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UN report explains sanctions decisions

Friday, August 6th, 2010

According to the Daily NK:

The 1718 Committee of the UN Security Council has published the final version of its “Report to the Security Council from the Panel of Experts established Pursuant to Resolution 1874,”

In the report, of which the Daily NK has obtained a copy, the 1718 Committee revealed North Korean overseas accounts which had likely been used for North Korea’s illicit activities such as conventional weapons transactions and luxury goods, and the names of entities and individuals involved in those activities. The lists were submitted by UN member states.

The report singles out 17 North Korean officials thought likely to violate UN Resolutions 1718 and 1874, and outlines the reasons why they were designated by the UN member states.

They are Jang Sung Taek, Vice-chairman of the National Defense Commission and the closest associate of Kim Jong Il, Vice-chairman of the National Defense Commission Oh Keuk Ryul, Kim Young Chun, the Minister for the People’s Armed Forces, Director of No. 39 Department Kim Dong Woon, Military Supplies Secretary in the Central Committee of the Party Jeon Byung Ho, former Yongbyon technical director Jeon Chi Bu, First Vice-director of the Ministry of the Munitions Industry Chu Kyu Chang, Standing Vice-director of the People’s Army’s General Political Department Hyun Cheul Hae, President of the Tanchon Commercial Bank Kim Dong Myung, Member of the National Defence Commission Baek Se Bong, Deputy Director of the General Political Department of the People’s Armed Forces Park Jae Kyung, President of the Academy of Science Byeon Youong Rip, Director of the General Bureau of Atomic Energy Ryeom Young, Head of the Department of Nuclear Physics of Kim Il Sung University Seo Sang Il, President of Kohas AG Jacop Steiger and Alex H.T. Tsai, who is known to have provided financial, technological and other support for KOMID, and his wife, Su Lu-chi.

It also released a list of autonomous designations provided by member states, covering 19 North Korean entities. That list was made based on information collected as of April 30th this year.

They are Amroggang Development Banking Corporation, Global Interface Company Inc., Hesong Trading Corporation, Korea Complex Equipment Import Corporation, Kohas AG, Korea International Chemical Joint Venture Company, Korea Kwangson Banking Corp, Korea Kwangsong Trading Corporation, Korea Pugang Trading Corporation, Korea Pugang Mining and Machinery Corporation ltd., Korea Ryongwang Trading Corporation, Korea Ryonha Machinery Joint Venture Corporation, Korea Tonghae Shipping Company, Ponghwa Hospital, Pyongyang Informatics Centre, Sobaeku United Corp., Tosong Technology Trading Corporation, Trans Merits Co. Ltd., and Yongbyon Nuclear Research Centre.

13 out of the 19 have direct or indirect links to Tanchon Commercial Bank and Korea Mining Development Trading Corporation (KOMID).

Amroggang Development Banking Corporation is the financial arm of KOMID and related to Tanchon Commercial Bank, which has also been designated by the 1718 Committee. Additionally, Global Interface Company Inc. is owned by Alex Tsai, who is thought to have provided, or attempted to provide, support to KOMID.

Sobaeku United Corp. is involved in activities related to natural graphite, producing graphite blocks that can be used in missiles.

The report points out, “North Korea has established a highly sophisticated international network for the acquisition, marketing and sale of arms and military equipment, and arms exports have become one of the country’s principal sources for obtaining foreign exchange,” and goes on to say, “Agencies under the National Defense Commission (NDC), the Workers’ Party of Korea (WPK) and the Korean People’s Army (KPA) are most active in this regard.”

The report explains, “The Second Economic Committee of the National Defense Commission plays the largest and most prominent role in nuclear, other WMD and missile-related development programs as well as in arranging and conducting arms-related exports.”

It adds, “The General Bureau of Surveillance of the Korean People’s Army is involved in the production and sale of conventional armaments.”

The report points out that North Korea has opened 39 accounts with 18 overseas banks in 14 countries. 17 of which are held with Chinese banks.

