Archive for October, 2007

GS Caltex to supply heavy oil to N. Korea

Sunday, October 28th, 2007


GS Caltex Co., South Korea’s second-biggest oil refiner, said Sunday it is set to supply 21,000 tons of heavy oil to North Korea as part of a nuclear disarmament agreement.

The oil shipment will be sent later Sunday via the port of Yeosu, a port city about 455 kilometers south of Seoul, to arrive at the North Korean ports of Songlim and Sunbong.

GS Caltex and European oil trading company Vitol have recently won a tender issued by the U.S. Agency for International Development to supply a combined 50,000 tons of heavy oil to the North as part of the disarmament-for-aid deal.


Oil price ‘grounds’ N Korea fleet

Sunday, October 28th, 2007


North Korea has been forced to ground a fleet of Soviet-era military planes because of the high oil price, South Korea’s Yonhap news agency reported.

Fuel is being diverted for other training flights, Yonhap quoted a military source as saying.

The Antonov An-2 biplanes – of which North Korea’s air force is thought to have about 300 – are able to drop special forces behind enemy lines.

The planes, which can cruise below radar, carry some 12 soldiers.

North Korea’s impoverished economy has suffered from energy shortages for years, and rising oil prices have made the situation worse.

Low speed

The Antonov, designed and built in the Soviet Union, first flew in 1947, and is still used by a number of military and civilian operators around the world.

The plane is useful in special forces operations because of its extremely low minimum speed – it can fly as slowly as 48km/h (30mph) without stalling, according to aviation experts.

North Korea’s air force fields hundreds of aircraft, but the vast majority are ageing Soviet models – such as the MiG 21 fighter – or Chinese copies outclassed by more modern aircraft fielded by the US, South Korea or Japan.

North and South Korea are still technically at war as a peace accord to bring an end to the 1950-53 conflict has never been signed.


Kim Jong-il Interested in Vietnam-Style Reform Policy

Sunday, October 28th, 2007

Korea Times
Jung Sung-ki

North Korean leader Kim Jong-il has expressed intention to model after the Vietnam-style economic reform and openness policy, dubbed “Doi Moi,” a report said Sunday.

Vietnam adopted the reform policy in 1986 to establish a market economy such as liberalization of trade and finance with foreign countries, decentralization of state economic management and reliance on the private sector as an engine of economic growth.

Kim made the remarks during a meeting with Nong Duc Manh, secretary-general of Vietnam’s Communist Party, in Pyongyang last week, Yonhap News reported, citing the Sunday edition of the weekly Yazhou Zhoukan, a Hong Kong-based international Chinese business daily. The newspaper carried an interview with Vietnamese Foreign Minister Pham Gia Khiem who accompanied the secretary general on his Pyongyang visit.

“Chairman Kim highly evaluated the achievements Vietnam’s Doi Moi has made in the past 20 years while meeting with Secretary General Manh,” Khiem was quoted as saying, adding the North Korean leader accepted Manh’s proposal for Kim’s visit to Hanoi.

The ongoing visit to Hanoi by North Korean Prime Minister Kim Yong-il aims to prepare for Kim’s visit to Vietnam, the report said.

The North Korean premier, who arrived in Hanoi Friday, visited several industrial and tourist sites in Vietnam, including Halong Bay, one of the biggest tourist attractions for foreigners, reports said.

Diplomatic sources in Hong Kong, however, were quoted as saying it is remarkable that Kim Jong-il expressed an interest in Doi Moi, but it is not likely for the communist North to closely follow the reform program.

The reason why the North is eyeing Vietnam’s economic program could have something to do with China’s lukewarm attitude to Pyongyang’s efforts to build special economic zones near the North’s border with China, they said.

Hanoi’s reform has often been referred to as a model for North Korea’s underdeveloped economy to emulate.

Chief U.S. nuclear envoy Christopher Hill said during a visit there in May that North Korea should “move on in the way that Vietnam has done so well.”

North Korea, Vietnam agree to boost bilateral ties


North Korea and Vietnam said Saturday they have agreed to forge closer cooperation in the sectors of agriculture, culture and tourism, in their first high-level meeting in five years.

