April « 2009 « North Korean Economy Watch

Archive for April, 2009

DPRK cell phone subscribers top 20,000- costs, services detailed

Wednesday, April 22nd, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-4-22-1
2009-04-22

Since 3G cellular phones were first offered in North Korea last December, more than 20,000 customers have signed up for service. According to a recent report by the Choson Sinbo’s Pyongyang correspondent, the North’s cellular network is capable of providing voice and SMS services to as many as 126,000 customers in the Pyongyang area and along the highway between Pyongyang and Hyangsan, and is available to North Korean residents as well as foreigners in the North.

Anyone can procure a cell phone in the North by submitting required information on an application to a service center, along with an application fee of 50 Yuan, or approximately one Euro, or 130 Yen. Currently, telephones are selling for between 110 Euros for basic handsets, to as much as 240 Euros for phones with cameras and other functions. When a phone is turned on, a white ‘Chollima’ horse graphic appears over ‘Koryolink’ in blue, all with a red background. The trademark is said to mean, “The Choson spirit, moving forward at the speed of the Chollima to more quickly and more highly modernize the information and communication sector.”

To use one’s phone, a pre-paid phone card must be purchased. Three types of phone cards are sold for 850 won (A), 1700 won (B), and 2500 won (C), with ‘B’ and ‘C’ cards offering 125 and 400 minutes ‘free air time’, respectively. In order to see to it that its customer base continues to grow, the communications company plans to adjust prices, and offer services such as television and data transmission. Video and picture transmission and other technological preparations have already been made.

As has been previously reported, the service is provided by CHEO Technology Joint Venture Company, owned by the Choson Posts and Telecomm Corporation (KPTC) and Egypt’s Orscom Telecom Holding. There are now two service centers within Pyongyang. In December of last year, only one International Communications Center was established, but as service grew, a temporary sales office was set up in mid-March. The North Korean government purports to provide cellular service as part of its plan to improve the lives of the masses, and the number of subscribers is climbing daily. CHEO Technology plans to extend the coverage area to every major city, along all highways and along major rail routes throughout the country by the end of the year, with the ultimate goal of providing cellular service to every residential area in the nation by 2012.

Posted in Cell phones, CHEO Technology Joint Venture Company, Communications, Foreign direct investment, Ministry of Post and Telecommunications, Orascom Telecom Holding | 2 Comments »

US Senate bill seeks to add DPRK to terrorism list (again)

Tuesday, April 21st, 2009

US Senator Sam Brownback (R-KS) has introduced legislation which would require the the US governmet to add the DPRK back to its list of state sponsors of terror. If passed by the legislature and signed by the president, this would reverse the decision by Republican President George W. Bush, who had the DPRK removed from the list in October of last year.

The bill is S. 837. It has been referred to the Senate Committee on Foreign Relations. I am not a political insider, so I do not have any insight into how long it will remain there or if it has any chance of passing a committee vote. Joshua ~~will probably be following the bill closely~~ will be actively seeking the bill’s passage, so we can expect updates at One Free Korea.

I cannot offer any analysis of the proposed legislation since the Government Printing Office has not yet published the bill’s text (so it is not on line at the moment). You can track the bill’s progress here. Thomas has a list of cosponsors, etc.

UPDATE: Joshua has a link to a copy of the Senate bill as well as information on the corresponding House bill.

Posted in International trade, USA | 3 Comments »

Lankov on DPRK Social Change II

Sunday, April 19th, 2009

Andrei Lankov writes in Newsweek:

North Korea will never follow the Chinese path because its circumstances are profoundly different. The biggest factor is the existence of a rich and free South Korea across the border. Southerners share the same language and culture as the dirt-poor North, but their per capita income is at least 20 times higher—and at the moment, average North Koreans are ignorant of the gap. The regime’s self-imposed isolation is so draconian that even owning a tunable radio set is a crime. If North Korea started reforming, it would be flooded with information about South Korea’s prosperity. This would make North Koreans less fearful of the authorities and more likely to push for unification with their far richer cousins, just as the East Germans pushed to rejoin the West.

Knowing all this, North Korea’s rulers will do whatever they can to maintain control. Given the weakness of its Stalinist economy, this means coming up with new ways to squeeze aid from the outside world. In order to keep the money flowing—with as few conditions as possible—Kim is likely to continue engaging in risky brinkmanship and blackmail. To survive, Pyongyang has to be, or appear to be, dangerous and unpredictable.

