North Korean Economy Watch

Kyodo News
4/20/2007

About 16 million children and adults have been immunized against measles in North Korea in one of the fastest responses to a major outbreak of the disease, it was revealed Friday.

The mass vaccination was organized by the U.N. Children’s Fund, the World Health Organization, the International Federation of the Red Cross and Red Crescent Societies and North Korea after the government asked for help in February.

According to the international organizations, the immunization campaign was done in two phases, with 6 million children aged 6 months to 15 years vaccinated last month and 10 million people aged 16 to 45 years immunized earlier this month.

The campaign was arranged following the appearance of several cases of measles in North Korea last November. By February this year two adults and two children had died and more than 3,600 had been infected.

Measles had not been reported in North Korea before this outbreak since 1992, according to a joint press release from the international organizations involved, and many health workers in the country were unfamiliar with the disease.

“This was a remarkable example of good cooperation between different organizations,” said Jaap Timmer, the International Federation’s head of delegation in North Korea.

“The Red Cross mobilized more than 15,000 of its volunteers to visit families and explain the importance and benefits of the vaccination campaign.”

Measles is spread by contact with fluid from an infected person’s nose or mouth and is highly contagious. Symptoms include fever and a rash.

Sending vaccines and syringes to North Korea cost about $6 million, the press release said.

Asia Times
Robert Neff
4/20/2007

Many small countries in the world have resorted to unorthodox methods of obtaining much-needed currency. Although these methods may be legal, they often assist unscrupulous individuals and governments in conducting illegal activities. One popular method of obtaining cash is through flags of convenience (FOC). Countries, even land-locked ones, register other nations’ ships under their flag for a price.

It is a profitable industry that has no shortage of customers. Shipowners choose to register their ships under a foreign flag for a number of reasons, including tax advantages, cheap non-union crews, the ships’ conditions fail to meet the standards of the owner’s country, political reasons, or to facilitate illegal activities.

Because many of these ships often exchange flags and even their names, it is difficult to trace them, thus providing the anonymity they need to conduct their illegal operations. According to a statement by David Cockroft, general secretary of the International Transport Workers’ Federation (ITF): “Arms smuggling, the ability to conceal large sums of money, trafficking in goods and people and other illegal activities can also thrive in the unregulated havens which the flag of convenience system provides.”

Flying the Cambodian flag
One of the most notorious FOC countries was Cambodia. In 1994, Cambodia established its own ship registry – Cambodian Shipping Corporation (CSC), based in Singapore – and began immediately flagging ships of other nations.

Although its beginnings were modest (only 16 foreign ships registered with Cambodia during the first year) the CSC rapidly expanded. According to CSC, prior to its closing in 2002, the number of ships registered with the company was between 400 and 600, but according to US investigators and Cambodian officials the number was probably twice that.

CSC offered basically what many other FOC countries offered: registry for any ship, no questions asked, under its (Cambodia’s) flag for a low price. But, unlike other FOC countries, it offered to do the entire process online and within 24 hours. Despite Cambodia’s relative lag in Internet technology, its operation in Singapore enabled CSC to pioneer online registration.

As more and more foreign ships registered with CSC, it soon became apparent that a large number of the ships were involved in illegal activities. Cigarette smuggling operations were discovered near Crete and Albania; during the oil embargo of Iraq, oil was smuggled out of that country; human trafficking and prostitution operations were discovered near Japan and Crete, and, of course, drug trafficking.

All of these activities were cause for concern and drew condemnation, but there was one more criminal activity that concerned many nations even more: allegations that many of the ships were running arms. “Cambodia is one of the highest-risk flags. It is particularly murky and has got to be one of the first choices if you are running arms,” a spokesman for ITF said.

When asked about CSC’s alleged illegal operations, Ahamd Yahya of the Cambodian Ministry of Public Works and Transport was reported to have told Fairplay: “We don’t know or care who owns the ships or whether they’re doing ‘white’ or ‘black’ business … it is not our concern.” (Fairplay, October 12, 2000.)

Unsafe ships
In addition to illicit activities, the condition of the ships themselves was a concern. According to an article in the Guardian of London, by 2002 the company had about 450 registered ships, and out of this number 25 had suffered shipwrecks/strandings, 41 collisions, nine fires and 45 arrests. Nine  ś% ¬’n-registered ships were deemed severely hazardous and banned from entering European ports.

By the summer of 2002, many of the leading shipping organizations were calling for action to be taken against CSC. A spokesman for ITF condemned CSC and Lloyds shipping intelligence service wrote in an opinion piece: “The world should join us in demanding that Cambodia shut down this sleazy and pestilent offshore registration. How many more people have to die in incidents involving Cambodian-flagged vessels, or its ships detained for illegal activities, before something is actually done about it?”

The North Korean connection
American and South Korean interests in CSC were aroused when it was observed that a large number of North Korean ships, at least a dozen according to Michael Richardson, journalist and author of A Time Bomb for Global Trade, were registered with CSC and flying the Cambodian flag.

