North Korean Economy Watch

U.S. Federal Register (Hat Tip OneFree Korea)

Here are the highlights:

DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 732, 738, 740, 742, 746, 772 and 774

[Docket No. 070111012-7017-01]
RIN 0694-AD97

North Korea: Imposition of New Foreign Policy Controls
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Final rule.
———————————————————————–

SUMMARY: In accordance with recent United Nations (UN) Security Council resolutions and the foreign policy interests of the United States, the United States Government is imposing restrictions on exports and reexports of luxury goods to the Democratic People’s Republic of Korea (North Korea), and is continuing to restrict exports and reexports of nuclear or missile-related items and other items included on the Commerce Control List (CCL). To this end, the Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to impose license requirements for the export and reexport of virtually all items subject to the EAR to North Korea, except food and medicines not listed on the CCL.
    BIS will generally deny applications to export and reexport luxury goods, e.g., luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other
alcoholic beverages; musical instruments; art; and antiques and collectible items including but not limited to rare coins and stamps.
    BIS will continue to generally deny applications to export and reexport arms and related materiel controlled on the CCL and items controlled under the multilateral export control regimes (the Missile Technology Control Regime, the Nuclear Suppliers Group, the Australia Group, and the Wassenaar Arrangement). This includes items specified in UN documents S/2006/814, S/2006/815 and S/2006/853. BIS will also generally deny applications to export and reexport other items that the UN determines could contribute to North Korea’s nuclear-related, ballistic missile-related, or other weapons of mass destruction-related programs.
    BIS will also generally approve applications to export or reexport: non-food, non-medical humanitarian items (e.g., blankets, basic footwear, heating oil, and other items meeting subsistence needs) intended for the benefit of the North Korean people; items in support of United Nations humanitarian efforts; and agricultural commodities and medical devices that are determined not to be luxury goods.
    BIS will review on a case-by-case basis applications to export and reexport all other items subject to the EAR.

DATES: This rule is effective January 26, 2007.

The following further amplifies the illustrative of list luxury goods set forth in Sec.  746.4(c):
    (a) Tobacco and tobacco products
    (b) Luxury watches: Wrist, pocket, and others with a case of precious metal or of metal clad with precious metal
    (c) Apparel and fashion items, as follows:
    (1) Leather articles
    (2) Silk articles
    (3) Fur skins and artificial furs
    (4) Fashion accessories: Leather travel goods, vanity cases, binocular and camera cases, handbags, wallets, designer fountain pens, silk scarves
    (5) Cosmetics, including beauty and make-up
    (6) Perfumes and toilet waters
    (7) Designer clothing: Leather apparel and clothing accessories
    (d) Decorative items, as follows:
    (1) Rugs and tapestries
    (2) Tableware of porcelain or bone china
    (3) Items of lead crystal
    (4) Works of art (including paintings, original sculptures and statuary), antiques (more than 100 years old), and collectible items, including rare coins and stamps
    (e) Jewelry: Jewelry with pearls, gems, precious and semi-precious stones (including diamonds, sapphires, rubies, and emeralds), jewelry of precious metal or of metal clad with precious metal
    (f) Electronic items, as follows:
    (1) Flat-screen, plasma, or LCD panel televisions or other video monitors or receivers (including high-definition televisions), and any television larger than 29 inches; DVD players
    (2) Personal digital assistants (PDAs)
    (3) Personal digital music players
    (4) Computer laptops
    (g) Transportation items, as follows:
    (1) Yachts and other aquatic recreational vehicles (such as personal watercraft)
    (2) Luxury automobiles (and motor vehicles): Automobiles and other motor vehicles to transport people (other than public transport), including station wagons
    (3) Racing cars, snowmobiles, and motorcycles
    (4) Personal transportation devices (stand-up motorized scooters)
    (h) Recreational items, as follows:
    (1) Musical instruments
    (2) Recreational sports equipment
    (i) Alcoholic beverages: wine, beer, ales, and liquor

UNFAO
10/30/2003

Despite better harvests this year, the Democratic People’s Republic of Korea (North Korea) will have another substantial food deficit in 2004, requiring a large amount of external assistance, two United Nations agencies said today.

