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North Korea-Russia Relations: A Strained Friendship

Tuesday, December 4th, 2007

International Crisis Group
Asia Briefing N°71
4 December 2007

North Korea’s relations with Russia have been marked by unrealistic expectations and frequent disappointments but common interests have prevented a rupture. The neighbours’ history as dissatisfied allies goes back to the founding of the Democratic People’s Republic of Korea (DPRK) with Soviet support and the Red Army’s installation of Kim Il-sung as leader. However, the Soviets were soon written out of the North’s official ideology. The Sino-Soviet split established a pattern of Kim playing Russian and Chinese leaders off against each other to extract concessions, including the nuclear equipment and technology at the heart of the current crisis. Since Vladimir Putin visited Pyongyang in 2000, diplomatic initiatives have come undone and grandiose economic projects have faltered. Russia is arguably the least effective participant in the six-party nuclear talks.

The relationship between Putin’s Russia and Kim Jong-il’s North Korea has disappointed both sides. Putin has mostly been unable to assert himself as a prominent player in North East Asia, and North Korea has received neither the unalloyed political support nor the economic backing it seeks. Russia has more influence in the region than it did in the 1990s but not enough to change the equation on the Korean peninsula. Opportunities for economic cooperation have been limited, mostly by Pyongyang’s refusal to open its economy but also by Russia’s fixation on overly ambitious schemes that at best may take decades to realise. China’s more nimble investors have moved in much faster than Russia’s state-owned behemoths.

Moscow has been conservative in its political dealings with Pyongyang, playing a minor but thus far positive role at the six-party talks consistent with its concerns about proliferation and the risks of DPRK collapse. It regards the denuclearisation of the peninsula as in its interests, has relatively few commercial opportunities in the North and considers its relations with the other nations in the exercise more important in every way than its ties to Pyongyang.

While Russia has shown interest in building energy and transport links through the North, little progress has been made. Rebuilding railways on the peninsula will cost enormous sums, and overcoming the many obstacles will require years of negotiation. Investments have been hindered by the North’s unreliability and history of default on loans. Russia may eventually have to forgive billions of dollars of debt the North cannot repay. Energy is a major mutual interest but pipelines across the North are unlikely to be built soon; Japan and China are expected to be the main markets for Russian energy, while South Korea is reluctant to become dependent on the North for its supply.

Pyongyang wants Russia to balance China’s growing influence but appears to recognise that Moscow will never provide the level of support it once did. The North has been keen to discuss economic cooperation but has lacked the political will to reform its economy sufficiently for foreign investment, even from a country as inured to corruption and government interference as Russia. It is equally interested in technical and scientific aid. Russian technology, equipment, and “know-how” have featured prominently in the history of both Koreas, and Pyongyang still seeks to resolve its economic problems by scientific and technical solutions. But there is unlikely to be much growth in bilateral cooperation unless the nuclear crisis is resolved peacefully, and the North opens its economy.

This briefing completes Crisis Group’s series on the relationships between North Korea and those of its neighbours – China, South Korea, Japan and Russia – involved in the six-party nuclear talks. It examines Russia’s aims and ambitions in the region, as well as the responses from North Korea and is based on both interviews in Russia, Central Asia and South Korea and analysis of Russian and North Korean statements.

Posted in Economic reform, Energy, Finance, Foreign direct investment, International Aid, International trade, Political economy, Railways, Russia, Transportation | Comments Closed

China casting wary eye on North Korea

Tuesday, December 4th, 2007

Asia Times
Ting-I Tsai
12/5/2007

The likelihood that North Korea’s nuclear disarmament will be completed just a year after Pyongyang announced that it had tested a nuclear bomb has been widely welcomed around the world, with the exception, perhaps, of China.

There are increasing concerns among Chinese academics that Pyongyang’s actions are hurting Chinese interests. Last October’s nuclear test not only unmasked the contradictions of a relationship frequently described as being “as close as lips and teeth”. It may have led to a further downturn in bilateral ties.

As the host nation of the Six Party Talks and once North Korea’s closest ally, China has reacted to the prospects for disarmament in a decidedly cool manner, with its North Korea experts debating how Pyongyang will harm China’s interests.

