North Korean Economy Watch

From GPI:

For many entrepreneurs, North-Korea is a relatively unknown trade destination. For this reason, from 28 September to 4 October 2008, a Dutch economic delegation investigated the business climate in this country. You may download a short report of this unique mission here.  Because of its success, another mission will be organised in 2009.
  
The participants noticed trade and investments in several fields, including textile and garments, shipbuilding, agribusiness, logistics, mining, animation and Information Technology. The findings of the mission will be presented at the seminar “Doing business with North-Korea”, which will take place in The Hague in spring 2009. A videofilm about the tour will be shown as well.
  
If you are interested in business opportunities in North-Korea, or in joining a seminar or trade mission, please contact us for further details. It is also possible for us to give presentations at business seminars abroad, in order to present the findings of the Dutch mission in more detail.
 
With best regards,
Paul Tjia (sr. consultant ‘offshore sourcing’)
GPI Consultancy, P.O. Box 26151, 3002
ED Rotterdam, The Netherlands
E-mail: paul@gpic.nl
tel: +31-10-4254172 
fax: +31-10-4254317
Website: www.gpic.nl
report_dutch_trade_mission_to_north_korea.pdf

North Korea Uncovered: Version 12
Download it here

About this Project: This map covers North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, energy infrastructure, political facilities, sports venues, military establishments, religious facilities, leisure destinations, national parks, shipping, mining, and railway infrastructure. It is continually expanding and undergoing revisions. This is the 12th version.

Additions include: Tongch’ang-dong launch facility overlay (thanks to Mr. Bermudez), Yongbyon overlay with destroyed cooling tower (thanks to Jung Min Noh), “The Barn” (where the Pueblo crew were kept), Kim Chaek Taehung Fishing Enterprise, Hamhung University of education, Haeju Zoo, Pyongyang: Kim il Sung Institute of Politics, Polish Embassy, Munsu Diplomatic Store, Munsu Gas Station, Munsu Friendship Restaurant, Mongolian Embassy, Nigerian Embassy, UN World Food Program Building, CONCERN House, Czech Republic Embassy, Rungnang Cinema, Pyongyang University of Science and Technology, Pyongyang Number 3 Hospital, Electric Machines Facotry, Bonghuajinlyoso, Second National Academy of Sciences, Central Committee Building, Party Administration Building, Central Statistics Bureau, Willow Capital Food House, Thongounjong Pleasure Ground, Onpho spa, Phipa Resort Hotel, Sunoni Chemical Complex (east coast refinery), Ponghwa Chemical complex (west coast refinery), Songbon Port Revolutionary Monument, Hoeryong People’s Library, Pyongyang Monument to the anti Japanese martyrs, tideland reclamation project on Taegye Island. Additionally the electricity grid was expanded and the thermal power plants have been better organized. Additional thanks to Ryan for his pointers.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your contributions to this project.

Version 12 available: Download it here

So it seems the DPRK “was” involved in the Black Sea shipping industry…until their ship sank.  From RIA Novosty:

The Tolstoy cargo ship that has reportedly sunk in the Black Sea off the Bulgarian coast was not Russian, but North Korean, the Russian Transportation Ministry said on Saturday.

“We have nothing to report in relation to this tragedy because the ship that sank on Saturday near the Bulgarian coast belongs to North Korea…The crew was not Russian either,” the ministry said in a statement.

The Bulgarian Ministry of Transport earlier reported that the Russian Tolstoy cargo vessel with 13-member crew on board sank about 04.00 local time 10-15 miles off the Bulgarian coast.

Meanwhile, Bulgaria’s Darik Radio said sea search-and-rescue teams, including a Bulgarian military helicopter, are attempting to find the survivors, but the rescue operation is hampered by bad weather.

A Bulgarian Navy frigate is expected to join the rescue effort later on Sunday.

Darik Radio said the 138-meter-long cargo vessel was carrying scrap metal from Rostov-on-Don in Russia to Nemrut in Turkey.

The ship has reportedly been in service for 37 years and was recently cited for numerous technical problems.

Read the full story here:
Russia says ‘sunken ship in Black Sea was North Korean’
RIA Novosti
9/27/2008

The most authoritative map of North Korea on Google Earth
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the eleventh version.

