Archive for November, 2007

Ignoring Buffett, Fabien Pictet Eyes North Korea Fund

Friday, November 2nd, 2007

Bloomberg (via DPRK studies)
Bradley Martin
11/2/2007

Fabien Pictet & Partners Ltd., a British money manager that specializes in emerging markets, plans to establish a fund focused on joint ventures in North Korea.

Fabien Pictet has applied to North Korea’s embassy in London for permission to visit Pyongyang to explore opportunities, Chief Executive Officer Richard Yarlott said in an interview. The closely held firm initially would buy into South Korean companies doing business in the north, he said.

“It would be very difficult to put more than $50 million directly into North Korea,” said Yarlott, 47, who helps manage $750 million of bonds and equities. “But it would be very easy to put $500 million into listed South Korean companies and then later, as we see specific private equity opportunities, go with them.” He declined to give further details.

A North-South agreement on economic cooperation, signed Oct. 4, may foster cross-border projects in industries such as mining and shipbuilding. Still, that prospect isn’t enough to lure billionaire investor Warren Buffett to a northern plunge.

“Things would have to change a whole lot before we can make investments,” said Buffett, chairman and CEO of Berkshire Hathaway Inc., during a visit to South Korea last week.

Buffett, who owns shares of South Korea’s Posco, Asia’s biggest steelmaker by market value, rates the nation’s stocks as “modestly cheaper” than most around the world. The benchmark Kospi index’s price-to-earnings multiple of 15.4 for current year estimated earnings is the lowest in Asia-Pacific after Thailand.

London-based Fabien Pictet, set up in 1998, invests in countries from Brazil to the Ukraine.

It started a South Korean equity fund, Three Kingdoms Korea Fund Inc., in 2004 partly to be ready for a northern push, Yarlott said.

LG Corp., Hyundai

South Korean companies — including units of LG Corp., the country’s fourth-largest industrial group, and Hyundai Corp. — have $2 billion to invest over the northern border, he said.

Three Kingdoms Korea has had a total return of 88.5 percent from April 30, 2004, to Sept. 28 this year. South Korea’s Kospi has risen 126 percent in the same period.

Foreign investment in North Korea has been legal since 1984 and repatriation of profits since 1992. The country doesn’t permit private ownership of assets and hasn’t established a stock exchange.

South Korea’s closely held Hyundai Asan Corp., which started a northern tourism business in 1998, has been reported to be struggling to avoid or reduce operating losses.

London-based Anglo-Sino Capital Partners Ltd., which in 2005 created Chosun Development and Investment Fund to focus on direct investment in North Korea, last month doubled its investment target, citing strong interest.

“We have raised the fund from $50 million to $100 million,” Colin McAskill, chairman in London of Koryo Asia Ltd., the Chosun fund adviser, said in an interview.

The fund will concentrate on direct transactions with North Korean companies that have been active internationally and have track records as foreign currency earners, he said.

Some investors say it’s too early to call North Korea an emerging market.

“I’m 77 years old and the thought that the day would come in my time — it’s very flattering but it’s a long way off,” said Buffett, also known as the “Sage of Omaha.”

Yarlott said the country was changing. “North Korea, like China, will develop a stock market,” he said.

“At this rate, even the sage will get a look-in.”

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South Korean Dramas Are All the Rage among North Korean People

Friday, November 2nd, 2007

Daily NK
Yoon Il Geun
11/2/2007

“Foreign Films That Are Circulating at More Than One Million CDs”

Despite the North Korean authorities’ strict control, foreign films and South Korean drama Video Compact Disks (VCDs) circulating around North Korea is reportedly over 1 million copies since 2000.

Defector Choi Young Bum (pseudonym, 38), who has circulated South Korean and foreign movie VCDs among North Korean citizens said, “If one goes to a large city market, not only Pyongyang, but Pyongsung, Chongjin, Hamheung, Wonsan, and Shinuiju, hundreds or thousands kinds of movie and drama CDs can be obtained through black marketeers.”