But such tactics could easily lead to disaster. The only way to avoid this is to replace the regime.

That’s easier said than done: Military options are unthinkable. And sanctions won’t work either, since China and Russia are unlikely to cooperate fully. Even if Moscow and Beijing did go along, the only likely result would be a lot of dead farmers. North Korea’s great famine of 1996–99 demonstrated that the locals do not rebel when oppressed, even under terrible circumstances. North Koreans are terrified, disorganized and still largely unaware of any alternative to their misery.

But there’s a way to change that equation. The past 15 years have seen the spontaneous growth of grassroots markets in the North and partial disintegration of state controls. Rumors of South Korean prosperity have begun to spread, assisted by popular smuggled DVDs of South Korean movies. The world’s most perfect Stalinist regime is starting to disintegrate from below.

The best way to speed things up is for Washington and its allies to push for active engagement with the North in the form of development aid, scholarships for North Korean students and support for all sorts of activities that bring the world to North Korea or take North Koreans outside their cocoon. Such exchanges are often condemned as a way of appeasing dictators, but the experience of East Europe showed that an influx of uncensored information from the outside is deadly for a communist dictatorship.

Pyongyang understands the danger of such exchanges, but it needs money and technology badly enough that it might allow them nonetheless—so long as they fill its coffers and don’t look too dangerous. This is even more the case when exchanges ostensibly benefit members of the elite. For example, a scholarship program to study overseas would go mostly to students from top families. Yet this wouldn’t limit its impact: experience of the outside world will change these young people and turn some of them into importers of dangerous information. A similarly small step helped to unravel the Soviet Union: the first group of students allowed to study in the U.S., in 1957, numbered just four and were carefully selected. Yet two grew up to become leading reformers, and one of them—Alexander Yakovlev—is often credited as having been the real mastermind behind perestroika.

Read the full article here:
Newsweek
Andrei Lankov
4/18/2009

Posted in Economic reform, Education, Uncategorized | 2 Comments »

North Korea’s programming industry

Sunday, April 19th, 2009

I came across this video (in Dutch with some English) featuring Leonid Petrov and Paul Tjia. It contains some interesting information on North Korea’s computer programming industry.

Click on image to see film

Paul Tjia of GPI Consultancyin the Netherlands has been running technology business delegations to the DPRK for several years. Their next delegation will be taking place this May. To learn more, you can read the marketing leaflet in PDF here.

Posted in Computing/IT, GPI Consultancy | Comments Closed

Jang moves to NDC

Thursday, April 16th, 2009

A couple of weeks ago, the DPRK anounced that Jang Song taek had been appointed to the National Defense Commission.

Today, Michael Madden sent me a biography (CV) of Jang he put together. You may download it here in PDF format.

Also, the Los Angeles Times published an article about Jang. You can read the LA Times piece here.

Posted in National Defense Commission | Comments Closed

Commodity price decreases vs. sanctions

Thursday, April 16th, 2009

Writing in Reuters, Lucy Hornby and Tom Miles point out that the DPRK faces greater economic uncertainty from falling commodity prices than from new sanctions. Below I have posted excerpts and charts:

Lower commodity prices may prove more painful to North Korea than the tightened sanctions, which will likely blacklist certain firms known to deal in military goods.

“Sanctions won’t have a big effect, they won’t change their actions,” said Shi Yinhong, a professor of international relations at Renmin University in Beijing.

“There will be no impact on trade with China, which is mostly grains and basic materials … Sanctions may have some influence on luxury goods, but only a weak effect on overall trade volume.”

The isolated country’s $2 billion annual trade with China, equal to about 10 percent of the North’s annual GDP, is its most important economic relationship.

North Korea profited from strong prices for minerals and ores over the last few years, ramping up exports of zinc, lead and iron ore to resource-hungry China.

Most of those exports have dropped again since last summer, in line with sharp decreases in metals prices buffeted by the global economic crisis.

The North’s mineral deposits could be worth $2 trillion, according to an estimate by the South’s Korea Resources Corporation. But dilapidated infrastructure and a broken power grid hinder mining and the transport of minerals out of the country.