Additions include: Mt. Paegun’s Ryonghung Temple and resort homes, Pyongyang’s Chongryu Restaurant, Swiss Development Agency (former UNDP office), Iranian Embassy, White Tiger Art Studio, KITC Store, Kumgangsan Store, Pyongyang Fried Chicken Restaurant, Kilju’s Pulp Factory (Paper), Kim Chaek Steel Mill, Chongjin Munitions Factory, Poogin Coal Mine, Ryongwun-ri cooperative farm, Thonggun Pavilion (Uiju), Chinju Temple (Yongbyon), Kim il Sung Revolutionary Museum (Pyongsong), Hamhung Zoo, Rajin electrified perimeter fence, Pyongsong market (North Korea’s largest), Sakju Recreation Center, Hoeryong Maternity Hospital, Sariwon Suwon reservoir (alleged site of US massacre), Sinpyong Resting Place, 700 Ridges Pavilion, Academy of Science, Hamhung Museum of the Revolutionary Activities of Comrade Kim Il Sung, South Hamgyong House of Culture, Hamhung Royal Villa, Pork Chop Hill, and Pyongyang’s Olympic torch route. Additional thanks go to Martyn Williams for expanding the electricity grid, particularly in Samjiyon, and various others who have contributed time improving this project since its launch.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.  Additionally, this file is getting large and may take some time to load.

Interview Blog, Germany
(click here for all their North Korea-related interviews)

“Phoenix Commercial Ventures Ltd is a venture capital company that offers investors business and investment opportunities in the DPRK” – Interview with Ken Frost (CFO of Phoenix)

Klaus-Martin Meyer: Mr. Frost, you are member of the Board of Phoenix Commercial Ventures Ltd, a company that offers investors business and investment opportunities in the Democratic People’s Republic of Korea (DPRK) otherwise known as North Korea. Would you mind introducing yourself and your company as well to our readers?

Ken Frost: Phoenix Commercial Ventures Ltd is a venture capital company that offers investors business and investment opportunities in the DPRK, enabling them to take advantage of the economic reforms that are taking place there.

Phoenix is owned and run by four experienced professionals, who are based in London, Paris and the DPRK. The Board has between them many years of international business experience, and an invaluable network of well placed contacts. Phoenix offers a unique service, by being able to offer direct access to the DPRK.

Phoenix Commercial Ventures Ltd specialises in project finance in the DPRK. As is well known, the business environment is difficult, and the company targets very specific investment projects; these are small enough to manage and have the capacity to generate foreign currency, either through export or import substitution.

Phoenix Commercial Ventures Ltd maintains an office in Pyongyang, almost the only European company to do so, and operates with the following specific aims:

• Identify commercially viable investment projects in the DPRK, on a case by case basis
• Identify reliable local partners for all forms of business in the DPRK, either trade or investment
• Seek overseas investment sources for such projects
• Minimise the risk in such projects, by taking responsibility for supervision of the local set-up procedures and management of the projects

The Board of Phoenix Commercial Ventures Ltd consists of nationals of the UK, France and the DPRK. The European flavour is enhanced by the fact that most of the counterparties and suppliers in the various projects are also European, and the DPRK government views Phoenix Commercial Ventures as a prime conduit for European business and investment in the DPRK.

One of the directors of Phoenix Commercial Ventures is also General Manager and CEO of the Daedong Credit Bank, the only western-invested foreign bank in the DPRK. Based in Pyongyang, this is a 70-30 joint venture between a UK financial management company based in Hong Kong and the Korea Daesong Bank, one of the main DPRK banks.

Phoenix Commercial Ventures is unique in having this connection with a reliable, locally based financial institution. The synergy benefits include a wider exposure to local business contacts in differing fields; as well as an additional degree of control, made possible by the fact that the various joint venture projects have to maintain their accounts with the bank.

We have a number of projects within DPRK, including two 50/50 joint ventures:

– Hana Electronics JVC, a consumer electronics company now ranked as one of the top three best performing joint ventures in DPRK, as assessed by the Ministry of Finance.

– Sinji JVC, whose main areas of operations are retail, software and bonded processing.

Full details about our company can be found on our website www.pcvltd.com

I am the CFO of Phoenix and am a chartered accountant with over twenty years international experience of FMCG industries, consumer electronics, rough diamond distribution and the Internet. I have worked in KPMG, Philips Electronics, De Beers and run my own Internet company. I am also a Scholar on Gerson Lehrman Group Councils.

In November 2007 I reached the finals of Accountant of the Year held by the Association of International Accountants at the President’s Awards Dinner 2007. This award is designed to recognise organisations’ accountancy stars.

In January 2007 I was awarded, based on recommendations from fellow members of the ICAEW, a New Year’s Honour by AccountingWeb. The award was for my services to the accountancy profession in opposing the merger of the ICAEW with other accountancy bodies.

