North Korean government installs corruption complaint boxes

September 19th, 2022

By Benjamin Katzeff Silberstein

Albeit a small one, but yet another data point on the North Korean government campaign against corruption. Radio Free Asia reports:

Government workers, like all North Korean citizens, are paid a small monthly wage by the state, but it is not enough to live on. Most families start businesses, selling goods in the marketplace or performing services to make enough money to get by. Government officials, however, can use the power of their position to bring in extra cash by extracting bribes in return for their services.

Citizens who know about the shady dealings can now more easily report them, although many are reportedly reluctant to do so. Complainants must give their names, leaving them susceptible to retribution by the people they identify as corrupt.

“A box for reporting on officials was installed on the main gate of the Hungnam Pharmaceutical factory the day before yesterday,” a resident of the eastern province of South Hamgyong told RFA’s Korean Service Sept. 15 on condition of anonymity for security reasons.

“Up until now they only had report boxes at the building of the reporting division at the provincial, city and county level. … The fact that the report box is now in a factory is an expansion of the corruption reporting system,” said the source. “This measure follows the Central Committee’s order to strengthen the system to identify officials who are blinded by self-interest and are violating the interests of others.”

(Source: Hyemin Son, “North Korea installs more complaint boxes to tackle corruption,” Radio Free Asia, September 19th, 2022.)

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Is the North Korean economy in crisis territory?

September 8th, 2022

By: Benjamin Katzeff Silberstein

Is the North Korean economy in a crisis following years of tough sanctions and the Covid-19 border closure? In a new report, the Bank of Korea’s answer is yes. They point to factors such as vast price increases on several basic goods to show that shortages have led to a price inflation virtually across the board for crucial consumer products:

The price of sugar in North Korea has multiplied by a factor of 8.3 between 2017 and late June of this year, from 5,201 won to 43,000 won per kilogram. During the same time period, the price of flour grew 3.7 times in the country as well, from 5,029 won to 18,700 won per kilogram.

Sugar and flour are two of the main food products North Korea imports from other countries. The extent to which their prices jumped in North Korea exceeds what might be observed in South Korea today due to high inflation. What could have happened in North Korea in the past five years to occasion such a surge in prices?

On Monday, the Bank of Korea published a report titled “North Korea’s Economy in the Past Five Years and Its Future Outlook,” which pointed to how the country’s economic environment changed during the time period. In a nutshell, the report argued that North Korea’s economy has entered yet another period of crisis after the 2000s, when its economy grew, following the 1990s, when the country experienced an economic crisis and a famine, also known as the Arduous March. North Korea’s gross domestic product (GDP) fell by 2.4% on average every year from 2017 to 2021 and is estimated to have dropped by a total of 11.4% during this time period.

What prompted the crisis in North Korea were economic sanctions against the country as well as border closures due to COVID-19.

(Source: Park Jong-O, “Why the price of sugar went up 726% in N. Korea over the last 5 years”, Hankyoreh, September 6th, 2022.)

Broadly speaking, given the data available, it is difficult to draw any other conclusion. At the same time, it is crucial to keep a few things in mind. First, much of the economy is adapted to a situation with very little foreign trade, because even in a normal year, North Korea’s external trade is exceptionally small compared with most countries in the world.
Second, there’s like to be considerable regional variation in the economic situation. Transportation inside North Korea has improved considerably over the last 10-15 years but getting goods from, say Hyesan in the northeast to Pyongyang, or a southern city like Sariwon, is still difficult, complicated and time consuming. So we are not necessarily talking about one, unified market with similar conditions across the country, but rather about a very fractured system.

Third, the word “crisis” in the context of the North Korean economy comes with very serious connotations since the famine of the 1990s. But we are decidedly not talking about a situation with mass starvation, and the Bank of Korea acknowledges this. Because of the expansion of the market system, the economy can respond very differently to shortages today than it could in the 1990s and early 2000s. Consumers can and likely have switched to less desired goods that can be procured and produced domestically. Both flour and sugar can, after all, to some extent be substituted for less desired but more easily available goods. We’ve also seen an increase in the price over corn over rice, which exemplifies this well: when the more desired good (rice) becomes more expensive, a greater number of people switch over to corn. This does suggest economic conditions have worsened, but not necessarily that they are disastrous.

