Archive for March, 2013

DPRK – Cuba relations in 1974

Sunday, March 31st, 2013

The Wilson Center’s North Korea International Documentation Project has posted a number of diplomatic cables from formerly fraternal socialist nations on the DPRK’s efforts to compete with South Korea for influence in the developing world. Below is a specific cable referring to DPRK – Cuban relations. It speaks volumes with masterful brevity (an art sorely lacking in public discourse today):

JANUARY 22, 1974

According to the Cuban ambassador accredited to this country, the DPRK asked Cuba to supply 300.000 metric tons of sugar in 1974. The Cubans replied that they could supply only 80.000 metric tons, and even this amount could be supplied only in quarterly items. If there was any delay in the [Korean] disembarkation of the delivered goods at the end of the quarter, the Cubans would halt the shipments next in line. The Korean trade officials declared that this Cuban measure was incompatible with the policy of mutual assistance that socialist countries pursued toward each other. The Cubans responded that they also needed assistance, and it would greatly help them if they could receive payment for the sugar shipments in a timely manner.

You can read all of the cables in the series here.


Kim Jong-un details issues facing light industry [consumer goods] sector

Saturday, March 30th, 2013

Institute for Far Eastern Studies (IFES)

On March 18, Kim Jong-un opened North Korea’s first national light industry convention in ten years, calling for efforts to be focused on the development of light industry. The hosting of this national meeting of light industry workers is somewhat atypical behavior for the leadership, as this event was held amidst military exercises aimed at demonstrating North Korea’s combat readiness.

In his speech, Kim Jong-un pointed out a number of issues which are currently affecting North Korea’s light industry sector including supply shortages, low quality, a high level of dependence on overseas suppliers of raw and other materials, workers’ ‘defeatism’, and a preference for imported goods.

He also emphasized the need for economic improvement through the development of light industry, promoting the production of consumer goods for the public, and modernization of the light industry sector on a scientific basis. In touching on these areas, Kim reiterated points made in his New Year’s address earlier this year.

Kim Jong-un’s itemization of the issues negatively impacting the light industry sector is receiving particular attention. During the Kim Il-sung and Kim Jong-il eras, progress reports tended to exaggerate positive results, with positive assessments of current performance and rosy projects for the future. Comparatively, Kim Jong-un’s unfiltered account of the state of the light industry sector in North Korea seems somewhat unconventional when juxtaposed against the propaganda of past regimes.

In Kim Jong-un’s words, “in the struggle to enhance livelihoods and to build an economically powerful country, the light industry and agriculture sectors must adopt the course of combining their fire power to deliver a decisive strike.” He further said, “Despite the current precarious situation, light industry, as this year’s first priority for economic development, will quickly solve the issues affecting livelihoods. Through the light industry, we will demonstrate the superiority of the socialist system and our ability to maintain livelihoods. This will be done in the name of advancing the great revolutionary event of national unification.”

Kim Jong-un indicated that the greatest issues facing North Korean light industry today are supply shortages and low quality. “Currently at light industrial factories, we are unable to accomplish the teachings left by Kim Jung-il. Whether exhibiting a new product or sample or displaying products in a store we must mass produce items and return them to the people.”

He continued, “The culture- and lifestyle-related demands of our people are rising by the day. No matter how many consumer goods are produced, if they are not of a quality high enough to meet the demands of the people using them, they are useless. We must produce consumer goods favored by the people and that receive good reviews. We must produce goods impeccable in the global marketplace.”

Kim Jong-un also pointed out that “high dependence on imports of raw materials and construction materials was another serious problem currently facing the light industry sector.” He said that “in order to realize domestic production of raw and other materials, the chemical industry must play a major role.” Kim claimed that “an economic business network must be established among factories and enterprises in the chemical industry” and that “a variety of chemical products composed of high quality textiles and plastics must be produced.”

“Currently, the most significant problem is that our workers do not feel responsible for the failures of their work sector and work units. Instead they have succumbed to defeatism and no longer put forth their greatest effort.” Kim added that “a preference for imports among workers stands as an obstacle to development of light industry.” He went on to say that “we must do away with the tendency to buy from other countries which have different facilities and the tendency to bring in foreign currency while claiming that we must import because our factories are modernizing.”