According to Mr. Choi, foreign movie CDs inside North Korea have become significantly more mainstream.

Mr. Choi said that the largest market for the North Korean VCD business is the Pyongsung market. He said, “In Pyongsung market alone, merchants who sell South Korean dramas or foreign movie CDs while avoiding regulations, are sufficiently over 100. One person has several hundred copies at the least while another person has over 2,000 copies on the higher end. The authorities are stepping forward for inspections, but VCDs that have been circulating are at over several million copies.”

He said, “In Pyongyang, VCDs that have been circulating are more than in other regions. In early 2000, Hong Kong movies, South Korean dramas in mid-2000s, and recently, American movies that have been translated in Korea have been drawing a lot of popularity.” He relayed that the cultural difference between Pyongyang or other large cities to the provinces are sizable. The South Korean drama “Winter Sonata” became already a classical one in Pyongyang, but was still a hit in the countryside.”

He said that with the rise in popularity of South Korean dramas among North Korean people, the VCD merchants along the border region made quite a profit.

According to Mr. Choi, the prime cost from China was 150 North Korean won, but now, the asking price is over 300 won. The price of a VCD was around 900~1,000 won per copy in 2003, but it is now over 1,500 won. The price is supposed to jump twofold as the VCDs pass through each phase through Chinese merchants, the wholesaler, runner (regional circulators), and to retail trade.

He explained, “With popular action movies or dramas, they were sold at 2,000 won per copy. South Korean Series that have been consistently popular like “Autumn Sonata,” “Hourglass,” and “Glass Slippers” are wrapped in cases by sets, so the price is a bit discounted.”

Mr. Choi said that the price of a VCD player is around 30,000 won. “There were times when we sold the VCDs in cash, but we have thrown in extra as a bonus when selling used TVs from China.”

He added, “From mid-2004, DVDs started entering North Korea. Nowadays, their qualities are better than VCDs and high-capacity DVDs have been in circulation.”

Mr. Choi said that according to a change in DVD trends, North Korea’s Hana (one) Electronics Company have assembled and sold DVD players from attachments from China with the “Hana Electronics” brand. These DVDs can be purchased at North Korean stores.

”The contents of DVDs which can be produced legally in North Korea are mostly North Korean movies, films, former Soviet movies, former Chinese movies, screen accompaniment music (music videos), etc. North Korean civilians pretend like they are watching DVDs that are officially sold in North Korea while they have been watching South Korean dramas bought from the black market.”

Defector Ms. Im, who entered South Korea, said, “North Korean citizens, when someone comes to visit them while they are watching South Korean dramas with doors locked, hide the CDs while the other person goes to the door. They switch on a North Korean CD as if they were watching a North Korean movie.”

Ms. Im said, “Even the National Security agents and the Safety agents watch South Korean dramas and most people are watching them secretly. No matter how much the authorities regulate, it is difficult to control the practice. Once people are exposed to such a culture, it is not easy to stop. They are not going to stop watching them.”

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The Best Identity in North Korea Is Being Pyongyang’s “Front Road” Resident

Thursday, November 1st, 2007

Daily NK
Kim Min Se
11/1/2007

Behind Pyongyang’s welcoming crowd at the time of the Vietnamese Communist Party’s Secretary General Nong Duc Manh and President Roh Moo Hyun’s visits, buildings, apartments, and residential homes could be spotted.

Residing in Pyongyang itself can be considered upper-class in North Korea. Defectors say that civilians who live apartments surrounding the city’s highways represent the highest class within North Korea.

North Korea calls roads that Kim Jong Il uses frequently or is able to use as “front roads.” The factor which is considered the most when allocating residents on these roads is preventing terrorist directed toward Kim Jong Il.

To reside in surrounding apartments of Pyongyang’s roads, potential residents have to go through a strict background search. Party members in Pyongyang, municipal party leaders, influential persons of the army and the administrative branch receive first priority. Besides this, average residents have to pass stringent background investigations.

It is difficult for even Pyongyang civilians to reside a day in these apartments. Even when visiting parents and siblings, it is not easy to stay overnight.

