Archive for May, 2008

DPRK stiffens drug laws

Friday, May 16th, 2008

From the Daily NK:

“The North’s adoption of partial open door policy has resulted in the rapid spread of western culture into the society, which could trigger the collapse of socialist ideology and regime. So, as part of efforts to prevent the collapse, the North adopted a series of amendments to its criminal laws,” explained Choi.

“In March 2008, North Korea introduced another amendment according to which individuals charged with drug possession are to be sentenced to death by shooting because drug use has been increasing among people suffering from the lack of basic necessities and medicine despite the state’s strict drug control,” said Choi.

According to the 2004 amendment, North Korea sentences those charged with drug manufacturing to two to five years in the labor reeducation camp (Article 216), those with drug use to up to two years in the labor-training corps (Article 217), and those with drug trafficking and sales to either up to five years in the labor camp (Article 218).

“The amendment of March 2008 further stiffened penalties against drug offenders. Individuals found to be possessing more than 300 grams of drug are to be sentenced to death penalty,” Choi said, “In addition, North Korea which did not have sufficient legal grounds to punish individuals involved with new types of offenses including making international phone calls, possessing copies of foreign pictures and smuggling now appears to have strengthened legal punishment against them.”

The passage of these statutes is probably as close as the DPRK government will get to admitting that markets for recreational drug use are firmly established.  Stiffening drug laws will make no difference to the dissipation of the state’s socialist ideology, but North Korea’s drug cartels will certainly benefit.

The Economics of Cartels

In a competitive market, it is difficult to maintain a cartel.  Cartels work by restricting output to raise prices.  The problem is that once everyone in the cartel has done so, each individual member has an incentive to sell more than his quota to capture those artificially high profits.  After everyone figures out how to do this, the cartel falls apart and prices return to their competitive equilibrium.

So how can cartel members be relied on to maintain their production quotas and not cheat/sabotage each other?  Many times this is done by group acquiescence to government statutes and regulations.  Restrictions on prices, services, quality standards…these can all be used to protect incumbent firms by driving up costs for smaller competitors, and what’s more, the government pays for the enforcement.

And now for the conspiracy theory 

If there is not already a cartel of “companies” or families seeking to corner the DPRK drug market, there soon will be.  Stiffening criminal penalties for drug production simply raises the costs of small-scale producers and distributors, forcing them out of the market because they cannot afford protection/bribes.  This helps the big guys, who can afford these services, to maintain their price premium.

No doubt the groups coming to dominate the drug trade had representatives involved in making sure these statutes were changed (meaning they are now sufficiently politically connected to protect themselves).  What will be the effects on crime?  Well, if the cartel members keep to their agreements, crime could drop, and police would only be used to break up non-cartel operations.

Small-scale producers will respond by shifting into “high quality, low volume” drugs (much like in prohibition when smugglers carried liquor over beer and wine). 

Thoughtful comments appreciated. 

Read the full story here:
North Korea Has Introduced Amendments to Its Criminal Codes to Save the Regime from Falling Apart
Daily NK
Yang Jung A


Chinese businesses want DPRK labor

Tuesday, May 13th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-5-13-1

Small and mid-sized Chinese companies are now looking toward North Korea. The Chinese press reported on May 5 that the industrial union of Dungta, a small city of just over 500,000 located south of Sunyang in Liaoning Province, recently spent seven days looking into opportunities in the North on the invitation of the Choson Bongwha Company.

The purpose of this recent invitation appears to be that North Korea is looking to improve small and mid-sized industrial activity by allowing foreign entities to set up shop. The North was seeking investment for an oil paint factory, a textile factory, and a rolling mill. The Chairija factory in China’s Dungta City is planning to invest three million euros (aprox. 470 million won) to set up a paint manufacturing facility in the DPRK.

The reason Chinese businesses are looking toward North Korea is that even in China wages have been growing sharply, and as labor laws are amended it has become more difficult to hire employees, driving up production costs and lowering the competitiveness of exports. Cheap and easy labor in North Korea is turning the eyes of many Chinese companies.

The importance of this latest visit by the Chinese industrial representatives was reinforced by the invitation by the Choson Bongwha Company, which specializes in commission-based textile production. This appears to be related to the North Korean authorities’ plan of boosting the standard of living throughout the country by hosting Chinese heavy industries. Recently in the North, companies have joined in partnerships with Chinese businesses to manufacture lighting and cigarettes, showing that Chinese businesses are also interested in enhancing their presence in North Korea’s domestic market.

