North Korean Economy Watch

Today The Committee for Human Rights in North Korea (HRNK) is releasing “Coercion, Control, Surveillance, and Punishment: An Examination of the North Korean Police State” (PDF) by Ken Gause.

Here is the table of contents:

Part I: The Internal Security Agencies
–State Security Department (SSD)
–Ministry of People’s Security (MPS)
–Military Security Command (MSC)
–Neighborhood Watch Units (In-min-ban)
–Ad Hoc Social Monitoring Organizations
Part II: What the Internal Security Agencies Do
–Surveillance of North Korea’s Citizens
–Investigation and Detention
–The Role of Internal Security Agencies in Trials
–The Role of the Internal Security Agencies in Prisons
Part III: History of the Internal Security Apparatus
–Formative Years (1945 and 1950)
–Purging the Enemies of the State (1950s and 1960s)
–Kimilsungism and the Monolithic Guidance System (1970–1980)
–Kim Jong-il as Heir Apparent (1980–1994)
–Intrigue Following Kim Il-sung’s Death (1994–1998)
–Kim Jong-il Regime
–Laying the Groundwork for Kim Jong-un’s Succession
–Kim Jong-un Regime
Conclusion
–Appendix I: Biographies of Key Internal Security Officials
–Appendix II: An Example of a North Korean Ministry of People’s Security Decree.180
–Appendix III: An Example of a North Korean Arrest Warrant

Additional Information:
1. Here is coverage in Yonhap

2. Here is coverage in the AFP

Jakub Rehor and Geoffrey See of Choson Exchange post interesting information on insurance in the DPRK:

According to the Choson Exchange:

In the planned, state-controlled economy of North Korea, familiar concepts (including insurance) acquire a very different meaning. In a market economy, insurance coverage indemnifies individuals or corporations for losses suffered due to natural disasters, accidents, sickness, or death. In North Korea, what is called “insurance” functions as a fundraiser for certain entities in the government.

There are two kinds of insurance products in North Korea, individual and enterprise insurance. Both are compulsory and are administered by KNIC (Korea National Insurance Corporation). Compulsory individual insurance is deducted automatically from salaries, and is used to fund the state-run healthcare system. Individuals cannot file claims under this insurance; all payments go into the healthcare system to cover its costs and to other state-directed uses. This individual insurance program was originally administered by Korea Central Bank, but parts of it were moved to KNIC where it formed a new department.

Individuals do not have the option of buying property or life insurance in DPRK. Only state-owned enterprises can use property insurance. Compulsory enterprise insurance covers property losses from all major perils (there is exclusion for war). There are no separate policies or riders for windstorm, earthquake, flooding, etc. Instead, policies specify coverage by type of property (animal insurance, machinery insurance, etc.)

Pricing is set without regard to individual risks and loss history. Rather, insurance operates on a pooled basis, with the goal of roughly matching premiums with claims and administration costs. There are no reserves and the state absorbs any losses or profits. As a result, KNIC has no incentive to care about profitability or correct pricing (and, presumably, service) for local insurance operations priced in North Korean won.

There is no independent regulatory authority in DPRK overseeing KNIC’s activities. In theory, the Central Bank and Finance Ministry should be involved, but in reality they don’t have the expertise or political backing. The only oversight of KNIC comes from the party which provides mainly political supervision.

Given the pooled nature of the compulsory policies and lack of risk-based pricing, KNIC acts mainly as an administrator, collecting premiums and disbursing payments. In this position it functions as a revenue generator for the government via two channels:

1. It fails to pay market replacement value of losses. Claims are settled at official government prices which do not reflect market reality.

2. It has been alleged that KNIC has been involved in reinsurance fraud. Media reports claim that European reinsurers write policies for KNIC which then submits false claims, or retains a portion of the claim settlement payments rather than passing it on to the insured.

The existing insurance arrangements in DPRK are clearly inadequate for the needs of foreign joint ventures operating in the Special Economic Zones. If North Korea hopes to attract foreign investment, it needs to modernize its insurance system to bring it into line with expectations of outside investors.

UPDATE 4 (2012-5-31): Three arrested in South Korea over GPS jamming. According to the Choson Ilbo:

Spies in South Korea were involved in North Korea’s recent jamming of GPS signals, police said Wednesday. The Seoul Metropolitan Police Agency said it booked or arrested three men on espionage charges of collecting confidential military information to help the North.

