North Korean Economy Watch

According to the Choson Ilbo:

South Korea gave North Korea an astronomical US$2.98 billion during the Kim Dae-jung and Roh Moo-hyun administrations from 1998-2008, according to a government tally announced Thursday. That is 1.5 times more than the amount of aid China gave to North Korea over the same period, which totaled $1.9 billion.

The government and private businesses gave North Korea $1.84 billion through commercial trade, $544.23 million for package tours to the Mt. Kumgang resort, $450 million for an inter-Korean summit, $41.31 million in land use fees and wages for North Korean workers at the Kaesong Industrial Complex and $30.03 million as part of various social and cultural exchanges, according to internal documents of the Unification Ministry and other government agencies.

Funds to Develop Nuclear Weapons

“North Korea is believed to have spent $500-600 million to develop long-range missiles and $800-900 million to develop nuclear weapons,” a South Korean government source said. “And the cash provided by South Korea could have been used to develop them.”

Former government officials during the previous administrations deny this. Lee Jae-joung, a former unification minister, said in a lecture in July last year, “It’s frustrating to hear claims that North Korea conducted nuclear tests using money that the Kim Dae-jung and Roh Moo-hyun administrations gave. So far the government offered cash to North Korea only once.”

He claims that the government was not responsible for paying North Korea $450 million for the first inter-Korean summit in 2000 as that was provided by private businesses together with the cash for the Mt. Kumgang package tours and the Kaesong Industrial Complex.

However, the whereabouts of the cash payment of $400,000 Lee admits to is also uncertain. That was the money North Korea demanded in April 2007 to build a video-link center for the reunions of families separated by the Korean War. North Korea has yet to start construction. “I think they just extorted the money,” a South Korean government official said.

Hungry for Cash

“North Korea demanded money for every event,” said one Unification Ministry official who was in charge of humanitarian cooperation projects during the Roh administration. “We got the feeling that North Korea was trying to use the reunions of families separated by the Korean War as a means to make money.” The North even demanded that South Korea pay $1,000 for each video clip exchanged by families in addition to all of the filming and editing equipment as part of a project back in 2007 that would allow some separated families to stay in touch via video messages, the official said.

A National Assembly audit in 2006 revealed how North Korea made money off South Korean broadcasters. A key example is the W1 billion (US$1=W1,149) that state-run South Korean broadcaster KBS gave North Korea in 2003 to record a TV show about a singing contest in Pyongyang to mark Liberation Day.

In 2005, SBS gave W700 million in cash and W200 million worth of paint and other goods to North Korea for a concert in the North Korean capital by South Korean singer Cho Yong-pil, while in 2002, MBC paid the North W320 million in cash and provided 5,000 TV sets (worth W734 million) for two concerts in Pyongyang by South Korean singers Lee Mi-ja and Yoon Do-hyun.

North Korea also received sizable amounts from South Korean businesses and civic groups through unofficial channels or backroom deals. “Many business owners in the South had problems managing their companies because North Korea habitually made excessive demands for money,” said Cho Bong-hyun, a researcher at the Industrial Bank of Korea’s economic research center

This suggests that a considerable amount of bribes were paid. One South Korean owner of a garment company that was based in Pyongyang said, “Bribes South Korean businesses paid in the early stages to prevent any problems later became customary. After North Korean officials got a taste of the money, they ended up asking for bribes first.”

A Unification Ministry official said, “It’s impossible to estimate how much money was given to North Korea through unofficial channels. We can’t even trace the use of official government money given to North Korea, such as the $400,000 for building a video-link center for the family reunions, so there is no way of telling what happened to money handed over under the table.”

Read the full story here:
S.Korea Paid Astronomical Sums to N.Korea
Choson Ilbo
12/3/2010

According to Yonhap:

Once hailed as vanguards of reconciliation but now threatened by simmering animosity between the Koreas, a group of South Korean businessmen pleaded Thursday with senior lawmakers to safeguard their operations in North Korea against further political fallout.

Since North Korea mounted a deadly artillery attack on the South Korean island of Yeonpyeong on Nov. 23, these seasoned businessmen have had jitters over the fate of their factories built in the western North Korean border town of Kaesong.

Considered the last remaining symbol of reconciliation between the divided countries, the joint industrial complex houses more than 120 South Korean firms employing 44,000 North Korean workers.

Holding a commercial fair at the National Assembly, representatives from eight companies and officials from their association mingled with two dozen lawmakers and scrambled to tout their products as bearing the messages of hope and peace.

“We have achieved a level of quality that enables us to compete with any other industrial complexes in the world,” Bae Hae-dong, chief of the association of South Korean factories, said in a speech. “Yet, we remain easily affected by inter-Korean political circumstances. We especially deplore the situation that has arisen since North Korea attacked Yeonpyeong.”

The shelling of the small fishing community killed two marines and two civilians in the most indiscriminate attack on South Korean soil since the 1950-53 Korean War that ended in a truce.

A travel ban imposed on North Korea a day after the attack remains in place, allowing only a limited amount of raw materials to be sent to Kaesong and hamstringing manufacturing operations there.

“We are suffering a 10-15 percent decline in production due to the ban,” said Kim Ssang-kyu, general manager at Pyxis Inc., which produces jewelry cases and other accessories.

Sung Hyun-sang, president of Mansung Corp., which makes women’s clothing, claimed the damage in production amounts to as much as 50 percent.

“We understand the ban is for the sake of our safety, but we’re sure the North Koreans won’t hurt us. They know how important we are” to their cash-strapped economy, Sung said.

“We can only worry and pray for now,” an official at Shinwon, which produces men’s suits, said, asking not to be named because his remark could be taken sensitively.

About 410 South Koreans remained in Kaesong as of Thursday, a drop from 760 on Nov. 23 when the artillery exchange erupted between the Koreas, according to the Unification Ministry in Seoul.

The Kaesong complex produced its first articles — kitchen pans — in 2004 even though the two Koreas had agreed four years earlier on the project in an effort to lessen border tension.

Combining South Korean capital and know-how with the cheap labor in North Korea, the park recently reached a total of US$1 billion in production. Supporters of the estate say its significance goes far beyond economic benefits.

“Kaesong has been a safety pin whenever the security on the Korean Peninsula sagged to a dangerous level,” Kim Choong-whan, a legislator with the ruling conservative Grand National Party (GNP), said in a speech.

Park Joo-sun, who is with the liberal Democratic Party (DP) and sponsored the fair, expressed hope that the park will survive the crisis sparked by the North’s shelling.

The fair was scheduled before the crisis, organizers said. The lawmakers who attended it included Park Jie-won, a DP lawmaker who led the organization of the 2000 summit, and Lee Sang-deuk, President Lee Myung-bak’s older brother who is a GNP legislator.

“Sir, please help us,” Bae told the influential lawmaker touring the booths set up at the fair.

Gently embracing Lee with his arm in a show of friendship, another businessman smiled widely and whispered to Lee, “This is the lifeline of peace.”

In a brief interview on the sidelines, Lee downplayed the economic damage the South Korean firms said they have incurred since the travel ban on North Korea came into effect on Nov. 24.

“They should and can withstand this. It is a risk they were willing to take,” he said as he stepped onto the elevator taking him to his office inside the building.