Just as South Korea’s small and medium-sized businesses have turned to China in order to stay competitive, now Chinese companies are eyeing North Korea’s cheap labor force in order to maintain their edge.


US to offer DPRK food aid. Seoul still waiting to be asked.

Tuesday, May 13th, 2008

According to the Financial Times (h/t One Free Korea):

The US has agreed to give North Korea 500,000 tonnes of food aid under a new deal that would allow monitors unprecedented access to oversee distribution in the Stalinist state.

Washington will supply 400,000 tonnes via the United Nation’s World Food Programme, while US non-governmental organisations will distribute another 100,000 tonnes, according to people familiar with the agreement. One US official told the Financial Times that President George W. Bush would approve the deal “within days”.

In order to ensure the food reaches ordinary North Koreans, Pyongyang has agreed to extensive monitoring, including random inspections that several observers said were “unprecedented”. It would also allow “port to mouth” inspections to reduce concerns that food would be siphoned off for the elites that support Kim Jong-il, the North Korean leader.

Pyongyang will also allow more monitors into North Korea than under previous food programmes, and will allow them to visit a greater number of areas.

North Korea will receive an initial shipment of 50,000 tonnes in early June. Once Mr Bush formally approves the deal, US experts will meet counterparts from North Korea, the WFP and NGOs to decide what kind of food is needed.

…And contrary to its previous report on 5/11/08 that South Korea was preparing to donate a nearly USD$10 million aid package to the DPRK, despite never being formally asked for it, Yohnap today reports that Seoul is doing no such thing.  The trial balloon carrying the aid must have popped somewhere over the DMZ.

Read the full stories here:
US to send food to N Korea under new deal
Financial Times
Demetri Sevastopulo

Seoul set to approve 10 bln won in aid for N. Korea: official

Gov’t denies rice aid to be sent to N. Korea via int’l body
Shim Sun-ah


North Korea prepares to celebrate 60th Anniversary with a new mass games

Monday, May 12th, 2008

Koryo Tours Press Release

British run Koryo Tours have just been informed that this year’s Mass Games in North Korea have been expanded to include two different events, both staged in Pyongyang’s May Day stadium with a full compliment of 100,000 performers. Running from August 4th until the end of September every day bar Sunday will see a 100 minute afternoon performance of an all-new Mass Games show named ‘Prosper the Motherland!’ staged specially for the 60th anniversary of the foundation of the Democratic People’s Republic of Korea, 9th September 1948. The classic ‘Arirang’ an 80 minute gymnastic and socialist realism extravaganza will be performed in the evening.

Koryo Tours are running their usual full compliment of tours during this time and details can be found on their website.  Koryo Tours offer regular group tours, tours for US citizens (only possible during the Mass Games), specialized trips including to Mount Paekdu, independent tours for small groups, as well as many others. This will likely be a bigger opening event than the Olympics and on a larger scale than ever before.


DPRK Energy Experts Working Group Meeting

Saturday, May 10th, 2008

From the Nautilus Institute (presentations at bottom):

Energy insecurity is a critical dimension of the North Korean (DPRK) nuclear challenge, both in its making, and in its reversal. One of the Six-Party Talks working groups, the Economy and Energy Working Group, is largely devoted to this topic, and energy assistance will play an important role in the process of denuclearization of the DPRK. Nautilus Institute maintains a unique database and set of quantitative and qualitative analytic tools to evaluate and track the DPRK’s energy economy, and has maintained working relations with North Korean scientists and technical personnel from the energy sector for more than a decade. With this capacity, Nautilus has provided a stream of policy analyses and briefings at their request to US, ROK and other officials on the DPRK’s energy needs, its likely negotiating postures and demands, and possible negotiable options. The need for such expertise in support of the Six-Party Talks is increasing.

This project ensures that the underlying data and technical analysis available at Nautilus is as up-to-date as possible, and that analysis and policy advice are available when needed by US and other officials.
The Second DPRK Energy Experts’ Working Group (2008) served to provide information and views from key experts in the field to inform the Nautilus DPRK energy sector analysis update. Experts in attendance at the meeting provided both pertinent, recent data and special insights that are being used to help to make the database as reflective as possible of actual conditions in the DPRK. This in turn provides crucial input to the analysis needed to help to inform the parties to the 6-Party talks regarding possible approaches to DPRK energy sector redevelopment.