It is no secret that the Cambodian royal family had, and still maintains, a close relationship with the North Korean regime. King Norodom Sihamoni has often spoken of the Kim regime in a favorable manner. Kim Il-sung provided him with asylum during the turbulent years of Cambodia’s past and even built him an extensive 60-room palace outside Pyongyang. When the royal family returned to Cambodia it was accompanied by North Korean diplomats and bodyguards.

North Korea’s involvement in Cambodia’s flag of convenience operation was suspected after an investigation revealed that one of the primary partners in CSC was Lim In-yong, a senior North Korean diplomat who had served in Cambodia for many years. His role with CSC was described as being that of “a private citizen, [and] not as a representative of the North Korean government”. Whether his role was purely that of an individual or of a more sinister nature is unclear. But the United States and several other countries became increasingly suspicious of North Korea and the company’s motives.

Among several charges of illegal operations by North Korean ships, one was drug smuggling. When it was suggested in the media that Cambodian-registered North Korean ships may have been involved in drug smuggling, CSC denied any knowledge.

Incidents of drug smuggling involving ships from other nations flagged by the company were apparent. In 2002, the Greek-owned, but Cambodian-registered Winner was seized by French forces and discovered to be smuggling a large amount of cocaine. Interestingly enough, Hun Sen, the prime minister of Cambodia, gave his permission to the French government to board the ship – an indication that he did not support CSC. A short time later he revoked CSC’s authority to grant registry to foreign ships.

Perhaps the most infamous North Korean drug smuggling operation took place in 2003. The North Korean freighter Pong-su began its journey from North Korea under its own flag, but on arriving in Singapore changed its registration and reflagged under Tuvulu. It then proceeded to Australia where it was discovered trying to smuggle in a large amount of heroin, and was eventually seized after it tried to resist Australian authorities. Although this incident did not involve a Cambodian-flagged ship, it does give some credence to speculation that North Korea had smuggled drugs using CSC-flagged ships.

Weapons smuggling
While North Korea’s attempts to gain badly needed hard currency by smuggling drugs and tobacco were of some concern to the United States, more important were allegations that North Korea was smuggling and selling advanced weapons technology to other nations.

“Of most concern to the US and indeed to South Korea was the clear evidence that North Korean freighters flying the Cambodian flag or on the Cambodian register were moving ballistic missiles to clients in the Middle East and Africa,” noted journalist Richardson.

Perhaps the best-known of these Cambodian-registered North Korean ships was the Song Sang. In November 2002, a freighter believed to be carrying weapons departed a North Korean port and was tracked by American satellites and American naval ships. In December, as it made its way through the Indian Ocean, it was stopped by American and Spanish naval forces and inspected.

The United States justified its actions by claiming that it was flying no flag and thus was considered a pirate ship. According to Richard Boucher, the State Department’s spokesman, “At first we couldn’t verify the nationality of the ship because the ship’s name and the indications on the hull and the funnel were obscured. It was flying no flag.”

On investigation it was found that the ship was the So San, which claimed to have Cambodian registry. The So San’s manifest stated it was transporting cement to Yemen, but an examination revealed 15 Scud missiles with 15 conventional warheads, 23 tanks of nitric acid rocket propellant and 85 drums of unidentified chemicals all hidden beneath the bags of cement.

It is believed that the North Koreans tried to disguise the ship (Song Sang) by painting over the last two letters in the first name and the final letter in the second name (So San) to help prevent identification. The ship was eventually allowed to continue on its course after it was determined that it had broken no laws.

World criticism
Following the World Trade Center and other terrorist attacks, world opinion began to force the Cambodian government to reconsider its policy of allowing CSC to flag ships at will. The Cambodian government felt compelled to take action before one of the ships under its flag was found guilty of terrorist activity.

“We are victims because the company recklessly allows ships to use the Cambodian flag without proper inspection or control,” said Hor Namhong, the foreign minister, adding: “The company will be audited by the government.”

In July 2002, bowing to international criticism over concern for “Cambodia’s maritime safety record”, the Cambodian government revoked CSC’s authority to grant registrations, giving that authority to the Ministry of Public Works and Transportation. Ironically, it was this ministry that had just two years earlier declared disinterest into the alleged illegal activities of ships registered under its flag.

The Ministry of Public Works and Transportation was only in control of the registry for about six months before the Cambodian government granted the authority to register and flag ships to a new company, International Ship Registry of Cambodia, and its representatives in Busan, South Korea. According to e-mail correspondence from the company’s managing director, Charles Bach, to New York Times reporter Keith Bradsher, there are no longer any North Korean ships registered under the Cambodian flag.

But Marcus Hand, the Asian editor for Lloyd’s List, explained how difficult it is to know for certain who owns what ship because so many of them are owned by different companies registered throughout the world and only the North Koreans themselves know how many ships they own and what flag they fly.

Not only does North Korea purchase flags of convenience, it also sells them for nearly three times the normal asking price. According to ITF in 2006, out of 408 North Korean-flagged ships, only 187 of them were actually owned by North Korea; the rest were owned by other nations including Cambodia, Tonga, Comoros and Sao Tome and Principe – nations that are infamous for their own flags of convenience.