Besides China, 11 banks in eight European and former Soviet countries (Russia, Switzerland, Denmark, Hungary, Poland, Italy, German, Belarus and Kazakhstan) hold 18 North Korean accounts. There is one account in Malaysia.

“The DPRK also employs a broad range of techniques to mask its financial transactions, including the use of overseas entities, shell companies, informal transfer mechanisms, cash couriers and barter arrangements,” the report notes.

According to experts on North Korea, since North Korean overseas illegal activities are all led by the loyal group surrounding Kim Jong Il, U.S. financial sanctions in accordance with UN Security Council resolutions 1817 and 1874 and also U.S. Executive Order (E.O.) 13382 have the potential to be a great pressure on the Kim Jong Il regime.

The Panel of Experts, which was appointed by the UN Secretary-General on 12 August 2009 to author the report, are David J. Birch (United Kingdom of Great Britain and Northern Ireland, coordinator), Masahiko Asada (Japan), Victor D. Comras (United States of America), Erik Marzolf (France), Young Wan Song (Republic of Korea), Alexander Vilnin (Russian Federation), and Xiaodong Xue (People’s Republic of China).

Read the full story here:
Report Explains Sanctions Decisions
Daily NK
Kim Yong Hun
8/6/2010

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Posted in Amroggang Development Bank, Bureau 39, Central Committee, Central Miltary Committee, Global Interface Company Inc., Hesong Trading Corporation, International trade, Kohas AG, Korea Complex Equipment Import Corporation, Korea International Chemical Joint Venture Company, Korea Kwangsong Trading Corporation, Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Korea Pugang Corporation, Korea Pugang Mining and Machinery Corporation ltd., Korea Ryongwang Trading Corporation, Korea Tonghae Shipping Company, Ministry of People’s Armed Forces, National Defense Commission, Pyongyang Informatics Center (PIC), Ryonha Machine Tool Factory (JV Company), Sobaeku United Corp, Tanchon Commercial Bank, Tosong Technology Trading Corporation, Trans Merits Co. Ltd., UN Security Council | Comments Closed

Inter-Korean trade falls more than 30%

Friday, August 6th, 2010

According to Yonhap:

Inter-Korean trade has fallen more than 30 percent since the South cut almost all business relations with the North after Pyongyang was blamed for torpedoing one of its naval ships in late March, the customs office here said Friday.

According to data provided by the Korea Customs Service, the trade between the two Koreas came to US$123.06 million in June, down 32 percent from April, when they still kept their ordinary business relations despite a probe into the naval disaster.

…

South Korea’s exports to the North amounted to $56.88 million in June, down 27 percent from April, while imports decreased 36.5 percent to $66.18 million over the same period, the data showed.

Inter-Korean trade also dropped 21 percent from May, with its exports to and imports from the North falling 4 percent and 32 percent, respectively.

Despite such a sharp shrinkage, the customs office said the decline was not as steep as expected thanks to the Kaesong complex, which takes up most inter-Korean trade.

“The reason why the decline was not as sharp as expected is because we still keep a trade channel open in the Kaesong complex, which accounts for around 70 percent of total trade with the North,” a customs official said.

South Korea is the North’s second-largest trade partner after China. A suspension of inter-Korean business would cause a significant impact on the efforts of the reclusive communist nation to secure cash, according to experts.

Earlier, a state-run think tank here said inter-Korean trade suspension could cost North Korea about $280 million annually, adding to pressure on the North’s cash-strapped regime in governing its country.

Read the full story here:
Inter-Korean trade falls more than 30 pct amid heightened tensions
Yonhap
8/6/2010

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Posted in International trade, Kaesong Industrial Complex (KIC), South Korea, Trade Statistics | Comments Closed

ROK agrees to increase payments to DPRK govt via Kaesong

Friday, August 6th, 2010

According to Yonhap:

South Korea has agreed to raise the minimum monthly wage for North Korean workers by 5 percent at the two countries’ joint factory park in the communist state, an official said Friday.

