Archive for February, 2014

UN WFP gives DPRK $3.2m assistance in Feb 2014

Friday, February 28th, 2014

According to Yonhap:

 The U.N. food agency has provided emergency food aid worth US$3.2 million for children and pregnant women in North Korea earlier this month, according to a news report.

The World Food Program (WFP) has given the emergency funding assistance in February, Washington-based Radio Free Asia reported Thursday, citing a spokesman handling North Korean affairs.

The U.N. body has said earlier that it will close five out of its seven factories within this month that produce nutritious biscuits due to a lack of funding, the report said, amid an apparent donor fatigue over North Korea’s missile and nuclear programs.

On Thursday, North Korea fired what appeared to be four short-range ballistic missiles off its southeast coast, South Korean officials said, in a suspected reaction to U.S.-involved military exercises in the South that Pyongyang condemns as a rehearsal for invasion.

The WFP said in November that food production in the North is estimated to have been around 5.03 million metric tons in 2013, up 5 percent from the previous year.

Still, the food security situation remains serious, with 84 percent of all households having borderline or poor food consumption, according to the U.N. food agency.

A few days ago, a report titled “Protracted Relief and Recovery Operation (PRRO) 200532 “Nutrition Support for Children and Women” in DPR Korea” was released with additional data.

Read the full story here:
WFP gives US$3.2 mln in emergency aid to N. Korea: report
Yonhap
2014-2-28

Share

State Economic Development Commission and the Jang purge

Wednesday, February 26th, 2014

Two officials at the State Economic Development Commission have apparently been reinstated following their removal during the purge of Jang Song-thaek. According to Yonhap:

Kim Ki-sok and Kim Chol-jin, chief and deputy chief of the North’s State Economic Development Commission, had been sacked in connection with the purge and execution of leader’s uncle, Jang Song-thaek, in December last year, but have been reinstated after undergoing an “ideology re-education,” the source said on the condition of anonymity.

“Kim Ki-sok and Kim Chol-jin were forced to resign from the posts after being involved in the case of Jang Song-thaek, but reinstated as they were considered not so close to Jang,” the source said.

After reinstatement, Kim Ki-sok, chief of the North Korean commission, made secret visits last week to Beijing and Shenzhen, southern China, during which he met with Chinese business people, according to the source.

Here is what the Choson Ilbo had to say:

A source in Beijing said Kim visited Beijing, Shenzen, Singapore and Malaysia last week. He met with businesspeople interested in developing North Korea’s special economic zones.

Kim also met with Chinese officials who had experience in developing special economic zones, the source said. In Singapore, Kim discussed the development of a tourism zone in Wonsan.

But he apparently returned empty-handed.

Diplomatic sources in Beijing say North Korea is poised to push for more economic exchanges with China after elections for its rubber-stamp parliament on March 9. It will form a new team to handle the initiative now that Jang and his associates have been purged.

Prime Minister Pak Pong-ju or Ri Su-yong, a deputy department chief in the Workers Party who used to manage the coffers for former leader Kim Jong-il, may pay an official visit to China, according to sources.

Read other posts about the State Economic Development Commission here.

Read the full story here:
N. Korea reinstates key officials on economic projects with China
Yonhap
2014-2-26

Share

UN World Food Program operations in DPRK: 2012 Audit

Monday, February 24th, 2014

The UN Office of Inspector General has published a report on the UN World Food Program’s activities in the DPRK throughout 2012. You can read it below (PDF):

Internal Audit of WFP Operations in The Democratic People’s Republic of Korea (DPRK)
Office of the Inspector General Internal Audit Report AR/14/01

Below are the key results of the audit given in the summary:

Positive practices and initiatives
4. A number of positive practices and initiatives were noted, among them, the stable working relationship between WFP and the counterpart at the Ministry of Foreign Affairs, the Government National Coordinating Commission (NCC), with regular weekly meetings at the WFP office; the DPRK Government authorized international Korean speaking staff to work in the WFP Country Office; and the change in the Country Office fundraising strategy yielded commendable results.

Audit recommendations

5. The audit report contains one high-risk and 14 medium-risk recommendations. The high-risk observation arising from the audit was:

6. Programme Implementation: The Country Office did not prioritize the most vulnerable in instances of pipeline breaks nor provide assistance in accordance with the obligations outlined in the project document.