Prior to the United Nations Security Council’s resolution following North Korea’s nuclear test in October 2006, some of the ships registered to North Korea may have done so to avoid inspection while they carried out illegal activities.

There is some question as to the number of ships that were owned by United States-based companies and registered and flagged under North Korea. According to the American Central Intelligence Agency’s Fact Book, there were three, but Bill Gertz, in an article published with The Washington Times (June 8, 2006), listed nine ships owned by foreign companies, such as Egypt and Syria, based in Delaware, United States. One of these ships was discovered in March 2006 engaged in smuggling migrants off the coast of Europe. Under sanctions that went into effect in May 2006, the companies were required to cancel their registrations with North Korea and seek new registrations with other countries.

The new threat
With the CSC no longer able to grant registrations and Cambodia and South Korea’s progressively warmer relationship, North Korea has been forced to look elsewhere to register its ships. According to The Straits Times, at least 40 nations in the world engage in flags of convenience; many of them willing to flag North Korean ships for a price. North Korea does business with several of them, but a surprising replacement for Cambodia has apparently been found – Mongolia, a land-locked nation.

However, following North Korea’s nuclear test in October of last year, Mongolia’s Ship Registry has urged ships under its flag to abide by the United Nations resolution against North Korea. It is unclear what effect this has had on North Korean ships registered with Mongolia.

In addition to the North Korean threat of nuclear weapons, it has been speculated that North Korea may have the ability to launch modified missiles from its submarines and cargo ships. North Korean-flagged ships would be more susceptible to being stopped and searched by United Nations forces, but ships under FOC might pass unnoticed through surveillance and pose a significant threat to the enemies of the Pyongyang government and to the reputations of the governments which flagged them.

Daily NK
Yang Jung A
4/19/2007

North Korea does not have a sex problem = North Korea, until 1980s, was not open about sex. A conservative aspect remained in their consciousness and under the socialist setup that emphasized rules, the problem of sex was not an important topic in everyday life. But recently, with exposure to much information from the outside world, a freer atmosphere regarding the issue of sex has been forming. However, North Korean women cannot be free in the midst of sex-related violence.

Ahn Mi Ran said women who go around the provinces alone for trade become targets of men’s sex crimes as well.

-Interviewees

Kim Young Soon (23)—defected in 2003, withdrew from Pyongyang High-Tech University
Ahn Mi Ran (43) – defected in 2003, born in Hoiryeong, North Hamkyung, escaped organ sales
Che Kyung Ja (35)—defected in 1997, born in Hamheung, South Hamkyung, married Korean-Chinese husband
Lee Eun Hee (39)-defected in 2000, born in Shinuiju North Pyongan, worked as a “runner” (broker)
Kang Soon Nhuh (40) – defected in 2002, born in Hyesan Yangkang, escaped organ sales

”One woman I knew worked as a runner from Pyongyang to Hamheung. According to her, women who ride trains experience a lot of incidents. Trains stop often and become delayed, so women frequently stay on the trains until the middle of the night, but there are no electric lights. So men come up to women who are around 50 years old and grope their bodies. When this became chronic, women just accepted this as how things were. When she told her husband, he told her to stop immediately, but there was no way to live if she did not trade, so she still runs. Women who run have to prepare themselves for such incidents.”

Particularly, if these problems become publicly known, it impacts the women’s entrance to the Labor Party. Kang Soon Nyuh explained, “If women become admitted, they can become big leaders, so there are a lot of women who want to enter. If women stay at home, they get entangled with the Union of Democratic Women, which is exhausting. But they do not touch women who are admitted to the party for the most part.”

”But women, upon entrance, have to submit their bodies to the leaders. If women are admitted, it automatically means these women have undergone such incidences. After returning from the Army, they become automatically admitted. This is standard. It has become such a prevalent incidence, that anybody will acknowledge this.”

In North Korea, sex trade is prohibited in principle, but after the severe food shortage in mid-1990s, this practice has seriously spread, centering on stations in big cities. Prostitution can be the utmost survival method that women can select.

Lee Eun Hee said, “If you go to the Pyongyang station, old women will approach men and ask if they will not take up standby lodging. Standby lodging, in one word, means
homestay. Men, if they are interested, will point to a woman standing on the platform and inform, “this one for 10,000 won and that one for 25,000 won. Women are not gathered in one place, but stand scattered between people. The price is based on appearance and age, in that order. If the man selects a woman, they go together.”

She added, “Among these women, vagabonds are included. In the starvation period, there were news that female college students would go out to the streets to sell themselves.”

Additionally, secondary problems resulting from improper teaching of sex education is not insignificant. North Korean teenagers are hardly receiving what can be called, “sex education.” Female students are taught in applied subjects about women’s hygiene, health, and raising a baby, but male-female relationships are not taught.

