North Korean Economy Watch

Pictured above: North Korean pilots in North Vietnam (1968).

According to Yonhap:

North Korea dispatched dozens of pilots to the Vietnam War decades ago, with its communist ally short of specialists to operate MiG-17 and MiG-21 fighter jets in battles against the United States, according to a recently released dossier.

“On 21 September 1966 an official North Korean request to be allowed to send a North Korean Air Force regiment to help defend North Vietnam against U.S air attacks was officially reviewed and approved by the Vietnamese Communist Party’s Central Military Party Committee, chaired by General Vo Nguyen Giap,” read the documents taken from an official People’s Army of Vietnam (PAVN) historical publication.

North Korea’s Chief of the General Staff, Choi Kwang, and his Northern Vietnamese counterpart, Van Tien Dung, held talks three days later to detail Pyongyang’s role in the war.

The Woodrow Wilson International Center for Scholars, a think tank in Washington, studied the dossier and made it public on its Web site as part of North Korea International Documentation Project.

In 2000, 25 years after the end of the Vietnam War, North Korea and Vietnam admitted for the first time that North Korea had provided military support in combat against U.S. aircraft.

North Vietnam sought North Korean pilots’ help in training and combat apparently to take advantage of their experience in shooting down U.S. fighter jets during the 1950-53 Korean War.

The newly unveiled dossier show details of North Korea’s military support.

“In late October or during November 1966 North Korea would send Vietnam enough specialists to man a Vietnamese MiG-17 company (a company consisted of ten aircraft),” the two sides agreed in the Sept. 21 1966 talks, adding North Korea would send more specialists to man a second Vietnamese MiG-17 company in later 1966 or early 1967.

“During 1967, after North Korea finished preparing specialists and after Vietnam was able to prepare sufficient aircraft, North Korea would send to Vietnam sufficient specialists to man one Vietnamese MiG-21 company,” they also agreed.

You learn more and download the entire report (PDF) at the Wilson Center’s North Korea International Documentation Project (NKIDP).

Andrei Lankov writes in the Asia Times:

It is often overlooked how much North Korea has changed over the past 20 years. Its Stalinist and militaristic facade is carefully maintained by the state, but in the new circumstances it is increasingly misleading. Behind this official veneer of militant posters and goose-stepping soldiers, the society itself has changed much.

In a nutshell, the past two decades were the time when the state was steadily retreating from the private life, and also was losing its ability (perhaps also its will) to control the daily activities of its subjects as well as how they made a living. One of many significant changes has been the steady decline in the significance attached to family background (known as songbun in North Korean parlance) – once the single most important factor that determined the life of a North Korean.

Family background did matter in other communist countries as well, but to a much lesser extent. For example, in the Soviet Union immediately after the 1917 communist revolution, scions of aristocrats, descendants of priests, and merchants faced many kinds of discrimination. It was more difficult for them to enter a college or to be promoted, and they were more likely to be arrested for alleged political crimes. However, this discrimination had disappeared by the late 1940s, so in the days of my youth, in the 1970s and 1980s, it had become quite normal in the USSR to boast about real or alleged aristocratic family roots.

North Korea is very different. In 1957, the authorities launched a large-scale and ambitious investigation of the family backgrounds of virtually all North Korean citizens. As a result of this and subsequent investigations, by the mid-1960s the entire population was divided into a number of hereditary groups, somewhat akin to the estates of medieval Europe. Career chances and life prospects of every North Korean were determined, to a very large extent, by his membership in one of these strictly defined groups.
The major criteria of classification were quite straightforward: the songbun (origin) of the North Korean was largely defined by what his or her direct male ancestors did in the 1930s and 1940s.

The official songbun structure was quite elaborate and changed over time. However, at the first approximation, there have been three groups in North Korea, usually known as “core”, “wavering” and “hostile” classes. Every single North Korean had to belong to one of these groups.

The “hostile class” included people whose ancestors in or around 1945 were engaged in activities that were not to the regime’s liking. Among others, this group included descendants of clerks in the Japanese colonial administration, Christian activists, female shamans, entrepreneurs, and defectors to the South. Members of the hostile class faced the greatest number of restrictions: They could not live in Pyongyang or other major cities and they could not be admitted to good colleges or universities. People whose songbun was exceptionally bad would not even be drafted into the military.

Members of the “core class” included those whose direct male ancestors contributed toward the foundation and strengthening of the Kim family regime. They were descendants of anti-Japanese guerrillas, heroes of the Korean War, or party bureaucrats. For all practical purposes, over the past half-century, only these people could be promoted to key positions in the North Korean state and party bureaucracy. They constituted the hereditary elite.