A combination of insufficient domestic production, the narrow and inadequate diet of much of the population and growing disparities in access to food as the purchasing power of many households declines, means that some 6.5 million vulnerable North Koreans will require assistance next year, according to a joint report by the UN Food and Agriculture Organization (FAO) and World Food Programme (WFP).

The situation remains “especially precarious” for young children, pregnant and nursing women and many elderly people, the Rome-based agencies warned.

The report projected domestic cereal availability in the 2003/04 marketing season (November-October) at 4.16 million tonnes, 4.7 per cent up from the revised 2002/03 estimate of 3.97 million tonnes.

The 2003 rice and maize harvests each rose by an estimated 4.5 per cent over 2002, to 1.48 million tonnes (milled basis) and 1.73 million tonnes respectively. The improvements were attributed to favourable weather, a relatively low incidence of crop pests and diseases, increased application of donated fertilizer andbetter irrigation.

Forecasting total cereal needs – food, animal feed and seeds – for 2003/04 at 5.1 million tonnes, the FAO/WFP report projected an import requirement of 944,000 tonnes. Given anticipated commercial imports of 100,000 tonnes, concessional imports of 300,000 tonnes, and food aid expected to be in stock or to arrive after 1 November, 2003 of 140,000 tonnes, the uncovered gap will be 404,000 tonnes.

Despite evidence of improved nutritional levels in recent years, malnutrition rates remain “alarmingly high”, the report said. Four out of ten young children suffer from chronic malnutrition, or stunting, according to a large-scale, random sample survey conducted in October 2002 by UNICEF and WFP. Continued, targeted food aid interventions are essential to prevent a slippage back towards previous, higher levels of malnutrition, the UN agencies said.

The economic policy adjustment process initiated in July 2002 has led to many factories being unable to pay full wages. Combined with food price increases that were higher than increases in wages, this has caused a further deterioration in the already inadequate purchasing power of many households, especially in urban areas.

Rations from the Public Distribution System (PDS) – a primary source of food for the 70 per cent of North Korea’s 23 million people living in urban areas- are set to decline to no more than 300 grams per person per day in 2004, from 319 grams this year, according to government authorities. The present allocation ensures only half of an individual’s caloric requirements.

Low as the PDS rations may be, industrial workers and elderly people now spend up to 60 per cent of their income on these rations alone. After paying for non-food necessities, they can ill-afford staples such as rice and maize in private markets, where prices are as much as 3.5 times higher, let alone more nutritious foods.

As the situation may worsen in the immediate future, the report recommended that attention also be given to the low-income PDS dependents in urban areas rendered increasingly under-employed by economic adjustment process.

The FAO/WFP report urged that 484,000 tonnes of commodities, including 400,000 tonnes of cereals, be sought as food aid for 2004 for the most vulnerable North Koreans. Three-quarters of the total is earmarked for children in nurseries, kindergartens, primary schools, orphanages and hospitals, pregnant and nursing women and elderly people.

Despite improvements in the operating environment for aid agencies, the report noted that there are still restrictions on access to the needy and to marketsand shops, reducing the scope for monitoring and the timely detection of newly emerging food-insecure groups. But it also says that the North Korean government has been more forthcoming with information needed to assess household food security.

The report recommended that “in addition to providing urgently needed food aid, the international community enter with the government into a policy dialogue to set an enabling framework to mobilise the economic, financial and other assistance needed to promote sustainable food production and overall food security.”

Joong Ang Ilbo
1/27/2007

Washington said Thursday it will withhold all contributions to the United Nations Development Program (UNDP), an agency accused of mismanaging its North Korea activities that led to a large, steady influx of cash into a regime suspected of seeking nuclear weapons.

The United States would also consider proposing that the UN stop all programs in the North except those for humanitarian assistance, said Ambassador Alejandro Wolff, acting U.S. envoy to the United Nations. He said the U.S. was satisfied with UNDP’s announcement of steps to remedy the situation, including an audit and readjustment of its 2007-2009 North Korea program.

“In the meantime, until we get the results of that audit and the program is reviewed, we would defer approval of the new program for the DPRK.,” the envoy said. “The U.S. also withholds its contribution in part to UNDP to the DPRK program,” he said. DPRK stands for Democratic People’s Republic of Korea, North Korea’s official name.

Japan went further, its envoy suggesting the UN stop all programs in North Korea except for direct humanitarian aid. Mr. Wolff said the Japanese argument “is quite compelling” and added the U.S. will consider the proposal.