The irregular pattern of North Korea’s alumina imports implies that its smelter only runs in fits and starts. Other ore exports are equally ragged, possibly indicating that North Koreans are only digging the easily accessible ores.

Chinese companies that have tried to invest in North Korean mines complain of constant changes in regulations and report that the North tries to tie mining access to commitments to build mills and other industrial projects.

“China and North Korea are friendly neighbors and we will continue to develop friendly cooperative relations with North Korea,” Chinese foreign ministry spokeswoman Jiang Yu said on Tuesday after the North’s withdrawal from the six-party talks.

Diplomats’ expectations that China might use trade to influence its prickly neighbor rose when China cut off crude oil shipments in September of 2006, as North Korea prepared to test a nuclear bomb. It had tested ballistic missiles that July.

In fact, energy trade data shows that China is reluctant to apply trade pressure. Increased oil products shipments offset the brief cut in crude supplies in 2006.

“The imposition of these sanctions (in 2006) has had no perceptible effect on North Korea’s trade with the country’s two largest partners, China and South Korea,” wrote Marcus Noland, of the Washington-based Peterson Institute for International Economics.

Data since early 2006 show that Chinese crude shipments have in fact been overwhelmingly consistent, at 50,000 tons a month.

North Korea has imported very little Chinese grain since the 2008 harvest, reflecting the better harvest. Flooding and a disastrous harvest in 2006 and 2007 required heavy imports of grains from China in those years.

Chinese corn shipments to North Korea since August have dropped to 2,670 tons, from 136,595 tons in the previous twelve months and 32,186 tons in the year before that.

Rice and soybean shipments show a similar pattern.

Read the full story below:
Little leverage left for North Korea sanctions
Reuters
4/14/2009
Lucy Hornby and Tom Miles

Posted in Agriculture, China, Energy, Food, Foreign direct investment, Mining/Minerals, Oil | Comments Closed

Lankov on sanctions

Tuesday, April 14th, 2009

Lankov writes in the Financial Times:

The US and its allies have almost no leverage when it comes to dealing with North Korea. There is much talk about sanctions, but, to be effective, they must be upheld by all major states, and this is not going to happen. China and Russia, driven by their own agendas, have already made clear that they would not support a tougher approach. These two states have veto power in the Security Council, and are major trade partners of North Korea (slightly more than half of Pyongyang’s entire trade is with them).

The ineffectiveness of sanctions has been demonstrated before. In 2006 when Kim Jong-il’s regime conducted its first nuclear test, even China was outraged and supported UN sanctions. However, it soon became clear that the sanctions were not working, since not only China, but also the US chose to return to business as usual. As a result from 2006 the North Korean government, despite theoretically being subjected to sanctions, felt more secure domestically and internationally than at any time since the early 1990s. This time, however, even the chance of passing a resolution is slim.

What else can be done? Military actions are unthinkable. Unilateral economic pressure will not work since neither the US nor its major allies have significant trade with North Korea. Financial sanctions, imposed on the foreign banks serving the regime, would probably deliver a blow, but it is unlikely that this would lead to a serious crisis in Pyongyang.

Indeed, even if an efficient sanctions regime were imposed, its only victims would be common people in North Korea. In the late 1990s, about 5 per cent of the entire population starved to death, but there were no signs of discontent: terrified, isolated and unaware of any alternative to their system, North Korean farmers did not rebel, but died quietly.

This means that diplomatic condemnation will have no consequences, and North Korean dictators understand this. If anything, the excessive noise is harmful: the sharp contrast between bellicose statements and lack of real action will again demonstrate to North Korean leaders that their opponents are powerless.

However, there is something even worse than empty threats, and this is empty threats followed by generous concessions. If history is a guide, this is likely to happen. In 2002-06 the US took a very harsh approach to the North, but everything changed in October 2006 when North Korea conducted a partially successful nuclear test. In merely four months, US policy was dramatically reversed, negotiations were restarted, and aid delivery resumed. Perhaps this change of policy was wise in itself (isolation would not work anyway), but its timing was bad. It once again confirmed to North Koreans that blackmail works.

The recent launch confirmed they had learnt the lesson. Since the regime was afraid the US was not paying enough attention to it, it was deliberately provocative, in the hope that the US, after a short outburst of militant rhetoric, would rush back to the negotiating table ready to make more concessions. It might be right.

