North Korean Economy Watch

US slaps sanctions on DPRK companies
According to the Associated Press (Via CBS):

The United States is imposing sanctions on several Chinese, Iranian and North Korean companies for violating arms export regulations governing missile technology and other proliferation activities.

The sanctions are largely symbolic as they bar the companies from trade with the U.S. that they were not likely involved in. Although they were in the works for some time, the Obama team signed off on the sanctions on Jan. 21, a day after it took office, signaling a continuing tough stance from Washington on weapons technology transfers.

U.S. Slaps Sanctions On Overseas Companies
Associated Press (via CBS)
2/2/2009

Here is a link to the text from the US Federal Register. 
Below is a summary:

SUPPLEMENTARY INFORMATION: Pursuant to Section 73(a)(1) of the Arms Export Control Act (22 U.S.C. 2797b(a)(1)); Section 11B(b)(1) of the Export Administration Act of 1979 (50 U.S.C. app. 2410b(b)(1)), as carried out under Executive Order 13222 of August 17, 2001 (hereinafter cited as the “Export Administration Act of 1979”); and Executive Order 12851 of June 11, 1993; the U.S. Government determined on January 15, 2009 that the following foreign entities had engaged in missile technology proliferation activities that require the imposition of missile sanctions described in Section 73 of the AECA (22 U.S.C. 2797b)  and Section 11B of the EAA (50 U.S.C. Appx 24710b) on these entities:

—Korea Mining and Development Corporation (KOMID) (North Korea) and  its sub-units and successors
–Mokong Trading Corporation (North Korea) and its sub-units and successors
–Sino-Ki (North Korea) and its sub-units and successors

And from the Donga Ilbo:

This is the eighth time for the mining company, which has been closely watched by Washington as an exporter of Pyongyang’s ballistic missiles and conventional weapons, to get U.S. sanctions.

The company was slapped with sanctions in 1992, 1998, 2000, 2003, January and August in 2007, and August last year.

Ex-IRA figure faces US counterfeiting charge
According to the Associated Press:

Irish police arrested former Workers Party leader Sean Garland, 74, outside the entrance of the fringe party’s Dublin headquarters — more than three years after he jumped bail in the neighboring British territory of Northern Ireland while facing a similar U.S. extradition warrant there.

Garland had been living openly in the Republic of Ireland — which typically refuses to extradite citizens to face criminal charges outside the European Union — since he left Belfast and abandoned a bail of 30,000 British pounds (about $53,000 at the time) following his October 2005 arrest.

U.S. authorities that year indicted Garland with receiving, smuggling and laundering millions in “superdollars” — so called because of their expert design — that the government of North Korea allegedly began distributing in the late 1980s to weaken the American currency. If extradited and convicted, Garland could face up to five years in prison and a $250,000 fine.

Only one of the past two-dozen extradition requests from the U.S. Justice Department has been approved by Irish judges, who generally oppose extradition, citing America’s harsher sentences and penal system.

Under [Garland’s] leadership, the Workers Party appealed in 1986 to the Communist Party of the Soviet Union for funds. According to the 2005 U.S. indictment, Russian officials encouraged Garland and other Official IRA activists to take counterfeit U.S. $100 bills produced by North Korea.

Read the full story here:
Ex-IRA figure faces US counterfeiting charge
Associated Press
Shawn Pogatchnik
1/30/2009

NK Defectors’ Groups to Get US Gov’t Aid
According to the Korea Times:

The U.S. Department of State will directly provide groups organized by North Korean defectors here with financial support for the first time, according to reports Sunday.

Thus far, Washington has funded local groups working for improvement of North Korean human rights via the National Endowment for Democracy (NED), a private organization supporting freedom around the world.

The move was construed as part of increased U.S. efforts to shed light on humanitarian issues in the Stalinist state.

The State Department posted a notice on the Human Rights Democracy Fund (HRDF) last September and about 50 organizations reportedly applied for the program.

Among the beneficiaries, Free North Korea Radio and the Coalition for North Korean Women’s Rights were granted $500,000 and $300,000, respectively.

The groups will receive a certain amount of money every month for two to three years in accordance with their performance.

