Archive for January, 2010

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Bermudez launches “KPA Journal”

Friday, January 15th, 2010

Joseph Bermudez, a military analyst for Jane’s Intelligence Review and author of The Armed Forces of North Korea, has launched a journal dedicated to the discussion of the DPRK military: KPA Journal.

According to the introduction by Mr. Bermudez:

The goals of this modest publication are to allow me to freely share with readers new, interesting or updated information concerning: all aspects of the Korean People’s Army (KPA, more commonly known as the North Korean Army) from its birth until present; ballistic missile development; intelligence operations (e.g., seaborne infiltration operations, etc.); and other defense and intelligence issues concerning the Democratic People’s Republic of Korea (DPRK, more commonly known as North Korea).

As I have researched, written and lectured on these subjects during the past 25+ years I’ve frequently come upon fragments or collections of interesting information that either didn’t fit into then current projects or that was deleted by editors in order to save space. Recently, while conducting research for three book projects—Combat History of the Korean People’s Army, DPRK Intelligence Services 1945-1975, and an update to my earlier North Korean Special Forces: Second Edition—I once again encountered numerous examples of these fragments and collections. Rather than let this information remain in my files unused I’ve decided to use it for KPA Journal.

Additionally, as I have written reports and articles concerning recent DPRK related issues new information has subsequently come to light. It is my hope to utilize KPA Journal to share such updated information with readers. While it is my hope that KPA Journal will eventually be a monthly publication, initially it will be distributed on an irregular basis until the time arrives when I can dedicate more energy to it.

A KPA Journal website is under construction and should be online later this year at www.kpajournal.com. It will eventually serve as a repository for issues of KPA Journal, declassified documents, longer research projects, previously authored articles and more.

Should readers find any of this information of interest or value, and decide to use it in your own research efforts, I would greatly appreciate your citing KPA Journal as your source.

Readers are encouraged to share KPA Journal with friends and colleagues. If they wish to be added to the mailing list, or should you not desire to be on the mailing list, please contact me at [email protected].

Download Vol. 1, No. 1 here (PDF).

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Posted in Japan, Military | 3 Comments »

China expanding mining rights in N. Korea

Friday, January 15th, 2010

According to Yonhap:

China has expanded its mining rights in North Korea to cover as many as 20 sites, a South Korean report said Thursday.

China is a leading investor in North Korea, which, according to a South Korean study, is believed to have enormous deposits of natural resources, including coal, nickel, molybdenum and bronze.

Further efforts to isolate the DPRK economically allow China to capture even more of these resources at bargain prices.  The North Koreans, for their part, are not happy about this.  According to the Steel Guru:

At an international conference held in Yanjiin in October, Director of the Economy Institute at the North Korean Academy of Social Sciences Mr Kim Chol Jun had revealed that his country is restricting exports of unprocessed resources. He added that “Mineral resources are exported at high prices by processing them. Exports of cheap unprocessed goods are a loss to the state.”

South Korea’s Unification Ministry estimates that underground mineral resources in North Korea are valued at about JPY 540 and the amount of deposits of magnetite used to trim the weight of automobile parts is the world’s largest at 3 billion tonnes to 4 billion tonnes. In addition to iron ore, North Korea is said to be rich in such rare metals as molybdenum and rare earth.

On a positive note, Chinese takeover of the mines could possibly lead to greater investment in mine working conditions if only to increase output—-although no data is really available to determine if this is the case.

I have been unable to locate the report mentioned in Yonhap because the story did not give any information about the title, author, publisher, or even the date or place it was released.

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Posted in China, Economic reform, Foreign direct investment, Mining/Minerals | Comments Closed

Compounding the economic policy decisions…

Wednesday, January 13th, 2010

…it is very cold in the DPRK right now. The image below was taken January 3, 2010:

korean-peninsula-2010.JPG

Click on image for much larger version.

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Posted in Uncategorized | Comments Closed

DPRK to permit US tourists year-round

Tuesday, January 12th, 2010

According to a press release from Koryo Tours:

Koryo Tours has been informed that a more general opening of the DPRK (North Korea) to US tourists is likely to take effect in 2010. It is expected that American citizens, who had previously been restricted to visiting North Korea only during the annual Arirang Mass Games festival which runs from August to October may now be permitted to enter the country year-round. Normal restrictions on American tourists also include staying in North Korea a maximum of 4 nights and only being permitted to enter and exit the country by plane from China, there is also a 4 times weekly train that runs from Pyongyang to Beijing, as yet it is unclear whether these restrictions will also be dropped but a decision is expected before too long.