Kim Young Soon heard a college friend’s petition one day, “Comrade, can you help me get rid of a baby?” In a North Korean college, if the pregnancy is revealed, the student is kicked out of school. But Ms. Kim did not know what to do because she had not yet received such an education.

“Chosun women have not received education even once since their birth. There are no contraceptives and they have not even heard of a condom. I went to the neighborhood clinic and gave the doctor the value of a cigarette and pleaded. Finally, I was referred to an obstetrician at the district’s hospital. But even there, you have to give money under the table to the doctor. Hospitals do not even give food, so we had to bring rice ourselves. After paying 30,000 won, my friend was able to safely undergo the surgery.”

“The doctor said many women receive such surgeries. But some women do not even have money and are ashamed, so they do not go the hospital but damage their bodies while using folk remedies. Chosun women do not have such an education, so they hear from their mothers to drink eggs diluted in vinegar or to fall from a precipice to abort the baby. The doctor said never to try such means, because of the damage to the body. But even at the hospital, you have to give adequate money to receive comfortable treatment.”

Daily NK
Yang Jung A
4/19/2007

Daily NK, through in-depth interviews with five female defectors residing in China, got a glimpse of the lives of North Korean women. These are women who defected as early as 10 years ago and as late as the end of last year.

From 1997 to 2006, a 10-year range, these women who crossed the Tumen River testified that “in Chosun (North Korea), women’s lives have been completely broken down.”

Despite the fact that women lead the significant economic role of overseeing over 90 percent of the family’s livelihood, they have to suffer unfair treatment in the family. But since year 2000, women’s lives have undergone many partial changes.

Interviewees

– Kim Young Soon (23)—defected in 2003, withdrew from Pyongyang High-Tech University
– Ahn Mi Ran (43) – defected in 2003, born in Hoiryeong, North Hamkyung, escaped organ sales
– Che Kyung Ja (35)—defected in 1997, born in Hamheung, South Hamkyung, married Korean-Chinese husband
– Lee Eun Hee (39)-defected in 2000, born in Shinuiju North Pyongan, worked as a “runner” (broker)
– Kang Soon Nhuh (40) – defected in 2002, born in Hyesan Yangkang, escaped organ sales

◆ Money decides the lives of North Korean women = The standard that classifies the quality of women’s lives in North Korea is of course money. Even though North Korea is a figurehead “socialist country,” the widening income gap between each citizen strips away such an appearance.

If the Party and the high-ranked military leaders who receive a generous provision from the North Korean administration or the up and coming wealthy people, who were able to increase their money through trade, belonged to the upper class, a majority of citizens who depend on provisions or small-scale jangmadang (market) sales are in a situation of having to be content with three meals.

Kim Young Soon, who was exposed to many friends with upper-class parents at Pyongyang High-Tech University, said, “There was a daughter of the Party’s high-ranked leader in our class who, before coming to our school, was isolated from regular people and did not know the reality of North Korea very well. She thought most people lived like her.”

The daily life of North Korea’s high-ranked, which Ms. Kim relayed, is entirely different from the reality we know. She inserted, “On one hand, I was angry, but amazed, too. In North Korea, the difference between standards of living is bigger than gender discrimination. I cried a lot during my college years.”

”That friend thought everything was according to what she knew, so she would say whatever she wanted to say without reservation. When she went home, she mixed honey, milk powder, and egg yolk to massage her face. She told us stories which were hard for me to understand, such as daily applying a face whitening cream which cost 6,000 won each.”

”Every Sunday, she would go to a private house with her mother and receive facial massage, a rubdown, and a straight perm. She said that she would eat strawberries in the middle of winter and keep ice cream bought from the foreign market in the refrigerator so she could eat it whenever she wanted. She also told us to eat pig feet to soften the skin. (Laughter) From umbrellas to boots to clothes, she used all foreign goods. She bragged that her mother bought a Korea-made mixer. Before, Japanese-made products were used a lot, but now, they use a lot of Korean-made goods, too.”

The standard of living of North Korean upper-class female students, which she relayed, was an extent even shocking to the reporter. “The children of the leaders even get double eye-lid surgery and nose jobs and braces for their teeth. They use all Korea-made make-up. They do not tell us where they got these goods, but I heard in passing that they purchase them illegally. If you use good make-up, your face definitely becomes prettier. Among these students, there was even the unwritten law that they not use products below a certain price.”

She said that upper-class students are not content with their current wealth and fervently hunt for a husband in order to participate in an even higher economic rank.

“Men who pursued them were sons of foreign exchange stores or university chancellors. They showed me the presents that these men gave, such as leather-bound books and dolls. I asked, “you must be so happy,” to which she replied, “I want to live with a man who is better-off than me.” I asked further, “is this not sufficient to marry him?” and she said, “at this level, I am bound to envy those who are wealthier. I came to college so that I can marry better with my diploma. I want to live abroad.”

Compared to that, school life for Ms. Kim, whose parents farmed in the countryside, were tear-filled. She told us, “My parents would send 40,000 won each time from the village, but after paying for books and school fees and meals, I would run out of money. College students cannot think about earning money, because they are restrained by a fixed schedule. However I ended up splitting the money that my parents sent, I could not help but spend it.”

