North Korean Economy Watch

TOPIC 1: NUCLEAR TALKS
(2011-10-24): U.S. and North Korea Begin Groundwork for Talks. According to the New York Times:

The United States and North Korea began two days of talks here on Monday that American officials have said will test the ground for a possible resumption of wider discussions on North Korea’s nuclear program.

A convoy of vehicles brought Kim Kye-gwan, North Korea’s first vice foreign minister, to the United States mission in Geneva exactly on schedule at 10 a.m. for the first round of talks with a team of American negotiators led by President Obama’s special envoy for North Korea policy, Stephen W. Bosworth.

In a statement at the end of the first day of talks, Mr. Bosworth said: “I think we are moving in a positive direction. We have narrowed some differences, but we still have differences that we have to resolve.”

His comments came after a working dinner with the North Korean delegation that he described as “very positive.” He added: “I am neither optimistic nor pessimistic, but as I said, we have made some progress. But we have issues still to resolve, and we will work hard to do that.”

American officials said last week that the discussions were intended to determine whether North Korea was “serious about engaging in talks and fulfilling its commitments under the 2005 joint statement of the six-party talks and its nuclear, international obligations, as well as take concrete steps toward denuclearization.”

Comments on the talks by Lankov, Panetta and Snyder.

(2011-10-19) New York Times: The United States will resume nuclear talks with North Korea next week in Geneva. According to the New York Times:

The current American envoy, Stephen Bosworth, will be replaced by Glyn Davies, the United States ambassador to the International Atomic Energy Agency, said Mark Toner, a State Department spokesman.

“It’s important to stress this is a change in personnel, not a change in policy,” he said during a regular State Department briefing.

Mr. Bosworth, 71, has divided his time between his Korea duties and his position as dean of the Fletcher School at Tufts University, near Boston. He held the preliminary negotiations in New York in July with a North Korean counterpart, Kim Kye-gwan. Both will take part in the Geneva meetings, set for Monday and Tuesday, along with Mr. Davies. The rarity of Mr. Kim’s comments had to do with their overall topic of his government’s nuclear program, but they were a restatement of Pyongyang’s well-known stance on his conditions to allow the resumption of the six-party talks, which have been stalled for years.

“Our principle position remains unchanged that the six-way talks should be quickly resumed without preconditions,” Mr. Kim said in a written interview with Itar-Tass, according to the North’s official Korean Central News Agency. It was the reclusive North Korean leader’s third known interview with outside news media.

In his comments to Itar-Tass, Mr. Kim said that his government remained committed to a 2005 six-party agreement in which Pyongyang vowed to relinquish its nuclear assets in return for economic aid and a peace treaty and diplomatic ties with Washington.

That seemed almost to anticipate a remark by Mr. Toner, the State Department spokesman, who said that the Geneva talks were “a continuation of the exploratory meetings to determine if North Korea is prepared to fulfill its commitments under the 2005 joint statement of the six-party talks and its nuclear, international, obligations, as well as take concrete steps toward denuclearization.”

(2011-7-24) New York Times: Announcement of visit to US by Kim Kye-gwan

TOPIC 2: US SOLDIER REMAINS
(2011-11-3): According to the Korea Herald, the US is planning to offer the DPRK  $5.7 million for excavation work for remains of soldiers:

The U.S. Defense Department plans to offer some $5.7 million to North Korea for a project to search for and excavate the remains of the U.S. war dead in the communist country, Washington-based Radio Free Asia reported on Thursday.

Citing an email message from Pentagon’s publicity officer Carie Parker, it said that the money will be used to establish base camps for the work in North Pyongan Province and South Hamgyeong Province and also cover overhead expenses.

Parker also said that the amount of money is the same as what the U.S. offered for excavation works in Vietnam and Laos.

The U.S. reportedly plans to carry out the work to recover the remains of its troops, who were killed in the North during the 1950-53 Korean War, four times between spring and fall next year.

Since 1996, the U.S. has recovered the remains of some 220 soldiers through its excavation works.

Since 2005, it has suspended the work because of concerns over the security of its personnel there. But the U.S. and the North agreed to resume the work after their talks in Thailand last month.

(2011-10-22) Reuters: Following up on (2011-10-18) AFP, the US and DPRK have reached a deal on recovering the remains of US soldiers who died in the Korean War:

The recovery operations, the first since 2005, are expected to resume next year, the Pentagon said.

“Accounting for Americans missing in action is a stand-alone humanitarian matter, not tied to any other issue between the two countries,” the statement said.

Yet there has been growing speculation U.S. President Barack Obama, approaching the final year of his four-year term, may initiate talks with North Korea on curbing its nuclear ambitions and the remains recovery talks were seen as a hint at U.S. willingness to engage.

More than 7,900 U.S. soldiers are listed as missing from the Korean War, with some 5,500 estimated to be buried in the reclusive North. Joint recovery efforts were halted in May 2005 over concerns about the uncertain environment created by North Korea’s nuclear programs.

The North has long sought to sign a peace treaty with Washington to formally end decades of enmity since the war, which ended in a ceasefire, not a peace treaty.

(2011-10-18) AFP: United States and North Korea began talks in Bangkok, Thailand, on resuming efforts to recover the remains of Americans killed during the 1950-53 Korean War. According to the article:

The US Department of Defense says more than 7,900 Americans are missing from the conflict, with 5,500 of those believed missing in North Korea.

Joint US-North Korean search teams, in 33 missions in the North from 1996 to 2005, recovered the probable remains of 229 of them.

But cooperation broke down in 2005 when the United States voiced concerns for the safety of its personnel as relations soured over North Korea’s nuclear programme.

The US delegation, which will include representatives from US Pacific Command and United Nations Command in Korea, will be led by Robert Newberry, deputy assistant secretary of defense for prisoner of war and missing personnel affairs, the Pentagon said. It was unclear who was representing North Korea.

Here is the official statement by the US Department of Defense:

No. 884-11
October 17, 2011
POW/MIA Talks Begin with North Korean Officials

A delegation from the United States will meet in Bangkok on Oct. 18 to begin negotiations with the Democratic People’s Republic of Korea (DPRK) on resuming recovery of the remains of American servicemen missing in action from the Korean War.

Robert J. Newberry, deputy assistant secretary of defense for POW/missing personnel affairs, will lead negotiations with a team including representatives from the Department of State, the Defense POW/Missing Personnel Office, the Joint POW/MIA Accounting Command, the U.S. Pacific Command and the United Nations Command-Korea.

The talks will only address the issue of resuming remains recovery of missing U.S. servicemen from the Korean War. Accounting for Americans missing in action is a stand-alone humanitarian matter, not tied to any other issue between the two countries.