They include a businessman identified only by his surname Lee who was formerly a prisoner of war from North Korea, a Korean-New Zealander identified as Kim, and another man who formerly worked for a defense contractor.

Export of electronic jamming devices to some countries including the North is banned.

Lee and Kim, who are engaged in trade activities in Nampo, North Korea and New Zealand, are suspected of attempting to hand over GPS jamming devices and radar systems to Pyongyang at the direction of a North Korean agent.

Police say they have footage of their meeting with the agent and a statement from Kim saying he received an order from the North.

Read previous posts on this topic below:

(more…)

UPDATE 14 (2016-12-8): The Pyongyang Times reports on the CDM project:

Various CDM projects obtain CERs

The UN Framework Convention on Climate Change CDM Executive Board recently issued certified emission reductions for the DPRK’s clean development mechanism projects.

Today many countries make great efforts to reduce greenhouse gas emissions as part of the worldwide bid to prevent global warming, the root cause of climate change.

The DPRK also proactively joins in the international efforts.

It signed the Kyoto Protocol, which took effect in 2005, and joined the Paris agreement on climate change signed by 174 countries in August this year.

The agreement, adopted at the UN Conference on Climate Change in Paris in 2015, is aimed at reducing the world’s greenhouse gas emissions to the maximum so that the global average temperatine would not rise more than 2 degrees over that in the 1850s, the pre-industrialization period.

As a signatory to the Paris agreement, the DPRK has worked out 2024 and 2030 greenhouse gas reduction plans and pushed ahead with them.

In keeping with the trend when the sales of carbon dioxide emission rights have emerged as CDM and CDM activities are brisk in the world environmental protection market, a non-permanent CDM committee has been set up in the Cabinet and the General Bureau for Cooperation with International Organizations of the Ministry of External Economic Relations plays the role of its secretariat.

While coordinating all CDM project activities in the country, the secretariat also undertakes issuance of CERs for various CDM project activities on the basis of agreements on cooperation for the development of CDM projects with CER buyers, Topic Energo of the Czech Republic and Ohana LLP, Britain.

In the course of this, several projects were registered as CDM projects by the CDM Executive Board. They include Ryesonggang Youth Power Station units 3, 4 and 5, Hamhung Youth Power Station unit 1, Kumyagang Power Station unit 2, Paektusan Hero Youth Power Station unit 2 and package projects for “Treatment of waste water from chemical factories in the DPRK” and “Collection and use of methane gas from coal mines in the DPRK”.

The secretariat ensured that Paektusan Hero Youth Power Station unit 2 and Ryesonggang Youth Power Station unit 4 obtained CERS for the first time after receiving international certification for their power generation in May.

Their CERs issued amount to 15 800 and 27 807 tons respectively.

The secretariat now works to achieve international certification of other registered CDM projects.

By Jong Hwa Sun PT

UPDATE 13 (2014-11-28): The Ryesonggang Youth Power Station No.4 has been completed. According to KCNA:

New Power Station Goes Operational

Kumchon, November 27 (KCNA) — Ryesonggang Youth Power Station No. 4 went operational.

President Kim Il Sung indicated the orientation of building the power stations on the Ryesong River. Leader Kim Jong Il visited the construction sites several times, setting forth tasks and ways for the construction and bestowing loving care and benevolence on the builders.

Marshal Kim Jong Un appreciated the achievements of the people in North Hwanghae Province when he visited Ryesonggang Youth Power Station No. 1. He not only took measures for finishing the construction of Ryesonggang Youth Power Station No. 2 by the concerted efforts of the army and people but also led the construction of Ryesonggang Youth Power Station No. 4.

The completion of Ryesonggang Youth Power Station No. 4 is another success in implementing the behests of Kim Il Sung and Kim Jong Il to settle the acute shortage of electricity in the North Hwanghae Province by building power stations on the Ryesong River. It also helped lay a more solid foundation for developing economy and improving the living standard of the people in the province.

The completion ceremony took place on Thursday.

Present at the ceremony were Tong Jong Ho, minister of Construction and Building-Materials Industry, Pak Thae Dok, chief secretary of the North Hwanghae Provincial Committee of the Workers’ Party of Korea, and others.

Here is KCTV footage (7:21). Here is UNFCCC data.

UPDATE 12 (2012-12-13): Robert Winstanley-Chesters has some additional data here.

UPDATE 11 (2012-11-25): The DPRK has registered four more power plants with the UNFCCC CDM project.