“There is no doubt that Pyongyang will create conflicts between China and the United States once it improves its relationship with Washington,” said Zhang Liangui, professor of international strategic research at the Central Party School in Beijing. He predicted that it was only a matter of time before Pyongyang took revenge on Beijing for China’s vote to impose sanctions on North Korea at the United Nations last October.

Zhang Yushan, researcher at the Jilin Academy of Social Sciences, however, doubts that North Korea could develop a close relationship with the US in the upcoming months.

After a year of dialog, North Korea agreed in October to shut its main nuclear reactor and provide detailed descriptions of all its nuclear programs by the end of the year. Furthermore, it has pledged not to transfer nuclear materials, technology or knowledge to other countries. Pyongyang fulfilled one of those promises in July by shutting down the reactor in Yongbyon. It has yet to make any substantial moves toward providing a description of its nuclear programs.

Chinese academics who question whether North Korea’s pledges to completely abandon its nuclear program are sincere also worry about Washington’s lack of determination to shape a nuclear-free Korean Peninsula after having received Pyongyang’s assurance that it would not transfer nuclear materials, technology or knowledge to other countries.

“China has always seen North Korea’s nuclear weapon issue as the Americans’ problem and has never adopted any strategic plan for itself in the Six Party Talks, which have led to where we are now,” said Jin Linbo, a research professor at the Beijing-based China Institute of International Studies. Jin argued that Beijing might have gained nothing but a security threat from its neighbor by hosting the talks.

What has particularly frustrated Beijing has been North Korea’s selfish neglect of China’s interests. The Central Party School’s Zhang noted that the latest developments have led some Chinese academics who originally had sympathies for North Korea to change their attitudes.

“Some of them have started to argue that North Korea is outrageous,” Zhang said.

Scoot Snyder, senior associate at the Washington based Asia Foundation, noted that North Korea’s traditional strategy is to play larger parties against each other; having found their country over-reliant on China for critical inputs, North Korean leaders would certainly like to stimulate a competition between China and the United States and South Korea to see who can most effectively win influence in Pyongyang. He pointed out in particular that DPRK negotiator Kim Kye-gwan’s public criticism of the United States for relying too much on China to carry out its Korea policy, US negotiator Christopher Hill’s sudden visit to Pyongyang without passing through Beijing, and the “three- or four-party” phrase in the inter-Korean summit declaration had all caused speculation and concern in Beijing.

In a study titled, “How North Korea threatens China’s interests“, conducted by Gregory Moore, assistant professor of political science at the St. Petersburg, Florida-based Eckerd College, the start of the decline in PRC–DPRK amity coincided quite closely with the rise of Kim Jong-Il in the late 1980s and the early 1990s. It was sealed with the passing of Kim Il-Sung in 1994, and contact between Beijing and Pyongyang broke down almost completely between 1994 and 1999.

Kim Jung-il, Moore suggested in his study, revealed his willingness to affront China in 1990-91 by conducting a dialog with China’s rival Taiwan and making a deal in which Pyongyang would have been paid to accept Taiwan’s nuclear waste. He played the same “Taipei card” again in 1996 when Beijing offered one-tenth of the grain that Pyongyang had asked for. In 1997, North Korea again opened discussions with Taiwan on direct flights between the island’s capital of Taipei and Pyongyang after another quarrel with China. At the time, Chinese agricultural experts publicly encouraged Pyongyang to adopt Chinese-style reforms, which led Pyongyang to call Deng Xiaoping a traitor to socialism. That jibe prompted Beijing to mull cutting off food aid to North Korea.

Other factors have also caused the relationship to sour. North Korea’s admission to US diplomat James Kelly in October 2002 that it was indeed pursuing a uranium enrichment program, its plan to establish the free trade zone and gambling city of Sinuiju, its counterfeiting of US$100 bills and Chinese currency, and China’s cutting off of an oil pipeline and deploying troops to the border in 2003 have all caused friction. In addition, rumors have surfaced that Pyongyang’s Chinese-built Taen Friendship Glass Factory resulted from Kim Jung-il’s flirtation with the “Taipei card”.

According to a Pyongyang-based foreign diplomat, bilateral relations “are mainly close in commercial and economic matters, especially with neighboring Liaoning province” in China. Bilateral trade in the first three quarters of 2007 reached US$1.44 billion, representing 16.6 growth year-on-year. The Chinese are reportedly operating three major coal mining sites in North Korea, although related government agencies in Pyongyang have denied this.

