US prepares maritime interdiction to stop North Korean sanctions evasion

February 23rd, 2018

By Benjamin Katzeff Silberstein

As the Winter Olympics with all its inter-Korean contacts wind down, the US is preparing to place Coast Guard forces to stop and search vessels in Asia-Pacific waters, to prevent North Korean sanctions circumvention. Reuters:

Washington has been talking to regional partners, including Japan, South Korea, Australia and Singapore, about coordinating a stepped-up crackdown that would go further than ever before in an attempt to squeeze Pyongyang’s use of seagoing trade to feed its nuclear missile program, several officials told Reuters.

While suspect ships have been intercepted before, the emerging strategy would expand the scope of such operations but stop short of imposing a naval blockade on North Korea. Pyongyang has warned it would consider a blockade an act of war.

The strategy calls for closer tracking and possible seizure of ships suspected of carrying banned weapons components and other prohibited cargo to or from North Korea, according to the officials, who spoke on condition of anonymity. Depending on the scale of the campaign, the United States could consider beefing up the naval and air power of its Pacific Command, they said.

The U.S.-led initiative, which has not been previously reported, shows Washington’s increasing urgency to force North Korea into negotiations over the abandonment of its weapons programs, the officials said.

North Korea may be only a few months away from completing development of a nuclear-tipped missile capable of hitting the U.S. mainland, despite existing international sanctions that, at times, have been sidestepped by smuggling and ship-to-ship transfers at sea of banned goods, according to officials.

“There is no doubt we all have to do more, short of direct military action, to show (North Korean leader) Kim Jong Un we mean business,” said a senior administration official.

The White House declined official comment.

The effort could target vessels on the high seas or in the territorial waters of countries that choose to cooperate. It was unclear, however, to what extent the campaign might extend beyond Asia.

Washington on Friday slapped sanctions on dozens more companies and vessels linked to North Korean shipping trade and urged the United Nations to blacklist a list of entities, a move it said was aimed at shutting down North Korea’s illicit maritime smuggling activities to obtain oil and sell coal.

Tighter sanctions plus a more assertive approach at sea could dial up tensions at a time when fragile diplomacy between North and South Korea has gained momentum. It would also stretch U.S. military resources needed elsewhere, possibly incur massive new costs and fuel misgivings among some countries in the region.

The initiative, which is being developed, would be fraught with challenges that could risk triggering North Korean retaliation and dividing the international community.

China and Russia, which have blocked U.S. efforts at the United Nations to win approval for use of force in North Korea interdiction operations, are likely to oppose new actions if they see the United States as overstepping. A Chinese official, speaking on condition of anonymity, said such steps should only be taken under United Nations auspices.

China’s Foreign Ministry, in a statement to Reuters, said they did not know anything about the plan, but that in principle China believes U.N. resolutions on North Korea should be fully and thoroughly implemented.

“At the same time, we hope relevant countries act in accordance with Security Council resolutions and international law,” it added, without elaborating.

Full article:
Exclusive: U.S. prepares high-seas crackdown on North Korea sanctions evaders – source
Phil Stewart, David Brunnstrom

I won’t go into the strategic and political implications, but when it comes to sanctions circumvention, a plan like this, thoroughly executed, would likely raise the costs of North Korean sanctions circumvention. Even with what sanctioned trade still goes on, there’s likely a substantial premium charged by traders that deal with North Korea because of the risks involved. As those risks go up, so should the premium. No measures can make circumvention fully impossible, but it can get a whole lot more expensive.


Are DPRK hard-currency reserves expected to dry up by October?

February 21st, 2018

According to Yonhap:

North Korea’s hard currency reserves are expected to dry up around October if international sanctions on the communist nation hold, the chairman of the parliamentary intelligence committee said Wednesday.

Rep. Kang Seok-ho of the main opposition Liberty Korea Party said during a party meeting that the North’s recent peace overtures toward the South, including its invitation to President Moon Jae-in to visit Pyongyang, are aimed at overcoming such economic hardship.

“I received an analysis that, if international sanctions against the North continue like this, all of North Korea’s foreign currency earnings and overseas assets will be frozen, and its dollar (reserves) will dry up around October,” the lawmaker said.

