Archive for January, 2011

Lankov pessimistic on inter-Korean relations in 2011

Tuesday, January 11th, 2011

According to Lankov:

2010 was a hard and dangerous year in Korea. Alas, 2011 might become even worse.

At first glance, this statement might appear excessively pessimistic. After all, in the last weeks the tensions on the Korean Peninsula were decreasing, North Korea suggested negotiations, and South Korea also said that talks might be a good idea.

However, the appearances are misleading. If one has a better look at the recent crisis, as well as at the current mood in Seoul and Pyongyang, there is little ground for optimism. It seems that both North Korean strategic calculations and South Korean assumptions about ways to handle its uneasy neighbor will bring the crisis back – and with a vengeance.

What we have seen throughout the last year was another exercise in the habitual North Korean brinkmanship – yet another attempt to apply tactics which have been used many times and usually with great success.

When North Korean strategists want to squeeze some aid or political concessions from other side, they follow a simple but efficient routine. First, Pyongyang manufactures a crisis, and does everything to drive tensions high. The missiles are launched, islands are shelled or nukes are tested, while the usual verbal bellicosity of the North Korean media reaches almost comical heights. Sooner or later both the “target audience” and international community begin to feel uneasy, and when this point is reached Pyongyang suggests negotiations. Its neighbors and adversaries alike feel relief and start talks, which usually end with Pyongyang getting what it wants – in exchange for restoring the status quo.

In the past, this tactic has worked well (for example, this is how in 2007 North Koreans managed to push the George W Bush administration to switch to a soft line and resume aid). However, this time things are different. So far, North Korea is not getting what it wants.

But what does the North want to achieve with this seemingly dangerous (but actually very calculated) military/political theater? As usually is the case with Pyongyang’s foreign policy, it is about money. In 2008 South Korea and United States dramatically reduced the amount of unilateral and unconditional aid to the North.

It had to turn to China instead. China obliged, and it seems that the North Korean economy – while still very poor by current East Asian standards – is in better shape than at any time since the early 1990s (albeit this modest recovery seems to be, first and foremost, brought about by domestic transformation rather than by Chinese aid). However, this made North Korean leaders excessively dependent on China, whom they do not like and whom they do not trust (this seems to be a mutual feeling).

So, they want the US and South Korean aid back. First, it will increase the size of the entire aid pie, controlled and distributed by the regime. Second, it will provide Pyongyang with ample opportunities to distance itself from dangerous China, and acquire a number of sponsors whose contradictions can be used to North Korea’s advantage. The North Korean diplomats are very good at this game, which they learned in the 1960s when they exploited the Sino-Soviet schism with remarkable success.

The North decided that this was a time to exercise pressure on both Seoul and Washington (actually, this is what it has been doing since 2008). It is not often noticed that North Korea actually conducts two separate, if related, blackmail programs – one aimed at the US and another aimed at South Korea. The ways of exercising pressure should be different, because the concerns of these two countries are dissimilar.

In the case of South Korea, the North decided to take advantage of Seoul’s dependence on the international markets. Foreign investors and trade partners of South Korean firms are not going to be amused by the newspaper headlines which talk a war “which is going to erupt on the Korean Peninsula”.

These tensions are likely to have a negative impact on the South Korean economy, making the South Korean voter worse off. On top of that, the average South Korean voter does not usually care too much about North Korea, but still expects its government to be capable at handling the North, in order to avoid major confrontations. Therefore, the North Korean leadership expects that sooner or later South Korean voters will penalize an excessively stubborn government by supporting the opposition.

To the US, the North’s selling point is its ability to proliferate. Since for the Americans the major (almost only) reason they care about North Korea is its potential for nuclear and missile proliferation, the North Korean regime demonstrated to Washington that even without aid and in spite of the international sanctions, North Korean engineers and scientists managed to make considerable progress in areas of military significance.

In mid-November, just before the shelling of Yeonpyeong Island, a group of American nuclear scientists led by Dr Siegfried Hecker from Stanford, was shown a state-of-the-art uranium-enrichment facility whose scale and sophistication exceeded what the US experts believed to be possible. This is a major step towards a full-scale military uranium program, which is, incidentally, more difficult to control than the old plutonium program.

Now, after a few months of tension building, the North Koreans decided to test the ground and check whether the adversaries (and potential donors) are ready to give in. Frankly, Pyongyang’s decision seems to be surprising, since the answer is obvious: neither Washington nor Seoul is ready to make concessions.

Why didn’t the old tactics succeed this time? In short, because the attitudes in both Washington and Seoul changed in recent years.

Talking about the US side, the main reason why Washington was in past willing to give concessions and unilateral aid, was the once widespread (albeit unfounded and naïve) belief that this was a way to facilitate the denuclearization of North Korea. It was assumed that Pyongyang could be persuaded/bribed/pressed into surrendering its nuclear program. This belief evaporated in 2008, after the second nuclear test.

American policymakers have finally realized that North Korea is not going to surrender its nukes under any circumstances. North Korean leaders are ready to talk about arms control, not about disarmament. In other words, North Korean leaders hope to get paid (generously) for freezing their nuclear program while still keeping the existent nuclear devices. The US is not ready to discuss this yet.