The latest increase, which was agreed to Thursday and will be effective over the next year, is in line with the 5 percent annual hike in the preceding three years, Unification Ministry spokesman Chun Hae-sung said in a briefing, adding the minimum wage for North Korean workers now stands at US$60.775.

North Korea has demanded wage hikes for its workers in the border town of Kaesong since early this year. About 120 South Korean firms operate there, employing 44,000 North Korean workers to mainly produce labor-intensive goods. The estate has been considered the last remaining symbol of reconciliation between the sides that remain technically at war.

“Our companies agreed to allow the increase, and we have also agreed it would be appropriate to increase the minimum wage by 5 percent, after hearing opinions from the firms,” Chun said.

Under an agreement with North Korea, South Korea may increase the minimum wage by up to 5 percent each year. The new raise will be effective for one year starting Aug. 1, Chun said.

The increase comes as tension simmers between the two countries, which fought the 1950-53 Korean War that ended in a truce that has never been replaced by a peace treaty.

…South Korea has halved the number of its nationals staying in Kaesong due to safety concerns since May, when it warned it would not tolerate any North Korean threat or harm to them.

The Kaesong complex began operating in 2004 after being agreed upon by the leaders of the Koreas in a summit four years earlier. The companies there have expressed concerns that the erosion in inter-Korean relations was affecting their businesses, calling for eased regulations on their operations.

Yonhap does not mention that nearly all of the wages paid to Kaesong workers are deposited with the North Korean government.

UPDATE via the Daily NK:

In addition to the wage rise, the spokesman also announced measures to combat a concern of the companies in the Complex; that of autonomy over staffing decisions.

“Every company contains North Korean workers’ representatives, and these representatives have tended to mastermind changes to work team arrangements as they saw fit,” the spokesman explained.

However, he went on, “We have added measures so that, in future, workers’ representatives will not be involved in this area, and workers will be organized according to the independent judgment of the companies.”

So it appears that the DPRK did not simply win a unilateral pay increase.  South Korean firms apparently gained some managerial control as well.

Read the full story here:
S. Korea agrees to pay raise for N. Korean workers at joint complex
Yonhap
Sam Kim
8/6/2010

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Posted in Kaesong Industrial Complex (KIC), Labor conditions/wages | Comments Closed

DPRK-Bulgarian trade to expand?

Thursday, August 5th, 2010

According to the Sophia News Agency:

North Korea has expressed interest in buying Bulgarian foods, pharmaceuticals and software, among other products.

This has been announced by the Bulgarian Chamber of Commerce and Industry (BCCI), which is researching the opportunities for organizing a business delegation trip to North Korea or North Korea and China in the fall of 2010.

According to the announcement of the International Organizations and International Cooperation Directorate of the BCCI, the North Korean side has shown interest in Bulgarian software products, pharmaceuticals, food products – including canned food, wines, juice, yellow cheese, and compotes; as well as metals – cesium, potassium, zinc, radium.

Read the full story here:
North Korea Interested in Buying Bulgarian Compotes, Software
Sophia News Agency
8/5/2010

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Posted in Bulgaria, International trade | 1 Comment »

DPRK takes PRC diplos to Kumgang

Thursday, August 5th, 2010

Accroding to the Choson Ilbo:

North Korea apparently offered a tour to the Mt. Kumgang resort to some 20  Chinese embassy staff last month but did not tell South Korea’s Hyundai Asan, which built the facilities there and has the exclusive right to run the tours. A Unification Ministry official said this was “a clear violation” of Hyundai’s operating rights.

According to the website of China’s Foreign Ministry, the officials toured the scenic mountain resort for three days from July 21 at the invitation of North Korea’s Foreign Ministry. The officials toured sites in Mt. Kumgang that require permission from Hyundai Asan. “The splendid peaks and strange rock formations of Manmulsang, the spectacular scenery of the Haekum River, the flowing waters of the Kuryong Falls… listening to the tour guide made us feel like we were in Shangri-La,” a participant wrote. There is also a photo of them in front of the Kuryong Falls.

