Archive for August, 2010

DPRK’s external debt

Thursday, August 19th, 2010

According to the Korea Herald:

North Korea watchers in the West estimate the North’s outstanding debts to be around $12 billion, two thirds of which is owed to former communist states.

In 2008, a ruling Grand National Party lawmaker had suggested allowing North Korea to pay back its loans from South Korea with mineral resources or development rights.

Rep. Kwon Young-se said during a parliamentary audit two years ago that North Korea’s debts amount to $18 billion, nearly as much as the country’s economic output in the year 2007.

About five percent of it, or $920 million, was borrowed from South Korea.

“Loans for North Korea’s economic development from socialist countries in the 1950s and 60s, and Western nations in the 1970s have accumulated with overdue interest on outstanding debts,” Kwon said.

“North Korea’s per capita debt is around 930,000 won, slightly less than the country’s annual per capita income of 1.07 million won.”

Last year, a top South Korean government official said Seoul could pay for tours to North Korea with commodities instead of cash.

He said the issue of paying cash to North Korea had to be reconsidered based on the U.N. Security Council Resolution 1874, which slapped tightened sanctions on the reclusive state as punishment for its nuclear and missile programs.

The crossborder tours have been suspended for the past two years after a South Korean tourist was shot to death in the North’s mountain resort.

Read the full sotry here:
North Korea cornered with snowballing debts
Korea Herald
Kim So-hyun


Dandong launches DPRK trade program

Thursday, August 19th, 2010

According to Reuters:

A northeast Chinese border city that is a key portal with isolated neighbour North Korea has launched a pilot scheme to settle export deals in China’s yuan currency, the city’s official newspaper said on Thursday.

North Korea’s struggling economy has come under greater strain after a chaotic attempt to re-denominate its currency last year hurt private traders and alarmed Chinese merchants.

The yuan’s trial use appears intended to boost Chinese exporters’ confidence in doing more above-the-table deals with the North, often a perilous gamble even in smoother times.

Many Chinese traders doing business with the North already use the yuan, dollar, euro in cash or even barter to settle export of food, clothes, appliances and other cheap goods in often informal or convoluted transactions. Smuggling and illicit deals are common along the border, marked by the Yalu River, a few dozen metres (feet) wide in many parts.

The Dandong Daily reported that approved exporters in Dandong will be able officially to carry out business in yuan.

The Chinese government announced in June that all of its trading partners would be able to invoice and settle imports and exports in yuan, but so far such transactions have been primarily confined to trade between China and Hong Kong.

“This means that state-designated export businesses in Dandong that engage in external trade can use the renminbi to settle transactions,” said the Chinese-language Dandong Daily ( of the scheme, which began on Wednesday.

The renminbi is another name for the yuan.

“This will reduce exchange rate risks and the costs of doing business, and smooth out enjoying export tax rebate policies, as well as improving capital utilisation,” said the report.

The scheme will also cover approved small-scale exports passing through customs posts at Dandong, it said.

The new scheme will allow exporters to enjoy rebates and other benefits for trade, but will also depend on North Korean importers being allowed to deal legally in yuan.

Dandong lies on the Yalu, and at night its neon-lit riverfront faces the darkness of the electricity-starved North.

North Korea’s dependence on Chinese goods and aid has deepened as Pyongyang’s ties with South Korea have frayed.

According to Chinese customs data, in the first six months of 2010, China’s trade with North Korea was worth $1.3 billion (835.6 million pounds), a rise of 15.2 percent on the same time last year.

China’s exports to the North grew by a quarter, but its imports fell by 4.8 percent, the customs data show. As much as 70-80 percent of that trade passed through Dandong, according to earlier Chinese news reports, citing local customs officials.

Read the full story here:
China city launches yuan trade scheme with North Korea


Lives of DPRK defectors

Wednesday, August 18th, 2010

According to the Korea Times:

Approximately 20,000 North Korean defectors are living in South Korea nowadays. Frankly, this number is not particularly large: in comparison some 689,000 East Germans defected to East Germany between 1961-1989, and the number of defectors/refugees from other Communist countries was also counted in the hundreds of thousands.