Of the approximately 83,000 Americans missing from all conflicts, more than 7,900 are from the Korean War with 5,500 of those believed to be missing in the DPRK.

(2011-8-9) Yonhap and New York Times: The United States said Monday that it has requested talks with North Korea on ways to search for the remains of American troops killed during the 1950-53 Korean War. On Friday, August 9, the DPRK announced an agreement to discuss how the U.S. could recover remains of American troops killed in the Korean War. According to the Washington Post:

The North’s state media, Korean Central News Agency, quoted an unnamed foreign ministry official Friday saying that Pyongyang had accepted the U.S. proposal to talk and that preparations for discussion had begun.
Relatives of the missing soldiers reacted to the news with hope.

…

In 1996, after negotiations, the U.S. military began excavations in North Korea to search for missing U.S. service members. Over nearly a decade, such operations yielded 229 sets of remains, according to the Pentagon’s Defense Prisoner of War/Missing Personnel Office.

But of that number, only 87 have been identified and returned to families. Part of the problem was that many remains uncovered by North Korean workers were jumbled together, and the U.S. office struggled to sort them out.

Then in 2005, the United States stopped its recovery operations amid rising tension with the North over its unwillingness to disarm its nuclear capabilities. The six years of diplomatic gridlock since then have frustrated many family members.

…

And Thursday, just hours before North Korea’s agreement to talk about recovering remains, the United States pledged $900,000 in flood aid to the North.

TOPIC 3: FLOOD ASSISTANCE (AID & TRADE)
(2011-12-10) Yonhap offers data on the DPRK’s aid and trade coming from the USA:

Trade between the United States and North Korea reached US$2.45 million in October, a U.S. report showed Saturday.

The bilateral trade volume was comprised completely of aid goods offered by the U.S. to the communist state, the Voice of America (VOA) reported citing data compiled by the U.S. Department of Commerce.

(2011-8-18) Washington Post: US to provide $900,000 in emergency relief supplies to North Korea after devastating floods. See more here.

TOPIC 4: NON-GOVERNMENT EXCHANGES
(2011-12-4) Mainichi (Japan): US Security experts return from visit to the DPRK:

A group of U.S. nuclear and Korean affairs experts completed a five-day visit to North Korea on Saturday, but one member said the group did not visit the country’s main nuclear complex in Yongbyon.

“We did not visit. That’s all I can say,” Charles Ferguson, president of the Federation of American Scientists, told reporters at Beijing airport when asked whether the group had visited Yongbyon where North Korea is building a light-water nuclear reactor to be fueled by low-enriched uranium.

Ferguson and another member, Joel Wit, a former U.S. State Department official in charge of North Korean affairs who currently is a visiting scholar at the U.S.-Korea Institute at Johns Hopkins University, declined to comment on the trip, including who they met in Pyongyang and what kind of talks they had.

During their trip, North Korea reported brisk progress in building a light-water reactor and producing enriched uranium.

(2011-8-6) Yonhap: N. Korean visitors to U.S. up over 50 pct in first half of 2011. Radio Free Asia (RFA), citing data from the Department of Homeland Security, said 139 North Korean nationals entered the country during a six month period this year, up from 89 tallied in the same period last year.

Radio Free Asia (RFA), citing data from the Department of Homeland Security, said 139 North Korean nationals entered the country during a six month period this year, up from 89 tallied in the same period last year.

It said that despite the drop in official contacts between Washington and Pyongyang, and a general cooling off in bilateral relations, there was a rise in the inflow of North Korean nationals into the country.

…

The radio station said the U.S. State Department mainly issued short term, non-immigration, commercial B1 or B2 tourism visas to the North Korean visitors.

(2011-6-24) Delegation visit: KCNA delegation visits US.

(2011-6-14) Delegation visit: North Korean Taekwondo team tours US for second time.

(2011-3-26) Delegation visit: North Korean economic delegation visits US.

(2011-2) Delegation visit: Last February, a North Korean delegation comprised mostly of scientists traveled to the U.S. to attend academic seminars and to discuss the exchange of science and technology between the two countries. The North’s scientists delegation was headed by Hong So-hon, president of Kimchaek University of Technology.

According to the Choson Ilbo:

The Weekly Chosun has obtained detailed official records of some 2 million adult residents of the North Korean capital Pyongyang from a source in the North Korea-China border area. The data, which contains the names, date of birth and home addresses of 2,108,032 Pyongyang residents, was compiled by the North’s State Security Department in 2005.

The data does not include children up to age of 17 or an estimated 10,000 members of the elite including relatives of leader Kim Jong-il, or of soldiers stationed in Pyongyang from provincial areas, according to the source.

But it does include people in four districts that were excluded from the Pyongyang administrative area last year. According to official data published by South Korea’s Unification ministry based on the North’s Central Yearbook in February, Pyongyang’s population shrank by about 500,000 as a result of administrative restructuring. But the list shows only about 197,000 adults living in those four districts in 2005.

The difference of 300,000 is too big to make sense, even if the omitted child population is taken into consideration.

The most remarkable aspect of the data is the shortage of men. There are a mere 870,000 men on the list compared to 1.22 million women.

What caused the imbalance is not known but it is possible that many men are soldiers and therefore not counted. Another guess is that there are more women in the capital because they are shipped there for mass rallies.

A former senior North Korean official who defected to the South in 2007, said, “More than six out of every 10 Pyongyang residents are female. It’s mostly the elite who are allowed to live in Pyongyang. A lot of men have been moved out to the suburbs, but the women are mobilized for mass events, which explains the gender imbalance.”

Based on analysis of the records, the average marriage age is 27 years old. More than 80 percent of adults in Pyongyang were registered as married, compared to South Korea, where single households are on the rise. Some 410,000 or 20 percent of the total population in Pyongyang were unmarried and under 27 years old. Divorcees accounted for about 1 percent of the total population with 21,000, although North Korean defectors say divorce and remarriage rates there are gradually increasing.

About 830,000 or more than one-third are party members — a very high ratio considering that the total number of party members across North Korea is about 2 million.

The remaining 1.28 million seem to be either prospective members or family of members. They are said to be working mainly in party-affiliated organizations.

A defector from Pyongyang told the Weekly Chosun, “It’s hard for non-party members to live in Pyongyang. Many people are in the process of becoming party members, even if they haven’t been admitted yet. They consider it an honor. So really most people in Pyongyang are in the party.”

According to the data, there are 124 registered foreign nationals in Pyongyang from 15 countries including the U.S., Japan, China, the former Soviet Union or Russia, the Czech Republic, Canada, France, and Lebanon. Japanese citizens top the list with 86, but they are likely to be ethnic Koreans. About one person from every European country lives in Pyongyang.