It remains to be seen how Pyongyang will handle its relationship with China. But both governments have made efforts to demonstrate their friendship.

On November 26, Liu Xiaoming, China’s ambassador to the DPRK, delivered a speech to students at Kim Il-sung University in Pyongyang, sharing the success of the Chinese Communist Party’s 17th congress, the significant accomplishments of its 29-year-long period of liberalization and reform, and China’s appreciation of its historical friendship with North Korea. The speech, which the embassy described as “a new page in the bilateral friendship”, came shortly after the visit of Liu Yunshan, member of the Secretariat of the Communist Party of China’s Central Committee and head of the Publicity Department of the CPC Central Committee, to Pyongyang on October 29. In July, Chinese Minister of Foreign Affairs Yang Jiechi made North Korea the first nation he visited after taking office.

In return, Pyongyang authorities issued a series of stamps featuring the 2008 Beijing Olympics in mid-November, and Kim Jung-il paid a visit to China’s embassy on the occasion of the Chinese lantern-festival holiday Yuan Xiao Jie.

In the eyes of South Korea, which has aggressively sought to improve its ties with the North, ties between China and North Korea remain unquestionably close.

Haksoon Paik, senior fellow at the Seoul-based Sejong Institute, argued that the US-PRC relationship is the key factor shaping East Asian international politics, and North Korea has simply “tried to just find some breathing space in between”.

Having dealt with North Koreans for more than a half-century, Chinese academics are now preparing for North Korea’s eventual tilt away from Beijing because of the landscape change in East Asian politics.

“For the upcoming decade, the relationships among the six-party-talk members will put the US, Japan and North Korea on one side, and China, South Korea and Russia on the other,” predicted a Chinese expert on North Korea, who spoke under the condition of anonymity.

Posted in China, International Aid, International trade, Political economy | Comments Closed

Two Koreas Join Forces to Develop Linux

Friday, November 30th, 2007

Electonic Times News (South Korea)
Hat tip DPRK Studies
Gil-soo Jang
11/30/2007

South and North Korea team up to develop a version of ‘Hana Linux (tentatively named)’ and set standards.

Reunification IT Forum (South), Chosun People’s Science Technology Association (North) and Chinese Information Society co-hosted ICMIP 2007 in Yenji, China on November 27 to 28.

At the conference, IT experts from two Koreas agreed on the need for cooperation in the Linux sector and developing ‘Hana Linux.’ Besides, the two parties will pursue other projects such as Open Office, an internationally certified (CC) office suite, and developing Korean language for excellent open software.

Such a proposal was initially made by president of Hee-tak Moon of Korea Open Source Software Association (KOSSA) to the North counterpart. A detailed plan will follow at the Speical Duties Committee (SDC) which will be formed soon by two Koreas and China.

President Ho-ik Seok of Reunification IT Forum, Secretary General Kyung Chon of Chosun People’s Science Technology Association, and President Ryong-woon Hyung of Chinese Information Society agreed to five points at issue and to create expert working groups and the SDC soon.

The three parties also consented to nurture software professionals and, as part of that effort, to base Yenben and Dandung of China, and Pyongyang, Kaesong and Hoichun of Korea as training centers. Moreover, they will consider sharing information by establishing an IT exhibition hall, library and history archive.

To further the agreement and issues, IT experts decided to hold an international conference in Pyongyang in the first half of next year to bring IT professionals together.

They were in agreement that there are differences in IT terminology between South, North Koreans and Korean Chinese and agreed to make efforts to standardize the terms.

Posted in China, Communications, Computing/IT, Economic reform, Foreign direct investment, Joint Ventures | Comments Closed

U.S. denies North Korea diplomatic ties report

Monday, November 26th, 2007

Reuters
11/26/2007

A U.S. embassy spokesman on Monday denied a report by South Korea’s biggest daily that the State Department has stationed an employee in Pyongyang to lay the groundwork for opening a permanent liaison office in North Korea.

The State Department has an employee in Pyongyang but only to manage equipment for a team that is overseeing the disablement of North Korea’s nuclear facilities. The employee will be in the North through the disablement process.

“This is not for normalisation,” spokesman Max Kwak said.

There has been a rise in exchanges between the two countries after reclusive North Korea agreed this year to a multinational deal to freeze and then roll back its nuclear arms programme in return for massive aid and better international standing.

