Archive for February, 2011

DPRK uses KCNA for preemptive “Food CYA”*

Monday, February 7th, 2011

UPDATE 2: KCNA posted its second food “CYA” story on March 16th:

A UN special rapporteur for food issue on Mar. 8 expressed concern about worldwide food price rise.

The rapporteur said that the world is facing the same serious food crisis as in 2008 amid the rise of food prices for eight months on end, adding that this is attributable not only to the natural disasters but to speculation in the financial field.

UPDATE 1: I offered a rhetorical analysis.  Haggard has some data.

ORIGINAL POST: Here is the article from KCNA:

Pyongyang, February 7 (KCNA) — Price of foodstuff is skyrocketing worldwide, sparking serious concern.

The monthly world foodstuff price indices have gone up 3.4 percent in the period from December last year to January this year, said FAO of the United Nations on Feb. 3 quoting a survey data.

This is an all-time high since 1990 when foodstuff price survey kicked off. The price of foodstuff is expected to continue to soar in the coming months.

It is true that global food prices are rising.  Here it seems the North Korean government is both warning its people and deflecting blame for the problem.  Although few North Koreans will have access to the FAO report, KCNA is careful to highlight the foreign source (not Pyongyang). Of course making the announcement will set off a wave of hoarding in the DPRK leading food prices to increase even more.

Despite its claims, the DPRK government does have the power to improve food prices for the North Korean people.  The DPRK could shore up confidence in market institutions; give farmers greater individual incentives rather than emphasizing collective farming; make it easier for food shipments to travel internally, and ease border crossings for food shipments from China.

Marcus Noland and Stephan Haggard recently posted data on food price increases in the DPRK.

*”CYA” is “Cover your ass” (‘arse’ for our British friends).

Share

Smugglers held for trading DPRK drugs

Monday, February 7th, 2011

According to the Choson Ilbo:

Police have arrested a Chinese-South Korean gang on charges of trafficking 5.95 kg of North Korean-made methamphetamines into the South. The Seoul District Prosecutor’s Office said Sunday among the 13 people arrested is a 56-year-old man in Busan identified only as Kim who is linked to organized crime in the southern port city, and a 35-year-old Korean Chinese identified as Chung from Shenyang, Liaoning Province, also a suspected mafioso.

Kim allegedly received the drugs from Chung and smuggled them into Busan port on ships disguised as fishing trawlers, prosecutors said. Another member of the gang in Busan, who committed suicide last year, sold the drugs on to about a dozen different gangs throughout South Korea.

The arrested Chinese gangsters said they believed the methamphetamines were made in North Korea, prosecutors said. The 5.95 kg that were seized have a street value of W19.8 billion (US$1=W1,117).

It is widely known in the international community that North Korea is the source of various narcotics that are trafficked around the world.

South Korean police believe North Korean-made drugs are trafficked along two routes. The first is through the three Chinese provinces that border North Korea — Liaoning, Jilin and Heilongjiang — where Chinese triads are involved in trafficking, for sale in China, South Korea and Japan. In August last year, one South Korean and two Japanese were arrested by Chinese police on charges of buying and selling 60 kg of North Korean methamphetamines in their hotel room in Shenyang. In July last year, three South Koreans were caught in Longjing smuggling 4.5 kg of North Korean methamphetamines. In 2009, 35 people were arrested in the three Chinese provinces on charges of drug trafficking, and most of them were apparently North Korean-made.

The other route is by ship directly to Australia, the Philippines or Japan. Some of these shipments involve hundreds of kilograms and lead to sharp decreases in the street price of meth. North Korean methamphetamine is known for its purity and apparently fetches high prices on the streets.

There have not been many DPRK drugs stories in the media for the last couple of years.  I wonder if production is down, arrests are down, demand is down, or the story is just too mundane to report. Anyone have any ideas?

In all fairness, the meth is only suspected of coming from the DPRK due to assumptions made by incarcerated Chinese gangsters. Maybe more helpful information will come out during the court proceedings.

Joshua wrote something about this nearly a year ago.

