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Firms venture into North Korea

Tuesday, March 13th, 2007

Asia Times
3/13/2007

Chinese auto maker Brilliance Auto recently signed an agreement with PMC of South Korea on jointly launching an assembly plant in North Korea.

The North Korean facility will be Brilliance Auto’s third after its operations in Egypt and Vietnam.

Brilliance Auto is neither the first nor the most active of the Chinese auto makers making direct investments abroad. Quite a few have already done or are doing so. Among them are Chery, Geely, Jianghuai, Chang’an, Great Wall, and BYD Auto, which have launched greenfield auto plants abroad, and Shanghai Automotive and Nanjing Automotive, which have invested abroad through merger and acquisition.

Chery is a leader in this regard, making great efforts on building CKD (complete knockdown) factories abroad in recent years. Aside from the existing assembly plants in Iran and Russia, it is looking for such opportunities in Egypt, Romania, Turkey, Indonesia, Italy and Argentina. Its Argentina joint-venture project with the local Socma group, involving investment of US$100 million, will be controlled by Chery. If it goes ahead, it will be the first China-invested auto venture in South America. Chery plans to own 12 assembly plants worldwide within a short time.

Geely also has been active in going global. It has invested in Malaysia and is preparing for another new factory in Russia.

Jianghuai, meanwhile, has established light-truck assembly plants in Vietnam, Malaysia and Indonesia.

Industry analysts hold that excessive capacity in the domestic market after rapid expansion in recent years is prompting Chinese auto makers to look for overseas markets. However, they are often hit with tariff barriers from the importing nations. For instance, Russia levies about a 25% tariff on complete vehicle imports, but only about 3% on knockdowns.

Direct investment overseas is regarded as a solution to such barriers.

So far, the overseas investments of Chinese auto makers have been concentrated in emerging markets such as the Middle East, Southeast Asia and Africa.

Posted in Automobiles, China, Foreign direct investment, Transportation | Comments Closed

Home of N.Korean Leader’s Son ‘Burgled’

Monday, March 12th, 2007

Choson Ilbo
3/12/2007

Intelligence services have information that the Macau home of North Korean leader Kim Jong-il’s eldest son Kim Jong-nam was burgled, sources say. Authorities are trying to confirm the information. A government official in Seoul told a reporter there was a rumor that homes in an exclusive villa complex in Coloane Island were broken into, and related government offices and police are investigating.

The Zhuyuan Haoyuan villa complex is 15 minutes from downtown Macau and its 80 villas are among the territory’s most exclusive. The average price of each villa is estimated HK$15 million, roughly US$1.92 million. Yellow sunflower symbols adorning the doors of nos. 361 and 371 easily identify them as Kim Jong-nam’s.

Posted in China, Political economy | Comments Closed

Chinese Entrepreneurs Poised to Pounce on North Korean Border

Thursday, March 8th, 2007

Bloomberg
Bradley Martin, Allen Cheng
3/6/2007

Chinese entrepreneur He Ho was burned by his first North Korean investment, a bakery in the shabby border city of Sinuiju. He lost his entire $20,000 when the plan to make the city a special economic zone stalled in 2003.

If another opportunity comes along, though, “I’ll be the first to go in,” the 34-year-old said in an interview in Dandong, the bustling Chinese city facing Sinuiju across the Yalu River. “North Korea’s a good investment because so many things are lacking.”

Business executives in Dandong, one of the main conduits for trade in and out of North Korea, see opportunity in the recent six-nation agreement to end Kim Jong Il’s nuclear-weapons program. They think the 65-year-old North Korean leader will now focus on fixing his country’s nearly flattened economy and may revive plans for a special economic zone — an area designed to promote foreign investment, with fewer rules and regulations than elsewhere in the country — on the western border with China.

“Most of North Korea’s trade with China is via Dandong, so a special zone in this corridor could make sense,” said Marcus Noland, senior fellow at the Peterson Institute for International Economics in Washington. “This could be the North Korean equivalent of the Chinese coastal SEZs in the early years of the Chinese reform.”