”In college, it was most difficult because of socks. Female students had to wear skirts, but each pair of stocking cost 2,000 won. Even if there are holes, I could not conceive buying a new one, so I wore it stitched up or turned inside out. For shoes, I wore pitiful ones from China and even recycled that. I like ice-cream, but because expensive ice-cream is sweet and makes you want to eat it over and over, I would buy 50 won ones that had saccharine added to ice when I had a craving.”

Of these factors, the thing that was most unbearable for her was not ability or performance but the climate of North Korean colleges that one can only earn recognition with money and power. “When exam period came, I studied to death to earn a perfect score. But the daughter of a Party’s leader had a mediocre result on the test, but would receive a perfect score after offering a bribe worth a pack of cigarettes. I could not stand it,” she expressed with vexation.

On one hand, Lee Eun Hee, who said she visited Pyongyang many times to do business, explained, “Pyongyang does not just have well-to-do people. The wealthiness of the Party area where party leaders live is a well-known fact, but in the neighborhoods of Sunkyogu or Daesunggu which are made up of single-story houses, most people get by from what they make daily.”

Ms. Lee equivocated, “In one of the families I knew, the husband was not working while trying to find a job and the wife was in charge of the home. They could not even receive provisions, so they tried to sustain their livelihoods through jangmadang sales, but it was difficult to even earn 3000 won per day. They had one rice meal a day and the rest, noodles. In that neighborhood, everyone’s situation was about the same, so not even a single family had color TV. Our youngest daughter was in the 3rd grade in high school and always chanted words of hunger. Her father cooked the remainder of the dog meat that the next door neighbor left behind and when I saw them devouring that…”

Kim Young Soon, who went to help out at a farm in the Yellow Sea region during college, gave all her clothes upon seeing the miserable situation in the country. “They lived in dilapidated shacks eating corn soup. I closed my eyes seeing people live this way in a region that is famous for being the production center for rice. After farming, all provisions would run out after a month or two due to material costs and military rations. They could not even go to trade anywhere and had to live in starvation.”

Because it is such an extremely poor environment, women’s lives cannot even be talked about. “People in the countryside do not even know the word shampoo. When we washed our hair, they would ask us what it is. Because soap is expensive, they would pour lye into sardine oil to make their own soap. When you do laundry with that, your entire clothes smell like sardines. They wash their face with that kind of soap.”

Ms. Kim said regretfully, “On the other hand, friends who live well use shampoo-and- conditioner-in-one which is made in Japan. Nowadays, they say they usually use Korean shampoo. If they wash hair with that, the scent lasts long…” (continued)

Yonhap
4/19/2007

South and North Korea on Thursday discussed a range of economic issues, including food aid, at a belated session of talks after the North withdrew preconditions for the formal opening, pool reports said.

But the plenary session, which took place about eight hours later than scheduled, did not appear to go smoothly as Chu Dong-chan, chief of the North Korean delegation, left the conference room, slamming the door shut behind him, just half an hour after the start of the meeting.

“Both sides delivered their position to each other during the meeting. We have to be engaged in further discussion, but the situation is not that good,” Chin Dong-soo, chief of the South Korean delegation, was quoted as saying by reports from Pyongyang, the venue of the talks.

The session was supposed to be held at 10 a.m., but failed to materialize because the North abruptly demanded to exchange keynote speech texts prior to the meeting.

The North also called for seeing a draft of a written agreement on the South’s provision of rice aid, as well as a draft of the joint press statement to be issued at the end of the four-day talks.

But the South rejected all of the requests, calling them “unprecedented” and “unproductive.”

Instead, they started the closed-door plenary session at 5:30 p.m., and the keynote speech texts were exchanged just before the session in the same manner as in previous meetings, a South Korean delegate was quoted as saying.

“Let’s work hard together and come up with good results for the Korean people,” Chu said in his opening remarks.

Chin echoed his view, saying, “Let’s pool efforts to make the talks benefit us mutually and become a stepping-stone on the path of joint prosperity.” The South is scheduled to hold a press briefing in Pyongyang to explain what they discussed during the meeting later Thursday.

South Korea was to call upon North Korea to fulfill its promise to shut down its main nuclear reactor at the earliest possible time.

According to South Korea’s keynote speech text obtained by pool reporters, Vice Finance Minister Chin was to call for the North’s immediate action on the denuclearization process.

“The quick implementation of the Feb. 13 agreement is a shortcut to draw firm international support for inter-Korean economic cooperation,” the text said.

South Korea was also to propose to conduct test runs of reconnected cross-border railways sometime in May, according to the reports. The two sides are scheduled to hold a series of negotiations until Saturday, the last day of the four-day meeting.

“The overland transportation of economic cooperation goods will be offered in consideration of the high cost of logistics from maritime transportation,” a South Korean delegate said, asking to remain anonymous.

