Nit-picking coverage of the five-year plan

May 19th, 2016

Numerous reports have claimed that the five year plan announced at the seventh party congress was the first since the 1980s. I did not think this was accurate, but was too busy to actually look the facts up. Fortunately someone else did it for me.

Here is a blurb from the recently released  report “North Korea’s Troubled Economy: The Real Challenges” by Ryo Hinata-Yamaguchi and Yeongseob Lee:

North Korea’s recent track record of economic plans have been far from effective nor consistent. Pyongyang’s Third Seven-Year Plan from 1987 failed to remedy the ailing economy, and the plan itself virtually disappeared during the so called “arduous march” of the mid-1990s. Moreover, in 2011, Pyongyang announced the “Ten-Year State Strategy Plan for Economic Development”, but there was very little follow-up from the regime on the progress.

The new Five-Year Economic Development Strategy announced at the recent Workers’ Party of Korea (WPK) Congress is therefore an attempt by the Kim Jong-un regime to politically reinvigorate the government’s uri-sik (our style) economic development strategy focusing on the energy and food crisis. While little details were disclosed, given the myriad constraints in capacity and resources, the prospects of genuine revival and development are questionable.

So the last plan was announced in 2011, not 1987.

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New market construction and renovation in North Korea

May 19th, 2016

New-nampho-Market-2016-5-19

Pictured Above (Google Earth, 2016-2-2): Construction of what I believe to be a new market in Nampho.

I have identified a few other smaller examples in this Radio Free Asia article.

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North Korean economic production and the 70-Day Campaign

May 18th, 2016

UPDATE 1 (2016-5-18): By Benjamin Katzeff Silberstein

A couple of weeks ago, KCNA carried another evaluation of production during the 70-Day Campaign. In the context of claims that the newly launched five-year plan (2016-2020) is the first one in decades, it is worth noting that economic planning as such has never fully ceased to be part and parcel of the official North Korean economy. As communist economies do, North Korea still measures economic success much in terms of mere output. The 70-Day Campaign is one example:

The Korean Central News Agency Thursday released a report on the successful conclusion of the 70-day campaign with a great victory to be specially recorded in the history of the Korean nation under the guidance of Marshal Kim Jong Un.

According to the report, the capabilities for self-defence including the capacity of nuclear attack of Juche Korea have been remarkably bolstered and the campaign plan has been over-fulfilled 44 percent in terms of industrial output value, and industrial production has grown 1.6 times as against the same period last year.

Signal successes have been achieved in the development of Korean-style smaller nuclear warhead, simulated test of atmospheric re-entry of a ballistic missile, test of high-power solid-fuel rocket engine and stage separation, test of high-power engine of inter-continental ballistic missile.

Workers in the four vanguard fields have performed labor feats in the van of day-and-night campaign.

Those in the field of power industry honored their 70-day campaign quotas at 110 percent.

I am not one to draw major conclusions from the order of mentions of areas in reports such as this one, but if the order says anything about priorities, it is worth noting that energy shows up first among other areas than missiles and nukes. Recall that energy has been emphasized by media tied to the North Korean regime.

The Ministry of Coal Industry carried out its coal production plan more than 10 days ahead of schedule and results of capital tunneling and preparatory tunneling have jumped several times as against those in the past.

Those in the steel field and miners hit the goals of production of Juche iron, rolled steel and iron ore.

The field of railway transport carried out the plan for the transport of major freight at 124 percent.

What economic value more transportation carries is unclear…

More than 70 farm machines of over 20 types have been invented and manufactured, typically potato harvester, self-propelled sprayer, combined plowing machine, combined soil governing machine, small multi-purpose farm machine and combined rice thresher.

Those in the fishery field built multi-purpose fishing boats of “Hwanggumhae” series by their own efforts and with indigenous technology in a brief span of time and put them into operation.

The plan for the production of machine tools has been over-fulfilled more than 60 percent and index-specific campaign plans have also been carried out in the machine-building industrial field.

Workers in the Namhung Youth Chemical Complex and Hungnam Fertilizer Complex produced 1.2 times as much fertilizers as before and the February 8 Vinalon Complex significantly increased the production of vinalon and various kinds of other basic chemical goods.

The nationwide cement production plan has been carried out at 141 percent and a boost has also been recorded in the production of varieties of building materials including glass.

Workers of forestry stations and mine pillars production stations honored timber production plan set by the Ministry of Forestry at 137 percent.

Agricultural workers across the country have made full preparations for farming by their devoted efforts.

But note that no numbers are given for farming output, or any agricultural output other than fishing and seaweed.

Officials and workers in the fishery field have over-fulfilled their plan for fishing and seaweed culture more than 10 percent when the results of the Ministry of Fisheries are taken as a whole.

The gross industrial output value in the field of light industry has been over-fulfilled 54 percent and the index-specific performance has shown a marked jump over the period before the campaign.

A number of consumption goods producers have hit their goals for the first half of the year or the yearly ones. Some of them even set a record by fulfilling two-year production quotas.

Those in the field of land and environment protection and workers and other people across the country including youths and students planted hundreds of millions of trees in mountains covering more than 100 000 hectares.

The Paektusan Hero Youth Power Station No. 3 and the Wonsan Army-People Power Station have been successfully completed.

In just one month after breaking the ground for the construction of Ryomyong Street, its builders finished ground excavation for dozens of blocks of apartment houses and are now pushing forward the ground concrete tamping in its final stage.

Baby homes, orphanages, orphans’ primary and secondary schools sprang up across the country and the Mindulle Notebook Factory was built.

New structures have been built one after another. They include Dyke No. 2 of Nunggumdo Tideland, Outdoor Sapling Cultivation Ground of the Central Nursery of the Ministry of Land and Environment Protection and Pyongyang Athletic Apparatus Factory.

Scientists and educators across the country registered three times as many research achievements as against the same period last year to be conducive to the economic development of the country and the betterment of the people’s living standard.

Unprecedented achievements have also been made in the fields of literature, arts, education, public health and sports.

The 70-day campaign of loyalty clearly showed the world how the great Kim Jong Un‘s Korea is advancing toward the eminence of the century.

The full article was published by KCNA on May 6th.

ORIGINAL POST (2016-4-30):

“Industrial establishments over-fulfill production targets as the 70-day campaign comes to an end” (Pyongyang Times: 2016-4-30)

The Hwanghae Iron and Steel Complex, one of the model units in the current 70-day campaign of loyalty, hit its steel and pig iron production targets 101 percent respectively as of April 20.

Smelters of the UHP electric arc furnace have so far reset the peak production record of molten iron per charge several times. They gave full play to the spirit of collectivism of helping and leading one another forward, while introducing advanced working methods to shorten the time of heating and increase the output of molten iron per charge.

The workers of the continuous ingot steel workshop carried out their daily production plan at 102 percent on average, 110 percent at maximum.

Those of the Sunchon Cement Complex drastically raised cement production on the first day of the campaign to renew the daily peak production record for the first time in 20 years. Without resting on their laurels, they worked hard and finally achieved their campaign goals.

The Ministry of Coal Industry carried out its highly-set campaign target ahead of schedule as of April 20 with the coal production plan 101 percent and major, preliminary and boring tunnelling 101.5, 105.5 and 106. 6 percent respectively.

Coal-mining machine factories across the country manufactured and repaired thousands of coal wagons and made over 1 800 wheels more than planned under the uplifted self-development-first banner. A great deal of achievements were also made in the production of coal-mining equipment and their parts.

The Chongchongang Thermal Power Station increased power generation to exceed its campaign plan by 2.2 percent as of April 25. The workers of the station repaired equipment and increased the number of boilers in operation to ensure uninterrupted power generation.

The February 8 Vinalon Complex gave priority to the supply of raw materials and fuel, staggered production and organized management of equipment and technology scrupulously to boost production, thereby surpassing the vinalon production goal by 50 percent.
Workers of the Wonsan Salt Works increased production 2.2 times over the same period of last year by fully storing seawater in reservoirs while introducing an advanced seawater freezing method which suits the conditions on the east coast throughout the winter.

Thousands of hectares of farmland have been rezoned in Kaesong and Jangphung County, with over 19 300 patches and paddies and more than 1 260-kilometre-long ridges between paddy and dry fields removed and hundreds of hectares of land brought under cultivation. This paved the way for comprehensive mechanization of farming on all fields and consequent increased cereals production.

