North Korean Economy Watch

According to the Korea Herald:

South Korea’s government last year executed the smallest amount of its inter-Korean cooperation fund in a decade, officials said Sunday, in another reflection of frayed relations with the communist North Korea.

The Unification Ministry, in charge of North Korean affairs, spent 42.6 billion won ($36.6 million), or 4.2 percent of the 1.1 trillion won fund designated as “South-North Cooperation Fund,” the ministry officials said.

The fund was used to support a Korean dictionary project, a humanitarian program by the United Nations Children‘s Fund as well as operating a facility for family reunions and an association for the inter-Korean industrial complex, they said.

Last year’s spending was the lowest level since 2000 when the two sides held their landmark summit talks and agreed on a wide range of cooperation projects as part of their reconciliation efforts.

Inter-Korean relations went to the lowest ebb in a decade after the North‘s two deadly provocations in 2010 that killed 50 South Koreans.

In 2008, when President Lee Myung-bak took office with a hard-line stance on North Korea’s nuclear program, the cooperation fund‘s execution rate plunged to 18.1 percent from 82.2 percent in 2007 under the liberal predecessor Roh Moo-hyun, the report noted.

The rate had remained at the 7 percent level between 2009 and 2010, it said.

The fund was created in 1991 to support humanitarian and economic exchanges between the divided Koreas, which remain technically at war after the 1950-53 Korean War ended in a truce. (Yonhap News)

Read the full story here:
Gov’t spending on inter-Korean projects lowest since 2000: ministry
Korea Herald
2012-1-8

Picture above via Wall Street Journal.  Click image for larger version.

Quoting from the article:

An examination of U.N. and Chinese trade data reveals that exports to North Korea of products including cars, tobacco, laptops, cellphones and domestic electrical appliances all increased significantly over the past five years. Most items crossed the border from China.

The data reveal glaring loopholes in the sanctions regime, demonstrating how China has stepped in as North Korea’s main supplier of goods considered luxuries as other countries have clamped down on such exports.

But the figures also hint at the emergence of a new entrepreneurial class in North Korea rich enough to buy imported goods. Some analysts say this group could represent the strongest impetus for economic reform, and potentially undermine the totalitarian grip of the Kim family dynasty.

Since 2007, North Korea’s imports of cars, laptops and air conditioners have each more than quadrupled, while imports of cellphones have risen by more than 4,200%, with the vast majority of items coming from China, according to the U.N. data. Chinese customs data show those trends continuing in 2011.

…

“The sanctions don’t work because as long as China allows the export of luxury goods, the North Korea elite will be paid with them to support the regime,” said Jiyoung Song, an associate fellow at London-based think tank Chatham House, who has studied North Korea since 1999.

At the same time, she added, “Things like DVDs and mobile devices will help to change North Korean society in a gradual manner by teaching them about the outside world, and showing them these things don’t just come through the benevolence of their leaders.” She said last year she interviewed a North Korean defector—the daughter of a trade official—who claimed she had been given an iPad and two laptops by the “Dear Leader,” as Kim Jong Il was known.

The growing demand for Chinese consumer goods is no longer confined to the political elite, according to Andrei Lankov, a leading expert on North Korea at Kookmin University in Seoul.

He estimated that the political elite consists of a few thousand key decision-makers and about a million people with midlevel or senior positions in the bureaucracy. Most of the rest of the population of 24 million receive an official monthly salary of $2 to $3 which they can top up to about $15 by selling things in private markets, he said.

More recently, though, a new entrepreneurial class of up to 1% of the population, or about 240,000 people, has emerged that is earning at least a few hundred dollars a month, said Prof. Lankov.

“This growing demand for luxury goods is being driven by the new bourgeoisie,” he said. He said he had met a defector who as early as 2008 claimed to have been earning $1,000 a month by importing tobacco from China and selling it in North Korea in fake packaging.

It is impossible to verify who precisely is driving the demand for Chinese consumer goods. North Korea does not publicize any kind of trade data, let alone allow independent market research. But other countries do report their exports to North Korea, and figures through the end of 2010 are compiled in the United Nations Commodity Trade Statistics Database, or UN Comtrade. China’s customs authorities provide data for its exports to North Korea through last November.

