to North Korea for repair.

Panama asked the United Nations to delay the arrival of investigators by a week until Aug. 12, because the process of unloading cargo found under 100,000 tons of sugar has taken longer than expected.

UPDATE 8 (2013-7-26): Panamanian authorities continue search at seized North Korean ship (La Prensa website, Panama City, in Spanish 26 Jul 13). Translated by BBC monitoring service:

The first drug prosecutor Javier Caraballo, said yesterday that the military equipment found so far in the North Korean vessel Chong Chon Gang matches the list issued by the Cuban Government last week, when they recognized the ownership of the shipment that was bound to North Korea.

According to Caraballo, however, inspection practiced in the vessel and that yesterday reached its eleventh consecutive day, is not based only on the content of the Cuban list.

He explained that until yesterday they had found nine containers in the first warehouse, seven of which were opened.

In these seven deposits they found two MIG-21 Bis aircraft, anti-aircraft radar systems, fire control radars, high power electrical generators and military trailers, all of which coincid! es with what was on the list of the Caribbean country.

The other two containers, he said, have not been opened yet.

He acknowledged that they could not go at the speed they expected in searching, sorting and inventory of military cargo, due to the large amount of sugar bags placed on the containers.

“The issue is going a little slow, not because of the difficulty of the work, but by the amount of sugar and because we have to locate a place to put the product” he added.

He also reiterated that the prosecution has had difficulty making inquiries statements to the 35 crew members detained since none speaks Spanish, few understand English and the Public Ministry has no Korean language translators.

The 35 sailors were charged for alleged crimes against collective security, in the form of possession and illicit arms trafficking, and prosecution ordered custody. All are being held at the base of Sherman.

Meanwhile, Public Security Minister, Jose! Raul Mulino, who was there part of the afternoon yesterday at the port of Manzanillo, confirmed that the hauling of sacks of sugar in the five holds of the ship continues.

He said that the ninth container located in the first warehouse in the boat has not been taken out, because it is almost buried under pounds of brown sugar.

He reported that the eighth container is already in the harbor and was revised with scanners, but it has not been inspected because it is expected that the prosecution authorities give the corresponding order.

Mulino said that since last Tuesday he asked the Ministry of Health to fumigate the ship once a day, in order to clear the enormous amount of bees that invade the vessels by the presence of sugar.

He added that in two weeks they will have the results of the health tests carried to the sugar by experts from the Institute of Agricultural Marketing.

UPDATE 7 (2013-7-20): The Washington Post updates us on other shipments between the DPRK and Cuba:

The freighter’s detention has thrown a light on the secretive deals North Korea is making, possibly in breach of United Nations sanctions, as it struggles for survival.

The voyage of the freighter Chong Chon Gang to Cuba, far from the Chinese waters where it normally operates, is not the first time a ship from the isolated communist country has followed that route.

North Korean vessels have made at least seven other trips to Cuba in the past few years, with three stopping at the same two ports as the Chong Chon Gang, according to two organizations that monitor North Korea, the Panamanian authorities and the Stockholm International Peace Research Institute (SIPRI).

Several of the freighters were operated or managed by Ocean Maritime Management (OMM), a Pyongyang-based company with links to the North Korean government, which is also the registered manager of the detained vessel, according to the Wisconsin Project, which uses ship tracking databases to follow North Korean and other vessels.

The journeys, made by ships that normally stay close to the Korean peninsula, are an indication that the Chong Chon Gang’s voyage may have been part of a wider, established trade route, amid an increasingly warm relationship between the two communist nations.

In a statement, Cuba said there was a “legitimate contract” for North Korea to repair and then return armaments, which they said included antiaircraft missile systems and two disassembled Mig-21s. The sugar on board was probably intended as payment for the work, according to monitors.

In the days before it was seized, the Chong Chon Gang had passed through the Panama Canal and called at two Cuban ports: Havana and Puerto Padre, a major sugar export center, according to the Wisconsin Project.