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North Korea seeking rice donations abroad

September 7th, 2022

By: Benjamin Katzeff Silberstein

I’m not convinced the main point of this news report is that North Korean state representatives have reached out specifically to Indian representatives. Rather, this suggests a much wider campaign, with North Korean diplomats and other functionaries posted abroad ordered to scout around for possible donations from abroad. Voice of America:

VOA’s Korean Service has learned that Pyongyang has turned to India for rice, its staple food, which it usually imports from China.

Manpreet Singh, executive president of the Indian Chamber of International Business, an organization that helps small to midsize Indian companies expand globally, told the Korean Service in an August 30 email that North Korean Embassy officials visited the organization in New Delhi.

“We have been approached by the Embassy to look at possibilities for donations of rice” as “floods destroyed most of the crop,” said Singh.

North Korea’s U.N. Mission in New York City did not respond to VOA Korean Service’s questions about its food situation and whether it is seeking outside aid. North Korea has dismissed South Korea’s offer of economic aid in exchange for its denuclearization, a deal outlined in South Korean President Yoon Suk Yeol’s “audacious initiative,” introduced August 15.

(Source and full article: Jiha Ham, “North Korea Turns to India for Rice Amid Food Shortages,” Voice of America, September 7th, 2022.)

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Chinese region near North Korean border suffers from lockdowns

September 1st, 2022

By Benjamin Katzeff Silberstein 

New York Times recently ran an interesting dispatch from Shenyang in northeastern China, about an hour’s high-speed train ride from North Korea. This report highlights something important: while trade with North Korea is negligible for China as compared to the country’s total trade volume, North Korea as a trading partner does matter for the Chinese border regions specifically:

….And in a region often referred to as China’s Rust Belt, the local economy had already been shaky for years.

Possibly the main problem, though, is that Ms. Wen’s primary customer base has virtually evaporated.

“With North Korea closed because of the virus, they can’t come or go at all,” she said from behind the counter of her store in Shenyang’s Koreatown, where signs advertising steep discounts on imported South Korean styles had done little to draw in shoppers. “Before, we’d have maybe dozens of North Korean customers every day. Now you don’t even get 10.”

China’s continuing strict coronavirus controls have battered local economies across the country. But Shenyang has endured a double blow. Just 150 miles from the North Korean border, it is suffering not only from the restrictions in China, but also from those imposed by the even more isolated country next door.

(Source and full article: Vivian Wang, “Lockdowns in China, and North Korea, Bring Double Blow to Bridge City,” New York Times, August 30th, 2022.)

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Putin’s letter to Kim Jong-un

August 15th, 2022

By Benjamin Katzeff Silberstein

In another data point on Russia and North Korea growing increasingly close, President Vladimir Putin sent a congratulatory letter to Kim on the occasion of North Korea’s Liberation Day (August 15th) from Japanese rule. There are clear limits on how far increased economic exchange can go at the moment between the two countries, but interest from both seems genuine and high. From KCNA:

Respected Comrade Kim Jong Un Receives Congratulatory Message from President of Russian Federation

Pyongyang, August 15 (KCNA) — Kim Jong Un, president of the State Affairs of the Democratic People’s Republic of Korea, received a message of greeting from Vladimir Vladimirovich Putin, president of the Russian Federation, on August 15.

In the message, Putin extended sincere felicitation to the respected Comrade Kim Jong Un on the occasion of the day of liberation, a national holiday.

The message noted that the two countries have deeply kept the memories of servicepersons of the Red Army and patriots of Korea who fought shoulder to shoulder for the liberation of Korea.

The glorious traditions of friendship and cooperation gained in the grim days serve as a durable foundation for developing the good neighborly relations between the Russian Federation and the DPRK today, it stressed.

It said that we would continue to expand the comprehensive and constructive bilateral relations with common efforts, adding that this would entirely conform with the interests of the peoples of the two countries and contribute to strengthening the security and stability of the Korean peninsula and the whole of the Northeastern Asian region.