Among the exports of liquor to North Korea from Hong Kong in 2010 were 839 bottles of unidentified spirits, worth an average of $159 each, and 17 bottles of “spirits obtained by distilling grape wine or grape marc” worth $145 each, according to the U.N. figures.

In 2010, North Korea also imported 14 color video screens from the Netherlands—worth an average $8,147 each—and about 50,000 bottles of wine from Chile, France, South Africa and other countries, as well as 3,559 sets of videogames from China, the U.N. data show.

Some of this might have been to cater to the small number of tourists, diplomats and foreign businesspeople in the country. Many items, however, were clearly destined for North Koreans. Cars, for example, are one of the highest status symbols, and are often given as gifts by the state to loyal senior officials.

In 2010 alone, North Korea imported 3,191 cars, the vast majority from China—although one, valued at $59,976, placing it in the luxury category. came from Germany.

One of the most striking figures is a dramatic increase in imports of mobile telephones—ownership of which was once considered a crime. In 2010 alone, the country imported 433,183 mobile phones, almost all from China, and with an average value of $81 each. Egyptian telecoms company Orascom, which launched North Korea’s first and only mobile network in 2008, said that its North Korean network had 809,000 subscribers at the end of the third quarter of 2011.

Read the full story here:
Luxuries Flow Into North Korea
Wall Street Journal
Jeremy Page
2012-1-7

According to the Daily NK:

A new holiday has been added to the North Korean calendar this year. April 4th is the day, and as ‘Chungmyung Day’ it appears aimed partly at writing off the commemoration of ‘Hansik’, the 105th day after the winter solstice and historically commemorated in Chinese custom, and partly at exemplifying the open heartedness of Kim Jong Eun.

One defector who recently arrived in South Korea told Daily NK on the 6th, “Originally Chungmyung Day was not a national holiday in North Korea, but since 2010 the authorities have been ordering us to rest on that day.”

The defector continued, “Last year we were forbidden to go to our ancestor’s graves at the time of Hansik because of orders handed down by the Central Committee of the Party to all levels stating that Hansik and Dano (the fifth day of the fifth month of the year) are not Chosun indigenous holidays.”

He explained, “We were instructed to go to our family graves and perform a simplified ceremony on Chungmyung Day instead. From this year, however, North Korea has officially marked Chungmyung Day as an official holiday on the calendar.”

Regarding the specific background to the newly marked day, he concluded, “North Korean propaganda has it that the considerate General Kim Jong Eun issued the measure bestowing this day on the people so that they could spend it conducting traditional rituals.”

Chungmyung Day falls on one of the 24 divisions of the year and conveys the image of the sky clearing up for spring. Usually the day is spent tidying up graves and doing home repairs that the winter prohibits.

New Years Day, Lunar New Year’s Day, Hansik (April 5th), Dano (May 5th) Chuseok (Korean Thanksgiving Day) are the ‘five folk holidays’ ordinarily commemorated in North Korea, but are not officially as important as Kim Jong Il’s and Kim Il Sung’s birthdays, which are both celebrated with 3-days of rest.

What about May Day?

Read the full story here:
A New Holiday for the People
Daily NK
Choi Song Min
2012-01-06

Below are some excerpts from a recent blog post at Foreign Policy:

Despite the perception of North Korea as a country hermetically sealed to the outside — and despite the very real risks — dozens, if not hundreds, of Christian missionaries operate inside the country, sometimes living there for months at a stretch, in the capital, Pyongyang, or in the Rason region, near the country’s Chinese border. Some run factories, distributing bread and soy milk to the poor. Others work for NGOs or universities, like the Pyongyang University of Science and Technology, North Korea’s first privately funded university (launched in 2010), which is bankrolled mostly by evangelical Christian movements. Its founder James Kim, who has spent prison time in North Korea for proselytizing, likes to say that he has “unlimited credit at the bank of heaven.”

Of the five NGOs that formed the consortium that the U.S. government worked with to deliver food aid to North Korea until 2009, four are evangelical Christian organizations. One of them, World Vision, only hires candidates who believe in Jesus. Heidi Linton runs Christian Friends of Korea, an organization that has sent more than $55 million dollars in food, supplies, and medical equipment throughout the country since 1995. Linton explains to North Korean patients and hospital staff that the donors give out of their love for God. “You don’t go into a lot of detail at that point, but we love because God first loved us,” says Linton. “No, we cannot give Bibles, we cannot give tracts, but we can live out for them what it means to be a Christian.” Asked how many people have been converted, she demurs: “We plant the seed and God brings in the harvest, in his time and in his way.”

