North Korean Economy Watch

According to Yonhap:

Trade between North Korea and its major trading partner China rose 6.2 percent on year in the first 10 months of this year to total US$4.72 billion, data showed Wednesday, despite international sanctions against Pyongyang over its defiant nuclear and missile tests.

The rise suggested that North Korea is becoming increasingly reliant on China, although Beijing is not supportive of Pyongyang’s nuclear ambition.

In the 10-month period, North Korea’s exports to China jumped 12.3 percent on year to account for $2.36 billion, according to data by the China Customs Information Center. The North’s imports gained 1.8 percent to $2.36 billion.

Remarkably this data shows a perfect balance of trade between the DPRK and China (exports=imports). This is a reversal from earlier in the year when it was reported that DPRK – PRC trade volumes had fallen from the previous year. See previous posts on DPRK trade statistics here.

Read the full story here:
Trade between N. Korea, China rise 6.2 pct in Jan-Oct despite sanctions
Yonhap
2013-12-4

“Speical Report: FAO/WFP crop and food security assessment mission to the Democratic People’s Republic of Korean”
Read the full report here (PDF). Previous reports here.

According to the UN WFP/FAO Press Release (on Thanksgiving day!):

ROME/PYONGYANG – A nationwide assessment by two United Nations agencies shows an increase in staple food production in the Democratic People’s Republic of Korea (DPRK) for the third year running.

The report, however, notes that although rates of child malnutrition have steadily declined over the past 10 years, rates of stunting caused by malnutrition during the first 1,000 days of a child’s life remain high and micronutrient deficiencies are of particular concern.

The joint Crop and Food Security Assessment Mission to the DPRK by the Food and Agriculture Organization (FAO) and World Food Programme (WFP) visited all nine agricultural provinces in late September and early October around the main annual cereal harvest.

Total food production is estimated at about 5.03 million metric tons (including milled rice) in 2013, which is about a 5 percent increase over the previous year. Despite the improved harvest, the food security situation is still unsatisfactory with 84 percent of households having borderline or poor food consumption.

The mission observed immense logistical challenges for the public food distribution system and expressed concerns about the timeliness and consistency of distributions. Markets and informal mechanisms of bartering and other forms of exchange are believed to be of increasing importance for access to food by families, particularly in urban areas.

“Despite continued improvement in agricultural production, the food system in the DPRK remains highly vulnerable to shocks and serious shortages exist particularly in the production of protein-rich foods,” said Kisan Gunjal, FAO economist and co-leader of the mission. “In the interest of increased protein consumption and to reverse the downward trend of soybean production, the price paid to farmers for soybean should be increased.”

Since 1998, WFP in partnership with the government has produced blended fortified foods and nutritious biscuits for children and pregnant or nursing women. WFP has recommended a shift to a new product – Rice Soya Milk Blend – for children in nurseries to reduce stunting and wasting.

“Improving the diversity and quality of food provided through the child institution system is essential to improving children’s nutrition,” said WFP DPRK Country Director Dierk Stegen. “We want to produce Rice Soya Milk Blend but can only do so if we receive sufficient donor support.”

Despite a small reduction in the area planted, overall crop production in 2013/14 is estimated to increase due to generally favourable weather conditions that resulted in a higher rice crop.

The aggregate production from cooperative farms, plots on sloping land and household gardens estimated by the mission includes the 2013 main season harvest and the forecast for 2014 early season crops. Unusually early and heavy rains in July and early August compromised maize and soybean yields but had little effect on paddy.

The report estimated cereal import requirements at 340,000 metric tons for the 2013/14 marketing year (November/October). Assuming the official import target of 300,000 metric tons of cereals is met, there remains an uncovered food deficit of 40,000 metric tons for the current marketing year.

While this food gap is the narrowest in many years, it needs to be bridged either through additional purchases by the government and/or international support to avoid increased undernourishment during the current marketing year.

To improve food security and nutrition, the report recommends national and international support for sustainable farming practices, better price and market incentives for farmers and improvements in farm mechanization.

In nutrition, the report recommends that efforts should go toward improving dietary diversity and feeding practices for young children and women through strategies such as behavioural change, market reform and encouraging livestock and fish production; strengthening treatment of severe and moderate acute malnutrition; and better hygiene and sanitation practices.

ADDITIONAL INFORATION:

1. Here is a follow up report in 38 North by Randall Ireson.

2. Here is coverage in the Wall Street Journal and Assocaited Press.

3. High-Resolution photographs from DPRK can be downloaded here.

According to Yonhap:

The number of skilled North Korean workers in Russia has jumped 2.8-fold in the first nine months of this year compared to 2012, a report showed Tuesday.

The report by Radio Free Asia that used data provided by Amur Oblast showed 762 cases of work permits being issued to skilled North Koreans in the cited period. Of these, 34 involved permits for specialized workers with considerable technical expertise.

The Washington-based media outlet said the sharp on-year increase is in contrast to the incremental rise in the number of work visas issued for menial laborers, which grew by just 2.2 percent to around 1,700 cases.

Pyongyang has been sending workers to Russia to help the country earn hard currency, with most being hired by Russian logging companies.

The North and Russia held government-level talks on Nov. 12 to facilitate the movement and employment of North Korean workers.

Read the full story here:
Number of skilled N. Korean workers in Russia surge this year: report
Yonhap
2013-11-26

According to Yonhap:

Inter-Korean trade has gradually been returning to normal levels following the reopening of a joint industrial park in North Korea’s border city of Kaesong in September, government data showed Sunday.

According to data from the Ministry of Unification and the Korea Customs Service, two-way trade between South and North Korea amounted to US$152.15 million last month. The amount is equivalent to 80.9 percent of total bilateral trade in the same month last year.

“Exports have grown with the entry of large amounts of raw materials, production facilities and food supplies as (the Kaesong complex) prepares to resume operations in earnest,” a ministry official said, speaking on condition of anonymity.

The complex, which ground to a halt in April amid high security tensions on the Korean Peninsula, reopened in September. Inter-Korean trade is limited to the joint factory park because all other economic exchanges have been banned since May 2010 due to North Korea’s sinking of a South Korean warship in March of that year.

“The Kaesong Industrial Complex is gradually recovering to previous levels,” the official said.

The complex, a key outcome of the first-ever inter-Korean summit in 2000, combines South Korean capital and technology with cheap North Korean labor to produce clothes, utensils, watches and other labor-intensive goods.

