North Korean Economy Watch

Yonhap
11/20/2006

China has lifted its freeze on some North Korean accounts in a Macau bank which have allegedly been involved in money laundering and other financial irregularities for Pyongyang, a diplomatic source said Monday.

China ordered its banks to stop engaging in financial dealings with Banco Delta Asia (BDA) in the Chinese territory of Macau, after the U.S. gave its financial institutions similar instructions in September 2005. The sanctions led to the freeze of about US$24 million of the North’s holdings.

Yonhap
11/20/2006 
U.S. does not confirm report of unfrozen N.K. account, reaffirms talks within 6-party context

U.S. officials deferred to Chinese authorities on Monday to confirm whether Beijing has released some of the North Korean accounts frozen for alleged illicit financial activities.

At the same time, they reaffirmed that the U.S. is ready to address the issue at the six-nation nuclear talks when they resume.

I just got back from visiting Turkmenistan with Koryo Tours.  I had a great time and have managed to identify most of the things I saw on Google Earth.  If you would like to live my vacation (via satelite images that are a couple of years old) click here (Updated on 12/30/2006) to download them onto your own Google Earth.

-Curtis

Joong Ang Daily
11/18/2006

Eight years have passed since the first tourist from South Korea entered North Korea to explore Mount Kumgang, one of North Korea’s most scenic mountains, but the picture at Hyundai Asan, operator of the tour program, is not so picturesque.

Demand for the tour has plummeted after North Korea’s nuclear weapon test last month.

Only 22,000 tourists visited Mount Kumgang in October, a popular fall season. Originally, 40,000 made reservations but almost half canceled because of the nuclear test.

For the first 10 months of 2006, a total of 226,000 tourists have visited the North Korean mountain, 20 percent less than the previous year and well below the company’s target of 350,000 for this year.

“Next year the tour area will be expanded to inner-Kumgang, and a golf course will be ready in May. We expect to attract more tourists,” said an official from Hyundai Asan.

Meanwhile, two conservative citizen groups, Right Korea and the Citizens’ Coalition to Stop Nuclear Development of North Korea, rallied Thursday. They want the tours stopped, saying it is a source of foreign currency for North Korean dictator Kim Jong-il.

World Peace Herald
Lee Jong-Heon
11/17/2006

North Korean leader Kim Jong Il has recently recognized the academic works of dozens of local scholars by presenting them with wrist watches as part of his “gift politics.” But this policy may not last much longer when the international community implements the U.N. sanctions resolution slapped on North Korea following its nuclear test last month.

According to the (North) Korean Central News Agency, a total of 26 professors and officials at the country’s prestigious Kim Il Sung University were awarded the watches inscribed with the captions, “Gift of Great Leader Kim Il Sung,” in reference to the country’s founding leader and father of the current leader Kim Jong Il.

The award was part of Kim’s unique ruling technique of using gifts to keep a key group of supporters in his hands.

Under the “gift politics,” Kim has provided wrist watches and other luxury goods to his aides and ruling elite members to reward their unconditional loyalty toward him. Most of the luxury items were made outside of North Korea, in places such as Japan or Switzerland, according to North Korean defectors and intelligence sources.

Gifts for loyalists also include cars, pianos, camcorders and leather love seats, among others.

But the North Korean leader may no longer use the “gift politics” because U.N. members have moved to impose bans on shipments of luxury goods — including cars and wrist watches — in a bid to obstruct the personal consumptions of Kim Jong Il and his ruling elite.

The U.N. Security Council unanimously adopted Resolution 1718 after the North’s nuclear test last month, calling for all U.N. members to impose wide-ranging sanctions on the communist country, including a ban on exports of luxury goods as well as large conventional weapons and weapons of mass destruction.

In line with the U.N. resolution, Japan’s Cabinet this week approved bans on exports of 24 kinds of luxury goods to North Korea, including cars, wrist watches, alcohol, cigarettes, jewelry, perfume and caviar.