Officials and workers of the Sinuiju Textile Mill have produced three times more cotton yarn and fabrics than before the campaign. Amidst the dynamic collective emulation drive between workteams, shifts and workshops, many workers and workteams have carried out the first half year and annual production plans as well as campaign plans and the number is growing.

More than 200 factories and enterprises in Pyongyang have hit their 70-day campaign goals and first half year plans ahead of schedule.

“Nation’s Industrial Production Rises 1.2 Times” (Pyongyang Times: 2016-3-16)

Industrial output grows rapidly thanks to the heightened revolutionary enthusiasm and creative spirit of selfreliance and self development of service personnel and people, who have risen up in the day and night march true to the call of the Central Committee of the Workers’ Party of Korea for launching a 70day campaign of loyalty for the Seventh Party Congress, according to a report of the Korean Central News Agency on March 12.

The nation’s industrial production increased 1.2 times in the first ten days of March over the same period of last year.

The Pukchang and Pyongyang thermal power complexes and other thermal and hydropower stations across the country pressed on with power generation as scheduled, far exceeding the tenday targets set by the Party.

Coal mines in the western areas including Tokchon and Sunchon cut thousands of tons of coal more every day.

The Ministry of Coal Industry overfulfilled the tenday production plan by 13 per cent and the results of major and preliminary tunnelling far surpassed the plan, securing hundreds of reserve coalcutting faces.

The workers of the Hwanghae Iron and Steel Complex doubled the Juche iron output over the same period of last year, and all metallurgical bases conducted a dynamic drive to increase iron and steel production.

Amidst the heated emulation and experiencesharing in iron ore mines in Musan, Unnyul, Thaethan and other areas, the Jaeryong Mine increased daily production over 1.5 times on average, thus taking the lead in the supply of concentrated iron ores to metallurgical factories.

The Ministry of Railways, all the railway bureaus and their branches commanded railway transport scrupulously and gave top priority to concentrated transport without accident to overfulfil the plan for main freight.

The increased production in the vanguard economic sectors injected a new lease of life into the overall major industrial sectors such as machinebuilding, chemical, building materials and mining industries and forestry.

The Taean Heavy Machine Complex completed the production of generating equipment till March 9 in a matter of two months and sent them to the construction site of Paektusan Hero Youth Power Station No. 3 on March 10.

The workers of the large machinebuilding bases in Ragwon and Ryongsong and the Sungni Motor Complex speeded up the processing of products and increased the production of spare parts including various kinds of gears and speed reducers, a great contribution to a 1.5 times rise in the production of thermal power generating equipment of the Ministry of Machine Building Industry.

The workers of the Hungnam Fertilizer Complex hit the Juche fertilizer production target for the first ten days of March.

Cement production is also growing in the Sangwon Cement Complex whose workers and technicians have turned out to break the production record again this year after last year.

Many forestry and prop production stations carried out their first quarterly and yearly timber production quotas.

Farming preparations were brisk on the agricultural front, resulting in a 1.7 and 2.8 times growth in the securing of hukposan and microbial fertilizers and an over 1.3 times increase in the acreage of field carpeted with humus soil.

Officials and fishermen carried out the plans of the Ministry of Fisheries for ten days 121 per cent.

Daily amount of catch increased rapidly and fishing results saw a leap in the fishery stations on the east and west coasts.

Hundreds of workers hit their targets for the first quarter and half of the year in the field of textile industry. Kumkhop, Pomhyanggi and Maebongsan and other popular brands saw a sharp rise in sales.

Many major construction projects progressed apace including those for Paektusan Hero Youth Power Station No. 3, reconstruction of Kim Il Sung Stadium, secondstage reconstruction of the Central Zoo, capacity builup of the Central Tree Nursery of the Ministry of Land and Environment Protection, the central class education hall and Wonsan Army People Power Station.

Many young people volunteered to work in labour consuming fields and hundreds of workers carried out their yearly plans.

“KCNA Reports about Signal Successes in Various Fields in Early March” (KCNA: 2016-3-13)

The Korean Central News Agency Saturday said in a report that the industrial production in the first ten days of March when the 70-day campaign of loyalty is under way grew 1.2 times as compared with the corresponding period of last year.

According to the report, production in the vanguard and basic industrial fields of the national economy including electric power, coal, metal and railway transport sharply rose.

Thermal power plants and hydro-power stations across the country have over-fulfilled their daily quotas.

The production plan of the Ministry of Coal Industry for ten days in March was over-fulfilled 13 percent.

The workers of the Chollima Steel Complex boosted the production of rolled steel 32 percent.

A dynamic drive for increased iron and steel production is under way in metallurgical bases across the country including the Hwanghae Iron and Steel Complex.

The Jaeryong Mine increased daily quotas over 1.5 times on an average, thus taking the lead among the iron ore mines in Musan, Unryul, Thaethan and other areas.

The Ministry of Railways, all the railway bureaus and sub-bureaus over-fulfilled main freight haulage plan.

The increased production in the vanguard sectors of the national economy injected vitality into major industrial fields such as machine-building, chemical, building material and mining industries and forestry.

The custom-built equipment for different fields of the national economy were turned out and the production of nonferrous metal ore, chemical fertilizers, cement, sheet glass, timber, etc. radically increased.

The Taean Heavy Machine Complex completed the production of generating equipment in a matter of two months and sent them to the construction site of the Paektusan Hero Youth Power Station No. 3 on Mar. 10.

The Ministry of Machine Industry increased the production of thermal power generating equipment 1.5 times.

Mines under the Phosphate Fertilizer Industry Management Bureau honored its plan at 150 percent.

The workers of the Hungnam Fertilizer Complex hit the goal for the production of Juche fertilizers.

The workers and technicians of the Sangwon Cement Complex are working hard to surpass the peak production year again this year.

The Sunchon Cement Complex, the Chonnaeri Cement Factory and the Sunghori Cement Factory boosted the production over 10 percent.

Many forestry stations and pit prop production stations also honored their first quarterly and yearly timber production quotas.

The production of homemade fertilizers and their transport, tractor overhauling and maintenance and other farming preparations are nearing completion thanks to the devoted drive of agricultural workers across the country.

The fishery officials and workers over-fulfilled their production plan of the Ministry of Fisheries for ten days 21 percent.

The field of light industry over-fulfilled the production plans for textiles, knitwear and shoes.

In the field of textile industry hundreds of workers honored the half yearly and first quarterly quotas and famous products and goods favored by the people are on the increase.

Many major construction projects are making rapid progress.

A lot of young people volunteer to work in the hard and labor-consuming fields.

Across the country hundreds of workers honored their yearly plans, at least 3,600 people carried out the first half yearly plans and more than 15,400 people hit the first quarterly goal.

A lot of members of the women’s union are giving helping hands to builders in power stations, workers of coal and ore mines. War veterans, honorary party members and pensioners have turned out in the 70-day campaign in South Phyongan Province and other parts of the country to fully demonstrate the noble traits of our society advancing with the might of single-minded unity.

“Rapid Economic Growth Witnessed in DPRK” (KCNA: 2016-4-8)

The DPRK has made a rapid progress in major construction or reconstruction projects and industrial production in recent 40 days after the start of the 70-day campaign.

In particular, Pyongyang, its capital city, showed an increase of twice in the tempo of construction or reconstruction projects and 1.6 times in industrial production.

The Aeguk Vegetable Processing Factory and the Mangyongdae Children’s Camp were rebuilt on a modern basis and the second-stage renovation of the Central Zoo is progressing apace at the final stage.

Besides, 80 percent of total work has been carried out in scores of construction and reconstruction projects, including the Ryuwon Shoes Factory, Pyongyang Cosmetics Factory and the Pyongyang Cornstarch Factory.

Electricity and coal outputs went up at thermal-power and hydro-power stations and coal mines.

The Pyongyang Steel Works and the Pyongyang Cast Iron Pipe Factory fulfilled their production plans 120 percent on an average, 150 percent to the maximum.

An increasing number of units in light industry and foodstuff industry have finished their yearly and half-yearly production quotas.