Management response

7. Management accepted all the recommendations. Work is in progress to implement the recommendations
8. The Office of Internal Audit would like to thank managers and staff for the assistance and cooperation accorded during the audit.

The report has been covered by Fox News.

Here is commentary by Stephan Haggard.

Share

1090 Peace and Unification Campaign offers aid

Monday, February 24th, 2014

According to the Joong Ang Ilbo:

A South Korean civic group sent a large shipment of food aid for North Korean infants, a major humanitarian assistance approved by the Park Geun-hye administration.

A ship carrying 26,000 cans of powdered milk totaling 22.1 tons departed for North Korea yesterday from Incheon Port, west of Seoul. The amount can feed about 13,000 babies for a month, according to the civic group 1090 Peace and Unification Campaign, which is in partnership with the JoongAng Ilbo.

The milk, worth about 340 million won ($316,868) wholesale, will arrive in Nampo, a western port city of North Korea, via Dandong, a port in China.

“At a moment of transition in inter-Korean relations with the ongoing reunions of separated families, it is a meaningful event to send the powdered milk for North Korean babies,” Lee Young-sun, chairman of the group and a former president of Hallym University, told the JoongAng Ilbo.

Along with medicine, powdered milk is needed in the North. Despite frosty relations with Pyongyang over the past few years, Seoul has frequently approved shipments of powdered milk or medicine by civic groups in South Korea. The Ministry of Unification, which is in charge of the approvals, green-lighted the civic group’s plan to send the milk on Friday.

President Park Geun-hye emphasized the need for humanitarian assistance to North Korea at a New Year’s press conference on Jan. 6.

Read the full story here:
Powdered milk sent to hungry babies in North
Joong Ang Ilbo
2014-2-25

Share

Babson on post-Jang economic management

Monday, February 24th, 2014

Writing in 38 North, Bradley Babson comments on the effect Jang Song-thaek purge will have on North Korea’s economic management moving forward:

With Jang’s demise there is now a potential opportunity to make fundamental changes in the North Korean economic management and financial systems. Removing his influence over major foreign exchange earning enterprises operating outside any institutionalized supervision means that some other mechanisms must be put in place to manage these important national resources. Whether this will lead to a more rational system of cabinet-managed financial institutions serving an economic development strategy endorsed by Kim Jong Un is a basic question. Early indications are that the cabinet will be empowered to exercise more centralized control over the economy,[2] but how far this will extend into the fragmented financial system remains to be seen.

One indicator of possible significant change is whether the KPA will regain its former economic independence or become more closely integrated with national economic and financial management. This is important for improving efficiency in allocation of resources for economic development and having more control in balancing security expenditures with investments in the general economy.

Another indicator will be whether the existing system that provides funds for sustaining luxury goods patronage for the Pyongyang elite and for showcase projects like equipping the new Masik Pass ski resort, will be handed over to new more loyal technocrats to manage. Or will the Cabinet be given more latitude to shape the future political economy and distribution of wealth, given the reality that access to market power is becoming more valuable for the Pyongyang elite than receiving patronage? This would be a major change that could lead to new incentives for more rational economic management. Acknowledgment that markets are here to stay would open the possibility of addressing the need to build new financial institutional capabilities required for mobilizing and regulating private savings and economic activity. This would also help focus attention on ways to improve macroeconomic management of the mixed state-directed and market economy system.

Read the full story here:
The Demise of Jang Song Thaek and the Future of North Korea’s Financial System
38 North
Bradley Babson
2014-2-24

Share

2013 Inter-Korean trade

Monday, February 24th, 2014

According to Yonhap:

Trade between South and North Korea fell to its lowest level in eight years in 2013 due to their strained relations, data showed Sunday.

Inter-Korean trade reached US$1.15 billion last year, down a whopping 41.9 percent from the previous year’s $1.98 billion, according to the data from the Korea International Trade Association (KITA).

South Korean exports to the North nose-dived 41.1 percent on-year to $531.8 million, with imports from the communist country sinking 42.5 percent to $617.2 million.

The 2013 inter-Korean trade volume was the lowest since 2005, when the figure came to $1.06 billion.