Vice Unification Minister Um Jong-sik, who admitted in a speech that the companies were suffering drops in production, would not say how long the ban will stay in effect.

“All things and situations must be considered before we can make a decision,” he said after a long pause, when asked if South Korean artillery drills planned for next week in the Yellow Sea would prompt the ministry to extend the ban.

“For now, we’re doing our best to listen to these companies and address their needs as much as we can,” he said as he left the fair with two bags full of clothing he bought from Mansun Corp.

South Korea and the United States ended their four-day joint naval drills mobilizing an American aircraft carrier in the Yellow Sea on Wednesday, a move they believed would intimidate North Korea into calling off further acts of provocation.

The U.S. has 28,500 forces stationed in South Korea, a legacy of the Korean War in which it led U.N. forces to fight against North Korea. Since a U.S. commander drew a line separating the waters of the Koreas at the end of the war, the North has denied its validity, triggering a series of deadly naval clashes there with the South.

North Korea says any further artillery drills by the South on Yeonpyeong, less than 10 kilometers from the North Korean coast, are bound to violate its waters because the Northern Limit Line is null.

The communist state maintains that it fired at Yeonpyeong because it had been provoked by South Korean forces shooting artillery shells at its side across from Yeonpyeong.

Read the full story here:
Businessmen plead for help as tension threatens their factories in N. Korea
Yonhap
Sam Kim
12/2/2010

According to Bloomberg:

North Korea’s use of international banks to facilitate nuclear weapons-related trade requires financial institutions to step up their vigilance, the European Union said.

North Korea exports $100 million in weapons and missiles each year in violation of United Nations sanctions, a UN panel wrote in a report released on Nov. 10. The EU said it’s concerned that some of the country’s trade involves prohibited nuclear technologies.

The 27-nation EU today urged all members of the International Atomic Energy Agency to “exercise particular vigilance over exports and financial transfers” in order “to prevent a contribution to proliferation-sensitive activities.”

Tensions with North Korea have increased in recent weeks. The country has built a new facility for extracting uranium, the key ingredient for nuclear weapons, a U.S. scientist reported on Nov. 20. Three days later, North Korea fired artillery at Yeonpyeong island, killing soldiers and civilians.

North Korea’s new nuclear facilities “could bolster its pursuit of a weapons capability and increases our concerns about prospects for onward proliferation of fissile material and of sensitive technologies to other parties,” U.S. Ambassador Glynn Davies said in a statement at IAEA’s meeting in Vienna.

The U.S. has been pressuring banks to cut ties with the North Korea’s regime, State Department documents posted today on WikiLeaks.org showed.

Reputation

Austria’s Financial Market Authority told the U.S. that it “exercised additional surveillance regarding North Korean financial activities” and that one bank cut ties with the country “to maintain its good reputation,” according to a February 2006 cable.

The U.S. and Japan will hold a week of naval drills beginning tomorrow. The aircraft carrier USS George Washington will join a force of about 400 aircraft and 60 warships. Drills will include responding to ballistic missile attacks on Pacific islands, the Joint Staff of the Japan Self-Defense Forces said in a statement.

“We will not accept North Korea as a nuclear-weapon state,” Davies said. “We seek an immediate halt of all nuclear activities in North Korea, including enrichment.”

Recent posts about the DPRK’s nuclear program can be found here. 

Recent posts on Yonpyong can be found here.

Read the full story here:
North Korean Use of Bank Transfers for Atomic Work Alarms Europe
Bloomberg
Jennifer M. Freedman, Andrew Atkinson
12/2/2010

As the focal point of DPRK-PRC trade, Dandong has seen phenomenal growth in the last 5 years.

Here is just one area in southern Dandong:

 

Here is a separate area in northern Dandong where Yalu River high-rise development is underway:

 

And here is another island in the Yalu River:

  

Dandong has been the focus of increasing media attention over the last 10 years because it has economically benefitted from increased trade (and expected future trade) between the PRC and DPRK.  

Today it is probably the easiest place to collect “survey data” on the DPRK’s business environment. According to a recent article in the Associated Press (via San Francisco Examiner), the DPRK still has a long way to go before foreign investors will see a climate ripe for investment:

Just across the Yalu River from North Korea, this sleepy border town in China’s Rust Belt is booming.

Towering apartment blocks are going up on the city’s western edge near the new Friendship Road Bridge, which will soon be the second bridge connecting Dandong to the North Korean city of Sinuiju.

Offices for trade and export-import companies dot the main road along the riverfront. A new airport is being built. Shops sell North Korean liquor, blueberry wine, ginseng, stamps and music CDs. And North Korean restaurants offer popular Korean dishes such as stewed dog leg and spicy deep-fried dog.

Dandong – like other parts of northeastern China along the 870-mile border – aims to profit from China and North Korea’s growing cross-border trade, now close to $3 billion a year. At a time when the United States and its allies are looking to isolate the Pyongyang regime for its nuclear program and erratic behavior, including this week’s artillery attack on a South Korean island, this hardscrabble part of China is finding that being North Korea’s back door to the world can be a lucrative business.

China already provides an estimated 90 percent of North Korea’s energy needs and most of its food and weapons. And the most recent gauge of trade between the two countries, from 2008, showed an increase of more than 40 percent from the previous year, according to the Council on Foreign Relations.

But even as officials map out grand plans for more cooperation, merchants and small-scale traders say doing business with North Korea remains problematic at best.

The government is unpredictable, they say, and rules change without warning. They tell horror stories about Chinese traders who have lost millions of dollars in goods or equipment that is expropriated or stolen outright. Many now insist on cash-up-front transactions and mostly conduct business on the Chinese side of the border, where they say they have more protections.

Moreover, while North Korean leaders have visited this part of China and professed admiration for China’s economic boom, local Chinese traders and businessmen in close contact with North Koreans say they don’t expect the country to shift to a market economy anytime soon.

“I haven’t seen any sign the North Korean government wants to open up,” said Cui Weitao, 47, who has been trading fruit, clothing, plastic bowls and chopsticks to North Korea for the past decade. “If they really wanted, they could learn from China and Russia. If they wanted, they could let people go back and forth and trade freely. . . . If they opened the border, their whole country would benefit.”

His friend, Wang Tiansheng, 47, another small-scale trader, agreed. “The thought of economic reform has been there for years but never happens. Not while the father is alive,” he said, referring to the country’s leader, Kim Jong Il. “Maybe when the son takes office.”

China and North Korea have been close allies since Chinese troops crossed the Yalu River to help North Korea fight American and South Korean troops during the Korean War, which is referred to here as the “War to Resist U.S. Aggression and Aid Korea.”

Yet Chinese leaders themselves consider North Korea’s leader an often-troublesome ally because of his brinkmanship with the United States over his country’s nuclear capability and incidents such as this week’s artillery barrage of Yeonpyeong Island, which killed two South Korean marines and two civilians, and the sinking of a South Korean warship in March.

Chinese leaders are reported to be concerned about North Korea’s economic crisis, and they encouraged Kim to embrace market-based economic reforms when he visited China in May and August this year and met with Chinese President Hu Jintao, according to some Hong Kong and South Korean media reports of the visits.