Such successes are reported from railway, agricultural and other industrial sectors.

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DPRK publishes environmental regulations for SEZs

May 18th, 2016

In the most recent issue of Foreign Trade (2016, No. 2), the DPRK publishes “REGULATIONS OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA ON ENVIRONMENT PROTECTION IN ECONOMIC DEVELOPMENT PARKS“.

I have painstakingly copied the regulations to a stand alone PDF and uploaded it here.

Enjoy.

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Foreign Trade report on the Nampho SEZs (Jindo, Waudo)

May 18th, 2016

Nampho-EDZs-Google-Earth

Pictured above (Google Earth): The approximate locations of the Waudo and Jindo Export Processing Zones

The North Korean quarterly magazine, Foreign Trade, published information on the Jindo and Waudo economic development Zones (straddling the Ryongnam Ship Repair Factory).

According to Foreign Trade (2016 vol 2, p6):

Economic development parks in the DPRK are booming recently.

The city of Nampho is conducting processing trade by relying on the bases in Jindo and Wau Islet, taking advantage of its favourable economic and geographical conditions.

As a gate city on the coast of the West Sea of Korea, the industrial city has an international port.

The city, situated on the lower reaches of the Taedong River, boasts metallurgical, machine building, glass-making industries, and lead and zinc refi ning, silk fabrics and shipbuilding bases.

It has the country’s biggest salt works and a fishing station, a fishing implements manufacturing factory and a refrigerating plant.

The Port of Nampho, the biggest of its kind in the western part of the country, is at the northern shore of the Taedong’s entrance to the sea. The water is deep, the port itself is far inside the estuary of the Taedong River and the dams of the West Sea Barrage stand high, assuring safe navigation by ships.

There are around ten major berths and crane ships, loading bridges and conveyor belts.

Wau Islet off the port is one of the famous tourist spots.

The port is linked with over a hundred foreign countries and regions for commercial trade.

Jindo Processing Trade Zone
The zone aims at producing various kinds of light industry and chemical goods made from duty-free raw materials for export.

Cooperation period: 50 years

Project plan: The coverage of the zone is about 1.8 sq km. By taking advantages of the Port of Nampho nearby and tens of years of development of the machine-building, electronical and light industries in Nampho, it processes various goods and exports them. Enterprises are admitted to it on the principle of conserving the environment and saving energy. It strives to develop new products and industrial fields, realize technical transfer with other countries and thus contribute to revitalizing the domestic industry. It is also making efforts to develop into a processing trade and bonded trade area.

Waudo Processing Trade Zone
The zone aims at developing into an intensive processing trade zone by introducing advanced development and operation mode and by placing stress on export-oriented processing and assembling.

Cooperation period: 50 years
Gross Investment: About USD 100,000,000

Project plan: The zone covers an area of about 1.5 sq km. By utilizing its favourable conditions, it puts main emphasis on bonded processing, processing to order, barter trade and other types of export-oriented processing industry.

It aims to develop into a comprehensive zone with financial, tourist, real estate and foodstuff industry bases in the areas around the port and the scenic area around the West Sea Barrage.

Cooperation mode: Joint venture between corporate bodies of the DPRK and foreign investors or wholly foreign-owned enterprises.

Location: Some parts of Ryongnam-ri, Waudo District by the estuary of the Taedong River southwest of the city.

Infrastructure condition: Only 50km away from Pyongyang and a few kilometres between the port, the biggest international port in the country, and the railway station.

From the port it is 330km to Dalian, 332km to Weihai, Shandong, 930km to Shanghai and 695km to Tianjin, China, and 1 575km to Chinese Taipei. The Youth Hero Road between Pyongyang and Nampho facilitates the few scores of kilometres of travel to the Pyongyang International Airport. These all provide favourable conditions for domestic marine transport and entry and exit of foreign personnel, materials and funds.

A 600,000kW-capacity power station and 10,000kW-capacity tidal power station are intended to be built near Kwangnyang Bay beside the West Sea Barrage. The Taedong fully guarantees water supply.

The site was formerly occupied by a salt farm, so problem of removing structures does not arise. The area is 40m above sea level and flat.

National Economic Development Guidance Bureau, DPRK Ministry of External Economic Relations
Add: Taedonggang District, Pyongyang, DPR Korea
Tel: 0085-02-381-5912
Fax: 0085-02-381-5889
E-mail: sgbed@star-co.net.kp

A screen shot of the original article can be seen here.

NK News has additional analysis here.

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DPRK and FATF (UPDATED)

May 17th, 2016

UPDATE 10 (2106-5-19): Wendy Zeldin has published an analysis of the DPRK’s AML statue at the Library of Congress Global Legal Monitor. Here is a simplified version of her report:

On April 20, 2016, the Presidium of the Supreme People’s Assembly of the Democratic People’s Republic of Korea (DPRK) issued a decree on the adoption of the Law on Anti-Money Laundering and Combating Financing of Terrorism. The Law has 40 articles divided among six chapters. According to the decree, the former Law on Anti-Money Laundering, which was adopted on October 25, 2006, no longer has any binding force.

The subjects covered by the new Law are:

-the Law’s objectives, the establishment of a national coordinating committee for anti-money laundering and combating financing of terrorism (AML/CFT) actions, and the scope of the Law’s application;
-the obligations of reporting institutions on verification of customer identification data, the establishment of an internal reporting system for large or suspicious transactions, and the reporting procedures for such types of transactions and confidentiality;
-the placement in and status of the financial intelligence unit (FIU) in the government structure, the FIU’s obligations and powers, and the operation of its database, among other matters;
-AML/CFT supervisory and regulatory institutions, obligations and powers of the Financial Supervisory Bureau, the tasks of customs agencies, and the obligations and powers of law enforcement institutions;
-the principles of international cooperation, the institutions involved in international cooperation, and the types of international cooperation for AML/CFT purposes; and
the property subject to sanctions and handling of complaints in connection with AML/CFT activities and the settlement of such complaints.

Expert observers are of the view that the adoption of the new Law indicates North Korea’s desire to join the Financial Action Task Force (FATF), the international AML organization. More specifically, they suggest, it seems that North Korea is seeking to become a full member of the Asia Pacific Group on Money Laundering (APG), a regional body of the FATF that North Korea joined as an observer in July 2014. However, the FATF has blacklisted North Korea, along with Iran. North Korea and Iran are identified by the FATF as being among 13 “high risk and non-cooperative jurisdictions” and the only two for which there is a “call for action.”

The blacklisting entails enhanced monitoring of and restrictions on financial access of North Korean financial institutions by the international financial system, according to Tristan Webb, former senior DPRK research analyst for the Foreign and Commonwealth Office of the United Kingdom. (Choi, supra.) In addition, according to article 34 of Resolution 2270 of the United Nations Security Council, adopted in March in response to North Korea’s nuclear test of January 6, 2016, “States shall prohibit financial institutions within their territories or subject to their jurisdiction from opening new representative offices or subsidiaries, branches or banking accounts in the DPRK.” Webb noted that even if the DPRK meets the FATF standards, the financial sanctions will not necessarily be lifted.

Adoption of the new Law alone will not lead to full APG membership; North Korea will also have to “reveal annual reports for three years for the purpose of monitoring to judge its sincerity,” according to Rhee Yoojin, a research fellow with the Korea Development Bank based in Seoul. (Id.) On the other hand, although the Law’s adoption does not necessarily mean that North Korea will institute an open door policy or aggressive economic reforms, “it does signify its desire to overcome international sanctions” that have prevented foreign financial organizations from seeking to enter the country, Rhee stated.

UPDATE 9 (2016-5-17): KCNA announces that the DPRK has passed a law on anti-money laundering:

Law on AML/CFT Adopted in DPRK

Pyongyang, May 17 (KCNA) — The Law of the Democratic People’s Republic of Korea on Anti-Money Laundering and Combating Financing of Terrorism was adopted.

The Presidium of the Supreme People’s Assembly of the DPRK promulgated a decree on the adoption of the law on April 20.

The Law on AML/CFT consists of 6 chapters with 40 articles.

Chapter 1 (Articles 1-6) defines the fundamentals of the law such as its objective, principle in the AML/CFT efforts, the establishment of the National Coordinating Committee and the scope of application.

