Archive for March, 2007

« Older Entries
Newer Entries »

Cradle to Grave Indoctrination in Revolutionary History

Saturday, March 10th, 2007

Daily NK
Park Choel Yong
3/10/2007

Forced Memorization of Kim Family History Ruining Student Potential

In the past, the greatest pleasure of North Korean university professors was meeting students whose abilities were superior to their own. However, these professors say new generations of students cannot be properly educated and their academic ability is declining because they are forced to memorize the revolutionary history of the Kim family. North Korean preschoolers are two through six years old.

Compulsory education consists of four years in elementary school and six in middle school, followed by an optional four year university degree. During the important middle school period when student development could be the greatest, students are instead directed to devote their efforts to rote memorization of North Korean revolutionary history. No exceptions are allowed even for gifted students.

The most important subject is Revolutionary History

In every province and city, there is “The 1st Middle School” in which the most brilliant students study. In Pyongyang there are the 1st Middle Schools in three districts: Chanduk School, East-Pyongyang 1st School and Moranbong 1st School. The best school among those 1st schools is Pyongyang 1st Middle School where the most gifted students in the country can study.

Pyongyang 1st Middle School used to be the Namsan Loyal Middle School where only children of high authorities and patriots who had fought against the Japanese colonial government can attend. Because Kim Jong Il graduated there, it has become a special school for the gifted.

To enter the Pyongyang 1st Middle School, high grades in Revolutionary History are necessary. There are sub-items under the Revolutionary History: “Revolutionary records of the respectable Father, Kim Il Sung”, “Revolutionary records of the beloved Leader, General Kim Jong Il” and others.

Students must completely memorize the history of Kim Il Sung’s activities along with those of his son Kim Jong Il. High grades on Revolutionary History entrance exams give students priority in attending the school.

Fortunately, Kim Il Sung achieved independence from Japan instead of his father

In order to enter the school, students develop their powers of retentive memory at the expense of intellectual learning. North Korean policy dictates that memorization of revolutionary history should be a cradle to grave endeavor, beginning in pre-school and lasting through university study and beyond. Students abbreviate “the Great Kim Il Sung’s revolutionary history” as “GR (‘Wihyuk’ in Korean)” and “the beloved Kim Jong Il’s revolutionary history” as “BR (‘Chinhyuk’ in Korean).”

Adding to student misery has been the inclusion of “MR (‘Eohyuk’ in Korean)” in 2000, meaning “the Heroine Kim Jong Suk, the Mother’s revolutionary history.”

Students cynically claim that it is fortunate that Kim Il Sung won independence from Japan instead of his father Kim Hyung Jic because the amount of material to be memorized would have doubled.

Foreign media focus on the starvation and ruined North Korean economy caused by Kim Jong Il. However, the destruction of North Korea’s educational system and the subsequent waste of human resources represent some of his most serious crimes. Revolutionary history brainwashing is destroying the intellectual development of future generations.

Share

Posted in Education, Political economy | Comments Closed

North Korea’s Central Class Fear Kim Jong Il’s Ruin Will Lead to Their Ruin

Saturday, March 10th, 2007

Daily NK (Part 1)
Han Young Jin
3/10/2007

The reason North Korea’s regime can persevere is because of the central class’ fear of regime collapse.

As a result of this perseverance, North Korea has been able to resist isolation and pressure for more than half a century, with the system even defeating the “March of Suffering” where tens and thousands of people died of starvation.

Today, powers maintaining the North Korean system are the hierarchical upper class including the North Korean Workers’ Paryy, the National Security Agency, the National Protection Agency, prosecutors and adjudicators.

Overall, there are about 4 millions members in the North Korean Workers’ Party (statistics as of 1995), this being roughly 20% of the population. Retrospectively, these people control the 23mn North Korean citizens.

The central class incorporating junior secretaries to the party, training officers, novice elites, generals from the army, safety and protection agents use their power position to control directly the North Korean people.

The most of these people have strong loyalty for the regime. In particular, military generals or party officials especially fear punishment and the thought that their privileges may be removed. Though they may be leaders, it is not one’s own desire to escalate in power but fear of retaliation from new powers.

Local party officers, security agents and protection agents directly control, inspect and punish civilians. In essence, they absolutely control the North Korean people and hence fear direct retaliation from the people. The collapse of the regime, also means that they may become jobless and troublesome.

In the 80’s, there was an incident where the Kangkye Munitions Factory incurred an explosion. The people who thought that a war had risen killed the security agent in charge and threatened to evacuate the country regardless of war or not. The people armed with weapons even raided the home of the security agent in charge, with stones and batons. As this rumor spread, security officers throughout the country felt the tension and were all on alert. Hence, control forces even to the lowest rank have become the trustworthy pillar to the North Korean regime.

Since the early stages of the regime, North Korea trained members of anti-Japan protestors and their families, Mankyungdae Revolutionary Academies and distinguished servicemen from the Korean War. As a result, the mindset of North Korea’s central class is relatively high in societal class awareness, as is their loyalty to Kim Jong Il.