The Chosun Ilbo newspaper quoted an unnamed source in Washington as saying: “A U.S. State Department diplomat who handles administrative affairs has checked into a room in Koryo Hotel and has been using it as an office and accommodation.”

The State Department employee has been acting as an administrative liaison between the United States and North Korea, the source said.

The Koryo is one of the few hotels in Pyongyang open to foreign guests.

The United States has said if North Korea completely ends its nuclear weapons programme, Washington is willing to establish diplomatic ties with Pyongyang.
U.S. Diplomat ‘Permanently’ Stationed in Pyongyang
Choson Ilbo (h/t One Free Korea)
11/26/2007

A U.S. diplomat has been stationed permanently at the Koryo Hotel in Pyongyang since mid-November, a source said Sunday. The development comes as U.S.-North Korea relations are improving as Pyongyang implements its promise to disable its nuclear facilities at Yongbyon by the end of the year.

A source in Washington said that the U.S. plans to dispatch another permanent diplomat to Pyongyang soon, with the Koryo Hotel likely to serve as a de facto U.S. liaison office in North Korea. This is the first time the U.S. has ever stationed a permanent diplomat in Pyongyang, and it suggests the possible normalization of relations between the two sides.

The Washington source said, “A foreign service officer in charge of administrative affairs from the U.S. State Department has been staying at the Koryo Hotel in Pyongyang, using his room as both an office and living quarters. He is mainly carrying out administrative liaison efforts between the U.S. and North Korea.”

The diplomat is apparently serving as a liaison officer for U.S. delegations to Pyongyang and figuring out their staying expenses there. The temporary U.S. office at the Koryo Hotel is said to be fitted out with exclusive telephone and fax lines and a computer with an Internet connection.

The U.S. is expected to dispatch a senior diplomat to Pyongyang who will handle political affairs when North Korea completes the disablement of its nuclear facilities. This senior diplomat will also participate in talks with Pyongyang and visit the nuclear sites at Yongbyon on a non-regular basis to inspect the progress of the disablement and dismantlement of the facilities.

Washington and Pyongyang agreed on this through meetings between chief U.S. negotiator to the six-party talks Christopher Hill and his North Korean counterpart Kim Kye-gwan and through “a channel in New York,” the source said.

The U.S. is expected to operate its temporary office in Pyongyang with a staff of two diplomats for the time being, with a view to upgrading the office to a regular liaison office or a permanent mission if North Korea clearly shows its intention to fully dismantle its nuclear programs.

The agreement to operate a de facto U.S. liaison office in Pyongyang suggests that the two sides strongly intend to improve their relations. Washington and Pyongyang agreed at the 1994 Geneva Accords to open a liaison office in Pyongyang upon concluding talks on the first North Korean nuclear crisis, but that agreement was never realized.

Posted in Communications, Internet, Political economy, Telephones, USA | Comments Closed

Musan Mine into Chinese Hands?

Monday, November 26th, 2007

Daily NK
Lee Sung Jin
11/26/2007

An insider North Korean source said in a phone conversation on the 22nd, “With long-term suspension of exports for the break in China’s investment in North Korea’s iron ore production, the lives of citizens and the Musan Mine laborers have become extremely difficult. There have been talks that this might be the 2nd March of Tribulation (Mass starvation period in the 1990s).”

The South Korean Chamber of Commerce and Industry released a report, the “North Korean Underground Resource Joint Development Strategy” on the 21th saying that China has cleared with a clean stroke North Korean minerals, Musan Mines being a representative example.

The report introduced the contract which gave 50-years-mining rights to the Musan Mine in North Hamkyung, which is North Korea’s best iron ore, for 70 hundred million Yuan (approximately DSD950 million) to China, which can take 10 million tons of iron ores from Musan every year for 50 years.

However, investment in Musan Mine, which was considered the China’s representative investment in North Korean underground resources, was ruptured due to the fact that opinions surrounding on the retrieval ways of shares and investment funds could not be narrowed down. Accordingly, Musan Mine laborers going through difficulty with the operation of the mine have fallen into a severe hardship in living.

The South Korean intelligence authorities confirmed the veracity of the breakdown in investment negotiation early June of this year.