In the days of Kim Il-sung’s rule, from the early 1960s to the early 1990s, songbun was of paramount significance. It determined where people lived and worked and even what they ate. Most marriages were also concluded between people of the same or similar songbun.

It was also important that the songbun was, in essence, unchallengeable. It was inherited from one’s father and was then bestowed on one’s children. The mother’s songbun did not matter. I know a couple where the husband’s songbun was bad (he was a “landowner’s grandson”), but the wife had the best songbun imaginable, being a descendant of a family that once was involved with the anti-Japanese guerrillas of Kim Il-sung. Frankly, such a marriage was rare and unequal – in most cases women of such standing would be as reluctant to marry a man of low origin as, say, a European noble lady from the 17th century. However, in this particular case the marriage did take place, much against the resistance of the girl’s parents.

In due time, though, the spouses discovered that the wife’s songbun did not really matter. Their daughter, a promising athlete, could not be sent for further training, since her songbun was bad: the great-granddaughter of a minor landlord could not compete on the national level and, for that matter, could be accepted only to a junior college.

In Kim Il-sung’s era – that is, before 1994 – the state was in near-complete control of an individual’s life. The only way to achieve high status and affluence was to climb the official bureaucratic ladder. As a North Korean friend put it in the late 1980s: “I hate officials, but I want to become an official, because in our country, only officials can live well.” Indeed, in Kim Il-sung’s North Korea all material goods were distributed by the state and almost all income was derived from work in state industry or the state bureaucracy.

But things started to change dramatically in the early 1990s. The state sector, suddenly deprived of Soviet subsidies, collapsed. North Koreans suddenly discovered that food rations were no longer forthcoming and their official monthly salary would only buy 1 or 2 kilograms of rice. Predictably, mass starvation followed, killing at least a half-million people.

To survive, the North Korean people literally rediscovered capitalism. Estimates vary, but the consensus is that over the past 10-15 years, the average North Korean family has come to draw most of its income from what can be described as black-market activities. Actually the so-called black market is not particularly black, since the government – in spite of occasional crackdowns – has tacitly tolerated its existence since the mid-1990s. Nowadays North Koreans work on individual fields on steep mountain slopes, they establish private workshops to produce garments and assorted consumer goods, and they smuggle and trade.

The new and increasingly dominant unofficial economy is in essence capitalist. As such, it rewards those who are sufficiently industrious, greedy, intelligent, ruthless and disciplined – and in some cases, it rewards them handsomely. Social inequality is growing and many a successful merchant or workshop owner lives better than a middle-ranking bureaucrat. A successful entrepreneur might have all trappings of luxury – including, say, a Chinese motorbike or a refrigerator, which in North Korea can be seen as roughly equivalent to a Lexus and a yacht.

The success in the emerging new economy is usually unrelated to one’s songbun. In fact, sometimes it seems that people with bad songbun tend to be more successful nowadays – perhaps because back in the 1990s they had no expectations of the state and were the first to jump into the murky waters of the emerging North Korean market economy.

Of late, the previously attractive career avenues have lost much of their allure. For example, in the past, many North Koreans were willing to do their long and tedious military service, which lasted some seven to 10 years. This popularity was easy to explain: For a person with average songbun, this would be the only way to get into the bottom tiers of the bureaucracy. As a North Korean told it, recalling the time of her youth, the 1970s: “The only way to become somebody was to go into the military, join the Korean Workers Party while on the active service, and then come back to become an official.”

Recently, however, military service has lost much of its popularity. Few people would be willing spend 10 years in a squalid barracks so as eventually to become a minor official in the city administration. Such a job is still attractive, to be sure, but it seems preferable to become a smuggler or a merchant, whose income far exceeds that of a petty bureaucrat.

Still, on the very top, songbun is important, since the key administrative positions are held by those with good songbun, and a mid- or high-level official can make a nice income by milking the private economy. Hence people with good songbun still often think about capitalizing on the real or alleged contribution of their ancestors to the establishment of the North Korean regime. However, for a majority the emergence of markets opened a new, faster and more attractive (but also more risky) avenue of social mobility.

North Korean society has become defined by one’s relationship to money, not by one’s relationship to the bureaucracy or one’s inherited caste status. Money talks, and for better or worse, in North Korea, money talks ever louder. As a female refugee in her early 40s put it recently: “Under Kim Il-sung, songbun was very important, it decided everything. Under Kim Jong-il, things are different – your family background still matters, but money nowadays is more important than social background.”