In November 2006 I was awarded an honorary fellowship of the Institute of Professional Financial Managers (IPFM), for my services to the accountancy profession.

In January 2006 Accountancy Age placed me on their Financial Power List for 2006. I was 11th on their list of the top 50 of “The Ones To Watch”. The list identified the “most influential names to look out for” in the world of finance for 2006.

Klaus-Martin Meyer: We read on your website “offers investors business and investment opportunities in the Democratic People’s Republic of Korea (DPRK), enabling them to take advantage of the economic reforms that are taking place there.” Can you tell us what kind of opportunities this could be?

Ken Frost:There are three main areas of investment opportunities open to investors, which we can facilitate within the DPRK:

1 Small scale investments ($500K or less) yielding good levels of return (20% or more).

These investment opportunities are in local production (consumer goods, bonded processing, software etc) for domestic market consumption and export. These utilise the advantages that DPRK has over all the other countries in the region namely:

– 99% literacy
– skilled/disciplined/hard working workforce
– well educated workforce, many speak a good level of English
– lowest wage rates in the region

Phoenix has a number of opportunities that it can offer investors in this area; eg bonded processing, consumer manufacturing, clothing manufacturing and software development.

2 Natural resources

DPRK has proven abundant natural resources worth several trillion dollars; eg coal, gold, copper, titanium, lead, zinc, nephelite, nickel, magnesia, graphite etc.

The investment required would be of a higher order than the small scale investments above, $1M plus. The money would be used to bring existing mines back to production, by pumping out flood water and renewing worn out capital equipment.

Phoenix has, via its working relationship with CPEEC, a number or opportunities in the natural resource sector that it can offer genuine investors.

3 Infrastructure development

Clearly investment in infrastructure is the costliest form of investment. However, given the dilapidated state of the roads, railways, ports, electricity grid etc it is necessary if the economy is to be revived.

DPRK also has a keen interest in infrastructure development focussed on green/renewable energy areas.

Phoenix has on it books a profitable renewable energy project that would suit a serious, well financed and experienced green energy investor.

The DPRK is the final economic frontier and is a “green field” site. Its primary advantages are:

– Location (physical position between Russia, South Korea, China and in AP)
– Location (historical, all the major players now want to move forward)
– Location (resources, it has abundant rich resources both mineral and human capital – high literacy, well educated etc)

Klaus-Martin Meyer: What are the main differences between your company and a conventional venture capital company that is investing for example in internet our biotech companies?

Ken Frost: Companies such as those you mention are industry-specific, whereas ours is location-specific. Our company is relevant to people who might want to invest in the DPRK.  We work in the DPRK and have a physical presence in the DPRK, other “conventional” venture capital companies do not.

Klaus-Martin Meyer: Are there any differences to other investment companies?

Ken Frost: We apply the same principles to potential investments as any other professional investment company, we look at:

– the risk
– the returns
– the quality of the local management
– the quality of the business plan
– the size of investment
– the share offered for that investment etc

We also pay very close attention to corporate governance issues such as; financial reporting, management structure and ethics etc. We have a code of conduct which can be seen on our website.

Phoenix Commercial Ventures Ltd is committed to being a responsible corporate citizen and to the pursuit of a sustainable future, both economic and social.

Phoenix Commercial Ventures Ltd adheres to three fundamental ethical principles:

– Integrity
– Competence
– Courtesy

To this end Phoenix Commercial Ventures Ltd has developed a Code of Conduct, which sets out to ensure that these principles are followed in its operations. The Code of Conduct governs Phoenix’s business decisions and actions. The Code applies equally to corporate actions, and to the behaviour of individual employees when conducting business on behalf of Phoenix.

We work very hard with our local management teams and business partners to ensure that international standards re reporting, corporate governance and ethics are understood and followed.

Klaus-Martin Meyer: What are your plans for the company’s future? How do you see Phoenix Commercial Ventures in five years time?

We see the coming period for Phoenix as that of being continued growth.

In our view there will be a major upswing in economic relations between the DPRK and other countries over the coming months/years. Phoenix Commercial Ventures is uniquely placed to take advantage of, and to respond to, that upswing.

We are one of the very few organisations to have made successful joint ventures in the DPRK. We are also one of the very few organisations to have people with many years’ experience, and cultural sensitivity, actually on the ground in Pyongyang. You cannot run a business by email!

