Archive for August, 2008

A Night in Pyongyang (mass games picture book)

Friday, August 29th, 2008

From the book’s web page (translated from German): Werner Kranwetvogel has travelled to the DPRK and had the opportunity to visit the Arirang Mass Games on two evenings. At these occasions he produced a spectacular series of pictures, which shows exactly this dualism: on the one hand there are tremendous and most impressing wide shots with thousands of synchronized performers. But on the other hand he firstly shows close ups of the dancers, isolates them, jumps close to several groups, shows their passion and the total devotion of the performers to that very moment. This outstanding series of pictures shows the ambivalent fascination of the mass aesthetics in a unique way and comments itself without words.

The book’s web page has an impressive number of pictures, as well as many video clips of the games (with the original music). 

(hat tip to Klaus-Martin Meyer)


DPRK real estate advice: Know your chairman

Thursday, August 28th, 2008

According to the Daily NK, the chairpersons of the DPRK’s “People’s Units” (the smallest administrative population unit) are elected by the local membership through a show of hands.  Since the chairperson is in a position of some power, the political and economic dynamics that take place are pretty interesting.  The Daily NK notes how a chairperson’s skill at protecting his constituents from inspections by other departments is now factored into local (unofficial) real estate prices:

Quoting from the article:

“When the inspection group comes, the chairpersons of the People’s Units contact each other in advance, so inspections can be avoided. Nowadays, how a People’s Unit chairperson acts affects the price of housing.”

“People who buy homes now cannot distinguish between good and bad homes, but pay great attention to the People’s Unit in the neighborhood. If the People’s Unit chairperson is not so sophisticated, then the neighborhood cannot come together, so people tend to avoid such neighborhoods and the price of housing tends to fall as well.”

“If an inspection unit comes suddenly, the People’s Unit chairperson tends to alert every household through the children in the village, which has been described as ‘the pastime of the People’s Unit.’ The more a People’s Unit chairperson excels at this, the less damage to the people of the unit.”

“Officials or big-time merchants pay careful attention to their relationship with the chairpersons. No matter what the type of inspection is, the citizens’ attitude can be assumed via the words of the chairperson of the People’s Unit, so the fate of a household depends on the words of the chairperson.”

And if the chairperson is not good at his job?

“Depending on the extent of the damage to the People’s Unit during the inspections, people distinguish whether or not the People’s Unit chairperson is smart and experienced or not. If the chairperson is judged to be not smart, then he or she has to relinquish his or her position.”

It is interesting that the chairpersons take such an interest in protecting their constituents from outside authorities, however, it is naïve to think that local elections are responsible for this behavior.  The reality is that these chairpersons probably know a good deal of information about their residents and collect some form of direct payment, or “taxes”, for their services.  The quote above, “big-time merchants pay careful attention to their relationship with the chairpersons,” is just a more polite way of saying this.  If the chairperson position was not profitable in some way, why would anyone want it?

Read the full Daily NK story here:
Who Is the Chairperson of the People’s Unit?
Daily NK
Moon Sung Hwee


DPRK-PRC trade shoots up 25%

Thursday, August 28th, 2008

Instutite for Far Eastern Studies (IFES)
NK Brief No. 08-8-28-1

Recently published Chinese customs statistics reveal that trade between North Korea and China in the first half of 2008 was 1.151 billion USD, 25 percent higher than in the same period last year.

Exports were up 13.5 percent at 330 million USD, while imports grew by 31.1 percent to 820 million USD. This means that the trade deficit for this period, 491 million USD, was 44.1 percent greater than the first half of 2007.

Mining topped the list of North Korean export industries, with 118 million USD worth of ores exported to China making up 36.2 percent of all goods sent across the border. Exports included 71 million USD worth of fossil fuel, 39 million USD worth of steel, 30 million USD in clothing, and 9 million USD in aluminum. On the other hand, Chinese goods imported by the North included 302 million USD in fossil fuels, making up 36.9% of all imports. 68 million USD in machinery, 37 million USD in electronics, 30 million USD in food, and 30 million USD worth of vehicles (excluding trains) were also brought in.