Kang Su-jin, founder and representative of the coalition, said she thinks that the U.S. department aims at nurturing North Korean defectors as future leaders through the direct funding.

An official of the department was quoted as saying on condition of anonymity by Radio Free Asia (RFA) that a total of $3 million has been set aside for the program.

But the official refused to elaborate on grantees, saying the issue was “very sensitive.”

Read the full story here:
NK Defectors’ Groups to Get US Gov’t Aid
Korea Times
Kim Sue-young
2/1/2009

By Michael Rank

LONDON – Britain is hosting the first ever delegation from the Workers’ Party of Korea (WPK) amid hopes that this will help to restart a dialogue between Pyongyang and the European Union on human rights, denuclearisation and other issues and lead to transfers of renewable energy technology to North Korea.

Labour Party member of the European Parliament (MEP) Glyn Ford, one of Europe’s top North Korea experts who has visited Pyongyang a dozen times, told NKEW that he was pressing the delegation to agree to reopen the dialogue that was broken off in 2005 after the EU sponsored a resolution at the United Nations in Geneva that was highly critical of North Korea’s human rights record.

He said it was hard to tell whether the four-member delegation would recommend reopening of the dialogue to decision-makers in Pyongyang. “It’s not the style of North Korea to make decisions on the spot,” Ford noted. He said he personally had opposed the resolution, which was supported by the US and Japan, because it was almost certain to result in suspension of the highly sensitive dialogue which had only just begun.

The four-man delegation is visiting Britain for a week and they are also going to Bristol and Cambridge. Ford accompanied the group to Bristol as this west of England city lies in his Euro-parliamentary constituency, and it is close to the possible site of a giant barrage across the river Severn which is currently being considered as a source of generating green electricity.

He said a deal on the nuclear issue and on reviving the human rights dialogue could result in the EU agreeing to provide wind, tidal and other renewable technology to North Korea, just as the EU has provided €500 million ($640 million) in humanitarian aid over the last eight years.

The delegation includes a scientist with a background in renewable energy, added Ford who has an MSc in marine earth science. He said the west coast of Korea has a tidal range of 11 metres (36 feet), which could make it highly suitable for an electricity-generating barrage. The Severn has a tidal range of 14 metres, the second highest in the world.

Tidal barrages are an attractive means of generating electricity because tides, unlike wind, are highly predictable, but the environmental cost of building a barrage over the Severn, up to 10 miles long, could be huge and there is considerable public opposition to the plan. But such factors are likely to loom less large in North Korea.

Ford said he had met three of the four-man delegation on previous visits to Pyongyang, and that he knew two of them fairly well. He is hoping to visit Pyongyang again with a European Socialist delegation at the end of March.

The group have already had a meeting with Foreign Office officials, who Ford said had presumably also pressed the North Koreans on human rights and the nuclear issue.

Apart from the North Korean visit to the UK, Britain’s Lord Alton, a veteran campaigner for human rights in North Korea, is due to visit Pyongyang early next month. Alton, a devout Catholic, is scheduled  to meet the chairman of Korean Religion Association and visit the Russian Orthodox church and the Jangchung Catholic church in Pyongyang. He will be one of the first Western visitors to the Russian Orthodox church, which opened in 2006 amid considerable official fanfare.

The WPK delegation’s visit to Britain has received little if any media attention so far. In fact hardly anyone would have known about it if the generally extraordinarily uninformative North Korean news agency KCNA had not announced on January 27 that “A delegation of the Workers’ Party of Korea led by Pak Kyong Son, vice department director of its Central Committee, left here today to visit the UK.”

On Friday, the DPRK announced it is rescinding the 1991 Agreement on Reconciliation with South Korea (h/t to Nautilus Institute).  The document is brief—so it is worth a read.

Among all of the stipulations in the document, the media has focused on the appendix in which the DPRK agreed to respect the NLL (the de facto, but disputed, maritime border in the West Sea).  The DPRK’s actions have led some analysts to predict that the DPRK will resort to staging provocations along the border in the near future.

Why the drastic policy change?  Well, we are talking about North Korean policy making here, so in a sense unpredictable changes in foreign policy should be…predictable.