The project serves as a key source of cash for the impoverished country.

My compendium of stories related to the closure and reopening of the Kaesong Zone can be found here.

Read the full story here:
Inter-Korean trade recovers following reopening of Kaesong complex
Yonhap
2013-11-24

A new article in Forbes updates us on some of the changes in Rason:

Tomas Novotny has been in North Korea two days, and he looks frazzled. It was a long journey from Prague, and standing on the street in downtown Rajin, his government minder by his side, he can already see that doing business in the DPRK’s remote northeast will present an unusual set of challenges.

…

Novotny is here because of that railway line. A brewing technologist with the Czech firm Zvu Potez, he has come to set up a brewery. All the equipment and materials were transported by train–from Prague to Moscow, through Siberia and onto the branch line of the Trans-Korean main line.

“We’re still building the brewery. Come and see it,” says Novotny. The two containers that brought the Zvu Potez equipment from Prague lie 50 meters from the brewery. It’s a great location by the sea in Rajin’s main park. The business is a joint venture between the Czech firm and the Rason regional government, says Novotny, and will target tourists and foreigners. There are about 300 Western tourists–including Russians–a year and about 20,000 Chinese visitors to the country’s northeast.

“When they’ve finished building,” he says, shouting over the drilling, “I’m going to teach three or four locals how to brew. I hope they can speak English. If they can’t it will be interesting.”

He expects to be in Rason for six months establishing the business, but already he misses home and his young son. “I won’t get to speak to them until I go home at Christmas,” he says.

North Korea’s telecommunications challenges are a headache for business, too. Foreigners are able to get 3G on their phones, but it is expensive. International calls are possible but equally pricey.

“When telecommunications become a little more open that will indicate the seriousness of purpose,” says Andray Abrahamian, who directs Choson Exchange, a Singaporean nonprofit that focuses on business and legal training for young North Koreans in the DPRK.

Abrahamian has been watching North Korea for a decade and visited Rason several times. He says things are finally moving, a result of legal changes made in 2010 that helped make Rason more autonomous. Further legal changes two years ago were intended to harmonize Rason’s economic laws with those of China, he says.

…

“The degree to which [Pyongyang] will allow autonomy to the regional decision makers or local planners has yet to be seen. That’s a key issue for Rason–how autonomous are these places really?” asks Abrahamian, 36.

…

“Chinese small and medium-size enterprises, from Jilin Province but also Heilongjiang Province, are continuing to come in–Rason is experiencing growth,” says Abrahamian.

Not all the factories are new. The Rajin Garment Factory was built in 1958, long before talk of special economic zones. In the early days it produced school uniforms for North Korean students. After 1991 it took orders from China and today employs 180 staff.

The factory manager stands on the front steps. It’s early evening, and he’s watching a staff volleyball game in the car park. Has business improved since Rason was made a special economic zone?

He shrugs and says: “It’s hard to say. It’s different. For every school uniform we used to get paid 800 won and a 1,200-won government subsidy. Now there is no government subsidy.”

The workers, nearly all women, are given housing and paid 600? to 700 won a month, plus overtime, he says. Inside the factory, on the first floor, close to 100 women are clocking overtime. Wearing blue uniforms and matching head scarves, they are sewing puffer jackets, hurrying to complete a big order. The final step of the process is to sew in the label: “Made in China.”

The tag is written in English, and the woman packing the jackets doesn’t understand the visitors’ raised eyebrows. Apparently this is a common practice.

It’s noisy on the factory floor. The popular all-girl band Moranbong blasts out of speakers, drowning out the whir of sewing machines. It’s impossible to hear the drone of the generator, switched on after yet another power failure, a regular feature of life in the DPRK.

There is a deal in place to bring power from Jilin Province, but the Chinese have been holding it up using the pretext of an environmental impact study.

More Chinese power can’t hurt, says researcher Melvin, “but there are many more substantive problems the North Korean must overcome before serious large-scale investment can move into the country. The DPRK cannot currently credibly commit to any policy–no policy stability, rule of law–and has a poor record of honoring its agreements and impartially enforcing contracts. No independent company will risk serious capital in this environment.”

Another matter is fuel. Joseph Naemi is director of HBOil, an oil trading and refining company based in Ulaanbaatar, Mongolia. HBOil grabbed a few headlines in June when it was reported the firm had acquired a 20% stake in Sungri oil refinery in Rason. That was premature, says Naemi: HBOil has 20% of a state-dominated joint venture called Korean Oil Exploration Corp. International, and a formal commitment with Sungri has yet to be made. Another option is to invest in a refinery on the west coast of the DPRK.

“The easy option is Sungri oil refinery because it’s based on Russian technology and because of its location in terms of the dynamic state of affairs in Rason Special Economic Zone. We are conducting engineering assessment of the refinery to determine the various phases of upgrading and expanding–it’s a work in progress,” says Naemi.

Describing Rason officials as well educated and smart, he says they understand issues of foreign investment protection, taxation and the need to not only be fiscally transparent but also to offer attractive terms to investors.

“I know a number of Mongolian companies, all privately owned, that are at various stages of either investing in North Korea or finalizing their joint ventures so that they can invest. There is a robust relationship between Mongolia and North Korea,” says Naemi.

…

For anyone doing business, there will be surprises. Standing on the terrace of the new brewery, Novotny looks out at the recently planted lawn. The seeds have been planted in rows, five centimeters apart, all the way down to the sea. Come summer and the warmer weather, the grass should have taken. It stands to be a great spot for a bar.

“Yeah, if we’re still open,” says Novotny and laughs. He drops his voice and out of earshot of his minder adds: “Look at the grass, see how it grows in such straight lines. Things are different here.”

Read the full story here:
Things are Brewing in North Korea’s Rason Zone
Forbes
Kate Whitehead
2013-11-20

UPDATE 9 (2013-12-9): Newman has issued a statement (Nelson Report):

Statement from Merrill Newman dated December 9, 2013

Over the past two days, I’ve been able to reunite with my wonderful family, rest, and try to recover from the difficult ordeal that began when I was prevented from leaving North Korea on October 26th. I can’t begin to tell you how good it is to be home, to be free, and to begin to resume my normal home life.