Read the full story here:
Official Data Shed New Light on Pyongyang Population
Choson Ilbo
201-1-23

Pictured above (Google Earth): The towns mentioned in the article below from which the Kaesong Industrial Zone could draw more labor: Pongchon (봉천), Kumchon (금천), and Phyongsan (평산).

Institute for Far Eastern Studies (IFES)
2011-10-20

According to South Korea’s Ministry of Unification (MOU), the “May 24 Sanctions” that went into effect after the sinking of the naval boat Cheonan was relaxed and began to permit the resumption of construction of businesses in the Kaesong Industrial Complex (KIC). In addition, plans to build fire stations and emergency medical facilities in the area are also currently underway.

After South Korean Grand National Party chairman Hong Jun-pyo visited KIC on September 30, 2011, the ROK government has reached the following decisions: 1) to allow the resumption of halted factory constructions; 2) to build a fire station and emergency medical facility; 3) to resume repair work for commuting roads for KIC employees; and 4) to extend the operations of commuter buses.

This means seven companies that received permits in the past to begin construction but stopped after the sanctions went into effect would be able to resume the halted construction projects.

According to the Ministry of Unification, the seven companies include three metal and machinery, three textile, and one electronic factories, taking up a total area of 103,527 square meters. The total site of production facilities of stage 1 businesses in the KIC reaches 2,171,900 square meters, in which the currently operating 123 companies take up 783,471 square meters. With the sanctions lifted, the total area of businesses in operation will reach 885,950 square meters.

In addition, five companies awaiting construction for expansion will have to wait a little longer. The authorities announced to discuss this issue at a later date, looking positively on their construction to resume shortly as well.

Also the MOU announced to push forward with the establishment of fire stations and emergency medical facilities, “to protect the properties and health of businesses and employees of the KIC. The plans to break ground for fire station will begin in mid-November and is expected to be completed by late next year.”

The layout for the KIC fire station was completed in December 2009 and 3.3 billion USD has been budgeted to fund the construction. The station will be constructed on a steel frame on a 3,305 square-meter lot with the total floor space to be around 2,182 square meters.

The Kaesong Management Committee has been operating a “fire/police station” from April 2005. But with occurrences of accidental fires since last winter, it has reinforced the number of fire engines and manpower – currently at a total of eight fire trucks and 36 fire fighters.

Medical facilities in the KIC will also be completed by the end of 2012 once the construction begins early next year. About 3 billion USD is set for this project.

Currently at the KIC, Green Doctor’s Cooperation Hospital is in charge of providing medical and health services in the KIC, with South Korea Green Doctor’s Kaesong Hospital treating the South Korean employees and North Korean Comprehensive Clinic treating the North Korean employees exclusively. The South Korea Green Doctor’s Kaesong Hospital is currently operated by volunteers at a clinic level. The hospital was in the process of improving the facilities to more than ten beds. However, this project was halted after the May 24 sanctions went in effect.

On another note, the MOU also announced that maintenance work for the road connecting Kaesong City to the KIC would begin. The road is normally used by North Korean employees of the KIC. It was also announced that the number and operation of commuter buses would increase to help with the commute. The buses operate in the 20 km radius; the plan is to increase that to 40 km. Since September 2010, the number of buses increased to 400.

There are plans to extend the service to cover the areas of Kumchon, Bongchon, and Pyongsang. However, the roads to these areas are unpaved and extension of transportation services to these areas will require negotiations with the North Korean authorities.

Although these measures will alleviate some of the problems faced by the businesses in the KIC, the MOU still stands firm on its position that North Korea must take responsibility and make formal apology for the Cheonan incident in order for a fundamental resolution of the situation to occur.

1. “Relying on One’s Strength: The Growth of the Private Agriculture in Borderland Areas of North Korea”
Andrei Lankov，Seok Hyang Kim ，Inok Kwa
PDF of the article here 

The two decades which followed the collapse of the communist bloc were a period of dramatic social and economic transformation in North Korea. The 1990-2010 period was a time when market economy re-emerged in North Korea where once could be seen as the most perfect example of the Stalinist economic model. The present article deals with one of the major areas of socioeconomic change which, so far, has not been the focus of previous studies. The topic is about the growth of private agricultural activities in North Korea after 1990. This growth constitutes a significant phenomenon which has important social consequences and also is important from a purely economic point of view: it seems that the spontaneous growth of private plots played a major role in the recent improvement of the food situation inside North Korea.

______________________

3. Korea Sharing Movement anti-malarial program (Via Cancor)
Read a PDF of on the project here

______________________

4. What is it like to teach at the Pyongyang University of Science and Technology (PUST)?
Find out from one instructor here. More on PUST here.

UPDATE 6 (2011-10-19): I finally received a list of companies participating in the first Rason International Trade Fair. Below is a picture of the names of participating companies listed on a display at the show and a PDF of their names (in English). I apologize for any typos:

Here is a PDF of the company names in English.

Most are obviously Chinese companies, though there appears to be at least one American company listed in the mix, White Stone Corporation Co., Inc. USA!

UPDATE 5 (2011-8-22): KCTV produced video footage from the fair.

UPDATE 4 (2011-8-25): KCNA announces the closing of the first Rason International Trade Fair:

First Rason International Trade Fair in DPRK Closes

Rason, August 25 (KCNA) — The first Rason International Trade Fair was closed with due ceremony on Thursday.

Present there were Jo Jong Ho, chairman of the Rason City People’s Committee, officials concerned and exhibitors of different countries and regions.

In a speech a speaker referred to the fact that the fair was successfully progressed and an advance was made in conformity in favor of mutual interests in economy, exchange of science and technology and trade through wide-ranging contacts.

Diplomas were awarded to the exhibitors who presented excellent goods at the closing ceremony.

UPDATE 3 (2011-8-25)): KCNA publishes a short article advertising the economic advantages of Rason:

Rason Economic, Trade Zone with Bright Prospect of Development

Pyongyang, August 25 (KCNA) — Rason City, the DPRK, is situated in an important area which can link China’s three northeast provinces and Russia’s Far East region, both full of natural resources, and many Asia-Pacific nations with each other.

Rajin, Sonbong and Ungsang ports in Rason and Chongjin Port adjacent to the area provide good conditions for transit trade for Northeast Asia and other continents.

The sea off the ports does not freeze in winter, so they are not subject to seasonal restriction.

The reconstruction projects of the Rajin-Khasan railway and Rajin Port launched in Juche 97 (2008) will make it possible to reduce the transport distance from Asia to Europe, sharply cutting down the transport fee.

The Rajin-Khasan railway will serve as a transport route between the DPRK and Russia and between Asia-Pacific and European nations.