Ms. Kim, a defector from Pyongyang, said, “To reside in an apartment adjacent to Pyongyang’s front roads, we have to go through the National Security Agency, the Safety Agency, and Party investigative agencies. This is because all kinds of “top-ranked events” related to Kim Jong Il frequently occur on the road.

Ms. Kim said, “If a ‘top-ranked event’ is planned or is going on, the residents of nearby apartments have to undergo daily lodging inspections almost daily.”

Ms. Kim said, “A key aim of the inspections is to prevent illegal lodging of outside civilians (from zones other than Pyongyang) in these apartments. This is to prevent any outbreaks from possibly occurring at the events or when Kim Jong Il’s car passes by.”

She also said, “Even when residing in Pyongyang, people cannot freely stay at the apartments of parents or siblings near the roads. If one has to stay over, no matter the time of the night, he has to go to the Safety Agency, report to the officer in charge, register in detail information about family and kin, and get approval.”

Lee Ae Ran, a defector, said, “It is very important for Pyongyang residents to live near the “front roads.” That is a measure of the confidence North Korean authorities have in you and these residents receive better treatment than other civilians.”

Ms. Lee said, “At the ‘World Youth Student Festival,’ held in Pyongyang in `’89, all apartment residents were given a set of color TVs due to the fact that foreigners can suddenly drop by. Another time, the state provided ham only to the residents living near the ‘front roads,’ so Pyongyang residents called this region the ‘ham region’ and areas that are not near the roads ‘non-ham regions.’”

Ms. Lee was also said, “Civilians who live near the roads also suffer a lot. Daily street-cleanings are a must and people have to clear roads even in the middle of the night during winter.” When asked if cleaning snow is challenging, she was noted as saying, “If the snow is not properly cleared, the Great’s Leader’s car will be at risk on the icy roads.”

In North Korea, where Kim Jong Il’s safety is considered top priory, most Pyongyang residents were expelled to remote areas on account of their family backgrounds up until mid`70s.

Mr. Kim said, “The authorities banished residents of the capital to the rural areas regularly, just as one weeds a garden regularly.”

Ms. Lee said, “I don’t know how many people were purged to the countryside. When I tried to find a high school classmate in Pyongyang back in `92, only 16 out of 53 had remained. Most likely, over 50% were banished because of their family backgrounds.”

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Hyesan Mine, the Center of Copper Production Is Flooding!

Thursday, November 1st, 2007

Daily NK
Moon Sung Hwee
11/1/2007

A source familiar with issues inside North Korea said on the 30th, “Most of the underground tunnel of Hyesan Youth Mine in Yangkang Province is now under water.” The source added, “Ever since Samsoo Hydroelectric Power Station started filling up the dam last year, the mine began to flood, and now it can not operate properly.”

Hyesan mine produces 80 percent of the country’s copper. North Korea expects that the mine could produce copper for the next forty years. Hebeisheng-Luanhe Industry in China once attempted to buy 51 percent shares of the Hyesan Youth Mine. However, this was unsuccessful due to opposition from North Korea’s second Economic Commission, which manages the military economy.

North Korea began the construction of Samsoo Hydroelectric Power Station in February of 2004, mobilizing thirty thousand troops of the so-called “Shock Brigade for the Propaganda of the Party Ideology” every year. Unfortunately, Samsoo Power Plant became the major cause of the flooding of Hyesan Mine.

If this mine is inundated with water, North Korea has to import huge amounts of copper. It was the Propaganda and Agitation Department that led the construction of Samsoo Power Plant, which generates 50,000 kilowatts of power and is now causing the flooding. It is absurd that North Korea is about to lose its principal copper mine because of Samsoo Power Plant, a facility that was primarily constructed for political purposes.

