North Korean Economy Watch

Unfortunately I will be in class this evening, but if you live in the DC area and wish to learn more about North Korea issues, I recommend you make the effort to attend.  Details below:

The Sejong Society of Washington, D.C. Event
North Korea Opens
Thursday, September 11, 2008
6:45 – 8:00 pm
 
Location:
Kenney Auditorium
Nitze Building, Johns Hopkins SAIS
1740 Massachussetts Ave., NW
Washington, DC
(Closest Metro: Dupont Circle)
Please RSVP here

The Sejong Society is pleased to host a talk by Marcus Noland, Senior Fellow with the Peterson Institute for International Economics.  Dr. Noland will speak on the events and policies that have contributed to a largely unplanned and unintended process of marketization of the North Korean economy.

Reckless policies, international provocations, bad weather, and global economic trends have once again brought the DPRK to the precipice of disaster, and the outcome will be conditioned on the country’s external relations.  Specific initiatives could emerge from the Six Party Talks, but not all forms of engagement are equally desirable.  Dr. Noland will highlight ways in which the nuclear and aid deals are linked and how greater external security could ultimately encourage greater reform.

This event is free of charge and refreshments will be served. Please RSVP here.

When I was much younger, I began martial arts training in taekwondo (TKD) and Brazilian jiu jitsu (BJJ).  Eventually I gave up taekwondo for kickboxing, and eventually just decided to specialize in BJJ. 

Although I was part of the International Taekwondo Federation (ITF), I really had no idea about its origins, or its part in the history and development of taekwondo.  So today I was surprised to read about the history of this organization and its relationship to the DPRK and even an assassination attempt on South Korean President Chun Doo hwan!

The beginning…

The ITF was founded in 1955 by General Choi Hong-hi, who is considered by the group to be the father of TKD.  Choi moved to Canada (from South Korea) in 1972, complaining that the Park government, among other things, allegedly forbade him from teaching TDK in the DPRK.  Shortly after he left, the South Korean government formed the World Taekwondo Federation (now recognized by the IOC).   

Choi’s final years were marked by his efforts to return to North Korea. He introduced taekwondo there in 1980, and won further favour with the government by changing the name of one solo practice form from kodang (after a North Korean democratic Christian moderate, presumed slain by the Red Army in 1946) to juche (after the isolationist policy of “self-reliance” advocated by North Korean leader Kim Il-Sung). Though Choi’s intention had been reconciliatory, unfortunately South Korea saw it as treasonous. (Guardian)

General Choi died and was buried in Pyongyang in 2002.  His death gave the DPRK the opportunity to name its IOC member, Jang Ung, as ITF leader, prompting Choi’s son, Choi Jung hwa, to resign as secretary-general and move back to Canada to set up a separate governing body there.  The ITF leadership is now claimed by three groups in the DPRK, Austria, and Canada who each purport to be successors to General Choi.

Choi Jr…

It seems that Choi Jr. moved to North Korea (from Canada) in 1981 after Canadian police discovered his role in plotting the assassination of then South Korean President Chun Doo-hwan, who was scheduled to visit Canada the following year.

In 1991, however, he surrendered to Canadian authorities and was sentenced to six years in prison, but was released after one year for good behavior. (AP)

“I was unintentionally involved” in the assassination attempt case, Choi told a news conference Monday. “I think that’s because of my political naivety or spirit of adventure. I made such a mistake due to this combination of factors.” (AP)

Now Choi Jr., after 34 years, has returned to South Korea to undergo questioning about the incident. Choi Jr. maintans that North Korea infiltrated the ITF, using it as a front to send out spies and plot the killing of a South Korean president who ruled for much of the 1980s:

“After taking control of the ITF, the North trained spies and sent them overseas, disguising them as taekwondo masters,” (Reuters)

Choi Jung-hwa, however, was expected to be cleared of most of the allegations against him because he voluntarily returned and the statue of limitations on many of them have expired.(AP)

Well the Olympics have wrapped up, and the DPRK made headlines for several notable reasons:

1.  The Chinese government made things harder for the North Koreans living in China. 

2. Two DPRK athletes test positive for doping.  This results in Kim Jong Su being stripped of his silver and bronze medals in shooting.