North Hamkyung Province’s Musan Mine is a strip mine containing 30 hundred million tons of coal reserves, 13 hundred million tons of coals capable of digging and several hundred tons of steel concentrate, has offered these materials to the Kim Chaek and Sungjin Steel Mills, but with the unreliable operation of these mills, mining came to a halt in early 2000.

In 2005, the North Korean government closed an investment contract with the Chinese Tonghua Steel Group Consortium and China’s investment in Musan Mine began the fall of that year. As the exports of iron ore started, the North Korean authorities resumed the provision system to mine laborers and their families.

With the influx of many goods including food, gasoline, and construction materials as a reward for exporting iron ore to China, the lives of citizens in Musan have stabilized in these last two years.

However, the volume of production was known to have rapidly decreased with the cease in iron goods export to China and the rupture in joint investment with China.

The source said, “With the cease in iron ore exports to China, provision to the miners have ceased, which has incurred significant damage. We are in the ‘March of Tribulation’ again. When we are barely able to get by, something else occurs.”

The source introduced the current situation of withdrawal for Musan Mine laborers, “With only 500 thousand won (approximately USD 152), a person can get out of mining. It takes 100,000 won at the mina labor department and another 100,000 won to receive a diagnosis at mine hospitals and about 300,000 won to receive approval from the Safety Agency and the county labor department leaders as bribes. The despair of people are so heavy that people hope to come out of mining, even with the granting of provisions.”

Posted in China, Coal, International trade, Mining/Minerals | Comments Closed

South Korea contributes more than US$4 million to First Environmental Project between Two Koreas

Thursday, November 22nd, 2007

According to Environmentalexpert.com:

The United Nations Environment Programme and the Republic of Korea today signed an agreement for establishing a Trust Fund that addresses key environmental issues in the Democratic People’s Republic of Korea (DPRK). The Republic of Korea will contribute US$4.4 million in total for this project. The first venture of its kind on the environment between the two Koreas, the Trust Fund will tackle forest depletion, declining water quality, air pollution, land degradation and biodiversity in DPR Korea. It will also support eco-housing initiatives as well as conservation and management of the Taedong watershed, environmental education, integrated environmental monitoring system, clean development mechanism and renewable energy technology.

‘This multilateral cooperation with UNEP is of great significance for both South and North Korea and a huge step forward in addressing pressing environmental issues in DPR Korea,’said LEE Kyoo-Yong, Ph.D., Minister of Environment of the Republic of Korea.

The past decade has seen declining forests in DPR Korea due to timber production, firewood consumption, wild fires and insect attacks associated with drought, population growth and conversion of land to agricultural production. Pollution of rivers and streams has become severe in recent years, particularly in the Taedong River, which flows through central Pyongyang. DPR Korea’s reliance on coal for power generation, industrial processes and domestic heating also led to serious air pollution, particularly in cities like Pyongyang and Hamhung.

To counter this, the country has encouraged community, youth and children’s groups to establish tree nurseries and to participate in campaigns such as the National Tree Planting Day on March 2 every year. The government is currently strengthening legal control on effluent from factories by applying the’Polluter Pays Principle’ and has initiated mass media campaigns to inform the public of the need for water conservation.
Environmental protection was also recognized as a priority issue and a prerequisite for sustainable development after a series of natural disasters in the mid-1990s led to a critical drop in yields of major crops. In 1998, DPR Korea revised its constitution and designated environmental protection as a priority over all productive practices and identified it as a prerequisite for sustainable development. National laws on forests, fisheries, water resources and marine pollution were also adopted.

‘This agreement will build on the momentum that DPR Korea has begun. It will also go a long way in strengthening the spirit of cooperation between the two countries,’ said UN Under-Secretary General and UNEP Executive Director Achim Steiner.

Since 2000, UNEP has been working in partnership with the National Coordinating Committee for Environment and UNDP to strengthen the capacity of the national government for environmental assessment and monitoring and implementation of Multilateral Environmental Agreements. In 2004, UNEP and DPR Korea signed a Framework Agreement for Cooperation in Environment. The first DPR Korea State of the Environment report was also launched that year.

Posted in Environmental protection, International Aid, South Korea, UN, UNEP | Comments Closed

N.K. officials visit Wall Street over access to global financial system: sources

Monday, November 19th, 2007

Yonhap
11/18/2007

A North Korean delegation is visiting Wall Street to meet financiers and attend a seminar that could help the isolated communist country gain access to the international financial system, sources here said on Sunday.