Jung You Sim (37, pseudonym), a defector from Hyesan who came to South Korea in July of this year, stated that “Hyesan Mine is almost abandoned. It takes about three years to fill up the Samsoo Dam with water. Even now, there is difficulty in pumping out the water leaked from the power plant. Once the dam is completely filled, the total volume of water will be 1,300 million cubic meters. By then, the water pressure will have made it impossible to pump out the water that has infiltrated the mine. North Korea must choose either Samsoo Power Plant or Hyesan Mine.”

Samsoo Power Plant was constructed in Jangan-ri of Hyesan, Yangkang Province; Hyesan Mine is located nearby in Masan-dong.

The construction of Samsoo Power Plant which began in February 2004 evoked a great deal of controversy from the beginning. The Guidance Department of the Party and the Ministry of Extractive Industries opposed the construction citing the high risk of flooding in the Hyesan Mine.

However, Jeong Ha Cheol, then Secretary of Propaganda and Agitation Department and Choi Choon Hwang, then vice director of the Central Committee of the Party pushed hard for the construction with the aim of boosting their political standing and succeeded in obtaining Kim Jong Il’s approval. It is almost certain that both men have been purged.

At that time, the Propaganda and Agitation Department reported that the water leakage could be prevented if the bottom of the power plant dam is pressed hard and cemented with mud about three meters deep. However, experts from France who inspected the area opposed the construction because the land itself was calcareous and unstable. The water leakage was inevitable.

First explored in the 1960s, Hyesan Mine produces 10,000 tons of copper concentrates annually. When Gapsan Dongjum Mine, explored during the Japanese colonial period, was finally depleted and closed in 1990, Hyesan Mine became the lifeline of the nation’s copper production. It flooded before in the mid 1990s but was restored shortly thereafter.

At that time, the mine flooded because the pumping device stopped operating due to the lack of electricity across the country. Although the workers at the mine did their best to pump the water, they could not stop the water flowing into the mine at a speed of 480㎥/hour. In January, 1997, Hyesan Mine flooded again, as did other mines throughout the country, and lost all mining facilities.

The workers faced insurmountable obstacles in trying to save the mine. This was because some workers at Hyesan mine had removed the copper from pumping devices and had smuggled it to China before the flood hit the country.

When the officials from the Ministry of Extractive Industries visited Hyesan Mine in 1999, they informed the local cadres that the mine’s copper production had become insufficient for the manufacture of military supplies, and as a result, copper would have to be imported from Chile.

Defectors coming from Yangkang Province said that when Kim Jong Il paid a visit to the mine in October, 1998 and received the report on the difficulties in the mine’s operation, he said, “We must save the mine at any cost. I will supply the money.” At once, the chief secretary of Yangkang Province and the Ministry of Extractive Industries took charge of restoring the mine and organized the recovery workforce.

Kim Jong Il provided the so-called “Revolutionary Fund” for the mine’s recovery. He sent $ 3.8 million in 1998 and $2.6 million in 2001, paid all in cash. In 1998 when a great number of people were starving to death, corn was available in China for $ 137 per ton. The amount of money spent on the mine’s recovery could have been used to purchase approximately 28,000 tons of corn. In those days, the local residents in Yangkang Province were made to listen to lectures about the ‘General’s Revolutionary Fund’ over and over.

Upon the order for recovery, residents in Masan 1-dong and 2-dong in Hyesan city were mobilized every weekend to dig out the dirt in the mine. By May 1, 2003, the locals had dug to a depth of 710 m. Later that year, the mine produced 1,500 tons of copper concentrates, and in 2004 it produced 3000 tons.

The local people made huge sacrifices to recover Hyesan mine, and the recovery cost about $ 7 million. However, it was all in vain. The mine is now again flooded due to the construction of Samsoo Power Plant. Hyesan defector Jung Yoon Sim said that Kim Jong Il later changed his tone when he visited Yangkang Province and heard about the recent flooding, saying “it was anticipated.”

Samsoo Power Plant can produce up to 50,000 kilowatts of power. However, about 60,000 kilowatts of power are needed to supply electricity to the apartment complexes constructed in 2003 in Samjiyun county of Yangkang Province.