In contrast to the plunge in trade with South Korea, the North’s trade with China, its chief ally and largest benefactor, jumped 10.4 percent on-year to a record high of $6.54 billion last year, according to the data.

Between 2009 and 2014, North Korea’s trade volume with China, the world’s second-largest economy, had been growing an annual average of more than 40 percent, the data showed.

 

According to the Choson Ilbo:

Inter-Korean trade fell to 18 percent of the North’s trade with China, the lowest since 2005.

South Korea’s imports of textile goods and electric and electronic products from the North fell 45 percent and 43 percent, while the North’s imports of mineral and textile products from China increased 15 percent and 33 percent.

Of course inter-Korean trade was down due to the DPRK’s closure of the Kaesong Industrial Complex (KIC). Once the complex was reopened, trade began to recover.

More on China-DPRK trade in 2013 here.

Read the full stories here:
Inter-Korean trade hits 8-year low in 2013
Yonhap
2014-2-23

N.Korean Trade with China Grows
Choson Ilbo
2014-2-24

Share

Lankov on the cost of emigrating

Wednesday, February 19th, 2014

1,516 North Koreans who arrived in South Korea in 2013–approximately the 2012 number. In 2011, 2,706 defected. Why the drop off? Lankov writes in NK News:

From 2010-11, the number of military patrols on the hitherto poorly protected border with China increased dramatically. Military personnel are also frequently rotated to ensure that soldiers do not develop overly cozy relations with the locals, and severe punishments for graft have been introduced.

Additionally, in 2010 Chinese authorities – obviously prompted by the North Koreans – began to build a tall wire fence along the border with North Korea. This fence is not a formidable obstacle, nonetheless it still makes the act of crossing the border more risky. The construction of the fence was completed in 2012, so nowadays the border between two states appears much better protected than ever.

The “defection market” reacted to the new situation in the most certain way. In the past one could cross the border for free or, at worst, would pay the border guards a small bribe of $30-50 (smugglers had to pay a bit more). Now the price increased to the hitherto unthinkable $3,000-5,000 – and one still has to pay an additional $3,000 to a professional guide who will ensure safe transit to a South Korean embassy in Mongolia or Southeast Asia. The steep rise indicates how much more dangerous the defection has become under the new conditions. It also means that that even under the best possible circumstances one needs some $8,000-9,000 to arrange even a simple defection.

In the original article, Lankov also discusses other tactics used to reduce the number of defections.

Read the full story here:
North-South migration, part 4: After 2011, the stream dries out again?
NK News
Andrei Lankov
2014-2-19

Share

The rise and fall of the Rakwon Chicken Specialty Restaurant (a case study in inter-Korean business)

Tuesday, February 18th, 2014

UPDATE 4 (2014-2-18): Western tourists are still visiting the restaurant (meaning it has a contract with KITC). The restaurant still has the sign “Rakwon Chicken Specialty Restaurant”, though it is a different color than the original. See tourist video here and here.

UPDATE 3 (2014-2-17): The Hakyoreh updates us on the fate of the inter-Korean chicken restaurant:

In 2005, Choi made his first trip to North Korea to inquire about chicken imports. Soon he had changed plans: he would open his own restaurant there selling South Korean-style chicken. Acquaintances tried to talk him out of it, but he was determined. “I went to Pyongyang and I could see there was money in it,” he recalled. And with economic cooperation between South and North at an all time high, he didn’t see much of a political risk either.

He went back and forth to Pyongyang a few times looking for partners. Finally, in June 2007, he opened up the Rakwon Chicken Restaurant, selling South Korean-style chicken on Puksae Road in the Kaesonmun neighborhood of Moranbong District. His North Korean partner provided the building and staff; Choi was responsible for the interiors, ingredients, recipes, and management system. He reached a deal where he took 70% of profits with a total investment of 500 million won (US$470,000). The opening drew a lot of media attention at the time, with write-ups in the South Korean press and foreign outlets like the Washington Post and Japan’s NHK.

Early on, he did strong business selling at fairly steep prices – the equivalent of US$11.30 for a single bird. His clientele came mainly from the city’s upper class and Chinese visitors. Sales of 100 million won (US$94,000) a year looked to be in sight. “My plan was to open up 100 restaurants in the North,” Choi said.