Although the DPRK claims it is taking this action in response to South Korea’s ‘hostile policy,’ (which is what Pyongyang euphemistically calls South Korea’s decision to end unconditional financial and economic subsidies), some have speculated that Pyongyang is experincing a bit of a power struggle.  Others believe the DPRK is merely raising tensions to get the attention of the new Obama administration which has been so busy with domestic issues that it has not yet named a North Korea envoy. If this is merely a play for more financial assistance from both South Korea and the US, then the use of provocative language and tactics is rational on the part of the DPRK as they have generally yielded results in the past.

Of course, as with any sequential game, players do adjust to adversarial strategies.  For now, South Korea is simply ignoring the DPRK’s complaints.  Financial markets also seem unimpressed:

“Market participants are sick and tired of the North’s rah rah … investors remain pretty much unmoved now,” said Y.S. Rhoo, an analyst at Hyundai Securities.

Major ratings agencies said they saw no reason to adjust their view on South Korea following the threats.

And according to Reuters:

Credit ratings agencies played down the impact on South Korea’s ratings of Friday’s threat by North Korea to scrap all key agreements with the South, calling the remarks yet more diplomatic manoeuvring.

“We have tolerance for both positive and negative news flow out of North Korea up to a certain limit,” James McCormack, Head of Asia-Pacific Sovereign Ratings at Fitch Ratings, said by telephone from Hong Kong.

“But I think what we’ve seen today is probably within the tolerance band,” he added.

Kim Eng Tan, a sovereign ratings official at Standard & Poor’s Ratings, also predicted little immediate impact on South Korean ratings from the North Korean remarks.

“Unless things develop to the point where there is a real threat to security or stability on the Korean peninsula, we are unlikely to change our assessment of the South Korean government’s creditworthiness as a result of this declaration,” he said in an email to Reuters.

Fitch has an A-plus sovereign rating on South Korea with a negative outlook while S&P has an A rating with a stable outlook. They have said security concerns regarding North Korea are among the main constraints on South Korean ratings. 

If this is true, then the South Korean government is not under any pressure from financial markets to resolve the situation quickly…which is not good news for the DPRK.  Could it be that the DPRK is now unable to credibly project itself as a threat to the South?  

What an interesting scenario that would be.

See also: DPRK Studies, One Free Korea, and the Economist. 

UPDATE: The full statement in KCNA:

DPRK to Scrap All Points Agreed with S. Korea over Political and Military Issues
 
Pyongyang, January 30 (KCNA) — The Committee for the Peaceful Reunification of Korea issued a statement Friday in connection with the situation on the Korean Peninsula growing tenser as the days go by due to the south Korean conservative authorities’ reckless moves to escalate the confrontation with the DPRK.

Citing facts to prove that the Lee Myung Bak group, far from reflecting on the treacheries of pushing the north-south relations to a serious crisis, shamelessly is challenging the north, raising a hue and cry over the “threat from the north” and “adherence to principle,” the statement said:

The inter-Korean relations have reached such pass that there is neither way to improve them nor hope to bring them on track. The confrontation between the north and the south in the political and military fields has been put to such extremes that the inter-Korean relations have reached the brink of a war.

The group of traitors has already reduced all the agreements reached between the north and the south in the past to dead documents.

Under such situation it is self-evident that there is no need for the DPRK to remain bound to those north-south agreements.

The statement vehemently denounced on behalf of all the Koreans the Lee group for having pushed the inter-Korean relations to the brink of a war through its moves to escalate the confrontation with the DPRK in gross violation of the inter-Korean agreements.

In view of the prevailing situation the statement solemnly clarified as follows:

First, all the agreed points concerning the issue of putting an end to the political and military confrontation between the north and the south will be nullified.

Second, the Agreement on Reconciliation, Non-aggression, Cooperation and Exchange between the North and the South and the points on the military boundary line in the West Sea stipulated in its appendix will be nullified.

Holding the Lee Myung Bak group wholly accountable for the present grave situation to which the inter-Korean relations have been pushed, the statement continued:

Never to be condoned are the crimes the Lee group has committed against the nation and reunification by bedeviling overnight the inter-Korean relations that had favorably developed amidst the support and encouragement of all the Koreans and ruthlessly scrapping the inter-Korean agreements.