With South Korea, the situation is more complicated. The Lee Myung-bak government was in favor of a hard line from the very beginning. After the Cheonan sinking and Yeonpyeong shelling, the South Korean public, usually cautious when it comes to matters of peace and war, switched to support of the hard line.

In a poll in late November, some 80% of participants said they were in favor of a massive military retaliation in the case of the next North Korean attack (and a considerable minority even said that they did not mind a war). This unusual bellicosity of the public, reinforced by the even harder position of the military, puts additional pressure on the government.

Paradoxically, the events (or rather non-events) of early December contributed towards Seoul’s shift to a hard line. Then, soon after the Yeonpyeong shelling of November 23, the South Korean military staged large drills in the disputed waters near the North Korean coast. Before the exercises, the North Koreans threatened a mighty counterstrike, but when Seoul decided to go ahead on December 20, nothing happened.

North Korea’s decision not to execute its threats was seen as a sign of weakness. A triumphant South Korean official said in a private conversation: “They are with their tail between their legs now. This is what we should have done from the very beginning.”

Therefore, the dominant view in Seoul now is that if North Korean leaders know that their new strikes will be met with a mighty response, Pyongyang will not dare to stage another attack. So, Seoul politicians believe that harshness is the best option, since North Korean leaders will surely duck a fight.

This seems to be an illusion – and, perhaps, a dangerous one. Like it or not, there is no valid reason why Pyongyang strategists should be afraid of a Southern counterstrike. It is true that North Korea does not want a full-scale war, but due to the peculiarities of its political system North Korea can sustain a minor military confrontation far more easily than its southern counterpart – or, to be more precise, in the case of such a confrontation the domestic consequences for the North Korean government will be far less serious.

Needless to say, even if a South Korean counterstrike kills many hundreds of North Korean soldiers or sailors, the leaders will not feel too sorry of them (and children of the leaders do not serve in the North Korean military). The loss of a few pieces of rusty military equipment of 1960s vintage will not upset them too much, either.

It is sometimes stated that an efficient counterstrike will at least lead to a loss of face for the North Korean leadership, and that fear of such humiliation could serve as a deterrent against future attacks. Unfortunately this seems to be wishful thinking as well. The North Korean government is in full control of the media, so such a defeat will remain unknown to almost everyone outside the military elite.

If this is the case, why did the North avoid a fight in December, after so many threats and bellicose statements? Because there is no reason why it should agree to fight at the time and place chosen by its adversaries, when these adversaries were ready to strike back. It makes much more sense to wait for a while and then deliver a sudden and powerful strike when the North Korean political leadership decides that the time is ripe.

It seems that we are not going to wait for long. Recent events leave little doubt that the North Korean charm offensive will be ignored by Seoul (and, perhaps, by Washington as well, even though signals are slightly mixed). The first sign of this position became visible on January 6 when the US and South Korea rejected North Korea’s call for unconditional talks with South Korea as “insincere” and repeated their usual set of demands, which are, alas, clearly unacceptable for the North Koreans.

The North Korean leaders will probably do what they did before in similar situations: they will stage a provocation or two in order to increase pressure on the stubborn Americans and South Koreans, in hope that sooner or later they will give in. After all, contrary to what Seoul wants to believe, the associated political risks for the North Korean elite are small and rewards in case of eventual success are significant.

This coming round of military/diplomatic might be more dangerous than usual, largely because of Seoul’s newly acquired belief in the power of counterstrikes. Now it seems likely that in case of another North Korean strike the South will retaliate mightily. This counterstrike is likely to trigger a counter-counterstrike, and there is even a probability (albeit very minor) that such an exchange will escalate into a real war or at least some intense fighting.

Far more likely, though, is that the situation will remain under control. In this case, the excessive reaction by the South Koreans is likely to amplify the message their North Korean adversaries want to deliver.

North Korean strategists want to damage the South Korean economy as well as create domestic tension, which will eventually turn the South Korean public against the current South Korean government and its North Korean policy. However, if such an exchange of fire happens we can be certain that the international media will not be merely writing about a “war that is about to start in Korea” but rather will declare that a “war started in Korea”. The impact of such reports on the world markets and, eventually, on the South Korean economy is easy to predict.

The South Korean government should not be misled by the current bellicose mood of the voters. This mood is not likely survive a major confrontation, and once the situation becomes really tough, the same people who now cry for revenge are likely to start blaming the government for its inability to maintain a stable and secure situation on the peninsula.

Alas, not much can be done now. The North is likely to follow the usual line of a professional (and usually successful) blackmailer: since pressure has not worked, even greater pressure should be applied. The South, confident in the power of deterrence, is likely to over-react, thus further aggravating the situation and increasing the scale of the next crisis.

Well, it seems that the year 2011 will not be especially tranquil in Korea. And the subsequent few years might be even worse.

Read the full story here:
Push could soon turn to shove
Asia Times
Andrei Lankov
1/12/2011

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ROK government to leave Kaesong office unstaffed

Tuesday, January 11th, 2011

According to KBS:

South Korea says it will not re-station personnel at the inter-Korean economic cooperation office inside the Gaeseong Industrial Complex in North Korea.