Let me repeat my thanks to the U.S. State Department for the amazing job they did in getting me out of North Korea and bringing me home safely. I want to thank Vice President Biden, who called me in Beijing to wish me well and even offered to give me a lift back to the United States on his plane. Thanks also to the Swedish Embassy in Pyongyang for their great work, especially their visit to me and their help in ensuring that I had the medicine I needed.

Let me also express deep appreciation to friends, family, members of the First Congregational Church, wonderful people of faith and from all walks of life, residents and staff of our home at Channing House, and Members of Congress for their prayers, vigils, hard work, and moral support on my behalf. I want to single out Evans Revere for his extraordinary help.

It wasn’t until I got home on Saturday that I realized what a story I had become in the press here. During my detention I had no access to any outside news, and wondered whether anyone was even aware of my situation. I am sorry I caused so many people so many heartaches back home.

Looking at the television and newspaper reports, I’ve seen a lot of speculation about why I was detained. I’ve given considerable thought to this and have come to the conclusion that I just didn’t understand that, for the North Korean regime, the Korean War isn’t over and that even innocent remarks about the war can cause big problems if you are a foreigner.

I’m a Korean War veteran and I’m very proud of my military service, when I helped train Korean partisans. The North Koreans still harbor resentment about those partisans from the Mt Kuwol area and what other anti-Communist guerrillas did in North Korea before and during the war.

The shooting stopped sixty years ago, and the North Koreans have allowed other American veterans of the war to visit. Moreover, I did not hide my own military service from the tour company that organized my trip. Therefore, I did not think this history would be a problem. Indeed, in my application for a tourist visa, I specifically requested permission to visit the Mt. Kuwol area. That request was approved and was on the official itinerary when I arrived, although after I got to Pyongyang, I was told that the bridge had been washed out by a flood and it would not be possible to do so.

Before they told me this, I innocently asked my North Korean guides whether some of those who fought in the war in the Mt. Kuwol area might still be alive, and expressed an interest in possibly meeting them if they were. The North Koreans seem to have misinterpreted my curiosity as something more sinister. It is now clear to me the North Koreans still feel much more anger about the war than I realized. With the benefit of hindsight I should have been more sensitive to that.

I’ve also seen a lot of reports about the “confession” I made in North Korea. Anyone who has read the text of it or who has seen the video of me reading it knows that the words were not mine and were not delivered voluntarily. Anyone who knows me knows that I could not have done the things they had me “confess” to. To demonstrate that I was reading the document under some duress, I did my best to read the “confession” in a way that emphasized the bad grammar and strange language that the North Koreans had crafted for me to say. I hope that came across to all who saw the video.

Getting the “confession” and my “apology” were important to the North Koreans. Although the North Koreans treated me well during my detention (they looked after my health and fed me well), I was constantly under guard in my hotel and my interrogator made it clear that if I did not cooperate I could be sentenced to jail for espionage for 15 years. In fact, the North Korean interrogator repeatedly made the following statement to me: “If you do not tell the full truth, in detail, and apologize fully, you will not be able to return to your home country. If you do tell the full truth, in detail, and apologize fully, you will be able to return to your home country — someday.” Under these circumstances, I read the document with the language they insisted on because it seemed to be the only way I might get home.

In the coming days, as I recover my strength I plan to share more details about my experience in North Korea. I know there is a lot of interest in this and I’ll do my best to answer as many questions as I can. We also ask that you not forget that another American, Kenneth Bae is being held in the DPRK and we hope that he, too, will be allowed to rejoin his family. For now, let me finish by saying again how great it is to be back home, safe, and with my loved ones.

UPDATE 8 (2013-12-7): Newman back home. According to the Washington Post:

An elderly U.S. veteran of the Korean War arrived home Saturday after being released by North Korea, where he had traveled as a tourist and was held for six weeks as a prisoner.

“I’m delighted to be home,” Merrill Newman said at the San Francisco airport, where he was reunited with his wife and son, the Associated Press reported. “It’s been a great homecoming. I’m tired, but ready to be with my family.”

…

Vice President Biden, laying a wreath at a war memorial in Seoul, said he had spoken briefly with Newman by phone.

“There is a piece of good news. The DPRK today released someone they should never have had in the first place: Mr. Newman,” Biden said.

“I’m told we tried to get in contact with him [but] he’s on his way or in China right now. I offered him a ride home on Air Force Two, but as he pointed out, there’s a direct flight to San Francisco, his home. I don’t blame him. I’d be on that flight too. It’s a positive thing they’ve done.”

Biden said the United States would continue to demand the release of another American, Kenneth Bae, who has been held for more than a year. Including Newman, North Korea has detained at least seven Americans since 2009, six of whom have been released.

“At least there’s one ray of sunshine today. Mr. Newman will be reunited with his family,” he said.

UPDATE 7 (2013-12-7): KCNA reports that Mr. Newman has been deported.

U.S. Citizen Deported from DPRK

Pyongyang, December 7 (KCNA) — As already reported, a relevant institution of the Democratic People’s Republic of Korea (DPRK) detained and investigated U.S. citizen Merrill Edward Newman who entered the DPRK under the guise of a tourist to confirm the whereabouts of the spies and terrorists who had been trained and dispatched by him, an intelligence officer, during the last Korean War.

According to the investigation, Newman entered the DPRK with a wrong understanding of it and perpetrated a hostile act against it.

Taking into consideration his admittance of the act committed by him on the basis of his wrong understanding, apology made by him for it, his sincere repentance of it and his advanced age and health condition, the above-said institution deported him from the country from a humanitarian viewpoint.

UPDATE 6 (2013-12-1): Yonhap reports that Swedish diplomats have been allowed to meet with Mr. Newman.

News wire services such as AFP and CNN said a consul met Merrill Newman at a hotel in Pyongyang and delivered medication sent by his family.

The Scandinavian country’s mission in Pyongyang acts as the “protecting power” for Americans in North Korea, and its diplomats provide consular services.

The media outlets said Newman was in good health and reported he was being treated well by the North Koreans.

UPDATE 5 (2013-11-30): KCNA has published Mr. Newman’s “apology”:

Apology of U.S. Citizen for His Hostile Acts in DPRK

Pyongyang, November 30 (KCNA) — The following is an apology U.S. citizen Merrill Newman presented to a relevant institution after his detention in the DPRK:

I am Merrill Newman living in California, USA.

During the Korean War, I have been guilty of a long list of indelible crimes against DPRK government and Korean people as advisor of the Kuwol Unit of the UN Korea 6th Partisan Regiment part of the Intelligence Bureau of the Far East Command.