But in 2008, less than a year after he opened the restaurant, Lee Myung-bak took office as South Korean President. Lee’s administration put a stop to the previous decade’s policies of engagement and cooperation with North Korea, opting for sanctions and containment instead.

“There was a promise between the two sides, and I never thought that would be rejected completely,”Choi said. “Suddenly, that was the reality.”

Bit by bit, exchange ground to a halt. A March 2008 shipment of ingredients through Nampo turned out to be Choi’s last interaction. He had not yet received a single share of revenue.

Then came the announcement of the so-called “May 24 measures” in 2010. Following the sinking of the ROKS Cheonan warship the preceding March, Seoul had called a complete halt to all exchange and economic cooperation with North Korea.

“All the May 24 measures did was drive it home,” Choi insisted. “Most of the economic cooperation had been choked off long before that.”

For the next four years, Choi wasn’t able to set foot in North Korea. Without his support, the restaurant lost its chicken focus and began selling ordinary cuisine. Choi’s other business began to suffer too.
“I’d put my house and buildings up as collateral to borrow the 500 million won to invest in the North,” he said. “Then, to top it all off, there was the US financial crisis. Things began to go downhill rapidly in South Korea, and my business started to fall apart.”

UPDATE 2 (2009-1-1): The BBC offers an update of the new chicken restaurant:

The governments may not be on the best of terms but a South Korean businessman seems to have found a way to North Koreans’ hearts: their stomachs.

Choi Won-ho, the owner of a fried chicken chain, was told he was doomed to fail when he opened his first branch in the impoverished North last year.

But encouraged by his progress so far, he is already preparing to open another one.

Mr Choi runs a fast food franchise in South Korea with a total of 70 stores.

He opened one more last year – no real challenge you might think – except this extension to his fried chicken empire is in the heart of one of the most secretive and business-unfriendly places on the planet.

But Mr Choi says the citizens of Pyongyang have been queuing in front of his shop which is taking around $1,000 a day.

He is now preparing to meet North Korean officials in January to finalise the approval for a second outlet.

His customers are almost certainly all members of North Korea’s elite, a country in which the World Food Programme says up to 9m people will face urgent food shortages this winter.

Relations between the two Korea’s have been at a low since the conservative government of President Lee Myung-bak came to power in the South in February.

North Korea has severed official contacts, stopped all cross-border tourism and restricted entry to a joint industrial zone built with southern money.

But despite the chill, Mr Choi’s fried chicken venture seems to be sizzling.

Read the full story here:
South Korea Chicken Success in NK
BBC
John Sudworth
2009-1-1

UPDATE 1 (2008-11-1): The restaurant is set to open in February 2008. According to Yonhap:

An inter-Korean joint-venture chicken franchise will open its first store in Pyongyang early next month, the head of the franchise’s South Korean partner said Friday.

The store set to open in early February will provide a food delivery service using motorbikes for the first time in the communist country, Choi Won-ho, president of the South Korean company said.

No North Korean restaurants offer food delivery service now, according to defectors from North Korea.

Fried, grilled and steamed chicken dishes as well as draft beer are available for delivery, he said, adding the food will be prepared in the North Korean style.

“I recently received a photo of the store’s interior design from our North Korean business partner, Rakwon General Trading Corporation, along with the offer to open the first store before the 66th birthday of North Korean leader Kim Jong-il,” Choi told Yonhap News Agency by phone. “After opening, I will use radio and newspaper ads to promote the business.”

Kim’s birthday, which falls on Feb. 16, is the most festive holiday in the North.

The North Korean company will provide land, some 20 low-cost workers, chicken, and draft beer. The early-stage investment, equipment, cook and spicy chicken will come from the South Korean chicken franchise called “Matdaero Chondak,” Choi said.

The first “Rakwon” chicken restaurant in Pyongyang will have the capacity of seating about 200 people, he added.

The businessman said he will visit North Korea next week to discuss the opening of the store.

“I hope the business will thrive enough so that we can open store No. 10 in Pyongyang,” he added.