UPDATE 3 (2013-3-15): Michael Rank offers more information on the DPRK – Taiwan nuclear waste deal:

North Korean-Taiwan nuclear waste deal thwarted over export permit
By Michael Rank

A Taiwanese report says one reason the North Korean nuclear waste deal fell through was that Taipower didn’t obtain an export permit for the waste from the Taiwanese Atomic Energy Council (AEC).

It also says that Taipower claims no final deal was ever signed, so there is no question of the agreement being violated. It quotes Taipower official Huang Tien-huang as saying the North Koreans blocked them from viewing the processing site at Phyongsan (Pyeongsan, 평산, 平山), while the AEC also had procedural problems with the North Koreans, leading it to refuse an export permit.

North Korea has hired a (presumably Taiwanese) lawyer, Tsai Hui-ling, to plead its case, and is claiming NT$300 million (US$10 million) compensation. Tsai can be seen on this English-language video clip.

A PRC report quoting Taiwanese reports says the first stage of the deal worth US$75.66 million envisaged shipping 60,000 barrels of nuclear waste, and a further 14,000 barrels in the second stage, with a total value of $150 million and that the North Koreans were after the deal as a source of foreign exchange at the height of the famine. There have been ten rounds of negotiations to try to resolve the dispute, the report says, adding that Taiwan decided in 1999 that it would process the waste domestically.

As I reported in 2008, North Korea signed a deal with a Chinese company to recycle industrial waste that is so polluted that other countries have refused to handle it.

A slightly fuller Chinese report than the one I cited earlier names the Chinese company involved as Dalian-based Huatai Recycling Resources Co Ltd and says it has close links with the North Korean National Defence Commission, foreign ministry, environment ministry and foreign trade ministry.

It also says the North Koreans have four large recycling sites at Sinuiju and Nampo, two for lead batteries and two for electronic goods, and that they are able to recycle a wide array of equipment, from plastics to refrigerators as well as computers, phones and scanners, including goods that are banned for recycling in China.

It is not clear if the Chinese-North Korean deal was actually implemented.

UPDATE 2 (2013-3-2): The DPRK intends to sue Taiwan for breach of contract in its failure to begin the Taiwan – DPRK waste management project. According to the China Post (Taiwan):

North Korea is poised to sue Taiwan Power Co. (台電) for damages of NT$300 million, over an alleged breach of a contract signed more than 16 years ago, according to lawyers working on Pyongyang’s behalf.
Litigation will begin March 4, North Korea’s legal counsel said.

In 1996, Taipower allegedly committed to a contract with North Korea in which nuclear waste from Taiwan would be shipped and stored in the isolated communist nation, according to reports.

However, the plans were halted due to North Korea’s then-inadequate waste storage facilities and the sudden eruption of international uproar over the scheme, with Taiwan paying US$8.72 million to preserve a five-year option period in 1998, according to the lawyers, who added that North Korea continued to invest in its waste storage facilities under the assumption that the deal would be completed.

After over 10 rounds of negotiation over the past 15 years, North Korea is now accusing Taipower of complacency and negligence, citing a lack of communication and effort to fulfill the agreed-upon obligations.

In light of North Korea’s unexpected litigation, Taipower has said that such a dated case needs a comprehensive internal review before a response can be formulated.

The lawsuit marks a surprising development in the ongoing row over the proposed plan to construct a fourth nuclear power plant in Taiwan, as the ruling and opposition parties wrestle over the terms of the proposed referendum, which would decide the fate of the plant.

UPDATE 1 (2009-1-8): A Taiwanese official is under investigation for activities related to the Taiwan – DPRK waste management deal. According to the AFP (via Singapore’s Straits Times):

The Apple Daily reported on Thursday that prosecutors had begun investigating claims that Chen might have pocketed 300 million Taiwan dollars of financial aid in 2004 and 2005 in exchange for North Korea handling the island’s nuclear wastes.

The daily, which did not name its sources, alleged the cash would be given to a high-ranking North Korean official through a contact who promised to help Taipei set up a ‘direct communication channel’ with Mr Kim Jong-Il’s regime.

However, Taiwan did not establish any form of contact with North Korea nor send its nuclear waste to the communist state after the foreign ministry paid the money, the report said.

Self-ruled Taiwan is formally recognised by only 23 countries and does not have diplomatic ties with North Korea.

Read the full story here:
Funds were for N.Korea
AFP via Straits Times
1/8/2009

ORIGINAL POST (2008-6-30): According to Michael Rank in the Telegraph:

North Korea is planning to recycle waste that is so polluted other countries refuse to handle it.