No Guarantee

There’s no guarantee against another disappointment for entrepreneurs like He Ho, said Peter Beck, Seoul-based Northeast Asia project director for the International Crisis Group, a Brussels-based organization that works to resolve crises around the world.

“The eternal optimist in me hopes that Kim will see the light and recognize the direction in which he needs to lead the economy,” Beck said in a telephone interview. “But the jury’s still out.”

At the same time, “the North Koreans have been talking about putting a special economic zone in the far northwest aimed at China for a decade,” said the Peterson Institute’s Noland. “If they get the politics right, this venture could work.”

China is North Korea’s top trading partner, with 2006 exports of $1.23 billion and imports of $468 million, according to its Ministry of Commerce.

A little over a year ago, Kim visited six booming Chinese cities, including the special economic zone of Shenzhen, bordering Hong Kong. North Korea’s Central News Agency described the nine-day trip as a visit to places “where the cause of modernization is being successfully carried out.”

Executives’ Speculation

Business executives in Dandong speculate that North Korea will develop a new zone in Cholsan County, a peninsula on the east side of the mouth of the Yalu some 50 to 60 kilometers (31 to 37 miles) south of Dandong and Sinuiju. China’s commerce and foreign ministries and North Korea’s embassy in Beijing didn’t respond to faxed requests to comment on their plans.

In 1991, North Korea built a special economic zone at Rajin-Sonbong, in the remote northeast of the country, which has failed to attract much foreign investment because of its location. Another zone near the southern border at Gaeseong, only 60 kilometers from Seoul, has proven more popular, especially with South Korean manufacturers in search of low-cost labor.

In 2002, North Korea announced plans for the zone in Sinuiju, which would have included export factories and casinos to lure gamblers from China. Kim named Dutch-Chinese businessman Yang Bin governor of the zone. China, which hadn’t given its approval, squelched the plan by arresting Yang and jailing him in 2003 on charges of fraud and illegal land use.

Strained Relations

Kim’s test of a nuclear device in October, which strained relations with the Beijing government, didn’t halt commerce on the border, according to Shen Yuhai, general manager of Dandong Jade Ocean Trade Co. “We didn’t stop trading at any time,” he said in a recent interview.

Shen’s office overlooks a busy parking lot where Chinese customs officials examine trucks departing neon-lit, high-rise Dandong for the run-down and darkened Sinuiju.

The trucks cross on the Friendship Bridge’s single lane in the morning with manufactured goods and return in the evening, either empty or carrying minerals, silkworm cocoons and seafood, Shen said. Four trains a week cross in each direction, connecting the North Korean capital of Pyongyang with Beijing.

China is supplying its neighbor with “daily necessities, home electrical appliances and, in this season, farming tools and chemical fertilizer,” said Shen.

While business is booming, he said he’s still cautious about the risks. He requests payment in yuan, dollars or euros, not North Korean won, and accepts bank transfers only after business relations have been established.

Even then, he said, “sometimes we are cheated.”

–With additional reporting by Hideko Takayama in Tokyo and Lee Spears and Dune Lawrence in Beijing.

For a copy of a list of banned goods to North Korea: http://www.state.gov/t/isn/76138.htm

Posted in Agriculture, China, Foreign direct investment, International trade, Sinuiju Special Administrative Region, Trade Statistics | Comments Closed

Chinese Merchants in North Korea – Cure or Poison to Kim Jong Il?

Wednesday, March 7th, 2007

Daily NK
Kim Min Se
3/7/2007

90% daily goods made in China, 50% circulated by Chinese merchants

While some prospect that North Korea may be an affiliated market of China’s 4 provinces in the Northeast, the real focus is on the merchants who actually control North Korea’s markets. Recently, North Korean citizens have been asserting that markets would immobilize if Chinese merchants were to disappear.

Lately, Chinese merchants are nestling themselves with their newly found fortune in North Korea, undeniably to the envy of North Korean citizens.

