Archive for February, 2016

Trade between North Korea and China fell 1.2 percent in January

Thursday, February 25th, 2016

By Benjamin Katzeff Silberstein

Note that the cause given here is not a fall in trade volume — trade in minerals jumped 35 percent in volume terms — but falling commodity prices.

BEIJING, Feb. 25 (Yonhap) — Trade between North Korea and its economic lifeline, China, fell 1.2 percent on-year in January, data showed Thursday, indicating that their trade was largely unaffected by the North’s latest nuclear test.

Bilateral trade volume declined to US$388 million last month, compared with $398 million for the same period last year, the Beijing unit of South’s Korea Trade and Investment Promotion Agency said, citing Chinese customs data.

China’s imports of North Korean goods slipped 3.96 percent in January to $177 million, the data showed.

North Korea’s exports of mineral resources, including coal, to China fell 3.94 percent last month to $76.9 million, but the volume of mineral exports jumped 35 percent to 1.66 million tons for the month.

The figures showed that North Korea also felt the pinch of lower commodity prices.

Full article here:
N. Korea’s trade with China falls 1.2 pct in January 
Yonhap News
2016-02-25

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China to halt half of coal imports from North Korea, according to Chinese newspaper

Wednesday, February 24th, 2016

By Benjamin Katzeff Silberstein

Dong-a Ilbo recounts the story from Global Times:

The Chinese government will suspend half of trade with North Korea, China’s official Huanqiu Shibao (Global Times) daily reported Tuesday. It said that China will stop importing North Korean coals, which account for 42.3 percent of the China-North Korea trade, next month. The Huanqiu Shibao is a sister paper of the Renmin Ribao, the organ of the Communist Party of China, with a circulation of 2.4 million copies.

The Huanqiu Shibao quoted a trader in Dandong, Liaoning Province that China’s coal trade with North Korea will be suspended, starting March 1 and that it is probably because of the financial sanctions following the North’s satellite launch. The trader was also quoted as saying that China’s Ministry of Commerce or the customs authorities sent an order to Liaoning Province about the trade ban and that half of China-North Korea trade will be halted.

The trade also stressed that while the China-North Korea trade will likely recover from May, it depends on Pyongyang’s attitude. An informed source on China-North Korea trade also told the Dong-A Ilbo in a telephone interview that a Chinese businessman attempted to remit cash to the North via a Chinese bank in Shenyang, Liaoning Province to pay for North Korean iron ores but was informed that he was not allowed to do so. It has yet to be confirmed whether Beijing actually put a ban on imports of North Korean minerals.

Full story here:
China halts half of imports of N. Korean coals
Dong-a Ilbo
2016-02-25

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Friday fun with North Korea’s new slogans

Friday, February 19th, 2016

By Benjamin Katzeff Silberstein

What better way to start off the weekend than to go through North Korea’s latest batch of political slogans (“Joint calls/공동구호”)? These were issued collectively by the Central Committee and the Central Military Commission on Wednesday February 17th, and printed on the frontpage of Rodong Sinmunas part of the run-up to the 7th Party Congress to be held later this year.

Below I have gathered those that relate to the economy, and a few other interesting ones, with brief annotation:

The calls underlined the need to make hurrah for the WPK and socialism resound far more loudly this year when the Seventh Congress of the WPK is to be held by staging an all-out death-defying struggle for building a thriving nation and improving the people’s living standard.

The Byungjin line is alive and well.

Let’s dynamically wage this year’s general advance in the same spirit as shown in succeeding in the H-bomb test!

Let’s build an economic giant as early as possible with the strength and the spirit of Korea and at the Korean speed!

Send more satellites of Juche Korea into space!

As often before, the satellite launch and the hydrogen bomb test are tied into the theme of economic development: both are technological advancements, showing the overall progress of the economy.

Produce more new-generation electric locomotives and passenger cars!

A shout-out to the domestic car industry?

Put the manufacture of Korean-style world-class underground trains on a serial basis!