Read the full story here:
Mobsters Held in Smuggling of N.Korean Drugs
Choson Ilbo
2/7/2010

Share

DPRK-Chinese mining deal

Monday, February 7th, 2011

According to Yonhap:

North Korea and China are expected to sign an agreement on joint development of the North’s underground resources in the middle of this month in Beijing, a source here said Sunday.

“It has been learned that Pyongyang and Beijing are expected to conclude a deal to jointly develop North Korea’s underground resources on Feb. 15, one day before the birthday of North Korean leader Kim Jong-il,” said the source, noting the accord will be signed in Beijing between China’s Commerce Ministry and the North’s Joint Venture Investment Committee.

“Specifically, the two sides may agree to jointly develop natural resources such as gold, anthracites and rare earths under the bilateral deal. Following the agreement, the two countries are likely to establish a joint venture company in Hong Kong,” said the source, asking to remain anonymous.

Trade between North Korea and China reached US$3.06 billion in the first 11 months of last year, which marked a rise of 9.6 percent from the 2008 annual volume of $2.7 billion. Mineral resources like coals and iron ores account for over 30 percent of the North’s exports to China.

Chinese mining investors have had mixed results in the DPRK despite geographical proximity and monopsony purchasing power (the Chinese can offer lower prices because in many cases they are the only purchaser/investor).

At one point, a Chinese firm had a controlling share of the DPRK’s Hyesan Youth Copper mine (Satellite image here).  As best I can tell, the mine is no longer operable because of flooding from nearby dam construction.

A Chinese firm had also invested in the Musan Mine, the DPRK’s largest, conveniently located on the Chinese border (Satellite image here). This deal also fell trough (see here).

I have heard informally that Chinese mining investors do not particularly like doing business in the DPRK because their North Korean business partners routinely violate contract terms and local officials need to be bribed repeatedly.  Today Chinese mining firms operate across the world in both developing and developed countries, so why bother with the DPRK?

The particular deal mentioned in this Yonhap article is interesting because it hints that the Chinese and North Korean central governments are setting the terms for mining investment in the DPRK for the first time.  This will give local officials less room for post-contractual rent-seeking behavior and could smooth the way for regular/predictable business operations in the DPRK.

Again, centralized corruption is preferable to decentralized corruption for investors.

Read the full Yonhap story here:
N. Korea, China likely to ink deal on joint resource development
Yonhap
2/6/2011

Share

New papers on the DPRK’s markets and Chinese investment

Friday, February 4th, 2011

In addition to the Haggard/Noland book release, there were a couple of other interesting North Korea events in Washington DC this week that I wanted to point out:

1. Korea Economic Institute: The Markets of Pyongyang
John Everard, UK Ambassador to the DPRK (2006-2008)

-Read his paper here (PDF).
-See his power point presentation here (PDF).
-See his full presentation in three parts: Part 1, Part 2, Part 3.

2. US-Korea Institute at SAIS: Silent Partners: Chinese Joint Ventures in North Korea
Drew Thompson, Director of China Studies and Starr Senior Fellow at The Nixon Center

-The event web page is here.
-Read an executive summary here
-Read the paper here.

Both papers are well worth reading.

Share

North Korea increasing coal production – seeking to ease power shortages and boost exports

Wednesday, February 2nd, 2011

Pictured Above: Pongchon Coal Mine (Google Earth)

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-01-18
1/28/2011

The DPRK Workers’ Party’s newspaper, the Rodong Sinmun, recently featured a front-page editorial urging the North Korean people to increase coal production. On January 26, the KCNA reiterated the call, reporting that the newspaper editorial highlighted fertilizer, cotton, electricity, and steel as products suffering from a lack of coal, and that “coal production must be quickly increased in the Jik-dong Youth Mine, the Chongsong Youth Mine, the Ryongdeung Mine, the Jaenam Mine, Bongchon Mine [Pongchon Mine] and other mines with good conditions and large deposits.”

The editorial also emphasized that “priority must be placed on the equipment and materials necessary for coal production,” and, “the Cabinet, national planning committee, government ministries and central organizations need to draft plans for guaranteeing equipment and materials and must unconditionally and strongly push to provide,” ensuring that the mines have everything they need. It also called on all people of North Korea to assist in mining endeavors and to support the miners, adding that those responsible for providing safety equipment for the mines and miners step up efforts to ensure that all necessary safety gear is available.