1. Paekdusan Songun Youth Power Station No. 2 (백두산선군청년2호발전소)
Registered July 13, 2012

Pictured Above (Google Earth): The approximate location of the Paekdusan Songun Youth Power Station No. 2

The UNFCCC documents on the registration of the power plant can be seen here.

Total installed capacity of the project will be 14 MW, consisting of two sets of 7 MW hydropower turbines and associated generators.

According to the UN documents, the project is expected to be put into operation on January 1, 2014.

The organizations listed on the document are the Namgang Hydropower Construction Complex and Topič Energo s.r.o. (Czech Republic)

2. Ryesonggang Youth Power Station No. 4 (례성강청년4호발전소)
Registered July 20, 2012

Pictured Above (Google Earth): The approximate location of the Ryesonggang Youth Power Station No. 4.

The UNFCCC documents on the registration of the power plant can be seen here.

The installed capacity of the project is 10 MW, which consists of 4 sets of generating facilities with a capacity of 2.5 MW each. The project will generate the electricity energy of 40,030 MWh and supply 38,640 MWh to the WPG in a year.

According to the UN documents, the project is expected to be put into operation on December 1, 2012. This facility was last featured on the DPRK evening news on 2012-11-8. See the footage here.

The organizations listed on the document are the Kumchon Electric Power Company  and Topič Energo s.r.o. (Czech Republic).

3. Ryesonggang Youth Power Station No. 5 (례성강청년5호발전소)
Registered August 22, 2012

Pictured Above (Google Earth): Construction work on the Ryesonggang Youth Power Station No. 5.

The UNFCCC documents on the registration of the power plant can be seen here.

The installed capacity of the project is 10 MW, which consists of 4 sets of generating facilities with a capacity of 2.5 MW each. The project will generate electric energy of 41,150 MWh and supply 40,616 MWh.

Organizations listed in the document include the Kangdong Hydro Power Construction Company and Topič Energo s.r.o. (Czech Republic).

According to the documents, the project is planned to be put into operation on May 1, 2012. The most recent Google Earth satellite imagery is dated Spetember 5, 2011 and the last time the project was featured on North Korean television was November 5, 2011. I am skeptical that the project was finished on time since the opening of the dam has yet to be announced publicly.

4. Ryesonggang Youth Power Station No. 3 (례성강청년3호발전소)
Registered October 23, 2012

Pictured Above (Google Earth): Construction work on the Ryesonggang Youth Power Station No. 3.

The UNFCCC documents on the registration of the power plant can be seen here.

The project with an installed capacity of 10 MW, 4 sets of generating facilities with a capacity of 2.5 MW
respectively. The project will generate the electricity energy of 42,800 MWh and supply the electricity of 41,310
MWh.

Organizations listed in the document include the Tosan Electric Power Company and Topič Energo s.r.o. (Czech Republic).

Though the plant is supposed to go into operation on July 1, 2012, the most recent Google Earth imagery from 2012-11-8 shows the plan remains uncompleted. The last time the plant was featured on North Korean television was 2011-6-25.

UPDATE 10 (2012-10-23): The DPRK has registered its second CDM project: Kumya Hydro Power Plant. (AKA Kumyagang Power Station No. 2, 금야강2호발전소)

Here is the official UN web page containing all of the technical information.

Here is a Google Earth satellite image featuring the dam and power station (39.552132°, 127.156062°):

The Hanns Seidel Foundation (Facebook page here) visited the site and took this photo:

KCTV footage dated 2014-9-16 shows a completed Kumya Hydro Power Plant (AKA Kumyagang Power Station No. 2). See the footage here.

UPDATE 9 (2012-8-16): The DPRK’s first CDM project registered: Hamhung Hydro Power Plant No. 1 (AKA Hamhung Youth Power Station No. 1)

Pictured above (date unknown): On Bing Maps (coordinates: 39.648086°, 127.269219°) we can see construction is underway

A valued reader notified me this morning that the DPRK’s first CDM project was registered in July: The Hamhung Hydro Power Plant No.1.

You can read more about the project on the UN web page here. As I understand it, the CER (the emissions rights) from the plant do not go directly to North Korea but to a Czech company who co-registered the project. It will become operational on January 1, 2013.

UPDATE 8 (2012-6-5): In addition to the seven power plants submitted for approval below, the DPRK is involved in several other “Programmes of Activities (POAs)“. You can see all the POAs by clicking here and selecting DPRK as “Host Country”.