The six-member delegation led by Ki Kwang-ho, a director at the North Korean Finance Ministry, arrived here on Thursday for the two-day-long session, which starts Monday. The U.S. side is to be represented by Deputy Assistant Treasury Secretary Daniel Glaser and other officials involved in ending Pyongyang’s suspected illicit activities.

The visit by the North’s delegation, the first of its kind, comes about one year after the release of some US$25 million in North Korean funds that were frozen at a Macau bank over their alleged connection to money laundering and other illegal activities.

Although the assets were released in a one-time transaction through the international financial system, the North has said it wants full access to the system without financial sanctions from the U.S., which has considerable influence over the global market.

The delegation’s visit also coincides with recent progress in the multilateral negotiations for North Korea’s nuclear disarmament, in which Washington is negotiating with Pyongyang on the removal of the North from its list of state sponsors of terrorism and the termination of the application of its Trading with the Enemy Act.

Washington, one of major shareholders in the International Monetary Fund and other lending institutions, is obliged by law to oppose any loans to countries on the list.

The North Korean financial officials met with financiers at the heart of global finance here Saturday to discuss international financing for the isolated communist state, informed sources said.

Donald Gregg, chairman of the New York-based Korea Society, quoted the North Koreans as saying Friday that they came to learn about ways to get access to the international financial system.

While attending a seminar sponsored by the National Committee on American Foreign Policy, the North Koreans asked about know how to join the IMF and other international financial institutions, the former U.S. ambassador to South Korea said.

Another North Korea expert, however, predicted a long and bumpy road ahead for the North, saying the isolated, impoverished communist state needs a lot of manpower, experience and technologies before joining the international financial system.

Posted in Banking, Finance, Insurance, USA | Comments Closed

Chinese Community in NK

Sunday, November 18th, 2007

Korea Times
Andrei Lankov
11/18/2007

Until recently it would have been just a minor exaggeration to say that Korea is a country without national minorities. The only exception to this rule are the ethnic Chinese who began to move to Korea in the late 19th century. Nowadays, South Korea is home to some 20,000 ethnic Chinese who are considered citizens of Taiwan.

North Korea also has its ethnic Chinese community, whose members, needless to say, hold passports of the People’s Republic of China. The ethnic Chinese of the North are descendants of people who moved there in the 19th century. In the late 1940s, most of them went back, but a few chose to stay, creating a small but unusual community, one of the few minorities in a society which sees its own homogeneity as a source of pride.

From the very beginning of their history, the North Korean huaqiao (as foreign nationals of China are known) found themselves in an unusual and controversial situation. Their presence was not really welcomed: in the 1950s and early 1960s the North Korean authorities went to great length to “cleanse” the land of all non-Korean elements, including citizens of supposedly friendly countries. Hence, the Chinese were strongly encouraged to go back to China.

However, the Chinese themselves were not very enthusiastic about this move: most of them had spent their entire lives in Korea. It was also important that China in the 1960s and 1970s was in an even worse state than North Korea. It had lower living standards, and hardly fared much better in terms of political freedom: Kim Il-sung’s dictatorship might have been bizarre, but it was more predictable and perhaps less brutal than the moody rule of Chairman Mao. People still went to China, to be sure, but they were not in a hurry.

According to a 2001 Chinese publication which cited North Korean sources, in 1958 in the North there were 3,778 Chinese households comprising 14,351 members.[1] In the 1960s numbers dropped on account of the ban on private economic activity, the forced collectivization of agriculture, and the nationalist policies of Pyongyang. These factors conspired to drive the ethnic Chinese away. Thus, by 1980 numbers had fallen to a mere 6,000, of whom half reportedly resided in Pyongyang with most of the balance living near the North Korean border with China.

The situation of the North Korean huaqiao was difficult to describe in one word: they were both discriminated against and privileged. As foreigners, they could not become members of the Korean Workers Party, and this alone made them ineligible for many possible careers (well, no department in the administration or bureaucracy would take them on anyway). However, children of small vendors and vegetable farmers hardly felt too bad when they realized that they would never become district party secretaries or army colonels, their aspirations were milder.