Read the full story here:
North Korea’s new class system
Asia Times
Andrei Lankov
2011-12-3

Pictured above (Google Earth): The Pyongyang – Nampho road (in yellow) and the Youth Hero Motorway (in orange).

UPDATE 1 (2011-11-29): KCNA has published pictures of the road construction, so it must be continuing apace!

ORIGINAL POST (2011-8-25): According to Yonhap (North Korea Newsletter No. 172–August 25, 2011):

Premier Choe Yong-rim Visits Pyongyang-Nampho Roadwork Sites

SEOUL (Yonhap) — North Korean Premier Choe Yong-rim made spot inspections on Pyongyang-Nampho roadwork sites and discussed with workers ways to provide raw materials for the project, the North’s media said on Aug. 22.

“After going round various places of the project, he held a consultative meeting of officials concerned on the spot,” the KCNA said.

The KCNA also said that “discussed at the meeting were the measures for finishing the project on the highest level in a brief span of time and substantially supplying raw materials for the project at relevant fields.”

Earlier, the Rodong Sinmun, the official organ of the North’s ruling Workers’ Party, on Aug. 18 said repair work of the Pyongyang-Nampho old road is now under way at a faster pace.

Premier Choe has been making brisk inspections on industrial facilities and other economic sectors so far this year.

It is worth pointing out for the new readers that the Pyongyang – Nampho road is not the same thing as the Youth Hero Motorway, which was opened in 2000. Since the motorway opened, however, it appears the original Pyongyang – Nampho road has fallen into some disrepair–requiring repairs.

The original Pyongyang – Nampho road is a bit more “industrial” and “practical” than the Youth Hero Motorway.  The latter extends from Kwangbok Street in Mangyongday-guyok to northern Nampho via the countryside.  It is five lanes in both directions and runs in a kinked straight line.  Because it falls outside any densely populated areas (outside its beginning and end), however,  it is largely empty–serving only through traffic.

The original road, however, stretches from Mangyongdae to Nampho along the Taedong River and through the industrial areas of northern Nampho. It connects populated areas of the Chollima Steel Complex, Taedonggang Tile Factory, Taean Heavy Machine Plant, and Taean Friendship Glass Factory before connecting with the Youth Motor Highway just north of the Pyonghwa Motors Factory.

According to the Daily NK:

According to records released today by the Ministry of Unification, there were a total of 48,242 workers in the Kaesong Industrial Complex at the end of September, up from 6013 when the project was launched in 2005.

Following the recent resumption of construction at the complex, the number of workers is now expected to grow further.

Revealing the data, an official with the Ministry of Unification commented, “Labor has been provided sufficient for Kaesong Complex enterprises to overcome labor shortages. If conditions get better allowing workers from further away to get employed, it looks like numbers will increase even more.”

The more than 48,000 North Korean workers in the Kaesong Complex bring in $50 million annually for the North Korean government.

As word of the good working environment that the Kaesong Industrial Complex offers spreads, the area is reportedly attracting internal migrants.

“The good reputation of Kaesong among workers has spread to Shinuiji, so they are moving to the area. But accommodation problems have to be solved before any can be hired,” the official explained.

The educational backgrounds of the workers include 81.8% with a high school diploma, 9.5% college graduates and 8.7% from professional schools.

Their base pay plus bonuses and incentives add up to roughly $100 dollars per person, though much of this is lost in payments to the North Korean state.

Here and here are recent post on road construction in Kaesong.

Here are previous posts on the Kaesong Industrial Zone.

Read the full story here:
Kaesong Still Growing
Daily NK
Kim Yong Hun
2011-12-02

UPDATE (2012-2-1): Karin Lee of the National Committee on North Korea wrote a great summary of the DPRK’s food situation in 2011:

In December 2010, North Korea began asking multiple countries for food aid. Its request to the U.S. came in early 2011, but it wasn’t until December 2011 that a deal seemed close, with the U.S. prepared to provide 240,000 metric tons (MTs) of assistance. Kim Jong Il died soon after this news hit the press, and details of the potential deal were never announced.

In the ideal world, Ronald Reagan’s “hungry child” knows no politics. But the case of North Korea is far from ideal. The U.S. government states it does not take politics into consideration when determining whether to provide aid to North Korea. Instead, the decision is based on three criteria: need in North Korea, competing demands for assistance, and the ability to monitor aid effectively. Yet these three criteria are subjective and tinged by politics.