The agreement was reached after a meeting of visiting North Korean Premier Kim Yong-il and Vietnamese Prime Minister Nguyen Tan Dung.

Kim, who is in charge of economic policy, arrived in Hanoi on Friday for a five-day stay, as part of the first leg of a tour to Southeast Asian nations that include Malaysia, Cambodia and Laos.

Vietnam has shifted to a market economy since the mid-1980s and Hanoi’s reform is seen by many as a model for North Korea’s underdeveloped economy to emulate.


Economic doldrums, restrictions on hawking cost jobs in N. Korea: aid group

Friday, October 26th, 2007


North Koreans have been suffering from chronic job shortages due to worsening economic conditions and a recent move by North Korean authorities to limit the number of hawkers for fear of capitalism spreading in the isolated, communist state, an aid group said Friday.

The North has recently forbidden women under the age of 40 from selling merchandise on their own, Good Friends said in its latest newsletter. The previous age limit was 30.


The Story of a Honorary Soldier Selling Noodles in Pyongyang

Friday, October 26th, 2007

Daily NK
Lee Kwang Baek

Mr. “Kim,” who lives in Pyongyang, lost a foot in an accident in the army. After his discharge, he became a 1st-class Honorary Soldier of merit living on provisions and bonuses supplied by the nation. The wounded soldiers are named as “Honorary Soldiers” in North Korea. Even before the great famine, Mr. Kim and his family could survive on provisions and bonuses alone. However, after the worsening of the economic situation, they fell into serious hardship.

Nowadays, Mr. Kim steps outside every morning, dragging his one foot, because he has to buy noodles at the “Sunkyokak (a noodles restaurant)” that sells honorary soldiers at a state-assigned price of 230 won. Mr. Kim, who is a first-class honorary soldier, can buy two bowls of noodles at one time.

There is no limit on the number of times one can buy a bowl of noodles. However, with the increase in honorary soldiers living on the profit from noodles bought and resold, the number of bowls Mr. Kim can buy from standing in line all day is only four. Even then, he can sell a bowl which he bought for 230 won for 1,000 and can go home with a slightly upward amount of 3,000 won after selling four bowls.

The subsidies Mr. Kim receives as an honorary soldier every month is 3,000 won. That only comes out to 100 won per day, not even sufficient for a bowl of noodles from Sunkyokak. The cost of living for a family of four is usually 100,000 won (approx. USD30.0), so it is not enough to get by for a month. If one can earn one month’s worth of bonus in a day by selling noodles, there is nothing he can do, besides sell them, but to stand in line all day on crutches.

Until now, North Korea has poured a lot of energy to support for honorary soldiers. After the Korean War, it has guaranteed jobs for soldiers by erecting the Distinguished Soldier Fountain Pen Factory, the Sariwon Honorary Soldier Dressmaker Factory, the Hamheung Honorary Soldier Plastic Products Factory, etc. and to soldiers who have lost their ability to work, it has given provisions and bonuses. Further, it has advertised support for honorary soldiers as the “citizen’s responsibility” and has sought out civilian support.

However, recently, according to North Korean sources, among the guests who come to the Sunkyokak, approximately half are honorary soldiers who resell the noodles. The honorary soldiers demonstrate the fact that survival based on provisions and bonuses alone are impossible.

After the food shortage, an important transformation has taken place in North Korea. The number of people relying on national provisions decreased by around 30% and the rest were placed in situations where they could not survive on provisions, salaries, and bonuses provided by the state alone. At least 100,000 won is needed for monthly living costs, but the salary and bonus that the state can provide is only several thousand won. North Korea has become a society where honorary soldiers who had received the state’s special consideration and support now have to sell whatever they can to survive.

In order to buy four bowls of noodles, Mr. Kim, who has to stand on crutches all day, is the testament of North Korea’s economic system which has crumbled since the food shortage and the rapid deteriorate of whatever grip it does have.


Jangmadang Will Prevent “Second Food Crisis” from Developing

Friday, October 26th, 2007

Daily NK
Kim Min Se

There is a prospect of the rise of “second food crisis” next year because of the flood disaster and the resulting food shortage.

A senior researcher at Korea Rural Economic Institute, Kwon Tae Jin said warningly, “Unless North Korea comes up with a special plan to secure food supply, there will come another food crisis next year, which is as severe as the one in the mid and late 1990s.”