Kang didn’t say where the analysis came from, including whether it’s from the National Intelligence Service.

He said it is an assessment he drew after discussions with intelligence authorities, concluding that as a result of international sanctions North Korea held out an olive branch, including its invitation to Moon to visit the North for what would be a third inter-Korean summit.

“At a time like this, our government should further strengthen cooperation with the international community on sanctions against the North,” Kang said.

He also said the government should send a special envoy to the North and work actively to help resume talks between the U.S. and the North.

A similar prediction was made in the Joong-Ang Ilbo a couple of weeks ago:

In 2017, the North’s exports to China — the only remaining market it officially trades with — plunged by 37 percent on-year. This year, they could plummet more than 90 percent if China fully complies with the sanctions.

Despite a sharp fall in exports, imports remained unchanged, suggesting a thinning of foreign exchange reserves.

Pyongyang is estimated to have about $3 billion in foreign exchange reserves. The unregistered sum could be higher when including foreign currency hoarded away by the elite. The coffers will fall further this year. By the second half, North Korea could be short on foreign exchange.

The Joong-Ang Ilbo article offers additional data and is well worth reading.

$3 billion seems low to me, but I can’t prove it. The black market value of the won has not moved much (since 2012!), and I have to suspect that the currency traders in the DPRK have a better idea of the country’s foreign exchange reserves than I do.

I suppose we will see in the later half of this year? It is interesting to think about think about the implications of North Korea running out of foreign exchange…

Read more here:
N. Korea’s hard currency reserves expected to dry up by October: lawmaker

The effect of sanctions
Joong-Ang Ilbo
Kim Byung-yeon


Some Kwangmyong Intranet screen shots on KCTV

February 19th, 2018

According to KCTV evening news (2018-1-31) [via KCNA Watch], the North Korean intranet service, Kwangmyong,  is being managed by the Kwangmyong Information Technology Research Institute (광명정보기술연구원) under the Central Science and Technology Information Agency (중앙과학기술통보사). According to the broadcast, the network is being improved (faster and easier to use search engine and databases) to fulfill a growing need by North Korean youth and workers to have access to the latest technology.

The broadcast featured screenshots of some of the Intranet content. I am unsure if this content has been rolled out for use by the public, or if it remains under development.

Picture 1:

This screen shot is for a service called “Learning ‘Paduk'” (AKA “Go”).

Picture 2:

This screen shows various topical journals or books the institute publishes ranging from light industry to animal husbandry.

Picture 3:

This screen shows various sports that one can learn about through the search engine: Volleyball, table tennis, swimming, tennis, and badminton.

Picture 4:

The fourth screen is a ‘Women’s Health Handbook’.

Picture 5:

This fifth screen shows programs available such as Chinese-North Korean and English-North Korean translators.

Picture 6:

The sixth screen is an ad for North Korea’s Kindle

Picture 7:

This last screen shot is an extension of the sixth picture, showing the Kwangmyong Technical Encyclopedia, Biyak(multi-lingual dictionary), multi-lingual picture dictionary, and Kwangmyong Sports Encyclopedia


Power and water supply in North Korea worsens in winter

February 19th, 2018

Institute for Far Easter Studies (IFES)

Reportedly, North Korea’s electricity and water supply have sharply deteriorated since mid-January this year.

According to a Seoul-Pyongyang News report on February 8, a Chinese resident in Sinuiju, North Pyongan Province, who is currently visiting China, told Radio Free Asia that the supply of electricity in North Korea began to deteriorate in January and that since the middle of the month the water supply was completely suspended due to the lack of power.

“Even if electricity is not supplied, lighting is possible with solar power, but the problem is that there is no supply of tap water,” the same source said. “People living in high-rise apartments are suffering more than those living in conventional houses,” he added.

People can draw ground water from the well. However, since elevators in high-rise apartments are not functioning due to the power shortage, those residents must carry water on their back while climbing several flights of the stairs.

Until last year, people could buy bottled water that North Korean truck drivers smuggled in from China. But this year even that has become difficult due to the international sanctions. It is said to be difficult to find such bottled water in North Korea ever since the Chinese customs authorities placed a complete ban on smuggling of all goods by truck drivers crossing the border.