Since the 2003 ‘National Light Industry Sector Workers’ Conference’ which ran from March 23-24, North Korea has not held a national meeting of local light industry workers.


Jim Rogers goes long on DPRK coins

Friday, March 29th, 2013

The Wall Street Journal offers an interesting story on American investor Jim Rogers. Here is an excerpt from the article:

By Sunday, Pyongyang-based Korea Pugang Coins Corp. had sold its entire stock of coins, which included 20 one-ounce gold coins featuring mostly century-old generals as well as several hundred silver coins featuring North Korean sports achievements, cultural landmarks and national animals.

Most of the coins were purchased by Mr. Rogers, an American commodities investor now based in Singapore, said a Korea Pugang Coins representative, who didn’t give her name. The company knows Mr. Rogers from last year’s fair, when he bought the entire lot of North Korean coins offered.

Mr. Rogers, who started the Quantum Fund with George Soros in the 1970s, couldn’t be reached for comment, but had said in a previous interview: “Coins and stamps are the only way I can invest in North Korea.”

By invest in, Mr. Rogers means he wants to wager against the long-term prospects for the isolated, economically struggling country. He views his purchase as a bet on the collapse of North Korea.

“At some point down the line, North Korea will cease existing as a country. Then the value of the coins will go up,” Mr. Rogers said.

According to North Korea’s state-controlled news agency, a special series of gold coins were minted last year to commemorate Kim Jong Il, the country’s leader who died in late-2011. The inscription: “The Great Leader Comrade Kim Jong Il Will Always Be Alive.” However, none of those coins were put up for sale at the Singapore fair.

Mr. Kim was succeeded by his son, Kim Jong Eun.

Situated next to the American Numismatic Association, the North Korean stand drew immediate attention from many visitors, when the Singapore International Coin Fair opened its doors Friday morning. By lunchtime, the sales team, wearing Kim Jong Il pins on their jackets, hardly found time to finish their sandwiches and cans of Coca-Cola KO -0.59% .

Thirteen of the gold coins were purchased by an assistant of Mr. Rogers, said a representative of state-owned Korea Pugang Coins. “He wanted to buy more, but we only had 13 left,” she said. The company offered the gold coins for 2,500 Singapore dollars, or $2,014—well above Friday’s closing gold price of $1,598.25 an ounce.

Mr. Rogers is a fervent believer that the commodities bull-run will continue and that China and other Asian nations will set the global economic agenda for this century. He advocates investing in frontier markets such as Myanmar and Cambodia, and in 2007, sold his New York mansion and moved to Singapore, in part because he thinks it is crucial for his children to learn Mandarin.

Korea Pugang Coins has minted coins in Pyongyang since 1987, but the mintage is only around 2,000 each year, as North Korea’s own gold resources are limited.

The coins draw only a limited amount of buyers within North Korea and are mainly sold to international investors and collectors at fairs in Hong Kong, Beijing and Singapore, the company said.

Estonia-based Tavex Group, a company that specializes in gold and currencies, made a deal with Pyongyang in 2008 to sell North Korean gold coins.

But the North Koreans ended it after the first shipment of coins from a 2007 series featuring elephants, rhinos, owls, lions and buffalos.

“We sold them at a relatively high price to collectors, but demand was not big,” says Tomas Pavelson, who works in sales at Tavex Group.

“Actually, we still have one left.”

See some examples of DPRK coins here and here.

Here is some additional information from the Choson Ilbo:

In March last year, American investor Jim Rogers went to an international coin fair in Singapore and snapped up 13 rare North Korean gold coins each valued at 2,500 Singaporean dollars, as well as hundreds of silver coins worth 70 Singaporean dollars each.

The commemorative coins were produced by Pyongyang-based Korea Pugang Coins Corp., a subsidiary of Pugang Trading Corp.

Pugang Trading operates under the “guidance” of the Workers Party’s Munitions Industry Department but is believed to be run by Chon Song-hun, the son of the former North Korean ambassador to China, Chon Myung-su. The younger Chon is a former professor at Kim Il-sung University.

The firm imports and manufactures motorcycles and owns six subsidiaries involved in metals, machinery, chemicals, electronics and pharmaceuticals production. It also owns a gold mine that supplied the commodity for the coins.