In addition, the DPRK Energy Experts Study Group Meeting served, as did the first Meeting, as an opportunity for experts on the DPRK to exchange views on the appropriate “next steps” in DPRK energy sector redevelopment. Key outcomes of this discussion are being reflected in the updated DPRK Energy Sector Analysis. In the process of discussions, the experts in attendance helped to further develop and elaborate-as well as providing input on the prospects for-the activities and means by which the various parties concerned with Korean peninsula affairs might engage and work with the DPRK to help resolve both the DPRK’s energy problems, and, in so doing, begin to address and ameliorate the regional and global insecurities of which the DPRK’s energy problems are a key part. In particular, through the focus of the second day of the meeting on Building Energy Efficiency, progress was made on consideration of possible benefits from and approaches to improving the effectiveness of energy use in the crucial DPRK buildings sector.

The Second DPRK Energy Experts Study Group Meeting convened by Nautilus and its partners will was attended by experts in a variety of areas related to energy supply and demand in the DPRK-including electricity, coal and other minerals, the DPRK economy as a whole, trade into and from the DPRK, and the DPRK’s rural household and agricultural sectors, and energy use in buildings in general in the DPRK and elsewhere (the primary topic of the second day of the Meeting)-to review and discuss the results of existing and newly-commissioned research, and to provide insights from their own experience and their own research. A total of approximately 15 experts on the DPRK and on matters related to DPRK issues attended the Meeting, not including an additional 15 experts, representatives from the organizations partnering to fund and organize the meeting (Nautilus, Tsinghua University, USDOE), including observers from bilateral aid agencies associated with a number of countries, from international organizations, from the business sector, and others, who also lent their expertise to the workshop. On the second day of the workshop, supported by funding from a private foundation, a five-member delegation from the DPRK also attended the meeting, providing presentations and insights of their own on energy use in DPRK buildings, and on related energy sector problems and plans in the DPRK.

Presentation: North Korea’s Mineral Resources and Inter-Korean Cooperation
By Woo-jin Chung

Presentation: Nautilus Institute’s Analysis of the DPRK Energy Sector and DPRK Energy Paths: Update
By David von Hippel

Presentation: Analysis on DPRK Power Sector Data & Interconnection Option
By Yoon Jae-young

Presentation: DPRK Energy and Energy-Related Trade with China: Trends Since 2005
By Nate Aden


North Korea propaganda museum opens in South

Saturday, May 10th, 2008

From the New York Times (h/t MR):

In early April, when North Korea called President Lee Myung-bak of South Korea an “impostor,” a “traitor” and an “American running dog,” the verbal barbs sounded all too familiar to Jin Yong-seon. He has a museum filled with them.

Sounds like a great place to visit if in South Korea.

Read the full article here (requires free on-line registration):
Koreans Recall an Era of Propaganda Battles
New York Times
Choe Sang Hun


Food shortage coping strategies

Saturday, May 10th, 2008

With the likelihood that food is coming into short supply in North Korea, the authorities and individuals alike have implemented strategies to minimize the adverse effects.

I am keeping a running list of official and civil responses here as they appear in the media.

1. The DPRK supposedly ended rations for mid-level cadres (party and state employees), though food can still be purchased in markets. Unless the government is hoarding its grain supplies, this probably has the effect of improving food distribution (transferring food stocks outside Pyongyang), though not to the satisfaction of those who were used to receiving it for “free.”

2. The DPRK asked China for food aid. (Requested 150,000: tons of corn. Received: 50,000 tons on their first ask)

3. Propaganda extolling people not to waste food has been distributed to workers.

4. The DPRK has started cracking down on liquor production/sale.

5. Lets grow potatoes!

6. Distributing food stocks to military families from military warehouses.  This will hopefully take some of the pressure off the price of grains in the markets.

7. Solicit food aid from the US.

8. Officials begin to demand more bribes!

9.  The KPA halts military exercises to assist in farming.

10.  Propaganda campaign to educate the population about alternative foods (Good Friends via OneFreeKorea)

11. China increases food export quota


They don’t believe…

Friday, May 9th, 2008

UPDATE: Follow up by Dr. Petrov in the comments

One of the big question marks for policy makers (both inside the DPRK and internationally) is the state of knowledge and public opinion inside North Korea.  How much do North Koreans know about the outside world?  How much of the propaganda do they believe?