An official from the Unification Ministry in Seoul said Tuesday that the decision was made as there is no work to be done at the office.

Seoul banned inter-Korean economic cooperation and trade in May of last year as part of its retaliatory measures for Pyongyang’s sinking of South Korea’s “Cheonan” naval vessel in March.

North Korea notified the South on Monday that it plans to resume operations at the economic cooperation office in the business park.

Meanwhile, the South accepted North Korea’s proposal to reopen the Red Cross communication channel at the truce village of Panmunjeom. The ministry official said that a South Korean liaison officer will answer the phone if North Korea attempts to contact the office Wednesday morning.

Read the full story here:
Seoul Will Not Send Officials to Gaeseong Office
KBS
1/11/2011

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ROK government encouraging DPRK restaurant boycott

Monday, January 10th, 2011

According to the Choson Ilbo:

Siem Reap, Cambodia’s second largest city near the sprawling ruins of the Angkor Wat, has two North Korean restaurants, down from three since North Korea recalled all their expat staff after Kim Jong-il’s stroke in 2008 and returned only the employees of two of them. The restaurants rely on South Korean tourists for business since the town is a popular destination for them.

One of them, called Restaurant Pyongyang, sells the famous cold noodles or naengmyeon for US$7 a dish, while North Korean dancers perform and pour drinks for customers. It used to be a regular stopover for South Korean tourists, with tour agencies charging $30 for a visit and a meal. One tour guide said, “In Cambodia $7 a dish is already pretty expensive, but many tourists go to the restaurant because of its attractions.”

After North Korea’s sinking of the Navy corvette Cheonan in March last year, the South Korean Embassy in Cambodia asked tour agencies and South Korean residents’ association there to avoid sending visitors from the South there, but local sources say the plea fell largely on deaf ears. But the North’s artillery attack on Yeonpyong Island in November last year finally did the trick. The South Korean residents’ association in Siem Reap voluntarily boycotted the North Korean restaurants, and tour agencies also voluntarily took them off their itinerary.

The restaurants are apparently suffering. A member of the South Korean residents’ association said, “Almost all of the customers were South Korean tourists, but it seems that even the performances have stopped now there are no customers.”

Around 120,000 South Koreans a year reportedly visited the two restaurants, contributing to an estimated W200-300 million (US$1=W1,126) in monthly sales. North Korea runs over 100 restaurants in China, Vietnam, Thailand, Laos and Russia, which serve as a source of much-needed hard currency for the regime by sending home $100,000-300,000 a year.

The mood in Siem Reap is now desperate. Last month, a placard outside a South Korean restaurant criticizing North Korea’s attacks were torn down by seven people who appeared to be North Korean agents, in what expats there believe was another small-scale North Korean provocation. Tour agencies are also losing revenues after taking the restaurants off their itineraries. “We used to charge $30 per visit and took 30 percent of the profits, but not any more,” a tour guide said.

South Korean residents’ associations abroad rarely voluntarily boycott North Korean restaurants. The Okryugwan chain of North Korean restaurants in Beijing’s Wangjing district is still accessible to South Koreans. A South Korean Embassy official there said, “We asked residents to avoid the restaurant in November but did not force them.”

Meanwhile, a North Korean restaurant in Kathmandu, Nepal closed down in November after its North Korean manager defected to South Korea.

Read the full story below:
N.Korean Restaurants Abroad Feel the Pinch
Choson Ilbo
1/10/2011

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Australia’s ANL cited in DPRK weapons smuggling

Monday, January 10th, 2011

According to The Australian:

The use of an Australian-owned cargo ship to smuggle weapons from North Korea to Iran has been highlighted in a report to the UN.

It was one of several breaches of UN sanctions against Kim Jong-il’s regime detailed in a report to the Security Council.

The report, which was submitted to the council recently after months of obstruction from China, found the North was making $US100 million a year through illegal arms sales to Syria, Iran and Burma.

Pyongyang used shadowy webs of front companies, false manifests and complex routes to try to get around sanctions aimed at stopping its arms proliferation, the investigation found.

The report flags the 2009 interception of the ANL Australia in Sharjah as one of at least four occasions that North Korea was caught out exporting arms or defence equipment.

The report said weapons were seized from the ANL Australia in the United Arab Emirates on July 22, 2009.

The cargo is thought to have included up to 10 containers of arms, including rocket-propelled grenades and trigger mechanisms and propellant, although this is not detailed in the report.

The cargo was packed and sealed in North Korea and shipped to China, where it was loaded aboard the ANL Australia en route to Iran.

The Bahamas-flagged vessel was owned by ANL Container Line at the time.

ANL, once Australia’s national shipping line, was taken over by French company CMA CGM.

Despite the breach of sanctions, an Australian government investigation found ANL was not responsible because the ship was chartered by a foreign company at the time.

“The Australian government’s inquiries into this matter indicated that at all relevant times the vessel was not under the operational control of its owner, but was rather being chartered by a non-Australian company,” a Department of Foreign Affairs and Trade spokesman said.