Pugang Pharmaceutical has even exported health products to South Korea and runs a mineral water business. The group’s annual transaction volume amounts to US$150 million with 15 overseas branch offices, including in Beijing and Moscow.

Now Pugang Trading is on the UN Security Council’s blacklist, but the company is still very active in the North.

“Pugang is the North Korean equivalent of South Korea’s Samsung Group,” said Cho Bong-hyun of the IBK Economic Research Institute. “It appears to have been thriving even after Kim Jong-un stepped into power.”

Chon’s brother Yong-hun, meanwhile, apparently controls the import of diesel fuel into North Korea as the head of a company affiliated with the party’s Finance and Accounting Department. “North Korean businesses usually split their profits 50:50 with the party,” said a government source here. “The Chon brothers are believed to be worth millions of dollars.”

Another tycoon is Cha Chol-ma, a former diplomat who amassed a fortune worth millions of dollars by taking charge of business projects the North engages in overseas to earn hard currency.

“As a market economy evolves in North Korea, we are seeing early signs of monopolization of wealth,” said a researcher at the Korea Institute for National Unification here. “Tycoons have grown wealthy through collusion with high-ranking party members.”

Experts say North Korean businessmen also act as proxy investors on behalf of high-ranking party members, who cannot get involved in business, and often share the profits.

Read the full story here:
Executing a North Korean Coin Flip
Wall Street Journal
Jacob Gronholt-Pedersen


KPA asset data

Friday, March 29th, 2013


In the kerfuffle that followed James’ NK News post about the North Korean targeting Austin, TX, Yonhap reports on KPA asset data that was also on display in the official KCNA photos:

Media coverage of an emergency military meeting convened by North Korean leader Kim Jong-un on Friday shows an overview of its major weapons system, giving a rare glimpse of the isolated communist country’s armed forces.

The list shows that North Korea has 40 submarines, 13 landing ships, six minesweepers, 27 support vessels and 1,852 aircrafts [sic], with some of the numbers covered by senior officials.

Military officials in Seoul said the figure is similar to the defense ministry’s estimation of North Korea’s weapons system, though there are some differences.

According to the 2012 defense white paper, the North is estimated to have 70 submarines and midget subs, 260 landing ships, 30 mine sweepers, 30 support vessels, 820 fighter jets, 30 surveillance aircrafts, 330 parachute drop aircrafts and 170 training jets.

While there are some disparities between the list and Seoul’s assessment, the number of midget subs seems to have been excluded from the list disclosed in the photo, military officials said.

As Pyongyang has never disclosed its weapon system in the past, outside watchers speculate that the North Korean military has mistakenly disclosed the confidential information.

“It may have been leaked accidently,” said a senior military official, who asked to remain anonymous. “It could have been unveiled as the North hurriedly reported the emergency meeting.”

Others said the photo may be aimed at stoking tensions by showing that Kim is mulling ways to strike the U.S., considering the operational map that has several lines between the Korean Peninsula and the U.S. Its details were not recognizable in the photo.

The Washington Post has offered some additional data in a follow up article on 4-25-2013:

South Korea says North Korea has more than 13,000 artillery guns, and its long-range batteries are capable of hitting the capital Seoul, a city of more than 10 million people just 30 miles (50 kilometers) from the border.

“North Korea’s greatest advantage is that its artillery could initially deliver a heavy bombardment on the South Korean capital,” Mark Fitzpatrick, a former U.S. State Department official now with the International Institute for Strategic Studies, said in an email.

South Korea’s defense minister estimates that 70 percent of North Korean artillery batteries along the border could be “neutralized” in five days if war broke out. But Sohn Yong-woo, a professor at the Graduate School of National Defense Strategy of Hannam University in South Korea, said that would be too late to prevent millions of civilian casualties and avert a disastrous blow to Asia’s fourth-largest economy.

Seoul estimates North Korea has about 200,000 special forces, and Pyongyang has used them before.

In 1968, 31 North Korean commandos stormed Seoul’s presidential Blue House in a failed assassination attempt against then-President Park Chung-hee. That same year, more than 120 North Korean commandos sneaked into eastern South Korea and killed some 20 South Korean civilians, soldiers and police officers.