At the State Department, spokesman Sean McCormack denied that the UNDP probe is targeted at Pyongyang. “This is not a U.S.-North Korea issue,” Mr. McCormack told reporters. “This is not directed at North Korea. This is simply an issue of management and oversight of UN programs. The secretary-general and executive director of UNDP understand it as such.”

The UNDP has been accused by Washington of mismanaging its aid in North Korea, resulting in a massive cash flow into the Pyongyang regime through hard currency payments to the North Korean government and local employees and vendors.

Ban Ki-moon, the new UN leader, asked for an overall audit of all UN funds and programs, starting with the first report on North Korea to be completed within 90 days.

Pyongyang in a statement claimed strict conformity with UN regulations.

Korea Times
1/26/2007

The number of undernourished people in North Korea has more than doubled over the past decade with a diminishing dietary energy supply despite the country’s increased food production, the Yonhap News Agency said Friday citing a Food and Agriculture Organization (FAO) report.

FAO said in its annual report in Rome on Wednesday that it estimated the number of undernourished in North Korea at 7.9 million for 2001-2003, more than twice as many as the 3.6 million recorded for 1990-1992.

The dietary energy supply, measured in daily calorie intake per person, dropped to 2,150 in 2001-2003 from 2,470 in 1990-1992, marking a 1.25 percent decrease, according to the report.

The proportion of undernourished subsequently grew from 18 percent of the total population to 35 percent, the report said.

North Korea’s per capita food production, however, was growing at an annual average of 1.9 percent during the 1996-2005 period, compared to a drop of 1.8 percent from 1986 to 1995.

Yonhap, a semiofficial South Korean news agency, quoted the report as saying that the North exported $22 million worth of agricultural products in 2002-2004, accounting for 2 percent of the country’s total exports.

The figures compare with $354 million in agricultural imports during the same years, representing 17.1 percent of North Korea’s total imports.

Plagued by repeated floods and droughts, North Korea subsisted on international food donations for nearly a decade from the mid-1990s. But the U.N. World Food Program (WFP), the main coordinator of the donations, was told to leave the country, which claimed it was producing a bumper crop and receiving aid outside of the U.N. relief agency.

The WFP curtailed much of its presence and activities in the North last year as a result.

Yonhap quoted FAO’s report as stating that North Korea has been the biggest recipient of food aid in recent years and still receives more than 1.1 million tons of grain equivalents per year on average. This equaled 31 percent of the country’s total cereal production in 2002 and 22 percent in 2003.

The report said the number of undernourished in South Korea stayed the same at 800,000 in 1990-1992 and 2001-2003, with the dietary energy supply increasing 0.12 percent between the two periods.

Yonhap
1/25/2007

The U.N. Development Program (UNDP), recently accused of unmonitored activities in Pyongyang that led to a large, unintended influx of cash to the regime there, announced Thursday that it will adjust the North Korea program and delay its implementation until approved.

But the US$17.91 million resource allocation made in the original 2007-2009 program will be maintained, it said.

Yonhap
1/25/2007

North Korea on Thursday rejected a U.S. allegation that it misused funds from the United Nations Development Program (UNDP), accusing Washington of conducting a smear campaign to increase pressure on Pyongyang.

The United Nations announced this week that an audit will be conducted of the UNDP operations in North Korea after Washington alleged it had funneled immense cash payments to Pyongyang.

The UNDP aid projects in North Korea “have been carried out strictly in conformity with the U.N. regulations and in a transparent way,” a spokesman for Pyongyang’s Foreign Ministry said in an answer to a question by the Korean Central News Agency, the North’s official media outlet.

U.S. deputy ambassador Mark Wallace alleged last week that the UNDP’s operation in the North had been run “in blatant violation of U.N. rules” for years and that millions of dollars ended up in the hands of North Korean leader Kim Jong-il. The UNDP denied the U.S. allegation, while U.N. Secretary General Ban Ki-moon, a South Korean, announced an external audit of U.N. programs on Monday.

“Nevertheless, the United States is kicking up another anti-DPRK racket over not much aid funds of the UNDP from the outset of the year to meet its dirty political aims,” the spokesman said.

North Korea said it will continue to develop its cooperative relations with the UNDP.