In a bow to reforms, North Korea sent a dozen mayors and provincial chiefs to northeastern China in October to visit factories and chemical plants. Earlier this month, North Korean Premier Choe Yong Rim visited Harbin, in Heilongjiang province, to discuss joint economic projects.

North Korea agreed to lease two Yalu River islands to China to develop into “free trade zones.” Chinese high-tech companies were encouraged to signed agreements to hire North Korean computer experts. In September, after Kim’s second visit, China established a new 100,000-square-foot marketplace in Tumen – across from Namyang in North Korea – for North Koreans to come on one-day passes to sell or trade their goods.

But the Tumen market in many ways illustrates the difficulties of coaxing North Korea to open up. The vast market is now mostly empty because the North Korean government changed its mind about allowing its citizens to come to China to trade freely, Tumen residents said.

One of the few Chinese vendors in the market during a recent visit, who was selling North Korean crab, shrimp and frozen fish, said he lost a lot of money because his North Korean supplier increased prices without warning.

“It’s been really hard and risky to do business with North Korea, firstly because of the complicated procedures of going there,” the seafood vendor said, speaking on the condition of anonymity. He said Chinese traders need an invitation from a state-owned company and three stamps from three departments.

Once inside North Korea, he said, officials “are very greedy. They asked us for digital cameras or DVD players or even computers. We have to buy them dinner, and booze is a must for every time we meet.”

Even the new Friendship Road Bridge being constructed – to augment the existing single-lane bridge – has been difficult to negotiate. China agreed to foot the bill for building the bridge, more than $200 million. But then North Korea demanded China also build a five-star hotel and other infrastructure on the North Korean side, local businessmen said.

Economists said the experience of the local traders confirms their own research: that while North Korean officials publicly claim to want to pursue economic reform, and may speak of emulating China’s success, North Korea’s ruling elite remains deeply ambivalent about anything that might dilute its grip.

“The state has never been comfortable with the market,” said Marcus Noland, senior researcher with the Peterson Institute for International Economics in Washington, who surveyed 300 Chinese companies operating in North Korea. “They see the market potentially as an alternative path to wealth and prestige, and perhaps political power.”

While trying to “deepen their economic integration with China” at the official level, Noland said, North Korean leaders at the same time take steps “to eradicate this kind of normal trading activity at the border” by denying visas and constantly changing the regulations.

“The Chinese do not trust the North Koreans at all,” Noland said.

According to a recent story in the Wall Street Journal, the second DPRK-PRC bridge in Dandong is still tentative:

Construction of the new bridge was originally slated to start in August. Zhao Liansheng, Dandong’s mayor, said in March that building would start in October, and be finished within three years.

“The new bridge is still waiting for the approval of central government,” said an official from the Dandong Transportation Department. “As far as I know, this project is not definite yet.”

I am not sure of the exact location of the new bridge.  If any readers are aware, please let me know.

Read the full stories here:
In Chinese Border Town, Trade With North Korea Can Be Lucrative but Problematic (Dandong, China).
Associated Press (via San Francisco Examiner)
Keith B. Richburg
11/26/2010

Border Bridge Reflects Dilemma
Wall Street Journal
Jeremy Page
11/28/2010

Below I am indexing media coverage of Wikileaks stories involving the DPRK:

2011-10-7: Jordanian bank tied to illicit weapons trade.

2011-9-13: As ties between the DPRK and Myanmar continue to grow, it is becoming more difficult for defectors to transit to South Korea.

2011-9-11: The Guangdong Development Bank, a mainland lender partly owned by the U.S. bank Citigroup, had banking ties with a North Korean arms dealer in 2009, according to a cable sent by the U.S. Consulate General in Hong Kong in July 2009, The South China Morning Post reported Saturday, quoting information provided by the Wikileaks.

2011-9-8: Hyundai Group Chairwoman Hyun Jeong-eun said Kim Jong-il believes the 2004 train station explosion in Ryongchon assassination attempt.

2011-9-6: U.S. prepared to intercept N. Korean missile: cable

2011-9-5: North Korean leader Kim Jong-Il expressed distrust of his country’s major economic prop China during a 2009 meeting with a visiting South Korean businesswoman, according to a US diplomatic cable.

2011-9-5: Myanmar, North Korea traded rice for arms: US cable

2011-9-3: Sudan negotiating purchase of missiles from North Korea

2011-9-3: US State Department urged China not to sell steel to the DPRK.

2011-8-3: Cambodian government worked with US and South Korea to quietly process North Korean defectors

2011-6-1: US tried to get Canada to finance oil donations to DPRK.

2011-4-11: China and US held DPRK intelligence talks.

2011-1-18: Did Iran pay the DPRK through a South Kroean branch?  The bank says no.

2011-1-6: U.S. Ambassador Feels Heat from WikiLeaks

2011-1-5: Chinese criticize DPRK currency reform.

2011-1-4: Kim Jong-il told a visiting South Korean businesswoman in 2009 that he had ordered the removal of a missile launch scene fromthe Ariarang Mass games because “Americans did not like it.”

2011-1-4: Former Chinese ambassador to Seoul, said today’s North Korea was similar to China during the Cultural Revolution in the 1960s and 70s and dealing with officials there required that he “mentally reset his personal clock by thirty years.”

2010-12-19: WikiLeaks cable: Winston Peters condemns N Korea missile tests

2010-12-9: DPRK-Myanmar nuclear cooperation: here, here, and here.

2010-12-11: DPRK-US family reunions are extortion (Guardian)

2010-12-5: Nothing new in NK leaks (Andrei Lankov)

2010-12-3: Top-Level Defectors from N.Korea Identified (Choson Ilbo)

2010-12-3: N.Korea ‘Fattens Up’ People for Family Reunions (Choson Ilbo)

2010-12-2: North Korean diplomat: Six-party talks are dead (Foreign Policy)

2010-12-2: North Korean’s Earning $1 Per Month!

2010-12-1: WikiLeaks: Mongolia passed North Korea message to U.S. (CNN)  Brookings also published information on the Mongolia-DPRK relationship.

2010-12-1: Singapore disapproves (Straits Times)

2010-12-1: China Blocks Wikileaks (Sky News)

2010-11-30: Cheong Wa Dae denies reports of considering N. Korean regime change (Yonhap)

2010-11-30: What WikiLeaks Cables Reveal About North Korea (The Atlantic)

2010-11-29: North Korea Keeps the World Guessing (New York Times)

2010-11-28: Is there an Iran-NK missile link?  Russia says no. Experts question the idea.

Click image for larger version

UPDATE 70 (2012-3-6): According to Yonhap, the DPRK has replaced the KPA commander responsible for the shelling of Yonpyong:

The head of a North Korean army unit responsible for shelling South Korea’s Yeonpyeong Island in 2010 has been replaced by the country’s vice defense minister, the North’s state media confirmed Tuesday.

General Kim Kyok-sik, who headed the 4th Army Corps of the Korean People’s Army starting in February 2009, is believed to have led the deadly attack on Yeonpyeong that killed four South Koreans, including two civilians.

The front-line unit near the inter-Korean sea border in the Yellow Sea is now headed by Pyon In-son, vice minister of the People’s Armed Forces, according to North Korean media reports of his appearance on state television Monday.