At the same time, the huaqiao were exempt from the many obligations of the average North Korean. For example, they were allowed to have radio sets with free tuning, on the condition that they would not tune in to anything but the official broadcast if some locals were present nearby. They did not attend the boring and time-consuming indoctrination sessions. And one also might surmise that they also enjoyed a much less likelihood of being arrested for some minor improper ties.

Like the ethnic Chinese in South Korea, the North Korean huaqiao have their own schools. According to the same publication, cited by Kim Min-se, in the late 1990s in North Korea there were four Chinese middle schools where students, young citizens of the People’s Republic, studied according to the Chinese curriculum. There were primary schools as well.

However, of all the privileges the most important one was their right to trade. From around 1980, the Korean huaqiao were allowed to go to China or invite their relatives to North Korea. This meant that they were the only group (at least, outside the narrow inner circle of the top families) whose members could go overseas more or less at will. In the 1980s China was beginning its remarkable economic overhaul, and the possibility of using a price differential between two closed markets is the dream of any astute merchant. In few years, most huaqiao made trade their main or only source of income.

They moved back and forth, selling seafood, frog oil, mushrooms and other exotic products, which play an unusually important role in North Korean foreign trade, to China. From China, they brought in garments, cloth, cheap electronics and household items. In the mid-1990s, during the famine, food became a major import item as well. Everything was sold at huge profits, and from around 1990 every huaqiao was seen as a rich person, almost by definition.

However, the numbers of North Korean huaqiao are said to be dwindling nonetheless. The lure of successful China is too great, so they often prefer to leave. They stay in touch with their connections in the North and maintain their business networks, but now they reside in the more comfortable and secure environment of modern China. Their desire to give their children a better education also plays a major role in the repatriation process, another similarity with the shrinking Chinese community in the South.

However, there is another move afoot as well: some Chinese are moving to North Korea to start businesses there, and they might just lay the foundations for a new huaqiao community. But that will be another story, of course.

Posted in China, Civil society, Education | Comments Closed

US-NK Financial Talks Scheduled in New York Next Week

Wednesday, November 14th, 2007

Korea Times
11/14/2007

U.S. and North Korean officials will meet in New York early next week to reopen talks on addressing Pyongyang’s alleged illicit financial activities, sources here said Tuesday.

Daniel Glaser, assistant treasury secretary in charge of terrorism financing, will lead the U.S. delegation to the talks scheduled Monday to Tuesday, according to the sources. It was not yet clear who will represent North Korea at the meeting. Previous sessions were led by O Kwang-chol, president of the Foreign Trade Bank of Korea.

The meeting is the first since the two countries resolved a banking issue that for over a year delayed North Korean denuclearization negotiations. The U.S. Treasury in September 2005 sanctioned Banco Delta Asia (BDA), a Macanese bank, for abetting North Korea’s laundering of money acquired through smuggling, counterfeiting and arms proliferation. The bank froze all North Korea-related accounts, and Pyongyang boycotted the denuclearization talks in protest.

The issue was settled with the release of some $25 million in North Korean money at the BDA early this year.

Sources said next week’s meeting will address North Korea’s suspected illicit activities that led to the Treasury’s sanctions, including Pyongyang’s counterfeiting of American currency.

North Korea has been accused of producing and circulating fake$100 bills, known as “supernotes” because of their near-authenticity, and smuggling contraband goods.

Posted in Banking, Finance, Fiscal & monetary policy, Foreign Trade Bank, USA | Comments Closed

North Korea, China Will Start $10 Billion Fund, Yonhap Reports

Tuesday, November 13th, 2007

Bloomberg
Bomi Lim
11/13/2007

North Korea’s Daepung Investment Group will set up a $10 billion fund with China Development Bank to help Chinese firms operating in North Korea, Yonhap News reported, citing the company’s vice president.

The fund will be used to help Chinese companies build roads, railways and ports in North Korea, Daepung Vice President Bae Kyeong Hwan was quoted as saying. Bae didn’t say how much each country will contribute the fund.

Daepung also plans to set up a bank to attract investment from overseas, the report said.

China is North Korea’s biggest trading partner and an important provider of food and fuel. North Korea is isolated from most of the rest of the world and has received virtually no foreign investment.

Posted in Automobiles, Banking, China, Economic reform, Finance, Foreign direct investment, International trade, Korea Taepung International Investment Group (Daepung Investment Group), Railways, Sea shipping, Transportation | Comments Closed

North Korean Economy Watch