Read the full story here:
Inter-Korean joint venture chicken franchise to open first store in Pyongyang
Yonhap
1/11/2008

ORIGINAL POST (2007-11-3): A South Korean entrepreneur is investing in a new fried chicken restaurant in Pyongyang:

According to Reuters:

A South Korean businessman plans to begin a fried chicken delivery service in the North Korean capital, with the first foreign-run restaurant in a country that struggles to feed its own people.

Choi Won-ho, head of a fried chicken franchiser that has about 70 restaurants across South Korea, said Friday he is opening a 50-table restaurant in Pyongyang on Nov. 15. It will also deliver chicken and draft beer to homes.

“I have wanted to be the world’s best chicken brand,” Choi told The Associated Press in a telephone interview.

“But I thought it makes no sense to conquer the world without sharing food with our compatriots. That’s why I went there first,” he said. “I plan to get into the Chinese market via Pyongyang.”

He laughed off concerns his venture may be too risky in the impoverished and isolated country of 23 million, where the elite citizens of the capital are much better off than others.

“I don’t think that I’m going to lose money at all,” he said.

It will be the first foreign-run restaurant in North Korea, according South Korea’s Unification Ministry.

Choi, 48, who has been in the fried chicken business for 15 years, said he hired an ethnic Korean Chinese as the main cook for the Pyongyang outlet and taught him all his cooking know-how. About 20 North Koreans will also work at the restaurant and five scooters will be used for deliveries, he said.

Choi said he invested about 500 million won (US$551,339, ?382,264) in the joint venture with a North Korean trading firm that will take 30 percent of the profits from the business.

North Korea is one of the poorest countries in the world and has relied on foreign food aid to feed the population for more than a decade since natural disasters and mismanagement devastated its economy.

Relations between the two Koreas have improved significantly since their first-ever summit in 2000, spurring a series of exchange projects between the Cold War rivals that fought the 1950-53 Korean War. That conflict ended in a truce, not a peace treaty, leaving the two sides still technically at war.

According to the Joong Ang Ilbo:

South Koreans are making two very different attempts to improve the culinary life of impoverished North Koreans.

First, a South Korean fried chicken franchise will open the only foreign-run restaurant in North Korea, targeting family dining on special occasions.

Second, the labor union of a South Korean conglomerate has built a plant in Pyongyang to provide cheap corn noodles to northerners who suffer from food shortages.

Choi Won-ho, who runs Matdaero, a 70-store fried chicken franchise in the South, said yesterday he would open a restaurant in a joint venture with a North Korean state-run trading company, near the Arch of Triumph in central Pyongyang on Nov. 15.

The restaurant will both receive walk-in customers and deliver chicken and draft beer to homes. Such places are common in South Korea, but it will be the first chicken joint of its kind in North Korea.

Choi has invested 500 million won ($551,000) in the restaurant’s cooking facilities, interior decoration and delivery scooters. He will split the profit 70-30 with the North Korean firm.

Choi, 48, who has been a chicken entrepreneur for 15 years, said there should be sufficient demand despite North Korea being one of the world’s poorest countries, because he plans to offer lower prices to locals.

“I will charge about $3 for a whole chicken for North Koreans and at least $12, the same price as in South Korea, for tourists from the South and other countries,” Choi said yesterday by phone. “One whole chicken will be enough for a four-member family, so the price of $3 will not be too burdensome for special occasions.”

The store will hire about 20 North Koreans to take telephone orders, fry the birds and make home deliveries. It will have seating for 50.

Separately, the labor union of Hyundai Motor Company, Korea’s top automaker, said in a statement that it has completed an 1,800-square-meter corn-noodle plant in Pyongyang. The plant can produce two tons of corn noodles a day, it said.

Hyundai Motor’s 44,000 unionized workers agreed in August to help a South Korean humanitarian group build the noodle factory. Workers donated about 12,000 won each, 500 million won in total, for the facility.

“The plant will be a great help to relieve the food problems of North Koreans,” Chang Kyu-ho, a spokesman for the labor union, said. “Corn is a staple food for North Koreans.”

Read the full stories here:
Fried chicken franchise goes North
Joong Ang Daily
Moon So-young
11/3/2007

S Korean businessman to debut fried chicken at first foreign-run restaurant in North Korea
Reuters (Via DPRK Studies)
Jaesoon Chang
11/3/2007

Share

Report of the commission of inquiry on human rights in the DPRK

Monday, February 17th, 2014

This site does not focus on human rights issues, but I want to point out that the commission of inquiry report is out.