So how do you bring the morals and values of Christianity to the world’s most closed country? With infinite patience. A missionary from the United States with almost 20 years of experience working with North Korea explains: “We’re not allowed to visibly pray. You can’t bow your head, and you can’t close your eyes. But when you’re praying you’re talking to God,” she says. “All the education we’re giving them is designed to make them think the truth — of all sorts.” Linton brought four ambulances into North Korea emblazoned with the Christian Friends of Korea logo, which includes a prominent cross. “They’ve told us multiple times that we need to change our name and our logo,” she says. “And we said, ‘No, that’s why we’re here.'” Proselytizing inside North Korea “has to be done almost exclusively in a one-on-one setting, where you talk to someone, typically someone you know very well, about faith,” says Todd Nettleton, director of media development at Voice of the Martyrs USA, who says that the organization and its partners dropped 1,467,600 Gospel fliers via balloons into North Korea in 2011.

“The picture we have of missionary work, where you go and try to talk to as many people as possible, or where you’re on a street corner handing out missionary tracts, is so far from [what is allowed in North Korea] it’s not even on the same planet. It’s painstaking, risky work.”

…

Little is known about Christianity in North Korea under Kim Il Sung, because so few North Koreans defected. When his son, Kim Jong Il, took power in 1994 and famine hit, hundreds of North Koreans fled to South Korea; thousands more began traveling back and forth across the Chinese border searching for food, acting as conduits of information between North Korea and the outside world. The famine and the death of Kim Il Sung also “coincided with the opening of North Korea to NGOs, hence the increased presence of missionaries” eager for a chance to preach the Gospel in the closed country, says Marie-Laure Verdier, a Ph.D. student at the School of Oriental and African Studies in London who is studying Christian organizations working in North Korea.

…

The threat of violence or imprisonment hasn’t stopped the evangelical movement; it has just made them more cautious. Chinese border cities like Yanji, the capital of China’s Korean autonomous region, and Dandong, through which most of the official trade between China and North Korea passes, act as bases for hundreds of American and South Korean evangelical Christians who help North Koreans get out of the country and who attempt to get themselves inside. One missionary living on the border spoke off the record because he didn’t want to upset the Chinese regional authorities, which he likened to “a sleeping dog.” Proselytizing is illegal in China, too, and the Chinese government, at least publicly, supports North Korea’s effort to forcibly repatriate defectors. In March 2011, I visited a Western cafe in Yanji where missionaries congregate and saw a woman wearing a sweatshirt from Wheaton College, the evangelical Protestant liberal arts university outside Chicago. I asked one of her tablemates whether that’s what had brought them to Yanji. “Food’s great here, isn’t it?” he replied.

* * *

Despite the danger missionaries face, it’s far more dangerous for North Koreans who come into contact with Christians or evangelical paraphernalia. Defectors have spoken about seeing friends and neighbors executed for the crime of simply owning a Bible. North Koreans themselves are often converted or co-opted to smuggle the Gospel into North Korea at great personal risk. On a 2011 visit to the border, I saw food packaged with a Christian symbol for delivery into North Korea. “People come across the border, we make them Christian, and then we send them back,” said the missionary associated with the food distribution. “We had a North Korean Christian several years ago who took five Bibles in with him, and he was beaten, literarily to death, when they found out that he had the Bibles on him,” says Nettleton.

But the majority of the missionaries involved with North Koreans work with them only when they’re safely outside the country. “For the ones who come out, Christianity can do a lot more for them because they need so much healing,” says a Christian activist in South Korea. Tim Peters runs Helping Hands Korea, an organization that helps North Korean women and children who have already crossed into China flee to other countries. He told a story of a man in North Korea who, in late December after the death of Kim Jong Il, became interested in Christianity. But after speaking about it in his community, he raised the suspicion of security forces. He and his family fled North Korea the next day, and Peters’s team near the Chinese border is now helping them. “Because they were discovered listening to Christian radio, if they were to be repatriated the punishment would be extraordinarily harsh,” says Peters. In a way, they’ve succeeded: More than half of the roughly 20,000 defectors in South Korea identify as Christians. “North Korean defectors associate Christianity with democracy,” says Verdier.

