New loyalty campaign in North Korea, to boost the 5-year plan

May 28th, 2016

By Benjamin Katzeff Silberstein

Just as one mass campaign ended (the “70-day battle”), another one begins. This time, it’s a 200-day campaign to boost the economy and fulfill the 5-year plan. Perhaps a grim premonition of what is to come as the 5-year plan is implemented further. Yonhap:

North Korea kicked off a new loyalty campaign to get people to work more as part of its five-year economic program announced at its seventh ruling party congress, state controlled media said Sunday.

According to the Korean Central News Agency (KCNA), a meeting of ruling Workers’ Party of Korea (WPK), government, economic and military officials was held Thursday through Saturday, where participants agreed to launch the “200-day campaign of loyalty” that can bolster growth.

The announcement comes on the back of Pyongyang concluding its “70-day campaign of loyalty” program just before the start of the rare congress that took place early this month. That campaign ran from mid-February to May 2.

The new effort is being pursued as the United Nations sanctions take bite, and the country finds itself more and more isolated from the outside world. The global body slapped its toughest sanctions to date on the reclusive country for its fourth nuclear test in January and the firing off of a long-range missile the following month.

The KCNA said that leading members at last week’s gathering in Pyongyang concurred on the need to join forces to bring about the successful conclusion of the new campaign in accordance with the guidance put forth by North Korean leader Kim Jong-un.

Kim outlined his new five-year economic growth plan running from this year to 2020 and called on North Koreans to meet the growth goals.

Article source:
N. Korea kicks off new loyalty campaign to prop up economy
Yonhap News 
2016-05-29

Here is a statement from the Pyongyang Times (2016-5-30):

Joint conference takes measures for five-year economic development strategy, declares 200-day campaign

A joint conference of Party, government and military officials was held between May 26 and 28 in Pyongyang to discuss the ways to implement the tasks set forth at the Seventh Congress of the Workers’ Party of Korea.

It was attended by senior officials Pak Pong Ju, Choe Thae Bok, Pak Yong Sik, O Su Yong, Kwak Pom Gi, Ri Man Gon and Jo Yon Jun and other officials from Party and military organs, the Cabinet, working people’s organizations, ministries, national agencies, local Party and government organs and major industrial establishments.

The joint conference, the first of its kind in the history of the WPK, discussed scientific and realistic ways to carry through the national five-year strategy for economic development put forward at the Seventh WPK Congress and important measures to achieve the grand objective for building a socialist power by inspiring all the service personnel and people to the campaign to create the Mallima speed.

Premier Pak Pong Ju, member of the Presidium of the Political Bureau of the WPK Central Committee, delivered a report.

He said the Party, army and people are faced with the important and honourable task of accomplishing the cause of a socialist power as early as possible when the independent ideal and desire of the people are being translated into reality in an all-round way under the banner of Kimilsungism-Kimjongilism.

In the five-year period, he noted, we should resolve the energy problem, put the vanguard sectors and key economic industries on a normal track and increase agricultural and light industrial production by adhering to the Party’s new line of simultaneously promoting the two fronts, thereby radically improving the people’s standards of living.

Specifying the targets for implementing the five-year strategy by major indices, he pointed to the issues to be settled in all sectors of an economic giant building, including the concentration on easing power shortage, the master key in economic development and improved livelihood of the people.

To thoroughly implement the important tasks set forth at the Seventh Party Congress, he pointed out, it is imperative to enhance the state’s function as the organizer of the economy and establish a Korean-style economic management method embodying the Juche idea in an all-round way.

“Officials of the Cabinet, ministries and national agencies should work out phased plans for implementing the economic development strategy in a realistic manner on the basis of the Party’s line and policy, arrange economic work scrupulously and make persistent efforts to carry them through,” he stressed.

“Economic work should be planned and directed in such a way as to concentrate efforts on the main link and activate the economy as a whole. All sectors and all units have to establish strict discipline and order whereby they place all economic work under the control of the Cabinet and work according to its unified planning and direction in line with the requirements of the Cabinet-responsibility system and Cabinet-centred system.

“Relevant sectors and units should establish Korean-style economic management methods as required by developing reality, while factories, enterprises and cooperative organizations have to map out business strategies and conduct business activities on their own initiatives and in a creative manner in keeping with the requirements of the socialist system of enterprises managing themselves on their own responsibility, thereby putting production on track and expanding and developing it.”

As part of the joint conference, meetings were held by each economic sector.

The meetings discussed the tasks to be tackled by each sector and unit, presenting lots of innovative and creative ideas.

As he wound up the joint conference, the Premier said that it fully discussed scientific and realistic measures and ways to implement the tasks of the Congress, stressing that all the participants came to have firm confidence and optimism through the conference that they could well attain the targets of the five-year strategy.

He called on all officials to plan and command economic work of their sectors and units in a three-dimensional way and at lightning speed and carry out the tasks of the Congress at the risk of their lives as the standard-bearers of their ranks and buglers of advance, thereby fulfilling their honourable mission as commanding officials in the glorious era of Kim Jong Un.

At the conference, a 200-day campaign of loyalty was declared for making a breakthrough in the implementation of the five-year strategy.

On the other hand, a meeting of members of Party guidance teams for the 200-day campaign was held on May 28, where the significance of the campaign was mentioned and steps related to the campaign were emphasized.