In 2000, Hyundai Asan paid US$500 million to North Korea for the exclusive right to operate seven projects in the North, including tours to Mt. Kumgang. But Hyundai Asan said it was unaware of the tour for the Chinese diplomats. “When our tourism operations ran smoothly, North Korea always informed us when they were bringing guests into Mt. Kumgang,” a Hyundai Asan staffer said. “It’s objectionable that they offered the tour without notifying us.”

In April, North Korea froze real estate in Mt. Kumgang belonging to Hyundai Asan and the South Korean government and said it would allow Chinese travel agencies to operate tours to the resort. When a number of Chinese travel agencies began offering tours, the South Korean government and Hyundai Asan protested, and in May Culture and Tourism Minister Yu In-chon sent an official letter to the Chinese government explaining that the freeze was a breach of contract and asked Beijing to take the resort off the list of travel destinations.

“The fact that Chinese diplomats, who must have been aware of the delicate situation, visited Mt. Kumgang is simply puzzling,” a South Korean official said.

Read the full story here:
N.Korea Takes Chinese Diplomats on Mt. Kumgang Tour
Choson Ilbo
8/5/2010

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Posted in China, Mt. Kumgang Tourist Special Zone, Special Economic Zones (Established before 2013), Tourism | 1 Comment »

DPRK’s Arms Exports Stay Steady

Thursday, August 5th, 2010

According to the Daily NK:

Despite the implementation of UN Security Council Resolution 1874 in June, 2009, North Korea’s weapons exports last year earned the country approximately the same amount as they have since Resolution 1718 was passed in 2006.

Song Young Sun, a lawmaker sitting on the National Defense Committee of the National Assembly, told reporters on Wednesday, “South Korea’s intelligence organizations have obtained a figure of around $50 million, and they assume that in practice the North has exported much more than that.”

Intelligence authorities apparently believe that the reason is that North Korea has exported parts and supported foreign munitions factories in other ways, rather than exporting finished weapons.

In September of last year, a Georgian cargo plane containing 35 tons of weapons parts including those for the Taepo-dong 2 was intercepted in Bangkok. Two months later, a ship heading for Congo was also revealed by South Africa to contain parts of the T-54 and T-55, North Korean tanks based on Soviet designs.

Meanwhile, the most successful period for the sanctions regime was immediately after UN Resolution 1718 was imposed on North Korea in 2006, when North Korean exports are estimated to have been reduced to $30 million, just 1/7th of the previous year’s total.

Read the full story here:
North Korea’s Arms Exports Stay Steady
Daily NK
Kim Min Su
8/5/2010

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Posted in Arms shipment, Illicit activities, International trade, Military, UN Security Council | Comments Closed

DPRK overseas financial organizations

Thursday, August 5th, 2010

They have been in the news quite a bit recently.

According to the Donga Ilbo:

The U.S. has reportedly confirmed that nine of the 15 financial institutions North Korea operates overseas are involved in illegal activity.

Accordingly, the nine and more than 20 other institutions and individuals, including financiers who oversee the institutions, will be subject to Washington’s new financial sanctions announced against Pyongyang.

A government source in Seoul said Wednesday, “The U.S. government and intelligence are pointing to Kim Tong Myong, president of Danchon Commercial Bank of the North. The bank helped to amass slush funds overseas for the North.”

“Washington judges that organizations subject to Executive Order 13382, which regulates weapons of mass destruction, are also involved in other activities, including the illegal trade of luxury goods and money laundering. The U.S. is considering including many such organizations in the new executive order.”

Under Executive Order 13382, three financial institutions and 18 trading companies were subject to financial sanctions. The imminent addition of six more North Korean financial institutions abroad will further put the Stalinist country in a bind.

