North Korean Economy Watch

any letters I missed in that title?

From the Korea Times:

WFP Asks South Korea to Contribute Food to North
By Christopher Carpenter

A representative of the United Nations World Food Program said on Friday that South Korea was considered a potential donor in the new North Korean food aid program.
At a press conference in Seoul, Tony Banbury, the WFP’s regional director for Asia, said he met with officials Friday at the South Korean Ministry of Unification and the Ministry of Foreign Affairs and Trade about contributing to the program.

“Our discussions were very positive,’’ Banbury said. “They are ongoing and I think I’ll leave it at that.’’

Bae Young-han, a spokesman for the Ministry of Foreign Affairs and Trade said that while he could not confirm the meeting with Banbury, South Korea was discussing participating in the WFP effort.

“In the past, we contributed through the WFP channel,’’ Bae said.

Banbury came to Seoul on the heels of signing a letter of understanding with Pyongyang Wednesday to resume aid to the North. It was discontinued in December 2005 when North Korea asked that food aid be replaced with developmental aid.

Banbury said assistance will not be on the scale it was when they left North Korea last year, but that the assistance being provided was better than discontinuing the program completely. Around 1.9 million people will benefit under the new agreement, down from the 6.5 million the WFP was feeding when it left in December.

“The alternative to this was closing down the operation entirely and walking away,’’ he said.

The new program will provide three types of assistance. Roughly half of the 150,000 tons of food that will go to the North over the next two years will be designated for pregnant and nursing mothers, and for babies that are younger than six months of age.

Primary aged school children will receive daily packages of enriched biscuits that provide 75 percent of their daily vitamin and mineral requirements. Finally, communities involved in projects that will increase their ability to produce food will be rewarded with food aid.

“As they do the work, we will pay them in food,’’ Banbury said.

The new program, which Banbury said the North considers a transitional program that will lead to development aid, allows the 10 WFP staff who will be in North Korea to monitor the food distribution system.

The staff will have access to the institutions where food is being distributed, to the community development projects, to areas of the country that may need further assistance and to the logistical operation that brings food into the country and stores it.

Banbury said the WFP would strictly enforce its monitoring policy of “no access-no food.’’

While Banbury said North Korean officials never admitted they needed emergency food assistance, the WFP offered to increase the scope of the program if it were wanted.

“That’s a conversation we might continue in the future,’’ he said.

From the Washington Post:

After a government-imposed shutdown of more than four months, the World Food Program announced Thursday that it would resume food aid to hungry North Koreans, but on a sharply reduced scale.

Tony Banbury, the U.N. agency’s regional director for Asia, said he signed an accord with the government in Pyongyang that will allow 10 staff members to operate a $102 million feeding program, helping 1.9 million of the neediest North Koreans over the next two years.

The accord, reached Wednesday after prolonged negotiations, ended the uncertainty that has prevailed since the DPRK government announced in August that it would accept development aid but no longer wanted food aid. That forced the World Food Program, which runs North Korea’s main feeding operation, to halt work at the end of December.

Banbury called the new agreement “an important breakthrough” for North Korea’s undernourished poor. But he said the number of people receiving food would drop considerably under restrictions laid down by North Korean officials — from 6 million in 163 counties under last year’s $200 million-plus program to 1.9 million in 30 counties under the new program.

“They explained this by saying they needed less food, that their crops were getting better and that they did not want to create a culture of dependency,” Banbury told reporters during a stop in Beijing.

Because Kim’s government is highly secretive, its assertion that more food aid was unnecessary could not be verified, Banbury said. But he expressed skepticism, noting that North Korea recently sought 500,000 tons of grain from South Korea and in recent years has consistently produced nearly 1 million tons less than its annual requirement of 5.3 million tons.

Economic reforms that began in 2002 have gradually loosened North Korea’s rigidly Stalinist system and injected some life into the economy, according to reports from Pyongyang. In particular, private food markets have been allowed in recent years, providing previously unheard-of choices for those with money. Food prices soared, however, prompting farmers to sell their crops in the private sector rather than to the public distribution system at controlled state prices. This in turn made life harder for the poorest among North Korea’s 23 million people, who rely on public rations.

In response, the government announced recently that the public distribution system would resume its monopoly on food grains. How this step ties in with the economic reforms was not explained. But Banbury said the agreement to resume U.N. food aid suggested that North Korean officials realized the public distribution system could not get food to everyone who needed it despite their earlier assertion that it was time to move on to development aid.

Production and distribution of U.N. food aid will resume immediately, he said, but it will take several weeks to get operations up to speed. As it was previously, most of the food aid will be in the form of vitamin-enriched biscuits for children, enriched porridge mixes for infants and supplements for pregnant women and the elderly.