In 1996, 26 North Korean agents infiltrated South Korea’s northeastern mountains after their submarine broke down, sparking a manhunt that left all but two of them dead, along with 13 South Korean soldiers and civilians.

North Korea has 70 submarines while South Korea has 10, according to Seoul’s Defense Ministry. The most menacing threats from the North’s navy are small submarines that would deposit commando raiders along the South Korean coast, said John Pike, head of the think tank.

North Korea also has 820 warplanes, more than South Korea, though Seoul is backed up by American air power. The South says most of the North’s aircraft are obsolete. North Korea also suffers chronic fuel shortages that have forced its air force to cut sorties, experts say.

“North Korea would not be able to prosecute a full-fledged war for very long,” Fitzpatrick said. “Its biggest problem is that North Korea would quickly lose control of the skies because of the vastly superior (South Korean) and U.S. air forces. The reported number of North Korean aircraft is meaningless, because many of them cannot fly, and North Korean pilots have little training in the air.”

Pyongyang is believed to have enough weaponized plutonium for four to eight nuclear bombs, according to Siegfried Hecker, a nuclear expert with Stanford University’s Center for International Security and Cooperation.

But he doubts Pyongyang has mastered the technology to tip a missile with a nuclear warhead. “I don’t believe North Korea has the capacity to attack the United States with nuclear weapons mounted on missiles and won’t for many years,” he said on the website of Stanford University’s Freeman Spogli Institute for International Studies this month.

orth Korea denies it runs any chemical and biological weapons programs. South Korea claims that Pyongyang has up to 5,000 tons of chemical weapons.

The IISS says that although the figures are “highly speculative,” the North probably does possess chemical and biological arms programs.

“Whatever the actual status of North Korea’s chemical and biological capabilities, the perception that it has, or likely has, chemical and biological weapons contributes to Pyongyang’s interest in creating uncertainties in Washington, Seoul and Tokyo and raises the stakes to deter or intimidate potential enemies,” it said on its website. North Korea is not a signatory to the Chemical Weapons Convention, but it has acceded to the non-binding Biological and Toxin Weapons Convention.

Read the full stories here:
N. Korea’s photo offers glimpse of major weapons
Kim Eun-jung

A look at the strengths and weaknesses of North Korea’s military
Washington Post (Associated Press)


Some new retail developments in Pyongyang

Thursday, March 28th, 2013

Instagram is no longer an option for regular tourists to the DPRK, but expats and regular visitors are still allowed access to the service. So Koryo Tours has used mobile access to photograph some recent changes in Pyongyang. I thought I would post a couple of their interesting images below and match them with satellite imagery to give a little more perspective.

Taedonggang Bar No. 3 (대동강제3술집):


Renovation on this bar began sometime after Feb 2012. The interior (pics by Koryo Tours) looks like any of the bars in Dupont Circle:

Taedonggang-bar-3-1 Taedonggang-bar-3-2

According to Koryo Tours, beer costs 1.5 Euros (per pint/half litre). There are seven taps along the bar. I assume they serve various brands of Taedonggang Beer.

Koryo Tours also posted this image of a new shopping center under construction in downtown Pyongyang:


Plastered to the wall is a map of what the site will look like when construction is completed, however, it is too small to make out with any specificity with this image.  Currently we do not know any details about this facility (or even its proper name), but hopefully it will appear in the official North Korean media before too long. Here is the location of the new facility:


The construction site sits on the former star-shaped fountain of the Mansudae Fountain Park….between the Mansudae Assembly Hall (Supreme People’s Assembly), Pyongyang Student’s and Children’s Palace, Mansudae Art Theater, and new Mansudae Street housing.


Kempinski claims to [not] be taking over management of Ryugyong Hotel

Thursday, March 28th, 2013

UPDATE 1 (2013-3-28): NK News reports that Kempinski has officially pulled out of the deal:

“Kempinski Hotels confirms that KEY International, its joint venture partner in China with Beijing Tourism Group (BTG), had initial discussions to operate a hotel in Pyongyang, North Korea, however no agreement has been signed since market entry is not currently possible”, Regional PR Director Hilary Philpott told NK NEWS by email.