Another vessel, the Oun Chong Nyon Ho, made an almost identical voyage through the canal and to the same two Cuban ports in May 2012. It passed back through the Panamanian waterway without being searched. In May 2009, the North Korean- flagged Mu Du Bong went through the canal and stopped in Havana, Cuba’s capital city. Both are currently managed by OMM, according to the Wisconsin Project.

A third ship, the Po Thong Gang, traveled through the canal and called at Puerto Padre in April 2012. During the previous year, it had visited Havana and Santiago de Cuba, according to research by Matthew Godsey of the Wisconsin Project. It was linked to OMM until 2008 and is now registered to a different company at the same address, Godsey said.

Hugh Griffiths, a maritime arms trafficking expert based at SIPRI, said his monitoring database has recorded two further North Korean-linked ships that have docked in Cuba on three occasions in the past 18 months. Two of the trips stopped at both Havana and Puerto Padre, the two Cuban ports visited by the Chong Chon Gang and the Oun Chong Nyon Ho, he said.

Griffiths said there was a “definite possibility” that other ships had made the journey from North Korea to Cuba undetected by registering under false ownership or by turning off onboard satellite transponders to avoid being tracked, as the Chong Chon Gang appears to have done.

The OMM company is registered to a P.O. box number in the North Korean capital and has 17 ships that largely ply their trade in the waters around China. Gary Li, a senior analyst at IHS Maritime, a consultancy firm, described it as the biggest state-owned shipping company in North Korea.

“It claims to have shipping agents in all the major [North Korean] ports as well as overseas, such as Dalian in China, Port Said in Egypt and Vladivostok in Russia,” he said.

OMM also owns a crew-training center and the Ryongnam Dockyard on North Korea’s west coast, which has reportedly been involved in the construction of military vessels, he said. OMM is also responsible for handling passport applications for all North Korean sailors.

Li said the Chong Chon Gang’s detention and voyages by other ships owned by OMM demonstrates that “some kind of ‘trade route’ no matter how slight, has been established between [North Korea] and Cuba.”

John Park, an expert on North Korea and associate at Harvard University’s Kennedy School of Government, said that the Chong Chon Gang’s voyage would not have been a “freelance-type transaction” but would have been part of a “broader revenue generation effort to essentially make money for the regime.”

Park said only the military was capable of carrying out repair work on the Cuban armaments, adding, “Given the contents of the consignment, it looks like it is a North Korean military-linked state trading company.”

Calls to the company’s listed phone number were disconnected a few seconds after being answered.

“The relationship between [North Korea] and Cuba is a lot closer than it used to be,” said Michael Madden, editor of the North Korea Leadership Watch. “There’s been a lot more contact and interactions between senior Cuban officials and senior North Korean officials in recent years.”

Jeffrey Lewis, director of the East Asia nonproliferation program at the Monterey Institute of International Studies, said the interception in Panama is unlikely to disrupt those ties and North Korea would look for a new route. Repairing old weapons is one of the “few things that North Korea is good at,” he said. “I don’t think the North Koreans are going to give that up.”

UPDATE 6 (2013-7-18): According to the Associated Press:

Panama has filed charges against the crew of a North Korean ship seized as it tried to pass through the Panama Canal while carrying obsolete weaponry from Cuba hidden under bags of sugar, possibly in violation of U.N. sanctions.

Ramon Lopez, operations director for Panama’s National Aeronautics Service, said authorities decided to stop the ship after getting intelligence from the United States and other countries about a suspicious North Korean vessel.

“There was a lot of tension and strong resistance during the inspection,” said Lopez, adding that the inspection lasted for three days.

Panama’s top prosecutor, Javier Caraballo, said the captain and 35 crew members have been charged with “attempts against Panama’s security” and “illegally transporting undeclared military equipment.”

The North Korean Foreign Ministry had urged Panama to let the crew go, but Caraballo said late Wednesday that the charges will force the crew to remain while authorities search the ship further. Investigators were still unloading sacks of raw brown Cuban sugar Thursday.