In 2011 a succession of four assessment delegations (one by U.S. NGOs, one by the U.S. government, one by the EU and one by the UN) visited the DPRK. All found pretty much the same thing: widespread chronic malnutrition, especially among children and pregnant or lactating women, and cases of acute malnutrition. The UN confirmed the findings late last year, reporting chronic malnutrition in children under five in the areas visited — 33% overall, and 45% in the northern part of the country.

Some donors responded quickly. For example, shortly after its July assessment, the EU announced a 10 Million Euro donation. Following its own May assessment, however, the U.S. government was slow to make a commitment. Competing demands may have played a role. In July, the predicted famine in the Horn of Africa emerged, prompting a U.S. response of over $668 million in aid to “the worst food crisis in half a century.” While there was no public linkage between U.S. action on the African famine and inaction on North Korea, there could have been an impact.

But the two biggest factors shaping the U.S. government’s indecisiveness continued to be uncertainty about both the severity of the need and the ability to establish an adequate monitoring regime. At times, South Korean private and public actors questioned the extent of the North’s need. Early on, a lawmaker in South Korea asserted that North Korea already had stockpiled 1,000,000 metric tons of rice for its military. Human rights activist Ha Tae Keung argued that North Korea would use the aid contributed in 2011 to augment food distributions in 2012 in celebration of the 100th birthday of Kim Il Sung and North Korea’s status as a “strong and prosperous nation.” According to Yonhap, shortly after the U.N. released the above-noted figures, South Korean Unification Minister Yu Woo-Ik called the food situation in North Korea not “very serious.”

South Korea’s ambivalence about the extent of the food crisis was noted by Capitol Hill, exacerbating congressional reluctance to support food aid. A letter to Secretary Clinton sent shortly before the U.S. assessment trip in May began with Senators Lieberman, McCain, Webb and Kyl explaining they shared South Korean government suspicions that food aid would be stockpiled and requesting State to “rigorously” evaluate any DPRK request for aid. With the close ROK-U.S. relationship one of the administration’s most notable foreign policy accomplishments, such a warning may have carried some weight.

Monitoring is of equal, if not greater congressional concern. Since the 1990s U.S. NGOs and USAID have worked hard with DPRK counterparts to expand monitoring protocols, and conditions have consistently improved over time. In the 2008/2009 program, the first food program funded by the U.S. government since 2000, the DPRK agreed to provisions such as Korean-speaking monitors. The NGO portion of the program was fairly successful in implementing the monitoring protocol; when implementation of the WFP portion hit some bumps, USAID suspended shipments to WFP until issues could be resolved. The DPRK ended the program prematurely in March 2009 with 330,000 MT remaining.

In 2011 the Network for North Korean Human Rights and Democracy conducted a survey of recent defectors to examine “aid effectiveness” in the current era. Out of the 500 interviewees, 274 left the DPRK after 2010. However, only six were from provinces where NGOs had distributed aid in 2008/2009. Disturbingly, of the 106 people interviewees who had knowingly received food aid, 29 reported being forced to return food. Yet the report doesn’t state their home towns, or when the events took place. Unfortunately such incomplete data proves neither the effectiveness nor ineffectiveness of the most recent monitoring regime.

Some believe that adequate monitoring is impossible. The House version of the 2012 Agricultural Appropriations Act included an amendment prohibiting the use of Food for Peace or Title II funding for food aid to North Korea; the amendment was premised on this belief. However the final language signed into law in November called for “adequate monitoring,” not a prohibition on funding.

The U.S. response, nine months in the making, reflects the doubts outlined above and the politically challenging task of addressing them. It took months for the two governments to engage in substantive discussions on monitoring after the May trip. In December, the State Department called the promised nutritional assistance “easier to monitor” because items such as highly fortified foods and nutritional supplements are supposedly less desirable and therefore less likely to be diverted than rice. The reported offer of 240,000 MT– less than the 330,000 MT the DPRK requested – reflects the unconfirmed report that the U.S. identified vulnerable populations but not widespread disaster.

In early January, the DPRK responded. Rather than accepting the assistance that was under discussion, it called on the United States to provide rice and for the full amount, concluding “We will watch if the U.S. truly wants to build confidence.” While this statement has been interpreted positively by some as sign of the new Kim Jong Un regime’s willingness to talk, it also demonstrates a pervasive form of politicization – linkage. A “diplomatic source” in Seoul said the December decision on nutritional assistance was linked to a North Korean pledge to suspend its uranium enrichment program. Linkage can be difficult to avoid, and the long decision-making process in 2011 may have exacerbated the challenge. Although Special Representative Glyn Davies was quick to state that “there isn’t any linkage” between the discussion of nutritional assistance and dialogue on security issues, he acknowledged that the ability of the DPRK and US to work together cooperatively on food assistance would be interpreted as a signal regarding security issues. Meanwhile, the hungry child in North Korea is still hungry.