North Korean refugees are very dissimilar from the refugees from Eastern Europe who crossed over to the western borders in large numbers during the Cold War.

Until the mid-1990s escape from North Korea was almost impossible, but things changed when North Koreans began to move to China which became the major stopover for nearly all refugees. Now the community of illegal North Korean refugees in China is estimated to be around 30,000-40,000. These people are usually members of the underprivileged social groups who once lived in areas of North Korea which are close to the border with China.

People of the borderland areas began to cross over to China in large numbers in the mid-1990s (an illegal crossing is not difficult since the border rivers are not broad, and also freeze in winter). In the first stage those people were fleeing starvation, but from around 2000, most of them have been attracted by jobs available in China. For most people these jobs would not appear lucrative: in that part of China a construction worker can earn a wage of $80-$90 a month (free accommodation provided), while a humble waitress is usually paid some $50 a month. However, the average salary in North Korea is now about $2-$3 a month, so this income is extremely attractive to poor North Korean farmers.

Of course, crossing to China and working there illegally is not risk-free. Chinese employers might be cheating, refugees are hunted by the Chinese police and if found extradited back to North Korea.

Nonetheless nowadays the punishment of extradited refugees tends be lenient ― by the cannibalistic standards of the North Korean regime, that is. If an extradited refugee can handle a few days of intense beatings and moderate torture without confessing that he or she did something politically dangerous in China ― like contacting Christian missionaries, South Koreans or foreigners ― chances are that the refugee will get away with just a few months of imprisonment.

This situation determines the composition of the refugee community in China. The typical North Korean refugee in China is a middle-aged woman (women outnumber men roughly three to one since it is easier for them to leave the village and reach the border). She has spent all her life working at a farm in a remote North Korean village. At best she might be a primary school teacher or a low level clerk in the local administration. Of course there are elite refugees, but those constitute a small minority.

Most of these people would like to move to South Korea if they are given the opportunity. Such a move is impossible for the vast majority. Contrary to the official rhetoric, South Korean government agencies in China are not excessively eager to help the run-of-the-mill defector (those few who have intelligence or political value might be a different matter).

Nowadays defection is, above all, business, controlled by defection specialists known as “brokers’. If they are paid a fee which currently fluctuates around $2000-$3000 per head but in some special cases might go higher, they can move a person from borderland areas to a third country where they would go to a South Korean consulate or embassy (usually, in Thailand or Mongolia). In third countries (but not in China) South Korean diplomats issue defectors with provisional travel documents and a ticket to Seoul.

The money which is necessary to pay for the broker’s service comes from different channels. In most cases, the sum is provided by a family member who has already reached Seoul. Acquiring this money independently is well beyond the means of the average North Korean refugee in China.

Upon arrival defectors go through a few weeks of debriefing by the South Korean intelligence agencies (admittedly, most of them don’t have much of interest to tell the South Korean authorities). This is followed by three months of readjustment training at Hanawon, a special reeducation facility for refugees. There the new arrivals are briefly lectured on the wonders of liberal democracy as well as provided with somewhat more useful knowledge about foodstuffs available in South Korean shops and the way to pay for a subway ticket in Seoul. Then they are provided with a modest accommodation (heavily subsidized by the government) and some stipend for the initial expenses (the sum varies, but the rough average is around $10,000 per person).

From that moment on, the North Korean refugee starts his or her life in the South. And, as one can easily predict, this life is usually quite difficult. Seoul is a tough place for a former North Korean housewife.

Read the full story here:
Lives of N. Korean defectors
Korea Times
Andrei Lankov


DPRK requests flood assistance from US NGO

Wednesday, August 18th, 2010

According to the Korea Times:

Christian Friends of Korea (CFK) said on its website last week that the North asked them to respond to a need for food, medicine and construction materials to the “fullest extent possible” to deal with “significant” flood damage.

The organization said it will follow through on a planned visit to North Korea later this month and assess flash flood destruction in the areas it works in.

This marks the first time a U.S.-based NGO has reported receiving an aid request directly from the North Korean government.

“We know from visits in years past of the damage and misery that (can) occur in the DPRK following heavy flooding,” it said.