ORIGINAL POST (2012-11-1): According to Bloomberg:

The 105-story, pyramid-shaped Ryugyong Hotel, whose foundations were poured almost three decades ago, will open partially in July or August, Kempinski AG Chief Executive Officer Reto Wittwer said today at a forum in Seoul. The German luxury-hotel manager will be the first western hospitality company to operate in North Korea, he said.

“This pyramid monster hotel will monopolize all the business in the city,” Wittwer said. “I said to myself, we have to get this hotel if there is ever a chance, because this will become a money-printing machine if North Korea opens up.”

Kempinski, based in Munich, is handling management while Egypt’s Orascom Telecom Media & Technology Holding SAE (OTMT) funds the hotel as part of a $400 million mobile-phone license it won from the North Korean government in 2008, he said. Cairo-based Orascom has spent $180 million on completing the hotel’s facade.

The top floors of the hotel will house guests in 150 of the originally planned 1,500 rooms, which “will be developed over time” to remodel the insufficiently designed spaces, Wittwer said. Shops, restaurants, a ballroom and Orascom’s offices on the ground and mezzanine floors will also open next year.

Additional Information:

1. Koryo Tours published the first photos taken inside the building.

2. The Choson Ilbo reports that the South Koreans tried investing in the hotel during the Noh Administration.

Read the full story here:
Kempinski to Operate World’s Tallest Hotel in North Korea
Sangwon Yoon


DPRK imports of Chinese silver surge

Thursday, March 28th, 2013

According to Yonhap:

North Korea imported an unusually massive amount of silver from China in January, possibly in relation to leader Kim Jong-un’s birthday that month, sources and China’s customs office said Thursday.

Data from China’s customs office showed that North Korea imported 661.71 kilograms of Chinese silver for US$653,128 in January.

The monthly import is unusually enormous given that the North took in only $77,593 worth of precious metal and other jewels for the whole of 2012. The corresponding amount for 2011 was $57,000.

Before January this year, the North had hardly spent more than $10,000 on monthly imports of such goods, according to the data.

Given the leader’s birthday on Jan. 8, North Korea watchers said the massive amount of imported silver may have been used to produce silverware souvenirs to celebrate the leader’s birthday.

“It’s difficult to assume the exact purpose of the silver imports,” a source said. Given that late leader Kim Jong-il used to bring in foreign brand luxury sedans and expensive watches to treat the country’s top echelon on major holidays, the bulk of silver imported in January may have been used for similar purposes, the source said.

Backing this assumption, the customs data also showed that the North imported an unusually large amount of costume jewelry worth $10,447 in the same month.

A reader points out this Daily NK story hypothesizing that the silver could have been used in batteries:

As such, there are suspicions that the recent North Korean decision to import more than 600kg of silver through China was done to facilitate the production of batteries for submersible production.

A North Korean military source told Daily NK on the 4th, “The [North Korean] Navy has been producing submersibles at every shipyard on their east and west coasts ever since the attack on the Cheonan in 2010.”

According to the inside source, prior to the Cheonan sinking such vessels were produced at one shipyard, the disguised ‘Bongdae Boiler Factory’ in Sinpo, South Hamkyung Province, at a rate of five per year. However, following the sinking of the Cheonan that rate went up four times to 16 per year, as the vessels started being produced across multiple shipyards including Yongampo, Chongjin and Rajin.

The source explained, “The reason why the North Korean authorities are increasing production of this kind of submersible that can fire torpedoes is to maximize their underwater attack capacity. The subs can take 12 to 15 soldiers yet still sink destroyers weighing thousands of tons with their twin torpedoes.”

“The engines noise on the submersibles is very quiet, making them able to approach their targets underwater in secret, while it is impossible to trace crimes such as the Cheonan incident,” the source went on, adding that during North Korean military training exercises they also emphasize the essential nature of the subs.

The rising production is pushing up demand for batteries, the source then went on to add, saying that this required the bulk production of both silver and zinc. “All the silver produced in North Korea is supplied to the shipyards,” he claimed.

The source admitted to being confused, therefore, at North Korea’s recent decision to import 660kg of silver from China, declaring, “There is lots of silver being produced in North Korea, so it’s hard to say why they are importing it from China…I suppose it may have been just that more batteries were being produced so they needed more silver.”