Chapter 2 (Article 7-24) specifies the obligations and principles of reporting institutions concerning the verification of identification data obtained from the customer, establishment of internal reporting system of large or suspicious transactions, reporting large or suspicious transactions and confidentiality.

Affiliation and status of the financial intelligence unit (FIU), obligations and powers of FIU, operation of database, etc. are stipulated in Chapter 3 (Articles 25-28).

Chapter 4 (Articles 29-31) concerning the supervisory and regulatory institutions clarifies the obligations and powers of the Financial Supervisory Bureau, functions of customs and obligations and powers of law enforcement institutions.

Principles in international cooperation, institutions involved in international cooperation, types of international cooperation for AML/CFT purposes are defined in Chapter 5 (Articles 32-34).

Chapter 6 (Articles 35-40) stipulates the property subject to sanctions, complaints in respect of AML/CFT and their settlement.

The Law on Anti-Money Laundering adopted on Oct. 25, Juche 95 (2006) has no binding force any longer, the decree said.

UPDATE 8 (2015-6-29):  FATF says member states should pay “special attention” to financial transactions with North Korea. According to VOA:

The Paris-based Financial Action Task Force last week reaffirmed its earlier decision to put the community country on its watch list because of North Korea’s “failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism,” the task force said in a public statement released on its website. It said that failure poses “serious threat … to the integrity of the international financial system.”

The task force had a plenary meeting last week in Brisbane, Australia.

“The FATF reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the [Democratic People’s Republic of Korea], including DPRK companies and financial institutions,” it said.

The group also expressed concern about the North’s noncompliance with its recommendations to fight money laundering.

In an apparent attempt to ease financial sanctions by the United States and the United Nations, the North promised steps to address money laundering concerns. In July 2014, Pyongyang announced it had joined the Asian affiliate of the anti-money laundering body as an observer. Later, the North sent a letter to the FATF indicating its commitment to implementing actions recommended by the group.

The FATF, created in 1989, has 36 members, comprising 34 member countries and territories and two regional organizations.

UPDATE 7 (2015-3-16): Following the FATFs statement regarding the DPRK on February 27, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a new advisory.

Read the full advisory here (PDF)

Here is coverage in Yonhap.

UPDATE 6 (2015-2-17): The FATF has issued another statement on North Korea:

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from money laundering and financing of terrorism (ML/FT) risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdictions.

Iran
Democratic People’s Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies. The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Algeria
Ecuador
Myanmar

———–
Democratic People’s Republic of Korea (DPRK)

Since October 2014, the DPRK sent a letter to the FATF indicating its commitment to implementing the action plan developed with the FATF.

However, the FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies.

The FATF reaffirms its 25 February 2011 call on its members, and urges all jurisdictions, to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies and financial institutions. In addition to enhanced scrutiny, the FATF further calls on its members, and urges all jurisdictions, to apply effective counter-measures to protect their financial sectors from ML/FT risks emanating from the DPRK. Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and take into account ML/FT risks when considering requests by DPRK financial institutions to open branches and subsidiaries in their jurisdiction.

UPDATE 5 (2015-2-4): NK News picked up the Choson Sinbo piece and offered these comments:

But other regime watchers suggested that there are at least certain segments of the North Korean elite who do indeed want money laundering combated.

“There’s a cohort of DPRK businessmen who want the country to take more active steps in dealing with financial improprieties because they are losing money or opportunities,” said Michael Madden of North Korea Leadership Watch. “The DPRK leadership, particularly Foreign Minister Ri Su Yong, is thinking more long-term on this.”

And Christopher Green of the Daily NK suggested that this was an effort by the North Korean government to not only avoid sanctions, but assert its control over the domestic financial industry by cracking down on money launderers.

“The state wants to bring into its remit all those rogue financial elements that occasionally tend to fall outside the remit of the ruling coalition,” he said. “The state is in a constant battle to stay as top dog in the financial sector in a country where so much is illegal for historical and political reasons – and illegality is always exploited eventually.”

And Daniel Pinkston of the International Crisis Group suggested that the North may have its eye on its northern neighbor with this move.

“I think it will be helpful – from the DPRK perspective – if Pyongyang ever needs to plead their case with Beijing to avoid financial sanctions that include Chinese banks since they are critical for the DPRK’s international financial linkages,” Pinkston said.

Kim Chon Gyun told the Choson Sinbo that the nation’s penal code has already been revised to reflect international standards when punishing money laundering.

UPDATE 4 (2015-2-3): Yonhap reports on the recent Chosun Sinbo article:

North Korea has created a national committee on efforts to fight money laundering and terrorist financing, a senior Pyongyang official confirmed Tuesday.

The communist nation’s move came after it joined the Asia/Pacific Group on Money Laundering (APG), the Asia-Pacific arm of the Financial Action Task Force (FATF) under the Organization for Economic Cooperation and Development (OECD), last year.

“The National Coordinating Committee is an organ to guide projects to prevent money laundering and financing of terrorism,” Kim Chon-gyun, head of North Korea’s central bank said in an interview with the Chosun Sinbo. The newspaper is published by the pro-Pyongyang General Association of Korean Residents in Japan, or Chongryon.

The panel, chaired by a deputy premier of the Cabinet, involves officials from the central bank, the foreign ministry, the finance ministry, and law-enforcement authorities, he added.

The North has already revised its penal code to take punitive measures against related violations in accordance with international norms, said Kim.

In January, Pyongyang said that it sent a letter to the FATF, based in Paris, pledging the sincere implementation of an action plan to meet global anti-money laundering standards.

UPDATE 3 (2015-2-3): The Chosun Sinbo has posted an article on anti-money laundering measures in the DPRK. Here is a rough translation:

[Interview] Kim Chon-kyun, the President of the Central Bank of the DPRK, Cooperation with International Organizations for Prevention from Money Laundering and Terrorist Financing.

“Establishment of the National System for Preventing from Illegal Acts”

By Kim Ji-young, reporter from Pyongyang

Kim Chon-kyun, the President of the Central Bank of the DPRK presented, at the interview with the Choson Sinbo, the opposite stance of North Korean government against money laundering and terrorist financing as follows.

“What cannot be allowed according to institutional characteristics”

– A letter from the president of the Central Bank of the DPRK that pledged to implement plans for action for prevention from money laundering and terrorist financing was submitted to Financial Action Task Force (FATF) on Jan 1st. How has the negotiation between North Korea and FATF proceeded?

The implementing recommendations of the plans for action we pledged this time were consented at the negotiation between North Korea and Asia/Pacific Group on Money Laundering in Cambodia on September 2014.

When looking into the recommendations, it included maintaining cooperative relations such as sharing data and proceeding cooperation with organizations, joining as a member state, devising a means to sanction and to punish on money laundering and terrorist financing, reinforcing the confirmation procedure of traders, establishing financing watching and information business system including reporting surreptitious trade, joining in international agreement, assessing loca, etc. These measurements are, in a word, that we should establish national system to punish severely illegal acts like internal/external money laundering and terrorist financing.

North Korea institutionally does not allow those illegal acts.

Long before such “international standard” appeared, North Korea already set legal, organizational measurement adequate for our society to prevent from money laundering –like acts. This is specifically described on our laws and those regulations have renewed according to the need for development in reality.

It is interesting that the head of the central bank is the point man for this operation because the DPRK’s central bank does not have the authority to hold foreign currency accounts–only accounts denominated in DPRK won. It seems to me that international money laundering should also be of concert to the Foreign Trade Bank, a sanctioned entity that is responsible for managing hard currency deposits in the DPRK.

UPDATE 2 (2015-1-24): According to the Pyongyang Times:

DPRK commits itself to anti-money laundering action plan

The Governor of the DPRK Central Bank on January 15 sent a letter to the Financial Action Task Force on Anti-Money Laundering, assuring it that the country would implement the Action Plan of International Standard for Anti-Money Laundering and Combating the Financing of Terrorism, a spokesman for the DPRK National Coordinating Committee on Anti-Money Laundering and Combating the Financing of Terrorism told KCNA on January 16.

He described this as a manifestation of the DPRK government’s political will based on its consistent stand to step up international cooperation in this field.