Read out at the meeting were the names of members of the central and provincial headquarters of the Party guidance teams and those who would be dispatched.

Speakers expressed their resolve to keep up the heightened spirit of having brought about great victory in the 70-day campaign so as to win triumphs uninterruptedly from the outset of the new campaign, thereby making a tangible contribution to demonstrating once again the mettle and stamina of Juche Korea rushing forward towards a socialist power.

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North Korea Reveals Economic Plans at Seventh Party Congress

May 27th, 2016

Institute for Far Eastern Studies (IFES)

In the Central Committee’s report at the Seventh Congress of the Worker’s Party of Korea, Kim Jong Un stated the country’s achievements—field by field—since the last (sixth) congress was held back in October 1980. The leader also revealed his upcoming plans. In the economic field, he specifically introduced goals of building a state that is economically independent and possesses highly developed scientific technology, a ‘five-year plan’ for economic development, and expansion of the country’s foreign relations, inter alia. Below are some of the highlights.

Building Economic Independence – According to the report, it was said that “both the party and the people have struggled to build the socialist economy along with economic independence. With the industrialization of the new century, factories and companies have experienced modernization in production line, resulting in an advancement of technology for the economy. We [DPRK] have already become a strong nation both politically and militarily, but still are lacking economically. The country we are trying to build with strength in economy is one that is independent and prospers through scientific technology. Thus we must reinforce our independence and identity. We must also seek self-sufficiency in food production.”

Five-Year Plan in Economic Development – According to the report, it was stated that “We must act in accordance with the Five-Year plan from 2016 to 2020. The goal of the five-year plan is to vitalize and balance the economy in order to continuously develop the economy. In the next five years, we must raise the quality of life for the people by initiating the Byungjin Policy and solve the energy related issues to put industries that have fallen behind back on track. The most urgent issue we face now is the energy shortage that we must build power plants as soon as possible and build an energy complex in Danchon to go hand in hand with the construction of nuclear power plants.”

Expanding Foreign Relations – The report also mentioned that “We must build and maintain our credibility in foreign trade while improving it by increasing the variety of our exports and the technology-based trade. We must also guarantee the environment and conditions for foreign investment on our special economic zones and put emphasis on the tourism.”

Previous posts on the new five year plan can be found here.

 

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DPRK Cyber attacks 2016

May 27th, 2016

UPDATE 1 (2016-5-26): DPRK Linked to attacks on Swift. According to the New York Times:

Security researchers have tied the recent spate of digital breaches on Asian banks to North Korea, in what they say appears to be the first known case of a nation using digital attacks for financial gain.

In three recent attacks on banks, researchers working for the digital security firm Symantec said, the thieves deployed a rare piece of code that had been seen in only two previous cases: the hacking attack at Sony Pictures in December 2014 and attacks on banks and media companies in South Korea in 2013. Government officials in the United States and South Korea have blamed those attacks on North Korea, though they have not provided independent verification.

On Thursday, the Symantec researchers said they had uncovered evidence linking an attack at a bank in the Philippines last October with attacks on Tien Phong Bank in Vietnam in December and one in February on the central bank of Bangladesh that resulted in the theft of more than $81 million.

“If you believe North Korea was behind those attacks, then the bank attacks were also the work of North Korea,” said Eric Chien, a security researcher at Symantec, who found that identical code was used across all three attacks.

“We’ve never seen an attack where a nation-state has gone in and stolen money,” Mr. Chien added. “This is a first.”

The attacks have raised alarms in the global banking industry because the thieves gained access to Swift, a Brussels-based banking consortium that runs what is considered the world’s most secure payment messaging system. Swift’s system is used by 11,000 banks and companies to move money from one country to another — one reason that it is a tempting target for criminals.

Swift has warned publicly that the attacks are part of a broad coordinated assault on banks, though it has not assigned blame. It has also emphasized that it was the banks’ connection points to its network — and not the core Swift messaging network itself — that the attackers were able to breach. Also, American bankers have noted that the security lapses all occurred at banks in third-world countries, which may give some comfort to banking customers in the United States.

Security researchers and American government officials have tied thousands of attacks to nations in the past. They have linked the United States and Israel to an attack that destroyed Iranian centrifuges, and the Chinese military and contractors to attacks that stole military and trade secrets from thousands of foreign entities.

Continue reading the main story
RELATED COVERAGE

Hackers’ $81 Million Sneak Attack on World Banking APRIL 30, 2016

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Once Again, Thieves Enter Swift Financial Network and Steal MAY 12, 2016
But the latest spate of attacks on banks in Bangladesh and Southeast Asia would be the first time, security researchers say, that a nation has used malicious code to steal purely for financial profit.

The idea that Pyongyang had turned to digital theft would not be surprising. North Korea’s economy has been ravaged by sanctions, food shortages and other deprivations. Pyongyang does not publish economic data, but estimates have put North Korea’s gross domestic product between $12 billion and $40 billion, tiny when compared with South Korea’s economic output of more than $1.4 trillion.

In the attack at Bangladesh’s central bank in February, the thieves tried to transfer $1 billion in funds from an account at the Federal Reserve Bank of New York. Fed officials became suspicious of the some of requested transfers and released only $81 million to accounts in the Philippines.