Ideology amidst the central class and brainwashed passion

These people believe that the survival of the North Korea system is directly connected to their lifeline. They fear that they will not be able to receive the same privileges given by Kim Jong Il, if the current North Korean regime were to collapse. They believe that Kim Jong Il’s fate is their fate.

The North Korean regime is currently strengthening the multiple control system for their central class so that the ideology of the class is not shaken and the principals of Kim Jong Il kept intact.

In North Korea, every position and decision is focused around Kim Jong Il and his every single word is glorified. In one sense, it is a specialty of the dictatorial regime, but in reality it is a way to force the upper class to stand in awe and even dread the grand Kim Jong Il. Some defectors, once members of North Korea’s elite say that people work having no conscious awareness of their heavy duty or how to modify words spoken by Kim Jong Il.

Educational jobs by the central class are different to that of the common citizen. As the former Soviet Union and Eastern European bloc was merging in the 90’s inflicting collapse to the regime, elite officials internally passed video tapes on the end of Romania’s former President Nicolae Ceausescu to calm other comrades but in the end stirred greater fear.

Recently, it is said that tapes on the Iraq situation have been televised for commanders and military elites to see. The aim of this viewing, to plant into the minds of the commanders that compromises to the protection of the system means death.

The Kim Jong Il regime gives privileges to inspire the people supporting them. For example, people who work for the Central Committee systems department or the elite propagandists, receive a Mercedes Benz with the number plate ‘2.16’ symbolizing Kim Jong Il’s own birthday, and depending on the position, the car series is upgraded.

Other elites from the Central Committee and figures in key military posts are provided with luxurious apartments in Pyongyang. The apartment blocks are built and located separately to the average house. Soldiers guard the homes, even restraining relatives from entering the apartment premises. These homes are furnished with electrical goods, sofas, food and goods made in Japan, as well as being accompanied with western culture.

As Military First Politics was implemented in the late 90’s, private nurses, full-time house maids, private apartments and country residences, private cars, office cars, as well as “recreational clubs” with beautiful women, were granted as privileges to the head military and provincial officers.

Every Lunar New Year, expensive foreign gifts are presented to the core central class. However, across the bridge, local and system secretaries, public control officers await common goods that can be found in South Korea’s supermarkets such as mandarins, apples, cigarettes and alcohol. Nonetheless, people who work for North Korea’s local offices are more than happy to receive these gifts are it distinctly segregates them from the common North Korean citizen.

OK to Capitalist Goods But NO to Capitalist Regime
Daily NK (Part 2)
Han Young Jin
3/11/2007

The higher the class, the closer one is to the 2nd and 3rd tier network. If a person is discovered to be in opposition to the regime they will be brutally punished and so a person is cut off early if they are found to show any signs of anti-Kim Jong Il.

The people who inflict the greatest control are the military high commanders. North Korea’s military can be seen as a branch of national politics that really does represent half of the regime. Political elites from the military closely control high commanders with under cover spies whose job is to specifically tattle on suspicious officers to the Party. Then, the protection agency in command contacts an expert who equipped with bugging devices carefully monitors the high commander’s every move, 24 hours a day.

In addition to this, control over university students who are being trained to become North Korea’s next elite group is also severe. In order to intensify regulations on university students, the protection agency initiates secret movements. Protection agents and even information staff are grouped to control the student’s movement with one information staff in charge of monitoring every each 5 students.

Even amidst the Workers’ Party and the ministries, national safety agents are dispatched to monitor the elite.

“Capitalist goods are good, but reform is unacceptable”

Though envious of South Korea’s economic development, North Korea’s upper class are opposed to growth and reform.

There is a popular story of an elite North Korean official who visited the South and frankly revealed “Though we may crawl and be worn, we cannot follow South Chosun’s economy.” It is also a well known fact that elite officials preferred Samsung digital cameras and showed interest in Hyundai cars at a South-North Cabinet talks and Aug 15th event in Seoul. Nonetheless, when it comes to acknowledging the need for capitalist reform, North Korea’s central class discards it with a wave of the hand.

The reason that capitalist goods are preferred but reform rejected is a result of the ideology that their individual power will be lost with change to the regime. Those who have loyally followed authorities have no mindset nor special skills that will enable them to survive a capitalist system. Rather than confronting a competitive society, they prefer their current position and the glory that comes with it.

The central class is also well aware of the restraints on North Korea’s economy. Every year as the harvest season arrives, they see citizens march onto the fields malnourished and underfed. They know that the economic policy implemented by authorities has failed and is incoherent. Yet, ultimately they are unwilling to let go of the small privileges they are endowed upon by the preposterous and unreasonable regime.

These people have become accustomed to their power which is utilized to gain them their privileges and tyranny. Even if North Korea enters a famine, they need not worry about food or clothing.