Mining exports were up 69.4 percent over the first half of 2007, making up the largest part of the increase in exports. The rising international price on natural resources was a factor in the North’s increase in exports of iron ore. The 68.1 percent rise in the import of fossil fuels, on the other hand, made up the largest share of the increase in imports, and this can also be attributed to the increase in global fuel prices. 


DPRK diverts aid….again.

Wednesday, August 27th, 2008

According to the Choson ilbo:

Following a request from the North in July 2005, the Unification Ministry and the Korea Tourism Organization bought 8,000 tons of asphalt pitch and subsidiary materials with about W4.9 billion from the Inter-Korean Cooperation Fund to repair Mt. Baekdu runway.

But inspection by the KTO in December 2005 showed construction to be shoddy because an insufficient amount of asphalt had been used. The Unification Ministry and the KTO bought another 8,000 tons of asphalt pitch and other materials with W4.4 billion from the fund in January 2006 and delivered them to the North.

But an inspection in 2007 by the Korea Expressway Corporation found that the paving was no different from that in December 2005, and that 3,497 tons of asphalt pitch had not been used to repair the runway, the BAI said.

The BAI presumes that W2 billion worth of aid materials were diverted illegally for other purposes.

And how did the South Korean’s respond?

The [Board of Audit and Inspection] said agencies including the Unification Ministry “made no preparations to deal with shoddy construction or illegal diversion of the fund.” They took “no action even when a senior North Korean cabinet counselor publicly said in 2006 the North would use a shipment to Nampo Port out of the aid materials to pave the runway of Sunan International Airport in Pyongyang” rather than Mt. Baekdu Airport.

As discussed before (here and here), South Korean development efforts (as conducted via the Ministry of Unification) have been poorly administered.   There is little transparency and less accountability for poor decision making and results.  Given this institutional environment, we can predict that resources will continue to be frequently diverted. 

An alternative, and I believe more effective, economic development strategy which South Korea could adopt towards the DPRK is simply to end MoU structural development programs and allow South Korean businessmen to directly negotiate business opportunities with North Korean counterparts (as the Chinese, European, and others currently undertake).  In this way, business persons risk their own capital and they are fully incentivized to make sure their efforts are properly administred.  Even if some graft is necessary to get things done, at least it does not come from the South Korean Treasury.

Comments welcome.

Read the full article here:
N.Korea Diverted W2 Billion in Aid: BAI
Choson ilbo


What comes after Sunshine?

Wednesday, August 27th, 2008

The policy of mutual benefits and common prosperity

It doesn’t have the same ring as “Sunshine Policy,” and the acronym PMBCP is too long, but this is the English name of South Korean President Lee Myung-bak’s policy towards the DPRK. 

According to Yonhap:

We decided to fix an English name for the policy because there have been many different translated versions,” Kim Ho-nyoun, spokesman for the Unification Ministry, the top Seoul office on North Korea, told reporters.

He said the name was chosen because it best suits the government’s policy of pursuing a relationship of co-existence and co-prosperity with the North beyond the current phase of reconciliation.

The government aims at a firmer inter-Korean reconciliation than its two liberal predecessors, seeking to bring tangible benefits not only to the North but to the South as well, officials said.

President Lee Myung-bak pledged during his election campaign to help the North triple its per capita gross national income to US$3,000 if it abandons its nuclear programs and opens itself to the world.

The so-called “Vision 3,000” program is now part of Lee’s broader North Korea policy, officials said.

The goal of tripling the DPRK’s per capita GNI (GNP) to $3,000 is based on the assumption that the DPRK’s current per capita income is close to $1,000, which is a wild over statement.  Some more realistic assesments put it as low as $368 per yearHere is a wrap up of the DPRK’s most recent economic stats from the Bank of Korea.