In a recent telephone conversation with the DailyNK, Kim Chang Yeol (pseudonym) a resident of Shinuiju said “Most of the tiled houses in Shinuiju are owned by Chinese merchants in Shinuiju are upper class and the rich.” Unlike Pyongyang, tiled houses in Shinuiju are greater in value than apartments. In particular, the homes owned by Chinese merchants are luxurious and impressing.

Kim said “At the moment, 90% of daily goods that are traded at Shinuiju markets are made in China.” What Kim means by 90% of goods is basically everything excluding agricultural produce and medicinal herbs. Apparently, about half of the (90% of) supplies are circulated by Chinese merchants.

Kim affirmed that the market system could be shaken if supplies were not provided by the Chinese merchants. Hence, Chinese merchants have elevated themselves in North Korea’s integrated market system, to the extent that the market could break down without their existence.

In addition to this, Chinese merchants are playing a vital role in conveying information about the external world into North Korea. Even in 2004, it was Chinese merchants to first telephone China through mobile phones relaying the news about the Yongcheon explosion. As a result, rumors say that the movement of Chinese merchants can either be a “cure” to the economic crisis in which the North Korean government seems unable to fix, or “poison,” as more and more foreign information flows into the country.

How many Chinese merchants are there in North Korea?

A report by China’s Liaoning-Chosun Newspaper in 2001 sourcing data from North Korea, states that immediately after WWII, approximately 80,000 overseas Chinese were residing in the Korean Peninsula. Then following the Korean War and the formation of a Chinese government, the majority of people, approximately 60,000 Chinese, returned home. In 1958, statistics show that 3,778 families of overseas Chinese were living in North Korea, totalling 14,351 people.

These Chinese engaged in business related to farming, home made handicrafts and restaurant business, and in the late 50’s, lost all this due to the implementation of economic planning and dictatorial regime. Since then, the majority of merchants continued to return to China until the early 80’s.

In 2001, Liaoning-Chosun Newspaper confirmed that approximately 6,000 Chinese were living in North Korea. Of this figure, more than half were residing in Pyongyang, approx. 300 families living in North Pyongan and approx. 300 families residing throughout Jagang and northern districts of South Hamkyung.

At present, there are 4 middle and high schools for children (11~17 years) of Chinese merchants, located in Pyongyang, Chongjin, Shinuiju and Kanggae. In addition to these schools, there are a number of elementary schools (for children aged 7~11 years) located sporadically throughout each province.

Wang Ok Kyung (pseudonym) a resident of Shinuiju attended Chongjin Middle School for children of overseas Chinese in 1981~86. Wang said “At the time, there were about 40 students in each year. Now there is only about 5~6 students.” Nowadays, many Chinese children complete their elementary studies in North Korea, but the general trend is to send the children to China for middle school. She said “In order to enter a Chinese university, students must have completed their middle school studies in China and must be fluent in Chinese. He/she can also go to private institutes in China.”

Fortunes made through trade between North Korea-China during the food crisis

Even until the early 80’s there were no such thing as a wealthy North Korean-Chinese merchant. They were no different to North Korean citizens.

However, in the 80’s, many people began importing and selling goods such as socks, handkerchiefs, hand mirrors and cards from China, literally through their sacks. As the 90’s approached North Korean-Chinese merchants began to experience great wealth, the time where North Korea-China trade fundamentally kickstarted.

Today, Son Kwang Mi (pseudonym, 52) falls under the top 10 wealthiest Chinese merchants in Dandong, characterizing an unique rags to riches story. In the past, Sun lived in Chongjin and was one of the first figures to trade with China in the 80’s.

In the beginning, Son was so poor that she had to sell her watch received as a wedding gift in order to buy goods to sell.

Fortunately, Son found her money smuggling gold. In North Korea, gold is considered a public good or simply put Kim Jong Il’s personal inheritance, so private trade of gold is strictly regulated. Nonetheless, there are still some laborers who export gold secretly and a great number of people still collect gold through dubious ways. In particular, after the 80’s as North Korea began to experience economic decline, more and more people sold gold secretly.