Through a Chinese-language website (link here) the country is seeking supplies of plastic and electronic waste which “can be processed in [a North Korean port] but which other countries and territories are restricted from dealing in”, reflecting the country’s dire economic plight and its scant regard for international norms.

Isolated and desperately poor, North Korea is a beginner so far as toxic waste is concerned, although in 1996 it signed a deal with Taiwan to dispose of its nuclear waste from atomic power plants.

South Korea reacted furiously to the deal and Taiwan was eventually forced to back down and cancel the agreement.

North Korea also offered to recycle the North Sea Brent Spar oil storage platform, which Royal Dutch Shell had proposed dumping in the deep Atlantic in 1995.

This caused an environmental furore, with Greenpeace claiming that the structure was full of oil and burying it at sea would result in serious pollution.

An enterprising young North Korean official in London unexpectedly offered to come to the rescue, suggesting that his country could dispose of the structure, saving Shell and the British government from further embarrassment.

The offer was turned down as Shell didn’t want to be seen turning to a regime as dubious as North Korea, but Greenpeace’s own reputation took a serious knock when it was forced to admit that it had enormously over-estimated the amount of oil remaining in Brent Spar’s storage tanks.

North Korea’s waste recycling plans are part of a much bigger, £5 million ($10 million) project to enlarge a port on its west coast and develop it into an export base including a duty-free zone.

“There are no limits, any business taking advantage of [North] Korea’s low labour costs for intensive processing is welcome,” the website states.

Although the port is not named, it is almost certainly Nampo, which is close to the capital and is the largest harbour on North Korea’s west coast. The development covers 30,000 square metres (320,000 square feet) and is “expandable”.

The port currently accepts vessels of up to 10,000 tonnes but the plan is to increase this to 50,000 tonnes.

The project is pitched at Chinese companies, and interested parties are asked to contact a firm in the Chinese city of Dandong on the North Korean border.

A deal with China would help to counterbalance a recent agreement with state-owned Russian Railways to build a £50 million ($100million) container terminal on North Korea’s east coast as part of a £1.5 billion ($3 billion) plan to create a rail corridor linking South Korea with Europe via North Korea and Russia.

Russian Railways wants to turn the port of Rajin into a hub capable of handling 320,000 containers a year for shipment from South Korea to Europe.

Russia and China have fought bitterly over rights to refurbish Rajin. A few years ago China appeared to have won out when a 50-year deal was announced with the Chinese border city of Hunchun, but this came to nought and Russia was the ultimate winner in the battle to revitalise the north-eastern port and ultimately link it with Europe.

The original source, a Chinese language website, is here.

To read the full story click here:
North Korea in bid to recycle toxic waste
Telegraph
Michael Rank
6/30/2008

UPDATE 3:  Executive Order: Continuing Certain Restrictions with Respect to North Korea and North Korean Nationals

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), and section 301 of title 3, United States Code,

I, GEORGE W. BUSH, President of the United States of America, find that the current existence and risk of the proliferation of weapons-usable fissile material on the Korean Peninsula constitute an unusual and extraordinary threat to the national security and foreign policy of the United States, and I hereby declare a national emergency to deal with that threat. I further find that, as we deal with that threat through multilateral diplomacy, it is necessary to continue certain restrictions with respect to North Korea that would otherwise be lifted pursuant to a forthcoming proclamation that will terminate the exercise of authorities under the Trading With the Enemy Act (50 U.S.C. App. 1 et seq.) (TWEA) with respect to North Korea.

Accordingly, I hereby order:

Section 1. Except to the extent provided in statutes or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order, the following are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

all property and interests in property of North Korea or a North Korean national that, pursuant to the President’s authorities under the TWEA, the exercise of which has been continued in accordance with section 101(b) of Public Law 95-223 (91 Stat. 1625; 50 U.S.C. App. 5(b) note), were blocked as of June 16, 2000, and remained blocked immediately prior to the date of this order.

Sec. 2. Except to the extent provided in statutes or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order, United States persons may not register a vessel in North Korea, obtain authorization for a vessel to fly the North Korean flag, or own, lease, operate, or insure any vessel flagged by North Korea.

Sec. 3. (a) Any transaction by a United States person or within the United States that evades or avoids, has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in this order is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.

Sec. 4. For the purposes of this order:

(a) the term “person” means an individual or entity;

(b) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization; and

(c) the term “United States person” means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.

Sec. 5. The Secretary of the Treasury, after consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government consistent with applicable law. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order.