It wished Kim Jong Un good health and success and all citizens of the DPRK happiness and prosperity.

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North Korea’s agricultural production grew last year, South Korean data says

August 11th, 2022

By: Benjamin Katzeff Silberstein

South Korea’s Bank of Korea (BOK) recently published its GDP estimates for North Korea in 2021. Overall, their estimates (the faults and flaws of which are many) are consistent with the general impression that last year wasn’t great for North Korea, but also relatively stabile.  An estimated GDP decrease of 0.1 percent in 2021, after all, is a whole lot less than the contraction estimated by BOK for 2020, minus 4.5 percent.

Agriculture (including forestry and fisheries) is, interestingly, estimated to have grown by 6.2 percent. Such precise numbers are rather pointless in estimates like this. Nonetheless, the direction seems to confirm assessments by the World Food Program and others that agricultural production last year performed somewhat better than the years before.

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North Korea-China railway freight could start again soon, for two reasons

August 8th, 2022

By Benjamin Katzeff Silberstein

Railway freight between Dandong in China and Sinuiju in North Korea, a crucial channel for the flow of goods between the two countries, started back up in January after a two-year border closure, and was shut down again in April due to the Covid-19 situation in both China and North Korea. Now, Radio Free Asia reports that railway freight could start again today or tomorrow (August 8th or 9th), citing North Korean sources:

Rail freight shipments between the northern Chinese city Dandong and North Korea’s Sinuiju will resume next week, providing a vital lifeline of goods to the pariah state, North Korean sources said.

“Starting around Aug. 8 or 9, the international freight train between Sinuiju and Dandong will resume its operation,” an official from a trading organization in North Pyongan province told RFA on Thursday.

“There has been an order from the Central Committee for all trading companies to prepare import and export materials to load,” he said, referring to the Central Committee of the Workers’ Party of North Korea.

North Korean authorities proposed the resumption of service to the Chinese government because the country faces economic difficulties due to a serious shortage of supplies, he said.

North Korea is dependent on trade and aid from China, its main ally and trading partner. Restrictions on the flow of goods from the country during COVID-19 pandemic lockdowns devastated North Korea’s already chronically unstable economy.

Freight train service between Sinuiju and Dandong, the hub of North Korea-China trade, was halted in August 2020 because of the pandemic. It resumed on Jan. 16, but was closed by the Chinese again on April 25 after outbreaks in both countries.

Maritime trade with North Korea was also halted at that time but was partially resumed in mid-July after repeated requests from authorities in North Korea.

Trading company representatives, including ones from firms in the North Korean capital Pyongyang, are stationed in Sinuiju, which sits across the international border of the Yalu River from Dandong, the source in North Pyongan said.

“They have been ordering goods from their Chinese counterparts to import construction materials and basic food. They are trying to secure foreign currency to pay for the imports,” he said.

A North Korean source in Dandong, with knowledge of the situation, also told RFA on Thursday that the Dandong-Sinuiju freight train service was about to resume.

“Since yesterday, a Dandong-based logistics company has been recruiting truck drivers to transport goods to the Dandong freight station and manpower to load goods on the freight train in preparation for the resumption of Dandong-Sinuiju freight train operations,” he said.

The logistics company must collect basic food such as sugar and flour, iron products, and construction materials ordered from North Korea from all over China and transport them to Dandong freight station, said the source, who declined to be named so as to speak freely.

Additionally, Dandong quarantine authorities will directly manage the freight station and the trains that return to China after transporting goods to North Korea, he said.

Chinese workers who load and unload goods on freight trains in Dandong must have received COVID-19 vaccinations, the source added. Workers will be tested daily for the virus and can continue on the job if their results are negative.

The freight train will operate 15 to 17 cars at a time and will go directly to the Uiju quarantine facility, formerly the Uiju Airfield, near North Korea’s northern border with China, the source said.

(Source: Hyemin Son, “Rail freight service between China and North Korea to resume in days,” Radio Free Asia, August 5th, 2022.)