As I gave 300 people with barbarity gone to the South who had ill feelings toward the DPRK from Chodo military education and guerilla training they later did attack against the DPRK although the armistice was signed.

I also gave 200 soldiers under my command in Mt. Kuwol the task to harass the rear base such as collecting information on the movement and the arm equipment in KPA, attacking and destruction on the communication system, the rice storage, railroad and munitions train by dispatching the several elements to Hwanghae Province Area.

According to my order they collected information of the KPA and attacked the communication system and killed 3 innocent operators, delayed the munitions supply using explosives obtained from attacking the mine and they attacked the KPA and harassing operations of the rear base 10 times in the Hwanghae Province Area.

They killed about 50 soldiers in the process of the operation. In the process of following tasks given by me I believe they would kill more innocent people.

As I killed so many civilians and KPA soldiers and destroyed strategic objects in the DPRK during the Korean War, I committed indelible offensive acts against the DPRK government and Korean people.

Although 60 years have gone by, I came to DPRK on the excuse of the tour as a member of 33 Tour Group from U.S. on October 17, 2013.

Shamelessly I had a plan to meet any surviving soldiers and pray for the souls of the dead soldiers in Kuwol Mt. during the Korean war. Following the itinerary I asked my guide to help me look for the surviving soldiers and their families and descendents because it was too hard for me to do myself.

If I had the opportunity to visit Kuwol Mt. I was going to pray for the souls of dead soldiers. If I saw surviving soldiers in Mt. Kuwol, I was going to connect them with the members of the Kuwol Partisan Comrades-in-Arms Association which I had already connected with, anti-Communist strategic plot organization.

All the members of the Kuwol Partisan Comrades-in-Arms Association escaped from the DPRK to South Korea. So I asked the guide to help me to look for their families and relatives living in DPRK and I gave the document written with their address and e-mail address to the guide in the Yanggakdo Hotel.

I also brought the e-book criticizing the Socialist DPRK on this trip and criticizing DPRK.

Although I committed the indelible offensive acts against the Korean people in the period of the Korean War, I have been guilty of big crimes against the DPRK government and Korean People again.

I realize that I cannot be forgiven for my offensives but I beg for pardon on my knees by apologizing for my offensives sincerely toward the DPRK government and the Korean people and I want not punish me.

Please forgive me.

I will never commit the offensive act against the DPRK Government and the Korean People again.

On this trip I can understand that in US and western countries there is misleading information and propaganda about DPRK.

If I go back to USA, I will tell the true features of the DPRK and the life the Korean people are leading.

Merrill Newman

Nov 9, 2013

Here is the video.

According to the New York Times:

In the apology, Mr. Newman said he was an adviser for the Kuwol Unit of the United Nations Korea Sixth Partisan Regiment, which served with the Intelligence Bureau of the Far East Command.

A person familiar with Mr. Newman’s military record and his current situation in captivity in North Korea said that Mr. Newman served as an adviser in that unit in 1953 before the armistice. The unit operated behind the lines in North Korea, but Mr. Newman conducted his duties as an adviser on Chodo, an island off the west coast of what is now North Korea, the person said. In the beginning of the video, Mr. Newman mentioned Chodo as the place where he was stationed. The person speaking about Mr. Newman’s situation declined to be identified because of the delicacy of the case.

…

According to American military documents declassified in 1990, the United Nations partisan warfare mission organized in 1951 eventually mobilized about 23,000 guerrillas to fight against North Korea, overseen by about 200 American advisers.

Read more in Time.

UPDATE 4 (2013-11-30): KCNA publishes article acknowledging detention of Mr. Newman.

KCNA Report on Arrest of U.S. Citizen for Hostile Acts in DPRK

Pyongyang, November 30 (KCNA) — The Korean Central News Agency released the following report on Saturday:

A relevant institution of the Democratic People’s Republic of Korea recently put in custody U.S. citizen Merrill Edward Newman who committed hostile acts against the DPRK after entering the country under the guise of a tourist.

After entering the DPRK as a member of tourists’ group in October he perpetrated acts of infringing upon the dignity and sovereignty of the DPRK and slandering its socialist system, quite contrary to the purpose of tour.

He also committed such crime as trying to look for spies and terrorists who conducted espionage and subversive activities against the DPRK in the area of Mt. Kuwol during the last Fatherland Liberation War as well as their families and descendants and connect them with the “Kuwol Partisan Comrades-in-Arms Association,” an anti-DPRK plot-breeding organization of south Korea.

According to the results of the investigation, he was active as adviser of “Kuwol Unit” of the UN Korea 6th Partisan Regiment part of the Intelligence Bureau of the Command of the U.S. Forces in the Far East since early in 1953. He is a criminal as he masterminded espionage and subversive activities against the DPRK and in this course he was involved in killings of service personnel of the Korean People’s Army and innocent civilians.

The investigation clearly proved Newman’s hostile acts against the DPRK and they were backed by evidence. He admitted all his crimes and made an apology for them.

UPDATE 3 (2013-11-23): According to NK News,  Merill traveled with Juche Travel Services. According to the article:

The agency, which only learned that it was involved in Newman’s case on Thursday, said that it currently had no information as to why the 85 year old Korean War veteran had been removed from a flight leaving Pyongyang on October 26.

“Mr. Newman had in place all necessary and valid travel documents to take his tour. We have no information concerning what has occurred to result in the current situation,” Thompson said in a statement emailed to NK News.

“Mr. Newman travelled with one other gentleman to the DPRK on a private tour booked via Juche Travel Services between 17th and 26th October 2013.”

UPDATE 2 (2013-11-21): Everything we know about Merrill Newman (Washington Post):

Merrill Newman, an 85-year-old American who lives in California, has been detained in North Korea since Oct. 26, multiple news reports now confirm. Several hundred Americans are thought to visit North Korea every year as tourists, typically safely. Newman’s arrest is highly unusual and remains shrouded in mystery. Here is the publicly available information on Newman so far, taken from accounts in NKNews.org, the San Jose Mercury News, New York Times and Associated Press [link broken].

The nine facts listed here only deepen the mystery; there is a total absence of any hint of a reason why he would have been arrested.

1. Newman was visiting North Korea on a nine-day tourist visa, traveling with a friend from his retirement community named Bob Hamrdla and two tour guides. Such guides also function as government minders.