Sec. 6. The Secretary of the Treasury, after consultation with the Secretary of State, is hereby authorized to submit the recurring and final reports to the Congress on the national emergency declared in this order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)).

Sec. 7. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, instrumentalities, or entities, its officers or employees, or any other person.

GEORGE W. BUSH

THE WHITE HOUSE,

June 26, 2008.

UPDATE 2: How much plutonium does the DPRK have?

From the Daily Times (Pakistan):

But there may be problems ahead with the declaration. Japan’s Asahi Shimbun newspaper reported an informed source as saying the North declared it produced around 30 kg (66 lbs) of plutonium, while US officials have said they think it is closer to 50 kg. Sung Kim, a State Department envoy who witnessed the cooling tower blast, told reporters in Seoul on Saturday that there might not be enough time to complete the North’s denuclearisation before President George W Bush leaves office in January 2009.

‘Emotionally attached’: Kim said North Koreans engineers appeared to have formed an “emotional attachment” to their atomic programme that has become apparent during international efforts to dismantle it. Kim told reporters that he saw emotion in Ri Yong-ho, head of the Yongbyon nuclear reactor, and his colleagues when they all witnessed Friday’s demolition of the plant’s cooling tower. “I think I detected a sense of sadness when the tower came down but I thought he put it well when he was asked what this all meant for him and he said that he just hoped this would contribute to peace and stability,” said Ri.  

UPDATE 1:
“US Treasury says N.Korea sanctions remain in place”
Reuters via Guardian
David Lawder
6/26/2008

U.S. Treasury financial sanctions aimed at ending North Korean money laundering, illicit financing activities and weapons proliferation remain in effect despite the easing of other sanctions against Pyongyang, a Treasury spokesman said on Thursday.

The move by the Bush administration to lift some sanctions after North Korea delivered a long-delayed account of its nuclear activities will not restore the country’s access to the international banking system, Treasury spokesman John Rankin said.

North Korea was largely cut off from the international banking system in 2005 when the Treasury named Banco Delta Asia, a small bank in the Chinese gambling enclave of Macau, as a primary money laundering concern.

The Treasury accused the bank of circulating counterfeit U.S. currency produced by North Korea, and of knowingly handling transactions by North Korean entities involved in illicit activities, including the narcotics trade and sales of counterfeit cigarettes and other goods.

Both North Korea and Banco Delta Asia have denied the Treasury’s allegations.

Although about $25 million in frozen North Korean funds in Banco Delta Asia was released last year, the sanctions against the bank, which prohibit transactions with U.S. banks, remain in effect, Rankin said. International banks have largely shunned Banco Delta Asia as well.

As recently as April, Treasury officials said so called “supernotes” — high quality counterfeit $100 bills produced by North Korea, were still surfacing.

“The lifting of sanctions associated with the Trading with the Enemy Act, and removing North Korea from the list of state sponsors of terrorism does not represent North Korea’s re-integration into the international financial system,” he said.

Sanctions that prohibit U.S. companies from owning, leasing, operating, insuring North Korean-flagged shipping vessels, as well as registering vessels in North Korea, remain in place. 

ORIGINAL POST: Today North Korean made the nuclear declaration required by the February 2007 six-party agreement.  This web site does not focus on the nuclear issue, but this turn of events represents a significant US policy shift with economic implications for the DPRK.  The coverage has been overwhelming, so below are media excerpts that cover most of the angles:

“Pyongyang Submits Nuclear Declaration”
Wall Street Journal
Evan Ramstad
6/26/2008

After keeping the U.S. and other countries waiting for 15 months, North Korea delivered a description of its efforts to develop nuclear weapons, setting up the next – and more difficult – stage in an international effort to disarm and reshape the isolated, authoritarian country.

North Korean diplomats gave a declaration of its nuclear-weapons program to Chinese counterparts in Beijing who have been coordinating the six-nation talks. In return, U.S. President George W. Bush announced the lifting of some trade sanctions and beginning of the process of removing North Korea from its list of state sponsors of terror. (Read the text of the White House statement here).

Under the February 2007 deal, North Korea also agreed to disable a nuclear plant that provided fuel for its nuclear weapons, a step that’s also nearly complete. On Friday, it plans to blow up the cooling tower at the nuclear plant and invited TV crews from several countries, including the U.S. and South Korea, to record the event.