The Lee group seems to wait for something, calling for “adhering to the principle” but it will only face a heavier blow and shameful destruction.

Read more on this story below:
North Korea Ramps Up Rhetoric Against Seoul
Wall Street Journal
Evan Ramstad
1/30/2009

North Korea, trying to jolt Obama, warns South
Reuters
Jonathan Thatcher
1/30/2009

North Korea Scrapping Accords With South Korea
New York Times
Choe Sang-hun
1/29/2009

NKorea ditches nonaggression pact with SKorea
AP (Via Washington Post)
Jae-Soon Chang
1/30/2009

Ratings agencies play down North Korea remarks
Reuters
Yoo Choonsik
1/30/2009

Power struggle suspected in N. Korea
Washington Times
Andrew Salmon
1/31/2009

For a good laugh, check out The Onion’s latest (well researched) “story” from North Korea (h/t to Rich at www.Asiabizblog.com for this one).

My favorite line: “The People’s Great and Harmonious Moon Hand of Kim Jong il will be the largest moon hand pedestal ever constructed”

I am told the English subtitles and the Korean voice-over actually come pretty close to matching.

The Onion recently published this piece as well.

The Dialachin Monument (a.k.a. Victory Monument, Derg Monument) was a gift from Pyongyang to Addis Ababa’s Derg regime in the 1970s.

You can see the location of the monument in Wikimapia here.

You can learn more about the Derg here.

See more photos of the monument here.

*This location will be added to the next version of North Korea Uncovered (North Korea Google Earth).  If readers are aware of other construction projects the DPRK has supported, please let me know.  I am especially interested in locating the North Korean restaurants in China, Thailand, Cambodia, Vietnam, and Bangladesh.  Are there others?

Kim Jong Nam, Kim Jong il’s eldest son (and a “nice” guy I am told), has recently been fairly amenable to speaking to foreign journalists—in English—about developments in the DPRK.  He has largely avoided giving much away except that he is not interested in succeeding his father—who is healthy.

Here is a video interview of KJN at Beijing Capital Airport where he boarded another plane to Macau. (Is Air Koryo flying into Beijing’s new terminal?)

Bradley Martin, author of Under the Loving Care of the Fatherly Leader, reports on KJN’s activities in Bloomberg:

Kim Jong Nam, who was wearing large sunglasses and a knit cap, said he was in Macau, Asia’s largest casino destination, for a “holiday trip.” “I never gamble out here,” he said before climbing into a taxi, with no sign of accompanying bodyguards.

At Beijing’s airport earlier in the day, Kim Jong Nam told Asahi Television that he had “no information” on whether Megumi Yokota, a Japanese national abducted by North Korean agents in 1977, might still be alive.

When asked whether he was interested in succeeding his father as North Korea’s leader, Kim said “I am not interested by the issue, sorry.”

Kim Jong Nam went to boarding school in Switzerland (as did his younger brother Kim Jong Chol).  Aside from English, Korean, and French, I would bet he also speaks some German, Mandarin, and Cantonese.  He was also rumored to be the target of an assassination plot in Austria in 2004.  Since my source with Austrian intelligence has gone dormant, I cannot confirm this. 

Read the full article here:
Kim Jong Il Seems Healthy, Eldest Son Tells Fuji News in Macau
Bloomberg
Bradley Martin and Taku Kato
1/27/2009

Council on Foreign Relations
1/28/2009

Download report here (PDF)

Continuing uncertainties about the health of North Korean leader Kim Jong-Il and possible succession arrangements “warrant heightened attention and preparation” by U.S. policymakers, says a new Council on Foreign Relations report. “The risks are too great and the stakes too high” for U.S. policymakers “to rely on last-minute improvisation for a peaceful and stable outcome” in nuclear-armed North Korea, says the report sponsored by CFR’s Center for Preventive Action (CPA).

In preparing for sudden change, the report recommends that the United States “continue to promote behavioral change within the current regime rather than actively seek to overthrow it unless extreme circumstances dictate otherwise.” But it cautions that: “The United States should not support efforts to prop up the current regime beyond the point at which it has clearly ceased to govern effectively.”