Hence, a small number of Chinese merchants infiltrated the market of secretly trading gold with China. Chinese smugglers were able to take advantage of North Koreans by greatly raise their market margins, as the supply of gold and North Koreans wanting to sell their gold was high yet the demand in North Korea low.

Son said “Of the Chinese merchants in North Korea, 60% earned a great fortune at that time through illicit trade.”

She says that there were two opportunities for overseas Chinese to make a great fortune. The first was in 1985~89 through illicit trade of gold and the second, during North Korea’s mass food crisis in 1995~98.

“During the mass famine, everything in North Korea was in shortage and so Chinese merchants began to provide the daily necessities of life. At the time, if you brought large amounts of goods such as fabric and sugar, you could make a profit of 1 million Yuan (US$137,000),” she said.

Son was fortunate enough not to miss these two opportunities which led her to great wealth and allowed her to possess a fortune of 50 million Yuan (US$6.31 million).

Chinese merchants can relatively enter and exit China freely. Also, with the ability to speak Chinese fluently and the possibility of staying in the homes of many relatives in China, the occupation possesses ideal conditions.

Posted in 1990s Famine, Black markets, Cell phones, China, Communications, Economic reform, Education, Foreign direct investment, Gold, International trade, Labor conditions/wages, Light Industry, Manufacturing, Real estate | Comments Closed

Borderline Activities

Monday, March 5th, 2007

Korea Times
Andrei Lankov
3/5/2007

When future historians analyze the history of North Korea in the 1990s and early 2000s, what will they see as the most important events of that era (likely to be remembered as the “demise of Kim Il-sung’s socialism’’)? I do not think that future works of historians will spend too many pages (or megabytes) describing the never-ending soap opera of the “nuclear crisis.’’ Perhaps, some still unknown clashes in the North Korean palaces will deserve attention. But much more important will be the social changes in North Korea and, among other things, the near collapse of border control on the northern frontiers of the country. This collapse has opened the North to foreign influences and international exchanges of all kinds.

It is a bit of an overstatement to say that the North Korean border with China is now “open.’’ It is not open in the same sense as, say, the border between the Canada and U.S., let alone borders between the West European states. But it is porous to the extreme, and this situation is quite new.

For decades, cooperation between the DPRK and Chinese authorities ensured that defectors stood little chance of gaining asylum across the border. Sooner or later a defector would be arrested by the Chinese police and sent back to the North where he or she would be prominently sent to a prison camp forthwith. Everybody, including aspiring defectors, was clear on this point.

But this system collapsed about ten years ago, and the adjacent areas of China were soon flooded with North Korean refugees whose numbers in the late 1990s reached some 200,000 (now the numbers are much lower).

Nowadays crossing the border is not too difficult or dangerous. In the late 1990s, the people who crossed the border every night could be counted in the hundreds. Most of them were refugees fleeing the destitution and hunger of their Korean villages. Others were smugglers, engaged in the somewhat risky but profitable business of moving valuable merchandise across the border. And yet others were engaged in more unusual activities.

There are professional matchmakers, for example. While ethnic Korean girls from the Chinese North-East try, and sometimes succeed, in marrying South Koreans, the girls from the North would not mind having a Chinese husband, normally _ but not always _ of Korean ethnicity. China, with its abundant food supply, appears a veritable dreamland for them.

Such marriages are quite common: according to one study, in 1998 some 52% of all North Korean refugees (overwhelmingly women) were living with their local spouses. In most cases such marriages are arranged via Chinese (Han or ethnic Korean) brokers, and sometimes these brokers contact girls and their families while they are still in North Korea. If the girls are interested in the idea, the matchmaker or his/her agent crosses the border and then escorts the would-be bride to her new place of residence.

Most of the “husbands’’ are people who, for a variety of reasons, have had difficultly in finding a wife by more orthodox methods: widowers with children, habitual drunkards, the handicapped. In many North Eastern villages the mass migration of young women to the booming cities has resulted in a bridal shortage, such that North Korean wives are in high demand.