After all was said and done, Kim Jong Il had mobilized 30,000 people for three and a half years and had them work 14 hours per day while providing a mere 580 grams of grain daily in an attempt to build a power plant that generates only 50,000 kilowatts. In doing so, he destroyed the nation’s leading copper production center.

President Roh praised such an incompetent and irresponsible man as “a charismatic leader who has a deep understanding about the affairs of the country and has faith in the system.”

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Hyundai Group chief, N. Korean officials discuss business projects: report

Thursday, November 1st, 2007

Yonhap
11/1/2007

The chief of South Korea’s Hyundai Group met with North Korean officials in charge of inter-Korean cooperation on Thursday to discuss the group’s business projects in the North, the North’s Korean Central News Agency (KCNA) reported.

The KCNA said Hyundai Group Chairwoman Hyun Jung-eun held talks with North Korean officials, including officials from the North’s National Economic Cooperation Federation.

The two sides took notes on an industrial park in the North Korean city of Kaesong and the building of a tourist resort near Mount Paekdu, according to the KCNA. Prior to the talks, Hyun’s delegation also toured Mount Paekdu, the North’s highest mountain on the border with China, the KCNA said.

The KCNA, however, stopped short of reporting the outcome of the talks.

At Thursday’s talks, Hyun is believed to have discussed the Mount Paekdu tourism project and the second-stage development of the Kaesong industrial complex with the North.

The South Korean company said earlier that Hyun and Yoon Man-joon, head of Hyundai Asan, a Hyundai subsidiary that runs Hyundai’s business in North Korea, visited Pyongyang on Tuesday via Beijing to discuss inter-Korean projects with North Korean officials. Hyun and Yoon are to return home Saturday, according to Hyundai officials.

Hyun’s visit this week marked her second trip to North Korea in a month, as she accompanied South Korean President Roh Moo-hyun on his historic inter-Korean summit with North Korean leader Kim Jong-il from Oct. 2-4.

At the summit, Roh and Kim agreed their two countries would work together on a wide range of economic projects, even though the two states are still technically at war since the 1950-53 Korean War ended in an armistice, not a peace treaty.

After the summit, Hyun said she expects tours to Mount Paekdu to start as early as next April. At the summit, the two leaders agreed to establish direct flights from Seoul to Mount Paekdu.

Hyundai maintains close business ties to North Korea. One of its major cross-border projects is tours of scenic Mount Geumgang on the North’s east coast. More than 1 million South Koreans have visited it since 1998.

Hyundai’s business with North Korea was started by its late founder, Chung Ju-yung, in the early 1990s.

Hyun took the helm of Hyundai in 2003 after her husband, Chung Mong-hun, the Hyundai founder’s fifth son, committed suicide by jumping from a window of his high-rise office in Seoul, apparently under pressure from a lobbying scandal involving a North Korean project.

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S. Korean biz leaders to inaugurate body for inter-Korean economic cooperation

Thursday, November 1st, 2007

Yonhap
11/1/2007

South Korean business leaders are set to inaugurate a forum next week to facilitate economic cooperation between the two Koreas’ private sectors, a South Korean business body said Thursday.

The Korea Chamber of Commerce and Industry (KCCI), which has spearheaded the the forum’s establishment, said about 70 business and financial figures, including KCCI chief Sohn Kyung-shik, and Unification Minister Lee Jae-joung, will get together on Monday to launch the private forum for inter-Korean economic cooperation.

Sohn will take the helm of the 60-member forum that will include representatives of the South’s leading conglomerates that have taken part in inter-Korean economic projects — Samsung Electronics Co., Hyundai Motor Co. and Hyundai Asan Corp.

The forum’s inauguration comes on the heels of the Oct. 2-4 inter-Korean summit. At the close of the summit, South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il issued a joint declaration calling for massive investment from the South in the North’s key industrial sectors, including shipbuilding and tourism.

The forum plans to serve as a mediator for exchanges and cooperation between the two Koreas’ private firms. After receiving information and feedback from South Korean firms on their investments in the North, the forum also plans to make recommendations to the two governments on inter-Korean economic projects.