Koryo Tours has been operating trips to North Korea since 1993 and is universally recognised as the only specialist/expert in this unique area. Unlike the competition, we are also regular visitors; rather than ship our clients off and hope for the best, we work in conjunction with the Korean tour guides as cultural conduits. ensuring everyone has the optimum experience from this journey of a lifetime. Recommended by all the North Korean guidebooks, we consult with international media regarding information and analysis on DPRK tourism and have produced three award winning documentaries on North Korea in association with the BBC (www.koryogroupcom). There’s more to see in North Korea than most people imagine, and with this new policy it seems likely that Americans will now have the opportunity to see more than ever.

I have visited the DPRK twice (though not wth Koryo Tours) and I recommend the trip. Koryo’s tour dates can be found here—although the dates for American tourists will likely be expanded.

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Posted in Koryo Tours, Tourism | 6 Comments »

Nicholas Eberstadt on the DPRK’s new monetary policy

Tuesday, January 12th, 2010

Nicholas Eberstadt has some interesting statistics in a Wall Street Journal op-ed this week:

For a variety of reasons—possibly including unintended reverberations from the past decade’s nuclear drama—the remonetization [of 2002] did not work well. Too much new money was chasing too few goods, sparking significant inflation. By November 2009, the North Korean won’s black-market value in dollars was barely 5% of the level when the 2002 measures were implemented, a depreciation averaging over 3% per month.

…

The speed and depth of the won’s resulting plunge has been dizzying. The nominal market price of rice is reportedly higher today than it was in November 2009, before currency reform. This would imply 100-fold inflation and then some in just over one month. The won-yuan exchange rate along the North Korea-China border has reportedly dropped by almost 50% over the past month, even after discounting for the 100-to-1 currency conversion. The government apparently has no confidence in its own currency move, and is now betting against it. News reports indicate that Pyongyang this month is issuing soldiers in its public security forces twice their nominal monthly pre-reform wages (a 20,000% raise in light of the currency conversion). If the government finances more wage hikes like this by running the printing presses, it will turn the currency into a toxic asset no one wants to hold.

…

The botched currency reform also has revealed how little North Korean decision-makers understand their own economy, much less the outside world. On a related note, the regime’s supposed heir apparent, Kim Jong Eun, was the mastermind behind the North Korean currency reform, according to South Korean intelligence. This may just be bad intelligence or disinformation. But if accurate, it raises disturbing questions about the judgment of the rising generation of North Korean leadership.

Read the full story here:
North Korean Money Troubles
Wall Street Journal
Nicholas Ebererstadt
1/11/10

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Posted in 2002 Economic reforms, Banking, Finance, Fiscal & monetary policy, Food, Price liberalization | Comments Closed

North Korea plans to restrict foreign exchange on open market

Tuesday, January 12th, 2010

Caijing (Chinese Finance Magazine)
12/20/2009
Translated by Bert Acosta

A Chinese reporter from the Chinese state media outlet Xinhua saw a government public notice posted on the entryway to a market stating that beginning January 1, 2010, North Korea will prohibit the circulation of foreign currencies on the open market.

Issued by the DPRK’s Public Safety Bureau, these regulations will apply to official state administrations, enterprises, social organizations (such as the military and special organizations), citizens, and foreigners. After these rules come into effect, citizens of the DPRK will not be permitted to use the Dollar, Euro, and other foreign currencies in stores and restaurants. Foreigners bringing these currencies into the DPRK must exchange them for Wan – even at the airport and international hotels.  The various exchange and transportation fees of the past will also change to a Won-centric system.

The notice also states that, in accordance with government authority, related institutions will adopt steps to establish a strict national monetary circulation system. The foreign exchange needs of all organizations will be guaranteed by state planning, and all related banks will be required to established foreign currency and Won exchange programs to responsibly undertake the task of exchange.

Furthermore, the notice stated that organizations found violating exchange regulations will be ordered to cease operational activities or be disbanded – with the government confiscating its trade capital and other resources. Regarding products purchased with foreign currencies, black market trading, usury loans, broker activities, bribery, illegal currency exchange, and other illegal actions, violators will be prosecuted in conformity with legal provisions.