2. He was arrested while sitting on an airplane at Pyongyang’s international airport, waiting to depart the country. A single uniformed officer boarded the plane and walked Newman off.

3. Authorities have held him for more than three weeks, but North Korean state media have not mentioned the case.

4. A Korean War veteran, Newman with his wife lives in a Palo Alto retirement community called Channing House. He is Caucasian, which is significant given that North Korea has tended in the past to arrest only Westerners of Korean or other Asian descent. Korean War veterans sometimes travel to North Korea, usually without incident. A group went in July to repatriate the remains of an American who’d died there during the war. They say the trip went fine.

5. Newman does not appear to be overtly political or to have a known record of human rights activism or religious evangelizing, the two practices that have gotten Americans detained by North Korean authorities. He is a retired technology executive with a master’s degree in education from Stanford. He’d reportedly taken Korean-language lessons to prepare for the trip.

6. It’s not clear which travel agency he was traveling with. A growing number of Beijing-based agencies have been cropping up that take Americans into North Korea.

7. Newman’s son said his father had a “difficult” discussion with his government minders about the Korean War. While political statements are obviously frowned upon by North Korea, the country has been hosting thousands of Western tourists for years. Newman would be far from the first Western visitor to raise sensitive political issues with his minders.

8. His son says he has a heart condition and a bad back. North Korea expert David Straub told NKNews.org, “The basic fact of the matter is that this gentleman is 84-85 yrs old, an elderly man, presumably not a threat in any way to North Korea, so this is, even by North Korean standards, an extraordinary thing.”

9. The State Department issued a blanket warning Monday against all travel to North Korea, the first of this level of severity since Americans began traveling there in 1995. A State Department spokesperson emphasized that the official warning cites a “chronic” threat to Americans of arbitrary detention. Two other Americans have been arrested in recent years, both of Korean descent and accused of conducting illegal Christian missionary work.

UPDATE 1 (2013-11-20): The New York Times provides a name and some additional information:

The veteran, Merrill Newman of Palo Alto, Calif., was taken from an Air Koryo flight on which he was to leave the country on Oct. 26, his son, Jeff Newman, the chief financial officer of a real estate company, said in a telephone interview from California.

“He was on a nine-day tour with a friend and two tour guides. He went through the normal visa process,” the younger Mr. Newman said. “Everything was going very well. They day before they were due to leave he had a meeting with his tour guide and without his companion.”

At that meeting, where at least one other North Korean aside from the tour guide was present, the Korean War was discussed, his son said. “That was the only hiccup,” he said. Mr. Newman’s traveling companion, Bob Hamrdla, who is not a Korean War veteran and lives in the same retirement village as Mr. Newman, assumed there must have been some misunderstanding from that meeting, Jeff Newman said.

 There has been no word of the whereabouts of Mr. Newman, who has a heart condition and a bad back, since he was escorted from the plane, his son said.

“All we would like is for whatever misunderstanding to be put aside and, on a humanitarian basis, he be able to leave the country and come home and be with his two grandchildren,” Mr. Newman said in the interview.

…

Mr. Newman’s detention has not been reported in the North Korean state-run news media.

In reaction to Mr. Newman’s detention, the State Department further tightened the United States travel warning to North Korea, making it clear that travel to North Korea was highly dangerous for American citizens who were likely left vulnerable to arbitrary arrest.

The updated warning, released on Tuesday, noted that “U.S. citizens crossing into North Korea, even accidentally, have been subject to arbitrary arrest and long-term detention.”

…

Mr. Newman, a retired technology executive, served as an infantry officer during the Korean War, and later earned a master’s degree in education from Stanford. He lives at Channing House, a retirement community, with his wife, his son added.

ORIGINAL POST (2013-11-20): Reuters reports that the DPRK may have detained another American tourist. According to the article:

North Korea may have detained an elderly U.S. man last month who entered the country on a tourist visa, Kyodo News Service said on Wednesday, citing an unnamed diplomatic source.

Kyodo, in a report from Beijing, said the possible detention could become another diplomatic bargaining chip for North Korea, which has held Kenneth Bae, a Korean-American Christian missionary, since November 2012. Bae has been sentenced by the Pyongyang regime to 15 years of hard labour.

The U.S. State Department echoed U.S. embassy officials in Beijing and Seoul who said they were aware of the reports but could not confirm them.

North Korea claims the man, who apparently is not of Korean descent, has broken the law, according to Kyodo. The man entered North Korea for sightseeing last month with a valid visa, Kyodo quoted the diplomatic source as saying.

Nolan Barkhouse, a spokesman for the U.S. embassy in Beijing, said: “We are aware of reports that a U.S. citizen was detained in North Korea, but we have no additional information to share at this time.”

I have been archiving information on Kenneth Bae here.

UPDATE 3 (2013-11-24): NPR offers more details:

In Pyongyang, a spokesman for North Korean’s foreign ministry responded last week with a sharply worded statement saying the country strictly forbids drug manufacturing drug smuggling. It called the case “another politically motivated puerile charade” spread by “the Western reptile media.”

Read the full story here.

UPDATE 2 (2013-11-21): Yonhap reports the men plead not-guilty. According to the article:

The five men all entered not-guilty pleas in federal court in Manhattan Wednesday [2013-11-20]. If convicted, they face a mandatory minimum sentence of 10 years in jail and the possibility of life in prison.

UPDATE 1 (2013-11-20): The New York Times offers additional details:

Five men have been charged with conspiracy to import 100 kilograms of nearly pure North Korean-produced methamphetamine into the United States, and federal officials said the case illustrates the emergence of North Korea as a player in the global drug trade.

The men were part of a sprawling international drug trafficking ring led by a former American soldier, Joseph Manuel Hunter, who has separately been charged with conspiring to murder a Drug Enforcement Administration agent and with importing cocaine into the United States, federal officials said.

“These guys worked for and with Joseph Hunter in a transnational criminal organization that involved drugs, weapons, chemicals, murder and a close involvement with rogue nations,” said a senior federal law enforcement official, who was not authorized to discuss the case publicly.

The five men — including British, Chinese and Philippine nationals — were arrested in Phuket, Thailand, in September and were extradited to the United States on Tuesday night. They appeared in federal court in New York on Wednesday.

In January, the group agreed to provide 100 kilos of meth to a man they thought was a narcotics trafficker but was, in fact, a confidential source who was working with the DEA.