3.  If these medals had not been taken away, the DPRK would have seen their most succesful Olympic showing ever.  Still, their medal count has been relatively impressive: 2 golds, 1 silver, and 3 bronze.  Mostly in weightlifting and Judo.

4.  Despite these results, the victories are not being touted back in Pyongyang.  According to Bloomberg:

At home, few Olympic events are shown live on television and press reports barely mention the reclusive nation’s haul of seven six medals, including two golds — the second-best in history.

Delivering news of a first gold medal since 1996, the national news agency, KCNA, carried a three-sentence report listing the weights that Pak Hyon Suk lifted for the title.

“She thus came first in the 63kg category final competition,” the story concluded.

Hardly the splurge of propaganda that might be expected in a state that misses few chances of self-promotion to a population experiencing its worst food shortages in a decade. The lack of Olympic hype is a deliberate exercise in keeping people from looking beyond their borders, said Mike Breen, author of “Kim Jong Il: North Korea’s Dear Leader.”

5.  North Korea’s Olympic sponsors made the news.  Turns out the DPRK’s athletes need to learn to thank their sponsors on camera, not “you know who:”

“When I was about to do the third (lift), I kept in my mind that the Dear Leader would be watching,” Pak said after her Aug. 12 win. “That thought was real encouragement to me and that is how I was able to lift the last weight.”

She stopped short of emulating Cha Kum Chol’s celebration at the world weightlifting championships in Thailand in September. Then, the 56-kilogram winner burst into a rendition of “If you didn’t exist, we wouldn’t exist” — a eulogy to Kim Jong Il — at a news conference.

“A lot of people give much pleasure to the Dear Leader and I’m happy to be one of them,” Cha said in Chiang Mai. (Bloomberg)

6. The DPRK’s Olympic athletes spent most of the time confined to the Olympic Village. According to a reporter with the Oregonian:

There are 63 athletes from the Democratic People’s Republic of Korea staying in a private compound inside the Olympic Village.

Literally.

Staying.

Inside.

The athletes get to go outside when they practice, or when they compete in the 11 sports they’ve come here to win medals in. But that’s about it. And I know this because I went to the Water Cube on Tuesday and talked with North Korean synchronized swimmers Kim Yong Mi and Wang Ok Gyong.

Well, I talked with an interpreter who spoke English and Mandarin. And he talked with a second interpreter who spoke Mandarin and Korean. And the five of us huddled at one end of the swim complex, against a steel rail that blocked off the back door, understanding each other, one clumsy sentence at a time.

Kim and Wang finished 15th in the preliminaries and didn’t qualify for today’s finals, which means they’ll probably be back in communist North Korea by the time you read this. There will be no trip to the Great Wall. No shopping excursion to the Silk Market. There will be no tours, or temples, or taking the subway.

The Forbidden City?

Forbidden.

Said Wang: “We’re not allowed to see places of interest.”

…

North Korean athletes are not allowed to mingle with athletes from other nations inside the village. And they refused to talk with reporters after their performance on Tuesday until their coach — a woman named Jong Ae Ryu — gave her blessing. It’s protocol, and the whole contingent hurried off after a few minutes and polite explanation that they didn’t come to Beijing to be tourists or make friends.

“No mixing with others,” Jong said.

Read more here:
North Korea Heads for Best Olympics; Don’t Say It in Pyongyang
Bloomberg
Grant Clark and Heejin Koo
8/21/2008

A lonely Olympics experience
The Oregonian
John Canzano
8/19/1008

I am returning to graduate school to upgrade my MA in economics to a PhD.  Since this is my last week at work, time is tight.  I am already behind in posting and will not be able to pick up the slack until next week (August 25th).

I had never heard of fellow American Zang Gi Hong, the first US citizen naturalized from the DPRK, until a few days ago when a colleague relayed his story to me.  I have been unable to find much information on him via the Internet, except from one article (here) and the Google archive version (here). 

Excerpts from the article:

It was Vienna, Austria, in late December of 1956. Two months earlier, heroic Hungarians next door to the east had erupted against their Soviet oppressors, and for ten glorious days Hungary was in Hungarian hands.