This is North Korea’s first economic management measure since revaluing the Won on November 30th, 2009.  Since revaluing its currency, North Korea has not announced an official exchange rate.

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Posted in Banking, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market), Ministry of People’s Security (Criminal Police) | Comments Closed

North Korea begins closing wholesale markets

Tuesday, January 12th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No.10-01-08-1
2010-01-08

North Korean authorities appear to be closing regional, large-scale wholesale markets, one after another. According to the latest newsletter from the North Korean human rights group Good Friends (January 6), “Based on a Cabinet measure passed on December 30 of last year, North Korean authorities will suspend operations management of the Sunam Market in Cheongjin [LOCATION HERE] from the end of this March, effectively deciding to close [the market].”

Like the South Pyeongan Province Pyeongseong Market [LOCATION HERE] reportedly closed last year, the Sunam Market, North Korea’s representative wholesale market, was built less than five years ago. Good Friends reported that provincial authorities from North Hamgyeong Province plan to raze the market, located between Chumok and Cheongnam neighborhoods, and build a modern park and residential housing.

The newsletter revealed, “More than 40 percent of Cheongjin residents rely on the Sunam Market to maintain their lifestyles, and if the market is closed, there will be considerable consequences,” and added that those who trade in the market or rely on it for their shopping are already worried about how they will continue to put food on the table if the market gets shut down.

It has also been reported that the Chupyeong Market [LOCATION HERE], in the Sapo district of Hamheung City, South Hamgyeong Province, will also be closed. The Chupyeong Market, which attracts as many traders as the Pyeongseong Market, apparently specializes in the wholesale trade of imitation goods. Good Friends explains that the Chupyeong Market is a very busy and crowded market, with many shoppers coming and going, and this has also led to an increase in scams, thefts and other crimes. It is anticipated that following the closing of the Sunam Market early in the year, the next move authorities make will be to shut down the Chupyeong Market, as well.

A directive has been issued that North Korean authorities are to ban the sale of manufactured goods in the country’s permanent markets, and that all goods are to be sold only in state-sanctioned retail stores, and at state-set prices. However, sources inside the North report that traders are gauging the attitudes of local authorities, and often not turning over their goods for sale in retail stores. This, along with the North’s currency reform and ban on foreign currency, as well as the increase in farmers’ wages, has led to huge increases in exchange rates and prices.

Currently, workers in state-operated enterprises are being paid anywhere from 1,500 won to as much as 5,000 won per month. With the currency revaluation, this is considerably more than they were making before, but taking into account the massive increases in prices, as well, the impact of the higher wages is negligible.

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Posted in Economic reform, Fiscal & monetary policy, General markets (FMR: Farmers Market), Google Earth, Labor conditions/wages, Price liberalization, Public Distribiution System (PDS), Sunam market | 2 Comments »

EU implements further sanctions on DPRK

Monday, January 11th, 2010

The EU has issued a list of 12 DPRK officials who will be denied entry visas to member countries.  According to the Choson Ilbo:

The EU has imposed sanctions targeting North Korea’s top leadership over the country’s nuclear weapons development. Twelve officials were blacklisted, many of them thought to be leader Kim Jong-il’s closest advisers.

The list includes Vice Marshal Kim Yong-chun (74), the minister of the armed forces, as well as Jang Song-taek (64), the director of the North Korean Workers Party’s Administration Department who is Kim Jong-il’s brother-in-law. Six of 13 members of the powerful National Defense Committee were blacklisted.

At a session of the Environment Council in Brussels on Dec. 22, the EU approved new sanctions against North Korea, including an entry ban on individuals and goods. EU regulations are binding on the 27 member states and overrule individual national laws.

The four other blacklisted committee members are O Kuk-ryol, the deputy chairman of the National Defense Commission; Jon Pyong-ho, the secretary of the Central Committee and head of the Committee’s Military Supplies Industry Department; Paek Se-bong, the chairman of the Second Economic Committee of the Central Committee; and Ju Kyu-chang, the first deputy director of the Defense Industry Department. Also on the blacklist are Hyon Chol-hae, the deputy director of the General Political Department of the Armed Forces, and Pak Jae-gyong, the deputy director of the Logistics Bureau of the Armed Forces.