In the recent New Year’s Joint Editorial, coal, power, steel and railways were named as the four ‘vanguard industries’ of the people’s economy. Of the four, coal took the top spot, and all of North Korea’s other media outlets followed up the editorial with articles focusing on the coal industry. On January 15, Voice of America radio quoted some recent Chinese customs statistics, revealing that “North Korea exported almost 41 million tons of coal to China between January and November of last year, surpassing the 36 million tons exported [to China] in 2009.” It was notable that only 15.1 tons were exported between January and August, but that 25.5 tons were sent across the border between August and November.

North Korea’s coal exports to China earned it 340 million USD last year, making the coal industry a favorite of Pyongyang’s economic and political elites. Increasing coal production is boosting output from some of the North’s electrical power plants, while exports to China provide much-needed foreign capital. However, even in Pyongyang, where the electrical supply is relatively good, many houses lack heating and experience long black-outs. Open North Korea Radio, a shortwave radio station based in the South, reported on January 24, “As electrical conditions in Pyongyang worsen, now no heating is available.” Farming villages can find nearby timber to use as firewood, but because prices are so high in Pyongyang, even heating has become difficult. Some in the city even wish for rural lifestyles, just for the access to food and heat.

Share

“Marketization” diminishing importance of leader’s birthday

Wednesday, February 2nd, 2011

According to the Choson Ilbo:

The most important dates for North Koreans born since the 1970s are the birthdays of former leader Kim Il-sung on April 15 and present leader Kim Jong-il on Feb. 16. North Koreans may forget their parents’ birthdays but they always remember the leaders’, because that is when gifts of food and other daily necessities are doled out and a festive mood prevails throughout the country.

But now, due to international sanctions and the spread of grassroots capitalism, the traditional “gift politics” may be coming to an end as the regime can no longer afford to dole out grace and favor.

Gift Packages

The candy and cakes that were doled out on Kim Il-sung’s birthday were traditionally much better quality than those available in ordinary shops. Nylon and tetron fabric were also distributed, much more highly prized than the normally available synthetic cotton, mixed-spun or vinalon fabrics that shrink in the wash. Parents who can barely afford to clothe their children have no choice but to be grateful to Kim Il-sung.

On the two birthdays, a bottle of liquor, five eggs, two day’s supply of milled rice, 1-2 kg of meat, and cigarettes are distributed to every household. These are precious commodities not normally available to everyone. Thanks to these gift packages, the birthdays of Kim Il-sung and Kim Jong-il have long become established as major holidays.

The elite of the Workers Party are given luxurious houses, luxury cars like Mercedes and Swiss-made Omega gold watches. Quality wristwatches are given to ordinary people who have distinguished themselves meritorious and are preserved as heirlooms.

Economic Changes

But amid a food shortage and international sanctions, the regime is having to rethink the practice. And markets are booming there now despite the regime’s attempt to suppress them, so North Koreans can buy Chinese-made candies and cakes and other necessities without much difficulties. This makes the leaders’ birthday gifts look not so special any more.

The quality of gifts is also falling year by year. Senior officials, unable to live on gifts and official supplies alone, enrich themselves through corruption. An increasing number of officials secretly hoard hundreds of thousands of dollars, and it is therefore natural that the leader’s gifts lose their luster.

January 8 was the birthday of Kim Jong-il’s son and heir Jong-un. Although there had been rumors that the regime would designate Kim junior’s birthday as a national holiday and hold lavish celebrations, it passed quietly.

The North designated Kim Jong-il’s birthday as a national holiday quite a few years after he made an official debut in 1974. It was also only when his power base was cemented that he began to dole out gifts to celebrate his birthday. While Kim Il-sung was alive, he gave gifts only to close associates as a gesture of courtesy to his father. So long as Kim Jong-il is alive, therefore, chances are that there will be no gifts to the public or nationwide celebrations on Jong-un’s birthday.

This story is reported every year for the leader’s birthday. Here is a link to previous posts on this topic.

Read the full story here:
N.Korean Regime’s ‘Gift Politics’ Starts to Lose Its Luster
Choson Ilbo
2/2/2011

Share

DPRK selling defective Chinese arms

Wednesday, February 2nd, 2011

According to Reuters:

North Korea was the supplier of a cache of defective weapons sold to Burundi’s army by a Ukrainian firm, said Western diplomats familiar with the case that has riled Burundi’s anti-corruption body.