UPDATE 75 (2011-12-5): The ROK will donate US$5.65 million to N. Korea through the UN. According to Yonhap:

South Korea said Monday it will donate US$5.65 million (about 6.5 billion won) for humanitarian projects in North Korea through the U.N. body responsible for the rights of children.

The donation to the United Nations Children’s Fund, or UNICEF, will benefit about 1.46 million infants, children and pregnant women in North Korea, according to the Unification Ministry, which is in charge of relations with the North.

Seoul’s contribution will be used to provide vaccines and other medical supplies as well as to treat malnourished children next year, said the ministry.

There have been concerns that a third of all North Korean children under five are chronically malnourished and that many more children are at risk of slipping into acute stages of malnutrition unless targeted assistance is sustained.

“The decision is in line with the government’s basic stance of maintaining its pure humanitarian aid projects for vulnerable people regardless of political situation,” Unification Ministry spokesman Choi Boh-seon told reporters.

South Korea has been seeking flexibility in its policies toward the North to try to improve their strained relations over the North’s two deadly attacks on the South last year.

Despite the South’s softer stance, North Korea recently threatened to turn Seoul’s presidential office into “a sea of fire” in response to South Korea’s military maneuvers near the tense western sea border.

South Korea donated $20 million for humanitarian projects in North Korea through the UNICEF between 1996 and 2009.

Last month, the South also resumed some $6.94 million worth of medical aid to the impoverished communist country through the World Health Organization.

…

Separately, South Korea also decided to give 2.7 billion won ($2.3 million) to a foundation to help build emergency medical facilities in an industrial complex in the North Korean border city of Kaesong.

UPDATE 74 (2011-12-2): The Choson Ilbo reports that the DPRK’s food prices are rising after the 2011 fall harvest, however, the price increase is not due to a shortage of output, but rather political directives. According to the article:

The price of rice in North Korea is skyrocketing, contrary to received wisdom that it drops after the harvest season. According to a source on North Korea on Wednesday, the rice price has risen from 2,400 won a kg in early October to 5,000 won in late November.

North Korean workers earn only 3,000-4,000 won per month.

This unusual hike in rice price seems to be related to preparation of next year’s political propaganda projects.

A South Korean government official said, “It seems the North Korean government is not releasing rice harvested this year in order to save it up” for celebrations of regime founder Kim Il-sung’s centenary next year, when the North has vowed to become “a powerful and prosperous nation.”

UPDATE 73 (2011-11-24): According to the Daily NK, DPRK television is calling on people to conserve food:

With barely a month left until 2012, the year in which people were promised a radical lifestyle transformation to coincide with the North Korea’s rebirth as a ‘strong and prosperous nation’, programs calling upon people to conserve food are now being broadcast by Chosun Central TV and the fixed-line cable broadcaster ‘3rd Broadcast’.

Chosun Central TV is broadcasting the programs as part of ‘Socio-Culture and Lifestyle Time’, which begins directly after the news on Thursdays at 8:40pm. The majority of the content is apparently now about saving food.

A Yangkang Province source told The Daily NK on Wednesday, “Recently the head lecturer from Jang Cheol Gu Pyongyang Commercial University, Dr. Seo Young Il, has been appearing on the program both on television and the cable broadcasting system, talking about saving food.”

In one such program, Professor Seo apparently noted, “In these days of the military-first era there is a new culture blossoming, one which calls for a varied diet,” before encouraging citizens to eat potatoes and rice, wild vegetables and rice and kimchi and rice rather than white rice on its own, and then adding that bread and wheat flour noodles are better than rice for lunch and dinner.

It is understood that older programs with titles such as ‘A Balanced Diet is Excellent Preparation for Saving Food’ and ‘Cereals with Rice: Good for Your Health’ are also being rebroadcast, while watchers are being informed that thinking meat is required for a good diet is ‘incorrect’.

Whenever North Korea is on high alert or there is a directive to be handed down from Kim Jong Il, both of Chosun Central TV and the 3rd Broadcast are used to communicate with the public. For this reason, some North Korea watchers believe the recent food-saving campaign may reflect a particularly weak food situation in the country going into the winter.