So Sang-guk, the chair of the Physics Department at Kim Il Sung University who laid the technical groundwork for the North’s nuclear development, and Pyon Yong-rip, the president of the State Academy of Sciences, were also blacklisted.

The legal statement issued by the EU can be found here on page 16. The complete list of officials affected by the travel ban are listed here on page 3.  The UN Security Council sanctioned five individuals in 2009.

The EU also maintained its ban on Air Koryo.  According to Yonhap (h/t The Marmot):

Air Koryo, North Korea’s air carrier, has been banned from offering flight services to Europe for a fifth year after having failed to meet international safety requirements, U.S. international broadcaster Radio Free Asia (RFA) said Saturday.

The North Korean carrier has been involved in the list of carriers prohibiting from flying to the 27 members of European Union that was released this year, RFA said.

Air Koryo reportedly has a fleet of about 20 planes made between the 1960s and 1970s in the Soviet Union.

UPDATE: Here are the EU regulations adopted on Dec 22, 2009. Thanks to Mike.

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Posted in Aviation, EU, Transportation, UN Security Council | 3 Comments »

DPRK cracks down on money lenders

Monday, January 11th, 2010

According to the Choson Ilbo:

North Korean authorities have been rounding up money changers in major cities since Jan. 4, it emerged Friday. Sources in North Korea said an average of 20 money changers were arrested in each major city, including 17 in Pyongyang and 23 in Sinuiju since Jan. 4.

After a shock currency reform in early December, authorities banned the use of foreign currency. In the past, residents had used U.S. dollars in hotels or markets without having to change them into North Korean won.

It seems the State Security Department and the Ministry of Public Security and members of the village resident organizations secretly investigated people’s dollar holdings prior to the currency reform, the sources said.

Heads of the resident organizations from each village reportedly discovered who spent dollars, and the two security agencies investigated foreign currency managers in agencies and enterprises.

The crackdown on money changers appears to be aimed at confiscating the dollars they hold. But more broadly, the North seems determined to ferret out all newly wealthy people by gathering information about state agencies or individuals who have engaged in under-the-counter foreign currency dealings, the sources added. A North Korean businessman who was recently in China said, “The crackdown has quickly frozen the exchange market in the North.”

Rich people who were not affected as seriously by the currency reform because they hold cash in foreign currency are reportedly becoming edgy. Some are now experiencing hardship because they have not been able to change their dollars into North Korean won.

A huge private exchange market has come into existence in the North since 2000. In the early days, only small-scale dealers were engaged in the market, but once they had more than US$100,000, they even opened clandestine offices. In some cases, dealers handle nearly $1 million and work closely with state agencies in Pyongyang.

Officials who handle foreign currency whose source is hard for them to reveal reportedly rely on private money changers instead of government banks. Many money changers even in provincial regions are said to hold more than $100,000.

Read the full story here:
N.Korea Cracks Down on Money Changers
Choson Ilbo
1/11/10

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Posted in Banking, Black markets, Fiscal & monetary policy, General markets (FMR: Farmers Market) | Comments Closed

Food prices continue to increase

Sunday, January 10th, 2010

According to an AFP report that cites Good Friends:

Good Friends, citing its own contacts in the reclusive North, said prices for rice and corn doubled last week at markets in the capital Pyongyang and in the eastern port city of Chongjin.

Rice prices ranged from 120-150 won per kilogramme (2.2 pounds) in Pyongyang and 110 to 140 won in Chongjin last week — up from 40 to 50 won reported on December 30, the group said.

Corn also traded higher at 70-75 won last week — up from 20-25 won on December 30 in the areas, it added. Seoul’s unification ministry, handling cross-border issues, could not confirm the data.

The official exchange rate is 135 won to the dollar but the black market rate is between 2,000 and 3,000 won.

The report came as the World Food Programme struggles to raise relief funds for the food shortage-hit North.

Major donors — including South Korea and the United States — refuse to help in protest at its second nuclear test in May last year.

Statistics available at the WFP website display it raised 89.8 million dollars as of late last month, around only 18 percent of its target of 492 million dollars in relief funds for the communist North.

Read the full article here:
Food prices soaring in N. Korea: group
AFP
1/10/10

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Posted in Agriculture, Finance, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market), International Aid, Price liberalization, UN World Food Program | Comments Closed

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