Rights groups estimate that of the 24 million North Koreans, there are only tens of thousands of Christians there today, though the exact number is unknowable. “My understanding is that the underground church is extremely underground,” says Peters. South Korean churches have amassed war chests of millions of dollars to bring Christianity to — and build thousands of churches for — their “brothers in the North” when the regime falls. Ben Torrey, raised in South Korea by missionary parents, runs the Fourth River movement, an organization that enhances preparedness among South Koreans and North Korean defectors, training them “as agents of reconciliation, healing, and problem solving” so that they can eventually enter North Korea and “rebuild the country on a foundation of biblical principles.”

Is the death of Kim Jong Il a propitious time, though, for missionaries and Christian organizations working inside North Korea? One spokesman at a Christian group that does extensive work in North Korea said hopefully, “We don’t have any contingency plans [for the regime falling], but the wheels could fly off the wagon and the structure could disintegrate. Who knows?” Many Christians who work with North Korea are worried that new leader Kim Jong Un, in a desire to reinforce his new mandate, will be even more hostile to them than his father. “We understand that [the North Korean underground church] is being even more cautious at present,” says Peters.

Read the full story here:
Preaching the Gospel in the Hermit Kingdom
Foreign Policy Blog
Isaac Stone Fish
2012-1-6

According to KBS:

The Voice of America reported on Wednesday that the World Food Program said North Korean authorities distributed 375 grams of food to every citizen in December.

A spokesman for the WFP quoted a North Korean government report saying that 200 grams of food were rationed per head in July through September. But it went on to explain that the amount increased to 355 grams in October, 365 grams in November and 375 grams in December.

The North Korean government cited the fall harvest as a reason for the increased food distribution. According to the WFP, the North Korean government aims to raise rations to 380 grams per head.

The WFP distributed 35-thousand-200 tons of food to three-point-one million North Korean people in December last year.

Read the full story here:

N. Korea Increases Citizens’ Food Rations
KBS
2012-01-05

Some thought it was possible that Kim Jong-un might deliver a new year’s address (as Kim Il-sung always did), but instead the leadership has chosen to follow the practice of the Kim Jong-il era by issuing a “joint editorial” by Rodong Sinmun, Joson Inmingun, and Chongnyon Jonwi.

Since I am writing this post well after the joint editorial has already been published, numerous commentators have already weighed in: Choson Exchange, Daily NK, Washington Post, CNN, Business Week, Hankyoreh, IFES, Xinhua.

Below is the full text of the Joint New Year Editorial c/o North East Asia Matters. My hat off to anyone who actually reads the whole thing:

Read the rest of this entry »

According to the Daily NK:

A Hamkyung Province source has informed Daily NK this afternoon of a directive completely forbidding the use of foreign currency in markets, saying he was informed that “As part of the last instructions of Kim Jong Il, those who circulate foreign currency including Yuan and Dollars will be punished more severely than those who deal in drugs.”

“They said it is part of General Kim Jong Il’s last instructions and didn’t say what the reason is, so it is being strictly enforced,” the source added.

In North Korea’s markets, foreign currency is ordinarily preferred to the North Korean Won, and most transactions are conducted accordingly in Chinese Yuan. Therefore, if the new measure is actually enforced it has the potential to cause chaos.

However, it may be just a part of an ongoing competition to display loyalty to Kim Jong Eun, and given that the use of foreign currency is so ubiquitous in North Korea that it would be extremely hard to strictly enforce such a measure, may not last long.

Dong Yong Seung, a researcher with Samsung Economic Research Institute in Seoul commented after hearing the news from Daily NK, “They could be trying to increase the value of the North Korean Won by stopping use of other currencies.”

Read the full story here:
Authorities Move to Block Currency Usage
Daily NK
Choi Cheong Ho and Cho Jong Ik
2012-1-2

Pictured above (KCNA): Heads and tails images of the DPRK’s gold and silver commemorative coins.