“If you presume it’s North Korea, $1 billion is almost 10 percent of their G.D.P.,” Mr. Chien said. “This is not small change for them.”

Symantec researchers said it was possible that the bank in the Philippines containing the North Korean code was also involved in the Bangladesh bank scheme and the attempted breach on the Vietnamese bank. The researchers would not identify the Philippines bank and did not say whether the thieves had been successful in transferring funds. Researchers were able to confirm only that the attackers had managed to breach the bank and install identical code strings on the bank’s computer systems — the same code that they discovered in Bangladesh, Vietnam and the two previous attacks at Sony in 2014 and South Korea in 2013.

Mr. Chien noted that the attackers not only used identical numbers but wrote the code in the same, unusual sequence across all three attacks.

Mr. Chien said the evidence pointed to all three attacks being the work of the “Lazarus Group,” a name his team gave to the attackers behind the Sony and South Korean attacks.

Officials have pointed to North Korea’s threat of “merciless countermeasures” against Sony if the studio released “The Interview,” a movie by Seth Rogen and Evan Goldberg that made fun of North Korea and includes a fictional assassination of its leader. F.B.I. analysts also note critical mistakes North Korean hackers made, such as logging into their attack servers from known North Korean Internet addresses and even logging into both their Facebook account and Sony’s servers from the same computers.

In the months since evidence of the attacks involving the Swift network started to emerge, investigators have been looking for commonalities at numerous other potential breaches. It remains unclear whether these breaches are connected to the ones in Bangladesh and Vietnam, but they too have occurred in or around Southeast Asia.

There is no evidence to date that the thieves have gone after large American or European banks, though new possible attacks are being reported weekly. Last week, evidence emerged that Banco del Austro, an Ecuadorean bank, was infiltrated by hackers who were also able to sneak onto the Swift network. The thieves transferred several million dollars to accounts around the world, according to a lawsuit the bank filed in federal court in the United States against Wells Fargo, which facilitated one of the transfers.

Researchers have yet to unearth any of the code used in the Ecuador attack, but banking analysts say it is probably no coincidence that these attacks are happening in the developing world, where security measures tend not to be as tight as they are in financial hubs like New York and London.

Swift has issued numerous warnings in recent weeks urging banks to step up their security protocols. Analysts worry that the breaches could have a chilling effect on global finance; larger banks may become reluctant or even refuse to transact with smaller banks in the developing world unless they can have assurances that their networks have not been compromised by thieves and malware.

At a conference on Tuesday in Brussels, Swift’s chief executive, Gottfried Leibbrandt, said the recent attacks could do far more damage than breaches on retailers and telephone companies, which he said suffer largely reputational and legal hits.

“Banks that are compromised like this can be put out of business,” Mr. Leibbrandt said.

North Korea has long been known for creative attempts to generate badly needed hard currency. In the last decade, United States government officials accused North Korea of counterfeiting $100 bills, which were known as “superdollars” or “supernotes” because the fakes were nearly flawless. The Federal Reserve began thwarting that effort by circulating a new $100 bill over the last three years that makes counterfeiting nearly impossible: The redesigned $100 is easier to authenticate and harder to replicate.

“North Korea is hurting for money,” said Herb Lin, the senior research scholar for cyberpolicy and security at Stanford University’s Center for International Security and Cooperation and a fellow at Stanford’s Hoover Institution. “They’ve been cut out of the financial system because of sanctions. They had been among the best counterfeiters in the world, and only recently have they been stymied in the counterfeiting of superdollars. If it’s true that we’ve cut them off from that, then it’s not at all surprising that they would turn to something else.”

Read the full story here:
North Korea Linked to Digital Attacks on Global Banks
New York Times
2016-5-26

ORIGINAL POST (2016-5-27): Swift hack linked to Sony hack. According to The Guardian:

Security researchers Symantec have found clues in the malware used to hack into international financial messaging network Swift, which suggest a link to the Sony Pictures hack in 2014.

At least three banks have reported financial attacks based on the Swift hack. In February, Bangladesh’s central bank lost $81m (£55m) after fraudulent messages were sent through the network instructing a transfer to an account in the Philippines. In May, a Vietnamese bank came forward to say that it had been targeted by the hackers as well, and had managed to stop a $1m transfer. And later that month, Reuters revealed that a third bank, Ecuador’s Banco del Austro, had also fallen prey.

At heart, all the hacks relied on social engineering as much as technical talent. Once the attackers gained fraudulent access to the Swift network, they simply messaged the banks’ banks, and asked for funds to be transferred – which, generally, they were. The Bangladesh case only came to light because a typo in one of the instructions alerted a worker.

But in order to gain access to the network, the attackers used a specific type of malware, dubbed Trojan.Banswift by Symantec.

The security research firm analysed the malware used in the Bangladesh attack, and found what it describes as “a distinct file wiping code”. The way the software deleted files was like little else the company had seen, but it had been seen in one other piece of malware, a specimen named Backdoor.Contopee, which had been used to hack into financial organisations in south-east Asia.

Programmers often have quirks that make it into their code, and they also reuse code between projects. Symantec says it believes “distinctive code shared between families and the fact that Backdoor.Contopee was being used in limited targeted attacks against financial institutions in the region, means these tools can be attributed to the same group.”