The Kremlin feared that one satellite turned into a shooting star could infect and unravel their whole communist empire. The Red Army rolled back into Hungary with 200,000 troops and 2,000 tanks and flattened the uprising. Hordes of Hungarians fled west to freedom in Austria.

…

After two years at the University of Budapest this young “enemy” soldier began to view communism not as a submissive North Korean but more as a repressed Western European. When the fighting started, he and 200 other North Koreans helped the Freedom Fighters.

Hungarian youths had not yet had military training. The North Koreans knew how to work every piece of captured and donated communist ordnance, from a hand grenade to a tank!

After the Soviet putdown of the uprising, special squads of Soviet troops helped the Hungarian communist police round up every Korean in Budapest. It’s hard to disguise a Korean in Budapest. Of the 200 young Koreans, only four made it to freedom. The others were shipped back to certain doom in North Korea.

When he and I and a young Hungarian woman interpreter went to the American Embassy the next day, I would have bet even money that President Eisenhower would send the Columbine (His presidential plane, before they thought of Air Force One) over to Vienna to take him and me both back to America. I was stomp-down certain they’d find a quick way to let him into America.

We were led into an upstairs office at the Embassy and I started telling the story to the official behind the desk. Do you know how a comic feels when the laughter doesn’t come through early in the act? Or when the young woman arranges for her hand to be unholdable when you reach out? That’s the feeling I got early in the narrative.

The Embassy official looked on like a zombie. No comments. No questions. If there’d been a little strip-screen across his forehead, it would have read “Non-Reacting!”

Even absent the euphoria of the Hungarian Revolution, as you read this I expect you to feel what I felt. When I finished this incredibly fortunate story for our side, the diplomat-zombie impassively opened his desk drawer and pulled forth a little booklet.

“Your friend can’t come to America as a Hungarian refugee,” he intoned, leafing to a page of rules, “because he’s not Hungarian. And he can’t come in as a North Korean because we’re at war and there’s no quota!”

At least the 200,000 Hungarian refugees in Vienna would be processed and admitted to a free country. My Korean friend was now diplomatically stateless and weightless.

Thanks to the subsequent intervention of broadcaster Tex McCrary and the supposedly villainous immigrant-hating Congressman Francis E. Walter of Pennsylvania, we got that young man into America with a scholarship to Syracuse from which he graduated with honors and became a millionaire architect and builder.

Sejong Society Event Details:
Perspectives on North Korea’s Financial System
Wednesday, June 25, 2008
6:45 – 8:00 pm
 
Location:
Johns Hopkins University SAIS
Kenney Auditorium (ground floor)     
1740 Massachusetts Ave., NW
Washington, DC  20036  
(Closest Metro: Dupont Circle) 
 
Bradley O. Babson is a consultant on Asian affairs with a concentration on North Korea and Northeast Asia economic cooperation. He presently is consultant for the Stanley Foundation Project on Future Multilateral Economic Engagement with the DPRK and chair of the DPRK Economic Forum at the John’s Hopkins School for Advanced International Studies. He worked for the World Bank for 26 years before retiring in 2000, serving as a Senior Loan Officer on Indonesia from 1983-87, Division Chief for Education and Health for eight Asian countries from 1997-92, Regional Representative in Bangkok, Thailand from 1993-94, and the first Resident Representative to Hanoi, Vietnam from 1994-97. From 1997-2000 he served as Senior Advisor in the office of the Regional Vice President for East Asia and the Pacific where he began his studies of the North Korean economy.

He has participated in projects on North Korea sponsored by the Center for Strategic International Studies, U.S. Institute for Peace, National Bureau for Asian Research, and the Stanley Foundation. He serves on the Advisory Council of the Korea Economic Institute of America and Executive Committee of the National Committee on North Korea, and is Vice President of the World Affairs Council of Maine. Mr. Babson received his BA degree from Williams College in 1972, and MPA degree from the Woodrow Wilson School of International and Public Affairs at Princeton University in 1974. He lives in Brunswick, Maine.

This Sejong Society event is free and will begin at 6:45 pm, and light Korean food will be served. Please RSVP here.