Although the number of staff members has been shaved from 48 to 10, Banbury said U.N. officials would be able to verify that the food was going to the poor and not government officials or the military. Diversion of food has been a major concern of the United States and other U.N. donor countries since Kim proclaimed that soldiers and other officials have priority in North Korea.

“We will not be providing food to any areas of the country where our staff does not have full access,” Banbury said.

From the Korea Herald:

South and North Korea resume talks today to discuss the opening of an inter-Korean railway link ahead of former President Kim Dae-jung’s visit to the North in June, an official at the Unification Ministry said yesterday.

In the two-day talks, the schedule for train test-operations and the inauguration ceremony of the cross-border railroad will top the agenda, an official said.

Last month the two Koreas failed to reach an agreement on the issue as the North demanded South Korea provide additional material and equipment to complete the construction of the foundation for its rail station.

Earlier this year, the ministry notified Pyongyang of Kim’s wish to revisit the communist state to meet North Korean leader Kim Jong-il in June. The former president wishes to travel via the reconnected inter-Korean rail link, making the inaugural train journey from Seoul to Pyongyang.

The two Koreas will hold further inter-Korean working-level talks next week from May 16 to work out the details of Kim’s second visit to the North. South Korea hopes a test-run of cross-border trains can be conducted before Kim’s visit to the reclusive country next month.

The two Koreas have almost completed construction work on reconnecting the link that has been closed for half a century. The reconnection of two railway lines that cross the 248-kilometer-long Demilitarized Zone is one of the achievements of the landmark summit in 2000 between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il.

The 27.3-kilometer Gyeongui railway connects the two border cities of Munsan in the South and Gaeseong in the North, while the 25.5-kilometer Donghae railway crosses the border at the peninsula’s eastern coast.

From the Korea Herald:

The ROK government is considering selling off the remaining blocks at the kaesong industrial complex in North Korea in three steps to maximize their value, sources said yesterday.

A 1-million-pyeong compound was built as the first phase of the Gaeseong project and is currently occupied by 15 businesses.

An additional 24 businesses are set to operate since last August and there is currently 580,000 pyeong of land left up for grabs.

The Unification Ministry, Hyundai Asan and Korea Land Corporation – the three organizers of the project – have recently completed its sale plan which will begin next month.

Of the 580,000 pyeong, the government will first offer 220,000 pyeong for sale in June.

Based on the outcome, the government will release the remaining lots in two steps, in September and December.

Sources said by dividing the land lots in the sale, the government is hoping to minimize the risk and maximize their value.

The government is also planning to differentiate the types of businesses entering kaesong in order to increase the level of cooperation within the companies.

Such business fields will include electronics, electricity, machineries, metal and chemicals.

The complex will also be open wide enough for three to four foreign businesses to invest, following a show of interest from business owners from Germany and China.

At Gaeseong there are currently 500 South Korean employees working with about 6,800 North Korean workers.

Yonhap
5/11/2006

The head of South Korea’s National Red Cross is to visit North Korean capital Pyongyang later this month to discuss enhancing medical cooperation between the divided Koreas, Red Cross officials said Thursday.

Red Cross President Han Wan-sang is to be accompanied by 40 officials including hospital heads and 13 officials from the Korean Hospital Association, on his five-day trip to the communist state from May 26, the officials said.

“President Han is scheduled to meet with officials from the North Korean Red Cross, including its Chairman Chang Jae-on, to hold negotiations on ways to develop and increase cooperation and exchanges between South and North Korea,” the Red Cross said in a statement.

Accompanied by heads and officials from other humanitarian organizations and 12 pharmaceutical companies, the Red Cross chief will deliver over 3.7 billion won (US$3.9 million) worth of medical supplies and equipment to the impoverished North, the statement said.

The 41-member delegation will fly directly to the North Korean capital, according to the Red Cross officials.

Red Cross officials from the two Koreas occasionally hold talks to resolve humanitarian issues between the divided countries, such as the tens of thousands of people who remain separated from their family members since the end of the 1950-53 Korean War.

The sides are scheduled to meet to arrange upcoming rounds of reunions between the separated families in June and August.

The South Korean Red Cross provides large amounts of fertilizer and food aid to the North in addition to its annual medical and technical support for the impoverished country, which has depended on outside handouts to feed a large number of its people since the mid 1990s.

From the Daily NK:

Dependency of North Korea on foreign medical supplies is very high. Most of the medical supplies delivered by international medical organizations are first provided to the Pyongyang Central Hospitals and military hospitals. For this reason, city and district hospitals always lack medicines.

Also, after the 7.1 Economic Management Improvement Measure, self-supporting accounting system has removed free supply of medicines, and patients need to purchase medicine themselves.

