North Korean Economy Watch

North Korea has requested that the German Red Cross continue providing medical aid beyond ithe 2009 deadline.

The request was made when Rudolf Seiters, president of the German Red Cross, visited Pyongyang on April 22-26 and met with Kim Yong-nam, chairman of the Presidium of the Supreme People’s Assembly to discuss his group’s overrall programs to aid the communist state.

The German group has sent medical kit that includes pain-killers, antibiotics and nutritional injections, as well as medical equipment such as blood pressure cuffs and stethoscopes to some 2,000 local hospitals and clinics across North Korea since April last year. About 8.8 million North Korean residents benefited from the aid, Koch said.

The German government has provided 4 million euros (US$6.2 million) worth of aid to the North every year since 1997, the spokeswoman added.

Read the full article below:
German Red Cross asked to continue helping N.K.: report 
Yonhap
5/1/2008

The Commission on International Religious Freedom has worked actively since its inception to draw the world’s attention to ways that the internationally guaranteed right to freedom of thought, conscience, and religion or belief is consistently—and severely—violated by the North Korean government. The Commission has devoted considerable resources to helping voices that are heard all too rarely—the voices of North Koreans—to reach policymakers far beyond the DPRK’s borders. The reality of life for the people of North Korea can perhaps best be summarized by the words of one former government official, “The only reason the North Korean system…still exists is because of the strict surveillance system… North Korea is a prison without bars.”

Here is their latest publication:
“A Prison Without Bars”: Preface

“A Prison Without Bars” (Complete PDF)

Here is all their North Korea information.

North Korea is intensively planting trees across the country to provide badly needed oil from their berries.

According to Yonhap:

The North, which suffers from a chronic oil shortage, has created Tetradium tree forests covering tens of thousands of hectares in several regions near the western and eastern coasts during the national tree-planting season, according to the North’s Korean Central News Agency (KCNA).

Some provincial administrations have set up offices to help residents properly understand the economic value of the trees and how to grow them, it added.

Fully mature Tetradium trees, also known as Evodia or Bee Bee trees, can each produce 7-10 kilograms of small berries composed of 38 percent oil. North Koreans use the oil, traditionally used as lamp oil, to make cooking oil, drugs and soaps, according to the KCNA.

Read the full article here:
N. Korea planting trees for fruit oil
Yonhap
4/30/2008

The article is badly translated, but [seemingly] according to the People’s Daily (h/t Go East) China is looking to outsource programming/animation services to North Korean workers in Dandong:

The main reason to select Dandong city as the China-North Korea animation game service outsourcing base is aimed to draw North Korea’s animation game talents to Dandong. Xu Aiqiao, chairwoman of the Hangzhou national animation game public service platform limited, said that North Korea has become the global animation industry processing “plant”.

With a total staff of 2,500, the base will not only reduce at least 5,000 yuan per minute for the production costs of animation companies, but inject more energy into the creative plans, original scripts, and other areas of China’s high-end animation talents of the animation game.

Read the full article here:
Hangzhou game service outsourcing base to make up 80 pct of domestic animation production
People’s Daily
4/29/2008

The Daily NK reports that South Korean businesses have delayed moving into the zone, or canceled their plans outright:

78.5 percent of those firms which received lots at the Kaesong Industrial Complex in the second round of the first stage of distribution in June last year have not begun construction of their facilities. 62.4 percent of them have not even hired a firm for construction,” said the Korea Federation of Small and Medium Business (KFSB) in a report released on April 27. For the report, the KFSB selected 85 firms out of all those firms which received lots and conducted a survey on how these firms are preparing their move into the Complex.

Companies distributed with lots in June last year are required to begin construction of their facilities within two years after the initial distribution contract. It is true that these firms have enough time to build their facilities. However, a number of firms have expressed that they would not move into the Complex.

The report says, “13 out of a total of 167 firms have already told the KFSB that they would not move into the Complex, and five of them have canceled the contract.”

59 percent of the firms including those 13 said that they would relinquish their rights to move into the complex because they are unable to raise enough money. 64 percent of these firms said that the reduced government funding has contributed to their financial difficulties.

Read the full article here:
South Korean Firms Postpone Their Move into the Kaesong Industrial Complex
Daily NK
Choi Choel Hee
4/28/2008

Why is this topic being discussed on North Korean Economy Watch?