North Korean Economy Watch would like to welcome our first reader from Turkmenistan today!  If you are interested in visiting Turkmensitan, talk to Koryo Tours.

In case you are wondering, this web site is frequently accessed from Chinese cities along the North Korean border, but we have yet to get a hit from inside North Korea.

Anyone who has spent time visiting North Korea on Google Earth will have noticed the acute shortage of trees.  I am not alone in this observation.  Dr. Lankov recently reported that South Korean tourists to Kaesong also sense this.

Donating trees to the North might sound like a particularly harmless form of aid–all the symbolism of inter-Korean cooperation without the messy politics of monitoring food aid or investment.  But the reality is far more pragmatic:

[H]elping North Korea to plant more trees is one of President Lee’s campaign pledges.

He said the South will send seedlings to the North but no details were given as to whether or when the two Koreas will meet for the forestry project.

The spokesman said when the Kyoto Protocol takes effect, the South can buy the right to emit CO2 from North Korea.(Korea Times)

The South Korean government is not alone in hoping to make money off increasing North Korea’s stock of trees.   Singaporean entrepreneur Richard Savage started a tree farm in the DPRK back in 2002:

Richard Savage kneels in the rich brown earth of a field on the outskirts of Pyongyang and reverentially spreads out the broad, green leaf of a young paulownia tree. The saplings have been in the ground for only a month but already they are a meter high; the first harvest could take place in just five years. Eyes shaded by his black cowboy hat, the Singaporean native gazes down the rows of juvenile trees, each worth thousands of dollars at maturity, with a satisfied grin. The experimental lumber crop has survived the harsh North Korean winter and is flourishing in the loamy soil. “The paulownia loves this,” he says. Glancing at another leafy plant, a new hybrid, he confides, “We’re going to let the Dear Leader name it.” (Time)

UPDATE 2002 (Via Werner Koidl):

The IHT wrote on Oct. 27th, 2006:
“Richard Savage, executive director of Maxgro, a company based in Singapore, is probably one of the most ambitious foreigners in North Korea. He is developing a hardwood plantation on 1,500 hectares, or 3,700 acres, manufactures Snow Pine cigarettes for the local market and is building an eight-story financial center in Pyongyang in a joint venture with the government and other investors.”

Even the North Korean government, though, has noticed that the forests are not as dense as they used to be.  Bradley Martin reported in Bloomberg that Kim Jong il has been pushing a reforestation program for some time:

North Korea’s deforestation program dates back to a 1961 speech by Kim Il Sung. In a mostly mountainous country, he proclaimed, “it is necessary to obtain more land through the remaking of nature.” Not only tidelands but “hills throughout the country and plateaus” should be “brought under the plough,” he said.

“The hills and mountains still had trees, and I never heard of floods,” said Hiroko Saito, a Japanese woman who moved with her Korean husband to North Korea in 1961. Her husband joined one of Kim’s vast mountain work teams in the early 1970s, said Saito, now 66 and back in Japan.

…

Following Kim’s death in 1994 — just before a flood-linked famine gripped the nation — his son and successor Kim Jong Il continued the sacrifice of forest cover until 2000, when he began encouraging reforestation. But the shift hasn’t reversed the damage, and some analysts warn that another famine, close to the scale of the 1990s disaster that may have killed millions of people, might occur as soon as next year.

The government’s agricultural policies launched a cycle of events that lead to greater and greater numbers of trees being culled.  Clearing the forests contributed to seasonal flooding.  The floods exacerbated the food shortage, and pushed people to adopt coping mechanisms to meet their minimum caloric intake for survival.  These coping mechanisms take a toll on what remains of the forests–which exacerbates the flooding.  Repeat annually. This  cycle of destruction has seemingly frustrated Mr. Kim’s plans to bring back the forests:

“For the past few years, I have been telling you to work hard afforestation and have encouraged you at every opportunity.”

“However, an forestation has not met the criteria of authorities and is not going according to plan.”

What Kim Jong Il is trying to say is that, “The reason afforestation is not working is because of the people’s reckless slash-and-burn cultivation, as well as the inefficiency of officers unable to block it.”