That means the hackers, who gained public notoriety with the Bangladesh hack, may have been attacking financial institutions for much longer than previously thought.

But it also links them to a wider group of hackers. The Backdoor.Contopee malware has previously been used by a group known as Lazarus, which has been attacking businesses and commercial operations across the US and South Korea for the last six years. And Lazarus, in turn, is “linked” to another piece of software, Backdoor.Destover, which was used in the 2014 hacking attack against Sony, which the FBI ended up attributing to the North Korean state.

The link is not conclusive, however. Hacking groups often share and sell code, and the Sony Pictures hack is several degrees removed from the Swift attacks.

What’s more, Lazarus was severely disrupted earlier this year, Symantec says. “The group was the target of a cross-industry initiative known as Operation Blockbuster earlier this year, which involved major security vendors sharing intelligence and resources in order to assist commercial and government organizations in protecting themselves against Lazarus.”

Swift itself has promised to improve its security following the hacks. According to Information Security magazine, the group’s chief executive offered up a new plan for change. Gottfried Leibbrandt said: “Banks can learn from one another about the modus operandi and put better preventative measures in place; entities like Swift can serve as the information sharing channel, and we can develop indicators of compromise to help those banks improve their detective capabilities.

“We are doing so,” he added, “But information sharing needs to get better, much better.”

Read the full story here:
Swift network bank thefts ‘linked’ to Sony Pictures hack
The Guardian
2016-5-27

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DPRK – China Trade in 2016 (UPDATED)

May 25th, 2016

UPDATE 4 (2016-6-3):  The Institute for Far Eastern Studies (IFES) also comments on the April 2016 trade statistics.

China Decreased Imports from North Korea in April by 22.3 Percent

Last month, imports from North Korea to China plunged more than 20 percent below that of the same period last year. April is the first month for China to begin the implementation of sanctions against North Korea adopted by the UN Security Council resolution. China’s sanctions against North Korea have a notable effect.

KOTRA Trade Office in Beijing released the official DPRK-China trade statistics of Chinese Maritime Customs Service on May 14. According to this report, China’s total import volume from North Korea in this period recorded 161,380,000 USD, down 22.35 percent compared to April last year. By item, imports of coal decreased by 38.34 percent while lead imports were reduced by 16.12 percent. There were no titanium imports as China listed titanium as one of the banned exports from North Korea.

However, iron ore is one of North Korea’s main export items along with coal. Unlike lead and coal, the import of iron ore increased 19.38 percent, and zinc import jumped a whopping 685 percent. In this regard, China appears to have decreased coal imports to deal with domestic overproduction problem of coal while increasing the imports of other minerals and under the suspicion that it is imposing sanctions on North Korea only on the outside.

China’s exports to North Korea recorded insignificant decrease of approximately 1.53 percent, with a total volume of 268,000,000 USD. Refined oil including jet fuel was identified to have decreased 6.11 percent compared to the same period last year. Exports of freight cars and electronic equipment decreased 45.46 percent and 43.95 percent, respectively, while agricultural and clothing items were not much affected.

As a result, the total of DPRK-China trade volume decreased 10.54 percent compared to last year, at 429,410,000 USD. Last month on April 5, China’s Ministry of Commerce announced 25 banned items of import and export to and from North Korea. This is about a month since the resolution on North Korean sanctions was passed. Since then, China immediately began to impose sanctions.

In the list of import bans, there are a total of 20 items, including coal, steel, and iron ore, along with gold, titanium, vanadium ore and other rare earth minerals as classified by maritime customs. Prior to the sanctions, DPRK-China trade in March recorded 490,000,000 USD in trade volume, which was an increase of approximately 20 percent compared to the previous year.

As China continues to impose sanctions on North Korea, North Korea can be expected to suffer a significant setback in its foreign currency earnings.

UPDATE 3 (2016-5-25): DPRK – China trade Jan 1 – April 30 2016:

Preliminary estimates of trade volume between DPRK and China through April 30 total appx $1.597 billion ($4.791 annualized, 11.7% decrease from 2015).

DPRK imports/Chinese exports total $862 million, and DPRK exports/Chinese imports total $735 million. So we can see a bilateral trade deficit in Jan-April 2016 of appx $127 million ($381 million at annualized rate vs $460 million in 2015).

Chinese enforcement of UNSC Resolution 2270 reportedly began in April, in which China reports it’s DPRK imports total US $161 million (down 22.3% from April 2015). Coal imports at $72.2 million (down 38.2% from April 2015 total of $116.6 million), gold imports $250k (down 91.1% from April 2015). China’s exports total $268 million in April 2016 (down 1.5% from April 2015).

It is impossible to tell from this data whether the sanctions are having any impact beyond the general downturn in the Chinese economy because this is trade based on value (Price x Quantity), and prices of North Korea’s commodity exports have been falling as well. We need to compare the quantity of the prohibited mineral exports over time to see if the sanctions are having any impact (assuming China is accurately reporting them).

It is also important to remember that DPRK – China trade is not regular, so past performance is not necessarily indicative of future results. Also, the data can be revised for numerous reasons.