The North’s official KNCA reported earlier this month that the flooding, brought on by torrential rain, had destroyed homes, roads and buildings. Almost 15,000 hectares of farmland were submerged, it said.

It reported casualties in Jagang and South Hamgyong provinces near its border with China but did not elaborate on how many, nor if people had died. China has also been coping with its worst flooding in decades.

The report did not indicate the level of need for outside help.

CFK is currently working to treat and control tuberculosis in the North, including refurbishing clinics and providing training. It said that in requesting aid, the government asked that it not divert from the medical work.

The original purpose of the planned trip was to confirm earlier aid shipments that included food, medical supplies, greenhouses and farming equipment.

The aid request came amid concerns regarding rivers near the border with China, which have swollen to dangerous levels. Xinhua News Agency reported earlier in the week that more heavy rain is expected in China.

Read the full story here:
N. Korea requests flood aid from U.S.-based NGO
Korea Times
Kim Young-jin


Kim’s expensive clothes

Wednesday, August 18th, 2010

According to the Choson Ilbo:

Kim Jong-il’s Mao suit is anything but affordable and utilitarian, according to a defector who used to supply luxury goods to the North Korean leader. “It should be called a luxury suit instead,” said the defector, who requested anonymity.

While working for the regime, his job was to tour the country’s embassies and consulates overseas and buy goods for Kim. “In the early 1990s, I was ordered to buy fabric for the dear leader and went to France to buy 60 yards of high-quality, cashmere and silk fabric produced by Scabal of London,” he said. “I paid US$300 per yard, which came to $18,000.”

About four yards of fabric are needed to make a suit, so the price of the cloth alone for Kim’s suit amounted to $1,200. The North Korean leader apparently hands out fabric as a gift to his closest aides. “Even in terms of South Korean standards, that would be quite a luxurious product,” the defector said. “But for the average North Korean it is unimaginable.”

But expensive price tags alone do not guarantee products a spot on Kim’s wish list. “There are plenty of other fabrics that are even more expensive than Scabal,” the defector said. “Kim Jong-il developed a liking for Scabal, because he heard foreign celebrities enjoy wearing clothes made using the fabric.”

Park Je-hyun, who owns a tailor shop in the trendy Cheongdam-dong neighborhood in Seoul, said, “Scabal is not a top-notch fabric, but it doesn’t wrinkle easily, which is why people on the move like it.” Fans include former U.S. President George W. Bush and movie star Will Smith.

At one time Kim apparently only wore shoes made by Italian cobbler Moreschi. “In early 2000, high-ranking North Korean government officials heard a rumor that the Dear Leader wears only Moreschi shoes, so they scoured Moreschi stores whenever they went on overseas trips,” the defector said.

Kim is picky about his luxury brands. According to the defector, he has a penchant for Perrier bottled water, Martell Cognac and imported menthol cigarettes. One foreign diplomat said, “During his visit to China in 2005, Kim Jong-il was delighted to see bottles of Perrier that Chinese officials had prepared for him and asked his aides how the Chinese knew he liked Perrier.”

The defector said, “I used to go to Switzerland a lot to buy large numbers of Omega watches. They weren’t all for Kim Jong-il, but as rewards for his staff. He added, “Kim Jong-il doesn’t need a watch. If he wants to know the time, he can just ask his underlings.”

Kim Jong-il rarely appears in a “Mao suit” any more (a “Mao suit” is known in the DPRK as a “Kim Il-sung suit” and in China as a Sun Yat-sin suit).  Kim Jong-il usually appears in public wearing a “soldier-worker jumper.

Read the full story here:
Kim Jong-il’s Label Addiction Revealed
Choson Ilbo


DPRK MiG crashes in China

Wednesday, August 18th, 2010

UPDATE 2 (8/19/2010): China and the DPRK assert mechanical problems as the cause fo the crash. According to the AFP:

Investigators have found that the plane crash in Liaoning province’s Fushun county was caused by a mechanical failure, the official Xinhua news agency reported, citing unidentified government sources.

The pilot lost course due to the unspecified mechanical failure and strayed into Chinese territory, Xinhua said.