The report also warns against “high-handed U.S. action,” advocating that the United States “defer to South Korean wishes and leadership in the management of change in North Korea,” except if “overriding national interests compel unilateral action.” The report was coauthored by CPA Director Paul B. Stares and Joel S. Wit of the Weatherhead East Asia Institute at Columbia University.

The report also stresses that the potential political, economic, security, and humanitarian challenges presented by instability in the Korean Peninsula as a result of sudden change demand U.S. cooperation with the region’s principal powers. “Failure to accommodate [these powers’] national interests… could have profoundly negative consequences for the evolution of Korea, the stability of northeast Asia, and U.S. relations with major allies and other countries in the region,” says the report.

The report, titled Preparing for Sudden Change in North Korea, examines three potential succession scenarios, each of which poses its own set of challenges to U.S. policymakers:

1) Managed succession: the current regime, which has ruled North Korea since 1948, maintains power but under new leadership.

2) Contested succession: different factions vie for power in Pyongyang, resulting in regime change and a new policy direction. “How a power struggle would play out and who the eventual winner or winners might be is obviously impossible to predict, but a prolonged, divisive, and potentially even violent succession struggle is not out of the question,” says the report.

3) Failed succession: changes in North Korean leadership produce no clear and effective national leader, fatally weakening the state’s ability to function and leading to its eventual demise. In this scenario, North Korea’s “rapid absorption by South Korea is widely viewed as the inevitable next step.”

Regardless of how succession transpires, the report offers specific policy recommendations on how the United States can improve its ability to manage sudden change in the peninsula. These include:

1. Enhancing U.S. readiness: “The United States should upgrade its ability to discern and comprehend domestic political, economic, and other developments in North Korea.” For example, the report recommends enhancing U.S. intelligence to take advantage of a variety of new sources of information; establishing broader contacts with Pyongyang during ongoing denuclearization negotiations; and reestablishing the working relationship between the U.S. and North Korean militaries to recover the remains of American soldiers missing or killed in action during the Korean War.

2. Promoting allied coordination and preparedness: “The United States should work closely with South Korea and Japan to improve allied coordination and preparedness for contingencies in North Korea… The current joint military planning between the United States and South Korea needs to be augmented with a coordinated political, diplomatic, economic, and legal strategy to tackle the core issues likely to arise.”

3. Fostering regional transparency and capacity-building: “To reduce the risk of misunderstanding and friction in a crisis involving North Korea, the United States should pursue a quiet dialogue with the People’s Republic of China to discuss issues of mutual concern… The aim of such talks would be not only to raise potential concerns and discuss possible responses but also to minimize misunderstandings that might arise and seriously exacerbate a crisis.” The United States also should open discussions with South Korea and Japan, UN agencies, European counterparts, and nongovernmental organizations.

4. The report concludes: “Improving contingency planning, sharing the results of this planning, improving consultation on the future of the Korean peninsula, and taking concrete steps to build up generic, potentially useful capabilities—though certainly not sufficient in and of themselves to cope with these challenges—will establish a much firmer foundation for the future.”

The report is coauthored by Paul B. Stares, the General John W. Vessey Senior Fellow for Conflict Prevention and Director of the Center for Preventive Action at the Council on Foreign Relations, and Joel S. Wit, Adjunct Senior Research Fellow at the Weatherhead East Asia Institute, Columbia University, and a Visiting Fellow at the U.S.-Korea Institute at the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University.

Download report here (PDF)

UPDATE: Information from the Korea Times:

South Korea and the United States should maintain about 460,000 troops to deal with any unusual situation on the Korean Peninsula that results from internal instability in North Korea, says a new report published by a private U.S. foreign policy organization Wednesday.

The figure represents a three-fold increase in the number of U.S. troops currently deployed to Iraq.

The authors believe Pyongyang possesses six to eight nuclear weapons as well as several ballistic missiles and 4,000 tons of chemical weapons. China might also try to secure the North’s WMDs in the case of an emergency, they forecast.

The South Korea-U.S. Combined Forces Command drew up a conceptual action plan to respond to sudden changes in North Korea, codenamed CONPLAN 5029, in 1999.