Well, economics is often accused of being an “imperial” science by other disciplines because, broadly defined, economics looks at human choice and the constraints, trade-offs, and incentives under which these choices are made.  This broad definition irritates sociologists, anthropologists, and political scientists because economists are always moving in to explain social phenomenon on their “turf.”  In this light, though, economics does have something to say about sexual social norms because they play a significant role in a significant number of every-day choices that people make, particularly in what are traditionally considered “economic choices”…even in North Korea.

On to the topic…
One would think that in North Korea—where personal associations and loyalties are particularly important and highly regulated—that non-marital sexual encounters would be highly suspicious and discouraged, but a recent article in Radio Free Asia makes the opposite claim:

[W]hen it comes to the privacy of the bedroom, even the all-powerful North Korean Workers’ Party is largely hands-off, according to North Korean defectors.

Intellectuals and artists in the Workers’ Paradise have long espoused a fairly open and liberal set of views around sexual relationships, according to former North Korean artist and defector Lee Yoon Jeong, despite a widespread lack of sex education for young people.

Apparently, pre-, extra-, and post- marital sex is so common that even the Workers Party doesn’t ban it:

Lee said high divorce rates, and the tendency for Party officials to have mistresses and extra-marital affairs, meant that the Party was reticent about dictating to the people about their love lives.

“The Workers’ Party is truly in no position to regulate relationships between men and women,” she told reporter Jinhee Bonny. “The authorities may control everything, but they could never dictate matters of love between North Korean men and women.”

The artcle also makes the claim that prostitution is fairly common now and that illegal abortions are taking place.  If this is the case, then North Korea is only the second communist country I am aware of where abortion is/was technically illegal (the other being Ceauceascu’s Romania).  Does anyone know any differently?

Read the full article here:

Love and Sex in North Korea
Radio Free Asia
Jinhee Bonny
4/18/2008

Summary by James Person, North Korea International Documentation Project:

This Document (full journal article including documents here) consists of a memorandum of a conversation between DPRK Ambassador Li Sangjo to Moscow and Soviet Deputy Minister of Foreign Affairs N.T. Fedorenko, as well as a letter addressed to N.S. Khrushchev. Li sought a meeting with either Khrushchev or A.I. Mikoyan to press upon the Soviet leadership the gravity of the situation inside the DPRK and KWP CC following the historic 1956 August Plenum.
 
In the letter, Li described in detail the actions of the party leadership after being criticized both before and during the August Plenum by opponents to Kim Il Sung’s development strategies. Although the existing historiography, as well as North Korean propaganda characterizes the events of August 1956 as an attempted coup, Li suggested that the challenge was a democratic one aimed at eliminating the serious consequences of the personality cult and ensuring intra-party democracy and collective leadership, completely in accordance with the statutes of the KWP accepted at the Third Party Congress in April 1956. However, sycophantic and hostile elements in the party leadership “took revenge” on those who “courageously” criticized them. Li, who had long been a proponent of outside intervention, encouraged fraternal assistance. Despite the failure of earlier attempts to press upon Kim Il Sung the need to reform through comradely criticism by fraternal leaders, Li asked that a senior Soviet official be sent to Pyongyang to call a new plenum with all present, including the purged members of what became known as the “consumer goods group.” Li also indicated that he had sent a similar request to Mao Zedong.

Read the documents from the Soviet archives, including historical context here.

UPDATE: You Tube has video footage of the Pyongyang leg of the Olympic torch relay taken from foreign news sources.  Judging from the videos, it looks like the ceremony kicked off at the Tower of the Juche Idea, and Pak Do ik was the first relay runner.

Here is coverage on CNN  (the announcers make at least two mistakes.  They identify the paper flowers people are waiving as Kimjongilia, and they call Kim Jong Il North Korea’s “President”– let’s get with the program people).

Here is coverage on Russian Television.

Here is more extensive print coverage from the AP.

I still have not managed to find the entire olympic torch route in Pyongyang or official DPRK coverage of the event.  If you find this information, please let me know.

ORIGINAL POST:   

North Korea’s most famous footballer (domestically), Pak Do ik, will be carrying the Olympic torch (for the first time ever) through Pyongyang:

Pak was introduced to modern western audiences through his appearance in the documentary The Game of Their Lives, released in 2002.  He scored the winning goal against Italy in the 1966 World Cup allowing the DPRK to enter the quarter finals (where the the DPRK lost to Portugal after being up 3-0 early on).