This may just be one individual news report, but the overall context also seems to speak for this in many ways. North Korea recently announced the end of its first Covid-19 wave. It might not be a coincidence that this report comes at the same time. Indeed, declaring the Covid wave over was more or less a prerequisite for re-opening rail freight traffic. It may be that signals from the Chinese government that they were willing to re-open the railway link factored into the North Korean authorities’ decision to declare the first wave over.

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North Korea and Syria discuss economic cooperation

August 4th, 2022

By: Benjamin Katzeff Silberstein 

If this development actually goes somewhere (a similar meeting was held in 2014 without any significant results) it’d provide a terrific data point on the increasingly emerging global, sanctions-evading sphere of authoritarian states. Here’s what the Syrian state news agency wrote on a meeting between Syria’s Minister of Industry and North Korea’s chargé d’affaires in the country:

Minister Sabbagh underscored the importance of working to strengthen joint cooperation between Syria and the DPRK to upgrade bilateral relations in the industrial field to be up to the level of the political relations in order to achieve the common benefit of the two friendly countries and peoples.

The Minister stressed the need to activate the memos of understanding and industrial agreements concluded between the ministry and the Korean side, which were suspended due to the outbreak of the Coronavirus pandemic.

In turn, Chargé d’affaires, Kim Hey Ryong, stressed standing in the face of the imperialist sanctions imposed on both friendly countries and the need to confront them with their own resources to advance in the face of the imposed economic blockade.

Ryong expressed his country’s interest in the projects proposed by the Syrian Ministry of Industry for investment, particularly in the field of pharmaceutical industries, alternative energies and the aluminum industry.

During the meeting, it was agreed to form a joint technical committee to set the initial principles for the fields of joint industrial cooperation, follow-up and activate the memo of understanding signed between the two sides.

(Source: Manar Salameh/ Ruaa al-Jazaeri, “Syria, DPRK discuss ways to enhance industrial cooperation,” Sana, 3/8/2022.)

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Yoon’s “audacious plan” may be doomed to fail from the start, but that’s not the point

July 27th, 2022

By: Benjamin Katzeff Silberstein 

There’s been an increasing amount of reporting on the Yoon government’s “audacious plan” for the North Korean economy over the past few weeks. A recent example here from Yonhap:

South Korea is seeking to coordinate with the United States and other countries before announcing the details of its “audacious plan” to revive North Korea’s economy in the event it accepts denuclearization, a presidential official said Monday.

Yoon outlined the plan in his inauguration speech on May 10, saying if North Korea genuinely embarks on a process to complete denuclearization, South Korea will be prepared to present an “audacious plan” to vastly strengthen North Korea’s economy and improve the quality of life for its people.

Last week, he asked Unification Minister Kwon Young-se to come up with the details.

[…]

“It’s far more realistic and likely to be accepted by North Korea if we announce it after sufficient consultations with the United States and other relevant countries, so we’re trying hard to include such details,” the official said.

(Source: “S. Korea seeks to coordinate with U.S. over ‘audacious plan’ for N. Korea,” Yonhap News, July 25th, 2022.)

I’ve already covered the “audacious plan” a little here on the blog. Here’s an excerpt from a post I wrote in May:

It seems likely to me that Yoon is aware of all of this – he presumably gets high-quality briefings on North Korean policies – but that this was the least bad thing to say, since he had to say something about his vision for North Korea policy. Subin Kim, who analyzes South Korean politics at his excellent website Koreakontext, pointed out in an email that most of Yoon’s national security team consist of the same people who advised Lee Myung-bak on North Korea policy. Perhaps this is simply a way of avoiding the topic by repeating tired and tried phrases. In any case, such suggestions are a dead end with North Korea, and Yoon likely knows it.

“All of this” being the many ways in which North Korea has declared it is not interested in “economic cooperation” in the sense that South Korean politicians often do, namely with heavy South Korean involvement in management and administration. South Korea most likely wants to consult with the US about the plan not to strengthen its implementation through cooperation, but as a courtesy to a close ally.

We will likely see the plan revealed soon, but I’m not too optimistic it will continue anything truly new or bold. Rather, each South Korean president simply needs his or her plan for North Korea, and Yoon is likely launching this in large part to meet that expectation.