The domestically manufactured subway cars haven’t been forgotten. One wonders if people living outside Pyongyang feel as strongly about them.

Step up the modernization of the mining industry and keep the production of nonferrous metal and non-metallic minerals going at a high rate!

Provide more resources for building an economic giant by channeling effort into prospecting underground resources!

At least now Jang Song-taek can’t touch them anymore.

Make the foreign trade multilateral and diverse!

This is interesting, and a clear statement about an important rationale for the SEZs: North Korea will remain politically and economically vulnerable as long as China continues to be its single largest trading partner by a large margin.

Let’s greet the 7th Party Congress with proud achievements in the improvement of the people’s living standard!

The people “will never have to tighten their belts again”, as Kim Jong-un said in his first public speech in 2012.

Achieve a great victory on the front of agriculture this year!

Which the regime has already claimed it did last year. The UN doesn’t agree.

Let’s give a decisive solution to the problem of consumer goods!

Let’s produce more world-competitive famous products and goods!

North Korean media has highlighted strides in consumer goods production several times this year.

Make Wonsan area an icon of city layout and build it into a world-level tourist city!

A shout-out to the Wonsan tourist zone, presumably.

Establish Korean-style economic management method guided by the Juche idea in a comprehensive manner!

Sounds like the management reforms, with greater autonomy for enterprises, are still on the table.

Let the entire party and army and all the people turn out in the forest restoration campaign!

And make sure they “properly conduct fertilizer management“. This is the only reference among the slogans to the forestry campaign, where the regime has publically acknowledged some crucial and systemic problems, but is yet to find a credible solution.

Put an end to proclivity to import!

Does this tell us something about North Korea’s trade balance that the numbers aren’t showing?

The Korean People’s Internal Security Forces should sharpen the sword for defending their leader, system and people!

Note that “people” comes after both “leader” and “system”.

Let us thoroughly implement our Party’s policy of putting all the people under arms and turning the whole country into a fortress!

Enhance the fighting capacity of the Worker-Peasant Red Guards by intensifying their drills as the anti-Japanese guerillas did in Mt. Paektu!

Develop and produce a greater number of various means of military strike of our own style that are capable of overwhelming the enemy!

Enhance the fighting capacity of the Worker-Peasant Red Guards by intensifying their drills as the anti-Japanese guerillas did in Mt. Paektu!

These four slogans seem to be saying that the Four Military Guidelines, adopted in 1962 by the Central Committee, are still very much in play: 1) arming the population, 2) fortifying the country, 3) establishing a cadre-based army, and 4) modernizing military equipment. Mao would probably have been happy to know that his People’s War Doctrine lives on in North Korea.

The whole list of slogans is very long, and saying that policy areas need to improve, or that production in a certain area needs to go up, isn’t much of a policy line. Still, it’s interesting to see what areas are highlighted.

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Some recent North Korean stamps

Monday, February 15th, 2016

A North Korea watcher just sent me some recent North Korean stamps that I thought I would share.

World Wildlife Foundation (Birds): The WWF is probably not receiving any donations from the use of their logo on these stamps…

WWF_BM

Pyongyang Standard Time: In August 2015, North Korea created it’s own time zone.

DPRK-Standard-Time

Let’s plant more trees: North Korea has devoted considerable public resources towards reforestation. Tree farms under the government and  military are popping up all over the country.

trees-stamp

Recent accomplishments: I am sure there is more to this one, but I have not had it translated yet

Accomplishmentsstamp

North Korean currency: In 2009 the DPRK renominated the currency. Between then and 2012, the value of the currency relative to the US$ fell from 100KPW to nearly 9,000 in January 2013. They currency has remained stable at about 8,000KPW/1US$ since then.

5wonstamp 10wonstamp

50wonstamp 100wonstamp

200wonstamp 500wonstamp

1000wonstamp 2000wonstamp

5000wonstamp

 

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Pyongyang Times: Tourism regulations in EDZ instituted

Monday, February 15th, 2016

According to the Pyongyang Times (2016-2-15):

Tourism regulations in EDZ instituted

The government has set new regulations to control tourism in the economic development zones.