80 individuals were selected for the torch relay, and most are DPRK citizens with significant athletic accomplishments under their belts–such as Jong Song-ok, who won the 1999 World Athletics Championship. The remainder of the runners are officials with the International Olympic Committee, the Chinese Embassy in Pyongyang, representatives of Chinese residents in North Korea and major sponsors of the torch relay.

It also looks like the torch might cross the DMZ: 

The torch is set to pass from South Korea to North Korea in the early hours of April 28 before heading to Vietnam that evening aboard a flight.

The 20-kilometer (12.4-mile) section linking Juche Tower to Kim Il Sung Stadium, both major landmarks in Pyongyang, was chosen for the event, it said.

It indicated Pyongyang citizens will be mobilized to stand along the street while the torch passes, by saying, “A large welcoming crowd will cheer for the torch runners.” (Joong Ang Daily)

UPDATE: According to Yohnap, the torch will be flown from Seoul to Pyongyang.  

Read the full article here:
Athletes selected to carry the torch in North Korea 
Joong Ang Daily
4/21/2008

N.K. preparations for torch relay almost complete: KCNA
Yohnap
4/23/2008

On April 23, the Korea Institute for International Economic Policy (KIEP)hosted, “The Lee Myung-Bak Administration’s Policy toward North Korea: Denuclearization or Disengagement.”  In this seminar they essentially answered this question with a ‘yes’.

According to the Daily NK coverage of the event:

[Dong Yong Seung, the Chief of the Security and Economics Department of the Samsung Economic Research Institute stated,] “While economic exchange between North Korea and China has been business-to-business, in the case of Kaesong, the exchange has been controlled from a single control tower, the North Korean regime. That is, the condition has been set up for government-to-government economic exchange to facilitate North Korean government’s planned economy. Economic cooperation in the style of South Korea’s has been obstructing North Korea’s rational transformation.”

In a sense, he is arguing that South Korea’s support for the Kaesong Zone yields results more similar to foreign aid than private economic exchange.  If this is the case, South Korea, and just about everyone else, could learn from China’s strategy for investing in North Korea.

As Judge Posner put it:

All the problems that foreign aid seeks to alleviate are within the power of the recipient countries to solve if they adopt sensible policies. If they do not adopt such policies, then foreign aid is likely to be stolen by the ruling elite, strengthening its hold over the country, or otherwise squandered. What we can do for poor countries is reduce tariff barriers to their exports. With money saved from eliminating foreign aid, we could compensate our industries that would be hurt by import competition from poor countries and thus reduce political opposition to tariff reform.

According to the Daily NK, many mid-level civil servants who used to receive enough rations to live on have now resorted to trading in the markets with the civilians.

“Since April, the government has only been giving out provisions to the head of each department of the People’s Safety Agency in Hyesan, Yangkang Province. As for the remaining staff, only 15-days worth of one-serving provisions have been supplied. The discontent among the agents of the People’s Safety Agency over the discrimination is quite significant.”

“With conditions worstening, those who have not been engaging in sales until now—the Provincial People’s Committee or the Municipal Committee leaders and average schoolteachers, doctors and their families—have been coming out to the alleyway markets. They do not even have a street-stand in a jangmadang, so they sit illegally in the alleyways, but the People’s Safety agents in charge of regulating the jangmadang have been reluctant to take action against them because they know who these people are.”

Is anyone starving?  Thankfully, it seems not yet..

In response to the question as to whether people have begun to starve to death as a result of the food shortage, the sources confirmed, “We have not reached that point yet.”

Our contact in Yangkang Province said, “During the ‘March of Starvation’, we did not even have brewers’ grains to eat, but now, people feed that to the pigs. It is true that living conditions have become a bit more difficult with the rise in food prices, but it has not reached the point of starvation.”

The Hoiryeong source also said, “With the significant rise in food price, the quality and the amount of rice have fallen quite a bit, but people have not been starving for days at a time. People who previously consumed only rice are now mixing rice and corn 50/50, and those in more dire situations eat 30/70 or 20/80.”  

The food situation in Ryanggang is probably better then most of the country on average due to its proximity to the Chinese border.

The full story can be read here:
The Price of Rice Has Risen, But Not to the Point of Starvation
Daily NK
4/22/2008
Lee Sung Jin