The weapons deal with Burundi appeared to be a violation of the international ban on North Korean weapons exports which the U.N. Security Council imposed on Pyongyang in June 2009 after its second nuclear test, the diplomats told Reuters on condition of anonymity.

The case involved the supply of some 60 Chinese-made .50-calibre machine guns to Burundi by a Ukrainian firm called Cranford Trading, the diplomats said. The weapons, which were defective, were sold to the firm by North Korea, they added.

Diplomats say Pyongyang continues to try to skirt the arms embargo. Last year South Africa informed the Security Council’s sanctions committee about a seizure of North Korean arms bound for Central Africa.

The expanded sanctions were aimed at cutting off North Korea’s arms sales, a vital export that was estimated to earn the destitute state more than $1 billion a year.

Some facts about the Burundi weapons deal became known late last year when the country’s anti-corruption watchdog went public about irregularities it found. It said that the arms had been defective and that Burundi had been overcharged.

A report on a state audit of the deal, seen by Reuters, concluded that Cranford Trading provided Burundi’s army defective military material with the complicity of former Defense Minister Germain Niyoyanka, current army chief Godefroid Niyombare and his deputy Diomede Ndegeya.

The auditors’ report said that the bidding offer was $3.075 million, while the amount in the contract was for $3.388 million. A further $1.186 million was paid in transport fees, even though such fees were not agreed in the contract.

The auditors concluded that the defense ministry had spent a great deal of money on defective material and recommended the prosecution of all people involved on suspicion of graft.

North Korea was not mentioned in the auditors’ report.

Several officials at Burundi’s U.N. mission in New York declined to comment when contacted by Reuters.

NO CERTIFICATE OF ORIGIN

“The weapons were transferred by China to North Korea, which then sold them to Cranford,” a diplomat said, adding that the official documentation for the deal had been incomplete.

“There was no certificate of origin of the weapons, which is necessary to comply with international conventions,” the diplomat added. Another diplomat confirmed the remarks.

The contract between Burundi’s defense ministry and Cranford Trading covered the period between October 2008 through 2010. It was not clear how much North Korea would have received when it sold the defective arms to Cranford Trading.

It was not possible to track down Cranford Trading in Ukraine, since the company was not readily accessible in any public lists. Ukraine’s U.N. mission did not respond to an e-mailed query about Cranford and the arms transaction.

It was not clear when China transferred the weapons to North Korea, or who in China was responsible, or whether the Chinese government had knowledge of the deal.

The U.N. arms embargo does not ban the sale of small arms to Pyongyang, though it does require exporters to notify the Security Council’s North Korea sanctions committee in advance about any small-arms sales to Pyongyang.

If the transfer took place after the latest round of U.N. sanctions were approved in June 2009, the exporter would have been required to notify the sanctions committee.

A spokesman for China’s U.N. mission was not available for comment.

The diplomats said the sanctions committee has not been notified about the Burundi case.

Read the full story here:
Defective Burundi weapons came from N.Korea
Reuters
Louis Charbonneau
2/1/2011

Share

North Korean art stirs Muscovites

Wednesday, February 2nd, 2011

Leonid Petrov writes in the Asia Times:

After two months, an exhibition in Moscow of North Korean graphics, mosaics and embroidery is coming to a close. Oddly entitled “And Water Flows Beneath the Ice”, the exhibition was a major project initiated and hosted by Russian entrepreneurs at the trendy Winzavod Gallery, a revamped wine factory in central-eastern Moscow.

All the pictures came from the Mansudae Art Studio in Pyongyang, a government-run enterprise that employs more than 1,000 artists to create art for export.

The late (and eternal) North Korean president, Kim Il-sung, is known to have once said, “Abstraction in art is death,” leaving no choice for North Korean artists but to embrace socialist realism as their method.

Russians, who still remember when this artistic trend was the only one permitted by the Communist Party, were given a chance to refresh their memory exactly 20 years after the collapse of the Soviet Union. It is no surprise that many felt a sense of familiarity and at times nostalgia for while visiting the unusual exhibition.