In the meantime, even Pyongyang, which often has the best supply of electricity, is said to have faced a substantial cut in power supply in January.

A Chinese resident in Pyongyang who has recently visited China claimed that “except for the central districts in Pyongyang, power is supplied only for two or three hours a day, yet the worst problem is that water supply is suspended as well due to the deteriorating energy conditions.”

“Even if electricity is not supplied, people can cope with many problems using sunlight [solar power], but there is not much they can do to solve the shortage of water for drinking, toilets, and other daily uses. All family members have to focus on resolving the water shortage,” the source added.

Although there are some differences depending on the region, another North Korean source says that in recent months Pyongyang has suffered from more than ten power failures a day.


North Korea’s largest overseas restaurant closed down

February 16th, 2018

By Benjamin Katzeff Silberstein

The largest of North Korea’s overseas restaurants has closed, and its workers have gone home, reports Daily NK. Those formerly employed in North Korea’s overseas joint ventures abroad, and as overseas labor with other companies, have been returning home in stages since sanctions passed by the UNSC last September forbade joint ventures with North Korea.

These restaurants are (were?) an interesting phenomenon. I’ve visited them in Vietnam, Cambodia, and China, and the last time I went to one was in 2013. At the time, it was packed with tourists, mostly from South Korea, and some locals. This was generally my experience with these restaurants from the first time I visited one in 2008, but of course I can’t say for sure whether that impression was representative of a general picture.

The last time I went to one was in 2016, in Beijing. On a regular Saturday night, the place was virtually empty, save for a couple of middle-aged men donning Kim Il-sung badges, drinking beer and chain smoking. Our party got our own room, complete with karaoke, even though we didn’t ask for one, simply because the place was so empty. I got a hint about what the reasons might have been earlier in the day when I called to make a reservation: since I spoke to the staff in Korean, they felt obligated to inform me that customers from South Korea were no longer welcome. This business-killing restriction was likely imposed after the mass defection to South Korea, from one of the restaurants earlier that year. For what it’s worth, this particular one – in central Beijing – seemed like a dying endeavor over a year before the sanctions, though one can’t generalize from just one data point.

Here’s Daily NK’s story:

Ahead of the Lunar New Year holiday, Daily NK obtained photos of employees of a recently-closed North Korean restaurant called Pyongyang Koryo Pavilion in the Chinese border city of Dandong returning home to North Korea.

Pyongyang Koryo Pavilion was the largest of North Korea’s overseas restaurants, and originally employed 200 people. However, the restaurant shut down in November due to intensifying international sanctions targeting North Korea for its nuclear and missile development. Its employees have continued to return to North Korea in groups.

“Management started repatriating the workers in groups following the Pyongyang Koryo Pavilion’s closure, but some of them went to work at other restaurants,” a source in China close to North Korean affairs told Daily NK on February 14. “The 30 people returning ahead of the Lunar New Year holiday were part of the contingent that had been working at other establishments following the shutdown of Pyongyang Koryo Pavilion.”

In September 2017, China’s Commerce Ministry ordered the closure of North Korean companies operating inside the country within 120 days of UN Resolution 2375, which passed on September 11, 2017. The ministry also announced that Chinese joint ventures with North Koreans and North Korean companies would be closed.

Upon the realization that the Pyongyang Koryo Pavilion would likely not be resuming operations, the North Korean authorities began to exfiltrate the workers in stages.

“They’re heading back to their hometowns, where their families live, but they don’t look very happy about it because they’re losing the opportunity to earn money abroad.

Article source (with pictures):
More North Korean overseas workers return home
Seol Song Ah
Daily NK


FinCEN designates Latvian Bank for North Korea links

February 14th, 2018

UPDATE 1 (2018-2-19): According to the AFP:

The European Central Bank said Monday it has frozen payments by the third-largest bank in tiny Baltic state Latvia, as its finances have deteriorated in the wake of money laundering allegations from Washington.

“Temporarily, and until further notice, a prohibition of all payments by ABLV bank on its financial liabilities has been imposed, and is now in effect,” the ECB said in a statement.