For example, in the case of an official factory secretary, he/she satisfies ones own personal needs by selling factory goods. Using the excuse that factory profits are being raised, he/she orders the workers to engage in more work, on the side. This is how tyranny occurs with the factory secretary manufacturing personal gains. Yet, these officials are not punished with any legal sentences.

Newly-rich dualism, collaborative relationship with official powers

Following the July 1st economic measures in 2002 trade became legal and North Korea experienced a sudden boom in newly rich elites. What led this new rich class to accumulate so much wealth was the fact that they had introduced an enterprise system which allowed trade with China.

The newly rich have a great interest in reform and development, and are well aware that the North Korean regime will not be able to solve the economic issue without facing reform.

However even this class of people are disinterested in bringing an end to the regime. They have already accumulated their wealth and feel no onus in the poverty stricken situation in North Korea. Whether capitalism or the current North Korean regime, as long as they can sustain a living, these people can continue to remain in a dualistic mindset.

While North Korean authorities are strengthening control over this new class, they are in another sense, receiving money and bribes to protect them. Where investigations are involved, authorities are risking their own identities being revealed and hence often ignore the illegalities of the people, even going to the extent of passing on information.

It is a fact that North Korea’s central class is acting as the forefront in sustaining the regime, but then again, these people have greater educational standard than the average commoner and they have had more opportunities to experience Western civilization. Hence, they can compare the North Korean regime with the outside world. Though the majority of this class accommodates to the North Korea regime, the possibility that a fraction of the elites may have some sort of antagonism against the Kim Jong Il regime and the odds that these people may just act upon these feelings cannot be discarded.

In addition, as North Korean society continues to decay, the organization of its systemic corruption may just be hit with danger. As corruption deepens and a crack appears in the regime, authorities will try to control this leak but while doing so, it is possible that endless punishment may just incite some elites to secede.

Particularly, the more information about foreign communities flow into North Korea and the people’s animosity against Kim Jong Il increases, even the elite will not be able to completely suppress feelings of antipathy.

Share

Posted in 1990s Famine, 2002 Economic reforms, Automobiles, DPRK Policies, Education, Kangkye Munitions Factory, Military, Political economy, Songun, Transportation, Worker's Party | Comments Closed

US Promises to End Financial Sanctions Against NK

Saturday, March 10th, 2007

Korea Times
3/10/2007

The United States has promised North Korea that it would lift financial sanctions against the communist country, the North’s chief nuclear envoy said Saturday in Beijing.

“The U.S. has promised to end financial sanctions on the Banco Delta Asia and the North is keeping a close eye on the promise,” Kim Kye-gwan told reporters at Beijing Shoudu Airport before taking a flight to Pyongyang.

“If the U.S. fails to solve the issue completely, we will have to take partial actions against it,” Kim said.

Kim was leaving Beijing after meeting with his Chinese counterpart Wu Dawei to prepare for a fresh round of denuclearization talks on the North’s nuclear disarmament on March 19.

He also briefed Wu on the outcome of his U.S.-North Korea normalization talks in New York on March 5-6 with Christopher Hill, the chief U.S. envoy to the six-party negotiations.

In the normalization talks, both sides also agreed to resolve issues surrounding the designation of North Korea as a terrorism-sponsoring state and the application of the U.S. Trading with the Enemy Act, Kim said.

“We agreed to resolve the issues based on our strategic interests and normalize ties between North Korea and the U.S.,” Kim said. “On those two items, there still are diplomatic issues between us.”

In September 2005, the U.S. Treasury Department blacklisted Banco Delta Asia in Macau for its suspicious role in helping the North launder money. Thus, the bank froze $24 million on North Korean accounts.

The North interpreted the financial sanctions as a U.S. attempt to isolate Pyongyang from the international community, and had boycotted the six-party talks until last December.

During the New York talks, Kim discussed with Hill measures for the normalization of diplomatic relations between North Korea and the U.S., following a breakthrough denuclearization agreement which was signed in the six-party talks in Beijing on Feb. 13.

Kim said the U.S. has promised to resolve the financial sanctions against the North within 30 days.

He added that if the U.S. kept its promise, we will shut down our nuclear facilities in 60 days.

Under the disarmament accord, North Korea committed to take intial steps to disable its nuclear weapons program in return for economic aid, security guarantees and diplomatic incentives from South Korea, the U.S., China, Japan and Russia.

The steps require the North to shut down its Yongbyon nuclear complex and admit international inspectors into the country by mid-April

With a two-month deadline, the other parties will provide 50,000 tons of fuel oil and discuss normalizing diplomatic relations with the North.

Share

Posted in Banking, Finance | Comments Closed

Lunch at a Chinese Restaurant Hosted by North Korea

Saturday, March 10th, 2007

Donga Ilbo
3/10/2007

820 2nd Avenue, New York City. This is the address of the permanent mission of North Korea in the United Nations, the only North Korean diplomatic arena in the U.S. It is a four-minute walk from the UN headquarters and a two-minute walk from the permanent mission of South Korea to the U.N. It is located on the 13th floor of the “Diplomatic Center.”