“No conduct relevant to the shipment can be attributed to an Australian person or body corporate,” he said.

ANL declined to comment.

The report found that while no ballistic missile or nuclear-related materials emanating from North Korea had been intercepted since sanctions were applied, evidence suggested “continuing DPRK (North Korea) involvement in nuclear and ballistic missile-related activities in certain countries, including Iran, Syria and Myanmar (Burma)”.

“To supplement its foreign earnings, the DPRK has long been involved in illicit and questionable international transactions (including) the surreptitious transfer of nuclear and ballistic missile-related equipment, know-how and technology,” it says.

The panel received government reports suggesting North Korea had helped build Syria’s Dair Alzour nuclear facility (destroyed in 2007 by an Israeli attack) along with details of Japan’s arrest in June 2009 of three individuals trying to illegally export a magnetometer, a device with potential missile-related uses, to Burma.

The report cited in the story is the “Panel of Experts” report to the UNSC.  You can read (and search) it here (PDF).

Read the full story here:
UN cites ANL in N Korea arms smuggling
The Australian
Rick Wallace
1/10/2011

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DPRK trade falls in 2009 – reliance on China remains high

Sunday, January 9th, 2011

According to Yonhap:

North Korea’s external trade fell in 2009 with its economic reliance on China staying significantly high, a report showed Sunday, underscoring the need for Pyongyang to diversify its industry structure and open its market for survival.

According to the report by the Korea Finance Corporation, North Korea’s total trade amounted to US$3.41 billion in the cited year, down 10.6 percent from a year earlier. The trade decrease was the largest since 1998.

Exports dropped 6 percent to $1.06 billion, while imports fell 12.5 percent to $2.35 billion over the same period, the report showed, bringing the North’s trade deficit to $1.29 billion.

With international sanctions in place for its nuclear ambitions and its reluctance to open up its economy, the North’s dependence on China stayed quite high at 80.4 percent in 2009, the report showed. Its trade deficit with Beijing totaled $1.1 billion.

The report said that the North should open its market and diversify its industry structure currently focused on producing weapons, while improving overall infrastructure such as power generation facilities, should it seek to revive its economy.

It also emphasized the need for resumption of inter-Korean trade and an increase in international aid for the North’s survival.

“For the North Korean economy to get back on track, inter-Korean trade has to be resumed and aid from the international community should also be expanded,” said an official of the state-run corporation.

South Korea’s economic relations with the North have remained frozen since Seoul cut almost all inter-Korean trade in May 2010 after it found Pyongyang was behind the deadly attack of its naval ship in March that killed 46 sailors.

The move led to a drop of around 30 percent in inter-Korean trade last year, according to the latest report by Seoul’s customs office. South Korea is one of the North’s major trade partners, although the two remain technically at war as their 1950-53 conflict ended in a truce, not a peace treaty.

If a reader can send me a link to the actual report, I would appreciate it.

The Los Angeles Times also covered the report.

Read the full story here:
N. Korea’s trade falls, reliance on China remains high in 2009
Yonhap
1/9/2011

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Hackers find creative way to celebrate KJU birthday

Saturday, January 8th, 2011

UPDATE  (1/11/2011): The DPRK accuses the ROK of hacking its web pages.  According to the AP (Via Washington Post):

North Korea is accusing South Korean Internet users of hacking into one of its websites, calling the behavior a provocation aimed at undermining its national dignity.

The North’s government-run Uriminzokkiri website said Tuesday that South Korean Internet users recently deleted articles on the site and posted messages slandering the North’s dignity.

It accuses the South Korean government of being behind the cyber attacks and urges it to apologize.

Anti-North Korea articles and pictures were reportedly posted on the site over the weekend, with one image showing leader Kim Jong Il and his son and heir-apparent Kim Jong Un kneeling down before what appears to be a Chinese emperor. [See image here]

UPDATE (1/11/2011): I am not sure how I missed it, but it appears that the battle between North and South Korean hackers  we saw on the weekend of Jan 8 has been going on for a few weeks.  According to the AFP, last weekend’s hacks on the North Korean web pages was actually the second round of such efforts:

The South’s hackers last month sabotaged the official website [Uriminzokkiri] with a 12-line acrostic poem — purportedly in praise of the Kims but with the first letter of each line spelling out derogatory words about them.

Apparently North Korean hackers responded to this with a DDOS attack last week, and that was followed by the South Korean hacker attacks over the weekend on the Uriminzokkiri YouTube and Twitter accounts.

UPDATE (1/11/2011): A Chinese-language blog focused on the DPRK printed a small screen shot of the hack job on the Uriminzokkiri page itself which features Kim Jong-il and Kim Jong-un kneeling before a Chinese emperor:

Click image for larger version

UPDATE (1/9/2010): The Uriminzokkiri web page is back up, and the North Koreans have gotten control of their YouTube account and deleted the pirate video.  I have posted it to my own YouTube account for archival purposes.  You can see it here.  As of today, the North Koreans still have not deleted the pirate tweets:

우리 인민의 철천치 원쑤 김정일 력도와 아들 김정은을 몰아내여 새 세상을 만들자!