It is the first time the ECB has used its power to impose a moratorium since taking on eurozone-wide banking supervision responsibilities in 2014.

The US Department of the Treasury last week named ABLV “an institution of primary money laundering concern” and accused it of connections to North Korea’s weapons development programme.

ABLV’s financial position, which had previously been stable, has rapidly deteriorated since as it found its access to the financial system cut off, even threatening the bank’s survival.

In late September 2017, the bank’s balance sheet stood at around 3.6 billion euros ($4.5 billion), with 1.0 billion euros of loans and 2.7 billion in deposits.

Just two days before the ECB’s moratorium, Latvian supervisor FCMC issued a statement saying the bank’s capital and liquidity ratios — key indicators of a bank’s financial health — were in good shape.

The ECB decision on Monday comes after Latvian central bank governor Ilmars Rimsevics, who sits on the ECB governing council, was arrested Saturday by the country’s Corruption Prevention Bureau (KNAB).

A source familiar with the case told AFP there was no connection between the ABLV case and the governor’s arrest.

ORIGINAL POST (2018-2-14): According to the FinCEN press release:

FinCEN Finds the Bank Orchestrates Money Laundering Schemes, Obstructs Regulatory Enforcement, and Has Conducted Activity Linked to North Korea

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) today issued a finding and notice of proposed rulemaking (NPRM), pursuant to Section 311 of the USA PATRIOT Act, seeking to prohibit the opening or maintaining of a correspondent account in the United States for, or on behalf of, ABLV Bank. FinCEN is proposing this action based on its finding set out in the NPRM that ABLV is a foreign bank of primary money laundering concern.

“FinCEN will continue to take action against foreign banks that disregard anti-money laundering safeguards and become conduits for widespread illicit activity,” said Steven T. Mnuchin, Secretary of the Treasury. “Deficient practices at banks foster a wide array of illicit conduct, including activity linked to North Korea’s weapons program and corruption connected to Russia and Ukraine. FinCEN is committed to protecting the U.S. financial system from these types of risks.”

As described in the finding, ABLV has institutionalized money laundering as a pillar of the bank’s business practices. ABLV’s management permits the bank and its employees to orchestrate money laundering schemes; solicits high-risk shell company activity that enables the bank and its customers to launder funds; maintains inadequate controls over high-risk shell company accounts; and seeks to obstruct enforcement of Latvian anti-money laundering and combating the financing of terrorism (AML/CFT) rules in order to protect these business practices.

ABLV’s failure to implement, and disregard for, effective AML/CFT and sanctions policies and procedures have made the bank attractive to a range of illicit actors engaged in organized crime, weapons proliferation, corruption, and sanctions evasion. Illicit financial activity at the bank includes transactions for parties connected to UN-designated entities, some of which are involved in North Korea’s procurement or export of ballistic missiles. In addition, ABLV has facilitated transactions for corrupt politically exposed persons and has funneled billions of dollars in public corruption and asset stripping proceeds through shell company accounts. ABLV failed to mitigate the risk stemming from these accounts, which involved large-scale illicit activity connected to Azerbaijan, Russia, and Ukraine.

Section 311 actions alert the U.S. financial sector to foreign institutions, such as ABLV, that are of primary concern and through the public rulemaking process, if necessary, cut them off from the U.S. financial sector.

Here is coverage in the Korea Herald:

Last year, an investigation by the US Federal Bureau of Investigation and Treasury found that five other Latvian banks, which mainly serve nonresident clients, violated the United Nations Security Council’s sanctions against North Korea and rules on anti-money laundering and the financing of terrorism.

Latvia’s Financial and Capital Market Commission confirmed the banks’ illicit activity and assigned it financial penalties totaling 3.5 million euros ($4.3 million).

It is the third time the US government has imposed sanctions against a foreign bank for dealing with North Korea.

In 2005, Macau-based Banco Delta Asia had some $25 million in North Korean funds frozen under US sanctions, as 24 companies including Chinese banks stopped dealing with the North, putting Pyongyang under severe financial strain. The US also blacklisted China’s Bank of Dandong in June last year for laundering money for North Korea.