Caraballo said the North Korean sailors could face four to six years in prison if convicted on the “attempts against Panama’s security” charge alone.

“According to the ship’s manifesto, this boat only had 220,000 quintals of sugar. It never declared the military weapons, and obviously this in itself is a violation of the rules and it puts in grave danger all who transit through the Panama Canal,” he said.

The captain and crew members have refused to speak to authorities, Caraballo said.

Caraballo also said shipping the weapons through the canal likely violated U.N. resolutions that ban North Korea from buying and selling missiles and other heavy arms.

Cuba has said it was sending the weapons, including missiles, two jet fighters and radar equipment, for repair in North Korea.

Panama’s government announced Wednesday night that visas issued by the Panamanian Embassy in Cuba’s capital to two North Korean officials based there were not valid because they were not authorized by prosecutors.

The diplomats had arranged to travel to this Central American country to inspect the ship and give their country’s version of events, but authorities said Panama would have to re-issue the visas.

“Only the attorney general may authorize citizens of the Republic of North Korea to conduct inspections of the ship because it’s a seized ship,” the presidency said in a statement. “The requested document in our embassy is not a valid one.”

The discovery of the weapons aboard the freighter Chong Chon Gang on Monday is expected to trigger an investigation by the U.N. Security Council committee that monitors sanctions against North Korea. Panamanian officials said U.N. investigators were expected in Panama on Thursday.

Panamanian security officials described to The Associated Press some tense moments aboard the ship after they stopped and boarded it July 10 for an inspection on suspicion it was carrying drugs.

Officials inspected the freighter while anchored a few miles from the port city of Colon. Officers then ordered the ship moved to a pier at the international port of Manzanillo.

Upon arrival, the captain and 35 crew members started to act aggressively, said Lopez of the aeronautics service. He said the captain went into a bathroom and came out holding a knife against his neck, threatening to cut himself.

“He made a small wound on his neck,” Lopez said.

A sailor was able to neutralize the captain and then the rest of the crew got restless and agents had to separate them, Lopez said.

“They started yelling and beating on a table, on the ship walls,” Lopez said. “They were demanding we free them.”

The captain was taken to a hospital in Colon, where he is in stable condition.

Panamanian President Ricardo Martinelli, who first announced the seizure of the ship Monday, said the captain had tried to commit suicide and had a heart attack.

Before the ship arrived in Manzanillo, the agents discovered that under sacks of sugar there was a metal container.

They opened the container and first found a radar control system for surface-to-air missiles, Panamanian authorities said.

Most of the crew was taken off the ship except for two sailors who remain to act as witnesses of the inspection by authorities, Caraballo said.

Read the full story here:
Panama Charges Crew of Seized North Korean Ship
Associated Press
Juan Zamorano and Kathia Martinez

UPDATE 5 (2013-7-17): The Chongchon-gang has been in trouble before. According to the Wall Street Journal’s Korea Real Time:

The 9,147-ton freighter, registered in 1977 to Chongchonggan Shipping Company in Pyongyang, has breached international laws repeatedly. In 2010 it was detained in Ukraine and found to be carrying narcotics and other contraband. In 2001 it set off alarms in South Korea by sailing through the country’s territorial waters near Jeju Island without approval. It later detoured.

This time it raised suspicions by disappearing.

Open-source Global Information System data show the Chong Chon Gang sailed through the Panama Canal on June 1 with a stated destination of Havana, Cuba. After that, the ship disappeared from the GIS satellite-based tracking system for about 40 days before it reappeared at the canal.

The satellite tracks have not recorded any calls by the ship on any Cuban ports, though the North Korean freighter may had just switched off its Automatic Identification System transmitter.

Panama’s security minister, Jose Raul Mulino, said Panamanian officials began tracking the cargo freighter on July 10. Two days later, the ship approached the narrow waterway that Panamanian officials used to corner and capture it after getting a tip that the ship was carrying illegal drugs.

Before being seized in Panama, 35 crew allegedly resisted, with its captain attempting suicide.