“However, it will not allow any attempt to politicize the aid project nor accept conditional or unjust aid at all. The U.S. will be wholly accountable for all consequences to be entailed by its ongoing reckless campaign against the DPRK,” the unidentified spokesman said.

Donga (Hat Tip DPRK Studies)
1/22/2007

It is expected that the government’s aid to North Korea will be affected as the international community has decided to investigate the general situation of aid projects using U.N. funding including the United Nations Development Program (UNDP). So far, the government and private groups supporting North Korea have often used international organizations as a means to give humanitarian aid to the North, as such aid through the World Health Organization (WHO), United Nations Children’s Fund (UNICEF), World Food Programme (WFP) and others are less influenced by the inter-Korean relations.

Last year, the government and private organizations didn’t provide previously planned corn aid to the North in the aftermath of North Korea’s missile and nuclear tests. However, they spent 5.912 billion won in malaria preventive measures and infant and child support.

In 2005, they sent products worth 25.773 billion won in food aid and quarantine measures against malaria. Besides, they provided goods worth 2.254 billion won in aid and preventive measures against malaria with the North in 2004, and offered North Korea goods worth 20.303 billion won in corn, malaria preventive measures, and vaccine and immunizing agents in 2003.

The total sum Korea spent on the North in humanitarian assistance over the last 10 years (from 1995 to 2004) amounts to $119.43 million, 7.99 percent of the total U.N. financial aid of $1.49 billion to North Korea. During the period, apart from world organizations, the government gave the North $1.16 billion in financial support.

A government official said, “The government’s support for North Korea through international groups is its obligation as a responsible member of the international community,” and added, “Assistance for North Korea through world organizations is for humanitarian purposes, and as far as I know, there is no possibility for misappropriating funds since the aid is being carried out based on a principle of providing 100 percent goods.”

However, contrary to the above government’s official statement, the government seems rather perplexed at the suspicion that its aid through world organizations was diverted to be used for the North’s nuclear development program. The government has used world organizations as an indirect route for its aid toward North Korea because it was worried about getting embroiled in accusations that it is being too lenient on North Korea.

Unification Minister Lee Jae-Jeong also said in his inaugural speech that even humanitarian aid should be divided into emergency aid, assistance in loan form and aid for development, and that emergency aid should continue under any circumstances in order to emphasize the continuation of government’s support for North Korea through world organizations.

Minister Lee has so far expressed regret to the WFP over the suspension of food aid to the North and emergency relief aid for North Korea’s catastrophic flood damage. Another government official stated, The “UNDP seems to have nothing to do with humanitarian aid since it is aid for the development of North Korea. Still, it will still affect the government’s humanitarian assistance program for the North in the future.”

Meanwhile, it was revealed that the government is investing in the Tumen River Area Development Programme (TRADP) the government has been participating in since 1995 under the auspices of the UNDP. An official at the Ministry of Finance and Economy noted, “This year, the government will pay $181,000 for the operating expenses of the TRADP office.”

Korea Times
1/21/2007

The United Nations Development Program (UNDP) said Friday that it would stop paying cash for its operations in North Korea and would start an independent audit. Suspicions have arisen that the U.N. agency funneled millions of dollars in cash to the Kim Jong-il regime.

The announcement came immediately after U.N. Secretary-General Ban Ki-moon called for an urgent investigation into the activities of U.N. agencies.

The U.N. move was in quick response to U.S. accusations that North Korea has diverted U.N. development aid with the complicity of the UNDP.

In a letter to UNDP Associate Administrator Ad Melkert, U.S. Ambassador Mark Wallace claimed that North Korea had “systematically perverted’’ the UNDP aid program since 1998 for the benefit of the Kim Jong-il regime, rather than the people of North Korea.

The Jan. 16 letter said the UNDP program for North Korea “has for years operated in blatant violation of U.N. rules, served as a steady and large source of hard currency and other resources for the DPRK government with minimal or no assurance that UNDP funds and resources are utilized for legitimate development activities.’’

DPRK is shorthand for the official name for North Korea. It stands for the Democratic People’s Republic of Korea.

On Friday Ban met with Melkert to discuss the North Korea issue.

“The secretary-general will call for an urgent, system-wide and external inquiry into all activities done around the globe by the U.N. funds and programs,’’ said U.N. spokesperson Michele Montas.