“The aircraft crashed into a civilian makeshift house, leaving no Chinese dead or injured. The pilot died on the spot,” the brief report said.

China and North Korea have “reached consensus on coping with the aftermath” of the accident, for which Pyongyang has “expressed regret”, Xinhua said.

It said Thursday that Chinese officials, watched by about 100 armed police, dismantled the plane and transported it to an unidentified location.

It quoted witnesses as saying the plane crashed after circling a couple of times above their village in an apparent attempt to crash land.

“I’ve never seen any plane flying so low in my life. I thought the plane was on a training mission but suddenly it fell to the ground,” one witness told Yonhap.

North Korea, which has been silent over the reported crash of its aircraft Tuesday, on Thursday boasted of its “invincible” air power.

The North’s air force has grown to be an “invincible revolutionary armed force” since it was founded in 1947, the official Korean Central News Agency said.

North Korean pilots “fully demonstrated their combat capability” during the 1950-53 Korean War, it said.

UPDATE 1 (8/18/2010): some pictures here and here.

ORIGINAL POST (8/18/2010): According to Yonhap:

A North Korean airplane that appeared to be a Soviet-era jet fighter crashed in a Chinese border area, killing the pilot aboard who may have been attempting to defect to Russia, intelligence sources in Shenyang said Wednesday.

The crash took place in Fushun Prefecture in the province of Liaoning Tuesday afternoon, the sources said, adding the pilot was the only person aboard the plane when it crashed.

“The pilot died on the spot,” one source said, adding the Chinese authorities were able to identify the nationality of the airplane only after the crash.

Chinese authorities had confirmed that a small aircraft flew into their territory but did not identify its origin. Photos of the wreckage purportedly taken by a Chinese resident and uploaded on the Internet showed the North Korean flag on the tail of the plane.

Another source said that the plane is believed to have lost its direction while flying to Russia after escaping North Korea. China has a repatriation pact with North Korea, which may have led the pilot to choose Russia as his destination.

Some experts said the plane appeared to be a MiG-15, a model widely deployed during the 1950-53 Korean War but now used mostly for training. South Korea’s military said it was more likely a MiG-21, citing a radar detection of the North Korean aircraft leaving an air base near the border with China.

“Radar images show the North Korean aircraft took off from the air base in Sinuiju,” an official in Seoul said, based on images captured by the Air Force’s Monitor Control and Reporting Center (MCRC) that monitors activities of North Korean aircraft.

“According to the images, it appears to be a MiG-21,” the official said on the condition of anonymity.

Fushun is about 200 kilometers away from the Sinuiju air base. The number of North Korean soldiers defecting from their impoverished homeland has increased in recent months as food shortages deepen, observers say.

According to the New York Times:

Although thousands of North Koreans have fled their repressive home country in the past decade and a half, it is highly unusual for an elite pilot to defect. A North Korean pilot flew his MiG-19 to defect to South Korea in 1983. Another North Korean pilot did the same in 1996.

Cao Yunjuan, a 54-year-old farmer in Fushun County, where the crash occurred, said she saw the plane going down but that she heard no explosion.

“Around 3 p.m. yesterday, I saw a small plane going down and soon it disappeared from my view,” she said in a telephone interview on Wednesday. “There was no blast, though.”

Ms. Cao said that she lived less than a mile from the crash site and that she and other villagers went to see the wreckage before the area was cordoned off by the police. Many saw a North Korean emblem on the plane’s tail. Photographs of what appear to be the crash site show a North Korean star on the wreckage.

Xinhua said China was in communication with North Korea about the crash.

Los Angeles Times:

North Korea’s first air division’s 24th regiment is headquartered in Uiju, just north of the border city of Sinuiju, and pilots frequently train near the Yalu River which forms the border with China.


Pyongyang International Trade Fair (Sept 2010)

Wednesday, August 18th, 2010

Information can be found on the European Business Association web page.

General information here (PDF).

Registration information here (PDF).