—

There is no alternative to negotiations with Mr Kim’s clique. But Pyongyang dictators should be taught that provocations do not pay (or, at least, do not pay handsomely and immediately). This is especially important now, when Mr Obama’s administration has its first encounter with North Korean brinkmanship.

Read the full article here:
Sanctions will have no effect on North Korea
Financial Times
Andrei Lankov
4/12/2009

Posted in China, International trade, Japan, Russia | Comments Closed

Day of the sun: propaganda time

Tuesday, April 14th, 2009

UPDATE: Here is a photo of the fireworks show.

April 15 is the biggest holiday in North Korea–it is Kim Il sung’s birthday. I thought this would be a good opportunity to post some good old fashioned communist propaganda which I found on the Korean Friendship Association web page.

The film is called Always Together, and it is in Russian, which gives it that socialist je ne sais qua. Another important thing to note is that although the film appears to be about Kim Il sung it is really about Kim Jong il and how is is the legitimate successor to his father.

Those interested in North Korean propaganda will be surprised to see how many classic propaganda images are taken from this video.

Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9.

Posted in Domestic publication, Film, Uncategorized | 1 Comment »

The end of six party talks or playing hard to get?

Tuesday, April 14th, 2009

UPDATE 2: Financial markets do not seem to care. According to Reuters:

Financial markets in Seoul and Tokyo were not affected by North Korea’s announcement, with investors seeing it as more of the sabre-rattling they have come to expect from Pyongyang.

UPDATE 1: According to the Wall Street Journal, the DPRK has ordered nuclear inspectors to leave the country (again):

North Korea ordered International Atomic Energy Agency inspectors out of the country Tuesday. The decision ends international monitoring of a research reactor at Yongbyon and in theory could allow reprocessing of fuel rods to produce plutonium. The IAEA is expected to announce the eviction in the next hour.

The on-again, off-again inspections at the 5-megawatt Experimental Nuclear Reactor Plant and the Nuclear Fuel Fabrication Plant at Yongbyon resumed in October, soon after the U.S. announced it would remove North Korea from the State Department list of countries that sponsor terrorism.

The IAEA issued a press statement here.

ORIGINAL POST:
The UN Security Council has published its presidential statement condemning th DPRK’s missile launch (read the full text of the statement here), and the media is widely reporting on the contents:

The United Nations Security Council has condemned North Korea’s April 5th rocket launch and demanded that Pyongyang not conduct further tests, saying that it would expand sanctions against North Korea.

—

The Security Council’s presidential statement is a level below a resolution — which has the power of force to back it up. But several ambassadors, including U.S. envoy Susan Rice, said the statement is legally binding, nonetheless. “The United States views presidential statements, broadly speaking, as binding. In this instance, it is more than binding in that it adds to an existing Chapter 7 sanctions regime. So in our view, there is no doubt that the measures that will be imposed as a consequence of this presidential statement by the 24th or 30th of April will occur and will be binding,” he said.

—

Monday’s statement goes further, saying there will be additional strengthening of measures in resolution 1718 and activates the dormant sanctions committee set up under that resolution.

“It is not extending the number of sanctions. It is not doing that. What it is doing is broadening the base of sanctions under the existing resolution. That is what we have agreed to do in principle and we have agreed to do it in a tight timeline by end of this month. So we are tightening the sanction screw a notch against North Korea,” said British Ambassador, John Sawers.

The statement calls for the designation of entities that would be subject to asset freezes and the prohibition of the transfer of some goods into or out of North Korea.

Turkish Ambassador Baki Ilkin, chairman of the sanction committee, said no countries have officially submitted their list yet. But several ambassadors said they are putting them together. (Voice of America)

This morning, the DPRK annonced it will withdrawl from 6 party talks:

Fuming at the U.N. Security Council for condemning its recent missile launch, North Korea said Tuesday it will restart its plutonium factory, junk all its disarmament agreements and “never participate” again in six-country nuclear negotiations.

It called the Security Council’s statement a “brigandish,” “wanton” and “unjust” infringement of its sovereignty. It said that six-party nuclear talks with the United States, South Korea, Japan, Russia and, even its closest ally, China, had “turned into a platform” for forcing the North to disarm itself and for bringing down its system of government.