During a short trip to Moscow last month, I met with colleagues, Russian scholars and researchers of Korean studies at the exhibition. They came along with their students, and we had a lively discussion about the hidden messages and artistic value of each picture. It was good to share opinions on a contentious topic such as North Korean art, and our feeling converged on many things regarding the commonalities and differences between North Korean and Soviet propaganda art.

First of all, socialist realism in art is a misnomer, since it depicts life as it should be, not as it really is. For instance, in this exhibition, there was an image of chubby children in Pyongyang Zoo feeding monkeys with ice-cream. The abundance of rice, vegetables and rabbits on show in other pictures also seemed a disservice to aid agencies diligently dispatching food and other humanitarian relief to starving North Koreans. In the artwork, life in the Democratic People’s Republic of Korea was consistently depicted as affluent and pleasant.

In fact, North Korea is a revolutionary state, struggling to achieve economic success and advance its military power. This can be viewed and sensed through the canvases dedicated to the heroism of builders working on the Taegyedo Tideland Reclamation Project or soldiers engaged in constructing the Huicheon Dam.

Heroism at war and in peaceful reconstruction is venerated and equated to the revolutionary course of juche (national self-reliance) and songun (military-first) politics. Thus, every picture, embroidery and poster carries a condensed revolutionary message that must convince the viewer that the people of North Korea are determined and invincible. Some may call it propaganda, but in North Korea this genre is known as Chosunhwa (Korean painting).

In fact, there is very little of Korean tradition in Chosunhwa. Although most pictures are created with watercolors and ink, the characters, actions and settings are Stalinist Soviet or Maoist Chinese. Even where the North Korean artists try to be experimental and use such materials as gouache or mosaic, the results resemble the typical posters and murals once omnipresent in the streets of Moscow and Beijing.

Only the embroidery works were genuinely traditional, and most viewers were stunned by their elaborate composition and vibrant range of colors.

After discussing the merit of each exhibit, my expert friends and I agreed that totalitarian societies do produce impressive pieces of art, which inspire awe and overwhelm the target audience.

While the value of such art is transient and more akin to propaganda, the technical side of it is so unquestionably powerful that it deserves recognition and research, if not admiration.

Unfortunately for the North Korean artists and Mansudae Art Studio entrepreneurs, the value of this art is restricted by the willingness of the purchaser to help the juche and songun revolution. Otherwise, mainstream North Korean art, which is dutifully devoid of abstraction, has very limited export value.

That explains the usual commercial difficulties encountered by the North Korean art exhibitions brought overseas by the North Korean Committee for Cultural Relations with Foreign Countries. Among the rare buyers of the socialist kitsch are maverick revolutionary zealots and some rich sympathizers from South Korea.

In Russia and China, former communist patrons of North Korea, the appetite for hackneyed images and themes is dwindling. What leaves the strongest impression from “The Water Flows Beneath the Ice” is not the contrived propaganda on the walls but the artistic installation placed in the middle of the gallery.

Dozens of green combat helmets hanging from the ceiling form perfect lampshades over the scarlet-red carpet hosting a lonely short-legged Korean traditional table. A bowl of white rice on the table symbolizes the prosperity that songun was designed to create and protect. The soft pink light gleaming from each helmet resembles the cherished hope of the Korean people for peace, love and harmony.

The bouquets of colorful firework shots projected on the screen at the end of the gallery hall surmount the composition and instill a sense of triumphant fulfillment. The aim is seemingly to capture the unbending spirit of Koreans (in both the North and South), as well as their hardworking and peace-loving character.

Overall, the “And Water Flows Beneath the Ice” was a bright and memorable phenomenon for the cultural life of the Russian capital. Neither the awkwardness of the premises (conditions in the old liquor factory demanded that all visitors wore clumsy overshoes) nor the overpriced pamphlet (more than US$30) spoiled the positive and inspiring atmosphere.

Although it is commercially and morally questionable as well as kitsch, the unusual initiative has awakened in hardened Russian art-lovers a long-lost belief in fairness and altruism: ideals that are highly valued by Koreans.

Read the full story here:
North Korean art stirs Muscovites
Asia Times
Leonid Petrov
2/2/2011

Share