Of course, being illegal aliens, North Korean wives face a risk of deportation, and there are problems with children born of such unions. Nonetheless, a bit of caution, and a hefty bribe, can often solve some of the problems, ensuring the much-coveted registration for a baby and buying the local constable’s willingness to look elsewhere.

Another business is getting people from the North to China and, ultimately, to South Korea. Nowadays, there is large and growing community of North Korean refugees in Seoul. Many of these people save every cent to get their families in from North Korea. When they have enough money, they pay the brokers who arrange the escape. A few thousand dollars will be enough to ensure that a professional agent will cross into North Korea, locate the person and escort him/her across the border. $10,000 is the payment for getting a resident of Pyongyang, but for closer areas the fees are lower. Then, an additional payment will be necessary to get the person to Seoul (this costs between another $2,000 and $9,000, depending on various factors).

And there are money transfers, both from the North Korean refugees doing well in China, and from South Korea. Money has to be sent in cash, through reliable couriers (and there are many ways to confirm that the transfer has been delivered).

Take, for example, the case of Ms. Lim, a 31 year old refugee, happily married to a Chinese man and engaged in running a small business (the story was recently described by the Daily NK, a South Korean web-based newspaper). Twice a year Ms. Lim sends about $400 to her parents in the North. Being a retired officer of an elite unit, and a devoted supporter of the regime, her father initially refused to accept any money from the “daughter who had betrayed the country,’’ but he changed his mind. Nowadays, these transfers keep the family alive and even prosperous by North Korean standards.

I also assume that some of the people who cross the border have far more important tasks than delivering a few hundred dollars from a loyal daughter. The area is perhaps a hotbed of spying activities of all kinds. But those are other stories, not to be told in full in the next fifty years…

Posted in China, Emigration, South Korea | Comments Closed

Shinuiju Customs Strictly Controlled by North Korean Authorities

Monday, March 5th, 2007

Daily NK
Kim Min Se
3/5/2007

North Korea customs at Shinuiju is under strict control by Central Committee of North Korea Workers Party.

An inside source from Shinuiju said on the 4th, “Authorities are currently undergoing investigations at Shinuiju customs, looking for tax evasions and illicit acts. The parties subject to these crimes include customs officers at Shinuiju customs and merchants engaging in North Korea-China trade.”

The source added that the investigations had virtually terminated North Korea-China trade between Shinuju and Dandong.

Shinuiju customs is critically important for North Korea as 80% of food and daily necessary goods between North Korea and China are imported and exported from here.

According to Kim Young Hee (pseudonym), a North Korea-China tradeswoman in Shinuiju, “Trade merchants have given up on trade and are in a state of panic because of authorities making investigations at Shinuiju.”

Kim said “At times like this, keeping is a low profile is the way to survive” and expressed her concern, “They have made orders to arrest at least 10 people. Who knows, anyone could be unlucky and caught.” She said “Like there is any trade merchant who does not engage in some sort of illegal act” and retorted “Simply obtaining a permit from authorities is generating money.”

“Prior to authority investigations, on average 50~100 cars would pass through Shinuiju-Dandong, per day. Now the figures have drastically reduced with only 5~10 cars passing through” she said.

Kim continued “There is not an article that falls through the cracks of authority officers. All goods approved by customs, whether it be minerals to seafood is confirmed by authorities… All things are left up to the hands of authority officials.”

On the other hand, the source also informed that despite recent investigations placing trade between North Korea and China in a state of lull, apparently counteracting effects such as dramatic rises in Shinuiju markets have not yet occurred.