The list also includes beef, tuna fillet, cosmetics, leather bags, fur products, crystal glass, motorcycles, yachts, cameras, musical instruments, fountain pens and works of art antiquities. The total export value of the 24 items was about $9.2 million in 2005.

Joong Ang Daily
11/17/2006

China has not cut off oil supplies to North Korea, nor will it stop oil and food assistance to its ally as a means of exerting political pressure, Chinese officials were quoted as telling a group of U.S. scholars.

The Americans in the group also said Wednesday that Chinese officials seemed to have a different understanding from the North Koreans about how U.S. financial sanctions would be dealt with at the next round of six-nation talks.

The Chinese reportedly said they were “surprised” that Pyongyang had told the group it expected those sanctions to be lifted.

Siegfried Hecker, a visiting professor at Stanford University, said he asked Chinese foreign ministry officials if Beijing had cut off heavy fuel oil to North Korea as reported.

“The answer was that China did not cut off heavy fuel oil to North Korea. That’s the direct answer that we received,” he said at a news conference.

Mr. Hecker was part of a four-member delegation that was in Pyongyang Oct. 31-Nov. 4. He is a former director of the Los Alamos National Laboratory, a U.S. nuclear weapons center, and has visited North Korea three times.

The other members of the team were Jack Pritchard, former U.S. point man on North Korea policy and now head of the Korea Economic Institute in Washington, D.C.; Robert Carlin, a former North Korea analyst now at the Korean Peninsula Energy Development Organization; and John Lewis, a Stanford University professor.

There was speculation that Beijing had ended the fuel aid to the North in September, when Pyongyang showed signs of preparing for its first nuclear test. The aid suspension was believed to be China’s way of pressing its ally to forgo the test.

Mr. Hecker said Chinese officials were clear that Beijing did not and would not stop fuel and food donations, arguing that North Korea would only “grow stronger” if pressured.

The team arrived in North Korea on the day the communist regime, after a year’s boycott, agreed to return to the six-nation nuclear talks that also involve South Korea, the United States, China, Russia and Japan.

Pyongyang left the table to protest punitive measures taken by the U.S. Treasury against Macao’s Banco Delta Asia for allegedly laundering money for the North.

North Korean officials told the American visitors that they expected discussions and a conclusion of the sanctions issue at the next six-party talks, according to Mr. Pritchard.

But Chinese officials, when told of Pyongyang’s position, “expressed some surprise,” Mr. Hecker said.

“They indicated, obviously, differences of opinion as to what was agreed on,” he said.

Yonhap
China won’t unilaterally seek World Heritage status for Mt. Paekdu: Chinese Amb
11/17/2006

China’s top envoy to South Korea said Friday that his country will consult with a concerned country before seeking UNESCO World Heritage status for Mount Paekdu on its border with North Korea.

The remarks by Ning Fukui came amid growing concern that China has taken steps to solidify its historical claim over the highest peak on the Korean Peninsula, nearly half of which is in Chinese territory.

Joong Ang Daily
China tries to ease Paektu concern
11/18/2006

China’s top envoy to South Korea has said his country will consult with a concerned country, apparently referring to North Korea, before seeking World Heritage status for Mount Paektu on its border with the North, embassy officials said Friday. The World Heritage list is maintained by the United Nations Educational, Scientific and Cultural Organization.

The remarks by Ning Fukui came amid growing concern that China has taken steps to solidify its historical claim over the highest peak on the Korean Peninsula, nearly half of which is in Chinese territory.

“Even though China will put Changbaishan on the World Heritage list, it will do so in consultation with a concerned country,” the ambassador said in a speech during an academic forum at Seoul National University on Thursday, using the Chinese name for the mountain.

He did not directly mention North Korea during the speech, but has previously suggested several times that North Korea is the concerned country on the Mount Paektu issue.

In September, Beijing issued a directive to about a dozen hotels operating there, including four run by South Koreans and one by an ethnic Korean resident of Japan, to close their businesses and leave by the year’s end. The move was part of an initiative to make the Paektu area a World Heritage site nominated by Beijing, critics said.