About 10 North Korean diplomats including North Korean Ambassador to the U.N. Pak Gil Yon are working in this place. When you look at the list of member states of the U.N., you’ll find names like ‘Mrs. Pak’ and ’Mrs. Kim’ right below the list of North Korean diplomats. These are diplomats’ wives who help their husbands at the office by answering phones.

They live in an apartment on Roosevelt Island located on the opposite side of the U.N. headquarters. Many diplomats from poor countries such as North Korea and African nations live there because the rents are relatively inexpensive compared to those of Manhattan.

The diplomats except for Ambassador Park go to work together via minivan. Deputy Ambassador Kim Chang Guk is in charge of U.N.-related affairs and Minister of Political Affairs Kim Myong Gil handles U.S.-related issues. North Korean diplomats have a good command of English. Minister Kim’s English is fluent enough to communicate with reporters in English. Some young diplomats speak French as well.

However, during North Korea-U.S. talks, Choi Son Hee, a fellow researcher of North Korean Foreign Ministry, interpreted for the North Korean delegation headed by Vice Foreign Minister Kim Kye Kwan. She is not only an interpreter but also a diplomat. Choi, who visited the U.S. for the third time, drew attention as an excellent interpreter.

North Korean diplomats are required to get permission from the State Department when they travel beyond the 30-mile limit from the Columbus Circle in Manhattan. When Ambassador Park has to go to Washington, he has to get permission.

Recently, Harvard University was going to invite Mr. Park to hold a forum but failed because the State Department did not issue permission. So the host tried to change the location to Columbia University, which is located within the 30-mile limit. .

South Korean diplomats contacting North Korean diplomats directly or indirectly say they are not financially abundant. It is said that ethnic Koreans who are friendly to North Korea help the North Korean representatives in one way or another. The North Koreans sometimes visit a Korean restaurant on the 32nd Street but not often. Some people say they saw them eat at a delicatessen.

North Koreans often use a Chinese restaurant just beside the North Korean mission when they have an official meeting. A lunch set menu costs about 40 dollars per person and the restaurant offers delicious food so that many South Korean diplomats visit the place. North Korea invited the U.S. delegation to the restaurant for lunch as a return courtesy.

The Korea Society sponsored a large sum of money for the 7-day stay of the North Korean delegation consisting of 7 members, and Stanford University`s North Korea expert group paid for the money needed for the stay in San Francisco. The National Committee on American Foreign Policy also chipped in. Non-profit organizations in the U.S. sponsored the delegation from hotels, restaurants and musicals, as well as round-trip flights from Beijing to San Francisco and New York.

The Korea Society, an organization founded by Korea experts dedicated to the promotion of greater awareness, understanding and cooperation between the people of the United States and Korea, says funding for its programs is derived from contributions, endowments, membership dues and program fees on its website. Many U.S. branch chiefs of Korean conglomerates such as Hyosung and Posco work in the board of directors, and many U.S. companies trading with South Korea sponsor the organization. The South Korean government is supporting it indirectly through the Korea Foundation. A 2004 document shows that the foundation gave 1.1 million dollars to the Korea Society.

Share

Posted in Korea Society, Political economy, USA | Comments Closed

Efficient Poultry Facilities Made

Friday, March 9th, 2007

KCNA
3/9/2007

Efficient large-sized incubators and fowl pellet fodder machine have been manufactured in the DPRK, enjoying a great popularity. 

The newly-made incubator with capacity and incubation rate higher than the existing one is of great significance in intensifying the duckling production. 

It, which consists of hatching chamber, air-supplying apparatus, egg-rolling apparatus, damp-producer and air-cooler, deals with tens of thousands of eggs at a time. 

The air-supplying apparatus keeps the temperature and humidity even in the hatching chamber, and the egg-rolling apparatus is movable. 

The fowl pellet fodder machine makes different sizes of pellet fodder for mother ducks and ducklings. 

Assorted feed produced by the machine boosts the weight-increasing rate per unit of feed by 40 percent and the utility rate of feed by 13 percent compared with the previous one.

Share

Posted in Agriculture | 1 Comment »

Kim: North off U.S. terrorism list

Friday, March 9th, 2007

Joong Ang Daily
Yeh Young-June and Ser Myo-ja
3/9/2007

The United States has already agreed to take North Korea off Washington’s list of states that sponsor terrorism and a follow-up development will happen soon, Kim Gye-gwan, North Korea’s vice foreign minister, said yesterday.

The United States is expected to release a new list in April. Mr. Kim said no conditions were placed on North Korea’s removal from the list.

After two days of talks in New York with his American counterpart, Christopher Hill, Mr. Kim arrived at Narita International Airport in Tokyo last night and spoke to reporters briefly on his way back to Pyongyang.