Recommendations of the action plan are legislative and organizational measures to criminalize and punish money laundering and financing of terrorism, and almost all of them have long been implemented in the DPRK to suit its actual conditions, according to the spokesman.

The DPRK will sincerely implement the action plan as it has pledged itself for the promotion of mutual understanding with member nations in the face of the obstructive moves of the US and some other countries that are reluctant to cooperate with the international organization, he stated.

He requested the organization to positively respond to the DPRK’s cooperative efforts as it assured in negotiations with the country.

UPDATE 1 (2014-10-24): FATF issues a public statement from Paris that includes the following:

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdictions.

Iran
Democratic People’s Republic of Korea (DPRK)

Democratic People’s Republic of Korea (DPRK)

Since June 2014, the DPRK has further engaged directly with the FATF and APG to discuss its AML/CFT deficiencies. The FATF urges the DPRK to continue its cooperation with the FATF and to provide a high-level political commitment to the action plan developed with the FATF.

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies.

The FATF reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies and financial institutions. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the DPRK. Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and take into account ML/FT risks when considering requests by DPRK financial institutions to open branches and subsidiaries in their jurisdiction.

Here is the web page for FATF. You can learn more about FATF here.

ORIGINAL POST (2014-7-19): North Korea joins OECD anti-money laundering group. According to the JoongAng Daily:

North Korea has joined the Asia Pacific Group on Money Laundering (APG), whose purpose is to prevent funding of terrorism and development of nuclear weapons.

Members of the APG unanimously decided to accept North Korea and Tuvalu as observers during its general meeting held in Macau yesterday.

APG is the Asia Pacific unit of the Financial Action Task Force under the Organization for Economic Cooperation and Development (OECD).

The Financial Action Task Force (FATF) has 41 member countries including the U.S., South Korea, China and Japan and observers include countries such as Germany, France and the U.K., as well as 27 international organizations such as the Asia Development Bank and World Bank.

Since North Korea has been accepted as an observer, it has to follow several rules including the prevention of money laundering, funding of terrorist organizations or actions, sharing its knowledge and experience and following global regulations and laws.

The APG will decide later whether to elevate North Korea from observer status to a member country once it evaluates Pyongyang based on its annual reports to the organization and visits by the representatives of the group over the next three years.

South Korea and many other members are trying to figure out the motive behind the unexpected move by Pyongyang, because North Korea was previously opposed to joining the APG.

“[North Korea’s motive] is a mystery to us,” said a high ranking government official, who requested anonymity. “We suspect that North Korea, while looking for ways to ease the international financial restrictions imposed on them, decided to show their efforts in improving their global image [by joining the APG].

“But since the lists that they need to follow are long, we will probably have wait and see how sincere and determined they are with their decision.”

In other words, it could be a facade as a way for North Korea to ease the sanctions imposed on it, since the possibility that Pyongyang will give up its nuclear ambitions is low.

The action is particularly suspicious because up until last year’s APG meeting held in Shanghai, North Korea refused to join the organization because of the rule requiring members and observers to follow global standards. North Korea at the time argued that it would join the APG only after the agreement to follow UN resolutions was taken out.

The resolutions include prevention of money laundering, nuclear terrorism and development of nuclear weapons, which is the opposite of the North Korean government’s goal of securing both economic growth and nuclear weapons.

But now, North Korea has agreed to follow all regulations presented by APG.

The tide seemed to have turned as financial sanctions imposed by the international community and led by the U.S. have intensified.

Pyongyang suffered heavily last year after the U.S. and China closed the accounts of the Foreign Trade Bank of North Korea, which was known as the money laundering window for Pyongyang. The money laundered through the trade bank is suspected of being used in funding the regime’s control over the country.

In May, the state-run Bank of China said it had notified the Foreign Trade Bank of North Korea that it was closing all of its accounts and suspending all financial transactions. It did not specify the number of accounts in the bank.

The move came as a shock considering China and North Korea’s strong ties. China was previously the lifeline of North Korea, whose economy has been heavily dependent on its close ally.

Last year wasn’t the first time that North Korea’s accounts have been shut down. In 2005, the U.S. froze North Korea’s accounts at Macau’s Banco Delta Asia, which was a heavy blow to Pyongyang’s ability to secure foreign capital.

The recent change of heart seems to have been triggered by a report by the U.S. State Department in May designating North Korea as a country that is non-cooperative against terror, citing its decision not to join either the FATF or APG.

Although suspicious, the South Korean government isn’t disapproving of the move by the North, as there are positive aspects such as better transparency of Pyongyang’s finances if it conforms to the APG’s regulations.

And if Pyongyang doesn’t follow the rules and loses its license as an observer, the sanctions against North Korea will further tighten.

“North Korean representatives, after their acceptance was approved [in Macau], stressed that they will work on following the APG’s international standards and our [South Korean] government has emphasized the importance of following the resolutions set by the United Nations Security Council,” said a government official.

Read the full story here:
North Korea joins OECD anti-money laundering group
JoongAng Daily
Jung Won-yeop and Park Jin-seok
2014-7-19

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Electricity and the five year plan

May 17th, 2016

According to Yonhap:

A pro-North Korean newspaper based in Japan said Tuesday that easing electric power shortages will be a prerequisite for North Korea to implement its new five-year plan for economic growth.

Without spelling out details, North Korean leader Kim Jong-un laid out a five-year strategy aimed at boosting the country’s moribund economy at the party congress which concluded its four-day run on May 9.

Kim stressed that resolving the shortage of electric power is critical to carrying out his vision for economic growth, saying that nuclear power generation needs to increase.

The Chosun Sinbo hailed the North’s economic plan, saying that if realized, the move will pave the way to improve the livelihood of people and boost balanced growth.

“North Korea is likely to focus on developing the defense industry…and to make efforts to tweak its advanced technology on the military and space programs to be applied into the improvement of North Koreans’ livelihood,” the newspaper said.

At the party congress, the North’s leader made it clear that he will “permanently” defend the pursuit of his signature policy of developing nuclear weapons in tandem with boosting the country’s moribund economy, commonly known as the “byeongjin” policy.

The newspaper said that the communist country is expected to lay out measures to back up the “dual-track” policy at the party level.

“As Pyongyang raised the issue of power shortages, the country is likely to focus on uses of nuclear power,” said Chang Yong-seok, a researcher at Seoul National University’s Institute for Peace and Unification Studies.

Kim’s vision for economic growth came after the U.N. Security Council slapped its toughest sanctions to date on North Korea for its fourth nuclear test in January and long-range rocket launch the following month.

Analysts said that Kim’s five-year economic development vision is too short on detail, especially when compared with his grandfather Kim Il-sung’s blueprint for economic growth which was unveiled at the party congress held in October 1980.

The North’s founder unveiled the 10-point plan to build a socialist country by setting special targets in economic sectors.

Here is a link to the Choson Sinbo article.

Read the full story here:
Easing power shortage critical for N.K.’s new economy plan: report
Yonhap
2016-5-17

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Foreign Trade report on Slovenian delegation

May 17th, 2016

According to Foreign Trade (2016 v. 2, p.7):

News from DPRK Chamber of Commerce in 2015

The DPRK Chamber of Commerce invited a delegation of the Slovenian Chamber of Commerce headed by Yan Mishra, director of the external cooperation agency, to discuss the issues related with developing nongovernmental economic exchanges and trade and investment in the Wonsan-Mt Kumgang International Tourist Zone.

During their stay the delegation exchanged opinions about the practical issues arising in realizing economic exchanges and trade between the businesses of the two countries and agreed to develop bilateral relationship and cooperation to activate non-governmental economic exchanges.

And they discussed the issues about a possible visit to Pyongyang in 2016 by a delegation of the Slovenian Chamber of Commerce comprising businesses that wish economic exchanges and trade with the DPRK and its presentation of rolling stock and electric products like tractor, timber transporter and motor generator at the forthcoming Pyongyang International Trade Fair.

Another agenda item of discussion was a possible participation by the trade companies of the DPRK in the international trade fair to be held in Slovenia in 2016 and their visit to factories in the country.

The investment policy and environment in the DPRK and the work of economic development parks like the Wonsan-Mt Kumgang International Tourist Zone were introduced, and possibilities of investment and cooperation by businesses of the two countries in these parks were discussed.