In related news, northeastern Jilin Province, which administers the Chinese part of the mountain, unveiled an ambitious plan Friday that would make the mountain a 5A scenic spot, the highest of China’s tourism zone levels. China is bidding to host the 2018 Winter Olympics on its side of the mountain.

Yonhap
11/16/2006

N. Korea’s assembly chairman holds talks with Iranian FM

Choe Tae-bok, chairman of North Korea’s Supreme People’s Assembly, held a meeting with Iranian Foreign Minister Manucherhr Motaki in Teheran on Wednesday and discussed ways of promoting bilateral cooperation, Iran’s state-controlled media said Thursday.

Choe visited Teheran to attend the 7th general assembly of the Asian Parliaments for Peace.

Preparations Needed for Their Explosive Increase
Korea Times
11/14/2006

The number of defectors from North Korea is expected to exceed 10,000 shortly, according to the concerned authorities. As of the end of September, the total number of defectors here stood at 9,140. However, considering some 700 defectors are waiting to make an entrance at Korean consulates in Thailand, Mongolia and China, it is only a matter of time to see their number exceed 10,000. Because of this, people have no choice but to ask the government if it is really prepared to absorb them into our society.

Their re-settlement here seems to be neither easy nor smooth. A recent report states the number of those having problems due to their failure to settle here is increasing. It may be true for the government that their arrival in growing numbers is not always welcome. At the height of inter-Korean confrontation in the 1960s through 1980s, defectors were received here with a hero’s welcome, and were guaranteed a large amount of money and other fringe benefits on re-settlement.

But, the situation changed in the 1990s when the number of arrivals began to rise. With the growing mood of inter-Korean reconciliation, the political significance of their arrival has come to be greatly devalued. Their status has been undeniably demoted to mere refugees, who escaped the Stalinist state in search of better lives. The number of defectors, which stood at about 600 in 1989, has increased by more than 15 times to about 10,000 over the last 17 years.

According to concerned authorities, more than 1,000 people from the North have made their way here every year since 2002. Their arrival is no longer considered news by the media here. The defectors are known to have much difficulty in assimilating themselves to the capitalistic way of living. The amount of money given to help them settle here has dwindled greatly compared to that in the past.

It is almost impossible for them to find decent jobs to support themselves, especially when unemployment is rising. Due to the utter difficulty of living here, a growing number of defectors are found to have committed crimes. The number of crimes committed by them due to the difficulties of living stood at 54 in 2001, but increased to 89 in 2002, 90 in 2003 and 93 in 2004.

There are even those, though small in number, who leave South Korea due to the economic difficulties they have experienced. What worries people is that political or military upheaval in the North could cause tens or hundreds of thousands of southbound refugees. The government is asked to seriously think what it can do about the matter before the situation drifts beyond the point of no return.

Joong Ang Daily
11/13/2006

Lars Hasjlund, the president of Junior Chamber International, an organization for younger entrepreneurs, said he looks forward to expanding into North Korea someday. “It is our dream and our sincere hope that we, as JCI, can provide leadership training and education in North Korea as well,” he said at the 61st JCI World Congress in Seoul.

“Promoting corporate leadership and social responsibility that fosters a healthier environment in the world is the objective of our organization,” said the president.

Mr. Hasjlund said this gathering is to exchange ideas and to network among members, emphasizing how JCI gives young entrepreneurs the opportunity to initiate projects all over the world, putting their leadership skills to the test.

Past members of JCI include John F. Kennedy, Kofi Annan, President Roh Moo-hyun, Bill Gates and Bill Clinton.

JCI Korea President Pyo Hyun-cheol said, “Our goal is to embrace and further disseminate the very slogan we have set for ourselves this conference, which is ‘into the JCI’ ― which means further integration to a bigger and much more developed JCI in the world.”