In addition, the forum envisions the dispatch of a delegation to the North, which will examine the investment climate in the communist country and establish a dialogue channel for inter-Korean economic cooperation in the private sector.

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Number of participants in Mt. Geumgang tours hits new monthly high

Thursday, November 1st, 2007

Yonhap
Nam Kwang-sik
11/1/2007

Hyundai Asan Co., an affiliate of South Korean conglomerate Hyundai Group, said Thursday that the number of visitors to a mountain resort that it operates in North Korea hit a monthly high in October.

A total of 64,447 people took its tours of the Mt. Geumgang resort on the east coast of the North in October, the company said in a statement, adding that it was the highest monthly figure since Hyundai Asan started the program in November 1998.

The previous monthly record was 43,000 in August 2005. In terms of one-year periods, the tours had the highest number of participants in 2005, when 301,822 people travelled from South Korea to the mountain.

“The rise in the number of tourists was attributable to the second summit between the South and North Korean leaders and growing hopes for the resolution of the North Korean nuclear issue,” a company official said.

The two Koreas held the summit in Pyongyang in early October, with the six-party talks on the North’s denuclearization making tangible progress.

Between 1998 and 2006, about 1.4 million people, including 8,000 foreigners, visited the resort, according to data by Hyundai Asan.

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What They’ll find in North Korea

Thursday, November 1st, 2007

Center for Strategic and International Studies
(Hat tip to the Marmot)
Jon B. Wolfsthal
10/17/2007

North Korea has pledged to disable its nuclear facilities by the end of the year, and the United States is sending a team of technical experts to Yongbyon to begin the process of putting Pyongyang’s bomb machine to sleep.

The more lengthy process of dismantling the full complex will come later.

Few Americans have been to the remote and heavily guarded complex. I was one of a group of Department of Energy employees that served as on-site monitors at Yongbyon. And far from the advanced complex depicted in so many James Bond thrillers, what we found were are a collection of crumbling cement structures with inadequate heat and power. The water and electricity work only sporadically. There are no lasers or modern computer complexes with flashing lights; the site is frozen in the 1950s and more closely resembles a junk yard than an evil regime’s nuclear nerve center.

Top on the disablement list is the North’s 5 megawatt nuclear reactor.

Built in the 1980s, the plant is capable of producing up to one bomb’s worth of plutonium every year. The U.S. team will find antiquated computer control equipment scavenged from the international market and cobbled together from so many spare parts. Rusting parts and broken windows dominate the outside view. While safe to visit for short periods, the levels of radiation on the site would force its closure in any state in America. U.S. experts will have to wear nuclear detection equipment, known as dosimeters, at all times for their safety.

The U.S. teams also have to de-activate the fuel reprocessing center where North Korea extracted plutonium from spent nuclear fuel for its nuclear weapons, as well as the fresh fuel production site. The condition of the reprocessing facility is not well known. However, reprocessing spent fuel is among the most radioactive activities there is and levels of radiation are likely to be very high. Only short periods of exposure will be permitted by the U.S. or Korean health physicists tasked with ensuring the health of those working in radioactive environments.

Locking down the fuel fabrication site may be the easiest task due to its poor condition, but will pose some of the greatest health challenges. It is likely that the damage to the site, as well as the standards of safety at the plant, has led to the dispersal of uranium at the site making day to day work difficult and dangerous.

In all three sites, US personnel will have to wear protective clothes, including overalls, masks, surgeon hats, and gloves. Dressing and undressing and being checked for radiation at every entry will take time and will get frustrating very quickly. Just ensuring there are enough sets of protective wear is a major logistics exercise, as most of the equipment needed by the American teams will have to be flown in from outside of the country. There are no Home Depots in North Korea. Ensuring they have the reliable electricity and heat, as well as necessary equipment to carry out their jobs, will take months to arrange and endless hours of haggling with North Korean engineers who will not be enthusiastic about helping the U.S. take apart the nuclear complex they spent their lives building. Even getting basic tools to complete their work will be a challenge.