According to the source, one recent program showed a cookery competition involving members of the Union of Democratic Women from Pyongyang’s Moranbong District. During which, one woman was filmed extolling the virtues of potato soup, saying “If we follow the words of The General and try eating potatoes as a staple food, there will be no problem.”

Read all previous posts on the DPRK’s food situation this year blow:

Read the rest of this entry »

According to the latest Koryo Tours newsletter:

For the past two decades, Koryo Tours has been opening North Korea to tourism, and in 2012 we are once again breaking new ground. After working closely with our Korean partners, we are proud to offer both our group and independent tourists the chance to go where no visitor has ever been, namely factories and similar sites around Nampo, the west coast port city not far from Pyongyang. Here’s a brief introduction to what is on offer:

Chollima Steelworks – A major heavy industry site for the Democratic People’s Republic of Korea (DPRK), this place was built by the Japanese and is known to Koreans as the birthplace of the Chollima movement, which even today drives the country. If you’ve always wanted to witness the making of ‘Juche Steel’ in a giant facility, come to Nampo with us. This is the DPRK’s most famous factory, and as always, Koryo Tours are the first company to be allowed to take tourists inside. But Koryo has its own Chlima connection; we can tell you about the art project we arranged at the steelworks as well as the scenes we shot there for our new feature film!

Tae’an Heavy Machine Tool Complex – This enormous complex boasts a number of hangar-sized buildings; we will see the vast range of machine tools, lathes and so on that the workers use to make shaped steel, turbine components, and other products.

Tae’an Glass Factory – This opened in 2005 with heavy Chinese investment, in fact, the Peoples’ Republic of China President Hu Jintao attended the opening ceremony along with DPRK leader Kim Jong Il. Tae’an produces glass and glass products for the domestic market. Koryo tourists will be the first visitors ever to watch the process from smelting to sheet-cutting, and even try to break a sheet of strengthened glass!

Nampo Taekwondo School – Many of the DPRK’s champion martial artists have been educated at this school, despite looking from the outside like it badly needs some maintenance the demonstration put on by the students here (aged from 6 – 16) is a mind-blowing masterpiece of the indigenous Korean fighting style – it’ll make you think twice about arguing with little girls in future!

Nampo Park – With a scenic view over the mouth of the Taedong River, as well as a fresh-water swimming area ideal for warmer months, this is a great place to relax or have a picnic. A popular wedding photography site, this picturesque park makes a pleasant diversion after the heat and noise of the factories.

As if factories, martial arts schools and rustic settings aren’t enough, we can also take you to a local restaurant in the city centre, an orphanage, and you can cap off the trip by visiting the nearby 8km-long West Sea Barrage and staying overnight at the Ryonggang Hot Spa Guesthouse

Keeping with our tradition of travel innovation, Koryo Tours would love to show you the face of DPRK no visitor has seen before. Come see the world’s most mysterious country with the only DPRK specialists around; contact us on info@koryogroup.com or pop in and see us if you’re in Beijing or Shanghai. For anyone planning a DPRK trip, whether it’s your first visit or you’re coming back for more, Koryo Tours is glad to offer you the chance to do and see more than ever before. We look forward to hearing from you!

We are adding these new attractions to the following tours, so if you’ve ever wanted to see Juche Steel (it’s a real thing!) being made, watch a load of sand turn to glass, see North Koreans operating lathes of all kinds, and see a young child beat up several surly attackers then one of these tours could be perfect for you!

Joseph Bermudez, now a Senior Analyst with DigitalGlobe’s Analysis Center and author of The Armed Forces of North Korea, has posted the latest issue of KPA Journal. You can download the PDF here.

Topics include: M-1979/M-1989 170 mm Self-propelled Guns (Part II) and “Yu Kyong-su, The Father of KPA Armor Forces.

Note: The satellite imagery used in this journal issue can be found on Google Earth here:  39.750290°, 124.820099°

Pictured above: Transparency International findings on the DPRK

According to the Gaurdian:

The [Corruption Perceptions Index 2011], which is closely watched by investors, economists, and civil society campaigners, is based on expert assessments and data from 17 surveys from 13 independent institutions, covering issues such as access to information, bribery of public officials, kickbacks in public procurement, and the enforcement of anti-corruption laws. While critics note that measuring perceptions of corruption is not the same as measuring corruption itself, the latter is almost impossible to do – as the corrupt are usually keen to cover up their tracks, hard data on graft and bribery is notoriously difficult to come by.

Here is the report.

Here are the findings in data form.

Here are the findings in map form.