Finally, China stopped reporting unrefined oil exports to the DPRK in 2014, but they did not stop exporting unrefined oil itself. According to Chinese customs data, the country exported about 520,000 tons of oil to North Korea every year from 2009 to 2012. Beijing normally supplied between 30,000 to 50,000 tonnes (222,000 to 370,000 barrels) of crude oil to North Korea every month. Shipments of crude oil to North Korea rose 11.2% to 578,000 tons in 2013.

The data in the above summary comes from the articles below, starting with this in the Choson Ilbo:

China’s imports of North Korean products declined more than 20 percent last month compared to the same period of 2015 as Beijing began to implement UN Security Council sanctions against Pyongyang.

According to statistics by the Korea International Trade Association, China imported US$161 million worth of North Korean products in April, down 22.3 percent on-year.

Its imports of North Korean coal fell 38.2 percent to $7.21 million [this statistic is wrong and was corrected by Yonhap], and of gold 91.1 percent to $250,000. Imports of North Korean titanium, which is on the list of banned imports, were zero.

But imports of iron ore, which is allowed since it is thought to support the livelihood of ordinary North Koreans, increased 1.7 percent, and of zinc, which is also not banned, a whopping 685 percent to $5.7 million.

China’s exports to North Korea totaled $268 million last month, down 1.5 percent. Sales of jet and rocket fuel dropped 39.9 percent and of cars and electronic equipment 45.5 percent and 43.9 percent.

Total trade between North Korea and China last month fell 10.5 percent on-year to $429 million. If China continues to abide by UN Security Council sanctions against North Korea, bilateral trade will shrink further and dent the North’s attempts to earn hard currency.

North Korea’s state-run Rodong Sinmun daily on Tuesday complained that the sanctions are pressuring the North “beyond imagination.”

Read the full story here:
Sanctions Slash Chinese Imports of N.Korean Products
Choson Ilbo
2016-5-25

UPDATE 2 (2016-5-23): Reuters reports a drop in Chinese imports of North Korean coal:

China’s imports of coal from its neighbor North Korea reached 1.53 million tonnes in April, down 35 percent on the month and 20.5 percent year-on-year as Beijing sought to comply with a tougher sanctions regime against the country.

North Korean shipments over the first four months of the year remain 23.2 percent higher than the same period of 2015, data from China’s General Administration of Customs showed on Monday.

China’s Ministry of Commerce announced at the beginning of April that it would ban North Korean coal imports to comply with new United Nations sanctions on the country, though it made exceptions for deliveries intended for “the people’s wellbeing” as well as coal originating from third countries like Mongolia.

Mongolia was the chief beneficiary of the decline in shipments from North Korea, with the country supplying 1.98 million tonnes to China in April, up 34.7 percent on the year.

Australia remained China’s biggest supplier, though the April volume of 5.74 million tonnes was down 12.9 percent compared to last year.

Read the full story here:
China coal imports from North Korea dip 35 percent as sanctions bite
Reuters
2016-5-23

UPDATE 1 (2016-4-14): Yonhap reports on Q1 2016. Overall trade is up, but this is composed of surging Chinese exports to North Korea and falling imports. Here are the relevant parts of the report:

Trade volume between North Korea and China posted double-digit growth in the first quarter of 2016 from a year earlier despite the United Nations’ punitive economic sanctions imposed on the reclusive country, official data showed Wednesday.

The size of bilateral trade stood at 7.79 billion yuan (US$1.2 billion) in the January-March period, up 12.7 percent from the same period last year, Huang Songping, spokesman of China’s General Administration of Customs, said during a press briefing on the country’s first-quarter trade outcome.

The increased trade volume is attributable to a sharp rise in China’s exports to North Korea in the three months, which posted 14.7 percent growth to 3.96 billion yuan, according to the spokesman.

On the other hand, China’s imports from North Korea contracted 10.8 percent to 3.83 billion yuan, he said.

“Major Chinese exports to North Korea are machinery, electronic goods, labor-intensive products and agricultural goods, while imports mainly are coal and iron ore,” Huang said.

The spokesman indicated that the trade increase should not be viewed as China circumventing the U.N. Security Council sanctions because the latest figure accounts for bilateral trade volume before the sanctions took effect.

China immediately implemented the sanctions after it announced a list of banned trade goods with North Korea on April 5, the spokesman pointed out.

“The China-North Korea trade data for the first quarter has nothing to do with anti-North sanctions,” the official said, also vowing to “follow through with the U.N. sanctions resolution thoroughly.”

Another official from China’s State Council stressed any trade items that concern the public welfare or have no link to North Korea’s nuclear weapons development are not subject to the sanctions.

But the official refused to release the monthly trade figure for March, only saying that the monthly data is not available.

In early March, the U.N. adopted the toughest sanctions it has ever slapped on North Korea as punishment for the communist country’s defiant nuclear test in January and a long-range rocket launch in February.

Read the full story here:
N. Korea-China trade volume up 12.7 percent on-year in Q1
Yonhap
2016-4-13

ORIGINAL POST (2016-4-7): The Chinese Ministry of Commerce issues announcement on trade and UNSC Resolution 2270:

MOFCOM Announcement No. 11 of 2016 Announcement on List of Mineral Products Embargo against the DPRK
April 7, 2016 – 10:57 BJT (14:57 GMT) MOFCOM

In order to carry out relevant resolutions of the UN Security Council and in accordance with the Foreign Trade Law of the People’s Republic of China, the following products are hereby embargoed against the Democratic People’s Republic of Korea:

1. Imports of coal, iron and iron ores from the DPRK are forbidden with the following two exceptions:

(1) Trading that is determined to be conducted to generate profits solely for the people’s livelihood, and that does not involve the nuclear program or the ballistic missile program of the DPRK or any other profit generating activities prohibited in the Resolutions No. 1718(2006), No. 1874(2009), No. 2087(2013), No. 2094 (2013) or No. 2270 (2016) of the UN Security Council.