Kim has often been spotted at events unrelated to the unit since late last year, spurring speculation that he may have been replaced.

During the broadcast by the (North) Korean Central Broadcasting Station, Pyon was introduced as commander of the 4th Army Corps, in effect confirming the replacement. Pyon served as vice defense minister starting in December 2010, and was included in the North’s 232-member commission for the funeral of former leader Kim Jong-il last December.

“The hearts of my corps’ soldiers are boiling with hatred for the Lee Myung-bak group of traitors and determination to get revenge,” Pyon was quoted as saying on air. “Be it Cheong Wa Dae or Incheon, we will immerse them all in a sea of fire and not let a single member of the group of traitors survive.”

North Korea has frequently denounced South Korea’s conservative President Lee Myung-bak as a “traitor,” accusing him of aggravating inter-Korean ties.

UPDATE 69 (4/1/2011): A group of US lawmakers are working to add the DPRK back to the US list of state sponsors of terror.  According to Yonhap:

A bipartisan group of congressmen will soon submit legislation to re-designate North Korea as a state sponsor of terrorism for its torpedoing of a South Korean warship and shelling of a South Korean border island that killed 50 people last year, sources said Friday.

“I understand Rep. Ileana Ros-Lehtinen has almost completed drafting the legislation, and she is likely to submit the legislation as soon as possible,” a congressional source said, adding several other Republican and Democratic congressmen are expected to sponsor the legislation.

Ros-Lehtinen (R-FL), chairwoman of the House Foreign Affairs Committee, introduced similar legislation in May last year but it didn’t pass.

In June, she had wreaths laid at the tombs of the 46 South Korean sailors killed in the sinking of the warship Cheonan in waters near the western sea border with North Korea.

UPDATE 68 (3/31/2011): KCNA publishes statement by NDC.

UPDATE 67 (1/26/2011): Int’l Criminal Court asks North Korea for info in war crimes probe

UPDATE 66 (1/14/2011): Joseph Bermudez in 38 North discussing the island shelling.

UPDATE 65 (1/12/2011): DPRK opens Red Cross hotline to ROK

UPDATE 64 (1/6/2011): South Korea’s Military Lowers Surveillance Alert to `Normal,’ Yonhap Says

UPDATE 63 (1/4/2011): Japan, South Korea to discuss defense ties and N.Korea

UPDATE 62 (12/29/2010): ROK  to create joint forces command

UPDATE 61 (12/29/2010): ROK’s President Lee calls for return to talks.

UPDATE 60 (12/29/2010): North Korean Air Force increases training flights

UPDATE 59 (12/25/2010): DPRK airs television show about Yonpyong shelling. The LA Times has more.  They have reportedly also distributed other domestic propaganda.

UPDATE 58 (12/21/2010): North Korea makes gestures toward calm after South’s drills

UPDATE 57 (12/23/2010): Joseph Bermudez analyzes the attacks in the two most recent issues of KPA Journal: November 2010, December 2010.  Bermudez was also interviewed by the Wall Street Journal.

UPDATE 56 (12/22/2010): ROK prepares for largest ever artillery drill

UPDATE 55 (12/21/2010): DPRK deploys more missiles along west coast — including decoys.

UPDATE 54 (12/16/2010): Gordon Flake on the DPRK shelling of Yonpyong and LEU program: Part 1, Part 2

UPDATE 53 (12/21/2010): Yonpyong residents return home

UPDATE 52 (12/21/2010): White House Rejects New Talks With North Korea

UPDATE 51 (12/20/2010): DPRK agrees to allow nuclear inspectors back into country. A chronological listing of stories related to the DPRK’s LWR and LEU facilities is here.

UPDATE 50 (12/20/2010): South Korea concludes military drill.  DPRK does not immediately respond.

UPDATE 49 (12/20/2010): UNSC meeting deadlocked.  Russia distanced itself from China.

UPDATE 48 (12/18/2010): DPRK warns it will attack ROK if it test-fires artillery from Yonpyong.

UPDATE 47 (12/18/2010): UN Security Council Schedules Emergency Meeting on North Korea

UPDATE 46 (12/19/2010): Bill Richardson reports on his trip to the DPRK. KCNA reports he brought gift.

UPDATE 45 (12/16/2010): Andrei Lankov offers thoughts on the escalating tensions between the two Koreas. Here too.

UPDATE 44 (12/16/2010): South Korea announces new military drill

UPDATE 43 (12/16/2010): Bill Richardson goes to North Korea

UPDATE 42 (12/15/2010): South Korea Practices for worst-case attack

UPDATE 41 (12/14/2010): Victor Cha calls for increasing US troop levels

UPDATE 40 (12/13/2010): NDPRK threatens ROK with nuclear war

UPDATE 39 (12/13/2010): ROK’s army chief resigns

UPDATE 38 (12/13/2010): ROK resumes live-fire drills

UPDATE 37 (12/11/2010): DPRK made few concessions to Chinese envoy

UPDATE 36 (12/10/2010): NKorea sends top diplomat to Russia amid tensions.  DPRK announces 2011-2012 plan for exchange between the foreign ministries of the DPRK and Russia.

UPDATE 35 (12/10/2010): Gas Masks for All Residents in 5 West Sea Islands

UPDATE 34 (12/10/2010): China affirms DPRK ties with ‘candid’ official visit

UPDATE 33 (12/09/2010): S.Korea council plans to turn ruins of shelling into park

UPDATE 32 (12/8/2010): DPRK claims waters around Yongpyon

UPDATE 31 (12/6/2010): Victor Cha sees war as a possibility

UPDATE 31 (12/8/2010): Japan to raise armed forces mobility to boost defense

UPDATE 30 (12/8/2010): NK Fires Artillery Shells into Own Yellow Sea Waters

UPDATE 29 (12/7/2010): International Criminal Court (ICC) reviewing actions by DPRK

UPDATE 28 (12/7/2010): ROK to make islands near DPRK ‘fortresses’

UPDATE 27 (12/6/2010): ROK, US, Japan reject 6-party talks on DPRK

UPDATE 26 (12/6/2010): ROK to spend 30 billion won to support artillery-hit islanders

UPDATE 25 (12/6/2010): ROK government advised to expand military forces.

UPDATE 24 (12/6/2010): South Korea Begins Firing Drills Amid North Korea’s War Threat

UPDATE 23 (12/2/2010): US and Japan conduct joint military drills. More here.

UPDATE 22 (12/3/2010): SKorean jets will bomb North if it attacks again.  Apparently the South Korean army soldiers are terrible shots.

UPDATE 21: (12/2/2010): Kaesong businessmen urge support for the industrial zone.

UPDATE 20 (12/2/2010): Satellite imagery of Yonpyong.

UPDATE 19 (12/1/2010): Choe Thae-bok in China.

UPDATE 18 (12/2/2010): DPRK boosts military capacities near DMZ

UPDATE 17 (12/2/2010): ROK Military suggests counterfire caused ‘many casualties’ in N. Korea.

UPDATE 16: Lankov on the shelling.

UPDATE 15 (12/1/2010): UNSC unable to pass resolution condemning attack.

The standoff over what language on North Korea that China, Russia, the United States, Britain and France — and South Korea and Japan — could accept highlights the way Beijing’s increasingly aggressive defense of its allies may lead nations to bypass the Security Council as a forum for action.