Institute for Far Eastern Studies (IFES)
2011-11-30

Pyongyang International Trade Fair is held every spring and fall. The exhibition is increasing in size and attracting European and other foreign investments.

Japan-based newspaper, the Choson Sinbo reported on November 22 that during the period of the exhibition, over hundreds of business talks went back and forth between the North Korean and foreign companies and over 50 trade contracts and investment agreements were reportedly signed, with total amount of trade reaching in the millions in USD. At the Seventh Pyongyang Autumn International Trade Fair, held from October 17–20, one contract between a European company was reported to have been over 10 million USD alone.

Initially, the trade fair drew about 100 participating companies with just about 100 trade items. This year, however, roughly 300 companies had participated and over a thousand goods were on display.

It was also reported that “The items presented at the fair represented all sectors of social economic development with machineries, electronic goods, building materials, transportation, chemicals, clothing, food, medical and other consumer goods. In addition to these items, trade items are transitioning from light industry and consumer goods to the state-of-the-art products with CNC technology.”

Recently, multinational companies are exploring ways to enter into the North Korean markets through such international trade fairs.

According to the North Korean press, Chinese companies such as Haier, manufacturer of home appliances, and electronics and television manufacturer Changhong are in attendance at every trade fair held in Pyongyang. This time, particular attention was paid to European companies seeking investment opportunities in North Korea, such as a German paper manufacturing company, French flooring company, and Sweden’s GIA Industries, which is known as a mining equipment supplier.

The trade fair, which used to be held once a year in the spring, is now also being held in the autumn season to meet the increasing interests from multinational companies doing trade in Pyongyang. The scale of the fair has been upgraded as well. Normally the event was held only at the first two floors of the Three-Revolution Exhibition House; but to accommodate for growing size, discussion for building an international exhibition center is currently underway.

In the North Korean analysis, certain factors point to the success of the trade fair: 1) North Korea’s economic revitalization policy that focused on modernization of the people’s economy with large-scale construction projects, as these are gaining attention from overseas companies; and 2) North Korea’s assertive trade goals with economic modernization in mind and the hosting of international trade fairs, which are resulting in long-term trade contracts and an increasing amount of trade.

Additional Information:
1. Previous posts on the Pyongyang International Trade Fair can be found here.

2. Rason (Rajin-Sonbong) also recently held its first international trade fair.

Story 1 (Daily NK): Ministry strikes out currency swap (2011-12-1):

The Ministry of Unification has concluded that the currency redenomination implemented by the North Korean government two years ago was, as is already widely accepted, an utter failure in most regards.

According to the ministry, which revealed its assessment today, North Korea intended to use the currency redenomination to weaken the role of the markets, generate supplies of capital for the construction industry and adjust the amount of domestic currency in circulation, but ended up achieving the opposite.

Instead, the overall economy slowed, while markets have now made a comeback, recovering to their state they were in before the event.

The process was simple. Straight after the currency redenomination, the flow of commodities rapidly froze up due to contracting supply and weakening purchasing power. According to the Ministry of Unification, factories and enterprises that relied heavily on materials and capital from the market were fatally undermined. This immediately added to extant difficulties securing daily necessities, and forced the authorities to tolerate the markets once again. Commodity flows are still in the process of recovering.

But worse, the value of the domestic currency fell and people’s preference for US Dollars and Chinese Yuan deepened further, setting exchange rates and prices in a continuously increasing inflationary spiral.

This can be seen in the case of rice, a good proxy for overall economic conditions. In 2009, rice cost between 20 and 40won, but within a year had increased abruptly to approximately 1,500won, and as of November, 2011 was more than 3,000won. Despite the 100:1 ratio of the redenomination, prices have returned to their level before the currency redenomination.

The North Korean authorities even attempted to ban the use of foreign currency in January, 2010, causing various problems which resulted in the withdrawal of the plan in the following month. In December, 2009, a US Dollar was worth 35 North Korean won, but by a year later had soared to 2,000 won, and is currently worth 3,800 won.

The North Korean authorities said the currency redenomination would improve the lives of the people, but in truth because of hyperinflation people’s lives have actually gotten more difficult.

At the time of the currency redenomination, they emphasized care for the common worker, giving them wage increases and cash payments; a one-off bonus (500won per person) to laborers and an additional payment to farmers (150,000won per person). However, nominal wages subsequently increased 100 times, and with a lack of food, necessities and soaring inflation, made the people’s lives worse.

The average worker’s salary is now 3,000won, but the living expenses of a family of four are approximately 100,000 won per month.