Rason City has seafood, agricultural product and wild vegetable processing bases operated by Korean trading companies. The city also boasts of many ponds, lakes and bays favorable for fresh-water fish culture and offshore farm.

Its natural and geographical environment is suitable to an international tourist resort. There are sea-bird, seal and other animal sanctuaries in the area with beautiful islets, like Pipha and Sol.

Some foreigners have already launched business in the area and an increasing number of investors are interested in the zone.

Rason City with amazing geographical and economic conditions is likely to greatly contribute to the development and prosperity of Northeast Asian nations.

UPDATE 2 (2011-8-21): The first Rason International Trade Fair opens Monday. Some interesting information below:

Pictured above (Google Earth): The Rason International Trade Fair Exhibition Hall (See in Google Maps here)

Also, a reader sent in this promotional flyer which is full of information on the trade fair:

See images of the flyer here: Part 1, Part 2, Part 3.

Video footage of the trade fair can be seen here.

UPDATE 1 (2011-8-17): The First “Rason International Product Exhibition” to be Held in Rajin-Sonbong Special Economic Zone
Institute for Far Eastern Studies (IFES)

Rajin-Sonbong or “Rason Special Economic Zone” is a co-development project developed by North Korea and China. The Rason SEZ International Product Exhibition is scheduled to take place from August 22nd to 25th — an exhibition targeted to attract foreign investors to the region.

According to the KCNA article released on August 14, “The exhibition will display a wide array of items from various countries including vehicles, pharmaceutical and clothing products.” It was said that the exhibition promises be an important event to encourage cooperation and exchange with various countries in trade, economic and science, and technology sectors.

This event is expected to not only bring Chinese but also European and other foreign companies into the economic zone, pushing investment into the area.

There is also talk of developing Rason into an international tourism zone to attract tourists from China, Russia, and Japan.

After the closing ceremony of the exhibition, visits to Rajin Harbor, Mangyongbong ferry, and the amusement park are scheduled in order to provide sightseeing tours for the participants to the exhibition.

Mangyongbong ferry, well-known in the past for transporting North Koreans living in Japan back to North Korea, is gaining special attention itself as a new tourist attraction. This cargo-passenger ferry is expected to be utilized further for tourism in the near future, including bringing Chinese tourists from Dairen and other harbors in China to Nampo Harbor close to Pyongyang.

In the late 1950s, Mangyongbong ferry began to shuttle North Koreans in Japan from Niigata Harbor to Wonsan Harbor near Pyongyang. From 1984, it was used to transport cargo into Japan, but this was halted in 2006 due to economic sanctions against North Korea which followed in response to North Korea’s missile and nuclear tests.

There are two ferries in North Korea with the name Mangyongbong. The Mangyongbong-92 will be introduced in Rajin Harbor to maximize the demonstration effect. The Mangyongbong, weighing 3,500 tons, is much smaller and older and inadequate to be used as a ferry.

The Mangyongbong-92 was built in 1992 to commemorate the 80th birthday of Kim Il Sung. The ship was built with funds collected from Chongryon (i.e., the General Association of Korean Residents in Japan). It was estimated to cost over 4 billion JPY at the time, weighing about 9,700 ton with a capacity to hold 350 passengers.

On another note, the fourteenth annual Pyongyang Spring International Product Exhibition held this May hosted over 280 companies from 10 countries. 100 Chinese companies participated in the exhibition. Since then, Chinese corporations from Liaoning and Dandong are reported to have placed contract orders worth 800,000 USD.

ORIGINAL POST (2011-8-15):

Pictured above (Google Earth): Rason geographic border (in red) and security perimeter fence (Yellow).

According to KCNA:

First Rason International Trade Fair to Be Held

Pyongyang, August 14 (KCNA) — The first Rason International Trade Fair will be held in the DPRK from August 22 to 25.

Vehicles, medicines, garments, etc. presented by companies of different countries and regions including the DPRK will be displayed at the fair.

The fair will contribute to boosting cooperation and exchange among countries and regions in fields of trade, economy, science and technology.

The DPRK is no stranger to trade fairs. By my calculations, the DPRK has hosted the Pyongyang Spring International Trade Fair since 1998 and the Pyongyang Autumn International Trade Fair since 2005. These events, which draw vendors from across the planet, are held at the Three Revolutions Exhibition in Pyongyang.

This is the first trade fair of which I am aware that is being held outside of Pyongyang. The Rajin-Sonbong area was the site of the DPRK’s first experiment with special economic zones. Although it did not generate the expected level of interest, North Korean authorities are hoping that this time around they will be able to capitalize on their proximity to the Chinese market (see here and here).

Additional Information:

1. Previous posts on Rason here.

2. Previous Posts on the Pyongyang International Trade Fair here.

3. The Chinese have been upgrading the road that links the Rason port with the Chinese border.

4. A few days ago I posted a preliminary list of DPRK trade companies published in Foreign Trade magazine. I imagine that more than one of them will have a presence at the trade fair.

Pictured Above (Google Earth): Eermel Factory in Ulan Bator

Simon Ostrovsky, who produced this BBC piece on North Korean loggers in eastern Siberia, has produced a piece on North Korean workers in the Mongolian capital, Ulan Bator. I have posted his article in The Independent as well as a few related pieces and additional information below.

According to his article in The Independent:

Sitting astride rows of buzzing looms and distinguishable from their colleagues by the white make-up heavily applied to their faces, a few dozen North Korean women in a run-down Mongolian clothing factory are busily knitting garments to please minders from their Communist state.

They are part of a North Korean labour force tens-of-thousands strong, put in place across Asia to help the Stalinist regime meet its financial targets. And British consumers are unwittingly filling the dictatorship’s pockets through these workers, an investigation in Mongolia by The Independent and the investigative journalism project WorldView has found.

Sent in their hundreds, under an agreement between Mongolia and the Democratic People’s Republic of Korea (DPRK), the North Korean workers take jobs on construction sites and in factories across this Central Asian state, where they are closely monitored by overseers from their homeland. Some of them were found to be producing goods for popular UK clothing brands such as Edinburgh Woollen Mill (EWM).

“They’re hard workers, they don’t complain and they get stuck in, they’re quite skilled,” said David Woods, a British textiles professional brought on as a specialist at the Eermel clothing factory in the Mongolian capital, Ulan Bator. North Korea has been able to transplant elements of its highly centralised state to Mongolia, where labourers keep to a tight schedule dictated by their embassy for the duration of their three-year contracts. They also have to seek permission to speak to outsiders, unlike their Mongolian co-workers.