UPDATE 14 (11/29/2010): DPRK strengthens coastal battery

UPDATE 13 (11/29/2010): ROK government mulls making Baeknyeong a forward deployment base

UPDATE 12 (11/29/2010): After issuing warning, Seoul cancels artillery drill on disputed isle

UPDATE 11 (11/30/2010): 49 ROK trucks allowed to restock Kaesong Industrial Zone on 11/29.

UPDATE 10: ROK will abandon policy of not responding militarily to the DPRK’s activities.

UPDATE 9: DPRK accuses ROK government of using Yonpyong Island residents as human shields and deploys surface to surface missiles in the Yellow Sea as US/ROK military drills underway.

UPDATE 8: Yeonpyeong Island designated as ‘control zone’ for military.  Military pushes to increase budget for defending western islands.

UPDATE 7: China calls for summit of 6-party talk nations (CNN).  South Korea cool to proposal.

UPDATE 6: US response:

1. US calls on China to reign in DPRK

2. US sends aircraft carrier to the West Sea

3. US and ROK begin military exercises

UPDATE 5: South Korea’s response:

1. South Korean defense minister let go.  The new defense minister will have new duties.

2. South Korea reassesses its defenses

3. South Korea reassesses rules of engagement with DPRK

4.  Residents evacuate Yonpyong.  More from the Wall Street Journal.

5. South Korea retrieves DPRK aid from China.  You can read more about this aid here.

6 South Koreans photographed new construction of NK artillery site.

7. South Korea bans workers from entering DPRK

8. Moddy’s keeps ROK credit rating at A1

9. ROK bond buyers switching to corporate notes after yield on sovereign debt fell below inflation

UPDATE 4: North Korea’s response:

1. North Korean Envoy to the UN: They [South Korea] Started It

2. (KCNA) KPA Supreme Command Issues Communique

3. (KCNA) Statement Released by Spokesman of DPRK Foreign Ministry

4. Kim Jong-il and Kim Jong-un visited Ryongyon County just before shelling

5. Uriminzokkiri demands revival of Kumgang tours

UPDATE 3: Andrei Lankov offers his opinion in CNN:

This time, North Korean leaders merely reminded Seoul that they are capable of making a lot of trouble if their demands are ignored.

A week earlier, a similar message was delivered to Washington, albeit in a less violent manner: A group of visiting American nuclear scientists was shown a state-of-the-art uranium enrichment plant.

This is a reaction to the current U.S. policy which is known as a “strategic patience,” and to somewhat similar approach of Seoul.

…

In essence, the “strategic patience” policy implies that the U.S. will not provide any concessions until North Korea demonstrates its “sincere willingness” to denuclearize — something which is not going to happen, actually.

The right-leaning government of South Korea has adopted the same approach. It decided not to increase the amount of unilateral and unconditional aid to the North — which has grown dramatically under the earlier leftist-nationalist administrations — unless North Korea makes some concessions, too.

Washington and Seoul expected that sooner or later the international sanctions will start making an impact on North Korea, so it will have to accept their demands and become a bit more reciprocal. Otherwise, they were in no hurry to deal with Pyongyang.

However, Pyongyang leaders have grown quite impatient with “strategic patience.”

Sometimes this is explained as a testimony that sanctions are beginning to bite, but this seems to be a wishful thinking: If anything, the food situation in North Korea is better than it has ever been in the last 16 years (albeit still bad by the standards of the modern world), and the North Korean military is not short of money, as their new and shiny uranium enrichment facility demonstrated.

Nonetheless, it appears that North Korea would like to squeeze more aid from Washington and Seoul largely because they do not want to be too dependent on China which now is the nearly sole provider of aid.

So, North Korean strategists chose to hit the weakest spots of both major donors. Americans worry about proliferation, so they were shown that Pyongyang’s nuclear program is advancing fast.

The South Koreans have a different vulnerability. Their efficient but outward-oriented economy depends on the whim of the international markets. Incidents like Yeonpyeong Island shelling are likely to scare markets, which damages the economy, and voters are likely to eventually blame the government for this damage.

The South Korean voters are remarkably indifferent to North Korea, but they are not going to be happy about economic troubles, so a government must know how to keep North Korean regime reasonable or face problems during the elections.

It is often stated that the incident has a lot to do with the succession issue in Pyongyang. Perhaps, the unusually violent nature of shelling is indeed related to North Korea’s domestic policy. Kim Jong Eun, recently promoted to four-star general, needs the support of the old generals (real ones,) so this might be his way to show himself as a tough warlord, not a spoilt brat who spent his youth in Swiss schools.

However, this is not the major reason: The succession politics might have made the incident more violent than it would be otherwise. But something like this was bound to happen.

This fits well into North Korean established pattern of actions. When Pyongyang believes that more aid and concessions can be extracted, it first manufactures a crisis and then, when tensions are sufficiently high, suggests talks in order to get paid for returning to less dangerous behavior.

Will the crisis lead to a war or prolonged confrontation? Most certainly, not, and North Koreans know it. Neither the U.S. or South Korea are going to start a war. They will win, but the price – especially for Seoul — will be prohibitively high.

Surgical strikes against military installations will not help, either. The lives of common North Korean soldiers are expendable, and their death will have no impact on Pyongyang’s policy.

So, it seems that South Koreans will bite the bullet and, after a healthy portion of the face-saving rhetoric, return to the business of usual.

But it is also likely that in few months time the North Koreans will repeat the lesson. They want to show that “strategic patience” is not an option in the long run, and they seem to be right.

UPDATE 2: CNN publishes theories on why the DPRK has behaved in this manner.

UPDATE 1: BR Myers notes that this is the first artillery attack on a civilian population since the Korean War (NPR).

According to the Wall Street Journal:

North Korea fired artillery rockets at a South Korean island near a disputed western maritime border Tuesday, in a clash that killed two South Korean marines and set numerous buildings on fire.

A South Korean military unit on the island, called Yeonpyeong, returned fire, while military officials scrambled fighter jets. In addition to the deaths, at least 16 more were injured, military officials said. Three civilians were injured, and the island’s 1,200 residents were sent scrambling for bomb shelters.

“The whole neighborhood is on fire,” island resident Na Young-ok said from a bomb shelter about an hour after the shelling began. “I think countless houses are on fire, but no fire truck is coming. We have a fire station but the shots are intermittently coming.

Video captured by closed-circuit monitoring cameras on location showed people scrambling out of buildings as explosions rocked the island.

The attack comes after relations soured dramatically between the two Koreas over the past two years, as North Korea’s totalitarian regime became angered at South Korea’s decision to cut off economic assistance unless it ends its pursuit of nuclear weapons. The issue of North Korean nuclear weapons intensified over the weekend after the revelation that Pyongyang had already installed thousands of centrifuges to produce nuclear fuel at its Yongbyon nuclear facility

The exchange of fire also comes less than two months after North Korean dictator Kim Jong Il began a process of transferring power to his son Kim Jong Eun, a process that analysts have said is likely to be volatile as the younger Kim grapples for authority over the North’s military.