You can download it here.

Additional information:

1. Though not directly cited, my work at identifying the expansion of camp 14 and camp 25 and changes to camp 16 was used by other contributing groups and individuals (mostly HRNK)–some organizations are better at citations than others.

2. I wrote a short piece for NK News on how the former prison camps are being converted into ordinary collective farms and mines. You can read it here.

3. Following publication of the report Botswana cut diplomatic ties with the DPRK.  Previous posts on this web page related to Botswana can be found here. I am unaware of any significant relationship between the two countries, though the North Koreans did build Gaborone’s Three Dikgosi (Chiefs) Monument. More in Xinhua here.

4. China has said it will block a referral to the ICC.

 

Share

DPRK food situation improves slightly in 2013 / UNWFP donations at low

Friday, February 14th, 2014

According to Yonhap:

The food situation for North Korean people improved slightly last year thanks to increased food rations and more outside support, a report by the World Food Programme (WFP) said Friday.

According to the WFP report, about 46 percent of North Korean families consumed an “acceptable” level of essential nutrients in the October-December period of 2013.

About 17 percent were categorized as having “poor” food consumption, while the rest, about 38 percent, were defined as at the “borderline” level.

The report is based on a WPF survey of 119 North Korean families as well as the food agency’s interviews with North Korean authorities.

The 2013 figures mark a modest improvement from a year ago, when a similar WPF report put only 26 percent of North Koreans in the relatively well-to-do “acceptable” bracket.

About 50 percent were at the “borderline” level, while 24 percent were ranked as “poor” in the report on the food situation in the fourth quarter of 2012.

The better outcome in 2013 is attributable to more generous food rations as well as WFP’s continued nutritive support, the report noted, adding that the daily food rations for each North Korean grew to 390 grams in October last year, before further raising to 400 grams in the following two months.

Fewer North Koreans are expected to suffer food shortages in the first quarter of 2014, the report predicted, citing protein as the most needed nutrient for North Korean citizens.

Although the Yonhap report does NOT cite a source (!?!) I have found it and offer a link below:
Protracted Relief and Recovery Operation (PRRO) 200532 “Nutrition Support for Children and Women” in DPR Korea (October – December 2013)
UN World Food Program
Other WFP docs can be found here.

At the same time, UN WFP assistance to the DPRK was at an all time low in 2013. According to Yonhap:

North Korea received record-low food aid from the United Nations food agency in 2013 due to sluggish contributions from the international community, a media report said Wednesday.

Some 38,000 tons of food were delivered from the World Food Program (WFP) to the impoverished communist country in 2013, some 30 percent of the agency’s target for the year, according to the Washington-based Radio Free Asia (RFA).

It was less than half the amount sent in the previous year and the smallest since 1996 when the agency began helping the North, the report said, adding it was attributable to the WFP’s failure to raise enough funds to achieve the goal.

The amount of the U.N. agency’s food aid to the North has been fluctuating from some 136,000 tons in 2008, 50,000 tons in 2010, 100,000 tons in 2011 and 84,000 tons in 2012, according to WFP data.

Citing its dark fund-raising prospects in 2014, the WFP told the RFA that most of its factories for producing nutrition biscuits for the people there were on the verge of shutting down in February.

The daily food rations for the people in the North came to some 400 grams per person last year, far lower than the minimum recommended amount of 600 grams and the North Korean regime’s target amount of 573 grams, the WFP said.

North Korea’s food production is estimated to have been at about 5.03 million metric tons in 2013, up 5 percent from the previous year, according to the WFP report posted on its website.

The food security situation, however, is still serious, with 84 percent of all households having borderline or poor food consumption, it added.

The North’s leader Kim Jong-un put an emphasis on food production in his New Year’s message last week, saying “all efforts should go for agriculture … in order to build a strong economy and to improve the people’s livelihoods.”

Read the full stories here:
N. Korea’s food situation better a tad in 2013: WFP
Yonhap
2014-2-14

WFP’s food aid to N. Korea hits all-time low in 2013
Yonhap
2014-1-8

Share