조선인민군대여! 인민군들을 먹일 돈으로 핵과 미싸일 개발에 14억 딸라를 랑비한 김정일 력도에게 총부리를 겨누자

로망난 김정일과 폭악한 새끼 돼지 김정은을 한 칼에 처단하여 우리도 남녘의 인민들처럼 이밥에 고깃국을 먹으면서 행복하게 살아보자

300만 인민들이 굶어죽고 얼어죽었는데 초호화별장에서 처녀들과 난잡한 술파티를 벌이고 있는 김정일을 처단하자

Mary has offered translations of these tweets in the comments.

Multiple users at http://dcinside.com are taking credit for the job.

ORIGINAL POST: In honor of Kim Jong-un’s (alleged) birthday, some hackers posted derogatory content to the DPRK’s Uriminzokkiri Twitter and YouTube accounts.  As of now, the content is still up, meaning that the hackers might have changed the passwords making it difficult to gain access to the accounts and remove the content.

Here is the most recent Uriminzokkiri Tweet:

According to the Washington Post, this roughly translates to “Let’s create a new world by rooting out our people’s sworn enemy Kim Jong Il and his son Kim Jong Eun!” (Please correct me if I am wrong)

According to Al Jazeera:

The four most recent messages posted on Saturday morning accuse the ruling family of exploiting the North Korean people to enjoy luxurious lives and develop nuclear arms and missiles.

One message called for an uprising to kill the Kims “with a sword”.

The apparent hacking of the site on Saturday, also Kim Jong-un’s birthday, is not the first such attack against the government’s online public relations efforts. Last month, the government’s official website, Uriminzokkiri, was reportedly duped into carrying a message that called the ruling family by harsh names.

Here is a link to the Youtube video:

The Noland/Haggard blog provides a translation:

“The truth behind the Kim Jong Un Train Incident [the reference is to reports of a derailed train SH/MN]”

Kim Jong Il: Ahh…Today is Kim Jong Un’s birthday. I wonder what he’d like for his presents? A Mercedez Benz? A Yacht? Money? Eh, whatever; I’ll just get him everything. Hahahaha.

Kim Jong Un: Get out of my way, you &@#@$@! [Runs over starving people; the corpses pile up on the railway.]

Hahahaha, these people are worthless!!

(Phone rings)

Hello?

Kim Jong Il: It’s me, your dad.

Kim Jong Un: Daddy, it’s my birthday; don’t you have any presents for me?

Kim Jong Il: Don’t worry, I just sent you your presents by train. I’m sure you’ll like them since they’re all crazy expensive. Haha.

Kim Jong Un: Oh, Okay Dad.

Train driver: Huh? What are those?

(The train runs into the corpses left on the railway by Kim Jong Un, and the presents hit Kim Jong Un one by one.)

Kim Jong Un: Dammit, who is it! Who left the &@#@$@! corpses on the railway! Damn it, if you get caught, you’re dead! Which bastard is it!

(Closing) They say Kim Jong Un is still looking for the culprit.

The irony is that KJU’s birthday seems to have garnered more attention outside the DPRK than from within.  Two articles this week point out that KJU’s ascension may still be debatable.  Read more in the New York Times and the Washington Post.

More information related to the hacking below:
1. Washington Post

2. Joshua Stanton, One Free Korea

3. Martyn Willams, North Korea Tech

4. Yonhap

5. Previous posts about the DPRK’s YouTube and Twitter accounts: here and here

6. Martyn Williams’ list of North Korea and North Korea-related web pages.

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Rumor of DPRK plans to focus on light industry

Friday, January 7th, 2011

According to the Choson Ilbo,

The North Korean regime wants to divert some of budget for the all-powerful military to the civilian sector and increase exports of mineral resources to China in its Quixotic quest to become “a powerful and prosperous nation” by 2012.

A senior member of the Workers Party who attended a meeting held in Chongjin, North Hamgyong Province on Monday was quoted by Radio Free Asia as saying, “This year, the party decided to divert some of the budget earmarked for the munitions industry to the people’s economy to develop the light industry.”

“People will undergo a sea change in their lives next year when we reach the goal to become an economic power,” the U.S.-funded broadcaster quoted a senior party official from North Pyongan Province as saying. “There’ll be big investments.”

The North did not even reduce military spending even during the famine of the mid to late 1990s, when more than a million people starved to death, telling people to “tighten belts until the peninsula is reunited.” The regime’s annual military spending is estimated at about US$1.7 billion.

A South Korean security official said the North managed to overcome a food shortage early last year by releasing some rice from its military stockpiles, “but it may not be as easy this year.”

Meanwhile, the regime has been increasing exports of mineral resources to China to earn hard currency.

“In 2009, Kim Jong-il banned exports of coal after receiving a report that factories weren’t working due to coal shortage, but the regime sold $300 million worth of coal to China in 2010,” a North Korean source said.

Coal accounted for 30 percent of the North’s total exports to China of about $900 million last year.