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Was North Korea’s Covid-19 “victory” planned from the beginning?

July 20th, 2022

By: Benjamin Katzeff Silberstein 

Since last month, there’s been strong signs that North Korea may soon declare “victory” over Covid-19. Its claims of progress against the virus are puzzling, like many claims the country has made about its Covid-19 situation, especially at a time when cases were climbing in the rest of the region. The most recent example came this past Monday, when the regime said it was close to solving the crisis completely:

“The anti-epidemic campaign is improved to finally defuse the crisis completely,” the Korean Central News Agency said. It added that the North had reported 310 more people with fever symptoms.

The World Health Organization has cast doubts on North Korea’s claims, saying last month it believed the situation was getting worse, not better, amid an absence of independent data.

The North’s declaration could be a prelude to restoring trade long hampered by the pandemic, one analyst said.

“Under the current trend, North Korea could announce in less than a month that its COVID crisis is over and that could be a prelude to resuming crossborder trade,” said Cheong Seong-chang, director of the Sejong Institute’s North Korea studies centre in South Korea.

(Source: Reuters, “North Korea says nearing end of COVID crisis,” Reuters, 18/7/2022.)

Signs that North Korea may soon declare victory began to appear only a little over a month after the country even admitted to having any cases of the virus in the first place. As AP put it a few weeks ago:

According to state media, North Korea has avoided the mass deaths many expected in a nation with one of the world’s worst health care systems, little or no access to vaccines, and what outsiders see as a long record of ignoring the suffering of its people.

[…]

What’s clear, though, is that the daily updates from state media make it appear inevitable that the nation will completely defeat a virus that has killed more than 6 million people around the world. According to the official tally, cases are plummeting, and, while 18% of the nation of 26 million people reportedly have had symptoms that outsiders strongly suspect were from COVID-19, less than 100 have died.

The South Korean government as well as some experts believe that North Korea may soon declare that it has beaten the virus. This will be linked, of course, to Kim’s strong and clever guidance.

[…]

“There are two sides to such a declaration,” said Moon Seong Mook, an analyst with the Seoul-based Korea Research Institute for National Strategy. “If North Korea says that COVID-19 has gone, it can emphasize that Kim Jong Un is a great leader who has overcome the pandemic. But in doing so, it can’t maintain the powerful restrictions that it uses to control its people in the name of containing COVID-19.”

(Source: Hyung-jin Kim, “‘It always wins’; North Korea may declare COVID-19 victory,” Associated Press, 21/6/2022.)

Indeed, a declaration of final victory is by no means a certainty, and the government would indeed lose a powerful reason for the stronger measures of social control it has implemented over the past few years.

But what about all the state has to win by declaring victory over Covid-19? I’m not talking here about the propaganda value for Kim Jong-un and his “clever guidance”, but about the economy. I speculated when the North Korean government first admitted that Covid had spread to the country that it could be a step toward normalizing the situation and, in the longer run, a step toward opening the border back up for trade with China.

When the government recognized it had been hit by Covid, it turned it from a risk to be avoided at all cost into a problem to be dealt with. By doing so, it made the border closure more or less superfluous; if the virus is already in the country, no more need to keep trade at close to a standstill.

In this light, declaring victory over the virus would be a natural step, and that would itself be a step toward fully normalizing trade and easing or abolishing internal restrictions. Several recent signs indicate that this may be happening. North Korea seems to, more or less, want to open trade back up with China, no longer fearing that the virus will enter the country. To the contrary, Chinese authorities are now weary of the virus coming in from North Korea. As Daily NK reports:

Although North Korea is making a show of confidence, claiming that the coronavirus situation in the country has “completely stabilized,” the Chinese government is tightly controlling trade with the North due to concern about the state of the pandemic in the country.

According to a Daily NK source in China on Monday, as coronavirus cases decrease, factories and restaurants are reopening in regions of China that border North Korea, including Liaoning and Jilin provinces. With highways, railways, ports and other inter-regional transportation links soon set to reopen as normal, the movement of goods and people within China is expected to improve.