In addition, the DPRK Chamber of Commerce arranged meetings between tens of local organs like the Korean Association for the Research and Development of Greening, Plant Import and Export Company, Kumsu Corporation, Korea Titanium Development and Trading Company, Central Imports Exchange Company and members of the Slovenian delegation so that they can exchange opinions on the matters of mutual concern.

DPRK Chamber of Commerce
Add: Central District, Pyongyang, DPR Korea
Tel: 0085-02-3815926
Fax: 0085-02-3814654

Screenshot of the article here.

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DPRK launches “Ja-ryok” cargo ship

May 16th, 2016

Jaryok-Google-earth

Pictured above (Google Earth): The Ja-ryonk (자력) under construction at the Ryongnam Shipyard in Nampho.

Jaryok-Rodong-Sinmun-2016-5

Pictured Above (Rodong Sinmun): The Ja-ryok

According to KCNA:

5,000-ton Trade Cargo Ship 자력 Launched

5,000-ton trade cargo ship “Jaryok” (self-reliance) was built as a present to the Seventh Congress of the Workers’ Party of Korea (WPK).

The ship was launched with due ceremony at the Ryongnam Dockyard on Sunday.

Present at the ceremony were O Su Yong, vice-chairman of the Central Committee of the WPK, officials concerned, officials and employees of the dockyard.

Kang Jong Gwan, minister of Land and Maritime Transport, made an address for the launch to be followed by some speeches.

They said the present success is ascribable to the patriotic devotion of President Kim Il Sung and leader Kim Jong Il to the development of maritime trade and to the leadership of MarshalKim Jong Un and it is also a proof of the loyalty of the working people and officials in the maritime transport field to the party who are determined to bring in earlier the final victory of building a thriving socialist country.

They referred to the fact that Kim Jong Un personally named the cargo ship “Jaryok”.

The loving care and trust of Kim Jong Un is associated with the intention wanting to dynamically promoting the development of the maritime industry in the spirit of self-reliance and self-development, they noted.

They called for attaining the high goal for the development of maritime industry by displaying the revolutionary spirit and mettle of heroic Kim Il Sung-Kim Jong Il working class in close unity around Kim Jong Un and dynamically fighting for the final victory of building a thriving socialist country.

A tape was cut and the cargo ship slid off the launching ways to the sea.

Here is footage from KCTV.

See more analysis by Leo Byrne at NK News here.

Michael Madden also provides information.

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North Korea’s 7th Party Congress and the economy

May 14th, 2016

By Benjamin Katzeff Silberstein

The 7th Party Congress is over, and it turned out to be an affair focused on personal appointments and formalities rather than concrete policy. This post is an attempt to gather some of the news about the congress, some international but mostly domestic coverage and Kim Jong-un’s speeches, particularly that pertaining to economic matters.

Day 1  (5/6/2016) and before 

The congress opened on Friday May 6th. This is how Rodong Sinmun covered the opening:

The Seventh Congress of the Workers’ Party of Korea (WPK) opened here with splendor Friday.

Kim Jong Un, first secretary of the WPK, was present there.

The congress was attended by delegates with the right to vote and speak elected at the provincial party conferences and officials of party, armed forces and power organs, economic organs, working people’s organizations and those in the fields of science, education, public health, literature and arts and media nominated at the provincial party conferences as observers.

Also present there were congratulatory groups of Koreans in Japan and the General Association of Koreans in China for celebrating the Seventh Congress of the WPK.

Kim Jong Un made an opening address.

He in his address, reflecting the infinite loyalty and ardent reverence of the delegates, Party members, service personnel of the Korean People’s Army (KPA) and all other people across the country, extended the noblest tribute and greatest glory to the great Comrades Kim Il Sung and Kim Jong Il.

[…]

The congress sent congratulatory messages to the service personnel of the Korean People’s Army and the Korean People’s Internal Security Forces who performed distinguished feats in defending the party congress and to the working people and officials of the institutions, industrial establishments and cooperative farms who performed brilliant labor feats in the 70-day campaign of loyalty.

The congress approved the following agenda items:

1.Review of the work of the C.C., the WPK.

2.Review of the work of the Central Audit Commission of the WPK.

3.On revising the Rules of the WPK.

4.On electing Kim Jong Un to the top post of the WPK.

5.Election to the central leadership organ of the WPK.

The congress started the discussion on the first agenda item.

Kim Jong Un began the report on the work of the C.C., the WPK.

The presentation of the report will go on at the second day-sitting.

In his opening address to the congress, carried by KCNA, Kim Jong-un highlighted both national prosperity and hardship:

Today we are holding the historic Seventh Congress of the Workers’ Party of Korea amid the grand struggle in which the whole Party, the entire army and all the people, filled with iron nerves and confidence to achieve the final victory of the Juche revolution as soon as possible, are making an all-out, general onward march courageously, thwarting all manner of threats and desperate challenges by the imperialists.

[…]

The Seventh Congress of the WPK has been convened at a historic time when the phase of leap forward in implementing the cause of the Juche revolution is being opened up.

The last decades since the Sixth Congress of the WPK were characterized by grim struggle and glorious victory on the part of our Party and people.

During the period under review the situation of our revolution was very grave and complex.

In the unprecedentedly hard times when the world socialist system collapsed and the allied imperialist forces concentrated their anti-socialist offensive on our Republic, our Party and people were compelled to fight against them single-handed.

The imperialists strained the situation constantly for decades to keep our people from living at peace even for a moment and blocked all the pathways to economic development and existence through all manner of blockade, pressure and sanctions.

In the face of harsh and manifold difficulties and ordeals and the hardships and sufferings worse than those during a war, our Party and people were united more firmly around the Central Committee of the WPK, holding the President and the General in high esteem as the centre of unity and leadership, and made strenuous efforts to defend and advance the socialist cause, following only the revolutionary line of Juche put forward by the great leaders as they braved the storm of history without the slightest hesitation or vacillation.

[…]

This year when the Seventh Congress of the WPK is held, our service personnel and people achieved great successes in the first hydrogen bomb test and the launch of earth observation satellite Kwangmyongsong 4 which served as landmarks in the nation’s history spanning 5 000 years, thus raising the dignity and might of Juche Korea to the highest level possible; in high spirits, they conducted a dynamic 70-day campaign of loyalty to perform great feats and make unprecedented labour successes in all fields of socialist construction.

All the service personnel and people throughout the country displayed the spirit of carrying out the policies of the WPK to the death in response to its militant call for launching the 70-day campaign, thereby making the greatest successes and leap forward in all sectors of the national economy and achieving the brilliant result of exceeding the targets of the campaign set by the WPK.

[…]

Kim also spoke about economic achievements, and said that North Korea’s economic plans had been fulfilled ahead of schedule (my emphasis):

During the campaign, the electric-power, coal-mining and metallurgical industries and rail transport sector strove hard for increased output and transport to bring about a surge in production, and many units in different sectors of the national economy including the machine-building, chemical, building-materials and light industries and agriculture raised a strong wind to ensure modernization and domestic production of our style and bring about an upswing in production, thus making the distinguished achievement of carrying out the first half-year and yearly national economic plans ahead of schedule.

Our heroic working class of Kim Il Sung and Kim Jong Il, scientists and technicians waged an unyielding struggle on the principle of giving priority to self-development to develop and manufacture new machines and equipment based on local efforts and technology, thereby presenting them as gifts to the Congress of the motherly Party. Others across the country wonderfully completed lots of major construction projects, which will be highly conducive to developing the economy and improving the people’s living standards, in a short span of time before the Congress to send reports of loyalty to the Central Committee of the WPK.

But reporters from abroad were in Pyongyang a few days before the congress opened and delivered some interesting dispatches. The Washington Post’s Anna Fifield, for example, visited Jangchon Cooperative Farm near Pyongyang on May 4th. Note that no one at the farm seems to have spoken to reporters about Kim Jong-un’s experimental agriculture reforms — if they have been implemented on a large scale, this would seem a good opportunity to express gratitude and pride in them.

The farm, which Kim visited in June, was deemed to be a shining example of progress, given that it is apparently used as a model for other agricultural cooperatives across the country. So reporters were taken down roads bustling with people to the conspicuously deserted complex.