Ban’s decision indicated that he was determined to avoid a repetition of the scandal over the U.N. oil-for-food program in Iraq, which lingered for months before his predecessor, Kofi Annan, agreed to an independent probe.

In a press conference at the U.N. headquarters in New York, Melkert said his agency’s auditors had raised concerns about the North Korea program and its management.

He said the agency would end all payments in hard currency to the Pyongyang government, national partners, local staff and local vendors as of March 1.

The agency will propose a full, independent audit at next week’s UNDP executive board meeting to make sure everyone understands the nature of work in a country like North Korea, he said.

U.S. officials were quoted as saying that they first received indications that there might be some irregularities in UNDP’s development program in the North in the second half of 2006. They raised concerns that the cash might be misused, possibly for Pyongyang’s nuclear program.

The Associated Press quoted UNDP as saying that in the 10 years, from 1997 through 2006, the executive board authorized more than $59 million for North Korea but only $27.66 million was delivered.

North Korea is under U.N. sanctions imposed after its Oct. 9 nuclear test. It is still refusing to comply with international calls to end its nuclear weapons program.

There has been speculation that the communist country has converted humanitarian aid from South Korea and international agencies for military use.

Daily Telegraph
Sergey Soukhorukov
1/21/2007

The men who finally made it into the remote highland village of Koogang were greeted by an eerie silence and a gruesome sight.

Lying among the simple wooden huts and burnt remnants of wooden furniture, they found the bodies of 46 North Korean villagers, including women and children, all of whom had frozen to death. Cut off from the outside world by one of the harshest winters in many years, the villagers had suffered a macabre fate that has exposed both the desperate poverty and callous misrule blighting the Stalinist state.

More than 300 people are thought to have perished from cold so far this winter in North Korea’s mountainous north, victims of temperatures as low as -30C and of an arrogant ruling clique.

“Nobody got out of the trap alive,” said an official at the Chinese embassy in the capital, Pyongyang, who confirmed the events of Koogang. “After heavy snowfalls, there was a severe frost. The inhabitants were doomed.”

In a country notorious for its secretiveness, the regime of President Kim Jong-il has made no mention of the deaths. As the rest of the population struggle to stay warm, 50,000 members of his ruling elite continue to live in splendid isolation in a compound in central Pyongyang – enjoying the benefits of hot water, central heating and satellite television.

Elsewhere in the city, though, the scene could have been lifted from the pages of a Charles Dickens novel. The air is thick with the smell of coal dust, as families light fires on the floors of their apartments to keep out the bitter, cold winds that blow south from Siberia.

Outside Pyongyang, the situation is yet more desperate. A six-mile drive from the city, poor farmers trudge through the snow with bundles of brushwood on their backs.

A massive process of deforestation, begun in the 1990s by Kim Jong-il’s father and predecessor, Kim il Sung, has resulted in huge swathes of forest being chopped down to clear land for farming. The disastrous policy led to large-scale soil erosion, believed by many to have been a leading cause of mass famine of the 1990s, when up to three million people starved to death.

It has made the bitter winter, when the temperature in the capital routinely falls to -13C, even more dangerous as the rural poor struggle to gather enough firewood to sustain them.

The inhabitants of Koogang, around 200 miles north-east of the capital, set fire to tables and chairs, even tearing down the wood from their own homes in a desperate attempt to keep warm.

The World Food Programme estimates that North Korea will be 900,000 tons short of the amount of food needed to feed its 23 million population this year. Aid efforts have been complicated by sanctions, imposed after Kim Jong-il’s regime carried out a nuclear test in October last year. Last week, the country held negotiations with US diplomats aimed at re-starting six-party peace talks, which also include China, South Korea, Japan and Russia.

Christopher Hill, America’s chief envoy at the talks in Berlin, signalled progress, saying that the US looked forward “to establishing a normal relationship with North Korea”.

But while there may be signs of a thaw in the country’s frosty relationship with the West, in Pyongyang there is no respite from the sub-zero temperatures.

The electricity supply is notoriously unreliable and as evening falls the city streets are plunged into darkness.

The only constant source of light is the giant illuminated copper statue of Kim il Sung on a hill top overlooking the city – cold comfort for those living through the bleak North Korean mid-winter.