Read the full article here:
Gov’t sets official English name for N.K. policy
Shim Sun-ah


DPRK aid and policy changes

Tuesday, August 26th, 2008

Andrei Lankov writes in the Korea Times that South Korea’s threats to reduce tourism levels to Kaesong, as well as support for the Kaesong Industrial Zone, are misguided.  His reasoning is as follows:

North Korea is a very peculiar society, where the elite are almost entirely free from the pressures experienced by those below them. When sanctions are applied to such a regime, they seldom have a direct bearing on the elite and their lifestyle.

Sanctions usually work in an indirect way, by punishing the population which then might either rebel against the government or vote it out of power. Neither rebellion nor elections are possible in North Korea (well, elections are happening there, as everybody knows, with the approval rate of the government candidates standing at a world record high of 100 percent). As a result of sanctions the populace will die without protesting, while the elite will survive and stay in control, even if for a while they will have ride their beloved Mercedes limousines less frequently.

The only way to bring changes to North Korea is to create forces which will be able to challenge the government. This might lead to a revolution, but one cannot completely rule out that the regime will start giving in if sufficiently pressed from within.

In addition to Lankov’s point above, sanctions can perversely benefit those in power who control and profit from black market activity (at higher prices).   Additionally, politically sophisticated leaders exploit the consequences of foreign-imposed sanctions to restrict domestic freedoms and political opposition. 

Bossuyt (Adverse Consequences of Economic Sanctions) shows even the most optimistic accounts of sanctions point to only a third having partial success.  Others find a mere 2% success rate among authoritarian regimes.  So sanctions have a poor track record of inducing positive policy changes, particularly in North Korea. 

So why are the Kaesong and Kumgang projects worthwhile?  Though not all that economical, Lankov argues that these aid projects create alternate channels for information to permeate the hearts and minds of the isolated North Korean people, and that shattering the North’s monopoly on information is key to promoting change within the DPRK:

…in order to facilitate North Korea’s transformation, more truth about the outside world needs to be imported. The survival of the North Korean regime now critically depends on a few important myths, and each myth is patently false and hence very vulnerable.

When the North Korean propaganda-mongers are talking to the North Korean public, they have to hide how poor their country actually is, and they also have to lie about the great respect Kim and his regime enjoys worldwide, especially in South Korea. An increase in contact with the outside world is the best way to undermine these falsities.

The inconvenient truth regarding South Korea’s huge economic advantage will start to surface soon. It will probably take more time before it will dawn on the North Koreans that their Seoul guests are not exactly full of love and respect for the Pyongyang dynasty, either.

There is plenty of journalistic evidence that many North Koreans already know the South is “rich”—although they might not have any idea what that actually means. Still, of all the Hyundai projects in the DPRK, I believe the Kaesong Industrial Zone is probably the most helpful for the South in the long term.  None of Hyundai’s other projects do all that much to improve the human capital of the DPRK people, and when things eventually change, it is important for the RoK to have a population of constituents in the DPRK who have some job and management skills and familiarity with the South’s culture to ease the transition.

Comments welcome.

Read the full article here:
Sanctions Harden Lives of Ordinary North Koreans
Korea Times
Andrei Lankov


DPRK 2008 Olympics round-up

Monday, August 25th, 2008

Well the Olympics have wrapped up, and the DPRK made headlines for several notable reasons:

1.  The Chinese government made things harder for the North Koreans living in China

2. Two DPRK athletes test positive for doping.  This results in Kim Jong Su being stripped of his silver and bronze medals in shooting.

3.  If these medals had not been taken away, the DPRK would have seen their most succesful Olympic showing ever.  Still, their medal count has been relatively impressive: 2 golds, 1 silver, and 3 bronze.  Mostly in weightlifting and Judo.

4.  Despite these results, the victories are not being touted back in Pyongyang.  According to Bloomberg:

At home, few Olympic events are shown live on television and press reports barely mention the reclusive nation’s haul of seven six medals, including two golds — the second-best in history.