Mr Woods showed a reporter a James Pringle-brand cashmere sweater made for EWM with a £140 price-tag already affixed, ahead of shipment to the UK, as he gave a tour of the factory. He described how its 80 female North Korean employees were housed and fed on site under a scheme managed by North Korea’s embassy, earning up to £200 per month.

Another Eermel employee told The Independent that the women’s labour fed the coffers of the North Korean regime, echoing the North Korean practice across Asia where tens of thousands of North Koreans are estimated to be employed on behalf of their government. “We are paying to Korean workers like Mongolians, the same salary,” said Bayar, Eermel’s director for exports, who like many Mongolians uses only one name. “But… we are transferring the money to the account of the [North Korean] embassy. How they split the salary, we don’t know.”

It’s a surprising move for a regime that regularly tries to keep its citizens in the dark about world events and strictly controls access to information at home. The fact that North Korea has allowed so many of its citizens to leave and glimpse the outside world reflects the severe economic situation the country has faced since the collapse of its one-time sponsor, the Soviet Union, and, more recently, international sanctions over its nuclear-weapons programme. It’s also an example of how Pyongyang has been able to adapt and continue profiting from a globalised economy while keeping most of its population at arm’s length.

In Mongolia, the practice goes back to 2004, according to leaked US embassy cables released by WikiLeaks in August. The cables, penned in 2006, describe how a representative of North Korea, who was “extremely professional in both manner and appearance”, approached a Canadian-owned gold mine to offer workers for $1.50 (90p) per day.

Another 2006 cable says: “The working and living conditions of these labourers raise the concern that they are subject to coercion, and are not free to leave their employment… the DPRK workers are monitored closely by ‘minders’ from their government, and many are believed to be subject to DPRK government pressure because of family members left behind in North Korea. The workers reportedly do not routinely receive direct and full salary.”

North Korea watchers warned that the work-abroad programmes should not be seen as a step by Pyongyang towards more openness. “As far as the regime is concerned, sending groups of people to foreign countries where they don’t speak the language and can be sequestered in barracks or factory dorms is a much safer option than granting to foreign investors in North Korea the kind of freedom and mobility they demand,” Brian Myers, a Seoul-based North Korea analyst, said.

The scheme has been hugely successful with businesses in Mongolia, which are attracted by the North Koreans’ rock-bottom labour costs and an unparalleled work ethic. One of the few countries with warm ties to the Stalinist state, Mongolia has increased its quota of North Koreans allowed to work in the country from 2,200 to 3,000 in 2011, according to the Ministry of Labour and Social Welfare.

The workers are even more popular in Russia, where 21,000 laboured in the first quarter of 2010 alone, according to the Russian migration agency. And many more are believed to be working in China, where the statistics are not made public.

Part of that army of workers are the seamstresses at Eermel, a hulking Soviet-era cashmere factory in the Mongolian capital that produces sweaters and other cashmere garments for the EWM retail chain and a number of lesser-known UK labels including Hush, Moray and Brodie. Clothing racks in Germany, Italy, Australia, Japan and beyond are also stocked with Eermel garments, according to Mr Woods. That means international isolation has not stopped North Korea from tapping global consumer markets.

North Korea’s culture of secrecy makes it difficult to get accurate data on the workers’ contract terms. The private interests using its labour force seem to understand that continued co-operation depends on maintaining the code of silence. After a short phone call to the North Korean embassy, Eermel factory officials refused to allow The Independent to interview any of its North Korean employees.

And at the Mongolian foreign ministry, officials were tight-lipped about how much the North Koreans’ labour is worth to Pyongyang in cash transfers, preferring to focus on benefits to the individual labourers. “For the families of the individuals who work [here] that could be helpful,” State Secretary Tsogtbaatar Damdin said. But when asked if he knew what portion of their salaries the North Korean labourers were allowed to keep, he said: “If they owe some commitments to their county we would rather not intervene in that area.”

The deal could be worth over £7m annually to North Korea if the Eermel factory workers’ wages are representative of those across Mongolia. It’s no small sum when compared to North Korea’s gross national product, estimated by the CIA to equal only $40bn in 2008. EWM, for its part, confirmed that it was supplied by the Eermel factory in Mongolia and that there were North Koreans among the workforce there, but said it was told by the factory that the North Koreans’ wages were paid directly to the workers, not the North Korean government.

The Scottish company quoted Eermel as telling it: “We do not pay any commission to the North Korean government, any North Korean Agency or anyone else. We pay the workers directly.” That stands in stark contrast to what The Independent was told by factory officials in Mongolia. But even though their contract terms are secret and are likely in violation of a raft of international agreements on workers’ rights, the practice has its supporters among North Korea watchers. They believe North Koreans working abroad will share their experiences of the outside world when they return home, perhaps in the long run leading to social and political change within the country.

“It’s every North Korean worker’s dream to be selected [to work abroad],” Andrei Lankov, a professor of Korean studies at Kookmin University in Seoul, said. “They cannot make even remotely as much inside North Korea. And on top of that, they are coming back and they bring knowledge about the outside world. They are closely supervised and they have to be very cautious, because their families back in North Korea are essentially hostages, but… this knowledge in the long run is going to change North Korean society.”

There is evidence that the North Korean workers will go to extreme lengths to avoid going home and live in perpetual fear that their minders will make them do so. “I met one man who broke his arm and was hiding it from his superiors for over a month because he was afraid he’d get sent back to North Korea if they found out about it,” said Koh Kwang Sub, a member of the South Korean business community in Ulan Bator. Mr Koh, who owns a local pharmacy, said he was able to meet workers and hand out medical supplies every few weeks when their managers were away. “It would be nice if they could work here and go back home safely, but they have no medical help and sustain a lot of work-related injuries,” he said.

The fully stocked store shelves and proliferation of mobile phones here must come as a surprise to a first-time visitor brought up to think North Korea is the world’s most advanced nation. Has the realisation led many of the workers to try defecting? “I really can’t talk about that,” said Ha Kyeong Yun, a South Korean entrepreneur who employs 30 North Korean army veterans at his farm in the northern Mongolian town of Sharin Gyol. But the answer is probably that very few, if any, have. “Their hierarchy is very rigid. They’re from the military and they maintain their rank relations.”

It’s also no coincidence that all of the male North Korean workers are at least 40-years old. All have families back home who would pay the price for what amounts to a crime against the state under the country’s system of hereditary discipline.

All of this makes the North Koreans very dedicated workers. At Eermel, Mr Woods said he was very proud of the company’s hard-won relationship with EWM and praised the North Korean staff. “Why they come over from North Korea to Mongolia I’m not entirely certain,” he said. “They work hard and we’re happy to have them here.”

A global market

Mongolia The practice of using North Korean workers goes back to at least 2004. A new deal was signed in 2008 that allowed for more than 5,000 workers to come to Mongolia until 2013. There are currently around 3,000 in the country.