[…]

Apparently, a total of 3,000 people live in this cooperative. But apart from a few people working in greenhouses and a handful more repairing roofs or painting lampposts, almost no one was around. Inside a science building, lab equipment sat like museum pieces.

[…]

What about these garden plots in front of the houses? They were household gardens, the minders said. Never mind that one house had a garden of only cabbages, another of only cucumbers, the next entirely squash.

Agriculture has been one of the areas where there has been significant change in recent years. Kim Jong Un’s regime has changed the quota system to allow farmers to keep between 30 and 60 percent of their crops, either to eat or to sell for profit in the markets. Economic analysts have been watching these changes­ keenly, part of a broader, if tentative, move toward marketization.

Full article:
A model farm – with few farmers – in North Korea 
Washington Post
Anna Fifield
2016-05-04

On the first day, the congress also sent a congratulatory message to “working people and officials” who participated in the 70-day campaign, carried by KCNA:

The 70-day campaign was a great one for consolidating the single-minded unity of the party, army and people of the DPRK as firm as a rock, bringing about a great innovation and leap forward in building a thriving nation, foiling the vicious moves of the hostile forces to put pressure on the DPRK and stifle it and fully demonstrating the dignity and might of the great Paektusan nation, the message said, and went on:

The Central Committee of the WPK together with its Central Military Commission made public joint slogans in order to glorify this year in which its Seventh Congress is to be held as a year of great heyday in building a thriving nation, ardently appealed to all party members to stage the 70-day campaign in the letter to them and clearly indicated the orientation and ways for winning victory in the on-going general advance.

Unprecedented achievements have been made in the above-said campaign thanks to the heroic struggle of the working people and officials who turned out to greet the Seventh Congress of the WPK out of their boundless loyalty and warm patriotism toward the party.

The Seventh Congress of the WPK extended warm congratulations to the working people and officials of the institutions, industrial establishments and co-op farms who creditably fulfilled the tasks before them during the campaign by sharing the thought, will and pace with the party and fully displaying matchless heroism and self-sacrificing spirit.

Day 2 (5/7/2016) 

On the second day of the congress, Kim gave a report on the work of the KWP Central Committee:

The demise of Kim Il Sung was the biggest grief and loss to our party and people and the biggest trial for our revolution.

After the greatest loss to the nation, the imperialists and their followers have reached the height in their political and military pressure, moves for provoking a war and economic blockade. To cap it all, the country was hit by severe natural disasters, bringing untold hardships and trial to the economic construction and people’s living.

When the world was concerned about the fate of the DPRK and when the imperialist reactionaries were foolishly trumpeting about “change in line” and “collapse of social system”, leader Kim Jong Il solemnly declared his iron will to invariably defend and carry to completion the revolutionary cause of Juche started by the President no matter how arduous the road of the revolution might be, and wisely led the revolution and construction only as intended by the President and the way he did.

By carrying forward the cause of the President under the wise guidance of Kim Jong Il, the WPK has firmly maintained the Songun revolutionary line, the path of winning the steady victory of the Korean revolution, and enforced the Songun politics in an all-round way.

[…]

As required by the prevailing situation and the developing revolution, the WPK advanced the strategic line of simultaneously pushing forward the economic construction and the building of nuclear force and worked hard for its implementation.

The WPK organized and waged an all-people general onward movement for building a thriving people’s paradise as planned and desired by the great leaders and thus ushered in the new era of the prosperity of the country.

The entire party and all the people have achieved the single-minded unity of the whole society in which they are united closely around the leader in thinking and purpose and sense of moral obligation. This is the great success and feat achieved by our party during the period under review.

Our party and people dynamically waged the drive to implement the strategic line of socialist economic construction to lay firm material and technical foundations of self-supporting national economy and provide a springboard from which to build an economic giant.

In delivering this report, Kim mentioned (for the first time during the congress) the new 5-year plan (2016-2020) (emphasis added):

In order to successfully build a socialist power under the banner of modeling the whole society on Kimilsungism-Kimjongilism, it is necessary to strengthen the people’s government and enhance its function and role and, at the same time, thoroughly carry out the general line of our party to dynamically conduct the three revolutions–ideological, technical and cultural.

It is imperative to carry through the five-year strategy for the state economic development from 2016 to 2020.

Kim had a busy second day, and also delivered a review of the KWP’s work (also carried by KCNA):

As required by the prevailing situation and the developing revolution, the WPK advanced the strategic line of simultaneously pushing forward the economic construction and the building of nuclear force and worked hard for its implementation.

[…]

A big stride has been made in the economic and cultural construction.

Raw materials, fuel and power bases of the self-supporting economy have been reinforced and Juche-based production processes introduced into core fields and the structure of industrial sectors further improved.

Is Kim perhaps alluding to changes in agricultural management in the following section? (my emphasis):

 A successful innovation was witnessed in the development of communications service and production processes, technical equipment and operation means have been further modernized in various fields including transport and building-materials industry.

A high-pitched campaign for bringing about a radical turn in seed selection, potato farming, double cropping and scientific farming was waged in the field of agriculture to provide a guarantee for increasing grain production.

Modern stock-breeding bases, fish farms, vegetable greenhouses, mushroom farms and vast thriving orchards were built across the country.

In fisheries a campaign for carrying out the Party’s idea of creating a new history of sea of gold has been waged to make a breakthrough in the development of the fishing industry.

Technical updating and the work for ensuring the local supply of raw and other materials has been positively conducted in factories and enterprises in the field of light industry to ensure increased production and supply of quality consumer goods for people.

Many monumental edifices representing the era of the Workers’ Party to which the Juche-oriented architectural idea was applied were built to lay a solid foundation for socialist economic construction and improvement of the people’s living standards.

Able scientists and technicians grew in number while the material and technical foundation for the scientific researches was consolidated despite economic hardship, bringing about radical development of the science and technology.

Fresh progress was made in the education as required by the IT era with the enforcement of the universal 12-year compulsory education and the establishment of the remote education system.

In another speech, Kim “set forth tasks for completing [the] socialist cause.” KCNA published the speech the same day it was given, and Kim does mention some goals connected to economic matters. This is, to my knowledge, the first statement where Kim actually elaborates somewhat on the five-year plan (my emphasis added):

We should attach importance to talents and attain the goal of turning all people into scientific and technological talents.

It is necessary to lay a firm material and technological foundation of the state and bring about a turn in improving the people’s living standard.

It is necessary to work out a phased strategy for the development of the national economy in a scientific and realistic way and carry out it without fail.

As an immediate task we should thoroughly carry out the five-year strategy for the state economic development from 2016 to 2020.

Note that Kim mentions “external economic relations” before any other matters when discussing the priorities of the five-year plan:

It is necessary to expand and develop external economic relations.

One could speculate whether the following pronouncement alludes to the enterprise management changes under Kim Jong-un — the true meaning of the statement seems to hinge on how one interprets “responsible”:

We should conduct the state unified guidance and strategic management of the economic work in a responsible manner.

The two statements above are the only ones that directly concern economic policy. They are fairly vague, but Kim’s expansions of special economic zones and management reforms come to mind.

Other parts of the speech are not necessarily interesting because of their connection to the economy. This is presumably a reference to the problem of people illegally watching foreign movies and tv-series (my emphasis):

We should usher in an overall efflorescence in the socialist literature and arts.

It is necessary to shatter the imperialist ideological and cultural poisoning and strictly preserve our socialist culture and lifestyle.

We should establish strong moral discipline throughout the society.

It is necessary to further increase the might of the politico-ideological power and military power.

We should more firmly cement the harmonious whole of the party and the popular masses.

We should detect and shatter all moves of the enemies to destabilize our socialism in good time and firmly defend our ideology and social system, class position and single-minded unity.

During the second day, Kim continued his review of the KWP’s work in another speech, and was no stranger to recognizing North Korea’s problems. In affirming North Korea’s “independence,” Kim struck a familiar chord and repeated a suspicion against foreign “aid” that both his grandfather and father often spoke of (my emphasis):

He noted that in the period under review, a radical change was made in the world political structure and correlation of forces and the international circumstances of the Korean revolution remained very complicated.

[…]

For global independence, it is important for each country and nation to maintain their sovereignty, holding aloft the banner of independence against imperialism.