If the import falls into the range of the trade mentioned above, then during the import declaration, the enterprise shall submit to the customs authority a letter of commitment (See Annex 2) signed by its legal representative or principal and affixed with its official seal. If it is confirmed by solid information that the imports are not for the people’s livelihood, or are related to the nuclear program or the ballistic missile program of the DPRK, the customs authority will not clear such imports.

(2)Trading of coal that is confirmed not to be originated in the DPRK but is delivered and used to export from the Port of Rason through the DPRK, and such trade does not involve the nuclear program or the ballistic missile program of the DPRK or any other profit generating activities prohibited in the Resolutions No. 1718(2006), No. 1874(2009), No. 2087(2013), No. 2094 (2013) or No. 2270 (2016) of the UN Security Council.

If the import falls into the range of the trade mentioned above, the importing enterprise shall submit to the provincial competent commerce authority, where such enterprise is located, relevant information and application in advance, which shall then be submitted to the Ministry of Foreign Affairs via the Ministry of Commerce, and then notified to the Sanctions Committee of the UN Security Council for record-filing before the enterprise can begin to import. During the import declaration, the enterprise shall submit to the customs authority a letter of commitment (see Annex 3) signed by its legal representative or principal of the enterprise and affixed with its official seal and the certificate of original. If it is confirmed by solid information that the trade does not fall into the exception, then the customs authority will not clear the imports.

2. Imports of gold ores, titanium ores, vanadium ore, and rare earth minerals from the DPRK are forbidden.

3. Exports of aircraft fuel including aviation gasoline, naphtha aircraft fuel, kerosene aircraft fuel and kerosene rocket fuel are forbidden with the following two exceptions:

(1) The aircraft fuel that has been specially approved by the Sanctions Committee of the UN Security Council case by case to be transferred to the DPRK and verified to be used to satisfy basic human needs; however, special arrangements must be made to effectively monitor the delivery and use of such fuel.

(2) The aircraft fuel that is sold to civil airplanes outside the territory of the DPRK or is supplied solely for use in trips from and to the DPRK.
4. For details of the product embargo, please see Annex 1.

This Announcement shall be implemented as of the date of announcement.

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North Korean economic history snippet: Kim Il-sung on the food supply system, 1962

May 24th, 2016

By Benjamin Katzeff Silberstein

Despite the rise of the markets in post-1990s North Korea, the public distribution system (PDS) retains an important function in supplying grain inside the country.

However, in the early 1960s, Kim Il-sung considered doing away with the official system for food distribution (식량공급제도). It is not clear how firmly such ideas were considered, but in a speech in Pyongyang in 1962 – or so his collected works from 2000 claim – Kim said he thought of abolishing it in favor of letting people purchase food freely.

Interestingly, in this speech, Kim cites relatively pragmatic reasons for sticking with central distribution of food. The issue, Kim says, would be that big families would fare comparatively worse if they had to depend on cash income for their food purchases. If food was bought and sold freely, a difference in living standards would arise (생활수준에서 차이가 생기게 됩니다).

Source: Kim Il-sung, Ch’ŏnjib (전집), vol. 29. Pyongyang, Korean Workers’ Party Publishing House, 2000.

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DPRK – China trade 2015

May 23rd, 2016

According to UPI:

North Korea’s trade with China shrank for the first time in six years, according to a South Korean government think tank.

According to a report from the Korea Institute for International Economic Policy, bilateral trade stood at $5.43 billion in 2015, down by 14.7 percent from 2014.

North Korea exports to China were estimated to total $2.95 billion, a decrease of 16.4 percent, and imports, excluding crude oil, were reported at $2.49 billion, a 12.6 percent decrease from 2014, local newspaper Kyunghyang Shinmun reported.

But the data from 2015 indicates North Korea was hit hard by a collapse in coal and iron ore prices in the commodities markets, according to the report.

North Korea iron ore initially remained competitive in the Chinese market, staying at a price that was 73 percent of market rates, but became less of a bargain in 2015 when it was priced at 84 percent of market rates, which also dropped precipitously last year.

The report stated China’s economic slowdown and new environmental policies targeting the coal industry played a role in the decline in North Korea coal and other exports, local newspaper Maeil Business reported.

In 2015, commodity prices dropped by more than 20 percent for coal and about 31 percent for iron ore.

Note that these trade data were recorded before new sanctions were implemented in 2016.

Read the full story here:
North Korea trade with China shrinks 15 percent
UPI
2016-5-23

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Russia sanctions DPRK

May 23rd, 2016

According to the Choson Ilbo:

Russia has halted financial transactions with North Korea, and the EU has added 18 individuals and one organization to its North Korea sanctions list.

The international sanctions aim to strangle the flow of hard currency into the North’s nuclear and missile programs.