“The attack is a sheer act of provocation. Moreover, shooting indiscriminately on civilians cannot be forgiven,” said Hong Sang-pyo, spokesman for South Korean President Lee Myung-bak. “Our military reacted immediately according to our combat rules. We will act sternly against any more provocation. North Korea should take the responsibility for this.”

North Korea’s official media late Tuesday said South Korea’s military fired artillery into water on the North’s side of the maritime border while conducting a drill, and that it fired the artillery at Yeonpyeong island in response.

The U.S. condemned the attack and called on North Korea to “halt its belligerent action.” “The United States is firmly committed to the defense of our ally, the Republic of Korea, and to the maintenance of regional peace and stability,” the White House press secretary said in a statement, referring to South Korea by its formal name.

The European Union also condemned the North Korean attack. Catherine Ashton, the EU’s foreign policy chief, called on the “North Korean authorities to refrain from any action that risks further escalation and to fully respect the Korean Armistice Agreement.”

A spokesman for the Ministry of Foreign Affairs in China, North Korea’s main benefactor, called for peace and stability. “We hope all involved parties will do more to promote peace on the Korean Peninsula,” Hong Lei said during a regular news conference.

Japanese Prime Minister Naoto Kan ordered the government “to do their best to collect information on the situation and be prepared for any kind of unexpected incidents.”

The attack roiled financial markets in Asia, briefly sending the U.S. dollar sharply higher before it gave back some gains, on a flight from what are considered riskier investment. The Bank of Korea convened an emergency meeting to discuss the effect of the attack. Several financial analysts quickly issued reports that said they didn’t expect South Korea’s stock market to be impacted.

A spokesman for South Korea’s Joint Chief of Staff said “scores of rounds” were fired by the North. The artillery was fired from positions south of the North Korean city of Haeju.

The attack came without warning at 2:34 p.m local time and lasted for 65 minutes, military officials said. About 250 residents escaped the island in fishing boats and arrived in the port city of Incheon two hours later. As the sun set three hours after the attack, fires continued burning in numerous homes and buildings and smoke covered the island, according to people there and on a nearby island called So-yeonpyeong.

The attack adds to a list of more than 30 fatal or life-threatening attacks by the North against the South—including plane bombings, assassinations and naval skirmishes—since the two countries fought the Korean War in the 1950s. Most recently, a South Korean warship sank in March about 40 miles west of the island struck Tuesday. South Korea blamed North Korea for the sinking, citing an exploded torpedo it found and other evidence.

Some units of the South Korean military had been training in waters near the two islands. However, the North routinely complains about the South’s exercises.

The attack shocked South Koreans, who have become accustomed through the years to brash statements and other provocations by North Korea.

“If this leads to any other provocation, it really will be disturbing in many ways,” Song Young-min, an insurance consultant who is in the military reserve, as he watched the news on his cellphone in downtown Seoul.

“It was shocking, scary as well. I even thought of a possible war,” said Park Jung-jin, a banker. “I still believe it won’t go that far, but the news on all that firing and shooting was definitely the most striking North Korean provocation that I’ve heard of so far.”

Lee Eui-sup, who works at South Korea’s National Pension Service, said he immediately suspected the firing was caused by the instability inside the North’s leadership due to the succession process. “It is a serious problem but will soon disappear as it usually does, I believe,” Mr. Lee said.

From the island of So-yeonpyeong, residents watched as the rockets hit the larger Yeonpyeong island. Some sent photos and cellphone videos of the attack to South Korean TV stations. “When I heard the artillery, I thought it was a usual military exercise, but then I noticed the fire and smoke,” said Lee Seung-yeon, a resident on the smaller island.

The two Yeonpyeong islands are the easternmost of five small islands that are within close firing range of North Korea. All are just a few kilometers away from the maritime border known in South Korea as the Northern Limit Line, or NLL, that was drawn up by the United Nations after the end of the Korean War in 1953.

The North has objected to the line since the early 1970s, arguing in part that the line forces its ships to take lengthy detours to international shipping lanes. Its objections intensified in the 1990s and led to two deadly skirmishes in the area in 1999 and 2002.

In 2007, leaders of the two Koreas agreed to turn the area into a “peace zone.” That vaguely worded agreement was struck just ahead of a South Korean election by an outgoing government and never implemented. It was interpreted in North Korea as erasing the maritime border and in the South as keeping it.

And China’s response according to Bloomberg:

China expressed “concern” over reports that North Korea fired artillery shells that struck South Korean territory and called for parties involved to work harder to promote peace and restart multinational talks.

“We have taken note of the relevant report and we express concern over the situation,” Foreign Ministry Spokesman Hong Lei told reporters in Beijing today. “We hope the relevant parties do more to contribute to peace and stability on the Korean peninsula.”

Hong said that officials are aware of claims by a U.S. scientist that North Korea had revealed to him a “stunning” new uranium-enrichment plant. The descriptions by the scientist underscore the need to restart six-nation talks on dismantling North Korea’s nuclear weapons program, Hong said.

“China unswervingly promotes denuclearization on the Korean Peninsula,” Hong said. “We have taken note of the relevant report. It is China’s consistent and firm position to realize denuclearization on the Korean Peninsula through dialogue and consultation. What is imperative now is to restart six-party talks.”

South Korea scrambled fighter jets and returned fire after North Korea lobbed dozens of shells into its territory, injuring four soldiers, Yonhap News reported today.

A South Korean Defense Ministry official, who declined to be identified, confirmed the shelling, without giving any further details. The military has been put on high alert and will “respond strongly” to further provocation, he said.

Stocks were down slightly in response to the news.  According to Bloomberg:

Stocks sank, dragging the MSCI Emerging Markets Index down the most in five months, while the dollar and the Swiss franc rallied as fighting broke out between North and South Korea and concern grew Europe’s debt crisis will spread. Metals slid as China’s banks approached lending limits.

The MSCI gauge of stocks in developing nations lost 2.3 percent as all 10 industry groups retreated, while the Standard & Poor’s 500 Index slid 1.1 percent at 9:39 a.m. in New York. The dollar and franc appreciated against most peers. South Korean won forwards slipped the most in six months. Ten-year Treasury yields sank six basis points, the Irish yield jumped 27 basis points, and a gauge of European sovereign debt risk rose to a record. Copper and zinc slumped more than 1.6 percent.

U.S. equities followed European shares lower after South Korea scrambled fighter jets and returned fire following North Korea’s shelling of Yeonpyeong island. China’s biggest banks are close to reaching annual lending quotas and plan to stop expanding their loan books, according to four people with knowledge of the matter. Greece will need to make an “extra effort” to cut its deficit to receive more emergency aid, European Union and International Monetary Fund officials said.

“We’re in this very fragile growth state,” said Matthew Kaufler, a Rochester, New York-based money manager at Federated Investors Inc., who helps oversee $341.3 billion. “When you have these other issues — the sovereign-debt crisis in Europe, concern about Chinese growth, geopolitical unrest in North Korea and a massive insider trading scandal — that’s going to undercut confidence. That all is overshadowing the latest economic data points in the U.S.”

On a related note, I have done my best to keep up with Cheonan stories here.