Russia There are some 21,000 North Korean workers in the far east of the country, where they work in logging camps. They reportedly have just two rest days a year.

China No reliable statistics exist, but there are thought to be thousands of North Koreans working in China. The numbers in Dandong, a city close to the border, is said to have soared in recent years.

Here is a related story in the Daily NK.

Here is some information on Eermel (Evseg):

Founded in 1982 and privatized in 1994, Eermel (Evseg TM) is on its way to becoming a strong competitor in the world market of quality cashmere and camel wool products. Today, it is the second largest manufacturer of Cashmire in Mongolia, after Gobi Cashmere Industry.

Presently, Eermel has over 600 workers and has capacity of washing 500.0 tons and de-hairing 90.0 tons annually, making it highly efficient in key segments of Cashmire production. The company now has four production lines of textile, knitting, sewing and quilting, and produces more than 380 different types of end-products available for customers to purchase at prestige stores throughout Mongolia. The company exports dehaired cashmere to Switzerland, China, United Kingdom, Hong Kong, Italy, Japan and the USA, and exports knitted yarns to Japan, Italy, China, United Kingdom and Mexico. Russia continues to be the largest recipient of Eermel Cashmire exports.

In addition to Cashmire, Eermel is Mongolian trading company that trades in coal, cobalt and copper and is also an importer of consumer goods to Mongolia. 50 percent of Eermel’s shares are owned by the everyday workers of the plant.

The company has been selling public shares since November 28, 1992 with the initial price of 100 MNT per 1 unit of stock.

Pictured above (Google Earth): a Pre-renovation satellite image of what is now the Huichon Ryonha General Machine Plant, one of two known factories which produce CNC machines.

I have posted several times on the DPRK’s growing use and promotion of CNC technology (here and here). In his most recent column in the Asia Times, Andrei Lankov mentions his exposure to this technology from his younger days in the Soviet Union:

An interesting confirmation of the trend is the current fad for CNC (Computer Numerical Control) technologies – computer automation at factories. The CNC craze is often associated with Kim Jong-eun, the most likely heir to the North Korean throne. Indeed there is good reason to believe that this is the case, but it doesn’t really matter whether this fad is sponsored by Kim Jong-eun or someone else. Rather, what is important is that this naive belief in the power of intelligent machinery that will miraculously transform the North. (See Happiness rolls over us like a wave, Asia Times Online, Feb 26, 2010)

Incidentally, when the present author was a Soviet teenager, back in the 1970s, he frequently read similar stories in the then-Soviet media. The Soviet leadership of the Leonid Brezhnev-era also invested some hope in the miraculous power of CNC technology. CNC is actually quite a sound idea and works very well if used in the right social and economic conditions.

However, such conditions were absent in the Soviet Union of the 1970s and are also seemingly completely absent from North Korea of today.

So, Pyongyang’s expectation for CNC, mobiles and computers are unfounded. These technologies, or for that matter any other technology, are unlikely to have any serious impact on the future of North Korea as long as the country’s social and political system remains unchanged. However, North Korea’s leadership cannot see or accept this.

The heavy official promotion of CNC stems from what Lankov calls “technological fetishism” (which would be a good band name), a condition he describes this way:

The logic behind technological fetishism is not that difficult to understand. The root cause of economic stagnation experienced by Stalinist regimes is the intrinsic inefficiency of the Stalinist economic model. But the potentates of such regimes as well as their henchmen could not admit such things – at least, openly.

For Stalinist leaders, the social system was perfect, or at least had to be presented as such. Therefore the only conceivable reason for obvious economic difficulties had to be technological issues. Being hard-core modernizers, Stalinists shared the modern belief in the power of technology as a force that could change people’s lives.

So by DPRK official logic, now that the DPRK has overcome imperialist economic blockades of the motherland and acquired vital CNC technology, economic growth lies just around the corner. Unfortunately for the people of the DPRK, real economic progress is always just ahead–but never now.

Pictured above (Google Earth): Kaesong Industrial Zone (Sept. 2009)

According to Reuters:

South Korea said on Tuesday it will allow 120 of its firms to restart building a joint industrial park with North Korea, a fresh sign of tensions between the rival countries easing.

Construction of five factories can resume, and work to build seven new ones can go ahead, South Korea’s Unification Ministry said, 17 months after stopping activity in protest at what the South said was an attack by the North on one of its ships.

The South Korean firms employ about 46,000 North Korean workers at the Kaesong industrial park to make clothes, utensils and watches, taking advantage of cheaper labour and property than is available in the South.

According to the Choson Ilbo:

[The Ministry of Unification] will also build a fire station and hospital at the complex, repair a highway linking the city of Kaesong with the industrial complex, and add 45 buses to shuttle North Korean workers to and from the facility.

Previous posts on the Kaesong Zone can be found here.

Read the full story here:
S.Korea allows work at factories in North to restart
Reuters
2011-10-11

UPDATE (2011-10-10): According to the Jordan Times, the Bank denies any involvement:

The Arab Bank on Sunday stressed that it has never dealt with the government of North Korea or Tanchon Bank, which the US has accused of being the primary financial agent behind Pyongyang’s weapons programmes. “Based on a review of its customer account and transaction records, Arab Bank does not believe that it has conducted business with the government of North Korea or Tanchon Bank,” a spokesperson from the Arab Bank said.

In a diplomatic cable sent by the US State Department to the US embassy in Amman in August 2007, officials warned that the Arab Bank could be unwittingly assisting proliferation-related transfers between Iran, Syria and North Korea. “We are concerned that Iran, Syria and DPRK [Democratic People’s Republic of Korea] proliferation entities are using the Arab Bank network to process what may be proliferation-related transactions,” read the cable, released by WikiLeaks on its website at the end of August and viewed by The Jordan Times.

According to the cable, the US knew that as of 2007, North Korea’s Foreign Trade Bank mission in Tripoli, Libya (FTB Libya) had expanded its role in North Korea’s banking network and was helping Tanchon Commercial Bank, the banking arm of North Korea’s primary weapons trading firm, KOMID, to move funds from both Syria and Iran.

It added that in 2007, FTB Libya provided assistance to Tanchon in making remittances from funds from the sale of unspecified, probably proliferation-related goods in Syria.

“Our information indicates that Tanchon is establishing this new arrangement because Tanchon could no longer remit funds through a route it had previously used. FTB Libya arranged remittance routes for Tanchon from Syria and other locations via intermediary banks… We have information that Tanchon’s financial transfers are conducted surreptitiously by using either aliases or front companies,” the US State Department said in the cable.