“We have no choice but to further strengthen our nuclear deterrent to cope with additional military threats by hostile forces,” North Korea’s Foreign Ministry said in a statement released by its state news agency.

If it follows through on Tuesday’s bluster, North Korea will walk away from six years of slow, fitful but sometimes productive negotiations that have led to substantial disablement of the North’s main nuclear reactor and partial disclosure of the scale of its weapons program.

—

“We will actively consider building our own light-water nuclear reactor, will revive nuclear facilities and reprocess used nuclear fuel rods,” the ministry said. Experts have said the North does not have the equipment or skills to make an advanced light-water reactor.

China, host of the six-party talks, called for restraint and calm on Tuesday, asking all countries to return to the discussions, even after North Korea announced it would never do so.

“We hope the relevant parties could proceed from the perspective of the overall interest of the region, so as to work together to safeguard the progress of the six-party talks,” Chinese foreign ministry’s spokeswoman Jiang Yu said at a news briefing.

Japan also urged North Korea to return to the talks and the Russia government said it regretted Pyongyang’s decision.

—

Analysts in Seoul said that North Korea, with its threat to pull out of the six-party talks, appeared to be up to its familiar tactics of brinkmanship — creating a crisis in order to be rewarded for helping to solve it.

“North Korea can use today’s walkout as a negotiating chip with the United States in the future,” said Koh Yu-whan, a profession of North Korean studies at Dongguk University in Seoul.

“North Koreans have learned from past experience that when they create worst-case scenarios they get closer to solving their problems,” said Chun Hyun-joon, a North Korea specialist at the Korea Institute for National Unification. (Washington Post)

Here is the full KCNA comment:

DPRK Foreign Ministry Vehemently Refutes UNSC’s “Presidential Statement”

Pyongyang, April 14 (KCNA) — The DPRK Foreign Ministry issued a statement Tuesday flatly rejecting the brigandish “presidential statement” which the U.S. and its followers finally released by abusing the UNSC to condemn the DPRK’s launch of satellite for peaceful purposes.

Saying that throughout history the UNSC has never taken issue with satellite launches, the statement continues:

First, the DPRK resolutely rejects the unjust action taken by the UNSC wantonly infringing upon the sovereignty of the DPRK and seriously hurting the dignity of the Korean people.

Second, there would be no need to hold six-party talks which the DPRK has attended.

Now that the six-party talks have turned into a platform for infringing upon the sovereignty of the DPRK and seeking to force the DPRK to disarm itself and bring down the system in it the DPRK will never participate in the talks any longer nor it will be bound to any agreement of the six-party talks.

Third, the DPRK will bolster its nuclear deterrent for self-defence in every way.

It will take the measure for restoring to their original state the nuclear facilities which had been disabled under the agreement of the six-party talks and putting their operation on a normal track and fully reprocess the spent fuel rods churned out from the pilot atomic power plant as part of it.

Read the full stories here:
North Korea orders UN nuclear inspectors to leave
Reuters
Jon Herskovitz
4/14/2009
North Korea Expels Nuclear Inspectors After Leaving Six-Party Talks
Wall Street Journal
David Crawford, Evan Ramstad
4/14/2009

Security Council condemns DPR Korea’s recent launch
UN Security Council Press Release
4/13/2009

UN Condemns North Korea Rocket Launch
Voice of America
Margaret Besheer
4/13/2009

N. Korea Says It Will Boycott Nuclear Talks, Restart Weapons Plant
Washington Post
Blaine Harden
Washington Post Foreign Service
4/14/2009

Posted in Arms shipment, Illicit activities, International Aid, International trade, UN | Comments Closed

DPRK – ROK ambassadors attend London panel

Monday, April 13th, 2009

(Hat tip to a reader) On March 26, the Anglo-Korea Society in London hosted an interesting panel discussion with the London ambassadors from both North and South Korea along with Martin Uden, Britain’s ambassador to the ROK, and Stephen Lillie, the head of the FCO Far East Group.

It is a bit too late to attend, but below are summary links and photos:
1. Official page of the event (pictures at the bottom)

2. Pearl Daborn summary

3. Michael Rank summary

4. Jennifer Barclay summary

5. Marian Werner summary

Posted in EU, United Kingdom | Comments Closed