Tourism regulations were adopted by decision No. 90 of the Presidium of the Supreme People’s Assembly on December 23 2015.

The regulations containing 32 articles in five chapters are applicable to EDZs established for tourism.

The DPRK citizens, overseas Koreans and foreigners can tour EDZs in various styles and methods including visit, sightseeing, vacation, amusement, sports, experiencing and medical treatment.

Personal safety, human rights and property of tourists in EDZs are protected by the law of the DPRK.

Management of tourism is undertaken by the managing authorities of EDZs.

The zones encourage planned development and protection of tourism resources such as scenic attractions, historic relics and remains and natural monuments.

Investors can invest, establish and run businesses in such fields of travel, lodging, restaurant, amusement, welfare services, production and sale of souvenirs and development of tourism resources in the zones with the approval of the management authorities of EDZs.

In case of establishing a travel company in the zones, license of the central tourism guidance organ should be gained through the management authorities. After receiving the license, the travel company should register its business with the management authorities and receive business registration certificate.

When an investor wants to set up and run a tourism service business in EDZs, he or she should obtain the approval of the management authorities following relevant regulations.

Tourists who want to travel EDZs should apply for tourism directly or via local and foreign travel companies outside relevant EDZs.

Anyone, who did any harm to personal safety, health and property of tourists, failed to provide proper service obliged by contracts, destroyed tourism resources or caused any damage to businesses and individuals, bears such civil liabilities as to restore them to their original state, or pay compensation, penalty and arrears.

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Progress in North Korea’s renewable energy production

Monday, February 15th, 2016

Institute for Far Eastern Studies (IFES)

North Korea has announced long-term plans to raise energy production up to 5 million kilowatts (kW) in 30 years utilizing a variety of renewable energy. The plan includes to secure 15 percent of necessary electricity through wind power and to raise renewable energy generation capacity up to 5 million kW by 2044.

The production goal of 5 million kW is an ambitious plan considering North Korea’s total output of the recently constructed Chongchon power plant which took three years to complete and has a total output of 430,000 kW. This plan was revealed by the internal resources of the ‘Natural Energy Institute’ which was established in November 2014 to develop pollution-free energy resources under the instructions of Kim Jong Un.

This renewable energy plan appears as one part of Pyongyang’s active exploration into the development of renewable energy to help resolve the country’s power shortages, in addition to the current measures of adopting energy resources from Russia and China and construction of large hydroelectric power plants. The plan entails measures to reduce the consumption of fossil fuels such as coal and oil while expanding development of renewable energy resources.

North Korea has promoted various investment and measures to expand the use of renewable energy since Kim Jong Un came to power. First, North Korea enacted the ‘Renewable Energy Law’ to provide legal guarantee for the development and use of renewable energy in August 2013. The law aims to “revitalize the renewable energy industry to continuously improve the economy and to protect the environment of the homeland.”

The Renewable Energy Law consists of six chapters and 46 provisions. The law includes the definition, purpose and basic principle for research, development and use, as well as planning, promotion, and strengthening of material and technical basis of renewable energy. The law also stipulates legal requirements necessary for guidance and control of the renewable energy sector. The law defines renewable energy as energy sources with reduced environmental impact such as solar, wind, geothermal, biomass, and marine energy.

Second, North Korea seems to be making considerable progress in developing its own industry-specific technology. The Green Energy Joint Venture company displayed solar panels at the Pyongyang Autumn International Trade Fair held last year and at the 15th May 21 Architectural Festival, North Korea released the design plans of green homes that utilized solar, wind, and geothermal energy sources. In addition, solar energy-powered buses and small passenger ships were unveiled at the festival.