UPDATE 4 (2013-7-17): KCNA has published a statement related to the whole situation:

DPRK FM Spokesman Urges Panamanian Authorities Let Apprehended Crewmen, Ship of DPRK Leave

Pyongyang, July 17 (KCNA) — A spokesman for the DPRK Foreign Ministry gave the following answer to a question put by KCNA on Wednesday as regards the case of the DPRK trading ship Chongchongang apprehended in Panama:

There occurred an abnormal case in which the DPRK trading ship Chongchongang was apprehended by the Panamanian investigation authorities on suspicion of “drug transport,” a fiction, before passing through Panama canal after leaving Havana Port recently.

The Panamanian investigation authorities rashly attacked and detained the captain and crewmen of the ship on the plea of “drug investigation” and searched its cargo but did not discover any drug. Yet, they are justifying their violent action, taking issue with other kind of cargo aboard the ship.

This cargo is nothing but aging weapons which are to send back to Cuba after overhauling them according to a legitimate contract.

The Panamanian authorities should take a step to let the apprehended crewmen and ship leave without delay.

UPDATE 3 (2013-7-17): IHS Janes reports that the components are missile parts. According to the Los Angeles Times:

The military equipment shown in images tweeted by Panama’s president after his government stopped a ship en route to North Korea are radar parts for the SA-2 family of surface-to-air missiles, according to IHS Jane’s Intelligence, the defense consulting firm.

In an emailed statement Tuesday, Jane’s identified the parts as an RSN-75 “Fan Song” fire control radar for the missiles.

The way the cargo “was concealed and the reported reaction of the crew strongly suggests this was a covert shipment of equipment,” the firm said. “One possibility is that Cuba could be sending the system to North Korea for an upgrade. In this case, it would likely be returned to Cuba and the cargo of sugar could be a payment for the services.”

In another scenario, the fire-control radar equipment could have been en route to North Korea to augment Pyongyang’s existing air defense network, Jane’s said.

“North Korea’s air defense network is arguably one of the densest in the world, but it is also based on obsolete weapons, missiles and radars,” the firm said. “In particular, its high altitude SA-2/3/5 surface-to-air missiles are ineffective in a modern electronic warfare environment.”

UPDATE 2 (2013-7-16): The New York Times offers more details:

It started with a tip: that a rusty North Korean freighter, which had not plied the Caribbean in years, was carrying drugs or arms amid more than 200,000 sacks of Cuban brown sugar.

It ended with a five-day, eventually violent standoff between Panamanian marines and 35 North Korean crew members, armed largely with sticks, who were subdued and arrested while their captain, claiming he was having a heart attack, tried to commit suicide. Underneath all that sugar, it turned out, were parts for what appeared to be elements of an antiquated Soviet-era missile radar system that was headed, evidently, to North Korea — a country that usually exports missile technology around the world, rather than bringing it in.

But American and Panamanian officials were still trying to understand why the ship’s crew had fought so hard to repel a boarding party as the ship tried to traverse the Panama Canal. After all, the equipment they were protecting would make a nice exhibit in a museum of cold war military artifacts. “We’re talking old,” one official briefed on the episode said. “When this stuff was new, Castro was plotting revolutions.”

The episode also offered a window on the desperate measures North Korea is taking to keep hard currency and goods flowing at a time when its ships are tracked everywhere, old customers like Syria and Iran are facing sanctions and scrutiny of their own, and its partners have dwindled to a few outliers.

Still, Cuba’s role was puzzling — at a time when Washington has talked of relaxing restrictions and Cuba’s leadership has seemed more eager to improve its ties with the West than to strengthen relations with cold war-era partners.

Even by the measure of bizarre stories about North Korea’s black-market dealings, the events of the past five days in Panama set some records. In recent times North Korean shipments to Myanmar and the Middle East have been tracked and in some cases intercepted, a testament to how closely American spy satellites follow the country’s aging cargo fleet.