The two Koreas will also address the North’s request for 400,000 tons of rice in the form of a loan. South Korea is likely to accept the request unless the situation surrounding the North’s nuclear reactor shutdown gets worse.

Shortly after the North conducted missile tests in July, the South suspended food and fertilizer aid. But fertilizer aid was resumed in late March, a few weeks after the two sides agreed to repair their strained ties.

The inter-Korean dialogue came just days after the communist nation failed to meet a Saturday deadline to shut down and seal its nuclear facilities under a landmark six-nation agreement signed in Beijing in February.

Last Friday, North Korea said it would take first steps toward nuclear dismantlement as soon as it confirms the release of its funds frozen in a Macau bank since September 2005.

Macau’s financial authorities unblocked the North’s US$25 million in the Banco Delta Asia, but the deadline passed with no word from the North on whether it has confirmed the release of the funds or when it will start implementing the initial steps.

In the February accord, North Korea pledged to shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, North Korea would receive aid equal to 50,000 tons of heavy fuel oil from South Korea.

The U.S. promised to resolve the financial issue within 30 days, but it failed to do so because of technical complications.

Meanwhile, during a luncheon meeting with South Korean delegates, Chu flatly denied that North Korea is considering sending back the USS Pueblo to the United States.

“Return? Why do we return such an important thing?” Chu said when asked about press reports on the possible repatriation of the warship.

The USS Pueblo, docked on the bank of the Taedong River in Pyongyang, is used to stoke anti-American feeling among the North Korean public. It was seized on an intelligence-gathering mission off North Korea’s east coast in 1968.

On Wednesday, U.S. Republican Sen. Wayne Allard introduced a resolution demanding that North Korea return the Pueblo in exchange for a Korean battle flag captured in the 19th century and now on display at the U.S. Naval Academy in Maryland.

South and North Korea had already expressed their commitment to carry out what they had already agreed upon at the latest ministerial meeting held in March. The Koreas agreed to discuss food aid and schedules for test runs of cross-border trains as part of efforts to expand economic cooperation for the sake of joint prosperity.

“Let’s implement already agreed-upon issues, overcome barriers bravely and advance grandly as united people,” Kwon Ho-ung, chief councilor of the North Korean cabinet, said in a welcoming speech during the reception for the South Korean delegation Wednesday evening.

In response, Chin stressed that the two sides should upgrade their economic ties. “I expect that the meeting will actualize and develop economic cooperation,” he said.

The six-member South Korean delegation arrived in Pyongyang Wednesday afternoon on a direct flight from Gimpo Airport. The delegates attended a banquet hosted by Kwon, following a brief meeting with their North Korean counterparts.

Also high on the agenda are test runs of the cross-border railways in the first half of this year, and the implementation of an economic accord in which South Korea was supposed to provide raw materials in exchange for the North’s natural resources.

North Korea abruptly called off scheduled test runs of the railways in May under apparent pressure from its hard-line military. The cancellation also led to the mothballing of the economic accord. North Korea’s subsequent missile and nuclear weapons tests further clouded hopes of implementing the agreement.

The tracks, one line cutting across the western section of the border and the other crossing through the eastern side, were completed and set to undergo test runs. A set of parallel roads has been in use since 2005 for South Koreans traveling to the North.

South Korea has repeatedly called on North Korea to provide a security guarantee for the operation of the railways, but the North has yet to respond on the issue.

The reconnection of the severed train lines was one of the tangible inter-Korean rapprochement projects agreed upon following the historic summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

In 2005, South Korea agreed to provide the North with $80 million worth of raw materials to help it produce clothing, footwear and soap starting in 2006. In return, the North was to provide the South with minerals, such as zinc and magnesite, after mines were developed with South Korean investments guaranteed by Pyongyang.

Daily NK
Choi Myung Chul
4/19/2007

I defected at a young age and arrived in South Korea in 2004, where I was admitted into third of year of middle school. In North Korea, I had been attending school and was in second year high school.

At first, I found it difficult assimilating into a South Korean school. Social interests were different and the fact that 9 out of 10 South Korean children enjoyed going to an internet café and playing games was intriguing on its own. Though I find computer games challenging and fun today, back then it was hard enough trying to figure out a computer, let along mastering a game.

There are no opportunities to see computers in North Korea. That’s because no one owns a computer. Comparatively, North Korea is like South Korea in the 1970’s. I played outside with top spins, paper-flipping, slides and soccer. I also caught fish as our family lived in Hoiryeong nearby the Tumen River, though catching fish was not only a game but our means of survival.

At that time, the greatest obstacle to our play was hunger. When you run around and play, you need food to regain your energy. There were even times we had no strength to sit up and play. Rather we lay, slumped. During those times, we sat around day-dreaming. We would play truth or dare and pretend to smoke with cigarette butts we had secretly collected and talked nonsense while lamenting over our lives.

Satisfying hunger through the generosity of an affluent friend

We often had fights with kids from other schools. There was one incident where a child even got his head seriously hurt, but back then your friends were all you had. Even as we lay lifeless, I felt secure because of my friends.