The Russian central bank last Thursday told all Russian banks to halt financial dealings with North Korean agencies, organizations and individuals on the UN Security Council sanctions list, Radio Free Asia reported.

The order said the banks must immediately freeze bonds held by sanctions targets and close accounts related to the North’s development of nuclear weapons and missiles.

A Russian presidential decree will also take effect soon to close North Korean bank branches and joint venture firms.

But Russia will continue to allow financial transactions between Russian and North Korean banks authorized by the UN.

The measures deal a blow to North Korea because the two countries have only recently increased cooperation.

Russia has been criticized for giving the North Korean regime a lot of leeway by allowing its banks to open accounts for North Korean banks and settling business with North Korea in roubles.

“What’s important is whether the international community including Russia and Switzerland will put their decisions into action,” a diplomatic source said. “If they do, the North will suffer a lot.”

A recent gasoline price hike in the North seems due to Russia’s downsizing of supplies to the North.

The EU has announced its third round of sanctions since the North’s latest nuclear test. This has brought the number of sanctions targets to 66 individuals and 42 organizations. They will be banned from entering EU countries and their assets will be frozen.

Here is coverage in the Joong Ang Ilbo:

Russia’s central bank called for a suspension of all transactions with North Korea, media outlets reported Friday, which follows Switzerland’s toughened sanctions on the regime earlier this week.

The move is in line with the strongest-ever United Nations Security Council resolution adopted in early March to penalize North Korea for its fourth nuclear test and long-range missile launch and curb its weapons of mass destruction program.

The Russian central bank was reported to have issued an order to local banks and financial institutions to suspend transactions with Pyongyang on Thursday, according to Radio Free Asia.

The order stated that transactions with Pyongyang were possible only with the permission of the United Nations.

The central bank further declared an immediate freeze on bonds held by North Korean individuals, agencies and organizations blacklisted by the UN Security Council.

Likewise, Russian financial institutions will have to close any accounts that have possible links to the North’s nuclear and missile programs.

On Wednesday, Switzerland imposed tighter sanctions on North Korea, ordering the freezing of assets held by North Koreans in the country and closure of their bank accounts as well as blocking funds owned by the North Korean government.

The Swiss government made the move to block all funds and economic resources connected with North Korea’s nuclear and missile programs in line with UN Security Council Resolution 2270, which was adopted in March in response to Pyongyang’s nuclear test in January and a ballistic missile test in February.

This included mandatory inspections of all cargo going in and out of North Korea, a ban on exports of coal, iron and other mineral resources from the North, as well as prohibiting aviation and rocket fuel exports into the country.

Russia and China, two of the five permanent members of the 15-member Security Council, have generally defended Pyongyang’s stance in the council. They also negotiated some room for leeway in the March resolution on North Korea. How they implement the sanctions will be crucial to cutting the cash flow into Pyongyang’s WMD program.

The Swiss government extended an existing ban on exports of luxury items to include more goods and prohibited North Koreans from studying in Switzerland in higher physics or nuclear engineering.

On Thursday, the European Union expanded its sanctions against Pyongyang, adding 18 individuals and an entity it deemed related to its weapons program to its blacklist.

This brings the EU blacklist to 66 individuals and 42 entities considered to be involved with North Korea’s nuclear and missile development.

When asked about the government’s position on Russia’s sanctions, South Korean Ministry of Unification spokesman Jeong Joon-hee said in a briefing Friday, “We strongly welcome that countries around the world, including China and Russia, are actively taking part in these strong sanctions.”

Read the full story here:
Russian Central Bank Halts Dealings with N.Korea
Choson Ilbo
2016-5-23

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Pak Pong-ju promoted

May 23rd, 2016

Bloomberg reports on the story, but I made some title corrections in the blurb below:

Kim this month named [Premier] Pak Pong Ju, 77, to the [Presidium of the Political Bureau of the Central Committee of the WPK], making him the highest-ranking official to lead a new five-year economic plan. The regime’s leader announced the blueprint at the first full party congress in 36 years, held as he seeks to tighten his grip on power.

Pak has had a rocky past, sacked as premier by Kim’s father, Kim Jong Il, about a decade ago and demoted to supervisor of a chemical factory. His policy of encouraging free enterprise while increasing wages and consumer prices to help the country cope with the rise of unofficial markets had unnerved die-hard socialists.

Pak also serves on the Central Military Commission. More analysis here.

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Rice planting campaign underway in North Korea

May 23rd, 2016

By Benjamin Katzeff Silberstein

Earlier this month, the North Korean government launched a rice-planting campaign, mobilizing citizens for agricultural work. Rodong Sinmun has written about this campaign a few times during May. On the 13th, Rodong dedicated almost a full page to rice plantation, calling for a “breakthrough”. The article contains some language on agricultural organization: for example, it cites an agricultural organization [기술전습회] that urges farmers to be creative in their farming methods and adapt to their separate conditions.

While this might sound like an argument for less central state control, provincial independence has been a hallmark of the Juche system for decades. Kim Jong-il said similar things during the famine years. The issue, of course, is that as long as inputs, land use, production targets and other variables remain centrally planned, local creativity can only go so far.