Aside from the work at hand, the teams will have to face some of the most isolating and demoralizing work conditions anywhere. U.S. teams will literally be behind enemy lines, as the United States and North Korea remain technically in a state of war with each other. U.S. teams will sleep at a guest house guarded by AK-47–toting guards (for their own protection, they will be told). Driven over dirt roads, each morning and evening they will pass through no less than four police and army check points, manned with machine gun nests and humorless North Korean officers. This winter the temperature will reach 20 degrees below zero every night.

Staying warm will be among the first of the challenges the technical teams face. Not losing their minds to boredom will be another. No outside T.V. or communication is possible, as North Korea will likely ban the use of satellite phones for communication with the outside world. Perhaps some of the hundreds of paper back books left by the U.S. government teams who worked there in the 1990s are still on site, but forms of entertainment for their resting hours will be few and far between.

In short, the U.S. experts heading to North Korea are going to a place unlike anywhere else on earth. Rugged and strangely compelling, the high mountains and dirt roads that surround Yongbyon will reinforce a sense of isolation hard to overcome. Only by concentrating on and remembering the importance of the difficult tasks at hand will they be able to maintain their morale and confidence. Any success they achieve will aid the process of disarmament on the Korean peninsula, but their time in country will likely go unnoticed and unappreciated by most. A shame, for their work could not be more important and deserves thanks.

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‘Bad apples’ sour relief in North Korea

Thursday, November 1st, 2007

Asia Times
Sunny Lee
11/1/2007

The people in Dandong in China’s northeast Liaoning province know more about North Korea than any other people on the planet. They see it every day – literally. Dandong neighbors North Korea just across the Amnok River (Yalu River in Chinese). Even on a foggy day, one is able to see North Korean fishermen at work.

This city of 2.4 million people is, once in a while, highlighted in the international media because it is the major land route where China’s aid to North Korea – both food and fuel – is shipped. It also becomes a major destination for foreign journalists when a rumor of an imminent visit by the secretive North Korean leader Kim Jong-il to China smokes up. Dandong is a place where Kim’s train has to pass through when he visits China.

Given its special geographical proximity to North Korea, naturally this is also a key outpost to which many non-governmental organizations (NGOs) involved in North Korean refugees are paying keen attention.

In Dandong, the name “NGO” is almost a synonym for “groups working on North Korean refugees”. Unfortunately, it often carries a negative overtone. This may sound odd, but that’s how things are here. “If you really know what NGOs actually do, you will feel quite turned off,” said a local resident.

He said many of these NGOs are commercial brokers in disguise. That is, they help North Korean refugees to flee from China. But they do it, really, for money. They charge money and even take advantage of the refugees’ vulnerability. He indignantly said he knows an NGO representative who slept with North Korean female refugees in his care.

That’s just one of the examples that he shared. In fact, he said he had seen so many depraved NGOs that it now gives him goose-bumps when he hears the word “NGO”.

Stories about bad NGOs are also coming out from those who are in the know – journalists. But they seldom write about it because doing so makes them unpopular among some interest groups or even backfire. For example, a writer could be accused of maligning the good work that most NGOs do, and worse, being a “pro-North Korea” figure who closes his eyes to the human-rights tragedy of North Korean refugees. That is a very powerful argument.

With increasing international attention on North Korean human-rights conditions and widely circulated harrowing stories of North Korean refugees in the news media, NGOs working on this field usually receive strong moral support from the mainstream media that provide them with legitimacy, which in turn helps NGOs receive financial support from sympathetic supporters.

Critics, however say that as NGOs rely on donations, when they are cash-strapped they sometimes resort to publicity stunts to raise their profile, and more importantly, to raise money.

Some NGOs even go as far as to deliberately put the refugees in danger to draw international attention, critics argue. One of the most controversial cases was a January 2003 incident in which a group of as many as 78 North Korean defectors was caught by Chinese police while they were attempting to escape on boats from China’s east coast shores to South Korea and Japan respectively.