According to KCNA (2011-12-31):

Pyongyang, December 31 (KCNA) — Commemorative coins will be issued in the DPRK on the occasion of the 20th anniversary of leader Kim Jong Il’s assumption of the supreme commandership of the Korean People’s Army.

A decree of the Presidium of the DPRK Supreme People’s Assembly was promulgated on Dec. 23 in this regard.

Gold and silver coins “20th anniversary of great Comrade Kim Jong Il’s assumption of supreme commandership of the Korean People’s Army” will be issued.

Engraved in the center of the front side of the gold and silver coins is the portrait of smiling Kim Jong Il in marshal’s uniform and seen in their upper parts are letters “The 20th anniversary of great Comrade Kim Jong Il’s assumption of the supreme commandership of the KPA” and in their lower parts figures “1991-2011” and 20 five-pointed stars.

Engraved in bold relief in the center of their back sides is the star of marshal and seen in their upper parts are letters “DPRK Central Bank” and in their lower parts the degree of their purity and weight and the year of their issue.

The gold coin is 35 millimeters in diameter and 2 millimeters in thickness. It’s made of pure gold.

The silver coin is 40 millimeters in diameter and 3 millimeters in thickness. It’s made of pure silver.

Additional Information:
1. The last time the DPRK issued commemorative coins was to mark the 65th anniversary of the founding of the Worker’s Party. Read more about them here.

2. Marcus Noland also noted the minting of the coins.

3. Kim Jong-il’s death was officially reported in December 2011.

UPDATE 2 (2012-12-29): According to Yonhap:

The National Assembly on Thursday approved a bill that would protect North Korean residents’ rights to inherit assets from family members living in South Korea but also strictly limit the transfer of those assets out of the South.

The government-proposed special bill on family relationships and inheritance between residents of the two Koreas passed a full-floor legislative session, the Justice Ministry said.

There are three N/S Korean inheritance cases that have made it into the media recently. Read about them here, here and here.

Read the full story here:
Parliament approves bill on N. Koreans’ right to inherit assets in S. Korea
Yonhap
2012-12-29

UPDATE 1 (2011-8-30): Cabinet approves bill on N. Koreans’ right to inherit assets in ROK.  According to Yonhap:

The Cabinet on Tuesday approved a bill that would protect North Korean residents’ rights to inherit assets from their families living in South Korea but also strictly limit the transfer of those assets out of the South, government officials said.

The government-proposed special bill on family relationships and inheritance between residents of the two Koreas will become law after obtaining parliamentary approval.

The move followed an unprecedented case last month involving four North Korean siblings who successfully claimed part of their late South Korean father’s multi-million dollar estate. A local court determined during mediation that their South Korean half-brothers and sisters must share the inheritance with their siblings from the North. More North Koreans are expected to follow suit.

The bill also requires North Korean inheritors to name a local manager for the assets within three months of inheritance and report changes in the property to the South Korean government.

The inheritors must get approval from the government if they want to take any inherited assets out of the country.

The strict restriction on the overseas transfers of the assets is aimed to ease mounting concerns that North Korean authorities could take advantage of the inheritance system, according to the Seoul government.

…

In addition, the bill included a provision recognizing double marriage by North Koreans who defected to the South after the inter-Korean division without divorcing their spouses in the North. Double marriage is otherwise banned under the South’s civil law.

Read the full story here:
Cabinet approves bill on N. Koreans’ right to inherit assets in S. Korea
Yonhap
2011-8-30

ORIGINAL POST (2011-8-11): According to KBS:

The Justice Ministry announced a revision to its special act on family relations and inheritance between South and North Koreans as the South Korean court recognized in January that North Korean residents have ownership rights to assets inherited from their families in the South.

The Justice Ministry has accordingly revised its preliminary notice legislation that it posted in January.

The revised version sets forth that the South Korean court designates a surrogate executor if a North Korean resident gains the right to assets in South Korea.

The earlier version required a relevant North Korean to designate a surrogate. However, the older version had been criticized as the executor of the estate could take the assets to a third country or to North Korea without the South Korean government’s permission.

Yonhap has more here.

Although these are historic times in the DPRK, I am taking advantage of the holiday season to go “off-the-grid”.

Blogging will resume in mid-January.

I wish you a happy holiday season and a peaceful new year.

-Curtis