Delivering news of a first gold medal since 1996, the national news agency, KCNA, carried a three-sentence report listing the weights that Pak Hyon Suk lifted for the title.

“She thus came first in the 63kg category final competition,” the story concluded.

Hardly the splurge of propaganda that might be expected in a state that misses few chances of self-promotion to a population experiencing its worst food shortages in a decade. The lack of Olympic hype is a deliberate exercise in keeping people from looking beyond their borders, said Mike Breen, author of “Kim Jong Il: North Korea’s Dear Leader.”

5.  North Korea’s Olympic sponsors made the news.  Turns out the DPRK’s athletes need to learn to thank their sponsors on camera, not “you know who:”

“When I was about to do the third (lift), I kept in my mind that the Dear Leader would be watching,” Pak said after her Aug. 12 win. “That thought was real encouragement to me and that is how I was able to lift the last weight.”

She stopped short of emulating Cha Kum Chol’s celebration at the world weightlifting championships in Thailand in September. Then, the 56-kilogram winner burst into a rendition of “If you didn’t exist, we wouldn’t exist” — a eulogy to Kim Jong Il — at a news conference.

“A lot of people give much pleasure to the Dear Leader and I’m happy to be one of them,” Cha said in Chiang Mai. (Bloomberg)

6. The DPRK’s Olympic athletes spent most of the time confined to the Olympic Village. According to a reporter with the Oregonian:

There are 63 athletes from the Democratic People’s Republic of Korea staying in a private compound inside the Olympic Village.




The athletes get to go outside when they practice, or when they compete in the 11 sports they’ve come here to win medals in. But that’s about it. And I know this because I went to the Water Cube on Tuesday and talked with North Korean synchronized swimmers Kim Yong Mi and Wang Ok Gyong.

Well, I talked with an interpreter who spoke English and Mandarin. And he talked with a second interpreter who spoke Mandarin and Korean. And the five of us huddled at one end of the swim complex, against a steel rail that blocked off the back door, understanding each other, one clumsy sentence at a time.

Kim and Wang finished 15th in the preliminaries and didn’t qualify for today’s finals, which means they’ll probably be back in communist North Korea by the time you read this. There will be no trip to the Great Wall. No shopping excursion to the Silk Market. There will be no tours, or temples, or taking the subway.

The Forbidden City?


Said Wang: “We’re not allowed to see places of interest.”

North Korean athletes are not allowed to mingle with athletes from other nations inside the village. And they refused to talk with reporters after their performance on Tuesday until their coach — a woman named Jong Ae Ryu — gave her blessing. It’s protocol, and the whole contingent hurried off after a few minutes and polite explanation that they didn’t come to Beijing to be tourists or make friends.

“No mixing with others,” Jong said.

Read more here:
North Korea Heads for Best Olympics; Don’t Say It in Pyongyang
Grant Clark and Heejin Koo

A lonely Olympics experience
The Oregonian
John Canzano


Inter Korea trade and exchange

Sunday, August 24th, 2008

Last week, the Choson Ilbo reported on trade, tourism and other exchanges between the two Koreas:

The number of [South Korean] tourists to North Korea plunged more than 60 percent last month following the shooting death of a South Korean tourist at Mt. Kumgang resort.

The Unification Ministry says the number dropped to about 21,000, almost a 20 percent decrease from July of last year. The resort was closed after the shooting.

The amount of trade between the Koreas also dropped 1.5 percent from last year.

Although commercial transactions at the jointly-operated Kaesong Industrial Complex in the North increased more than 28 percent year on year, non-commercial transactions, such as aid to the North, plunged more than 80 percent.

Read more here:
Tourism to N. Korea Drops 60% in July
Choson Ilbo


DPRK and Myanmar trade: Guns and rubber

Sunday, August 24th, 2008

Myanmar severed diplomatic relations with the DPRK after North Korean agents attempted to assassinate South Korea  president Chun Doo Hwan on his October 1983 visit to Rangoon.