A Chinese businessman dealing with the North said in early December last year, a delegation from Resources Development Corporation of the North’s National Defense Commission agreed with the Chinese province of Liaoning on the development of 350 million yuan worth of graphite in the North. He added Chinese officials last November looked around Pyoksong, Yonchon and Haeju in Hwanghae Province, which have abundant graphite deposits.

The regime ordered officials to earn hard currency by selling coal from Pukchang, South Pyongan Province, and iron ore from Unyul, Hwanghae Province, to China, a member of a North Korean defectors organization said.

Read the full story here:
N.Korea Diverts Military Budget to Light Industry
Choson Ilbo
1/7/2011

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Chinese to boost investment in Rason

Friday, January 7th, 2011

UPDATE  1 (2011-1-19): According to the Wall Street Journal:

A Chinese firm has signed a letter of intent to invest $2 billion in a North Korean industrial zone, representing one of the largest potential investments in Kim Jong Il’s authoritarian state and a challenge to U.S. policy in the region.

The agreement was signed with little fanfare in Pyongyang on Dec. 20—a day otherwise marked by pitched tension on the Korean peninsula following the North’s shelling of a South Korean island—according to documents viewed by the Wall Street Journal. Confirmation of the deal comes as Chinese President Hu Jintao visits Washington this week in a bid to forge closer security and economic ties with the U.S.

U.S. officials said the administration is aware of the possible Chinese investment, but noted that previous projects haven’t gone anywhere. “No investment project will enable North Korea to meet the needs of its people as long as its government continues its destabilizing behavior,” said a senior administration official.

The letter of intent involves China’s Shangdi Guanqun Investment Co. and North Korea’s Investment and Development Group. An assistant to the managing director of Shangdi Guanqun, who identified himself only by his surname, Han, said his company’s planned investment is focused on the Rason special economic zone, situated near North Korea’s border with Russia.

The zone was called Rajin-Sonbong when it was established in 1991, but failed to attract sufficient investment. It was revived, and re-named Rason, following a visit there in 2009 by Mr. Kim.

Mr. Han said the plan is to develop infrastructure, including docks, a power plant and roads over the next two to three years, followed by various industrial projects, including an oil refinery, over the next five to 10 years. He said the company was waiting for a response from the North Korean government before applying for approval from China’s Ministry of Commerce.

“It’s all pending at this stage, and it’s really up to the Korean side to make the decision,” Mr. Han said. He added that the $2 billion figure was what the North Korean side had hoped for, not necessarily what his company could deliver.

The company’s Web site says the company was “under the administration” of a state-owned enterprise, Shangdi Purchase-Estate Corporation. Mr. Han, however, said his company was “100 percent private.”

For the Obama administration, securing China’s cooperation in restraining North Korea’s military and nuclear-proliferation activities is a cornerstone of a warmer bilateral relationship. But the potential investment is a reminder of possible limits of Chinese cooperation.

The U.S. wants to step up sanctions to force Kim Jong Il to give up his nuclear-weapons arsenal and military activities. China, meanwhile, is increasingly promoting business projects and direct investment to influence the North, say Chinese and American analysts, arguing financial pressure hasn’t worked.

China is North Korea’s biggest trading partner and aid donor, but the scale of this deal raises concerns in Seoul that Beijing is running its own version of the “Sunshine” policy under which the South boosted investment in the North from 1998 to 2008.

This policy disconnect is expected to be one of the issues Chinese and U.S. officials discuss this week. “These types of deals pursued by China generally present a real challenge to the sanctions” being effective, said Victor Cha, a North Korea expert who helped oversee Asia policy in George W. Bush’s National Security Council. “The net effect is that it does make it more difficult for these sanctions to have the desired effect.”

Such deals have emerged in the past and have come to nothing, analysts said, and it is possible this one, too, could peter out. A number of similar North Korean economic zones have failed to live up to their billing because of poor infrastructure and corruption, and a lack of economic reform. News of the deal was first reported in the Korean-language press, including the Voice of America’s Korean service.

It is unclear how long the agreement has been in the works. But its Dec. 20 signing came on the day South Korea conducted a closely watched artillery test from Yeonpyeong Island near North Korea.

The test marked a high point in tensions after North Korea’s surprise late November shelling of Yeonpyeong, which killed four South Koreans. Pyongyang had threatened a swift military response should Seoul carry out an announced artillery test on Dec. 20. But the day’s drill came and went amid high security in the South, with the North saying in a statement it “did not feel any need to retaliate.”

Top administration officials have recently both praised and chided the Chinese over the North. On a trip to China last week, Defense Secretary Robert Gates commended the Chinese for their “constructive” role in reducing tensions on the peninsula after Pyongyang’s recent shelling of a South Korean island. Secretary of State Hillary Clinton in a Friday speech pressed China to be more aggressive in helping tamp down the North’s nuclear program.

The proposed investment is among the strongest evidence yet of China’s strategy of using direct investment rather political pressure to push for change in North Korea. Chinese experts say that after North Korea’s first nuclear test in 2006, China tried to make improved bilateral relations dependent on Pyongyang dismantling its nuclear program. But after a second test in 2009, China changed tack.