GPI September business delegation to DPRK

Wednesday, August 18th, 2010

According to the GPI web page (PDF):

Exploring new business opportunities
European trade & investment mission to North-Korea
(11 – 18 September 2010)

Rotterdam, 29 June 2010
The Democratic People’s Republic of Korea (DPRK, also known as North-Korea) finds itself at a new era of international economic cooperation, and it especially welcomes business with Europe. The DPRK is offering various products and services to export markets, while the country is also in need for many foreign products and investments.

In the current financial and economic situation, European companies face many challenges. They must cut costs, develop new products and find new markets.

In these fields, North-Korea is an interesting option.

It established several free trade zones to attract foreign investors and there are several sectors, including renewable energy, textile, shipbuilding, agro business, fishing, horticulture, logistics, mining, stone processing, restaurants and Information Technology, that can be considered for trade and investment. DPRK is competing with other Asian countries by offering skilled labour for very low monthly wages. In particular companies with production facilities in China, where the wages are rising fast, are currently investigating alternative options in North-Korea.

Do you want to explore new business opportunities for your company? From 11 to 18 September 2010, GPI Consultancy will organize again a trade & investment mission in order to investigate these business opportunities. This tour is open for business participants from all European countries. Note: in case this date is not convenient for you, other trade missions will take place in 2011.

Our previous economic missions to Pyongyang were informative and successful. The participants found the program, with tailor made business meetings and company visits, interesting and well-varied. In addition, there were many opportunities for informal meetings. A report of such a mission can be found at:

During our upcoming trip in September, the annual Autumn International Trade Fair in Pyongyang will be held. A visit to this interesting trade fair will be included; participation with a booth is also possible.

Business mission September 2010: short overview
Members of our business delegation will be able to discuss trade opportunities in several areas, including light industry (e.g. textiles, garments, ceramics), agribusiness, fishing, mining, energy and Information Technology / Business Process Outsourcing. We will also receive information about investment opportunities in a number of sectors, and several projects will be offered.

Taking part in a business mission is a very informative way to explore business opportunities in DPRK in detail, and to meet new potential business partners. Participation is also useful for those European companies already doing business with DPRK, since it gives them an easy option to meet their Korean trade partners personally.

Saturday 11 September: Departure of European participants to Beijing (note: departure at an earlier date is possible).

Sunday 12 September: The participants will meet; informal welcome reception and dinner at a local restaurant. Introduction to the studytour.

Monday 13 September: In the morning: visa collection at the DPRK Embassy in Beijing. Receiving Air Koryo airplane tickets. Afternoon: available for individual program. Tentative: the seminar: “Doing business with DPRK” takes place. The event, with several speakers, will address various aspects of doing business in DPRK.

Tuesday 14 September: Transport from the hotel to the airport will be provided. Departure from Beijing to Pyongyang, using the national airline Air Koryo. Upon arrival, we meet representatives of the DPRK Chamber of Commerce. Transport will be arranged to the hotel. Schedules of business meetings will be handed out to the participants, after which a welcome dinner will take place.

Wednesday 15 – Friday 17 September: In the mornings, business meetings with representatives of North-Korean companies will commence in the hotel. These meetings will be arranged, on request by the participants, by the DPRK Chamber of Commerce. In the afternoons, the delegates can visit firms in and around Pyongyang from a range of sectors, including agriculture, textiles and garments, ceramics, computer software, art, animation and cartoons.

A visit to the 6th Pyongyang Autumn International Trade Fair is included. This fair takes place from 13 – 16 September and is organized by the Korea International Exhibition Corporation. In addition, we meet members of EBA (European Business Association): European business people working and living in DPRK.  There is also some time available for informal activities, such as a citytour in and around Pyongyang, a visit to an art gallery and the spectacular Arirang Massgame.

Saturday 18 September: In the morning, departure from Pyongyang to Beijing. Upon arrival, participants can take a connecting flight to Europe, or decide to spent more time in China.


DPRK asks Hungary to write off debt

Wednesday, August 18th, 2010

According to the Financial Times:

Hungary has revealed that it was asked by North Korea to write-off more than 90 per cent of its outstanding debt in the latest indication of the secretive totalitarian regime’s financial distress.

Hungary’s economy ministry told the Financial Times that North Korean negotiators had tabled the request in November 2008 during a meeting in Pyongyang.