Diplomatic relations between the two countries were restored in April 2007.  Shortly after, North Korea was accused of selling rocket launchers to Myanmar’s SPDC (Orwellian acronym for: State Peace and Development Council)–formerly known as SLORC (State Law and Order Restoration Council).

Now the AFP reports that trade has expanded into natural resources, with which Myanmar is abundantly blessed:

Military-run Myanmar is to begin exporting rubber to North Korea, in a further warming of relations between the reclusive governments of the two countries, a weekly newspaper reported Tuesday.

“They will start by importing at least 10,000 tonnes within the first year,” Khaing Myint of the Myanmar Rubber Planters and Producers Association was quoted as saying by the Myanmar Times.

“We are extremely pleased to add another client nation to our export destinations for our rubber. We expect the first batch to be delivered in October,” Khaing Myint reportedly said.

Read the full article here:
Myanmar to begin rubber exports to North Korea


New York Times reports on Kaesong Zone

Sunday, August 24th, 2008

Although the article did not offer much new or probing analysis, there were a few data points that I thought it was important to highlight: 

Despite its isolation and prisonlike feel, the Kaesong Industrial Park is booming with construction. The park’s operator, a South Korean developer, Hyundai Asan, hopes to expand it into a minicity over the next 12 years, with high-rise apartments and hotels, an artificial lake and three golf courses.

By that time, the company hopes there will be about 2,000 factories here employing 350,000 North Koreans and producing $20 billion worth of goods a year.

That compares with a manufacturing output of only $366 million in the first half of this year, according to South Korea’s unification ministry.

In the six months through June, the flow of goods in and out of the industrial park accounted for 42 percent of the $881 million in trade between the two Koreas, the ministry said.


[…] 72 smaller South Korean companies have already built factories here, looking to tap the North’s supply of low-cost, Korean-speaking labor. So far, only one foreign company has come [–German auto parts maker Prettl Group is building a factory. Two Chinese companies will begin operations soon[, b]ut most companies here continue to be smaller South Korean firms, producing low-tech goods, from frying pans to running shoes, largely for domestic consumption.] (NKeconWatch combined two different paragraphs here)

The piecemeal brand of change is seen in the experiences of SJ Tech, a South Korean maker of car and cellphone parts that built a $4 million factory here four years ago. The company’s first North Korean employees had never even seen a keyboard, much less a computer, said Yoo Chang-geun, SJ Tech’s president. SJ Tech has spent so much time teaching them things like machinery operation and management concepts that Mr. Yoo jokingly calls his factory “North Korea’s first business school.”

But the North Koreans were eager learners, sketching keyboards on paper to teach themselves typing. Now, SJ Tech’s 430 North Korean employees have learned enough to run the factory without South Korean supervisors.

In a telling sign, they have also changed their haircuts to look more like their South Korean colleagues.

Andrei Lankov seems optimistic on the project’s political goals, stating “When North and South Koreans can interact on a daily basis, it is a chance for the North Koreans to see with their eyes that their own propaganda doesn’t make sense.”

A few described how the South Korean-run industrial park was improving lives by paying its workers the equivalent of about $60 a month, three times the average salary in the rest of Kaesong. […]

The South Korean government, which spent more than $150 million subsidizing the park, provides low-interest loans and insurance to companies to offset the risks of investing in the unstable and still hostile North.

Mr. Yoo of SJ Tech said his North Korean employees’ monthly salaries of $75, in contrast to the $2,000 he pays South Koreans, made investing in North Korea entirely worthwhile, despite any risks.

The article seems to take worker compensation claims at face value, but in reality Kaesong workers do not take home their allotted wages.  The DPRK government keeps most of them in taxes and administrative fees.  However, other non-monetary benefits make the jobs highly envied among North Korean workers.  Rumor has it that North Korean workers pay hefty bribes to get these jobs. 

Read the full article here:
Big Dreams for North Korean Industrial Park
New York Times
Martin Fackler