The plan includes outlines for joint military responses by South Korean and U.S. troops to various levels of internal turmoil in North Korea, according to sources.

Contingencies include a mass inflow of North Korean refugees, a civil war provoked by a revolt or coup, South Korean hostages being held in the North, and natural disasters such as earthquakes and floods.

The plan also includes measures to prevent Pyongyang’s weapons of mass destruction from being smuggled out of the country, if the regime was involved in a domestic crisis or suddenly collapses.

In 2005, the Roh Moo-hyun administration, which pursued a policy of greater independence from the United States, rejected a U.S. proposal to develop the conceptual plan to an operational plan involving more specific scenarios.

Read the full article here:
‘460,000 Troops Needed to Stabilize NK Collapse’
Korea Times
Jung Sung-ki
1/28/2009

UPDATE 3: February 26, 2009. According to Yonhap:

Prosecutors on Thursday questioned two activists who brought in North Korean bills for their leaflet campaign criticizing North Korea, allegedly in violation of South Korean law.

The South Korean government has not restricted the controversial leaflet campaign, which criticizes North Korean leader Kim Jong-il as “the most vicious dictator and murderer,” saying there was no law to stop it.

But the Unification Ministry requested a probe for the first time last week, after the activists attached North Korean banknotes to their flyers to encourage North Korean citizens to pick them up. 

Bringing North Korean money into South Korea is permitted only for trade purposes or for personal possession. Violations can result in up to three years in jail or 10 million won (US$6,562) in fines, according to the law on inter-Korean exchange and cooperation.

A North Korean defector, Park Sang-hak, and Choi Sung-yong whose fisherman father is allegedly being held in North Korea, flew scores of North Korean banknotes attached to some 20,000 propaganda leaflets toward North Korea via gas-filled balloons on Feb. 16, Kim’s birthday. Most of the flyers never reached the North, however, because of unfavorable winds.

Prosecutors said they questioned the activists about how the North Korean money was brought in. Other details were not available.

“They asked us how we acquired the North Korean bills and how much we have,” Park said. 

UPDATE 2: February 16, 2009.  Kim Jong Il’s official birthday.  The activists called Seoul’s bluff and sent the flyers across the DMZ with DPRK won in tow.  Nothing has happened. Pyongyang has not yet complained in the press (as of 2/24). 

UPDATE: South Korean government declares the use of DPRK won by groups is illegal:

“It is against the law for civic groups to bring in North Korean currency [into the ROK] without Unification Minister authorization and enclose it in leaflets,” ministry spokesman Kim Ho-nyeon said at a news briefing.

“It is the related ministries’ position that such a request for authorization, if it comes, is likely to harm the order of South-North cooperation and thus will not be granted.”

In other words: “You need permission to do this and we will not give it to you.” But according to Yonhap:

Defying the announcement, organizations of North Korean defectors and families of abducted South Koreans vowed to go ahead with a plan to fly a fresh batch of propaganda leaflets across the heavily fortified border in February. They said the new leaflets will be flown with North Korean bills attached to encourage people to pick them up.

If they go through with this plan, the stage will be set for what I assume will be a well-publicized showdown between the police and North Korean defector groups.

ORIGINAL POST:
South Korea-based human rights groups garnered headlines last year by sending hundreds of thousands of leaflets about Kim Jong il’s lifestyle into the DPRK attached to balloons.  (A copy of the leaflet and a rough English explication can be found here).  Not only did these leaflets promt repeated public complaints from Pyongyang, but they were also blamed for the North’s unilateral “renegotiation” of inter-Korean cooperation projects in Kaesong—which reduced cross border civilian traffic to 880—about 20% of the 4,200 licensed to enter the Kaesong Complex.  Of course closing down these projects was also a goal of the human rights groups, so in the end Pyongyang delivered its most vocal critics a double victory: South Korean subsidies to the North via Kaesong have been drastically curtailed and the balloons, which were temporarily suspended, have resumed. 

As an aside, there is evidence that the Kaesong projects were curtailed for other reasons, most notably internal political concerns and/or the politics of North-South relations.  No matter the true cause(s), Pyongyang publicly blamed the leaflets.