One of the defendants, Ye Tiong Tan Lim, 53, from China, bragged that his Hong Kong-based criminal group was the only organization that was able to produce meth in North Korea because of a crackdown there on the drug trade, according to a criminal indictment filed in federal court.

Lim told the DEA source that the North Korean government “already burned all the labs. Only our labs are not closed. . . . To show Americans that they are not selling it anymore, they burned it,” Lim said.

The meth was first sent to the Philippines, and the men agreed to deliver the narcotics in Thailand, where they were told it would be shipped to the United States by boat.

One of the defendants said that his organization had stockpiled one ton of North Korean methamphetamine in the Philippines because “we already anticipated this thing would happen. . . . [whereby] we cannot bring out our goods right now.”

The group arranged for a “dry run” and sent a shipping container of tea leaves from the Philippines to Thailand to test the delivery channel that would later be used to ship the meth.

The drugs were later seized by law enforcement officials in Thailand and in the Philippines. The North Korean meth tested at more than 99 percent pure, DEA officials said.

“Like many international criminal networks, these drug traffickers have no respect for borders and no regard for either the rule of law or who they harm as a result of their criminal endeavors,” DEA Administrator Michele M. Leonhart said.

The five men could face a mandatory minimum sentence of 10 years and the possibility of life in prison.

“Methamphetamine is a dangerous, potentially deadly drug, whatever its origin,” said Preet Bharara, the U.S. attorney for the Southern District of New York. “If it ends up in our neighborhoods, the threat it poses to public health is grave whether it is produced in New York, elsewhere in the U.S., or in North Korea.”

Hunter, 48, the alleged leader of the ring, was arrested in September in Thailand and sent to the United States.

Nicknamed “Rambo,” Hunter had served as a sergeant in the U.S. Army. When he left the service in 2004, he began a new life as a contract killer, according to senior law enforcement officials. In May, Hunter and two other former U.S. soldiers allegedly planned to kill a DEA agent and one of the agency’s informants for $800,000.

“My guys will handle it,” Hunter wrote in a May 30 e-mail when asked if he could execute the killings, according to an indictment. The drug traffickers who said they wanted to hire Hunter were part of an undercover sting operation.

Four other men have been arrested in the case, including another former U.S. Army sergeant, as well as German and Polish nationals.

ORIGINAL POST (2013-11-20): According to CNN:

U.S. drug agents in Thailand took custody of five men wanted in the United States on allegations of being part of a drug ring that sought to traffic in North Korean methamphetamine and other drugs, CNN has learned.

The men, who have British, Filipino, Taiwanese and Slovak citizenship, were being flown to New York to face charges, according to a source.

Thai authorities announced the arrests after the men were turned over to U.S. authorities. A U.S. law enforcement official said the charges would be made public soon.

The men are part of a broader investigation that federal prosecutors made public in September, filing charges against a group of former U.S. and European ex-military men in a murder-for-hire and drug-importation plot.

The Drug Enforcement Administration concocted a sting operation and arrested Joseph Hunter, a former U.S. Army sniper trainer nicknamed Rambo, and four others in the sting case.

The five more recently arrested were expelled by Thai authorities and put on a DEA plane to New York.

Additional details of the charges couldn’t be learned because they remain under seal.

Drug trafficking from North Korea has occurred for decades with at least 50 documented incidents. In previous years, North Korea had been linked to shipments of heroin and methamphetamine, according to the CIA World Factbook.

In 2003, a North Korean ship, Pong Su which was carrying nearly 300 pounds of heroin, was seized along the eastern coast of Australia after a four-day chase.

There isn’t enough information to determine whether the North Korean government is currently involved in drug trafficking, according to the 2013 International Narcotics Control Strategy Report issued by the U.S. State Department

“There have been no confirmed reports of large-scale drug trafficking involving DPRK (Democratic People’s Republic of Korea) state entities since 2004,” it stated. “This suggests that state-sponsored drug trafficking may have ceased or been sharply reduced, or that the DPRK regime has become more adept at concealing state-sponsored trafficking of illicit drugs.”

Information on the case against Joseph Hunter can be found here and here.

Read the full story here:
5 men extradited to U.S. in North Korean meth case
CNN
Evan Perez
2013-11-20

This article contains a wealth on information on Chinese investment and financial support of the DPRK.

According to the South China Morning Post:

On his ninth business trip to North Korea this year, Hao Ze has been meeting government officials to finalise his latest investment deal, providing equipment to mine rutile, an ingredient in paints, plastics and sunscreen.

The work at the mineral ore deposit will add to Hao’s growing business empire, which includes a plant manufacturing car parts, a restaurant and a spa – all investments in a country run by a reclusive dictatorship.

Hao is among a growing league of private Chinese investors lured by North Korea’s powerful business potential and undeterred by its unpredictable politics. The investments are fuelling growth in North Korea’s economy, as well as concerns among Western analysts that the boom could encourage more erratic behaviour by the hermit kingdom.

There, Chinese investors dominate certain business sectors – in particular, mining – and its one reason many analysts say that North Korea’s feeble economy appears to be improving.

Before 2011, North Korea had been running a deficit. Two prominent economists have estimated that the country enjoyed a small surplus over the last two years. Last year, the country’s gross domestic product grew by 1.3 per cent, according to Bank of South Korea. The bank did not provide any dollar figures.

Most of these business deals are private and sealed outside of the Chinese government’s control. The exact size of the investments could not be gleaned. But many of the arrangements are profitable and have inadvertently increased Pyongyang’s dependence on its closest ally, Beijing, even as China has shown apparent frustration with the nuclear ambitions of supreme leader Kim Jong-un.

The increase in North Korea’s wealth from the investments could also shift the country’s engagement, or lack of it, with the outside world. Some researchers fear that with more capital, North Korea’s nuclear ambitions might grow bolder. The country will also have less incentive to introduce economic changes. Other researchers express hope that foreign investment creates an opportunity for more fruitful engagement with the outside world and the international community.

Raised in the central province of Zhejiang , Hao’s interest in North Korea was piqued by his grandfather, who fought in the Korean war in the 1950s. The grandson started travelling to North Korea in 2004 with friends to distribute food and money. He cultivated contacts and resourceful middlemen, and relied on those people when, in 2010, he started to import North Korean ginseng and honey to China. His portfolio expanded steadily and now includes a variety of small businesses on the peninsula.