“We have made clear to countries and companies around the world that they can choose to trade with North Korea or the United States, but not both,” the US Treasury’s Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said in an anti-money laundering and financial crimes conference in New York on Tuesday.

“We will target not only companies that actually know they are being exploited, but also those that should know. We are resolved that anyone who knowingly aids North Korea faces being cut off from the US financial system.”

Read the full story here:
Latvian bank faces US sanctions for dealing with NK
Kim So-hyun
Korea Herald


Jang Song-thaek photo-shopped out of guidance picture

February 13th, 2018

On February 2, KCTV broadcast from inside a home on Mirae Scientist Street. You can see the video here at 5:07:38 if you subscribe to NK News. Inside the apartment, they showed where the resident had been photographed with Kim Jong-un and Kim Jong-il. Here are the photos on the wall:

Here is a blow up of the lower-center picture:

Surprisingly, I recognized this picture. It is from Kim Jong-il’s and Kim Jong-un’s guidance trip to the Jagang Machine Plant on 2011-4-8. Here is the official photo as it appeared in the media at the time:

In this lower photo, the three individuals wearing grey coats are (from left to right) Jang Song-thaek, Kim Jong-un, and Kim Jong-il. In the photo above (hanging on the wall of the apartment on Mirae Street) there are only two people wearing grey coats: Kim Jong-il and KimJong-un. There is also one less person in the photo.

I thought this was interesting. I wonder how many photos have been altered to remove Jang Song-thaek? Also, I wonder how many apartments on Mirae Scientists Street are dedicated to the machine plant industry.


Sanctioned Foreign Trade Bank can’t pay North Korea’s UN dues…

February 13th, 2018

Reuters reports that North Korea cannot pay its UN dues owing to sanctions on its official hard currency repository, the Foreign Trade Bank (FTB). According to the article:

North Korea’s U.N. Ambassador Ja Song Nam met with U.N. management chief Jan Beagle on Friday to ask the world body to help secure a bank transaction channel so Pyongyang could pay the nearly $184,000 it says it owes for 2018.

U.N. member states are required to pay assessed contributions to the world body’s regular and peacekeeping budgets, as well as a budget for international tribunals.

U.S. and U.N. sanctions on the Foreign Trade Bank, North Korea’s primary foreign exchange bank, were preventing the country ”from honoring its obligation as a U.N. member state by hindering even normal activities such as payment of the U.N. contribution,” the North Korean mission said in a statement late on Friday.

The United States sanctioned the Foreign Trade Bank in 2013, while the U.N. Security Council blacklisted the bank last August.

The 15-member U.N. Security Council has unanimously boosted sanctions on North Korea since 2006 in a bid to choke funding for Pyongyang’s nuclear and ballistic missile programs.

According to the U.N. Charter, countries in arrears in an amount that equals or exceeds the contributions due for two preceding years can lose their vote in the 193-member U.N. General Assembly. The General Assembly can grant an exception if a country can show that conditions beyond its control contributed to the inability to pay.

The U.N. website said that as of Jan. 28 there 12 countries in arrears of more than two years. Apart from its 2018 dues, North Korea said it is up to date with its payments.

I know that many in the diplomatic and NGO communities have been physically bringing in cash to fund their operations in Pyongyang since the FTB was sanctioned.

There was a Russian Bank, Bank Sputnik, that had maintained a financial link to the FTB to service the diplomatic community. However, this banking link was severed in September 2017 and apparently remains closed.

UPDATE (2018-2-21): A news site I was previously unaware of has some interesting information on the relationship between the DPRK’s Foreign Trade Bank and the Russian bank, Sputnik. According to Inner City News:

In the face of North Korea sanctions, the UN in December 2017 used the sanctioned Foreign Trade Bank and Russia’s Sputnik Bank to transfer EUR 3,974,920.62 into the country, documents obtained by Inner City Press show. A letter from Sputnik Bank states that “unauthorized person (I.V. Tonkih) led negotiations with Korean party on interbank correspondent relationship.” Photos here.

NK News did a better job reporting on the relationship between Sputnik and the FTB.