Although Pyongyang has discovered it had little political leverage over the supply side of the leaflet market, it retains significant leverage over the demand side.   Quoting from Yonhap:

North Korea is arresting citizens who possess U.S. one dollar bills as a way to crack down on packages of anti-Pyongyang propaganda leaflets sent by South Korean activists that include the currency, an activist here said Wednesday.

The North’s spy agency, the State Security Agency, issued the directive in early November to stop citizens from collecting the leaflets that criticize leader Kim Jong-il and his communist regime, said Park Sang-hak, a North Korean defector and leader of Fighters For Free North Korea in Seoul. 

So now we move to round three.  How will the human rights groups respond?

South Korean activist groups will attach N. Korean currency to anti-Pyongyang leaflets sent into North Korea, replacing US$1 bills, following rumors that citizens found with the notes are punished, an activist said Thursday.

Seoul’s National Intelligence Service confirmed that North Korean authorities arrest and interrogate those who possess U.S. dollars that allegedly came with the leaflets from South Korea. But the spy agency declined to comment on what kind of punishment they face.

To prevent further arrests, Park Sang-hak, a North Korean defector and head of Fighters for Free North Korea in Seoul, said his organization and another activist group will send 5,000 won North Korean notes — the highest denomination in the country — when they fly a fresh batch of balloons into North Korea next month.

The amount is just enough to purchase about 2kg of rice, officials and aid workers say, and is a little more than the average monthly salary for urban workers. A North Korean household needs at least 20,000 won a month to survive, they added.

This is an interesting move as it increases the demand for leaflets in the DPRK in two important ways.  The first, is that low-level workers and cadres will find it much easier to possess and spend DPRK won (compared to $US), particularly in the southern provinces.  Secondly, the DPRK-US$ exchange rate is about W3,000/$1, so the switch represents a 66% increase in purchasing power per collected note! 

Of course this raises the question of where they will get the DPRK won:

Park refused to elaborate on how he acquired the North Korean bills, except to say that they passed through China’s border region with North Korea.

South Koreans can bring North Korean money into the country only for trade purposes and must first receive government approval to do so. Failure to abide by these restrictions can result in three years in jail or a 20 million won (US$15,198) fine. The ministry is reviewing whether the activists’ possession of North Korean bills was legitimate.

But other than creating routine problems for North Korean state security, I am not sure what specific results human rights groups seek from these activities.  North Korea’s information blockade cracked over a decade ago—even in the southern provinces where the balloons drift.  Although people in these areas might possess little positive information about the outside world, they probably have a general sense that the state of global affairs is not as their leaders portray.  So, breaking the information blockade is a necessary but not sufficient condition for social change in the DPRK.  

Unfortunately, the information on the leaflets is predominately non-actionable.  Rather than condemning Kim Jong il’s lifestyle, the leaflets should provide instructions on accessing foreign radio and television broadcasts, tactics for clandestine organization, case studies in successful defection, business and smuggling opportunities, local prices, and even mundane news like sports scores, movie reviews, etc.  This would likely be much more valuable to the North Koreans than political propaganda. 

This is an interesting tactic, however, and I look forward to seeing what the next moves will be from players in both the North and South.

Read the full articles here:
N. Korea arresting carriers of $1 bills to stop anti-Pyongyang leaflets: activist
Yonhap
Kim Hyun
1/7/2009

Activists to send N. Korean currency with anti-Pyongyang leaflets
Yonhap
Kim Hyun
1/8/2009

North Korea cash sent with leaflets illegal: Seoul
Reuters
Jack Kim
1/27/2009

Seoul bars activists from bringing in N. Korean currency
Yonhap
1/28/2009

2008 Working Papers   
 
WPS 08-9: Alliance of “Tooth and Lips” or Marriage of Convenience? The Origins and Development of the Sino-North Korean Alliance, 1946-1958, by Shen Zhi-Hua, traces the development of Sino-North Korean relations and challenges the “tooth and lips” myth often purported as the basis of their alliance.
 
WPS 08-8: Dependence and Mistrust: North Korea’s Relations with Moscow and the Evolution of Juche, by Kathryn Weathersby, Ph.D., discusses North Korea’s diplomatic history with the former Soviet Union and the Soviet Communist Party, identifying key events which catalyzed the deterioration of the Soviet-North Korean alliance.
 