The contents of North Korea’s declaration weren’t immediately disclosed. In recent weeks, U.S. diplomats have said they didn’t expect it to include a key piece of data – how many nuclear weapons the country has built. The document also is believed to be limited to North Korea’s efforts to develop plutonium as a nuclear fuel, but doesn’t mention suspected research into highly-enriched uranium as a fuel nor its suspected proliferation efforts to Syria.

“North Korea removed from US ‘axis of evil'”
London Times
Jeremy Page and Richard Lloyd Parry
6/26/008

The US move, which will also see a lifting of long-running sanctions, would mark the most significant thaw in relations between Washington and Pyongyang since the 1950-53 Korean War. Mr Bush said that it was intended to reward and encourage North Korean co-operation and accelerate the tangled negotiations on the country’s nuclear disarmament.

In the first instance, America will exempt North Korea from sanctions under the Trading with the Enemy Act, a piece of First World War legislation that was employed during the Korean War, and which restricts trade with Pyongyang by US companies and citizens. The only other country subject to its provisions is Cuba.

It also gave notice that it would start the 45-day process of removing North Korea from its list of state sponsors of terrorism, where it stands alongside Cuba, Iran, Sudan and Syria. Sanctions against them include a ban on arms sales, economic assistance, and an obligation on the US Government to oppose loans to listed countries by such international institutions as the World Bank.

“Diplomacy Is Working on North Korea”
Wall Street Journal
Condoleeza Rice
6/26/2008; Page A15

In its declaration, North Korea will state how much plutonium it possesses. We will not accept that statement on faith. We will insist on verification. North Korea has already turned over nearly 19,000 pages of production records from its Yongbyon reactor and associated facilities. With additional information we expect to receive – access to other documents, relevant sites, key personnel and the reactor itself – these records will help to verify the accuracy and completeness of Pyongyang’s declaration. North Korea’s plutonium program has been by far its largest nuclear effort over many decades, and we believe our policy could verifiably get the regime out of the plutonium-making business.

Getting a handle on North Korea’s uranium-enrichment program is harder, because we simply do not know its full scale or what it yielded. And yet, because of our current policy, we now know more about North Korea’s uranium-enrichment efforts than before, and we are learning more still – much of it troubling. North Korea acknowledges our concerns about its uranium-enrichment program, and we will insist on getting to the bottom of this issue.

Similarly, we know that North Korea proliferated nuclear technology to Syria, but we do not know whether that is the end of the story. Rather than just trying to address this threat unilaterally, we will be more effective in learning about North Korean proliferation and preventing its continuation through a cooperative effort with Japan, South Korea, China and Russia.

And in return for these steps, what have we given thus far? No significant economic assistance. No trade or investment cooperation. No security guarantees or normalized relations. And our many sanctions on North Korea, both bilateral and multilateral, remain in place.

“‘Good start’ to UN’s Syria probe”
BBC
6/25/2008

The head of a UN team investigating allegations that Syria has been working on a secret nuclear weapons programme says their work is off to a good start.

The IAEA official, Olli Heinonen, said inspectors had taken samples at the al-Kibar site in the Syrian desert.

“It was a good start, but there’s still work that remains to be done,” he said.

“For this trip we did what we agreed to. We achieved what we wanted on this first trip. We took samples which we wanted to take. Now it’s time to analyse them.”

Mr Heinonen also said he was generally satisfied with the level of co-operation by Syria.

Additional information: 

To read a hawk perspective, see Josh’s post at One Free Korea.  Also, the Telegraph (UK) reports that Vice President Cheney tried to block the deal.

David Kang spoke to NPR’s Market Place.

US move reduces Japan’s negotiation leverage over DPRK.

Acheon Global Corp.  has obtained the exclusive right to use the Ryongnam Ship Repair Factory in the western port city of Nampo

The right to enable the firm to gain domestic and overseas investment in its ship repair and steel-structure manufacturing businesses in North Korea, Acheon officials said.

According to KCNA (12/29/2006), the site has been recently refurbished:

The Ryongnam Ship Repair Factory of the Democratic People’s Republic of Korea has been reconstructed on an expansion basis. The factory successfully constructed a large dock, three wharves to repair big cargo ships, a combined repair workshop, an acetylene generating workshop, oxygen generating workshop, a heavy oil power plant, a wind and solar power station over the last four years.

The newly built Dock No. 2 can repair several ships of tens of thousands of tons simultaneously.

The repair processes are automatized and controlled by computer. There are in the dock a horizontal jib crane, gantry crane and general control room. It is divided into the main sluice, operated by computer, and the middle one.