“Spring is coming, so the atmosphere will change,” Mr. Kim said, describing the first round of normalization talks as “constructive.”

He also said the discussion included North Korea’s cooperation in the investigation of a highly enriched uranium-based nuclear arms program.

Mr. Kim said he and Mr. Hill also discussed the possibility of arranging a foreign minister-level meeting among the two Koreas, China, Japan, Russia and the United States. “It will probably take place around April,” Mr. Kim said. “It is, however, not to upgrade the six-party talks. It is for the six ministers to get together to give momentum to the six-party talks.”

Asked whether Pyongyang will make more demands after financial sanctions on North Korean accounts in a bank in Macao, China are lifted, Mr. Kim said, “Just think that things are going well. Don’t try to know too much about it.”

Share

Posted in Political economy, USA | Comments Closed

Chinese Entrepreneurs Poised to Pounce on North Korean Border

Thursday, March 8th, 2007

Bloomberg
Bradley Martin, Allen Cheng
3/6/2007

Chinese entrepreneur He Ho was burned by his first North Korean investment, a bakery in the shabby border city of Sinuiju. He lost his entire $20,000 when the plan to make the city a special economic zone stalled in 2003.

If another opportunity comes along, though, “I’ll be the first to go in,” the 34-year-old said in an interview in Dandong, the bustling Chinese city facing Sinuiju across the Yalu River. “North Korea’s a good investment because so many things are lacking.”

Business executives in Dandong, one of the main conduits for trade in and out of North Korea, see opportunity in the recent six-nation agreement to end Kim Jong Il’s nuclear-weapons program. They think the 65-year-old North Korean leader will now focus on fixing his country’s nearly flattened economy and may revive plans for a special economic zone — an area designed to promote foreign investment, with fewer rules and regulations than elsewhere in the country — on the western border with China.

“Most of North Korea’s trade with China is via Dandong, so a special zone in this corridor could make sense,” said Marcus Noland, senior fellow at the Peterson Institute for International Economics in Washington. “This could be the North Korean equivalent of the Chinese coastal SEZs in the early years of the Chinese reform.”

No Guarantee

There’s no guarantee against another disappointment for entrepreneurs like He Ho, said Peter Beck, Seoul-based Northeast Asia project director for the International Crisis Group, a Brussels-based organization that works to resolve crises around the world.

“The eternal optimist in me hopes that Kim will see the light and recognize the direction in which he needs to lead the economy,” Beck said in a telephone interview. “But the jury’s still out.”

At the same time, “the North Koreans have been talking about putting a special economic zone in the far northwest aimed at China for a decade,” said the Peterson Institute’s Noland. “If they get the politics right, this venture could work.”

China is North Korea’s top trading partner, with 2006 exports of $1.23 billion and imports of $468 million, according to its Ministry of Commerce.

A little over a year ago, Kim visited six booming Chinese cities, including the special economic zone of Shenzhen, bordering Hong Kong. North Korea’s Central News Agency described the nine-day trip as a visit to places “where the cause of modernization is being successfully carried out.”

Executives’ Speculation

Business executives in Dandong speculate that North Korea will develop a new zone in Cholsan County, a peninsula on the east side of the mouth of the Yalu some 50 to 60 kilometers (31 to 37 miles) south of Dandong and Sinuiju. China’s commerce and foreign ministries and North Korea’s embassy in Beijing didn’t respond to faxed requests to comment on their plans.

In 1991, North Korea built a special economic zone at Rajin-Sonbong, in the remote northeast of the country, which has failed to attract much foreign investment because of its location.  Another zone near the southern border at Gaeseong, only 60 kilometers from Seoul, has proven more popular, especially with South Korean manufacturers in search of low-cost labor.

In 2002, North Korea announced plans for the zone in Sinuiju, which would have included export factories and casinos to lure gamblers from China. Kim named Dutch-Chinese businessman Yang Bin governor of the zone. China, which hadn’t given its approval, squelched the plan by arresting Yang and jailing him in 2003 on charges of fraud and illegal land use.

Strained Relations

Kim’s test of a nuclear device in October, which strained relations with the Beijing government, didn’t halt commerce on the border, according to Shen Yuhai, general manager of Dandong Jade Ocean Trade Co. “We didn’t stop trading at any time,” he said in a recent interview.

Shen’s office overlooks a busy parking lot where Chinese customs officials examine trucks departing neon-lit, high-rise Dandong for the run-down and darkened Sinuiju.

The trucks cross on the Friendship Bridge’s single lane in the morning with manufactured goods and return in the evening, either empty or carrying minerals, silkworm cocoons and seafood, Shen said. Four trains a week cross in each direction, connecting the North Korean capital of Pyongyang with Beijing.

China is supplying its neighbor with “daily necessities, home electrical appliances and, in this season, farming tools and chemical fertilizer,” said Shen.