However, in contrast to moves to relax domestic disease control measures, the Chinese government has yet to begin easing controls and inspections regarding trade with North Korea. In regions that border North Korea, Chinese authorities are reportedly cracking down hard on Chinese people directly contacting or doing business with North Koreans.

The source told Daily NK that the Chinese government is levying fines of at least RMB 300,000 (around USD 44,450) on people caught smuggling with North Koreans, a measure that has helped prevent Chinese traders from readily dealing with their North Korean counterparts.

On the other hand, North Korean trade officials are making more requests for imports from Chinese traders. With North Korean authorities recently allowing certain North Korean trading companies to participate in or expand existing trade with China, these companies appear to be responding by increasingly asking for items to import.

(Source: Seulkee Jang, “China still appears wary about reopening trade with North Korea,” Daily NK, 20/7/2022.)

North Korean firms, presumably on order by or at least approval from the state, are in other words trying to start trade ties back up while Chinese authorities are weary.

Internally, too, authorities have eased restrictions. According to Radio Free Asia, travel restrictions were virtually dismantled late last month:

North Korea has lifted COVID-19 travel restrictions nationwide, a sign the government may soon claim victory over the coronavirus pandemic, RFA has learned.

After two years of denying the virus had penetrated its closed borders, North Korea in May acknowledged COVID had begun to spread among participants of a large-scale military parade the previous month and declared a “maximum emergency” to fight the disease.

As part of its response, the government restricted movement between provinces and prohibited large gatherings. But now, after a partial lifting of the travel ban in late May, North Korea ended the limitations completely on June 12, a source from the northeastern province of North Hamgyong told RFA’s Korean Service on condition of anonymity for security reasons.

“Residents are able to travel to other provinces and even to the capital city, Pyongyang,” the source said. “The new order from the National Emergency Quarantine Command was given to residents of each neighborhood in Pohang district.”

Each neighborhood watch unit held meetings to explain the policy change to residents, the source said.

“They have been unable to travel outside the provincial borders with only the partial lifting of restrictions, so they welcome the news,” he said. “It is especially great news for merchants who rely on long-distance travel between provinces for their businesses.

“But even if the restrictions are completely ended, there is still a separate procedure that requires travelers to carry a COVID-19 test certificate issued by the quarantine command. We can get a travel pass only if we have the test certificate,” he said.

North Korea requires passes for travel between provinces even under normal circumstances.

Residents with mobile phones can access test certificates through a smartphone app, a resident of the northwestern province of North Pyongan told RFA. Others must travel to receive a paper copy.

“In rural areas such as Pakchon county, you have to visit the town quarantine center, which is miles away, to get a COVID-19 test certificate,” the second source said. “If a resident who wants to get a test certificate does not have a mobile phone, it is inconvenient.”

But she agreed that most residents are happy the restrictions are ending.

“Now they hope that the residents will have their livelihoods restored as soon as possible, but also by lifting the blockade of the border with China,” she said.

After briefly restarting rail freight shipments from China earlier this year, new outbreaks in China forced Beijing and Pyongyang to suspend trade again. Aside from the short respite, trade has been suspended since the beginning of the pandemic in January 2020, with disastrous effects on the North Korean economy.

The first source said that not all residents were overjoyed at the lifted restrictions, believing that the government had an underlying and unsaid motive.

“There are speculations that restrictions were lifted in order to mobilize the residents,” the first source said, referring to the government practice of forcing residents to provide free labor for construction, farming and other state projects.

“The COVID-19 lockdown restricted mobilizations on national construction projects and on rice planting duties,” he said.

Nevertheless, the government has been saying that it is the leadership of Kim Jong Un that has eradicated the coronavirus, the second source said.

Sources told RFA that North Korean traders and their Chinese counterparts are preparing to resume trade quickly once the Sino-Korean border reopens. They anticipate that cross-border trade will resume once coronavirus case numbers subside.

(Source: Jieun Kim, ,”North Korea ends COVID-19 travel restrictions as ‘fever cases’ subside,” Radio Free Asia, 22/6/2022.)

It seems, thus, that the admission of Covid back in the spring may have been the first step to normalizing the situation. It is a change that the North Korean economy very much needs.

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