The JCI World Congress started yesterday and will continue until Saturday at the COEX convention center and other venues.

JCI has 200,000 members from 20 to 40 years of age in 110 countries. Korea first joined the community in 1954 and currently has 17,000 members, the third-largest JCI branch in the world.

Korea Times:
11/13/2006
Andrei Lankov

For the last few decades a visitor to Eastern Siberia would sometimes come across unusual logging camps: fenced off with barbed wire, they sported the telltale portraits of Kim Ilsung and Kim Jong-il. These are North Korean camps: from the late 1960s, North Korean loggers have been working in Russia’s Far East.

In the 1960s the timber shortage was felt both in North Korea and the USSR, but the reasons for the shortages were different.

The Russians had plenty of forest, but lacked labor. When the gulags were emptied after Stalin’s death, few people were willing to up and fell trees in remote corners of Siberia.

The North Koreans had an abundance of cheap labor, but almost no good timber. Thus, the two Communist states had a potential match made in heaven.

In March 1967, when the relations between the two countries began to recover after a serious chill, the logging agreement was signed.

According to the agreement North Korean loggers were allowed to work in designated areas of the Russian Far East.

They were housed in special labor camps, run by the North Korean administration. The timber was to be divided between the two sides: the Russians 60 percent and the North Koreans 40 percent.

At their peak in the mid-1980s the Far East joint logging projects employed over 20,000 North Korean workers. This means that some 0.5 percent of all North Korean able-bodied men labored there. Nowadays, the operations are smaller in scale, with some 8,000 workers employed. An additional 3,000 North Korean workers are employed in other joint projects in Russia (construction industry, vegetable gardening etc.). Since the workers were rotated every three years, it is likely that up to a quarter of a million North Koreans have taken part in this project over the decades.

Politically, this was not as dangerous as it might seem. Even in the 1960s, the Soviet Union had far higher standards of living and was much more liberal and permissive society than the North.

However, the North Korean workers were in the middle of nowhere, and kept under the watchful eyes of their supervisors in the nearly isolated camps. People who broke the rules were arrested and sent back to the North. If it was deemed too difficult or impractical, they could be killed on the spot _ the Siberian forests provided more than enough space for unknown burials.

The Soviets usually turned a blind eye to everything the North Korean administrators did. In the early 1990s the situation changed. During the heyday of perestroika, investigative journalists began to report on the conditions of the North Korean workers.

An expose of the prison maintained by the North Korean security police in one of the logging camps led to a particular public outcry. In those days the Russians felt a nearly universal enthusiasm for democracy and believed that Kim Il-sung’s regime would soon collapse.

There were also publications about the secret opium plantations and illegal harvesting of protected species of plants and animals _ both, frankly, long established pillars of North Korea’s foreign currency earning programs.

On top of that, some loggers used the change in the international situation to defect to the South. In those days, defectors were still rare and thus welcomed in Seoul.

In 1992-1994 it appeared that the entire timber project would be discontinued owing to political considerations. However, the situation changed. The events of 1992-2005 made Russians quite skeptical about democracy, and very suspicious of idealistic crusades of any kind.

Thus, the North Korean camps were left alone to the great relief of the local Russian administrators and businessmen who make good money out of these projects.

For them, the North Koreans were but a source of cheap labor, and they did not care how these “Orientals” were treated by their supervisors.

When the initial Russian enthusiasm for a free press died out, the local politicians learned how to keep journalists away.

By the late 1990s, it also became clear that South Korea was not going to encourage the defection of the loggers. On the contrary, anecdotal evidence indicates that loggers who approach the local South Korean consulate are unceremoniously turned away.

Seoul does not need these impoverished and potentially troublesome brethren in our sunshiny days! Of course, some loggers run away, but largely in order to find better job opportunities in Russia’s black economy.

There are about a thousand such runaways hiding in Russia now, but the authorities tend to ignore their presence.

But what was the incentive for the North Koreans workers? The short answer is: money.

Really good money _ at least, by North Korean standards.