A South Korean reporter later trailed the same route and deplored: “It’s a place you don’t want to choose. The Chinese North Sea Navy Fleet of the People’s Liberation Army base is just around the corner. How would anyone in his sane mind choose this place as an escape route unless you wanted to get caught?” he fumed.

The Durihana Mission, probably the most well-known group in Seoul that helps North Korean refugees to come to South Korea, is also alluded to in that criticism. The group’s founder, Cheon Gi-won, is dubbed as the “Godfather of Refugees”. He has reportedly brought more than 500 North Korean refugees to the South.

Cheon himself was once arrested by Chinese police and served a 220-day prison term. His incarceration, however, also helped him to become known internationally. After this year’s recipient for Nobel Peace Prize was announced, for example, the Asian Wall Street Journal ran an article mentioning Cheon as someone who deserved the prize for his work on North Korean refugees.

Cheon pioneered the so-called “Mongolian route”. That is, his team takes North Korean refugees in China to the Sino-Mongolian border and helps them to escape to Mongolia, from where they go to another country, usually South Korea.

“There was a case where his team took a group of North Korean refugees to near the Mongolian border from China. But instead of taking them safely to the border and making sure they crossed it, they simply dropped the North Korean refugees in the middle of nowhere near the border on a dark night and just drove away,” said a person who has knowledge of the incident. They reportedly didn’t even give them a flashlight or anything that could help them orient their direction in the dark.

Confused and fearful, the North Koreans tried to find their own way to freedom. But their panic drew attention from Chinese border patrols. Some got shot, the rest were arrested.

“They then made an all-out media stunt, letting the world know the atrocity and how China mistreats North Korean refugees. We also used to run articles on it. But after we got an idea of how the thing had played out, we stopped writing about it,” a South Korean journalist said.

With the dropping of media coverage in South Korea, he said Cheon has recently turned to the Western media and is now actively working in the US, where he set up a branch office last year.

Cheon was not available for comment. But Lee Chung-hee of Durihana, who answers inquires during Cheon’s absence, said: “That doesn’t even make the slightest sense.”

“It’s very difficult to engage in a constructive dialogue with such critics. Think about it from a common sense point of view The consequence of a failed escape would mean death for North Koreans. If there was any deliberate intention, it would be beneath human dignity to do so,” Lee said. Those who follow this logic believe that NGOs simply didn’t plan the escape well enough.

In Dandong, Cheon is a well-established name. People who know Cheon said that even though the allegations might be true, Cheon himself is not likely to be involved. One pointed out that as Cheon has become internationally known, there are people who become jealous and want to undermine him.

A former official with a major South Korean NGO said that he strongly doubts whether Cheon himself was part of any alleged incidents. But he pointed out that some NGOs act without considering how their irresponsible acts harm others who are sincerely helping North Korean refugees.

Critics point out that NGOs’ media stunts and big-scale, organized escapes also draw the Chinese authorities’ attention to the many North Korean refugees who are hiding in China.

Some view that it’s unfair to blur the big picture of the good work that most NGOs do. They also point out that most NGOs are victims of some “bad apples” or commercial brokers who pose as NGOs or even as missionaries.

A good number of commercial brokers are former North Korean refugees. As many NGOs were arrested or deported from China in recent years, North Korean refugees who have settled in South Korea began to take the job. The reason they take up this risky business for themselves, and even are willing to walk again the same route that they themselves had escaped from, is because of the economic difficulties and job discrimination they face in South Korea.

Some of these commercial “pay-for-escape” brokers demand as much as one third of the “settlement money” that North Korean refugees expect to receive once they arrive in South Korea. Unfortunately, things have started to have a chain effect. Looking at some “NGOs” making money, now even those NGOs which otherwise do the same work non-profit, have started to charge a minimum of US$2,000 to $3,000 as a “logistical fee”.

Sunny Lee is a writer/journalist based in Beijing, where he has lived for five years. A native of South Korea, Lee is a graduate of Harvard University and Beijing Foreign Studies University.

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