WPS 08-7: Ending the Korean War: Considerations on the Role of History, by Kathryn Weathersby, Ph.D., argues that as the complex task of constructing a peace regime on the Korean peninsula begins, constant confrontation with historical inquiry, which undercuts the natural tendency to simplify and distort the past into national myths that hinder reconciliation, will be necessary.
 
WPS 08-6: Japan and North Korea: The Long and Twisted Path towards Normalcy, by Gavan McCormack, Ph.D., discusses the diplomatic history of North Korea-Japan relations, including the tensions over the issue of Japanese abductees.
 
WPS 08-4: How Korea Could Become a Regional Power in Northeast Asia: Building a Northeast Asian Triad, by Im Hyug Baeg, Ph.D., presents strategies for increasing South Korea’s soft power and smart power around Asia in order to close the power gap with its Northeast Asia neighbors, China and Japan.
 
WPS 08-3: Necessary Enemies: Anti-Americanism, Juche Ideology, and the Tortuous Path to Normalization, by Charles Armstrong, Ph.D., chronicles the development of U.S.-DPRK relations from 1942 to the present, including such contentious issues as the USS Pueblo Incident and North Korea’s nuclear ambitions.
 
WPS 08-2: In Pursuit of Peaceful Development in Northeast Asia: China, the Tumen River Development Project and Sino-Korean Relations, by Carla P. Freeman, Ph.D., examines the changing dynamics of China’s relations with both North and South Korea, as well as with ethnic-Korean populations within China, and the implications of these complex relationships for East Asian regional security and cooperation.
 
WPS 08-1: Korea: An Important Part of India’s Look East Policy, by Walter Andersen, Ph.D., presents a multi-faceted look at growing India-Korea cooperation, including the strengthening of institutional mechanisms for increased trade and investment, and key opportunities and obstacles for increasing strategic cooperation.
 
Find more about USKI’s Working Paper Series here.

From the Daily NK:

A source from Yangkang Province reported on the 27th in a telephone conversation with the Daily NK that, “On the 15th in Woonheung, 8 freight wagons carrying a total of 480 tons of gasoline and diesel overturned at dawn. The National Security Agency and the provincial security agency are examining the causes of the incident.”

In Youngha Workers-gu, which adjoins Baekam where this incident occurred, a train on the Hyesan-Pyongyang line overturned on March 27th, 2008, killing or wounding hundreds.

According to the source, there were 16 casualties, including merchants and an engineer on the freight train. 8 freight wagons completely overturned, causing the spill.

Right after the incident, North Korean authorities mobilized citizens to deal with it and dispatched the NSA to examine the causes.

The source said that, “As the train was going down a slope, a blackout occurred so the brakes did not work. However, the NSA presumes it happened deliberately, because similar incidents have occurred in this region.”

The North Korean authorities have been claiming to citizens that such incidents, which happen every year in Youngha Workers-gu, Woonheung and Baekam in Yangkang Province, are maneuvers by enemies. However, no criminals have been detained.

Thoughts:
1. The DPRK’s railway system is outdated to say the least.  Many of the lines were laid during the Japanese occupation of the peninsula (pre-WWII).  After the Korean war, large sections were reconstructed, but needless to day, for the last 50+ years the system has suffered severe under-investment.  Recently it has been targeted as a major focus of the policy to create a “strong and prosperous nation” by 2012. 

2. We know from multiple tourists that the Pyongyang-Sinuiju line is operational.  We now know that the line from the Russian border to Pyongyang is operational.  Other than these two lines, the functionality of the DPRK’s railway system is largely a mystery to the outside world.

3. The Daily NK also reported a DPRK railway accident in April 2008 (here and here).

4. No word yet on whether the DPRK purchased life insurance for the passengers!

5. An excellent map of the DPRK’s railway system can be downloaded to Google Earth here.

6. You can read past blog posts about the DPRK’s railway system here.

You can read the full Daily NK story here:
Freight Train Overturned in Yangkang, 16 Casualties
Daily NK
Lee Sung Jin
1/27/2009