Though I was starving, I even got to watch TV, that is during the short times our village was supplied energy. Though the majority of us were poor, one of my friends had a TV in his home, as his mother had done well at the markets. Even though only one station was broadcasting, the North Korea program, it was still very fun. I remember seeing one movie, “Order 027” which was about the People’s Army invading the Blue House (South Korea’s presidential building). The action wasn’t too bad, even interesting to a point.

Once in a blue moon, a friend would come into some money and then we would go to the markets to buy snacks. We bought bread made of corn powder and tofu rice. Even though the serving was small, my friend always shared his food with me.

Actually, all our friends did this. It was a time where we were all starving, yet we were willing to share our food, even half a corn cob.

Then one day, my mother left and I starving of hunger, left for China. On my way to Dalian in search for relatives, I was caught and forcefully repatriated back to North Korea. So I went looking for my best friend Hakjoo. Hakjoo and I had grown up together and had experienced so many things including severe hunger.

Offer to escape but offer denied

I informed Hakjoo of my plans and tried to persuade him to come. He replied, “Nevertheless, my homeland is here. If I died, I am going to die here. I cannot go with you.” We got into a huge argument and he said I had been brainwashed by capitalism.

Ever since we were little, we studied that Chosun (North Korea) was a socialist paradise and learned of Kim Jong Il and Kim Il Song’s revolutionary history. Even at that time, many of us were ignorant of the outside world. My friend’s loyalty to the great leader stood firm and he denied leaving our motherland.

By the time I had seen and heard of China, my devotion to Kim Jong Il had disappeared. I tried to convince Hakjoo that China was rich in food and much more abundant than North Korea but, failed to persuade him. I remember him saying, “Still. How can I desert our leader and our motherland?”

Hakjoo did not agree with my dreams but he still wished me health and safety. He also promised me that he would not report me to the authorities and said, “Don’t worry. But you must go in safety. Do not get caught and be safe.”

North Korea is a society where each person regulates one another. It is a society where trust is nonexistent. However, I trusted that friend and because I believed that he would not report me, I was able to safely defect the country.

As I left, I said to me friend, “I will return without fail… I’ll see you then.”

That was ’98. I found my way to my relatives home in Dlian, worked as a farmer in China for 3 years and then at a restaurant for 3 years.

At first, I planned to live in China. I had no intention of coming to Korea as I felt it would then be harder for me to return to North Korea. However, I could not continue to live hidden as an illegal immigrant and in the end, I followed the footsteps of another friend in 2004.

Whenever I face a hard time I think, ‘If I came with Hakjoo, it wouldn’t have been so hard,’ If we had defected together, the hardships in China and the loneliness would not have been so bad.

No matter how difficult the task, that friend always pulled through. However, he is not here now and so all the decisions have to be made by me. It’s tough because there is not one person I can fully trust and be dependent on.

But I am going to live well. Every day, I have just enough to scrape by and though it’s not easy, I am attending university. When I return to North Korea one day, there are many things for me to do. My dream is to construct a company there and rebuild a North Korea that has fallen to devastation.

And above all, I study because I made a promise to my friend. When I return to my hometown, my aim is to meet my friend standing tall and proud.

KCNA
4/18/2007

The “Pomhyanggi” Cosmetic Exhibition has been newly built in Moranbong District of Pyongyang.

It is a show of quality cosmetics produced in the Sinuiju Cosmetic Factory and a research center for developing new products and establishing scientific method of their application.

It operates a consultation room and gives such services as explanation, sale, medicinal sauna, massage and facial treatment. The consultation room diagnoses skins, health and constitutions of the customers and introduces relevant cosmetics to them at their request.

The explanation room explains the peculiarities and effectiveness of “Pomhyanggi” Cosmetics (3 pieces, 7 pieces, 8 pieces).

Kwon Mun Gap, senior official of the exhibition, said in an interview with KCNA that “Pomhyanggi” cosmetic research team has developed the quality cosmetics not by the chemical method but by the method of combining over 30 kinds of natural medicinal materials with Kaesong Koryo Insam.

“Pomhyanggi” cosmetics are the refined and developed ones of the famous “Nowana”, “Meari” and “Kumgangsan” cosmetics.

Chosun Ilbo
4/18/2007
 
The inter-Korean Kaesong Industrial Complex in North Korea, now in its second year, is in trouble due to “unreasonable” demands from Pyongyang, South Korean companies there say.

North Korea late last year suggested that South Korea pay North Korean workers according to their academic background. “North Korea demanded that we pay four-year college graduates 30 percent more and two-year college graduates 10 percent more than high school graduates, depending on their type of work,” a businessman said. As of last year, North Korean workers in the industrial complex got an average monthly salary of US$67, including overtime.

But businesspeople in the complex said the demand ignores realities. “Most of the workers at the Kaesong Industrial Complex are doing menial jobs, so staff with a higher academic background are not necessarily more productive,” one said. “Moreover, if we should introduce the system, the North Korean authorities would inevitably intervene in the hiring process. Our autonomy in personnel management and governance structure could suffer.”