Posted in Black markets, China, Economic reform, International trade, Trade Statistics, Worker's Party | Comments Closed

The Ordinary Abductions

Thursday, February 22nd, 2007

Korea Times
Andrei Lankov
2/22/2007

North Korean spy agencies love kidnappings. Of course, their colleagues worldwide also would not mind abducting a person or two, but in most cases there are some urgent reasons for taking such drastic measures _ the victims are prominent opposition leaders, or wanted criminals who cannot be extradited through normal channels, or people who are unlucky to know something way too important. North Korean abductions are different: They are often surprisingly random and target people of no significance. The very randomness of most of their abductions once was often cited by sceptics who tried to refute these accusations as “Seoul-inspired falsities.’’ Indeed, why should the secret services of a Stalinist state spend so much time and money only to kidnap a Japanese noodle chef, or a tennis-loving teenager? Nonetheless, in 2002 Kim Jong-il himself confirmed that these seemingly meaningless abductions of ordinary Japanese citizens did take place.

Of course, North Koreans spies did not limit themselves to Japanese only. Quite a number of South Korean citizens have disappeared into the Northern maw as well: it is known that at least 486 South Koreans have been forcibly taken to the North and have never returned.

A vast majority of them are fishermen who were imprudent to come too close to the North Korean coast, but this figure also includes a number of known victims of covert operations. Currently they number 17, but there are few doubts that the actual number is much higher. If the abduction is planned and conducted well, its victim simply disappears and is eventually presumed dead.

A good example is the case of the five South Korean high school students who disappeared from the island beaches in 1977 and 1978. They all were believed dead for two decades, but in the late 1990s it was discovered that the youngsters were working in North Korea as instructors, teaching the basics of South Korean lifestyle to would-be undercover Northern operatives.

Eventually, one of those former students was even allowed to briefly meet his family at the Kumgang resort. Kim Yong-nam disappeared from a beach in North Cholla Province in 1978. Later he was identified as the husband of an abducted Japanese woman, so North Korean authorities grudgingly admitted that Kim Yong-nam was indeed in the North, and staged a meeting with his family. Unsurprisingly, during this meeting and press conference, he insisted that he was not kidnapped but saved from the sea by North Korean sailors. Far more surprisingly, he sort of admitted that his job was related to spying.

It is remarkable that the kidnappings of the South Korean teenagers roughly coincided with similar abductions in Japan. In both cases the abductors obviously targeted randomly selected teenagers who were unlucky enough to be on a lonely beach. Another commonality was that the abductees were later used to train espionage agents. Perhaps, teenagers were seen as ideal would-be instructors for the spies _ still susceptible to indoctrination but with enough knowledge of local realities to be useful.

In April, 1979, a young South Korean walked into the North Korean Embassy in Oslo, Norway. His name was Ko Sang-mun, and he was a schoolteacher back home. Why and how he came to arrive at that embassy is not clear. As was usually the case, the North Korean side insisted that Ko Sang-mu defected, while the South Koreans alleged that the young teacher was the a victim of a taxi driver’s mistake: He took the taxi to a “Korean embassy’’ and the driver delivered him to the embassy of the wrong Korea.

It is impossible to say now whether this highly publicised case was abduction, defection, or something in-between. However, in 1994 it became known that Ko Sang-mun was in a labour camp. A small propaganda war ensued. Ko was made to appear in a North Korean broadcast assuring everybody that he was free, happily married, and full of righteous hatred for the US imperialists and their Seoul puppets (most of his speech consisted of customary anti-American rhetoric). We do not know where he went after delivering this speech _ to an apartment in Pyongyang or to a dugout in a prison camp. Meanwhile, Ko’s widow in the South committed suicide, unable to cope with the stress of the situation.

There were also more “normal’’ instances of abductions. The North Koreans kidnapped people who possessed important intelligence. In 1971 Yu Sang-mun, a South Korean diplomat stationed in West Germany was kidnapped in West Berlin, together with his family _ wife and two children. Perhaps, the few other South Korean officials who went missing in Europe in the 1970s were also abducted by North Korean agents, but presently only Yu’s case is certain.

In the 1990s most abductions of this sort took place in China, and their victims were political activists, missionaries, and real or suspected South Korean spies. All these abductions occurred in the Chinese North-East, near the borders of North Korea.