The US reportedly claimed that the transfers, which were probably proliferation-related, occurred inside the Arab Bank network and involved both Arab Bank branches and the Arab Tunisian Bank, of which, according to the US, the Arab Bank is a 64.2 per cent stakeholder.

“By processing these transactions, Arab Bank could be unwittingly assisting proliferation-related activities,” read the cable.

In the cable, the State Department called on Jordan to maintain vigilance with regard to Syrian, Iranian and North Korean financial transactions in its jurisdiction to prevent these countries from using deceptive financial practices to further their proliferation-related activities, urging appropriate authorities to investigate such transactions.

The Arab Bank spokesperson told The Jordan Times that the bank has not found any records indicating that Jordanian government officials provided it with information concerning surreptitious efforts by North Korea to move funds through its network.

Citing the cable’s reference to “deceptive financial practices” by North Korea, the spokesperson emphasised that without knowing the details of these efforts by North Korea to conceal its financial transactions, it is not possible for Arab Bank or any other bank to address these allegations with any more specificity.

“As noted in the US State Department cable, Arab Bank is one of the ‘most respected banks in the Middle East’, with a network that spans 30 countries and five continents. The bank maintains a state of the art compliance programme, works closely with banking regulators in all countries where it operates, and has a long history of providing safe and secure banking services,” the spokesperson stressed.

A US embassy official in Amman told The Jordan Times last week that the embassy’s policy is not to comment on WikiLeaks cables.

ORIGINAL POST (2011-10-7): According to the Wall Street Journal:

As it sought to stop North Korea from spreading its nuclear technology, the U.S. uncovered signs in 2007 that the country was channeling funds through a major Middle Eastern bank based in Jordan, one of its closest regional allies, according to diplomatic cables posted online by document leaking website WikiLeaks.

In the cables, viewed by The Wall Street Journal, U.S. officials warned their counterparts in Jordan that North Korea was using Amman-based Arab Bank PLC to receive money from Syria and Iran, circumventing international sanctions.

The U.S. has said, apart from the cables, that it believes Syria purchased North Korean nuclear technology, including a nuclear reactor that Israel bombed in 2007. The U.S. also believes that Iran has acquired long-range missiles from North Korea.

“We are concerned that Iran, Syria, and DPRK [North Korea] proliferation entities are using the Arab Bank network to process what may be proliferation-related transactions,” read an August 2007 cable from the U.S. State Department to the U.S. Embassy in Amman.

The warnings provide a rare glimpse into U.S. efforts to stop North Korea from spreading arms and nuclear technology to its enemies. U.S. officials have said as recently as last month that North Korea is still aggressively establishing a network of front companies through which to secretly sell its weapons and evade sanctions.

“U.S. efforts have helped to spur isolation, but I think there is still a cat-and-mouse aspect to North Korean illicit financial activity,” Juan Zarate, a White House counterterrorism official until 2009, said Thursday.

In the cables, the U.S. said it was concerned that North Korea helped one of its lenders, Tanchon Commercial Bank, which it describes as the “primary financial agent behind the DPRK’s weapons programs,” to funnel money from Syria and Iran through Arab Bank.

The governments of Syria, Iran and North Korea didn’t respond to calls and emails requesting comment. A spokeswoman for the Jordanian Embassy in Washington declined to comment.

The cables said those transactions “have occurred through Arab Bank PLC, one of the oldest and most respected banks in the Middle East.”

Arab Bank said it didn’t believe it had processed any North Korean funds. “Based on a review of its customer account and transaction records, Arab Bank does not believe that it has conducted business with the government of North Korea or Tanchon Bank,” the bank said.

“In addition, Arab Bank has not found any records indicating that government officials provided information to the bank concerning surreptitious efforts by North Korea to move funds through its network,” it said.

The U.S. cables, which were posted at the end of August, suggest that Arab Bank may have processed the purported North Korean transactions unwittingly. They say that Tanchon was conducting its financial transfers surreptitiously using aliases and front companies.

In interviews, current and former U.S. officials said warnings such as those reported in the cables aren’t unusual and don’t indicate that they viewed Arab Bank as a particular cause for concern.

The bank was fined by U.S. banking regulators in 2005 for lacking adequate safeguards to stop money laundering and terrorist financing. Since then, a U.S. official said, Arab Bank has taken major steps to shore up its internal controls and has emerged as one of the more responsible lenders in the region.

The cables don’t say how large the purported transactions were, or their purpose. Nor do they say what, if anything, was done after the warnings.

Arab Bank is facing several civil lawsuits in a New York federal court dating to 2004 that allege it knowingly helped fund Palestinian terrorist attacks. The suits, brought by family members of those killed or injured in the attacks, allege the bank acted as a conduit for money from Saudi donors that went to families of suicide bombers and terror groups, a charge the bank denies.

In a statement, Arab Bank said it complies with banking laws in all 30 countries where it does business, including the U.S. “The bank abhors terrorism and has not done business with terrorists or terrorist organizations designated by these countries,” it said.

Jordan has interceded on Arab Bank’s behalf in the suits, arguing that the bank is being unfairly punished for failing to turn over what it says are confidential client records. In a November 2010 court brief, Jordan said a set of legal sanctions imposed by the U.S. judge hearing the case could destroy the bank. Because Arab Bank was a crucial cog in the regional economy, that outcome would be “potentially calamitous” for the economies of the Middle East, the brief said.

The appeals court has called a hearing on Nov. 14. However, Arab Bank has asked for it to be postponed as its lawyer cannot make it that day due to a conflict with another case.

While the leaked cables show the U.S. had concerns about illicit money transfers at Arab Bank two years after the 2005 punishment, they also include a U.S. expression of support for the bank. In a July 2008 cable, the U.S. Embassy in Amman said it saw no reason why the U.S. shouldn’t provide financing for Arab Bank and two other Jordanian financial institutions.

“The embassy does not have any information that these banks or their investors have known ties to terrorists, money laundering, corruption, or violations of the law,” it stated.

According to UPI:

A bank in Jordan, a strong U.S. ally in the region, may have unknowingly moved cash for the North Koreans to finance illicit weapons programs, cables suggest.

Sensitive cables distributed by WikiLeaks and reviewed by The Wall Street Journal suggest Jordan’s Arab Bank PLC was used by North Korea to get money from Syria and Iran to help with its proliferation activity.

An August 2007 cable from the U.S. State Department to Washington’s embassy in Amman expressed concern “that Iran, Syria and DPRK (North Korea) proliferation entities are using the Arab Bank network to process what may be proliferation-related transactions.”

Arab Bank, in a statement published by the Journal, said it “does not believe” it carried out business with the North Koreans. The bank was fined in 2005 by U.S. banking regulators for not having mechanisms in place to prevent money laundering and terrorist financing, the newspaper adds.