The article does, however, contain some interesting claims. For example, one senior official (Ri Kyong-rok) is quoted as saying that water conditions are twice as good as last year. Moreover, the article also claims that fertilizer is more abundantly available than last year. Perhaps this is all true (a big perhaps), but if so, it would go against the past year’s trend of worsening conditions for agricultural overall.

On May 16th, Rodong again carried a long piece on the rice planting campaign, calling for every citizen’s participation and hard work, based on scientific methods.

Mass campaigns such as this one can obviously not be fully understand only through North Korean publications. Yesterday, Daily NK carried a piece about how campaigns such as this one play out on the ground, with market trade becoming more restricted as the government strives to ensure that everyone dutifully participates in rice planting:

The mobilization, which commenced on May 15, will remain in effect until June 15, a source from South Pyongan Province told Daily NK. Of most concern to residents is the fact that for the duration of the mass mobilization, official general markets will operate only three hours daily– from 5 p.m. to 8 p.m.–and business-related travel be strictly limited.

This news was corroborated by sources in North and South Hwanghae Provinces, North Pyongan Province, and North and South Hamgyong Provinces.

In addition, alcohol sales in restaurants will be banned for the ordinance’s duration; service establishments including barbers, hair salons, and public bathhouses are permitted to operate, but only after 5 p.m.

All central agencies, state-run factories, social organizations, universities, and high schools are busy gearing up for the mass mobilization. To ensure their compliance, streets are plastered with “farm assistance-battle” posters, and vehicles outfitted with loudspeakers move through neighborhoods from early morning hours, blaring propaganda songs to keep up the pressure; local officials wielding megaphones follow suit on foot, calling on everyone from “homemakers, the elderly, and middle school students to commute to farms nearby and work,” the source said.

“The streets are lined with Ministry of People’s Security personnel [MPS], carrying out orders to step up surveillance and crackdowns to maximize support [for the mobilization]. In parallel, prosecutors and other agents from the judicial system patrol state-run companies and residential areas to check up on the mobilization numbers. If firms fall short of the quotas, company managers face punitive measures, which can include, among other things, imprisonment for up to ten days.”

The heightened control and fear tactics, he added, are to hedge against possible public outrage from a populace forced to participate in successive mobilizations, which hamper market business and thereby severely undermine their livelihood.

Full article:
Rice-planting mobilization order handed down
Choi Song Min
Daily NK
2016-05-22

 

Daily NK also discussed the campaign with So Jae Pyong, secretary general for the Association of North Korean Defectors:

We saw an article emphasizing grain production on page five of the 13th issue of the Rodong Sinmun entitled, “This Year’s Uphill Battle for Grain” and then again on the front page on the 16th issue, “Band Together for the Rice-Planting Battle.” It would appear that North Korea is still dealing with their chronic grain underproduction. What seems to be the problem?

The main problem is that even the farmers themselves are suffering from hunger and are therefore turning their attention away from their official farm duties and working private secret farms on the side. This is because they till the earth tirelessly all year long on their official farms only to have their produce taken away for the military and State rations. They are only met with poverty and starvation based on this system so it’s easy to see their lack of drive to work hard for more production. Based on this, they have no other choice but to have an almost forced production system on the collective farms. The government needs to implement some kind of policy to improve the quality of the lives of these farmers but that just simply isn’t the case. Farmers have zero interest in the production of their crops because of this system. They’re really only focused on their separate, private crops. I think the only way to alleviate the hunger and poverty that citizens are suffering from is to completely do away with this type of quota system.

Full article:
Hearts and minds remain at the ‘jangmadang’ despite propaganda push
Unification Media Group
Daily NK
2015-05-22

 

(UPDATE 2016-02-24): 

Daily NK reports some discontent with rice planting campaign, with complaints about how it interferes with Kim Jong-un’s own policies of raising science and technology in education:

“The students in our province have been sent to agricultural regions such as Koksan County and Yonsan County. During the ‘70-Day Battle,’ the students were forced to plant seeds and pull up weeds. Now, as the students head off to the farms again, they are sardonically spouting off lines about how they are farmers rather than students,” a source in North Hwanghae Province reported to Daily NK on May 20.

“The students have remarked that being pressed into forced labor during the ‘70-Day Battle,’ and now for the ‘Rice-Planting Battle’ is just as laborious and difficult as risking your life on an actual battlefield. They justifiably point out, ‘If these kind of ‘battles’ continue to arise, when are we supposed to study?’“

Since rising to power, Kim Jong Un has frequently underscored the importance of education, describing universities as the “platform for launching the future of the nation, one of the main pillars of society, and the training ground for leaders.” He has also continued to point out that it is important to focus on experiential learning and on-the-job-training in order to elevate the quality of the nation’s education and produce illustrious students with technical knowledge.

However, the record shows a different tale. Students have spent a considerable amount of time being mobilized to work on idolization construction sites and farms. This has severely crippled their educational experience. Consequently, students have become upset that their instruction hours have not been protected and that they are being exploited for their labor.

Added a separate source in South Hwanghae Province, “University students have spent more time working on the farm than they have spent studying for their classes or learning about science/technology. Under such circumstances, students naturally complain that it is difficult to imagine how these universities will be able to fulfill Kim Jong Un’s order to create illustrious students with technological capabilities.”

Full article:
Complaints mounting among university students sent to farms for labor
Daily NK
Kim Chae Hwan
2015-05-23

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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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