Being able to answer these questions scientifically is not possible.  Political expression has never been encouraged in the DPRK except through state-sponsored solidarity events.  Additionally, the role of the media in North Korea is to broadcast information from the top down, not to let it percolate from the bottom up.

Numerous scientific efforts at extrapolating North Korean public opinion have been made by journalists and scholars conducting surveys in northern China along the North Korean border (most recent examples here and here).  However, these surveys are subject to various sample biases: the interviewees have already decided to leave the DPRK, most of them come from the provinces along the Chinese border, and most of them are not mid- upper- level cadres.  So extrapolating the opinion of the median ri-level party secretary in a small village near the DMZ is not possible. 

In the absence of a scientific survey, we are forced to resort to anecdotes and ethnographic data (usually with a very small “n”).  A single anecdote is not so valuable, but multiple anecdotes taken together help us paint a more comprehensive picture. The opinions of most “North Korea watchers” on this topic are formed by this kind of ethnographic analysis. 

I rely on personal anecdotes collected from North Koreans, visitors to North Korea, and former residents of North Korea, supplemented by stories in the media such as the popularity of South Korean films in the DPRK.  These lead me to conclude that though North Koreans are generally not internationally savvy, they do not believe the official propaganda and do not pay attention to political speeches (if they can help it) for many of the same reasons that Americans do not pay attention to political speeches: namely that they have little to do with one’s day-to-day needs, and they get very old very fast.

This story in the Daily NK is one more anecdote:

A source from Yangkang Province told DailyNK in a phone interview on May 1st, “At the Union of Democratic Women (UDW) conference, commemorating the founding of the Chosun People’s Army on April 25th, a speaker humiliated herself when she blamed South Korean President Lee Myung Bak [for the crisis].”

The source told our reports that “during the conference, a speaker explained the international and domestic state of affairs, saying that ‘the U.S. and the puppet regime (the Lee administration) have overridden the peaceful agreements between the North and South (referring to the June 15th Joint Declaration and the October 4th Agreement) in order to create a serious food crisis in our Republic (North Korea)’.”

The source described an awkward atmosphere at the conference: When a chairperson of the People’s Unit of Hyehwa-dong in Hyesan asked outright, “We can understand that fact that Americans and Lee’s puppet factions are not aiding us with rice, but, why won’t China help us, as our closest ally?” The speaker’s face turned pale at the question and a sudden silence and tension filled the hall.

“At that moment, the lady next to the chairperson started chuckling, putting her head down, people began to chuckle here and there, and eventually, the entire hall was engulfed in laughter,” the source told DailyNK.

The speaker reportedly responded through his own laughter, “’You know the lecture material always reads like this. You can well understand the situation and know what I am saying, right?’” The source said that “his comment sent people rolling in the aisles,” and pointed out, “The situation showed how absurd the propaganda released by the authorities is.”

Read the full story here:
Government Lectures are Losing Effect
Daily NK
Lee Sung Jin


New N. Korean envoy starts work at U.N.

Thursday, May 8th, 2008

Via Yonhap:

North Korea’s new envoy to the United Nations presented his credentials to U.N. Secretary-General Ban Ki-moon here Wednesday, along with envoys from several other nations, to officially begin his service, Ban’s office said.

Ambassador Sin Son-ho replaced Pak Gil-yon, who had been at his country’s U.N. mission since 2001. He served as deputy chief of the mission from 2000 to 2003.


Uranium enrichment verification in the DPRK

Tuesday, May 6th, 2008

According to an article in the Associated Press today (reprinted in the Washington Post):

The U.S. has recently stepped back from its demand for a detailed declaration addressing North Korea’s alleged secret uranium enrichment program and nuclear cooperation with Syria; North Korea has denied those allegations. Washington now says it wants North Korea to simply acknowledge the concerns and set up a system to verify that the country does not conduct such activities in the future.

How can any uranium enrichment verification plan be implemented in the DPRK?  One solution was proposed to me by Glyn Ford, a member of the European Parliament, when I met him in Beijing last March.  His idea was this: Any uranium enrichment program would require a colossal amount of electricity delivered at a consistent voltage.  So one way the west could monitor if such a program was taking place would be to keep tabs on the North Korean power grid for suspicious spikes in activity or to build voltage fluctuations into the power supply.

Read the full article here:
US official to travel to NKorea
Associated Press (Printed in the Washington Post)
Foster Klug