Kwon anticipated that North Korea would need 5.2 million tons of grain for domestic consumption. Unfortunately, it is expected that North Korea would produce around 3.8 million tons of grain. This means there will be a shortage of 1.4 million tons of grain.

The statistics indicates there is a real possibility of a food crisis. North Korean authorities announced that the flood inundated about 2.2 billion ㎡ of farmland, which accounts for 14 percent of the country’s farmland. It is estimated that 2.2 billion ㎡ of farmland produces at least 500,000 tons of grain.

However, another prospect says that although food shortage is inevitable, it will not lead to mass starvation in North Korea as it did in the mid-1990s. Most of defectors from North Korea said, “Since the mid-2000s, things have changed. There won’t be any serious starvation.” They said that the current situation is different from that of those days under the central food distribution system. They added that the Jangmadang (markets) economy has changed a way for life among North Korea people.

◆ The amount of demand for food is overestimated

It should be double-checked whether North Korea really needs a minimum of 5.2 million tons of grain. There is criticism that the estimate of food demand which was calculated by some South Korean experts on North Korea and relief organizations is unrealistic. It is also pointed out that the estimate is calculated based on the nutrition standard of South Korea.

Defectors said that mass starvation would not have occurred if North Korea had at least a half of 5.2 million tons of grain in the mid 1990s.

Although the international standard for daily nutritional intake is between 2,000 and 2,500 kcal/day, North Korea sets the standard at 1,600 kcal/day, which amounts to 450 grams of grain.

It is easy to estimate the minimum amount of food demand needed in North Korea. Let us say every individual including children and the elderly needs 550 grams of grain per day, which is equal to the daily amount of food distributed to every adult by the state. With the population of 22 million in North Korea, the country then needs 12,100 tons of grain each day and 4.4 million tons of grain per year.

It is known that the North Korean government provides 550 grams of grain for adults and 300 grams for both children and the elderly. According to CIA’s World Fact Book 2004, the population aged between 15 and 64 in North Korea is around 15 million, which accounts for 67.8 percent of total population. This means the population of children and the elderly together reaches about 7 million. If we do the math, we come into conclusion that the amount of food needed in North Korea every year is 3,777,750 tons of grain.

Recall that North Korean people had received the aforementioned amount of food through the state food distribution until early 1990s. Of course, the country did not suffer from mass starvation back then.

The mass starvation during the mid-1990s resulted from huge decrease in food production between 1994 and 1998. In those years, North Korea produced about 2 million tons of grain, which fell far below the needed levels of food production. Hwang Jang Yop, former secretary of the Worker’s Party also testified that in the fall of 2006, while he was still in North Korea, he once heard the secretary of agriculture Seo Kwan Hee worrying about extremely low food production.

Therefore, it is correct to estimate the minimum amount of food needed in North Korea at 3,777,750 tons of grain. If the food production decreases below 3 million tons, then the food prices will skyrocket, and the possibility of mass starvation will be increased.

◆ A New way of life among North Korean people helps prevent them from falling victim to starvation.

North Koran people do not believe in the state authorities any more. The people know that they suffered from horrible starvation because they relied on the state and its food distribution system. During the crisis, many people had desperately waited for food to be distributed until they collapsed and died. Nowadays, North Korean people find a means of living by themselves at Jangmadang.

“There is no free ride” is the words on everybody’s lips in North Korea, which means that everyone must work hard in order to make a living. The lowest class became a day laborer.

The mass starvation of the mid-1990s has brought a significant change into North Korean society. Except a few, most of North Korean people do not rely on the state’s food distribution system. Instead, they have come up with a variety of survival techniques such as engaging in business, illegal trade with China or real estate transactions, receiving support from defected family members, and house sitting.

In that manner, North Korean people make money and use it to buy rice. An affiliate at the Bank of Korea who studies price trends of North Korea said, “Since the adoption of the July 1 Economic Improvement Measure, the price of rice and corn has increased the least.” If the prices go up, people would tighten their belts and decrease their spending on every item except rice. This means they are not that vulnerable to starvation as they used to.

◆ Businessmen are good at securing food.