In conclusion, an official from the Ministry of Unification declared, “As long as there is deepening popular distrust of the North Korean authorities, it looks like the power to implement future policy will weaken. The decisions made by the authorities that decreased the quality of people’s lives deepened the distrust.”

“The seizure of property, which in the short term alleviated polarization, ended up causing more poverty among the general population and had a relatively minor effect on the people who hold a lot of foreign currency.”

“North Korea tried to restore their socialist economy via the currency redenomination, but in reviewing the comments and perspectives of various North Korea experts and defectors we can see that the currency redenomination was an overall failure.”

That being said, he noted, “There is a limit to the ability of collective discontent to turn into collective political organizing.”

Story 2 (Yonhap): Botched currency reform destabilizes N.K. rice prices, exchange rates (2011-12-1):

North Korea’s currency reform has failed to stabilize rice prices and its currency while the nation still endures lack of food and supplies, Seoul’s Unification Ministry said Thursday.

The North carried out a massive currency reform two years ago to try to rein in galloping inflation, squash free market activities and tighten state control over the economy. The measures failed to halt massive inflation and worsened food shortages and public backlash.

The North Korean won was traded at 35 won to one U.S. dollar in markets right after the currency reform in late 2009. But one dollar was traded at around 3,800 won in November, up from around 2,000 won in 2010, according to the ministry.

The ministry, which handles inter-Korean affairs, also said rice prices have risen to pre-currency reform levels in a sign of food shortages in North Korea.

A kilogram of rice cost up to 40 won in 2009 before skyrocketing to about 3,000 won in November, the ministry said in an assessment of the North’s currency reform.

The dire assessment comes as the North is struggling to achieve its goal of building a prosperous nation by next year, the centennial of the birth of the country’s late founder, Kim Il-sung, the father of current leader Kim Jong-il.

The rice prices started to soar in Pyongyang on rumors that Kim failed to secure much aid during his trip to Russia in August, Good Friends, a Seoul-based private relief agency, said in September.

Rice is a key staple food for both South and North Koreans.

The botched currency reform is “expected to further deepen public distrust of the authorities and undermine their control on the people,” the ministry said in an assessment report.

Still, North Koreans are unlikely to display any collective action, because there is no organized political force, the ministry said.

Kim has been ruling the country with an iron fist, and tolerates no dissent.

There have been reports of growing discontent in the communist country over chronic food shortages and political oppression, though no organized opposition has emerged to challenge the leader.

Story 3 (Daily NK): Rice and Yuan zooming up in Ryanggang (2011-11-28):

The price of North Korean rice and the Yuan exchange rate have both reached post-2009 record levels in Yangkang Province, with domestic rice surpassing 4,000 won/kg and 1 Chinese Yuan selling for 720 North Korean won on November 28th.

Although a geographically remote location when seen from within North Korea, Yangkang Province act as a barometer for the situation in other areas because it stands alongside the capital Pyongyang and the Shinuiju-Dandong area as one of the most marketized, active trading locations of all.

Speaking with Daily NK today, a source from the province commented, “In the daytime on the 27th, the Yuan price, which had risen to 780 won, fell back to 720 won; however, the discomfort of the people is continual,” before adding, “Because of the rising exchange rate, the rice price also went up to 4,000 won.”

According to the source, as the price of North Korean rice hit 4,000 won/kg, that of Chinese rice also reached 3,200 won and sticky rice 5,000 won.

This means that the price of rice in Hyesan, the provincial capital, has now risen 500 won in two weeks, while the value of the North Korean won has depreciated by 120 won over a similar period.

The cause of the problem stems from a number of sources, but at the top of the list is a lack of faith in the North Korean won and the continual desire on the part of people who hold currency not to do so in domestic money.

As a result, the source said that traders are not selling their products, preferring instead to watch for changes, and with customers less likely to buy at such inflated prices, the overall effect is that trading volumes in the market have fallen drastically.

He explained, “There is even one rumor out there suggesting that by year’s end the price of the Yuan will have reached 1,000 won and that before long rice will have gone over 5,000 won. Rice traders are not selling their stock, saying that ‘if it gets more expensive, I’ll sell’, and so those citizens who are unable to get food together are looking pretty uneasy.’

Meanwhile, the new price records present a sense of cruel irony for a country about to commemorate the 2nd anniversary of the November 30th, 2009 currency redenomination.

“This is all the fault of the government, which organized the currency redenomination and destroyed the value of Chosun money,” the source agreed, complaining, “The price of everything is soaring, so the time has come where we can’t even buy blocks of tofu to eat.”