The Natural Energy Research Institute of the National Academy of Sciences was established in 2013 as a specialized research institute to develop technology for alternative energy resources such as wind, geothermal, solar, biomass, methane hydrate and hydrogen. In 2014, Natural Energy Research Institute Director Lee Myong Son revealed that, “among the wind turbine currently in use, 71.4 percent are in the 300w range while 28.6 percent are above that range,” indicating that most products used in solar and wind power generation are domestically produced.

In addition, North Korea established the Kwangmyong LED and Solar Cell Factory to domestically produce solar energy products. Since the enactment of the ‘Energy Management Law’ in 1998, North Korea has placed the development of wind, solar, tidal, biomass, fuel cell power as a top research priority and appears to have made considerable advancement over the years.

 

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Science and technology to strengthen the ‘self-development first’ principle

Monday, February 15th, 2016

Institute for Far Eastern Studies (IFES)

Recently, Rodong Sinmun, the mouthpiece for the Workers’ Party of Korea (WPK) released a commentary entitled, “Strengthening Self-Reliance through Science and Technology” to elaborate on the term, ‘self-development-first’ principle mentioned in this year’s New Year’s speech.

The ‘self-development first’ policy was discussed in an editorial titled, “Self-Development Is a Powerful Weapon of Building a Powerful Socialist Nation,” which appeared in the January 27, 2016 edition of the newspaper.

Previously, Kim Jong Un stated, “The principle of giving priority to self-development should be maintained in building a thriving socialist country,” and referred to ‘self-development-first principle’ to signify the power to strengthen oneself where “self-development alone is the road to sustaining the dignity of our country and our nation and to paving a broad avenue for the revolution and construction.”

In addition, ‘self-development’ was emphasized as a principle that protected and highlighted ‘socialism of our-way.’ The newspaper further elaborated that in order to promote economic development and improve the livelihoods of the people ‘self-development-first principle’ must be upheld. Moreover, it stressed that powerful nations should not be worshipped and becoming import-dependent must be avoided. In other words, the antonym for ‘self-development’ was ‘worship of big nations’ and ‘import-dependent.’

In last year’s new year’s speech, Kim Jong Un used the term ‘import disease’ to refer to ‘import-dependence’ as he stressed, “All the factories and enterprises should wage a dynamic struggle to get rid of the proclivity to import and ensure the domestic production of raw and other materials and equipment, while sprucing themselves up by taking their cue from the model units put forward by the Party.”

In this regard, North Korea boasted on specific technological achievements such as subway trains as well as “Juche-based metallurgical industry and model and standard factories of the era of the knowledge-driven economy in various parts of the country . . . opening a new road of advance for developing the overall economy and improving the people’s standard of living.”

North Korea’s emphasis on ‘self-dependence’ is seen as a way to make a breakthrough in a difficult situation with international economic sanctions enforced to make up for ‘lacking’ and ‘inadequate’ resources from the outside world.

The newspaper particularly stressed, “self-development principle is based on science and technology and is an impetus to achieve economic revival.” It added, “Self-development principle inevitably calls for emphasis on science and technology. Self-development can be developed more powerfully and in rapid speed only with the backing of modern science and technology which can serve as the basis to achieve the prosperity of the nation to make a new leap in the construction of a strong nation.”

Ultimately, the editorial explained ‘self-development-first principle’ in the current stage is implemented through promotion of science and technology, which is seen as the key to solve the immediate tasks of achieving economic development and improvement of people’s standard of living.

Kim Jong Un’s announcement of ‘self-development-first principle’ and Rodong Sinmun’s elaboration of the principle in this recent editorial, in conjunction with the calls for science and technology development, reflects and exemplifies what North Korea’s current stance and methodology is in constructing its economy and nation.

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2016 closure of the Kaesong Industrial Complex

Friday, February 12th, 2016

UPDATE 7 (2016-5-12): Yonhap offers some postmortem statistics on the Kaesong  Industrial Complex:

The total value of products churned out from the Kaesong Industrial Complex in North Korea reached US$3.23 billion in the 11 years of its operations before it was shut down earlier this year, a report by South Korea’s unification ministry said Thursday.