He and several Chinese partners have invested 10 million yuan (HK$12.6 million) in Pyongyang, where he employs about 150 local workers, built an 8,000-square-metre factory compound and runs a restaurant and spa.

“There certainly are risks,” Hao says. “But this place is just like China in the 1980s. It’s highly risky, but it’s also highly profitable if you seize the opportunity.”

The actual size of private Chinese investment in North Korea is hard to gauge. Chinese citizens had poured about US$6 billion into businesses in North Korea by 2011, according to Sheila Miyoshi Jager, an associate professor of East Asian studies at Oberlin College in the United States.

China’s non-financial foreign direct investment in North Korea had reached US$290 million by the end of 2010, according to China’s Ministry of Commerce, a figure included in a report last year by the newspaper Oriental Morning Post in Shanghai. Hao and other academics say the figure is growing as more Chinese investors with an appetite for risk venture into North Korea.

And risks there are. Last year, a rare open row between a Chinese company and the North Korean government drew international attention to Korea’s opaque rules and arbitrary decisions. Chinese fertiliser and mineral producer Xiyang Group said in an August 2012 blog post that, after it had spent four years and 240 million yuan on an iron ore enterprise, North Korean authorities suddenly cancelled the company’s contract last year. The company said it was cheated out of its mining assets after North Korean officials extorted more than US$800,000 from the Chinese firm.

Xiyang called its venture a “nightmare” and said estimates of their losses were US$55.3 million. North Korean state media denied the claims and said the company implemented just 50 per cent of its investment obligations. Beijing has stayed silent about the dispute.

The incident has not dampened the enthusiasm of Chinese investors. Hao says that private businessmen like him are lured by a large pool of cheap labour and lower operating costs. Despite an unstable electrical power supply, utility fees and taxes are much lower than in China.

Almost 90 per cent of the more than 300 Chinese investors surveyed in 2007 reported making a profit in North Korea despite problems such as asset theft and rampant corruption, according to a survey by Marcus Noland and Stephan Haggard, two economists at the Peterson Institute for International Economics in Washington.

“That’s partly because this place is so isolated and so underdeveloped that if you can avoid major problems, there is money to be made,” Noland says.

Hao made big profits in the manufacturing and service industries. Now he’s setting his sights on North Korea’s mining sector, an increasingly important component of the country’s economy that has otherwise been severed from international trade.

That’s partly because of sanctions imposed by the United Nations and Western countries. Hao intends to invest 36 million yuan in his rutile venture, working with a company from Qinghai , which Hao declines to name as the deal is not finalised.

Chinese investors dominate North Korea’s mining industry. According to the US Korea Institute at John Hopkins University in the US, 41 per cent of the 138 Chinese companies registered as doing business in North Korea in 2010 were involved in the mining industry.

However, Zhang Huizhi from Jilin University’s North East Research Centre says that many private Chinese investors are working in North Korea without registering with Chinese authorities.

It’s believed that North Korea has around 200 different minerals and US$6 trillion worth of rare elements and mineral deposits including magnetite, zinc, copper and limestone, according to estimates by the South Korean state-owned mining company Korea Resources.

However, many international investors are turned off by North Korea’s cryptic business environment, unstable politics and faulty infrastructure, which have made operating mines and transporting minerals difficult. Chinese businessmen, though, plough ahead thanks to their proximity, access to savvy Chinese middlemen who speak Korean and connections on both sides of the border. “These are the resources not available for other investors,” says Scott Bruce, an associate with the East West Centre in the United States.

Coal mining is a popular choice for Chinese businesses. According to Bruce, many Chinese investors pay far less for North Korean coal than for what’s extracted from other countries. North Korea, however, pays a premium for Chinese coal imports.

“The Chinese investors have to deal with huge risks to get in and out of the country. They often have to build infrastructure to access the minerals, so they are looking for their costs to reflect those risks,” Bruce says.

Since he inherited power in 2011, supreme leader Kim has pledged to revive the country’s economy. In October, Pyongyang announced a plan to establish 14 special economic zones to attract more foreign investment. Last year, the government began allowing North Koreans to work in China. But experts wonder whether Kim is committed to opening economic borders or if he will roll back the few existing reforms, as his father did, for fear of losing authority.

Recent visitors to North Korea do not dispute that the country’s economy may be improving.

“There are a lot more taxis on the road. More people are using cell phones. And you would be surprised to see that the restaurants are actually packed,” says Wu Wenxing, a Chinese businessman who has visited the country five times since last year.

No hard figures are available to indicate the country’s economic performance. But according to ongoing research by Noland and Haggard, the country is likely to have run a surplus in the past two years largely because of growing trade with China.

While analysts are still trying to explain the sudden growth in wealth, many see China’s economic presence, especially in the mining industry, as a major contributing factor. Despite Beijing’s support for the latest round of United Nations sanctions against North Korea, bilateral trade between the two nations hit a record high in the first eight months of this year.

Noland said a wealthier North Korea could mean that the country would be less vulnerable to international pressure.

Remco Breuker from Leiden University in the Netherlands agrees. He says that the international community could be forced to readjust how it engages with North Korea. More international investments, he argues, could prod the country to become a better international neighbour.

“For years it has been the premise of US policy towards the North that if you exert enough pressure, the country will collapse. But it’s not happening, and in fact the country is in the black,” Breuker says. “We have to realise North Korea is here to stay.”

North Korea’s parallel development of nuclear weapons would hamper its economic development, Noland says. Most of the nuclear and missile tests would be followed by UN sanctions, a key detractor for international investors.

Expanding the country’s mineral extraction might have an economic downside. Bruce from the East West Centre says it may convince North Korea that it’s better to sell its resources for short-term cash while delaying productive economic changes that would promote long-term growth.

Sunny Lee, a fellow with the Shorenstein Asia-Pacific Research Centre at Stanford University, says that Beijing would not mind a wealthier North Korea as long as it maintains a good relationship with Beijing.

“Given the economic sanctions from the US and its allies, Pyongyang’s economic dependence on China is bound to deepen,” Lee says.

For businessmen like Hao, all is well as long as business is good. “We are expecting to recoup all our investment next year,” he says.

Read the full story here:
Chinese businessmen seek profitable opportunities in North Korea
or Mining North Korean opportunities
South China Morning Post
Kristine Kwok
2013-11-18

According to Yonhap:

South Korea has sent 17.8 billion won (US$16.7 million) in humanitarian aid to North Korea in 2013, a 26 percent increase from last year, despite the spike in cross-border tensions, the Seoul government said Sunday.