The core of the struggle against imperialism is to frustrate the moves of the U.S. and its followers for aggression and war and defend the global peace and security.

Underscoring the need to conduct a vigorous struggle to get the aggressive military blocs, the root of military confrontation and war, dissolved and the military bases for aggression removed from other countries and thus build a new peaceful world, he continued:

All countries and nations aspiring after independence should never harbor any expectation and illusion about the imperialists’ cunning double-dealing tactics and hypocritical “aid”, but preserve the Juche character and national identity.

The progressive mankind of the world should vigorously struggle for international justice, irrespective of differences in political view, religious belief and economic and cultural development.

It is sometimes difficult to understand how the North Korean regime conceives of the logic behind Byungjin (parallel development of nuclear weapons and the economy), but the following passage gives a hint — with nuclear weapons, the country will be in a stronger position to negotiate its standing in all other areas as well:

Since it retained the status of a full-fledged independent power, a nuclear power, the DPRK will develop its external relations in conformity with the status.

Day 3 (5/8/2016)

On the third day, one of the main statements concerned the work of the auditing commission of the KWP. If one were to speculate, it may not be completely far-fetched to connect this emphasis on internal financial control with the anti-corruption drive launched earlier this year. This is what the designated rapporteur had to say about the work of the commission:

The reporter said the Party Central Auditing Commission confirmed that the party finance has properly performed its mission and duty and all financial activities have been conducted correctly on the principle of the party in the period under review on the basis of the audit data and reports of the review of the work of the auditing commissions submitted to the provincial party conferences.

He underlined the need to steadily improve the party’s financial management as required by the new era of the Juche revolution.

Kim Jong-un made a concluding review on the last day of the congress, also carried by KCNA (emphasis added):

It is necessary to continue to carry out the party’s strategic line of simultaneously pushing forward the economic construction and the building of nuclear force [byungjin].

This strategic line is the most revolutionary and scientific one reflecting the lawful requirements of building a thriving socialist nation and the specific conditions of our country.

Byungjin was also front and center in the decision adopted on the review of the Party by the congress (also carried by KCNA) (emphasis added):

We will consolidate the position of the political and military power and fly the flag of victory on the eminence of the scientific and technological power, an economic giant and a highly civilized nation.

We will take the general line of socialist construction and the principle of self-development as the constant strategic line, win a great victory in building a thriving socialist nation and successfully realize the historic cause of modeling the whole society on Kimilsungism and Kimjongilism.

We will make a new leap forward in the development of the country’s science and technology, open up an era prospering with science and bring about a revolutionary turn in socialist construction in a short span of time.

We will work out the phased strategy for the national economic development in a scientific and realistic manner and carry it out without fail and carry through the five-year strategy for the state economic development from 2016 to 2020 for the present.

We will accelerate the building of a highly civilized socialist country and thus bring up all the people to be able men for the socialist construction with profound knowledge and cultural attainments, and provide them with conditions and environment for leading a wealthy and a highly civilized life to their heart’s content.

International media was not allowed in to witness the congress proceedings for most of the event, but that probably made for more interesting dispatches anyway. Reuters noted the increasing prevalence of electric bikes in Pyongyang:

While pedal-powered bikes still predominate on Pyongyang’s wide avenues, the electric bike trend began in the last year, locals and foreign residents of the North Korean capital said.

On Saturday, a Reuters journalist covering the congress saw six of the bikes in the space of 10 minutes.

“You can carry luggage,” said Kim Chol Jin, a computer science student at Kim Chaek University of Technology, who was riding his electric bike along Mirae Scientists Street.

“My wife bought me this to help shorten my commute,” he told Reuters journalists, who were accompanied by a government guide.

The proliferation of electric bicycles follows another recent local consumer trend: a surge in residential usage of LED light bulbs and solar panels, to get around the country’s chronic electricity shortage.

A bike made by a Chinese company called Anqi was for sale this week in Pyongyang’s Kwangbok Department Store for 2.62 million won – around $330 at the unofficial exchange rate of 8,000 won to the dollar. While that is well beyond the reach of the average North Korean, an expanding gray market economy has given rise to a growing consumer class known as “donju”, or “masters of money”.

Full article:
Power to the people: electric bikes take off in North Korea
Reuters
James Pearson
2016-05-08

Day four (5/9/2016) 

The 7th Party Congress concluded with a statement calling for a “general offensive toward complete victory of socialism,” also carried by KCNA (emphasis added):

It stressed that the main idea of the decision made at the 7th Congress of the WPK is to arouse the entire party, the whole country, the entire army and all the people again to the struggle for winning the final victory in the building of a thriving socialist nation as soon as possible [a rather ambiguous timeline, to say the least…] and thus make them wage a general offensive in the period up to the 8th Congress.

The 7th WPK Congress called upon all the servicepersons, youths and other people to launch a Mallima speed campaign of rapid progress and innovation for the implementation of its decision in every sector and unit, the appeal said, adding:

The entire party, the whole country and all the servicepersons and civilians should dash toward the high eminence of a thriving nation at the speed of Mallima.

And if anyone ever thought that the core characteristics of North Korea’s political system were ambiguous:

Never tolerate but mercilessly squash any element contrary to the idea and intention of the respected Comrade Kim Jong Un and any slightest act of breaking our single-minded unity and backbiting at our Party’s policies.

Science and technology were prevalent themes in much of the rhetoric from the congress:

Let us build an economic and highly-civilized power by dint of science and technology and thus make the Democratic People’s Republic of Korea, our beloved motherland, the envy of the whole world.

This whole paragraph is one sentence:

Let us put the nation’s industry and agriculture on a modern, scientific and IT basis our own way and at the earliest date with our technology, efforts and resources and thus raise the level of the national economy to that of the most developed countries under the banner of self-development-first principle for turning everything of the country into wealth of socialism hard to find in other parts of the world, making the latest science and technology our possessions and creating everything with our materials.

Byungjin again:

Let all the people implement more thoroughly and steadily the Party’s line of simultaneously developing the two fronts, each holding arms in one hand and a hammer or a sickle in the other.

The cooperative farm that Washington Post visited got a special shot-out:

Let us raise the level of every factory and farm to that of the January 18 General Machinery Plant and the Jangchon Vegetable Co-op Farm and build every structure into such spectacular edifice as the Sci-Tech Complex and Mirae Scientists Street.

Beyond the congress

How much did this all cost the North Korean state? A Korea University scholar has attempted a calculation, as reported by Yonhap, and lands at a figure of more than $200 million, placing policy choices such as not increasing imports to close the gap between food need and availability, for example:

North Korea probably spent more than US$200 million on the just-ended ruling party congress, which will further burden the already impoverished country, a local scholar who keeps track of developments in the reclusive country said Friday.

Korea University’s Nam Sung-wook made the claim in an analysis of the four daylong Seventh Congress of the Workers’ Party of Korea (WPK) that ended Monday. He described the rare convention as a “political show.”

[…]

n the assessment, the academic argued the communist country spent at least the amount he estimated in the past six months for the “self coronation” of leader Kim Jong-un.

He said the move’s sole aim seems to be the consolidation of the hereditary power succession. The current leader inherited the country after the sudden death of his father in late 2011, while the late Kim Jong-il took over after his own father, the North’s founder Kim Il-sung, died in July 1994.

“Ultimately, the huge amount of money spent will result in a greater burden for North Koreans,” he said.

[…]

In another paper, professor Yang Moon-soo of the University of North Korean Studies in Seoul said the Pyongyang regime will likely pursue a market-friendly economic policy for the time being.

Cho Bong-hyun, a researcher at the state-run Industrial Bank of Korea (IBK), on the other hand, said the five-year economic development plan issued by Kim Jong-un at the party congress will turn out to be a failure and will eventually come to haunt the regime down the road.

Full article:
N. Korea spends over $200 mln on Workers’ Party congress: scholar
Yonhap News
2016-05-13

This blog looks forward to closely following the implementation of the five-year plan!

UPDATE 1: The National Committee on North Korea has posted all of Kim Jong-un’s speeches.

UPDATE 2: Bob Carlin writes about his thoughts on the congress in 38 North.

UPDATE 3: Ruediger Frank writes about the economic aspects of the congress here. Here is the speech (PDF) to which Dr. Frank refers.

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