The joint factory park that began production in 2005 as part of a deal reached between the leaders of the two countries in June 2000, had been the last remaining economic link between the two countries. On Feb. 10, Seoul announced the closure of the joint venture as punishment for North Korea’s defiant nuclear test in January and a long-range rocket launch in February.

The ministry’s white paper said in 2015, the annual production volume reached its peak at $563.3 million. Last year also marked the first time yearly production numbers exceeded the $500 million threshold, data showed.

In the first year of operations in 2005, the corresponding number stood at $14.9 million before it grew steadily to $323.3 million in 2010 and $469.5 million in 2012, according to the findings.

A four-month suspension of operations, amid escalating inter-Korean tensions, caused annual production to drop to $223.8 million in 2013 before numbers rebounded to $470 million the following year.

As of the end of 2015, a total of 54,988 North Koreans were employed at the factory park designed to combine South Korea’s capital and the North’s cheap labor force. The numbers marked a growth of more than 1,000 workers from a year earlier.

Spurred by last year’s biggest-ever production at the factory, trade volume between the South and the North reached $2.71 billion, the highest figure recorded to date, the white paper also showed.

The brisk performance helped push up the number of travelers between the countries in 2015, with the figure rising to an eight-year high of 132,101.

The unification ministry’s report then said South Korea’s humanitarian assistance to the North soared to a six-year high of 25.4 billion won (US$21.8 million) in 2015.

In the same year, the number of North Koreans defecting to the South reached 1,276 last year, the smallest tally since 2001 when the figure stood at 1,043, according to the ministry.

The annual addition of North Korean defectors took the total population of North Korean defectors in South Korea up to 28,795 as of the end of last year, with about 70 percent of them being women.

“Based on the principle of maintaining solid security, the government has strived to normalize South-North relations and bring about peace on the Korean Peninsula,” the ministry said in assessment of its performance in 2015.

“The government is keeping the Kaesong factory park venture closed and taking stringent sanctions in collaboration with the international community,” the ministry said, denouncing North Korea’s defiant nuclear test in January that was followed by numerous military threats.

UPDATE 6 (2016-2-24): Korean firms claim huge losses from factory shutdown. According to Yonhap:

South Korean firms based in a jointly run industrial park in a North Korean border city have suffered more than 815 billion won (US$660 million) in losses from its shutdown, their association claimed Wednesday.

Earlier this month, North Korea expelled South Korean workers from the Kaesong Industrial Complex and froze the assets of companies operating there, a day after the South suspended operations in retaliation for Pyongyang’s rocket launch.

The shutdown of the industrial park, regarded as the top achievement of inter-Korean reconciliation and cooperation efforts, is feared to deal a heavy blow to the South Korean firms involved.

A total of 124 South Korean companies have been operating in the zone, some 50 kilometers northwest of Seoul, employing more than 54,000 North Korean workers to produce labor-intensive goods, such as clothes and utensils.

The estimated financial damage breaks down to some 569 billion won in investment and facilities, and some 245 billion won in inventory.

The association said any potential losses stemming from compensation to their customers and the stoppage of their operations was not included in the tally.

According to the association, 49 companies largely rely on their factories in the industrial park for their production. “Actual damage should be counted more accurately, and will be revealed later,” it said.

South Korean companies at the inter-Korean industrial park have been urging their government to roll out full support measures as their losses from the park’s shutdown are unimaginable.

When the industrial park was closed in 2013 for 160 days, South Korean firms reported a combined loss of 1.05 trillion won.

The companies, however, claim the actual damage will be greater considering the loss of business partners and credibility.

“We strongly demand that the government fully compensate our losses in investment and other assets as insurance coverage is very limited,” it said.

In order to minimize South Korean firms’ possible losses, the country’s financial regulator earlier said it would provide financial aid to the firms operating there.

The complex, which opened in 2004, had served as a major revenue source for the cash-strapped North, while South Korea had benefited from cheap but skilled North Korean labor.