“What I can say for sure is that looking at illicit North Korea trade, their ships in particular, these guys are stumped for money, they are incredibly poor,” said Hugh Griffiths, an arms trafficking specialist at the Stockholm International Peace Research Institute. “Business deals that might look silly to us don’t look ridiculous to them.”

Panama’s president, Ricardo Martinelli, announced the discovery in a radio broadcast on Monday night, making it clear that the North Korean ship was in blatant violation of numerous United Nations sanctions. He even posted a photograph of the contraband on his Twitter account.

“We’re going to keep unloading the ship and figure out exactly what was inside,” Mr. Martinelli said. “You cannot go around shipping undeclared weapons of war through the Panama Canal.”

There was no comment on Tuesday from North Korea on the vessel’s seizure.

The Chong Chon Gang, a 36-year-old freighter, has its own peculiar history, and this was not the first time the vessel had encountered run-ins with maritime authorities. It was stopped in 2010 for carrying narcotics and ammunition, Mr. Griffiths said. He also said it had been attacked by Somali pirates.

According to IHS Fairplay, a London-based vessel-monitoring service, the freighter had not traveled the Western Hemisphere in at least four years. The monitoring data shows that it visited Panama in 2008 and Brazil in 2009.

Mr. Griffiths noted that its reappearance, even with the cover of a Cuban cargo of sugar, was bound to attract attention. He said interest in the vessel’s itinerary in recent weeks, which included a stopover in Havana, might have been heightened because of the July 3 visit to Cuba of North Korea’s top military commander, who conferred with President Raúl Castro. Cuban and North Korean news media publicized the trip.

“There are very few states where the North Korean chief of staff is welcomed for a high-level meeting,” Mr. Griffiths said.

American spy satellites regularly track North Korean vessels — but usually to stop weapons proliferation, not drugs. And as the intelligence agencies discovered several years ago, failure to monitor can lead to other lapses: the United States missed the construction of a North Korean nuclear reactor in Syria until Israeli officials brought evidence of it to Washington in 2007. Israel destroyed the reactor later that year.

Matthew Godsey, editor of the Risk Report, a publication of the Wisconsin Project on Nuclear Arms Control, a proliferation research group in Washington that follows North Korean behavior, said the Chong Chon Gang might have also been able to travel in the region undetected in the past by turning off its satellite transponder, used by tracking services to monitor vessels for their own safety.

“I think North Korean vessels have been known to do that,” he said. “It’s dangerous, but when you’re carrying dangerous stuff it can happen. When you have a captain willing to kill himself, it wouldn’t surprise me.”

Mr. Martinelli and other Panamanian officials said the vessel’s 35 crew members were taken into custody on Sunday after they violently resisted efforts to redirect the vessel to the Panamanian port of Manzanillo, at the Atlantic end of the canal. He did not explain how the captain sought to commit suicide, and the captain’s condition was unknown.

José Raúl Mulino, Panama’s minister of security, said in a telephone interview that the entire crew had been detained at a naval base after committing what he called an act of “rebellion and sabotage” in trying to resist the boarding of the vessel. It was unclear whether they would face criminal prosecution or be sent back to North Korea.

Mr. Mulino said that the suspect cargo was hidden in two containers behind the sugar, and that all 220,000 to 230,000 sugar sacks aboard would be removed before the ship could be completely investigated. The process can take a while, he said, because the crew had disabled the unloading cranes, forcing the Panamanians to remove the bags by hand.

UPDATE 1 (2013-7-16): The Cuban Ministry of Foreign Affairs has issued a press statement:

Statement about the North Korean ship Chong Chon Gang seized in Panama Canal

The authorities of the Republic of Panama have informed of the detention, in the Panamanian port of Colón, of the merchant vessel Chong Chon Gang, inscribed in the Democratic People’s Republic of Korea, coming from the Republic of Cuba.

The Ministry of Foreign Affairs wishes to inform that said vessel sailed from a Cuban port to the Democratic People’s Republic of Korea, mainly loaded with 10,000 Tons of sugar.