Read the full story here:
North Korea says unable to pay U.N. dues, blames sanctions


Kim Jong-un’s new model farms

February 8th, 2018

In the most recent issue of Kumsugangsan, the North Koreans highlighted the renovation work of Poman-ri (one of the eight scenic vistas of the songun era).

Here is the article:

A quick check with the imagery on Planet Labs does indicate that there was a new health complex built (normal at the town level, but only specially allocated at the village level), new apartment buildings constructed, and a school appears to have been renovated (also very common in North Korea these days).

Pictured above (Top): Poman-ri as seen on Google Earth in 2015-8-26 (Bottom): Planet imagery from 2018-2-3 showing renovated area.

This is not the first farm to be “renovated” in the Kim Jong-un era. It is also not the largest village to be renovated (so far it appears to be one of the smallest). So what is going on here? North Korea appears to be in the process of constructing new “model farms” in the KJU era. Previous “model farms,” such as Chongsan-ri in Nampho, are primarily associated with revolutionary works of Kim Il-sung or Kim Jong-il. These new farms, however, are intended to spearhead Sci-Tech achievements under Kim Jong-un which can be replicated across the country.

Jangchon-ri  (AKA “DPRK-Libya Friendship Jangchon Co-op Farm”) on the outskirts of Pyongyang appears to have been the first of Kim Jong-un’s new model farms. Consequently, it has received the most attention in the official media; it has been visited at least twice by Kim Jong-un; and it receives regular foreign tourists, journalists, and even foreign NGOs.

Images via Google Earth. Top dated 2014-3-13 (before). The bottom is dated 2015-5-20 (after)

KCNA reports from Kim Jong-un’s first visit to the farm after it was renovated (2015-6-30):

Kim Jong Un, first secretary of the Workers’ Party of Korea, first chairman of the DPRK National Defence Commission and supreme commander of the Korean People’s Army, gave field guidance to the Jangchon Vegetable Co-op Farm in Sadong District, Pyongyang City, whose looks have undergone a radical change to be a model and a standard of the socialist rural cultural construction.

He set forth a task to build the farm into an exemplary farm and icon of greenhouse vegetable production when providing field guidance to the farm associated with the immortal history of leadership given by President Kim Il Sung and leader Kim Jong Il in June last year. He guided the layout for the construction of Jangchon area several times and took benevolent measures for settling the issues arising in it.

He went round the mosaic depicting smiling Kim Il Sung, a monument to the revolutionary activities of Kim Il Sung and Kim Jong Il, the room for the education in the revolutionary history and the room dedicated to the history of the farm.

He recalled that the farm developed into a dependable producer of vegetables under the warm and meticulous care of Kim Il Sung and Kim Jong Il who made indefatigable efforts to the last moments of their lives to provide the Pyongyang citizens with fresh vegetables all the year round.

He went round the hall of culture, science and technology disseminating center, Jangchon health complex, modern dwelling houses and other places to learn about the construction in detail.

He praised the farm for building the hall of culture as well as a national art theatre so that the farmers may fully enjoy a cultural and emotional life and constructing a nice park and a leisure ground having a volleyball court, a swimming pool, a roller-skate ring and a fishpond.

He was satisfied to see the library, e-reading room and technology study room in the science and technology disseminating center and modern equipment in the soil analysis room and the room for examining damage done by insects.

Appreciating the successful construction of modern dwelling houses, in particular, he was pleased that the farm carried out the party’s policy of making an effective use of natural energy and turning the village into an orchard by equipping each house with solar water heater, solar cells and a methane gas supply system and planting fruit trees around each house.

He went round mud-walled plastic sheet greenhouses and arch-style chain greenhouses to learn in detail about the vegetable production and management of the farm.

He enjoyed a bird’s-eye view of the farm from the observation deck.

He praised the Pyongyang City for working an eye-opening miracle in the socialist rural cultural construction as required by the party and being able to proudly greet the grand festival in October.

He extended thanks in the name of the Party Central Committee to farmers of the farm and officials and other working people in Pyongyang City for making a positive contribution to turning the Jangchon area into a spectacular farm reminiscent of a rural city as required by the party.