The complex had been recognized as an exception to Seoul’s sanctions against Pyongyang designed to punish it for the sinking of a South Korean warship in 2010.

UPDATE 5 (2016-2-12): Seoul cuts off power supplies to factory park in North Korea (AP)

South Korea has cut off power and water supplies to a factory park in North Korea, officials said Friday, a day after the North deported all South Korean workers there and ordered a military takeover of the complex that had been the last major symbol of cooperation between the rivals.

UPDATE 4 (2016-2-11): NK Leadership Watch posts CPRK statement.

UPDATE 3 (2016-2-11): North Korea freezes Gaeseong assets, expels South Korean workers (Korea Herald)

At about 10 p.m., the South Korean government confirmed that all of the 280 South Korean workers who had been at the facility returned home safely.

“The frozen equipment, materials and products will be managed by the committee of Gaeseong people,” Pyongyang’s statement said prior to the workers’ return to South Korea.

“From 10 p.m. (10:30 p.m., South Korean time) on Feb. 11, (the North) will seal off the industrial park and nearby military demarcation line, shut the western overland route and declare the park as a military off-limit zone.”

The South Korean firms operating in the complex sent one truck each to Gaeseong to bring to the South their finished products, production materials, equipment and other belongings, while Seoul authorities vowed to try their utmost to minimize possible damages to firms.

An additional 130 South Koreans entered the complex to prepare for the suspension of factory operations. There were 70 more South Koreans in the park from the previous day as more workers were sent to carry out the government’s withdrawal instructions.

Apparently in line with Pyongyang’s instructions, North Korean workers did not show up at the park, Seoul officials said. Some 55,000 North Korean workers worked at the complex through which Pyongyang raked in around $100 million annually.

UPDATE 2 (2016-2-11): North Korea to Freeze South’s Assets at Kaesong Industrial Park (New York Times)

North Korea said on Thursday that it would freeze all South Korean assets at a joint industrial complex the South shut down to retaliate for a recent nuclear test and a rocket launch by the North.

It also ordered all 248 South Korean managers in the factory park in the North Korean town of Kaesong expelled by 5 p.m. on Thursday, allowing them to return home with only their personal belongings. The North said it would sever all communication across the border after the last of the South Koreans left.

In addition, it said it was shutting down the only cross-border highway open between the two Koreas. The road has linked South Korea with the factory park since 2004, when it began operations just over the western inter-Korean border. The zone will return to the control of the North Korean military, it said.


South Korea’s action was “a declaration of an end to the last lifeline of the North-South relations” and “driving the situation in the Korean Peninsula to the brink of a war,” said a statement from the Committee for the Peaceful Reunification of Korea, a North Korean government agency in charge of relations with the South.

“The South Korean puppet group will experience what disastrous and painful consequences will be entailed by its action,” it said, calling the South Korean president, Park Geun-hye, “a traitor for all ages.”

The corridor linking Kaesong and Seoul, the South Korean capital, was the main invasion route for North Korean troops during the 1950-53 Korean War and was at one time the most heavily guarded section of the 155-mile border.

After a historic inter-Korean summit meeting in 2000 in which the two sides agreed to promote reconciliation, the hard-line North Korean People’s Army grudgingly stepped aside as South Korean engineers removed barbed-wire fences, tank traps and minefields to build the highway across the border.

The Kaesong complex began as a pilot project to combine South Korean manufacturing skills with cheap North Korean labor. Eventually, more than 45,000 North Koreans worked for 123 South Korean-owned factories there. The plants produced more than $515 million worth of textiles, electronic parts and other labor-intensive goods last year, according to the South Korean government.

UPDATE 1 (2016-2-10):  South Korea Takes a Stand, Closes Kaesong Industrial Complex (RFA)

Until Wednesday, Kaesong was one of the few instances where the two countries cooperate.

Established in 2004, the industrial park is the last remnant of former South Korean President Kim Dae-Jung’s Sunshine Policy, which also led to a historic summit with then-North Korean leader Kim Jong Il in 2000.