Recently, a number of rich businessmen have emerged. Some have tens of thousands dollars, and others as many as several million dollars. Groups of Jangmadang businessmen have been organized with these rich businessmen as the leaders.

These businessmen come and go to China as they please and supply food and goods to Jangmadang in North Korea. If the rice price in North Korea is expensive than in China, they buy Chinese rice and sell it at Janmadang. In this way, they help balance supply and demand at the market.

Furthermore, Chinese residents in North Korea and Chinese businessmen also joined the North Korean businessmen as providers at the market. They too sell food produced in China at Jangmadang when food prices go up in North Korea. If possible, they even sell rice reserved for the People’s Army. There was an accusation that the state authorities supplied food aid from overseas for the People’s Army while collecting food produced in North Korea at the same time.

Of course, some businessmen could deliberately keep a hold on food supply anticipating an increase in food prices. However, that kind of unfair activity is temporary. Although it is too early to tell, the “invisible hand” of the market, however small it is, is operating in North Korea and acting as a preventive measure against starvation.


Inside North Korea: A Report by Good Friends Chairman Venerable Pomnyun and Seungjoo Baek

Wednesday, October 24th, 2007

pomnyun.jpgInside North Korea: A Report by Good Friends Chairman Venerable Pomnyun and Seungjoo Baek
SAIS US Korea Institute
September 19, 2007


For audio, click here. 

Chairman of the Good Friends Center for Peace, Human Rights and Refugees, the Venerable Pomnyun, briefed audience members at SAIS on current trends inside North Korea, including issues surrounding the current food crisis caused by the flooding, continuing health crisis, and the breakdown of the education system.

Good Friends, one of the largest Korea-based organizations providing humanitarian aid inside the D.P.R.K. and to refugees in Northern China, contributes some of the most accurate and timely reports on conditions inside North Korea. The Venerable Pomnyun visited Washington D.C. with a team of experts to discuss the on-going food shortage and proliferation of non-government controlled information. While here, they briefed Congress and held a day-long conference at CSIS.

Highlights of his comments (paraphrased, not direct quotes):

  • In contrast to the much lower number of famine deaths provided by Stephan Haggard and Marcus Noland Pomnyun maintained the 3 million number claimed by Good Friends in the past.
  • He provided a short narrative of coping mechanisms people have adopted to stay afloat (selling and manufacturing in homes). Society is being sustained by activities that are still considered illegal.
  • He claims the food situation is getting worse, and he does not think the DPRK can resolve the situation on its own.  Now people buy all their food on the market.
  • He claims that people’s lives are not improving.
  • TB is on the increase along with other epidemics.  Since there is no electricity, water is not clean. 
  • He offered that there are four levels of hospitals: clinics at the town level, hospitals in cities and some towns, hospitals at province level, and specialist offices in the Pyongyang area.
  • Hospitals and clinics are not working at the city/province level.  The situation is better in Pyongyang hospitals.  The amount of international medical aid, however, is not enough for even the Pyongyang hospitals.
  • Medical aid is the second most needed good (after food).  People do not get medicines from the hospital, but from the markets.  With low salaries, however, medicines are difficult to afford.  [Because the institutional environment is still not supportive of entrepreneurship] there are qulaity problems with pharmaceuticals purchased at the markets.
  • The education system, though ‘free’ is not functioning well.  Due to the food shortage problem, students do not go to school.  Teachers also do not come to class.  The cost of education is being pushed back to students directly.  For example, students buy chalk for teachers.  As a result, however, poor students cannot attend school.  The rich students are hiring tutors, so we are seeing a market in private education emerge in the DPRK.
  • The DPRK is slowly moving to a private economic system.  Men who cannot get work are now jokingly referring to themselves as “guard dogs,” because they sit at home all day.
  • North Koreans do not trust the government or party.  People on their death beds are telling their children to trust their descendents, not the government.  People still spend much of their time trying to subsist, but these complaints will not become a political issue.  The political system is stable and will not collapse any time soon.

British singer charms North Koreans into a tour

Wednesday, October 24th, 2007

Times of London
Lucy Bannerman

She is one of the few Westerners to be invited behind the borders of the world’s most secretive state, and is surely the only soprano from Middlesbrough to perform for Kim Jong Il.