While business is booming, he said he’s still cautious about the risks. He requests payment in yuan, dollars or euros, not North Korean won, and accepts bank transfers only after business relations have been established.

Even then, he said, “sometimes we are cheated.”

–With additional reporting by Hideko Takayama in Tokyo and Lee Spears and Dune Lawrence in Beijing.

For a copy of a list of banned goods to North Korea: http://www.state.gov/t/isn/76138.htm

Share

Posted in Agriculture, China, Foreign direct investment, International trade, Sinuiju Special Administrative Region, Trade Statistics | Comments Closed

Koreas to hold Red Cross talks to resume construction of family reunion center

Thursday, March 8th, 2007

Yonhap
3/8/2007

Red cross officials from South and North Korea are to meet this week on resuming the construction of a family reunion center on the North’s scenic mountain bordering the South along the east coast, South Korean officials said.

The one-day meeting, slated to be held at the North’s Mount Geumgang resort on Friday, will also address the next family reunions via video link to be held on March 27-29.

Last week, the two Koreas agreed to resume reunion events for families separated by the border since the end of the Korean War. The next face-to-face family reunions will be resumed in early May.

Shortly after the North conducted its missile tests in July, the South suspended food and fertilizer aid. In retaliation, the communist nation immediately suspended inter-Korean talks, family reunions and the construction of the family reunion center.

“The construction has been put on hold for about eight months, so we will have to resume construction after checking whether there are technical problems. The construction will likely be completed next year, far later than the originally scheduled April of this year,” a South Korean Red Cross official said on condition of anonymity.

High on the agenda will be discussions on when to resume construction, how to check the facilities needed for construction, and how to provide supplies and dispatch engineers, the official said. The South Korean delegation will be headed by Hwang Jeong-ju, while Pak Yong-il will lead the North Korean team.

The two sides started the construction at a village near the scenic mountain resort in August 2005. The envisioned 12-story building will house two reunion halls and serve as the venue for family reunion events.

The two Koreas have held 14 rounds of family reunions. More than 90,000 people from South Korea alone have remained separated from their loved ones since the end of the 1950-53 Korean War.

Share

Posted in Civil society, Foreign direct investment, International/Korean Red Cross, Mt. Kumgang Tourist Special Zone | Comments Closed

Daedong fights U.S.-imposed sanctions on North Korea banks

Thursday, March 8th, 2007

International Herald Tribune
Donald Greenlees
3/8/2007

Last August, Colin McAskill, a British businessman, agreed to buy a small bank in North Korea. On the face of it, Daedong Credit Bank was not a brilliant investment.

The agreement that McAskill signed with the management of Daedong Credit at a hotel in Seoul came as the bank was caught in the grip of financial sanctions that had virtually cut off North Korea from the global financial system.

Financial institutions around the world were shunning any links to North Korean banks, making it almost impossible to transact business.

Daedong Credit was using couriers to carry cash in and out of the country in amounts as high as $2.6 million because it could not make electronic transfers to other banks.

Since September 2005, Daedong Credit had also been fighting to recover $7 million that had been frozen in a Macao bank as part of efforts by the United States to put a financial squeeze on North Korea over alleged illicit financial transactions. This was a big sum for Daedong Credit. When McAskill had examined the bank’s books, its total assets were just $10 million.

None of this has deterred him. He said during an interview in Hong Kong that he planned to execute the sale agreement within the next two weeks and take full control of the only foreign-managed bank in North Korea. The Hong Kong- based Koryo Asia, chaired by McAskill, will take control of the banking license and a 70 percent stake owned by British investors through a Virgin Islands company. The remaining 30 percent is held by the state-owned Daesong Bank. “I think it’s a magnificent deal,” McAskill said, although he would not disclose the purchase price. “The bank has been running for 12 years. It is trusted and it has been profitable since day one.”

Despite McAskill’s optimism, the future of Daedong Credit has been under a cloud since the imposition of the U.S.- orchestrated banking embargo on North Korea 18 months ago and the viability of the business remains precarious.

Even amid signs of a thaw in relations between Pyongyang and Washington, the start of a bilateral dialogue that began in New York on Monday and an agreement in six-nation talks in Beijing on Feb. 13 to start to denuclearize the Korean Peninsula, analysts say banks in North Korea will struggle to restore contacts with the global financial system.

The trigger for the financial embargo of North Korea was a declaration by the U.S. Treasury Department under section 311 of the Patriot Act that the Banco Delta Asia, based in Macao, was a “primary money laundering concern” because of its links to a number of North Korean banks, individuals and companies alleged to have engaged in product and currency counterfeiting, drug trafficking and weapons proliferation.

The U.S. and Macanese authorities began separate investigations into Banco Delta Asia and the bank was placed under Macao government supervision.

Along with about 50 North Korean banks, trading companies and individuals, Daedong Credit had its account frozen. The total amount put into “suspense accounts,” according to Banco Delta Asia, was about $25 million, with Daedong Credit accounting for the largest share. Since then, almost all foreign banks that had correspondent relations with Daedong Credit have severed contact for fear of being excluded from the U.S. financial system.