It is the resolution and will of the party to bring about a radical turn in the rural cultural construction with this farm as an example and torch, he said, giving Pyongyang City an instruction to push ahead under a plan with the work to spruce up well the farms on the outskirts of the city on the basis of the successes and experience already gained.

He expressed expectation and belief that Pyongyang City would take the lead in the drive to implement the behests of the leaders and uphold the party policies in the future as a political, economic and cultural hub of socialist Korea having the mission to hold aloft the banner of the three revolutions-ideological, technical and cultural.

He was accompanied by Hwang Pyong So, Choe Ryong Hae and Ri Jae Il.

The words in bold above indicate the types of facilities that are to be constructed at all of the new model farms. These types of facilities are already common at the city- and town-level, but still relatively rare at the village level. It would also be interesting to know if this farm (and other similar model farms) operate under different agriculture policies–such as de-facto family plots, or perhaps some flexibility to make agricultural decisions on the spot. Time will tell.

These types of projects are typically rolled out at the provincial level, so other than Jangchon-ri (Pyongyang) and Poman-ri (North Hwanghae), what other model farms can we point to that are being renovated under this policy?

1. Thaesong-ri (Nampho): This farm was featured on KCTV on 2017-9-21, and miraculously it has not been deleted by YouTube). KCTV described the village as a model village with new facilities that are pleasure to live and work in.

I have previously mentioned this village in Radio Free Asia.

2. Sokha-ri (North Phyongan): This farm was featured on KCTV on 2018-1-9, but YouTube has since deleted the material. Shame on them.

3. Sinchang-ri (South Hwanghae): This farm was featured on KCTV on 2017-9-20. This village has actually undergone at least two rounds of renovations. I believe the first round was done because the village is next to a popular road artery (North Korea has long been cleaning up villages long the main roads). The second round of renovations is due to the new model farm policy under Kim Jong-un.

Pictured above (Top): 2006-12-25 (Middle): 2014-3-20–showing completed first renovation (Bottom): 2016-10-23–showing completed second renovation in the new model farm style.

4. Jikha-ri (North Hamgyong):  This was also featured on KCTV on 2017-11-5, but has also been deleted by YouTube. I previously pointed it out to RFA on 2016-6-22.

Image above (Top): 2015-9-20 (Bottom): 2016-5-7–showing that the village is under renovation.

5. Phyongsu-dong (South Hamgyong): According to imagery on, renovation of this farm has been completed, but I have not see it appear in the North Korean media to date. I previously mentioned it in RFA here.

6. Songchon-dong (Kangwon): This farm renovation has yet to appear in the official media (as far as I am aware). I previously reported in RFA that is sits just outside the security perimeter of Kim Jong-un’s Wonsan compound:

Image dates (Top): 2016-2-26 (Middle): 2017-2-14 (Bottom): Planet image from 2018 showing construction continues to progress.

This is not the only village to be renovated in Kangwon. However, I believe it is the only renovation project in the province related to this new series of model farms. Another village in south Kangwon Province, Thaebek-ri (38.574028°, 127.673046°), has also been renovated in the last few years, and several other farms in Kangwon were renovated as part of the Sepho Tableland Project.

Below is the information that remains TBD.

1. Manbok-dong (Rason): This area in Sonbong was formerly named Paekhak-ri, and it was the site where the North Korean government constructed new housing following floods in the summer of 2015. I could be wrong, but I believe that the post-flood housing is being pragmatically named as the new model farm in the city. However, I could be wrong. I searched for other village renovation in Rason on Planet Labs imagery and Google Earth, but did not find anything significant.


2. South Phyongan: I am still unsure which village in South Phyongan will be designated as the model farm to be built in this new style. I reported in RFA that lots of housing around Pyongyang Airport was being renovated back in May 2017, some of which is in South Phyongan, but none of these housing projects seem to match the new model farm design. According to a later KCTV report on 2017-11-20 (before it was deleted by Youtube), the Ministry of Coal Mining (석탄공업성), Ministry of Forestry (림업성), National Tourism Bureau (국가관광총국), and the Korea Oceanic Company (조선대양총회사) built new housing in the Pyongyang International Airport District. 1,000 homes were built earlier than scheduled and work was continuing on the remaining houses. However, it is possible that construction on the province’s new model farm has not yet begun in this province.