Read the full stories here:
N. Korea imports massive amount of Chinese silver in Jan.: data

NK Producing More Silvery Subs
Daily NK



Thursday, March 28th, 2013

Today I discovered someone trying to hack into this web page.

So everyone out there, keep a close eye on your systems and be safe.


Fatherland Liberation War Memorial Hall

Wednesday, March 27th, 2013


Today NK News ran this story on the unfinished “Victory in the Fatherland Liberation War Memorial Hall” (조국해방전쟁승리기념관). I thought I would add some images of the interior of the building that were shown on North Korean television:

FLWM-interior-1 FLWM-interior-7

FLWM-interior-6 FLWM-interior-2

FLWM-interior-3 FLWM-interior-4



In addition to the construction of this building, the “Victory in the Fatherland Liberation War Museum” and the “Victory in the Fatherland Liberation War Memorial” are all under renovation. As previously reported (in December 2012), the Pueblo has also been moved here.


Collection of DPRK laws and regulations

Wednesday, March 27th, 2013

A much-appreciated colleague has sent me a PDF document published by the DPRK’s Committee for the Promotion of External Economic Cooperation in 2003. It that contains hundreds of pages of DPRK laws and regulations.

Compilation-of-laws-and-regs-for foreign-investment

Click here to open the PDF document

Here is a list of the contents:

1. The Law of the Democratic People’s Republic of Korea on Foreign Investment

2. The Law of the Democratic People’s Republic of Korea on Equtiy Joint Venture

3. Regulations for the Implementation of the Law on Equity Joint Venture

4. The Law of the Democratic People’s Republic of Korea on Contractual Joint Venture

5. Regulations for the Implementation of the Law on Contractual Joint Venture

6. The Law of the Democratic People’s Republic of Korea on Foreign Exchange Control

7. Regulations for the Implementation of the Law on Foreign Exchange control

8. The Law of the Democratic People’s Republic of Korea on Foreign-Invested Bank

9. The Law of the Democratic People’s Republic of Korea on the Leasing of Land

10. The Law of the Democratic People’s Republic of Korea on Foreign-Invested Business and Foreign Individual Tax

11. Regulations for the Implementation of the Law on Foreign-Invested Business and Foreign Individual Tax

12. The Customs Law of the Democratic People’s Republic of Korea

13. The Law of the Democratic People’s Republic of Korea on the Protection of Environment

14. The Insurance Law of the Democratic People’s Republic of Korea

15. The Law of the Democratic People’s Republic of Korea on External Economic Arbitration

16. The Law of the Democratic People’s Republic of Korea on External Civil Relations

17. The Notary Public Law of the Democratic People’s Republic of Korea

18. The Civil Proceedings Act of the Democratic People’s Republic of Korea

19. The Law of the Democratic People’s Republic of Korea on Processing Trade

20. The Law of the Democratic People’s Republic of Korea on Bankruptcy of Foreign-Invested Enterprises

21. The Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone

22. The Law of the Democratic People’s Republic of Korea on Wholly Foreign-Owned Enterprises

23. Regulations for the Implementation of the Law on Wholly Foreign-Owned Enterprises

24. Regulations on the Financial Management of Foreign Invested Enterprises

25. Regulations on the Introduction of Latest Technologies by Foreign-Invested Enterprises

26. Regulations on the Naming of Foreign-Invested Enterprises

27. Regulations on the Registration of Foreign-Invested Enterprises

28. Labor Regulations for Foreign-Invested Enterprises

29. Regulations on the Resident Representative Offices of Foreign Enterprises in the Rason Economic and Trade Zone

30. Regulations on Entrepot Trade in the Rason Economic and Trade Zone

31. Regulations on Contract Construction in th Rason Economic and Trade Zone

32. Regulations on Forwarding Agency in the Rason Economic and Trade Zone

33. Regulations on Statistics in the Rason Economic and Trade Zone

34. Regulations on Tourism in the Rason Economic and Trade Zone

35. Regulations on Financial Management of Foreign-Invested Enterprises in the Rason Economic and Trade Zone

36. Regulations on Foreigner’s Immigration Procedure and Stay in the Rason Economic and Trade Zone

37. Customs Regulations For the Rason Economic and Trade Zone

38. Regulations on Finding in the Rason Economic and Trade Zone