While Kim was awarded the Nobel Peace Prize for implementing the Sunshine Policy, his legacy was dismantled in 2010 when South Korea’s Unification Ministry declared the policy a failure.

Closing Kaesong now snuffs out what remains of North-South cooperation and closes a window through which some North Koreans could get a taste of life in the south, Lankov said.

“I have supported the continued operation of the Kaesong complex because of the enormous effects of South Korean Choco Pie cookies on the North Korean workers, which the North Korean regime banned distribution of some time ago,” Lankov said.

“The Kaesong Industrial Complex has served as sort of a window through which its North Korean workers can get a glimpse of life in South Korea,” he added.

Labeled a special administrative industrial region of North Korea, Kaesong operated as a collaborative economic development zone that hosts South Korean companies attracted by its access to cheap labor. Kaesong is only six miles inside North Korea, with direct rail and highway access to the south.

The industrial park has been controversial in South Korea, as some conservative South Koreans argue that it extends a lifeline to the North Korean leadership, undermining United Nations sanctions.

Kaesong has been closed before.

In 2013, North Korea pulled its 53,000 workers from the plant in a show of strength during an earlier time of rising tensions between the two nations. At the time, North Korea said it “gets few economic benefits from the zone while the South side largely benefits from it.”

While the earlier closure did not last, the closure announced Wednesday looks set to become permanent.

ORIGINAL POST: Here is a statement from the Ministry of Unification:

Government Statement regarding the Complete Shutdown of the Gaeseong Industrial Complex

North Korea has pushed ahead with the extremely provocative act of launching a long-range missile on the heels of its 4th nuclear test, showing disregard for the repeated warnings of the international community and the suffering of its people.

North Korea’s provocations are a direct challenge to peace and stability on the Korean Peninsula and in the international community and its actions are absolutely unacceptable. Notwithstanding international efforts to deter North Korea from developing its nuclear capabilities and long-range missiles,

North Korea has declared that it would follow up on its recent provocations with additional nuclear tests and missile launches, thereby not even showing the slightest intent to forgo the development of its nuclear and missile capabilities.

The status quo is not static, as North Korea’s nuclear capabilities will be upgraded, all but leading to a catastrophic disaster. If left unattended, North Korea’s nuclear and missile development will lead to a fundamental imbalance in and threat to the security landscape of Northeast Asia, not to mention the Korean Peninsula, and the countries of this region will be left with no choice but to take measures to ensure their own survival and shore up their security, and there are concerns that this could eventually even lead to a nuclear domino effect.

Under these grave circumstances, it is clear that the existing approach will not work in discomfiting North Korea’s nuclear and missile development plans. Accordingly, what is in order is a vigorous response together with the international community that, for sure, exacts a price for North Korea’s misguided actions, as well as extraordinary measures that compel North Korea to give up its nuclear capabilities and change its ways.

At a time when the international community is seeking sanctions in the wake of North Korea’s violation of UN Security Council resolutions with its nuclear test and long-range missile launch, there is a need for Korea, as a key party, to show leadership in taking part in these moves.

Over the years, our Government has been working to continue maintaining the Gaeseong Industrial Complex despite North Korea’s repeated provocations and under extreme state of affairs, all with a view to assisting the lives of the North Korean people, providing impetus to lifting up the North Korean economy, and achieving the shared progress for both South and North Korea. We have also made every effort to move the Gaeseong Industrial Complex forward under the position that it should be developed in conformity with international norms.

However, such assistance and the efforts of our Government have ultimately been wrongly harnessed in the service of upgrading North Korea’s nuclear weapons and long-range missiles.

To date, the total amount of cash that flowed into North Korea through the Gaeseong Industrial Complex is 616 billion won (560 million dollars), with 132 billion won (120 million dollars) in cash having flowed into North Korea last year alone, and the Government and the private sector have invested a total of 1.019 trillion won. It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles.

This tramples on the efforts of the Korean Government and the 124 businesses that have set up shop in the Gaeseong Industrial Complex, and puts at risk the lives and safety of the Korean people.