3. Jagang Province: I have searched the North Korean media, Google Earth imagery, and Planet imagery, but have not seen where construction on a new model farm has begun.

4. Ryanggang Province:  I have searched the North Korean media, Google Earth imagery, and Planet imagery, but have not seen where construction on a new model farm has begun.


Advance payments in the Pyongyang housing market

February 6th, 2018

By Benjamin Katzeff Silberstein

Daily NK reports an interesting trend on the Pyongyang real estate market (or is it a countrywide phenomenon?) of construction companies selling apartment units before construction is finished, requiring what to me sounds like a regular deposit. First construction companies require the equivalent of $10,000 for the initial phase, and later, for interior work, at least another installment of the same amount.

I’m not sure this is an entirely new system or phenomena in the North Korean housing market, which, like virtually all spheres of the economy, has been increasingly guided by market mechanisms since the late 1990s. Nevertheless, the trend is interesting for several reasons. For example, advance payments suggest a trust in the system itself, despite a lack of transparency and formal rules. It’s unclear what would happen to customers who have made advance payments on apartments if construction doesn’t come through, but since the real estate market is still formally illegal, there is likely no judicial mechanism for people to demand their money back. It’s also unclear how widespread these practices are – obviously, most North Koreans can’t put up $10,000 for a new apartment.

Full article at Daily NK:

Real estate companies in Pyongyang are pushing ahead with construction projects in the new year after receiving permission from the North Korean authorities. These companies are reportedly securing construction funds by demanding upfront payments for spaces in the buildings.

“Owners have already been determined for half of the units in the apartment building in the Sadong area of Pyongyang, set to finish construction in the spring,” a source in the capital told Daily NK on February 1. “Typically, construction project managers announce the planned location and expected completion date, and then people who want to buy a unit are required to pay in advance in (US) dollars.”

According to the source, the advance payment system was created by individual construction project managers who lacked the private funds to begin building. They are demanding at least $10,000 USD for each advance payment, and are using these funds to begin construction.

Project managers must first gain permission to build in certain locations, and they cannot expect to raise the necessary capital through advance payments unless the location is central. This has led to intense competition between project managers to curry favor with the influential figures in charge of granting local building permits.

“Construction companies cannot earn the funds to start building unless they get a good location for the project,” the source said. “Although the new 12-floor apartment building is being built in the outskirts (of Pyongyang), they were able to secure advance payments because of the location’s convenient transport options to the city center.”

“Generally, prices for spaces in the planned buildings are set depending on the floor number and usage, such as for underground vs. upper-floor units, or for spaces intended to be used for a business,” she added. “Developers thus have to plan according to expected customer demands.”

A 1st-floor apartment may require a $10,000 advance payment, $30,000 for a mid-level unit, and $8,000 for an 11th-floor unit. Mid-level apartments are the most popular and therefore most expensive in North Korea, as they are considered a good balance between safety from burglary and ease of access by stairs during the country’s frequent power outages.

Once the building’s framework is complete, customers, who must be issued usage permits for new apartment units by the Pyongyang People’s Committee. must then pay about twice the initial payment for the interior construction of their unit to proceed.

The construction companies must also save a portion of the funds to give to the government. “For this building (in Sadong), units on the 12th-floor were deliberately withheld from sale. They are saving the entire space to give to the government upon completing construction,” said a separate source in Pyongyang, adding that this can be seen in the context of the fact that the real estate market remains illegal under North Korean law.

According to the Article 6 Section 44 of the Real Estate Administration Law (adopted by the Supreme People’s Assembly on November 11, 2009), “All revenue gained from unapproved real estate ventures are to be forfeited to the state.”

“Private businesses must give about 10% of the revenue from a construction project to the government, and they also have to give them the entire top floor,” the second source said, “but the top floor is generally not very popular anyway, the companies do not see this as a huge loss.

Article source:

Real estate companies in Pyongyang use advance payments to fund construction
Seol Song Ah
Daily NK


An affiliate of 38 North