Beijing now believes, according to Chinese experts, that the North Korean regime won’t respond to political pressure and could collapse completely if China cuts off aid and investment, triggering a flood of refugees into northeastern China, and bringing U.S. troops right up to the Chinese border.

The investment strategy was cemented when China’s Premier Wen Jiabao visited North Korea in October 2009 and signed a slew of economic and trade agreements. One of those agreements was for China to fund construction of a $250 million bridge across the Yalu River that separates the two countries.

Construction of the bridge, which would link China with another North Korean special economic zone, had been slated to start in August. Local officials said in November it appeared to have been put on hold indefinitely. Now they say a ground-breaking ceremony was held Dec. 31.

U.S. officials are particularly concerned about how China’s financial links to North Korea may be facilitating Pyongyang’s weapons programs. In November, Pyongyang showed a visiting American scientist 2,000 centrifuges stationed at a cover site, drastically raising fears about the North’s ability to expand its nuclear-weapons arsenal.

“China’s increased economic support undercuts the rest of the region’s efforts to convince Pyongyang that there will be consequences for further belligerence, nuclear weapons development or transfer of nuclear capabilities,” said Michael Green, who also served as a senior official on Asia during the Bush administration.

Read the full story here:
Chinese Firm to Invest in North Korea
Wall Street Journal
Jay Soloman and Jeremy Page
2011-1-19

ORIGINAL POST (2011-1-7): According to the Joong Ang Ilbo:

A Chinese state-run company recently agreed to invest $2 billion in North Korea’s Rason free trade zone, the JoongAng Ilbo learned yesterday from documents related to the deal.

Shangdi Guanqun Investment Co., Ltd. signed a 10-point memorandum of understanding with Pyongyang’s Investment and Development Group on Dec. 20 in Beijing, the documents showed.

The signing ceremony was attended by Mi Chang, president of Shangdi Guanqun Investment, and Kim Chol-jin, president of the Investment and Development Group.

The goal of the investment, stated in the documents, is to build Rason, a northeastern North Korean city on the East Sea that borders both China and Russia, into the “biggest industrial zone in Northeast Asia” in around 10 years.

The project calls for coal-fired power plants, roads, piers and oil refineries in the North Hamgyong Province city, the documents said.

According to the documents, the deal is “a strategic joint project based on trust between high-level figures” in China and North Korea, which suggests it may have been negotiated by North Korean leader Kim Jong-il during two visits to China last year, on which he met Chinese President Hu Jintao.

The North’s economy has suffered under international sanctions on trade and financial services overseas, imposed after its nuclear weapon tests, and is desperately seeking foreign investment.

China is investing in Rason as an export base to serve markets in Japan, southern China and Southeast Asia.

Rason is a merger of two towns, Rajin and Sonbong, and was designated the first free trade zone in the North in 1991. It was promoted to a “special city,” which means it has fewer restrictions on businesses.

“We have a deep interest in North Korea’s ample natural resources,” an official of Shangdi Guanqun Investment Co., Ltd. told the JoongAng Ilbo. “To facilitate the export of natural resources [from the region], we will invest $300 million first and construct a coal-fire power plant at the coal mine and build a railway, roads, and harbors and piers [near it].”

The Chinese firm’s official said the company opened an office in Pyongyang at the end of last month.

Shangdi Guanqun Investment, established in 1995 by the Chinese government, is a trading firm specializing in oil processing, natural resources and international financial services. It is one of the key companies in China’s 12th five-year economic development plan that starts this year.

North Korea’s Investment and Development Group is in charge of developing the country’s four free trade zones. The other economic special zones are in Kaesong, Mount Kumgang and Sinuiju.

The Shangdi Guanqun Investment official said the company will build an oil refinery in Rason, where it plans to refine crude imported from the Middle East and Russia and sell the output to China or other countries.

I believe this Chinese story also relates to the same project.

Read the full story here:
China backs North’s Rason project
Joong Ang Daily
Ko Soo-suk
2011-1-7

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Friday Fun: where KJI watches football–and recovers from adverse health events

Friday, January 7th, 2011

Back in the autumn of 2008 the North-Korea-watching-world was abuzz with speculation about Kim Jong-il’s health since he had vanished from public view in August (see more here). Fueling the speculation, Kim Jong-il missed the country’s 60th anniversary celebrations in September–which everyone expected him to attend (read more here). KJI marked his return to “public life” on October 4th of that year when he attended a student football match (read more here).  According to KCNA:

Pyongyang, October 4 (KCNA) — General Secretary Kim Jong Il enjoyed a student football match on the occasion of the 62nd anniversary of Kim Il Sung University, the highest institution of Juche-based education and science.

There was the football match between teams of Kim Il Sung University and Pyongyang University of Railways that day, at which the former beat the latter 4-1.

KCNA released several pictures of the match, but I post the most important below along with a satellite image of the location from Google Earth:

In both Google Earth images I have marked off the respective image locations using red arrows.  The top images are the most convincing: The fence, the covering, the field, and hilltop in the background are all spot-on matches .  There is a viewing stand as well (shown in the bottom pictures).  The other official photos, which I did not post, match the satellite imagery as well. You can see them all in the original KCTV broadcast on YouTube.