Read the full stories here:
North Korea Fires Rockets at Island
Wall Street Journal
Evan Ramstad and Jaeyeon Woo
11/23/2010

China Voices Concern on N. Korea Artillery; Calls for Dialogue
Bloomberg
Michael Forsythe
11/23/2010

Stocks Fall on Korea Clash, Europe Debt, China Lending; Dollar Strengthens
Bloomberg
Stephen Kirkland
11/23/2010

According to the Daily NK:

According to a former North Korean logger in Russia, instances of forestry workers running away from a “Forestry Mission” program organized by North Korea’s Forestry Ministry in the Russian Far East are increasing due to excessive salary deductions currently being imposed by the North Korean authorities.

Song Ki Bok, a 48-year old former logger who now lives in South Korea told The Daily NK on November 18th, “The Forestry Mission takes 70% of monthly salary in the name of Party funding. Who would want to work there when all the money you earn from working yourself to death is taken from you?”

Prior to 2008, North Korea took 30% of the North Koreans’ wages for “Party loyalty funds”. However, after sanctions put in place by the international community following the first North Korean nuclear test began to bite, the amount was increased to 70%.

The North Korean forestry workers do hard physical labor. Depending on the intensity of their work, they receive just $40 to $100 per month.

Therefore, once 70% is deducted as Party funds, the take-home pay of the worker is between $12 and $30. As a result, workers cannot even dream of wiring sums back to family in the North. They just deliver what cash they can gather via colleagues returning home.

Worse yet, with this kind of swingeing monthly deduction, many workers cannot even recover the bribe they had to offer Party officials in order to be sent to Russia in the first place. For example, the total amount Song ended up paying was nearly $400.

Before escaping from the forestry program, Song saw a monthly salary of $30, meaning that even if he had saved every penny he earned for a year he still would not have recouped the $400 he paid out in bribes.

In the beginning, he was buoyed by the ‘Russia Dream’. The family of a worker in a foreign country traditionally lives in better conditions than most people. Therefore, Song went to Russia in the belief that if he worked hard for three years, he could make 10 years of a North Korean working man’s salary; however, the reality was as harsh as the bitter cold of Siberia.

The Forestry Mission in Russia; Kim Jong Il’s hard currency provider

According to Song, there are 17 forestry sites in Russia which employ North Koreans. Depending on the size of the camp there are differences; however, approximately 1,500~2,000 North Koreans work at each.

The major activities of the Party Committee in each camp are surveillance and the collection of Party funds. A manager, Party secretary and an agent from each of the National Security Agency and People’s Security Ministry are assigned to each site, and 15 administrative officers below them manage operations.

The life of workers is the same as it would be if they lived in North Korea. They must partake of weekly evaluation meetings, and food is provided by distribution. They plant potatoes and wheat in cleared areas near their digs to supplement the insufficient state provisions.

If workers leave without permission, they are punished upon their return. If the crime is grave, the worker might be summoned to North Korea for reeducation.

Song commented, “Sometime people leave the camp to go hunting to earn money. They can only escape punishment by bribing the management.”

In total, the amount gathered in the name of Party funds by the North Korean authorities from each camp can exceed $140,000 per month. Calculations suggest that the annual North Korean government take from the program exceeds $25 million.

However, this harsh Party policy is driving escapes, according to Song, “Since most of their monthly salary began to be taken away as Party funds, the number of workers escaping started to increase. Just from those I know, the average has reached 30 workers per a year.”

Song, describing the harsh working conditions at the site, said, “In 2006, a wood cutter from Dukcheon in South Pyongan Province who had frostbite in both feet at work didn’t receive treatment in time. In the end, they had to cut off both his legs. His co-workers, who could not ignore the situation, raised it with the Party Committee there; however, not only was this opinion ignored, but the wood cutter was sent home with the explanation, ‘It was an accident caused by my own carelessness’.”

“The life of a forestry worker fighting against cold which can reach -40˚C in winter is unspeakably tough,” Song said. “Meanwhile, they don’t even receive a proper month’s salary, which reduces their will to work.”

“If a worker escapes, in the end he has no choice but to head to South Korea. When I think about those of my colleagues who couldn’t come to South Korea with me, it is still hard to sleep at night.”

Read more about logging camps in Russia (including satellite imagery) here and here.

Read the full story here:
Runaway Loggers on the Rise Due to Wage Cuts
Daily NK
Kang Mi Jin
11/22/2010

According to Yonhap:

North Koreans are expected to live 11 years less than the average South Korean due mainly to malnutrition that adversely affects births and causes more people to die earlier than normal, a government report showed Monday.

The Statistics Korea report, based on data released by the United Nations and Pyongyang, showed the life expectancy for an average North Korean at 69 years, lower than numbers reached in the communist country in the early 1990s before it was hit by devastating famine.

The life expectancy for men reached 64.9 while that for women was 71.7 years. This is 11.3 years and 11.2 years less than this year’s life expectancy of South Korean men and women, respectively.

“Generally, the population has not fully recovered from the famine and hardship, although conditions have improved in the past few years,” a statistics official said.

He said estimates revealed that there may have been a “population loss” of around 610,000 for a decade after the mid-1990s, caused by a higher number of deaths and people shying away from having babies.

The official said up to 480,000 more people may have died compared to what was normal during the 1994-2005 “slow-motion famine” period when the country could not properly feed its people.

Newborn baby numbers fell by an estimated 130,000 vis-a-vis natural increase rates in the 1995-2004 time frame, as fewer people married and couples put off giving birth during hard times, he said.

The latest statistical report, however, said that despite chronic food shortages, North Korea’s population managed to post steady growth in the last two decades.

As of this year, the population is estimated to be 24.19 million, up 0.5 percent from a year earlier. Before 1997, the population grew more than 1 percent on-year, but gains have become stagnant since 1998, staying under the 1 percent mark.

This year’s numbers make North Korea the 49th most populous country in the world, compared with 26th-ranked South Korea, whose population reached 48.88 million.

The statistical report, meanwhile, showed the number of economically active people in the North between the ages of 15 and 64 reaching 16.58 million this year, with the number of men being smaller than women.

The median age of the population stood at 30.1 years for men and 33.7 for women, five or six years younger than numbers for South Korea. The country effectively became an “aging society” in 2003 with the number of people over 65 hitting 7.2 percent of the total population and should be an “aged society” in 2033 with 14.5 percent of the population over 65 years old.

The report predicted that North Korea’s population will peak at 26.54 million in 2037, compared to South Korea’s peak population that is expected to be reached in 2018, when there may be some 49.34 million people living in the country.

If both South and North Korean populations are combined, the number would hit its peak in 2027 with 75.06 million people living on the peninsula, the report said.

Read the full story here:
N. Koreans expected to live 11 years less than S. Koreans: report
Yonhap
11/22/2010

Lankov writes in the Korea Times:

One of the most important peculiarities of North Korean life is the degree of isolation of North Koreans from entire world. The government does not want them to be aware of some facts which contradict the officially approved picture of the world and their own country. To make sure that propaganda has no competition, the North Korean authorities eliminate all possible sources of alternative information.

Few if any Communist countries were as efficient as North Korea in cutting their population off from the unwanted and unauthorized knowledge about the world beyond the nation’s boundaries.

Few North Koreans are ever allowed to leave their country. The only statistically large but non-privileged group of people with overseas experience was the Siberian loggers who were sent to the wilderness of Southern Siberia from the late 1960s onwards. However, that part of the world is not famous for a high density population, so their contact with the locals was kept at a bare minimum (and North Korean authorities saw to this).