The abduction of North Korean dissenters, or suspected would-be defectors, from Soviet territory has been quite routine for decades. Sometimes these abductions sparked a crisis in relations between Moscow and Pyongyang, but in most cases the Soviets simply turned a blind eye to such acts.

Posted in China, Education, Emigration, Japan, South Korea | Comments Closed

Seoul Wants 6 Nations to Shoulder Burden for Energy Aid to NK

Sunday, February 11th, 2007

Korea Times
Park Song-wu
2/11/2007

South Korea is thinking of chairing a working group for energy aid to North Korea as the United States is trying to differentiate this round of the six-party talks from a 1994 process, a Seoul official said on Sunday.

But Seoul has a firm position that all parties should jointly pay the “tax” for peace, he said.

“Denuclearization will benefit all parties, so the burdens should be shared jointly,” he said. “But we are thinking of taking the lead in the working group for energy aid, considering the circumstances of the other parties.”

He did not elaborate. But Tokyo is not expected to raise its hand to chair the working group, considering the Japanese anger over the North’s abduction of its nationals in the past.

Russia prefers forgiving the North’s debts instead of providing it with energy.

China, host of the multilateral dialogue, is already playing the most important role of chairing the six-party meeting.

What the United States apparently has in mind, and consented to by all parties, is the necessity to differentiate the result of these on-going negotiations from the 1994 Agreed Framework.

Since it was signed by Robert Gallucci and Kang Sok-ju in Geneva on October 21, 1994, Washington provided 500,000 tons of heavy oil annually to Pyongyang over the following seven years.

But the North’s promise to freeze its graphite-moderated reactors in return for two light-water reactors was not obeyed, causing the Bush administration to criticize the deal as a diplomatic failure of his predecessor, Bill Clinton. After that, U.S. diplomats even avoided meeting their North Korean counterparts bilaterally.

The U.S. policy, however, has recently reached a turning point.

“The Bush administration may have been driven to greater negotiating flexibility by a need to achieve a foreign policy victory to compensate for declining public support for the Iraq war and the loss of the Republican leadership of Congress,” Bruce Klingner, a senior research fellow for the Heritage Foundation said in a recent article.

But one thing that has not changed is the U.S. hope of not repeating the “mistake” it made with the Geneva agreement.

From 1994 to 2002, Pyongyang received 3.56 million tons of heavy oil, equivalent to $500 million, from the now-defunct Korean Peninsula Energy Development Organization (KEDO), and the United States shouldered the largest share of $347 million.

To shake off that bad memory, Washington wants to use the term “shut down” instead of “freezing” and even wants to avoid providing fuel oil to the North, reportedly citing the possibility that it can be used for military purposes.

So the talks have dragged on. And, to make things worse, the North Koreans are demanding a lot.

Japan’s Kyodo news agency reported that North Korea had demanded 2 million tons of heavy oil or 2 million kilowatts of electricity in exchange for taking the initial steps towards denuclearization.

Christopher Hill, the top U.S. envoy, expressed hope on Sunday that such technical issues could be discussed at working group meetings. On the same day, the Seoul official hinted that South Korea will chair the working group.

Posted in China, Electricity, Energy, Foreign aid statistics, International Aid, Japan, Nuclear, Oil, Russia, South Korea, USA | Comments Closed

NK Imports 15,000 Tons of Rice From China in Late 2006

Friday, February 9th, 2007

Korea Times
2/9/2007

North Korea purchased about 15,000 metric tons of rice from China late last year, reflecting a severe food shortage in the communist state, according to South Korea’s state-run trade agency Friday.

The impoverished communist country imported 7,423 tons of rice in October, 3,910 tons in November and 3,928 tons in December, the Korea Trade Investment Promotion Agency (KOTRA) said.

The amount of rice imported over the three-month period is about 2.6 times more than that of the same period in 2005, and it accounted for almost half of its annual rice imports totaling 38,479 tons, KOTRA said.