Some 13,000 North Koreans work at the Kaesong complex. Four-year college graduates and two-year college graduates account for about 10 percent of them. A South Korean government official said, “If we introduce this system, businesspeople say their spending on wages will rise by about 4-10 percent.” Seoul wants to continue negotiations with the North. Pyongyang, which takes most of the workers’ salaries, is already demanding considerable fees for issuing permits to South Korean businesspeople and officials who want to stay for extended periods.

Even if the fee and wage issues are resolved, nobody knows what requests North Korea will make next. Kim Kyu-chul, the chairman of civic group Citizen’s Solidarity for Inter-Korean Economic Cooperation, said Tuesday, “We’re not sure if the free trade agreement with the U.S. will recognize products made at the Kaesong Industrial Complex. And the productivity there is not high due to various regulations. If there are wage hikes, South Korean businesses there will suffer.”

Associated Press
4/18/2007

Macau Bank at Center of Nuclear Talks Dealt Gold for North Korea

A small Macau bank accused of laundering money for North Korea also dealt gold for the reclusive country, with gold pieces flown in to the Chinese territory then carried to nearby Hong Kong and sold there, a news report said Wednesday.

Citing an audit report by the accounting firm Ernst & Young, the South China Morning Post said Banco Delta Asia’s ties to North Korea go back 30 years, and that besides accepting deposits, the bank also handled gold and silver sales for clients from the country worth $120 million.

The Post said six North Korean companies shipped gold pieces stamped with “Central Bank of North Korea” to Macau.

The gold was then moved to Banco Delta Asia’s Hong Kong subsidiary, Delta Asia Credit, by hand, then sold to a German trader, according to the Post.

Hong Kong is an hour by high-speed ferry from gambling enclave Macau.

The report says Banco Delta Asia’s North Korean business accounted for 22 percent its turnover during the 30 years, the Post reported.

The U.S. announced last month the bank would be blacklisted and blocked from doing business with American banks, a potentially crippling blow to most lenders.

The move came after American investigators accused the bank of helping North Korea launder money and handle counterfeit currency.

Macau’s Monetary Authority took control of the bank and froze about $25 million in North Korean funds. That enraged the North Koreans, who for more than a year boycotted the six-nation talks that aim to disarm the North’s nuclear program.

The bank has repeatedly denied knowingly helping in North Korea’s alleged illicit activities and said Monday it filed a challenge against the U.S. ruling.

It said it was a family-owned lender that lacked the sophisticated equipment and procedures to combat money laundering and counterfeiting.

Banco Delta Asia and Ernst & Young’s Macau office didn’t immediately respond to messages from The Associated Press.

Daily NK
Kim Min Se
4/18/2007

Cigarette prices escalate as Japan toughens economic sanctions

Following Japan’s economic sanctions, North Koreans are finding it to difficult to splash out on luxury goods, an inside source informed on the 17th.

Though only a minority of the rich are experiencing this hardship as the import of Japanese cigarettes and foods slowly come to a halt, it will be interesting to note what further repercussions will follow as a result of Japan’s sanctions.

The North Korean rich often lavish on “Seven” cigarettes, made in Japan which is known to be different to “Mild Seven” sold in South Korea. It is a much stronger cigarette containing 14mg of tar and 1.4mg of nicotine,

Seven was first introduced to North Korea in the mid-1980’s and has captivated tobacco preference of North Koreans ever since. As living standards deteriorate in North Korea Seven cigarettes have become a rare commodity for an average person to have today, though earlier in the 90’s, Seven was a luxury cigarette smoked by the majority of North Koreans. In particular, merchants who accumulated wealth through North Korea-China trade still prefer this brand to others.

Unlike other popular luxuries, smoking is a habit which becomes easily addictive. Hence, a handful of North Korean elites who in the past commonly smoked Seven’s and acquired its taste are experiencing withdrawal symptoms today, due to Japan’s economic sanctions and consequent ban of Seven.

Seven is a strong cigarette and though it sells well throughout the Japanese, it is not a preferred brand in South Korea. While Japan places export bans towards the North, conversely North Korean authorities are also regulating Japanese goods. For this reason, North Korean citizens are smoking these cigarettes in secret.

As supply does not meet demand, the cost of Seven cigarettes has skyrocketed in the cities of Pyongyang and Nampo.

Nowadays, a packet of Seven’s in Pyongyang sells at around 40 Yuan (11,000 North Korean won, US$3.6). This is 7~8 times more expensive than the common North Korean brand of cigarettes “Cat.” Considering that a kilogram of rice costs 800 North Korean won (US$0.26) and the average monthly salary of a worker 3,000~4,000won (US$0.98~1.3), the price of Seven’s is phenomenal.

However, as supply continues to be depleted, rich merchants and powerful ministers face a difficult test.

Furthermore, the rich and former Korean residents of Japan are unable to taste the flavors of popular Japanese foods that they have become accustomed to such as soy sauce, bean paste and instant noodles for a long time.