All other groups of North Koreans who were allowed to travel overseas formed the upper crust of society and by definition were carefully chosen for their supposed political reliability. These privileged few were diplomats, crews of the North Korean ships and planes as well as a handful of the people who were allowed to participate in international exchanges, largely of academic nature. These people had a lot to lose, and they also knew that their families would pay a high price for any wrongdoing they committed, thus they seldom caused trouble. They are least likely to talk much about overseas life.

There were students, of course, but their numbers were very small ― perhaps, less than 10,000 North Koreans ever graduated from foreign universities (just for comparison: some 240,000 South Koreans are studying overseas right now).

The North Koreans cannot buy or read books published overseas ― no exception is made even for books from other Communist countries. All non-technical foreign publications are kept in special departments of libraries and one needs a security clearance to access them. In these departments the subversive material could be read only by the trustworthy people who obtained special permission from security police.

Of course, radio was the major source of worries for the Pyongyang leaders. So, North Korea is the only country which outlaws the use of the radio sets with free tuning. All radio sets are permanently fixed on the wavelength of the official Pyongyang broadcast, and police conduct random house checks to ensure that technically savvy owners have not re-modeled their sets.

In a clearly Orwellian twist, the government does its best to keep the populace cut off from the past as well. All periodicals and most books more than ten years old are to be sent to the same special departments with access being limited to the people with proper security clearance. Even speeches of the Great Leader are edited (rewritten) from time to time to meet the demands of the ever changing political situation.

Why did they do it? The answer seems to be obvious: the governments know that they have to hide the huge difference in economic performance between North Korean and its neighbors, and above all ― between North and South Korea. Currently, the ratio of per capita income between two Korean states is estimated to be at 1:15 at best and 1:50 at worst. This is the largest gap which exists worldwide between two countries which share a land border, and this gap is powerful proof of North Korea’s economic inefficiency. The government understands that once the populace learns about the gap, the situation might get out of control. To prevent it, they work hard to keep people ignorant about the outside world.

Until 2000 or so, they have been generally successful, even though some snippets of dangerous information found their way to North Korea. Things began to change in the late 1990s when North Koreans began to move across the porous border with China. Most of the refugees did not stay in China, but eventually returned to North Korea. They brought back stories of Chinese prosperity, DVDs with South Korean TV shows and small, easy-to-hide transistor radios with free tuning.

Since then, things began to change, and the information self-isolation system began to fall apart. However, it might be premature to believe that it has been damaged beyond repair. Yes, people in the borderland area are aware that they live in a poor and underdeveloped society. Many people in Pyongyang also came to realize this. But it seems that in more remote parts of the country the isolation still works reasonably well.

Sometimes I wonder how shocked North Koreans will be when exposed to the outside world for the very first time. We can be sure that their surprise will be huge ― and perhaps, their disappointment about their country’s past will be huge, too.

Read the full story here:
Crack in Orwellian paradise
Korea Times
Andrei Lankov
11/21/2010

Andrei Lankov writes in the Korea Times:

Nowadays, there are between 20,000 and 30,000 North Koreans hiding in China, and roughly three quarters of them are women.

But what are they doing there? Of course, the major motivation behind their decision to flee was the disastrous economic situation in North Korea.

In the late 1990s, the refugees fled a very real threat of starving to death, while nowadays it is most likely that destitution and malnutrition drive them across the border. For men it is not so easy to move, since for them the stakes are higher. If caught, men are likely to face greater problems than women.

But there is another reason: large-scale trafficking of women (well, as will be explained later, the present author is somewhat wary about using the word “trafficking” to describe this phenomena).

Once a North Korean woman finds herself in China, she soon realizes that without ability to speak at least some Chinese, and with police constantly on alert against refugees, one of the best survival strategies available for her is to become a “live-in” partner of some local Chinese man.

The patterns differ greatly. In some cases, women are kidnapped or lured by false promises and then sold to Chinese husbands who might be very abusive and cruel. In some other cases, women make their own choice, often after spending years in China and acquiring a good command of the language as well as a good understanding of the situation.

The first is human trafficking, pure and simple. The second can hardly be described as anything but a normal marriage. But it seems that most cases lie somewhere between these two extremes.

When the border controls nearly collapsed in 1998-99, cross-border match-making services began to develop. The brides are in great demand in the poorer rural parts of northeast China. Similar problems are well-known in the South Korean countryside, too.

Single men cannot find wives since most girls go to cities and few of them would consider a farmer as a suitable husband anyway.

In the case of South Korea such a phenomenon recently produced an explosive growth in the number of the interracial marriages, with Korean farmers marrying Vietnamese and Chinese girls. In the case of China, the illegal migrants from the North are a substitute.

In some cases, a desperate bachelor pays mobsters or their intermediaries to get a wife whom he might eventually keep under house arrest, for fear that the kidnapped woman might escape.

However, more frequently families use the intricate network of inter-border connections to arrange a bride. Often the prospective wife is located on the other side of the border, but it is not a major obstacle as long as people have some cash to pay North Korean border guards.

Thus, many young Korean women enter the game willingly, even if their expectations about their future might be overly optimistic as they are often misled.

Frankly, I have serious problems with describing this particular type of arrangement as “human trafficking.” Our modern sensitivities might indeed be offended by an idea of a woman marrying somebody whom she has never seen, purely on assumption this is the surest way to guarantee her livelihood.

However, this is how nearly all marriages were concluded a century ago. The idea of romantic love union based on the mutual attraction is a novelty, invented in the 19th century Europe and still unusual in poorer parts of the world.

After all, many women get what they want: a stable life, free from hunger. They would never have such a life “under the fatherly care of the Dear Leader.”

However, these women are illegal immigrants and they have no way to protect themselves if the relationship turns abusive. If they escape, they are very likely to be caught by mobsters and sold again, or caught by police and extradited back to their home country (god knows what is worse).

However, it is also important and telling that a large number of such women, if they are indeed deported to the North to spend some time in jail there, use the first opportunity to come back to China in order to reunite with their husbands again.

Still, the North Korean authorities make sure that all women who are caught pregnant have abortions: perhaps, on the grounds of habitual racism, so common in the Kim Jong-il’s kingdom.

Many Chinese husbands try hard to do something about their Korean wives’ official standing. If the husbands are willing to contribute enough resources, sooner or later, the women acquire Chinese Resident Identity Card where they are registered as China-born ethnic Koreans.

Such an ID costs a lot in bribes to officials, but once it is secured the former hapless refugee becomes a proud citizen of the People’s Republic of China.

It is also important that children born out of such unions usually get the Chinese Resident Identity Card as well. This means that they will go to the Chinese schools and receive a standard education in Korean and/or Chinese.

However, apart from this cross-border movement of brides there is trafficking pure and simple. The Chinese sex industry is controlled and restricted, but exists, and North Korean girls form a large part of the sex workers in the cities of northeast China.

They are even more hapless than Chinese prostitutes, since they are probably more afraid of deportation than of their captors. But their sorry fate should probably become a topic of another story …

Read the full story here:
North Korean defectors
Korea Times
Andrei Lankov
11/18/2010