“They asked [us] to take good consideration of the Democratic People’s Republic of Korea’s current economic difficulties and asked for cancellation of over 90 per cent of the total debt amount,” the ministry said.

The revelation follows a report in the FT last week that Pyongyang had asked the Czech Republic to write-off 95 per cent of its Kc186m ($10m) debt.

The cash-strapped totalitarian state offered to settle 5 per cent of the debt in ginseng, a root that is said to combat lethargy and impotence.

North Korea appears to be struggling to meet its financial obligations owing to the pressures of a moribund domestic economy and international trade sanctions imposed over its nuclear weapons programme.

Following the mysterious sinking of a South Korean warship in March, Washington vowed to further crack down on North Korea’s international financing, money laundering and narcotics operations.

Pyongyang’s outstanding debts are estimated at about $12bn, about two-thirds of which is owed to former communist states.

Its Hungarian debt emerged from a trade surplus between the two countries, mostly in the period before the fall of the Iron Curtain, an official said.

The total debt is 29.6m clearing roubles – an accounting unit used in the former Soviet Bloc.

Hungary said North Korea had agreed in principle to pay the debt in cash, with partial cancellation.

Details such as the clearing-rouble conversion rate and the size of the cancellation must still be settled, however.

Officials were unable to say when the negotiations would resume. Ginseng was not mentioned during previous talks.

Read the full sotry here:
Hungary reveals North Korean debt request
Financial Times
Chris Bryant


NGO: Concern Worldwide

Wednesday, August 18th, 2010

(h/t CanKor)  According tot he Concern Worldwide web page, they are engaged in the following projects in the DPRK:

Concern has recently begun work on an EU-funded programme in Phyongan province.

This work is focusing on sanitation and waste disposal in Hoichang town. We’re building water systems and improving sewage treatment systems and latrines in the area.

Over 55,000 people will benefit from this work.

Another EU-funded Concern programme is focusing on nutrition. We are aiming to increase sustainable food production in Hoichang and Koksan, and in two neighbouring cooperative farms. 

To do this, we are establishing urban greenhouses, irrigation systems and goat milk processing facilities. We are also working with locals to increase their technical and management skills.

This programme will benefit over 43,000 people.

Water works
An important part of our work is focused on water, sanitation and hygiene promotion.

Between 2004 and 2009, Concern provided 252,500 people in the country with clean drinking water. We did this by renovating pump stations and providing household connections. Key innovations have included gravity-fed water systems and the use of solar powered water pumping systems.
In addition, 46,800 people have benefitted from improved sanitation facilities, especially in institutions such as schools, kindergartens, nurseries and the county hospital.

In the rural communities where we work, our focus has been on halting deforestation and improving farming techniques.

We have provided 270,000 potted tree seedlings to three community-run nurseries. These potted seedlings grow quickly – in three to nine months – with undamaged root systems.

This is a major improvement on the more traditional bed-grown seedlings that were previously used. Traditional seedlings usually take one to three years to grow and often suffer from damaged roots.

As a result of the success of the potted seedlings, the Ministry of Lands and Environmental Protection is now keen to extend their use countrywide.

As part of our forestry work, we have also supplied nurseries with tools, pots and fuel.

Improving crops
With supervision from the Academy of Agricultural Research, we undertook a series of crop trials. We wanted to find out what types of crops could flourish on the lower slopes of hills and mountains.

The crops included new varieties of rice, sweet potato, sorghum, soya bean, millet, hybrid maize and ground nuts.

The trials were successful. There were positive results: the hybrid maize produced twice the normal yield; the millet produced standard yields using only half the normal amount of fertiliser. These crops are now being incorporated into the annual co-operative crop plans.

The ability to grow these crops on lower slopes will alleviate the pressure to produce crops on the higher steeper slopes.

Food production
Another EU-funded project aims at improving food production for people living on sloping land.

As part of this project, we are introducing conservation agriculture, which will increase yields, reduce soil erosion and reduce labour requirements to produce food.

We are also improving crop storage to reduce the post-harvest losses, and conducting crop trials for improved varieties of maize, winter wheat, soya bean, upland rice and potatoes.