In a report released by the Ministry of Unification, the total amount of aid sent to the communist country, including money donated to international organizations, represents a 26 percent increase from 14.1 billion won offered in 2012.

“Despite criticisms that Seoul has not done enough to help the disadvantaged in the North, the incumbent Park Geun-hye administration has sent more aid to Pyongyang than what was shipped last year when President Lee Myung-bak was in office,” a government official said.

The official, who did not wish to be identified, pointed out that while critics have said the amount is small, people have to take into account the overall aid offered. North conducted its third nuclear test in February and threatened pre-emptive strikes against Seoul and Washington, seriously souring cross-border ties.

Fifteen local charity groups including the Eugene Bell Foundation and Korea Sharing Net provided 4.3 billion won, or a little over 24.1 percent of all aid to the North, with the rest coming from the South Korean government.

Seoul donated 13.5 billion won to the World Health Organization and the United Nations Children’s Fund since President Park took office in late February.

Moving forward, the official said South Korea has no plans to provide direct food aid to the North but that it may consider offering matching funds to private charity organizations wanting to help the North.

The source said while Seoul has no plans to ease its so-called May 24 sanctions that ban all nonhumanitarian economic and social exchanges with the North, it has exercised flexibility and permitted limited cross-border contacts and transactions.

Seoul implemented the ban after it accused the North of sinking one of its warships in the seas off their west coast in 2010. The incident claimed the lives of 46 South Korean sailors.

“The policy of flexibility existed in the past and is nothing new,” he said.

Read the full story here:
S. Korean aid to N. Korea grows 26 pct in 2013 on-year
Yonhap
2013-11-17

UPDATE 91 (2014-1-14): ROK spends 1/3 of DPRK budget for FY 2913. According to Yonhap:

South Korea spent less than one-third of its fund intended to boost exchange and cooperation with North Korea last year, the unification ministry said Tuesday.

South Korea spent 296.4 billion won (US$280 million) last year, or 27 percent of the 1.09 trillion won earmarked, for the inter-Korean cooperation fund, according to the ministry, which handles inter-Korean affairs.

The figure represents the highest level in six years as the government paid insurance money to small South Korean companies that operate plants in the North’s border city of Kaesong.

The South Korean companies received insurance money worth 177.7 billion won due to the months-long shutdown of the inter-Korean joint factory park in Kaesong last year.

In 2008, the ministry spent 18.1 percent of the inter-Korean cooperation fund. The ratio dropped to 8.6 percent and 6.5 percent in 2009 and 2012, respectively, as inter-Korean relations soured.

The factory park resumed operations in September, more than five months after the North unilaterally closed it in anger over joint annual military exercises between South Korea and the United States. In August, Pyongyang pledged not to shut the park down again “under any circumstances.”

More than 44,600 North Koreans work at 120 South Korean firms operating in the park to produce clothes, shoes, watches and other labor-intensive goods. The project serves as a major legitimate revenue source for the impoverished communist country.

UPDATE 90 (2013-12-30): The ink has barely dried before the DPRK has seemed to breech it.  This time the DPRK has demanded that the firms in the KIC pay back taxes. According to Yonhap:

North Korea has demanded that South Korean firms operating in a jointly run factory park in the communist nation pay taxes to North Korea, an official said Monday, in an apparent breach of a September deal.

The North said in a notice last week that the firms in the factory park in the North’s western border city of Kaesong should pay taxes incurred between Jan. 1 and April 8, according to the official handling the issue at the unification ministry.

The ministry, which handles inter-Korean affairs, said the North’s demand did not make any sense, and it was in talks with North Korea over the issue.

The move comes three months after North Korea agreed not to collect taxes from the South Korean firms for 2013 to make up for their losses following its unilateral closure of the factory park on April 9.

In September, the sides resumed the operation of the factory park, a month after the North pledged not to shut it down again “under any circumstances.”

Although the North Korean government took a loss on “tax revenue” it still made plenty of money from the confiscated wages of its workers. According to the article:

The North earned US$80 million in wages for its workers last year.

UPDATE 89 (2013-11-24): Inter-Korean trade has started to recover.

UPDATE 88 (2013-11-13): The Korea Times reports that the Kaesong firms are getting loan payments deferred and a new round of talks is underway.  According to the article:

The government said Wednesday it will allow companies with factories at the inter-Korean Gaeseong Industrial Complex (GIC) to delay payment of loans due within the next six months.

“The due date for loans taken out from the state-run inter-Korean cooperation fund will automatically be pushed back six months,” said Park Soo-jin, vice-spokeswoman of the Ministry of Unification that handles inter-Korean affairs, Wednesday, during a regular briefing. “The amount equals to 46 percent of all loans provided by the fund.”

According to the ministry, 28 out of the total 123 companies, which have taken out loans totaling 9.7 billion won ($ 9 million), will benefit from this measure.

Up to date, companies that have factories in North Korea’s border city of Gaeseong altogether borrowed about 21.3 billion won ($ 19.9 million) from the cooperation fund.

The move by the government is aimed at easing the pressure on GIC companies strapped for cash in the face of declined production as a consequence of the five-month hiatus of operations because of heightened tension on the Korean Peninsula earlier this year.

In the same article, the Korea times reports on the latest round of talks between the DPRK and ROK over the management of the KIC:

Meanwhile, on the same day, working-level officials from the South and North met to discuss ways of better protecting investment at the GIC and promote its internationalization.

The meeting of two sub-panels of the Gaeseong joint management committee were held in the North’s border city, the ministry said.

“The two sub-panel meetings, the first since Sept. 26, are designed to bolster the overall global competitiveness of the GIC,” a ministry official said.

There are altogether two sub-panels under the larger GIC joint management committee that has taken charge of running the complex since operations resumed in September.

During the investment protection panel meeting, the two sides reportedly discussed the establishment of an official dispute settlement regime coupled with how to attract more foreign investors into the GIC.

Previously, the two Koreas agreed to hold an IR session on Oct. 31 but it was canceled when little headway was made in a separate sub-panel meeting to change rules dealing with travel, communication and customs at the joint complex in North Korea.

The ministry also said another meeting to discuss the rights and safety of South Koreans working in Gaeseong will be held today.

But the date for the travel and communication meeting has yet to be fixed because of its sensitivity.

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