In addition, the above mentioned vessel transported 240 metric tons of obsolete defensive weapons –two anti-aircraft missile complexes Volga and Pechora, nine missiles in parts and spares, two Mig-21 Bis and 15 motors for this type of airplane, all of it manufactured in the mid-twentieth century- to be repaired and returned to Cuba.

The agreements subscribed by Cuba in this field are supported by the need to maintain our defensive capacity in order to preserve national sovereignty.

The Republic of Cuba reiterates its firm and unwavering commitment with peace, disarmament, including nuclear disarmament, and respect for International Law.

ORIGINAL POST (2013-7-16): Panama detains DPRK-flagged vessel. According to Reuters (via Washington Post):

Panama has detained a North Korean-flagged ship coming from Cuba as it approached the Panama Canal with undeclared weapons, President Ricardo Martinelli said.

The weapons, hidden in containers of brown sugar, were detected after Panamanian authorities stopped the ship, suspecting it was carrying drugs. The vessel was pulled over near the port of Manzanillo on the Atlantic side of the canal.

“We’re going to keep unloading the ship and figure out exactly what was inside,” Martinelli told Panamanian television late on Monday, without giving further details.

“You cannot go around shipping undeclared weapons of war through the Panama Canal.”

Martinelli said the captain of the vessel tried to commit suicide after the ship was stopped. Panamanian authorities have detained some 35 crew members.

A spokeswoman for the canal said she did not have any more information and referred questions to the attorney general.

The attorney general’s office did not immediately return requests for comment.

Javier Caraballo, Panama’s top anti-drugs prosecutor, told local television the ship was en route to North Korea.

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North Korea expanding cooperation with Mongolia in IT, distribution, and livestock industries

Friday, July 5th, 2013

Institute for Far Eastern Studies (IFES)
2013-7-5

Economic cooperation between North Korea and Mongolia is increasing. In July 2013 alone, Mongolian authorities made two trips to North Korea, actively displaying exchanges between the two states. According to North Korean media, on July 3, 2013 a Mongolian delegation representing information and technology, postal, and communication industries signed an agreement with North Korea to promote exchanges and cooperation in the IT sector.

On July 15, Lundeg Purevsuren, national security and foreign policy advisor to the Mongolian president, and Avia Baatarhuyag, director general of the Mongolian News Agency, visited North Korea. Last month, Mongolian oil trading and refining company HB Oil JSC acquired a 20 percent stake in the North Korean state-run entity operating North Korea’s Sungri Refinery, representing the first purchase by a Mongolian-listed company of a foreign asset.

In particular, one of North Korean leader Kim Jong Un’s focal projects is the development of the Sepho tableland (in Gangwon Province) into a large-scale stockbreeding base. North Korea is reportedly cooperating with Mongolian experts in the livestock industry in this regard.

North Korea and Mongolia are strengthening economic cooperation as national interests of the two states overlap in many areas. As Mongolia is a landlocked country, Ulaanbaatar wants to take advantage of North Korea’s Rajin Port as a conduit to export Mongolia’s natural resources to foreign countries since access to the East Sea via use of the port can significantly reduce transportation costs.

In November 2012, when North Korea’s Supreme People’s Assembly Chairman Choe Tae Bok visited Ulaanbaatar, Chairman of the Mongolian Parliament Zandaakhuu Enkhbold expressed interest in cooperating with North Korea in trade, IT, and people-to-people exchanges and affirmed Mongolia’s interest in use of the harbor. In response, Chairman Choe also conveyed North Korea’s interest in leasing the harbor, as well as in cooperating with Mongolia in the coal and mining industries. North Korea is promoting the development of Rajin Port as an international harbor to attract foreign investment, including Mongolian investment.

In addition, as a means of earning foreign currency, North Korea sends a large number of workers to Mongolia to work at construction sites. Radio Free Asia (RFA) reported on July 3 that there were 1,749 North Korean workers dispatched to Mongolia as of April — the second largest group of foreign laborers in Mongolia (second only to the Chinese at 5,976 workers), which has a total of 12,064 workers from 103 countries.