On Washington’s plan to impose additional sanctions against Pyongyang, South Korean Foreign Minister Yu Myung-hwan said, “Measures designed to impose specific sanctions on organizations and individuals and freeze assets will come in two weeks.”

And according to the Choson Ilbo:

Hong Kong financial authorities are inspecting all banks in the territory to find out if North Korea’s Taepung International Investment Group has opened secret accounts there. Taepung has the unenviable task of attracting foreign investment to the North.

According to information obtained by the Chosun Ilbo, the Hong Kong Monetary Authority in late July asked banks to report no later than Aug. 3, if they had engaged in “any kind of transactions” with four companies over the past six years.

The four are Taepung International Investment Hong Kong, Taepung International Investment Holdings Virgin Islands, Taepung International Investment Group, and Taifung (Taepung’s Chinese pronunciation) International Investment Group.

This was the first time Taepung has been targeted for financial sanctions by a third country.

A source in Hong Kong said it seems authorities have asked all Hong Kong branches of about 190 banks from the U.S., Europe and Asia for data about the four Taepung affiliates and two Iranian firms.

Taepung Hong Kong is believed to be a paper company. In April it registered at Rm.# 2508, Lippo Centre, 89 Queensway, Hong Kong, but the only office at the address is a local law firm.

Read the full stories here:
US: 9 Illegal NK Financial Entities Abroad Confirmed
Donga Ilbo
8/5/2010

Hong Kong Looks for Secret N.Korean Accounts
Choson Ilbo
8/5/2010

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Posted in Banking, Finance, Fiscal & monetary policy, Hong Kong, Korea Taepung International Investment Group (Daepung Investment Group) | Comments Closed

Google Earth reveals new DPRK hovercraft

Thursday, August 5th, 2010

According to the Choson Ilbo:

Seoul-based news channel YTN reported on Wednesday that a 34 m-long vessel equipped with 30- and 57-mm cannons was caught in a satellite photograph off the North’s Daedong River, near Nampo in South Pyongan Province.

An improved version of a hovercraft built to assist Pyongyang’s special forces in carrying out a possible invasion of South Korea, the ship is twice the length of the North’s earlier military hovercrafts.

In addition to some 130 wartime hovercrafts of about 17 to 20 m in length which the North Korean military has anchored off both the east and west coasts, a whopping 37 m-long air-cushion vehicle was also seen docked at Wonsan port in the East Sea.

Supported by a cushion of air, hovercrafts can move over land, ice and water, as well as mudflats and swamps.

Read the full story here:
N.Korea’s New Hovercraft Battleship Seen for First Time
Choson Ilbo
8/5/2010

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Posted in Google Earth, Military | Comments Closed

More on upcoming US sanctions

Wednesday, August 4th, 2010

According to the AFP:

The United States is expected to blacklist three key North Korean figures suspected of handling secret funds for leader Kim Jong-Il as part of its new sanctions, a report said Wednesday.

Washington is devising the measures to punish the North for an alleged deadly March attack on a South Korean warship and to push it to abandon its nuclear weapons ambitions.

Yonhap news agency, quoting an unidentified South Korean government source, said one of the three officials is Kim Tong-Myong, head of the North’s Tanchon Commercial Bank.

“The US is paying special attention to three people, including Kim Tong-Myong, who operate North Korea’s secret funds abroad,” the source was quoted as saying.

“If they are included in the new sanctions, it could deal a blow to North Korea’s leadership.”

The foreign ministry had no comment on the report.

Washington also has evidence that nine North Korean financial institutions operating overseas and at least two trading firms have been used for illicit activities such as trading in conventional arms, luxury goods and counterfeit money, the source was quoted as saying.

Overall, the US is expected to add 10-20 North Korean entities and individuals to its blacklist, the report said.

Robert Einhorn, US State Department special adviser for non-proliferation and arms control, said Monday during a visit to Seoul the new measures would designate companies or individuals involved in the North’s illicit activities.

Any property or assets they possessed which were under US control could be blocked.