Jack Pritchard, president of the Korea Economic Institute in Washington, said it was unlikely that the United States would send an explicit signal to the financial community to resume trading with North Korea, regardless of whether Pyongyang starts to address concerns about its foreign financial transactions.

He said that although a portion of the frozen money was likely to be released soon, there would not be a “100 percent reversal” of the American stance on financial transactions with North Korea.

Daedong Credit is likely to be one of the first North Korean account holders in Banco Delta Asia to get its money back from the Macao Monetary Authority where it has been earning no interest.

In recent months, McAskill has circled the globe from his home in London acting under a mandate from Daedong Credit to persuade officials in Washington and Macao to release the account. At 66, McAskill has spent 28 years doing business with North Korea, including as a consultant to North Korean banks on debt negotiations and helping to operate North Korean foreign gold sales. He said that at no stage in his meetings with officials from either the U.S. or Macao governments had he seen any specific reason for freezing the Daedong Credit money or been told of any specific allegation about its origins.

McAskill has produced what he calls a “dossier of proof” to establish the identity of all the customers whose money is frozen and the sources of the money. Since it was founded by the failed Hong Kong finance group Peregrine in 1995, Daedong Credit has filled a valuable niche serving the foreign community in Pyongyang. It has about 200 customers among foreign-invested joint ventures, foreign relief organizations and foreign individuals, according to McAskill. The biggest single amount frozen in Macao is $2.6 million belonging to British American Tobacco, which owns a cigarette plant in North Korea.

“We irrefutably established that the money was legal,” McAskill said. “The U.S. Treasury have been going around the world saying to banks ‘close this account, close that account’ but not offering any proof of wrongdoing.” He said his due diligence of Daedong Credit had convinced him that it was a “fully legal, legitimate operation” that did not manage state accounts or had ever been connected to illicit practices.

One of the Treasury’s main allegations against Banco Delta Asia is that it facilitated the spread of counterfeit $100 bills. But McAskill said Daedong Credit had put $49 million into Banco Delta Asia in 2005 and all that money had been forwarded to HSBC for verification.

Only three of the $100 notes belonging to Daedong Credit were confiscated because they were “suspect,” he said.

McAskill has charged the Treasury with harassment after two correspondent banks — one in Vietnam and the other in Mongolia — informed Daedong Credit late last year that they would immediately close accounts because of pressure from the United States.

But it is likely to prove difficult to persuade banks, nervous about the effect on Banco Delta Asia of the long- running Treasury investigation, to take the risk of dealing with a North Korean counterpart, regardless of the pedigree of its shareholders and board.

Last week, at a meeting in Macao, McAskill was finally told by the head of a government-appointed committee supervising Banco Delta Asia, Herculano de Sousa, that it was likely that the money in Daedong Credit would be returned by the end of March.

In the meeting, McAskill told de Sousa that once the funds were freed, Daedong Credit intended to leave the money in Banco Delta Asia and resume operating its old account.

But Banco Delta Asia has informed the U.S. Treasury that as part of its cleanup both the administrative committee and the shareholders were adamant that they no longer would do business with any North Korea entities. In doing so, the bank hopes to avoid the United States making good on a threat to ban Banco Delta Asia from having any correspondent relationships with U.S. banks.

Still, McAskill insisted that Daedong Credit has not broken any law in Macao or elsewhere and that there were no grounds for it to be forced to close its account.

“I am not going to take my money back and cut and run,” he said.

Share

Posted in Banking, British American Tobacco (BAT), Daedong Credit Bank, Daesong Group, Finance, Gold, Korea Business Consultants, Tobacco | Comments Closed

Chinese Merchants in North Korea – Cure or Poison to Kim Jong Il?

Wednesday, March 7th, 2007

Daily NK
Kim Min Se
3/7/2007

90% daily goods made in China, 50% circulated by Chinese merchants

While some prospect that North Korea may be an affiliated market of China’s 4 provinces in the Northeast, the real focus is on the merchants who actually control North Korea’s markets. Recently, North Korean citizens have been asserting that markets would immobilize if Chinese merchants were to disappear.

Lately, Chinese merchants are nestling themselves with their newly found fortune in North Korea, undeniably to the envy of North Korean citizens.

In a recent telephone conversation with the DailyNK, Kim Chang Yeol (pseudonym) a resident of Shinuiju said “Most of the tiled houses in Shinuiju are owned by Chinese merchants in Shinuiju are upper class and the rich.” Unlike Pyongyang, tiled houses in Shinuiju are greater in value than apartments. In particular, the homes owned by Chinese merchants are luxurious and impressing.

Kim said “At the moment, 90% of daily goods that are traded at Shinuiju markets are made in China.” What Kim means by 90% of goods is basically everything excluding agricultural produce and medicinal herbs. Apparently, about half of the (90% of) supplies are circulated by Chinese merchants.