The cables suggest the Jordanian bank processed the North Korean activity without knowing about it.

The International Atomic Energy Agency, at its regular summer meeting with the board of governors in Vienna, expressed concern about the Syrian, North Korean and Iranian nuclear programs.

I have created  a wikileaks story index which you can see here.

Read the full stories here:
Cables Say Syria, Iran Illegally Moved Cash to North Korea
Wall Street Journal
Thomas Catan
2011-10-7

Jordanian bank tied to illicit weapons?
UPI
2011-10-7

Pictured above: An American-made, petrol-guzzling Hummer H2 (MSRP 2008-$53,286; 10 mpg_-US;24 L/100 km; 12 mpg_-imp) in the parking lot of (I believe) the Yanggakdo Hotel in Pyongyang in September 2010.  The photo comes from here.

UPDATE 2 (2011-10-5): Accoridng to the Mainichi Daily News:

A man standing trial for illegally exporting luxury foreign cars to North Korea was a spy attempting to acquire foreign currency under the guise of a businessman, police allege.

An Sonki, 71, a North Korean resident of Japan, is being tried at the Tokyo District Court on charges of violating the Foreign Exchange Law for exporting three foreign luxury cars to North Korea in 2008.

An traveled to North Korea and China on 40 occasions over the past five years. He is believed to have worked as a broker between North Korea’s state-run companies and foreign firms, while ostensibly working for an electricity-affiliated company in Tokyo almost every day. He managed his own trading company, whose nominal president was a South Korean resident of Japan whom he was acquainted with.

The Metropolitan Police Department (MPD)’s Public Security Bureau had kept track of An since the 1990s because An invited North Korean trade missions to Japan and visited the North Korean passenger-cargo ship Mangyongbong while it was docked at a port in Japan.

The MPD launched a criminal investigation into the illegal export case in June and found that An belonged to a spy agency under the Korean Workers’ Party. An reportedly received instructions from the secretive agency by calling it about once a week from a public telephone.

The MPD also confiscated dozens of contracts and planning documents from locations linked to An. The documents pertained to joint crab and shrimp fishing with Russian companies; the processing and selling of kimchi with Vietnamese companies; scrapping and repairing of ships with Japanese and Chinese companies; cable copper trading with Zambian companies; and importing matsutake mushrooms and snow crabs to Japan.

An’s activities were apparently aimed at brokering joint ventures between North Korean state-run companies and foreign companies, as well as bringing supplies to North Korea. Investigators suspect that An was helping with North Korea’s acquisition of foreign currency and the improvement of power supply in the North.

An was reportedly living a frugal life, renting a six-tatami mat apartment room without a bathroom for 40,000 yen a month. The apartment was not equipped with an air conditioner or television. There was hardly any living ware in the apartment, except for a rice cooker and a compact refrigerator. His lunch box he brought to his company contained only rice and pickled vegetables. He always wore a suit, which was left by a deceased acquaintance. He rarely contacted his separated wife and child.

“I never thought of my own interests but acted in accordance with the agency’s instructions,” An was quoted as telling investigators.

An has not revealed much about the flow of his money. Investigators confiscated 1 million yen in cash and wads of receipts from traveling abroad, but the origin of those funds is unknown.

“His activities are shrouded in mystery. We suspect that the importance of secret agents like him has been increasing in North Korea, which is under economic sanctions,” said a senior MPD official.

During the first hearing of the trial on Sept. 9, An demanded that all charges in the indictments be withheld. How much of his secret activities will be revealed depends on the questioning of the defendant during the ongoing trial.

UPDATE 1 (2011-7-7): According to the Mainichi Daily News:

A North Korean man under arrest for illegally exporting luxury foreign cars to Pyongyang by way of South Korea allegedly disguised the cars as destined for foreign embassies, it has been learned.

An Sonki, 71, a North Korean resident of Tokyo’s Bunkyo Ward, was earlier arrested by the Metropolitan Police Department (MPD) on charges of violating the Foreign Exchange Law for exporting luxury foreign cars to North Korea from Kobe in 2008 under the instruction of the Workers’ Party of Korea’s undercover agency.

According to the latest revelations, the North’s undercover agency instructed An to make the Indian Embassy in Pyongyang one of the final destinations of the exported cars apparently to prevent South Korean authorities from uncovering irregularities when the cars went through the South. The MPD is trying to work out all the facts of the case.

An is suspected to have exported three fancy foreign cars to Pyongyang on two separate occasions in 2008, ferrying the cars from Kobe Port. The export was undertaken by a Tokyo-based trading company called “Godo Holdings,” which is effectively managed by An. The MPD suspects that An is a North Korean agent.

According to the MPD’s Public Security Bureau, An had declared to Japanese customs that the consignee of the luxury cars was a delivery company in Seoul. However, the vehicles were ultimately shipped to North Korea by way of the South, where the items were re-registered as transit cargo. It is believed that the cars were declared as destined for the embassies when they cleared South Korean customs.

Investigators have confiscated from An’s home documents that described a plan to make the Indian Embassy and a Middle Eastern embassy in Pyongyang the final destinations of the cars.

“I was told to make the embassies the nominal destinations of the cars,” An was quoted as telling investigators.

Investigators have also confiscated a North Korean passport, a seal with the name of the undercover agency engraved, as well as a document describing a plan to establish routes to distribute the North’s agricultural and marine products to Japan, the United States and Europe. It has also emerged that An had traveled to South Africa in order to procure rare metals, according to investigators.

An reportedly belonged to a section of the North’s undercover agency that was in charge of Japan.

More on the interesting business dealings of the North Korean embassy in India below.

ORIGINAL POST (2011-6-21): According to KBS:

Japanese police have arrested a North Korean citizen on charges of selling luxury foreign cars to the North through South Korea.

Japanese media said that the North Korean man, who resides in Tokyo and was identified only by his surname “Ahn,” is charged with violating Japan’s foreign currency law.

Ahn is accused of illegally exporting three used Mercedes-Benz cars to North Korea without the Japanese government’s permission. The cars were shipped to the communist country from Japan’s Kobe port via South Korea’s Busan and Incheon between September and December 2008.

This is the first uncovered illegal export scheme to use South Korea as a stopover between Japan and North Korea. China is generally the popular channel for illegal exports between the two nations.

Japanese police also believe that Ahn is a North Korean spy.

Back in May, the DPRK detained two Japanese men for drug smuggling in Rason, and North Korean Embassy officials in India came under investigation for involvement in a luxury car smuggling case worth W100 billion (US$1=W1,091).

Read the full story here:
Japan Arrests N. Korean on Charges of Illegal Export
KBS
2011-6-21