From Fox News
George Russell
1/19/2007

U.S. State Department Reveals North Korea’s Misuse of U.N. Development Program Funds and Operations

Has North Korean leader Kim Jong Il subverted the United Nations Development Program, the $4 billion agency that is the U.N.’s main development arm, and possibly stolen tens of millions of dollars of hard currency in the process?

According to a top official of the U.S. State Department — using findings made by the U.N.’s own auditors — the answer appears to be a disturbing yes, so far as UNDP programs in North Korea itself are concerned.

And just as disturbingly, the U.N. aid agency bureaucracy has kept the scamming a secret since at least 1999 — while the North Korean dictator and his regime were ramping up their illegal nuclear weapons program and making highly publicized tests of intermediate range ballistic missiles.

Nothing was disclosed even to the UNDP Executive Board, which oversees its operations and is composed of representatives of 36 nations — including the United States and, this year, North Korea itself.

That fact is sure to be a bombshell at the Executive Board’s regular annual meeting, which begins Friday and extends through Jan. 26. Among the main items to be discussed is the $18 million, two-year UNDP budget in North Korea.

Moreover, the period of scandal and secrecy in the UNDP’s North Korean operations coincided in large measure with the tenure of Mark Malloch Brown, most recently Deputy Secretary General of the United Nations itself, as administrator of the UNDP.

[…edited…]

From at least 1999 to at least 2004, it appears the UNDP, and the U.N. itself, had no idea what Kim Jong Il did with the aid agency’s money, ostensibly intended for aid programs ranging from development of energy programs and small and medium sized businesses, and for environmental protection.

But the UNDP had plenty of warnings from auditors it had contracted to look at the program during that period, and who signaled loudly that something was badly awry.

In a letter sent to the UNDP on Jan. 16, Mark Wallace, the U.S. State Department ambassador at the U.N. for management and reform, wrote that the auditors’ testimony shows it is “impossible” for the U.N. aid agency to verify whether its funds “have actually been used for bona fide development purposes or if the DPRK [North Korea] has converted such funds for its own illicit purposes.”

Ironically enough, neither Wallace nor the U.S. government has been allowed to obtain copies of the audits, which are deemed “management tools” by UNDP bureaucrats and therefore not even available to governments that pay for the organization.

Their contents came to light only after Wallace and the U.S. demanded an opportunity to view the audits at UNDP headquarters, and took careful notes based on the documents. Wallace reiterated the contents in his letter, addressed to Ad Melkert, the UNDP’s No. 2 official.

The difficulties in finding out what the UNDP was doing in North Korea were apparently something that U.S. diplomats and UNDP auditors shared.

Wallace relates in his letter that whenever the auditors, contracted from the consulting firm KPMG, tried to discover what was going wrong, they were either limited in what they were allowed to investigate, or they were forced to accept “sham” audits done by the North Koreans themselves.

The picture painted by the auditors, according to Wallace, shows a U.N. agency that “operated in blatant violation of U.N. rules.”

The UNDP allowed members of Kim’s regime to “dominate” local UNDP staff, who were apparently first selected by the North Korean government itself, the auditors said, and added that Kim’s operatives even ran “core” financial and managerial functions directly.

The regime also demanded cash payments from the aid agency in violation of U.N. rules, and kept UNDP officials from visiting many of the sites where development projects were supposed to be underway.

On at least three occasions, in 1999, 2001 and 2004, the KPMG auditors filed reports that brought troubling aspects of the situation to the attention of UNDP headquarters, recommending “timely corrective action.” There is no evidence that any such action took place.

Just exactly how much money the UNDP funneled into North Korea in all those years is not revealed in Wallace’s letter. But he notes that in 1999 there were 29 ongoing UNDP projects in North Korea, with a total budget of $27.86 million. Two-thirds of the programs were so-called “National Execution programs” run by North Korea directly, using UNDP money. The other third was ostensibly run by UNDP itself.

But that may not have made a difference. The auditors complained that even UNDP-run programs paid for everything in cash, which is against UNDP policy, at prices set by the Kim regime, and to suppliers that the regime designated. There were not even any purchase orders involved. The regime provided no audits of the programs under its own direct control.

In his letter to Melkert, Wallace called for a “full independent and outside forensic audit” of UNDP’s programs in North Korea, going back to at least 1998.

Only “the bright light of real oversight” would allow the UNDP’s overseers to decide whether any or all of the programs should be continued, he said.