North Korea and Mongolia established diplomatic relations in 1948. Pyongyang closed its embassy in Ulaanbaatar in August 1999 for economic reasons, but re-opened it in August 2004.

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DPRK frees Chinese fishing boat

Tuesday, May 21st, 2013

UPDATE 1 (2013-5-27): According to the Global Times (PR China):

Chinese agencies operating in Dandong, Northeast China’s Liaoning Province have been implicated in the seizures of Chinese fishing boats for ransom by armed North Koreans.

The Beijing Times quoted Zhang Dechang, whose boat was seized by North Koreans in May last year, as saying that he was given a cellphone number registered in Dandong and was demanded to pay a ransom to the cellphone owner. However, Zhang failed to reach the cellphone owner, and the number later was canceled.

The report said Zhang asked the boss of a Chinese agency in Dandong, which represents North Korea in handing out licenses for Chinese fishermen to fish in North Korean waters, for mediation but was turned down. He claimed a Chinese boat took part in the looting of his boat when the North Koreans seized it.

A North Korean patrol ship, which has hijacked several Chinese fishing boats, is said to be a retired Chinese ship and given to the North by a Chinese agency, the report said.

Yu Xuejun, whose boat was hijacked by North Koreans for two weeks this month, earlier told the Global Times that the kidnappers asked him to pay ransom to a bank account of a company in Dandong, but he failed to catch the name of the company.

The Guangzhou-based Nandu Daily quoted an unidentified fishing boat owner as saying that the Chinese agencies in Dandong are related to the company which is collecting the ransom.

There are three major agencies in Dandong representing North Korea. The fishing boats, which obtained licenses from the agencies, fly both Chinese and North Korean flags and can enter certain areas inside North Korean waters.

The Chinese boat owners, whose boats had been hijacked, insisted that their boats were operating in Chinese waters when they were captured.

Sun Caihui, whose boat was seized by North Koreans in May last year and released after the intervention of the Chinese government, told the Global Times Monday that local fishermen have been operating on the western side of 124 degrees east longitude for generations, which has long been regarded as the demarcation line of the sea border between China and North Korea.

“We aren’t going to take the risk of being seized by the North Koreans again,” he said, calling on the government to clarify the sea border with the North so as to address the concerns of fishermen.

However, there is no available official documentation on the sea demarcation between the two countries.

Meanwhile, Sun Chen, a professor from Shanghai Ocean University, said Monday that the Chinese fishery authority should strengthen law enforcement activities to protect the fishermen.

“Currently, we face shortages in personnel, equipment and spending of the fishery management department. The government should attach importance to the building of the law enforcement force,” she said.

ORIGINAL POST (2013-5-21): According to Bloomberg:

North Korea freed a Chinese fishing vessel and its crew after the boat’s owner posted updates on his microblog account saying that he’d been told to pay a 600,000-yuan ($97,800) ransom to win their release.

The ship and its crew, from the northern city of Dalian, were freed today, the official Xinhua News Agency reported, citing a Chinese consular officer in North Korea. The ship’s owner, Yu Xuejun, said on his Tencent Holdings Ltd. (700) microblog account today that he couldn’t come up with the cash and was “thankful to the Foreign Ministry for its diplomacy.”

China, which filed a formal complaint over the detention, is asking North Korea to investigate and “make a full explanation to us,” Foreign Ministry spokesman Hong Lei said today. No ransom was paid to secure the crew’s freedom, China National Radio reported today, without citing anyone.

“There is no territorial confrontation between China and North Korea,” the editorial said. “It’s more likely the North Korean military police are using the ambiguity of maritime borders to make a quick buck.”

Last year a North Korean ship seized three Chinese fishing and demanded 300,000 yuan to free each vessel.

Read the full story here:
North Korea Frees Chinese Fishing Boat After Ransom Report
Bloomberg
2013-5-21

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