Kim affirmed that the market system could be shaken if supplies were not provided by the Chinese merchants. Hence, Chinese merchants have elevated themselves in North Korea’s integrated market system, to the extent that the market could break down without their existence.

In addition to this, Chinese merchants are playing a vital role in conveying information about the external world into North Korea. Even in 2004, it was Chinese merchants to first telephone China through mobile phones relaying the news about the Yongcheon explosion. As a result, rumors say that the movement of Chinese merchants can either be a “cure” to the economic crisis in which the North Korean government seems unable to fix, or “poison,” as more and more foreign information flows into the country.

How many Chinese merchants are there in North Korea?

A report by China’s Liaoning-Chosun Newspaper in 2001 sourcing data from North Korea, states that immediately after WWII, approximately 80,000 overseas Chinese were residing in the Korean Peninsula. Then following the Korean War and the formation of a Chinese government, the majority of people, approximately 60,000 Chinese, returned home. In 1958, statistics show that 3,778 families of overseas Chinese were living in North Korea, totalling 14,351 people.

These Chinese engaged in business related to farming, home made handicrafts and restaurant business, and in the late 50’s, lost all this due to the implementation of economic planning and dictatorial regime. Since then, the majority of merchants continued to return to China until the early 80’s.

In 2001, Liaoning-Chosun Newspaper confirmed that approximately 6,000 Chinese were living in North Korea. Of this figure, more than half were residing in Pyongyang, approx. 300 families living in North Pyongan and approx. 300 families residing throughout Jagang and northern districts of South Hamkyung.

At present, there are 4 middle and high schools for children (11~17 years) of Chinese merchants, located in Pyongyang, Chongjin, Shinuiju and Kanggae. In addition to these schools, there are a number of elementary schools (for children aged 7~11 years) located sporadically throughout each province.

Wang Ok Kyung (pseudonym) a resident of Shinuiju attended Chongjin Middle School for children of overseas Chinese in 1981~86. Wang said “At the time, there were about 40 students in each year. Now there is only about 5~6 students.” Nowadays, many Chinese children complete their elementary studies in North Korea, but the general trend is to send the children to China for middle school. She said “In order to enter a Chinese university, students must have completed their middle school studies in China and must be fluent in Chinese. He/she can also go to private institutes in China.”

Fortunes made through trade between North Korea-China during the food crisis

Even until the early 80’s there were no such thing as a wealthy North Korean-Chinese merchant. They were no different to North Korean citizens.

However, in the 80’s, many people began importing and selling goods such as socks, handkerchiefs, hand mirrors and cards from China, literally through their sacks. As the 90’s approached North Korean-Chinese merchants began to experience great wealth, the time where North Korea-China trade fundamentally kickstarted.

Today, Son Kwang Mi (pseudonym, 52) falls under the top 10 wealthiest Chinese merchants in Dandong, characterizing an unique rags to riches story. In the past, Sun lived in Chongjin and was one of the first figures to trade with China in the 80’s.

In the beginning, Son was so poor that she had to sell her watch received as a wedding gift in order to buy goods to sell.

Fortunately, Son found her money smuggling gold. In North Korea, gold is considered a public good or simply put Kim Jong Il’s personal inheritance, so private trade of gold is strictly regulated. Nonetheless, there are still some laborers who export gold secretly and a great number of people still collect gold through dubious ways. In particular, after the 80’s as North Korea began to experience economic decline, more and more people sold gold secretly.

Hence, a small number of Chinese merchants infiltrated the market of secretly trading gold with China. Chinese smugglers were able to take advantage of North Koreans by greatly raise their market margins, as the supply of gold and North Koreans wanting to sell their gold was high yet the demand in North Korea low.

Son said “Of the Chinese merchants in North Korea, 60% earned a great fortune at that time through illicit trade.”

She says that there were two opportunities for overseas Chinese to make a great fortune. The first was in 1985~89 through illicit trade of gold and the second, during North Korea’s mass food crisis in 1995~98.

“During the mass famine, everything in North Korea was in shortage and so Chinese merchants began to provide the daily necessities of life. At the time, if you brought large amounts of goods such as fabric and sugar, you could make a profit of 1 million Yuan (US$137,000),” she said.

Son was fortunate enough not to miss these two opportunities which led her to great wealth and allowed her to possess a fortune of 50 million Yuan (US$6.31 million).

Chinese merchants can relatively enter and exit China freely. Also, with the ability to speak Chinese fluently and the possibility of staying in the homes of many relatives in China, the occupation possesses ideal conditions.

Share

Posted in 1990s Famine, Black markets, Cell phones, China, Communications, Economic reform, Education, Foreign direct investment, Gold, International trade, Labor conditions/wages, Light Industry, Manufacturing, Real estate | Comments Closed

« Older Entries
Newer Entries »