Having become an unlikely celebrity in North Korea over the past six years, the opera singer Suzannah Clarke has pulled off perhaps her greatest coup by getting permission to take the state’s national orchestra to Britain. The Times has learnt that plans are under way for 120 musicians to perform at a number of big venues across the UK early next year.

The Foreign Office has already given its support to the project and the search is now on for sponsors.

For the performers, it will be their first experience of the outside world; for Clarke, 38, it will be the culmination of years of work, using her position as the darling of Pyongyang to build close relations with North Korea’s leaders. She said: “This is not an easy project. Two years ago I wouldn’t have had any hope of succeeding. But when I went out there last April, I could feel a change in the air, a warmer atmosphere. This is the first time the North Koreans have ever let their orchestra abroad.

Clarke, who opened the Euro 96 football championships at Wembley, claims that ending isolation is the best way for the West to build relations with the hardline state, which has a dismal record on human rights and is thought still to be holding up to 200,000 political prisoners, and has presided over millions of deaths from famine and economic mismanagement. However, she argued that isolation was not the answer. The idea of a British tour came to her as she watched the orchestra perform during the annual Friendship Festival this year.

As befits the tough standards set by the dictatorship, the musicians displayed the same discipline and technical prowess demonstrated by the thousands of dancers who take part every year in the synchronised gymnastic games marking Kim Jong Il’s birthday. “They played a cheeky medley of tunes – Shostakovich, Mozart, as well as some of their own repertoire. It was powerful, passionate, but funny as well, and I thought, ‘Gosh, British audiences would love this’,” she said.

She is seeking sponsors and dealing with the considerable logistical challenge of arranging transport and accommodation for 120 North Koreans and their chaperones during their visit. “I wake up from mini-nightmares of losing a North Korean on the Tube,” she said.

Supporters include Lord Alton of Liverpool, chairman of the British-North Korean All Party Parliamentary Group and official patron of the project, and David Heather, a British financier who curated Britain’s first exhibition of North Korean art in Pall Mall, this year.


Unemployment Grows as DPRK Businesses Reject Hiring Regulations

Tuesday, October 23rd, 2007

Institute for Far Eastern Studies
NK Brief No. 07-10-23-1

DPRK authorities are quick to stress that not one single unemployed worker can be found in Socialist North Korea. The truth is, however, unemployment has existed in the past, and now out-of-work laborers are taking on a new form.

With the exception of a small minority of North Koreans, most citizens are assigned professions and dispatched to their place of employment by DPRK authorities with no regard to personal aptitude or skills. This has led to the refusal of some to take assignments in mines, shipyards, and other undesirable factories, creating a group of ‘non-workers’.

However, today’s unemployed are different from the unemployed found in the 1980s and 90s. In the past, these workers refused positions at undesirable factories. In the late 1990s, with the cessation of food rations and lack of job positions, a good number of factories and businesses shut down operations, leading to an increase in unemployment. Now, it is the mines, companies, and yards that are refusing to take on new workers.

Currently, North Korean authorities are tasking managers of organizations and companies with the responsibility of feeding employees. Anyone with the skills and the money can become a manager. Authorities assess whether someone can provide wages and rations for employees, and if so, will put them in charge. However, the order that “Managers not able to carry out the task of feeding [employees] will be released or demoted” has been passed down, putting a considerable burden on executives and managers. As they are now responsible for both the wages and the rations of their employees, these managers are not looking to take on new workers. This is problematic for those dismissed from military service with little or no trade skill, and for those receiving only a middle-school education, especially women. These citizens are turning to trade to provide a living.


Ministry streamlines investing in North

Tuesday, October 23rd, 2007

Joong Ang Daily

Regulatory filing requirements to invest in North Korea will be eased, and the Export-Import Bank of Korea will manage information on investment activities in the North, according to a Ministry of Finance and Economy release yesterday.

For an amount below $300,000, an investor will no longer need to hand in an annual financial report to the bank handling the company’s foreign exchange deals for investments in the North.

For an amount below $1 million, an investor will only need to report briefly.

The bank dealing with foreign exchange transactions will need to report the investor’s financial information to the Export-Import Bank of Korea instead of the Ministry of Unification and the Finance Ministry.