“North Korea’s massive rice imports following the harvest season means that its food situation is so severe. Due to the imported rice, North Korea’s market rice prices are stable so far,’’ said Kwon Tae-jin, a senior researcher at the state-run Korea Rural Economic Institute.

Another North Korea expert said the communist country might have had to take such measures because of United Nations sanctions on the North following its nuclear weapon test in October as well as South Korea’s suspension of its food and fertilizer aid to North Korea since July.

Posted in Agriculture, Agriculture statistics, China, Foreign aid statistics, General markets (FMR: Farmers Market), International trade, Statistics, Trade Statistics | Comments Closed

Food aid key to N Korea talks

Thursday, February 8th, 2007

BBC
2/7/2007

As six-party talks on North Korea’s nuclear programme resume in Beijing, the BBC’s Penny Spiller considers whether food shortages in the secretive communist state may have an impact on progress.

Negotiators for the US, North Korea, China, Japan, South Korea and Russia are meeting in Beijing amid signs of a willingness to compromise.

While the last round of talks in December ended in deadlock, bilateral meetings since then have brought unusually positive responses from both North Korea and the US.

Such upbeat noises were unexpected, coming four months after North Korea shocked the world by testing a nuclear bomb.

The test brought international condemnation and UN sanctions, as well as a significant drop in crucial food aid.

South Korea suspended a shipment of 500,000 tonnes of food supplies, while China’s food exports last year were sharply down.

The World Food Programme has struggled to raise even 20% of the funds it requires to feed 1.9 million people it has identified as in immediate need of help.

Aid agencies warned at the time of a humanitarian disaster within months, as the North cannot produce enough food itself to supply its population. It also lost an estimated 100,000 tonnes-worth of crops because of floods in July.

‘Queues for rations’

Kathi Zellweger, of the Swiss Agency for Development and Cooperation in Pyongyang, said the present food situation in the country was unclear.

No figures are yet available for last year’s harvest, and it was difficult to assess what impact the lack of food aid was having on supplies, she said.

However, the UN’s Food and Agriculture Organisation estimated the country was short of one million tonnes of food – a fifth of the annual requirement to feed its 23 million people.

South Korea-based Father Jerry Hammond said there were signs of shortages – not only in food but also in fuel – when he visited the North with the Catholic charity Caritas in December.

He described seeing long queues for rations, and ordinary people selling goods in the street for money to buy the basics.

“You do expect to see more shortages during the winter time,” the US-born priest, who has visited North Korea dozens of times in the past decade, said.

“But I did see a noticeable difference this time.”

High malnutrition rates

Paul Risley, of the World Food Programme, said people in North Korea may still be cushioned by the November harvest and the pinch will be felt in the coming months.

“We have great concerns,” he said, pointing out that North Korea was now in its second year of food shortages.

He says “stabilising food security” in the country will be very relevant to the talks in Beijing.

“It is certainly the hope of all who are observing the situation in [North Korea] that imports of food can be resumed and returned to prior levels,” he said.

“Malnutrition rates are still the highest in Asia, and we certainly don’t want to see those rates rise any further.”

Father Hammond thinks Pyongyang may be persuaded to consider compromises in Beijing, but is unlikely to do so as a result of any pressure from the people of North Korea.

“People are very cut off from the outside world, and there is constant propaganda about national survival. Even if they go hungry, it will be considered patriotic,” he said.

There have been signs of possible compromise from both sides in the run up to the talks.

Washington has reportedly hinted at flexibility over its offer of aid and security guarantees, as well as showing a willingness to sit down and discuss North Korea’s demands to lift financial sanctions.

Meanwhile, North Korea reportedly recently told visiting US officials it would take the first steps to disband its nuclear programme in return for 500,000 tonnes of fuel oil and other benefits.

And South Korea is keen to resume its shipments of rice and fertiliser aid – if Pyongyang agrees to freeze its nuclear programme, the Choson Ilbo newspaper has reported.

As the nuclear talks resume, all sides will be looking to translate such pressures into progress.

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North Korean Economy Watch