“By publicly naming these entities, these measures can have the broader effect of isolating them from the international financial and commercial system,” Einhorn said.

He named Tanchon Bank as one of several North Korean companies active overseas. The bank has already been designated by the US and the UN Security Council for suspected illicit activities.

South Korean Foreign Minister Yu Myung-Hwan said details of the new US sanctions will emerge soon.

“We’re expecting concrete measures within the next two weeks that will freeze assets of related North Korean individuals or companies and will prohibit third countries from dealing with such individuals or companies,” Yu told a local radio station.

South Korea, the United States and other countries, citing a multinational investigation, accuse the North of torpedoing a South Korean warship in March with the loss of 46 lives — a charge it denies.

Read the full story here:
US to target secret funds of N.Korea’s Kim
AFP
8/4/2010

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Posted in Banking, Finance, Fiscal & monetary policy, Tanchon Commercial Bank, USA | Comments Closed

Flooding claims lives in DPRK

Wednesday, August 4th, 2010

UPDATE: According to the Associated Press (8/5/2010):

Flooding last month caused serious damage in North Korea, destroying homes, farms, roads and buildings and hurting the economy, state media said Thursday.

About 36,700 acres (14,850 hectares) of farmland was submerged and 5,500 homes and 350 public buildings and facilities were destroyed or flooded, the official Korean Central News Agency said.

“Not a small number of industrial establishments were damaged or flooded, inflicting an adverse effect on the economic growth and the people’s living,” the report said.

Landslides caused by the torrential rains wrecked bridges and roads and caused a power equipment failure that disrupted railroad traffic in some parts of the country, KCNA said.

“Active efforts have been made to heal the flood damage in the affected areas,” the report said without elaboration.

KCNA reported casualties in Jagang and South Hamgyong provinces but did not say how many, nor if people were injured or had died.

The news agency had previously reported heavy rains fell in the country in mid- to late July, but those earlier reports did not mention flooding or damage. State media in the impoverished, reclusive nation often report news days or weeks after an event takes place.

There was no indication the North would need outside help to deal with the flooding.

In 2007, the regime did seek outside help to cope with its most severe flooding in decades. About 600 people were dead or missing and 100,000 homeless after those floods, which destroyed more than 11 percent of the country’s crops.

North Korea is prone to floods and landslides due to poor drainage systems and massive deforestation after a famine in the 1990s that is believed to have killed as many as 2 million people.

The impoverished nation has relied on foreign aid to feed its 24 million people since its economy was devastated by natural disasters and mismanagement in the 1990s.

ORIGINAL POST: According to the Choson Ilbo:

Heavy rains since mid-July have inflicted heavy losses in North Korea, with 120 killed in Hungnam, South Hamgyong Province alone, Radio Free Asia reported Tuesday.

Quoting a source in Chongjin in the province, the radio station said over 2,000 people along the Songchon River were completely isolated when localized torrential rain that fell in Hungnam for three hours on July 22 flooded the dikes. Most of them were rescued by military helicopters and fishing boats, but 120, including 40 middle school students mobilized to help farmers, died.

A source in Sinuiju, North Pyongan Province said rumor has it that over 160 drowned in Hungnam. There are said to have been many casualties in Kaechon, South Pyongan Province as well.

Some 60 Workers’ Party officials heading for Mt. Baekdu on an inspection tour were stranded on their train as part of the railroad was washed away in Unhung, Yanggang Province, said a source in the province. All markets were closed due to destroyed roads and railroads, further aggravating the suffering of the locals.

North Korea’s official media detailed some of the damage from the rainstorms. North Korea Central TV on July 28 showed damage inflicted in July in the unusual format of a reporter discussing it with an official from the Ministry of Land Environment Protection, but they said nothing about casualties.

Read the full story here:
‘Hundreds of N.Koreans Killed in Floods’
Choson Ilbo
8/4/2010

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Posted in Agriculture, Food | 1 Comment »

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