The combined repair workshop which covers the floor space of over 17,000 square meters specializes in making ship-body pipes while repairing propellers and power system.

The acetylene generating workshop does not produce any industrial spent water.

The wind and solar power station turns out stabilized electricity for the general control room, dwelling houses and cultural welfare facilities. Its expansion on a modern basis has consolidated the material and technical foundation for developing water transport.

Read the full article here:
Local firm to use N.K. ship repair yard
Yonhap
3/23/2008

In the words of Alejandro himself:

[The] Korean Friendship Association concluded its first busines [sic] delegation, headed by Mr. Alejandro Cao de Benos, Special Delegate and KFA President, in collaboration with the DPRK Committee for Cultural Relations, Ministry of Trade and the DPRK Chamber of Commerce. The group included companies from Australia, France, Spain and Lebanon in different sectors like ship building, foodstuff production, medicine, IT and infrastructure, etc. The visit was a big success and 75% of the investors signed letter of intentions and contracts. All of the participants agreed that DPR Korea has a huge potential and new market with many interesting opportunities with the lowest taxes and wages but with the most skilled, motivated workforce. The companies fullfiled [sic] all their plans and resolved the questions during the visit and they had meetings with their Korean counterparts as well as with the officials of Trade, Chamber of Commerce, Banking authorities and logistics.

They visited a Foodstuff factory,  Heavy Machinery complex, Ostrich farm as well as the ‘Kaesong Industrial Zone’ in the border with South Korea, were they had a briefing by the Director representative of Hyundai-ASAN.

After that, the investors visited a South Korean cable-making factory and a garment manufacturing plant specialized in high quality sport brands.

From KFA we congratulate the companies that concluded agreements and established Joint Ventures in the DPRK and wish them success in their projects.

From a follow up post on the KFA forum, one of the attendees appears to be Mr. Kevin Liu, head of Asian Division of London-based Exclusive Analysis.

Writing in today’s Asia Times, Dr. Leonid Petrov analyses the complexity of Russia, Rok, DPRK, and Chinese relations:

Russia and North Korea:

Territorial claims, in one form or another, involve almost all countries adjacent in this region with the exception of Russia and Korea. The Joint Russian Federation-DPRK Commission for the Demarcation of State Borders has recently completed its work by documenting and marking the 17-kilometer frontier. This strip of uninhabited and swampy land in the mouth of the Tumannaya (Tuman-gang) River plays an exceptionally important geopolitical role. It not only provides the two countries with land access to each other, but also prevents Chinese access to the East Sea (Sea of Japan).

China and North Korea: 

Here, some 50km north of the small port that forms the core of North’s Rajin-Seonbong Special Economic Zone, the interests of Russia and China are now at stake. Russia is rapidly repairing the railroad track, and China (in a similarly speedy manner) is constructing a new automobile highway, both leading from their respective borders to the port of Rajin. Russia, investing at least 1.75 billion rubles (US$72 million) into this project, seeks to strongly connect Rajin (and the rest of northern Korea) to its Trans-Siberian Railroad. China, in turn, hopes to divert the growing cargo traffic to its own territory, offering the efficient network of railroads for delivery of South Korean and Japanese goods to Central Asian and European markets. What position will the government of North Korea take in this clash of ambitions?

Russia and South Korea (energy and trade):

In 2007, the volume of the export of “black gold” from Russia to South Korea reached 38.13 million barrels (2.7 times more than in the previous year). The relative proximity of the Russian oil and gas fields is an attractive factor for Korean companies who actively search for alternatives to Middle East oil suppliers. This year South Korea will for the first time start importing natural gas from Russia. The expected volume of delivery during 2008 is 1.5 million tons (or 5.1% of South Korea’s annual demand).

and

Trade relations between Russia and Korea are steadily growing. According to customs statistics, last year Russia recorded the sharpest increase of South Korean imports (56.2% more than in 2006). Due to the inflow of “petro-dollars” the new class of nouveaux riches in Russia began actively buying Korean automobiles, cell phones, television sets and LCD monitors. South Korea exported to Russia goods worth US$8.1 billion (including $3.296 billion of automobiles, $859 million of mobile phone equipment, motor vehicles and spare parts worth $659 million). As for trade with North Korea, in 2006 Russia occupied third place after China and South Korea and absorbed 9% of the total $3.18 billion spent by the North on imports.

More on Russia/South Korea energy talk here. 

The whole article deserves reading here:
Russia lays new tracks in Korean ties
Asia Times
Leonid Petrov
3/5/2008