Just to be safe, I checked out the football fields at Kim Il-sung University and the Pyonyang University of Railroads and neither come close to matching the photographs:

I also checked the hundreds of football fields that I have tagged on my Google Earth file.  None of those match either.

So I think it is fair to say that Kim Jong-il watched the football match from his home in the Kangdong compound (39.200045°, 126.020564°) and this is where he recovered from his surgery, or stroke, or whatever befell him, in the fall of 2008.  Or maybe this is just what they want us to think and he was actually in Wonsan or Hamhung?  It is also worth noting that this compound received a new helipad sometime between March 6, 2004 and December 17, 2006 (39.204600°, 126.014662°).

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Caveats on information originating in the DPRK

Thursday, January 6th, 2011

According to the Korea Times:

North Korea’s former premier Yon Hyong-muk died, presumably of pancreatic cancer in 2005. At the height of his career, he was the most powerful person in the North outside the Kim Jong-il family. He was premier of North Korea from 1989 until 1992.

He is the person who signed the South-North Basic Agreement in 1991. The agreement on reconciliation, nonaggression, exchanges and cooperation is regarded as the bible for inter-Korean relations.

This week, Radio Free Asia (RFA) reported that Kim Jong-il had killed him. Yon’s story is one of many stories making outsiders feel puzzled when they read news on North Korea.

Verifying reports on North Korea is quite elusive and puzzling.

For the past two decades, there have been occasional reports over the imminent collapse of North Korea. Then people wonder why this does not happen.

We are showered with a wide variety of news on North Korea daily. There have also been reports on the execution of North Korean technocrats. Later some of them appear at official functions again. Then people ask themselves whether some people concoct stories to undermine the North or for their political gain.

South Korean media often depend on refugees and their organizations which have their own agenda ― to harm the North Korean system or to work for the democratization of North Korea. These sources are familiar with how the North is ruled and understand the North Korean language. They often claim that they received specific pieces of information from their collaborators living in the North. Those sources of information were never confirmed, however.

Stories often sound interesting, and even believable, but have no proven grounds. The Japanese press is equally imaginative in reporting make-believe stories, but not credible factual stories, on North Korea.

RFA which is often quoted by South Korean news organizations, also depends heavily on North Korean refugees for its reporting.

In other words, many of the news stories reported in the press are unconfirmed stories. It is like saying, “We do not care if people believe it or not, but this is our story.’’.

Verification is not that difficult on such news on economic policy like currency reform, control over markets, daily life and the economy. If people hear more or less from different sources, it is probably true. However, such confirmation is only possible on news about market policies, prices and administrative regulations at lower levels.

Over half of all published reports on domestic power politics and succession, have eventually been shown to be false.

Over the last three to four years, each of the three sons of Kim Jong-il, as well as other members of his family were reported to be confirmed successors.

There is no way to prove the alleged power struggle or succession. Nothing can be done to substantiate such reports until official announcements are made.

Many South Korean news agencies quote North Korean defectors in publishing articles. Are these defectors representing North Korean society? Do they know the inside story of the regime? They may be talking about either end of an elephant. It is difficult to know everything about North Korea without knowing the full picture of an elephant.

A story on a defector is sometimes published as if it were representing North Korean society. News agencies sometimes boast that they have communication channels with many North Koreans inside the North. Is it really possible for North Koreans inside the tightly controlled society to communicate with the outside world?

Even different news agencies interpret the same North Korean story from their ideological angles. The conservative Chosun Ilbo and progressive Hankyroreh often publish the same article from different angles. We need to take them with a grain of salt.

Many online news outlets on North Korea have cropped up in South Korea. People wonder who sponsor these news outlets. They need money to run the news outlets. Without advertising, how can they stand on their own two feet? What are their purposes for running such news outlets? Are they seeking to topple the North Korean regime? Are they dedicated to reporting news without any bias?

They make daily reports on the North. It may be naive to believe all of them. It is also naive to distrust all of them.

In checking news on North Korea, we need some steps. First is common sense. Repeated news by different agencies and media may be true. All media in Korea copy Yonhap articles. We can also obtain technical data through Google Earth, open-source data, statistics from the U.N. and various sources such as JETRO, KOTRA, IAEA, WFP, NGO reports and International Crisis Group.

Human intelligence is also vital. They include defectors, visitors to North Korea, both former and incumbent diplomats in the North and government officials. Out of these sources, only defectors are willing to talk to the media or open source networks, and others will not speak to the media. Accumulated know-how based on expertise is also necessary. When there are reports, it may be safe to contact North Korea experts for verification or interpretation.

When the truth of news is difficult to confirm, it is difficult for policymakers to make a decision on North Korea. Whether accurate or inaccurate, news on North Korea has an impact on South Koreans and policymakers. Making a judgment on assumptions, not on facts, is quite risky and dangerous. Leaders need to be careful in commenting on North Korea as their impact is quite widespread. Talking about North Korea based on unconfirmed news is all the more dangerous.

Read the full story here:
Accuracy of reports on North Korea
Korea Times
Lee Chang-sup
2011/1/6

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