For example, Doctor A at a hospital does not provide medicine after the treatment. Doctor A only directs the patients to Mr.B who has the medicine. The patient purchases the medicine from Mr. B and asks Doctor A how to use them. It is no different from private drug store.

Mr. Chun (53) who used to sell drugs at Hamheung before he defected said, “Hospitals don’t have medicine while there are hundreds of different kinds of medicines at Jangmadang. District hospitals use salt water as sanitizer for emergency treatments, and papers are used because they do not have bandage and cotton balls.

It will be interesting to see if the DPRK takes this laying down.  After all, this sacred mountain is the birthplace of the Dear Leader.

From the Donga:

The Japanese daily Mainichi Shimbun reported on May 9 that a private airport will be completed by the end of next year in Baisan, Jilin Province, the area with access to Mt. Baekdu (Chang Bai Shan in Chinese) located between China and North Korea.

As a result, competition will become intense between China and the two Koreas to attract tourists to the mountain and boost the image of the mountain as their own territory.

China seeks to take the upper hand in the development of Mt. Baekdu tourism by constructing the airport. South Korea, for its part, is rushig to kick off Mt. Baekdu tours via North Korea.

There is a growing concern in South Korea that Mt. Baekdu, a symbol of Koreans, might be registered as cultural heritage of China because China wants to put Mt. Baekdu on the list of World Heritage sites before the 2008 Beijing Olympics.

from NK zone:

Yanbian Taida has agreed to import 50,000 tonnes of North Korean coal, and plans to increase this if there is market demand, according to a yet another Chinese report. The company had imported 1,820 tonnes by March 7, worth $41,860, under a first such deal with Hunchun customs involving “concentrated customs declarations” (not sure what that is) which has relieved pressure at the Shatuozi border post. The coal came from Gogeonwon mine, just 17 km from the border.

from Yonhap:

The U.S. Treasury’s ban on owning or operating North Korea-flagged vessels took effect as of Monday, the latest punitive action against a state accused of counterfeiting American currency and cigarettes.

The amendment to the Foreign Assets Control Regulations (FACR), announced on April 6, prohibits “U.S. persons” from owning, leasing, operating or insuring any vessel flagged by North Korea.

U.S. persons refers to U.S. citizens and permanent residents, U.S. entities, including their foreign branches, and any person in the U.S.

The move is in addition to an action taken last September designating Macau-based Banco Delta Asia as a primary money-laundering concern abetting North Korean front companies.

These companies are suspected of circulating bogus U.S. dollars and exporting items used for weapons of mass destruction.

The U.S. has had broad economic sanctions imposed against North Korea since 1950, when the Korean War (1950-1953) broke out, under the Trading with the Enemy Act.

The sanctions were eased in June 2000 when the U.S. amended FACR in return for Pyongyang’s moratorium on missile tests.

At least 11 U.S. vessels are affected by the new measure, and they had all been notified to take appropriate steps before Monday.

KCNA
5/9/2006

Supreme Commander of the Korean People’s Army Kim Jong Il, general secretary of the Workers’ Party of Korea and chairman of the DPRK National Defence Commission, gave on-the-spot guidance to pig farm No. 110 newly built by KPA servicepersons. After being briefed on the farm before a huge painting showing its panoramic view, he looked round the exterior and interior of the farm to learn in detail how it was built and is being operated. He highly appreciated the merits performed by the soldier-builders, greatly satisfied with the successful construction of the farm.

He went round pig sties, assorted feed and processing factories and various other places of the farm to acquaint himself in detail with its technical equipment and breeding.

He set forth important tasks which would serve as guidelines in managing and operating the farm and increasing the pork production, pleased to learn that the employees of the farm are mass-producing pork and quality processed products by establishing a scientific production system.

In order to increase the production of pork on the farm, it is necessary to put the breeding on a scientific basis and make sustained efforts to raise the level of technical skill of the producers and, at the same time, to energetically push forward the work to introduce advanced technology, he said.

Noting that a scientific breeding system has been established at the chicken and pig farms that have mushroomed in recent years is now paying off profusely, he added that this reality eloquently proves that it is possible to bring about a change in the stock-breeding, too, in a brief span of time if full play is given to the people’s revolutionary spirit and creative ingenuity on the basis of the advantages of the Korean-style socialist system.

A solid material and technical foundation has been laid in the country to make a leap forward in the production of pork including the establishment of the system for breeding superior pedigree stock, he noted, underscoring the need to raise pigs in a big way by taking advantage of these favorable conditions.

He called on all fields and units to wage a dynamic popular movement to further develop the stock-breeding so as to provide the people with a more affluent and highly civilized life.

He was accompanied by KPA Generals Ri Myong Su, Hyon Chol Hae and Pak Jae Gyong.