After the food crisis in ’95, people uprooted vines and trees to suffice their underfed diets, as well as cultivating illegal farms for food. Further, to save themselves from freezing to death, people used trees as firewood.(Daily NK)

Spontaneous coping mechanisms aside, efforts at increasing forrest cover might prove more difficult than the government expects.  Even if it resolves the food shortage (which does not seem likely in the near term), it has seemingly lost control of its technocrats who have no problem selling DPRK lumber overseas:

…Oh Moon-hyuk, branch manager of the Ruengra 888 trading company in Yunsa, North Hamkyung Province, was executed after being implicated in the smuggling of timber. The trading company was responsible for the export of timber, and operates under the control of the Party’s accounting bureau. The inside contact stated that because of this incident, North Korean authorities carried out further inspections, leading in October of last year to the dismissal of one official receiving vice-minister pay, and the broadening of the inspections nationwide. (Institute for Far Eastern Studies)

The full articles can be found here:
S. Korea to Help N. Korea Plant More Trees
Korea Times
Kim Yon-se
3/5/2008

Kims’ Clear-Cutting of Korean Forests Risks Triggering Famine
Bloomberg
Bradley Martin
Hideko Takayama
11/21/2007

Cause of Barren Mountains: Imperialism-Natural Disaster-Officers
Daily NK
Han Young Jin
3/16/2007

Institute for Far Eastern Studies (IFES)
NK Bfrief No. 08-2-5-2
2/5/2008

Light from the North?
Time
Donald MacIntyre
8/11/2002

When looking at North Korea’s cities on Google Earth one can’t help but notice the number of monuments to the Great Leader.  But if you are looking for the true heart of the cities, in other words where all the people are, you need to look closely for North Korea’s markets.  They do have them–in all of the major cities visible on Google Earth:

 
 
(Clockwise from upper left) Markets in Pyongyang, Kaesong, Sinuiju, and Wonsan

This week, the Daily NK reported that the new regulations and crackdowns on market activity are meeting with resentment in Pyongyang. 

What happened?  Supposedly Pyongyang’s new Party Chief Secretary suggested to Kim Jong Il the idea of converting the jangmadang into farmers markets (in other words only selling agricultural goods from the countryside as in the past), and Mr. Kim approved it.

As of January 15, public announcements were placed on the entrances of marketplaces detailing what could/could not be sold in the market.  Violators are subject to having their goods confiscated by inspection units (these sorts of policies are ripe for promoting corruption).

Ever entrepreneurial, North Korean sellers simply adapted, shifting location from inside the marketplaces to back-alleys.  Seemingly, they are still subject to inspection and confiscation in these local neighborhoods, but apparently the risk is lower.  Several of these street markets are also visible on Google Earth:

But others have decided to stay put in the markets and simply hide their goods:

A portion of the people still secretly trade in the jangmadang. Simultaneously avoiding the inspection units, they refrain from putting out the goods and bargain with customers by holding up signposts. When they tell the passing-by customers, “This is what I have,” a bargain is reached. Of course, the goods are temporarily stored at a nearby residence and taken out after the bargain. (Daily NK)

Lankov also discussed the regulations and games people play to avoid the market inspection units here. 

The full article can be found below:
Jangmadang Will Be Converted to Farmers Markets
Daily NK
Jung Kwon Ho
2/13/2008

Below are three video’s recently posted on YouTube which portray North Korea’s national mourning in 1994 when Kim Il Sung passed away.  Although we do not know what people really think of the deceased leader, we do know that the public displays of sadness and eternal loyalty were scripted for television (and probably planned out in advance): Large crowds were mobilized at politically symbolic locations throughout the country, people were lined up in formations, given black arm bands, and placed in front of well-positioned television cameras to make sure they gave their best performances (which were strangely identical). 

The cameramen were also composed enough to carry out their tasks: Not only would they have to be dispatchted from Pyogyang to record the mass sadness, but they would have to arrive early to the scene, plan out their shots, record each scene several times, conduct multiple interviews, travel back to Pyongyang, and finally edit the footage into the final product.  This would all take a fair amount of time because travel conditions between the different locations would have been less than stellar.

Click on the images below to see the three part video:

Part 1.  

Part 2.

Part 3.