Today, in order to stop funds of the Gaeoseong Industrial Complex from being used to support the development of North Korea’s nuclear and missile capabilities, and to prevent our businesses from suffering, the Government has decided to completely shut down the Gaeseong Industrial Complex.

We have notified the North Korean authorities of this decision and called on them to extend such cooperation as is rendered necessary by the complete shutdown of the Gaeseong Industrial Complex, including the safe return of our citizens.

The Government will move expeditiously forward with all steps to ensure the safe return of our citizens, and will set up a Government Task Force under the Office for Government Policy Coordination to provide the necessary whole-of-government assistance to our businesses.

We ask for the full understanding of our people that the Government’s complete shutdown of the Gaeseong Industrial Complex is an unavoidable decision, which takes into account the seriousness of the situation on the Korean Peninsula, and we call upon the people to stand with us as we seek to overcome such challenges.

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How bad is the Kaesong shutdown for the North Korean Economy?

Wednesday, February 10th, 2016

By Benjamin Katzeff Silberstein 

The Ministry of Unification in Seoul announced today that the industrial park in Kaesong be closed as a form of retaliation for North Korea’s recent rocket launch, alleging that funds from the park have been used to finance the north’s arms buildup. Wall Street Journal (with my emphasis):

A representative of South Korea’s Unification Ministry said that the move to shut down Kaesong was an effort by South Korea, “as a key party, to show leadership in taking part in these moves.”

Kaesong is an important source of income for Pyongyang. The regime received $120 million last year, and a total of $560 million since 2004, in workers’ wages directly from the South Korean side, according to the Unification Ministry. Those payments are made directly to the regime, which is then charged with paying the workers themselves, a system that critics say allows the regime to pocket most of the money.

“It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles,” the Unification Ministry said on Wednesday.

Naturally, this is bad news for the North Korean economy. But how bad exactly?

Here are a few other figures to give some sense of the proportions:

  • The volume of trade between North Korea and China only in the January-May period of last year totalled $1.1 billion, with North Korean exports accounting for $954 million.
  • Between January and November last year, the value of North Korea’s exports to China was $2.28 billion.
  • Textile exports to China from North Korea brought in around $800 million in 2014.
  • North Korean guest workers in China’s border provinces are estimated to be raising between $140-$170 million per year.

In the overall context, it seems like losses from the closure of Kaesong could be potentially bad, but not catastrophic.

 

 

Full reference to the Wall Street Journal article quoted above:
South Korea, Japan Take Steps to Penalize North Korea
Wall Street Journal 
Jonathan Cheng
02-10-2016

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Chinese companies requesting more North Korea guest workers

Friday, February 5th, 2016

By Benjamin Katzeff Silberstein 

Demand is increasing for North Korean guest workers among Chinese companies in the Sino-Korean border region, reports Joongang Ilbo. The Chinese labor force increasingly migrates to other regions for better wages and working conditions, and one company looking to recruit North Korean employees says one third of their Chinese workers left last year to find better-paying jobs elsewhere:

Companies in three northeastern Chinese provinces are vying to recruit as many North Korean workers as they can to capitalize on cheap labor costs – moves that run counter to the international community’s efforts to impose further economic sanctions on North Korea following the country’s fourth nuclear test early this month.

Chunwoo Textile, a company based in Dandong, Liaoning Province, lost 100 of some 300 workers last year to factories operating in other provinces because wages were much higher there.

China’s northernmost provinces of Liaoning, Jilin and Heilongjiang reputedly offer much cheaper wages for labor-intensive workers compared to other regions.

In Dandong, the average monthly wage stands at 2,843 Chinese yuan ($431.90), much less than the 5,313 yuan offered in Guangdong Province.

In 2012, North Korea and China agreed that 40,000 North Korean workers would come to China on industrial training visas.

Full article:
China seeks more workers from north
Ko Soo-suk and Kang Jin-kyu
Joongang Ilbo
01-27-2016

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