Here is a summary:

1. Methane Utilization and Destruction Programme from Animal Waste Management System (AWMS) in DPR Korea

2. Methane Utilisation and Destruction Programme from Industrial Wastewater in DPR Korea

3. CarbonSoft Open Source PoA, LED Lighting Distribution: Emerging Markets

4. Coal Mine Methane Utilisation and Destruction Programme in DPR Korea

5. International water purification programme

6. CFL Lighting Scheme in Democratic People’s Republic of Korea (DPRK)

UPDATE 7 (2012-6-2): The creator of Nord Korea Info passed along the following information on the DPRK’s CDM projects:

1. Naenara, one of the DPRK’s official news outlets, has posted numerous CDM documents. You can see them here.

2. Information posted to the UNFCCC web page on specific CDM projects:

A. Kumya Hydropower Plant (AKA Kumyagang Power Staiton No. 2)
B. Ryesonggang Hydropower Plant No.3 (Comments) (AKA Ryesonggang Youth Power Station N. 3)
C. Ryesonggang Hydropower Plant No.4 (Comments) (AKA Ryesonggang Youth Power Station N. 4)
D. Ryesonggang Hydropower Plant No.5 (Comments) (AKA Ryesonggang Youth Power Station N. 5)
E. Paekdusan Songun Youth 14MW Hydropower Project No.2 (AKA Paektusan Songun Youth Power Station No. 2)
F. Wonsankunmin Hydropower Project No.1 (Comments) (AKA Wonsan Army People Power Station No. 1)
G. Hamhung Hydropower Plant No.1 (AKA Hamhung Youth Power Station No. 1)

No new information is available on the Hamhung 20MW Hydropower Plant No. 2 (AKA Hamhung Youth Power Station No. 2). So I am unsure what has happened to it.

UPDATE 6 (2012-5-31): Bloomberg Businessweek reports on the DPRK’s efforts to sell carbon credits:

[U]nder the terms of the [Kyoto] protocol, North Korea, as a developing country and a member of the United Nations, has the right to build clean energy projects that may apply for Certified Emission Reductions, or CERs, popularly known as carbon credits. The North Koreans can then sell them to a rich country or company that needs the credits to offset its own greenhouse gases. Dig into data from the UN’s Framework Convention on Climate Change, and you will find seven North Korean projects registered for carbon trading.

This is where Miroslav Blazek comes in. Blazek, director of Czech company Topic Energo, acts as a link between North Korea and potential carbon credit buyers. He says his experience as manager of a tractor factory in socialist-era Czechoslovakia is invaluable for doing business with the communist North Koreans. “I can work with them because I understand how their system works,” he says. “If I send an e-mail and still don’t have a reply in several days, I know it’s not because they didn’t see it but because it had to work its way through the chain of command. For me it’s like a trip down memory lane.”

North Korea is now building seven hydroelecrtric plants, which provide some of the cleanest energy going. Most can earn tradable carbon credits. Blazek says the North Koreans “jumped” at the opportunity to get into carbon trading: “They immediately grasped that this is a way to make money.” Korea’s seven dams may generate as many as 241,000 CERs a year, worth almost €1 million ($1.3 million). “The projects are already in a relatively advanced phase,” says Ondrej Bores, director of carbon advisory services at Virtuse Energy in Prague, who’s worked with Blazek on other deals.

Still, selling anything made in North Korea has its challenges. More than 30 potential buyers pulled out because of the U.S. embargo on trade with North Korea. Blazek finally struck a deal with a Chinese-controlled conglomerate that needs credits to offset emissions from facilities in Europe. He won’t name the company, citing a confidentiality clause.

The Prague Post also reported on this story.

UPDATE 5 (2012-2-14): I have been notified that the certification program is proceeding. From a reader:

There has been a statement by the 1718 committee (on sanctions) that CDM projects in NK do not violate UN rules.

[Seven] hydropower plants did get their validation and underwent a process of “clarifications and corrections” as foreseen by UN rules. After the final report (which might have been already issued or might be issued soon) they will go for final vote to the UNFCCC.

Currently, North Korea works on projects as diverse as methane gas from coal mines, bio-gas and electricity-saving light bulbs.

UPDATE 4 (2011-7-11): I just checked the UNFCCC web page, and it appears that in addition to the hydro power plants mentioned below, the North Koreans also submitted the “Energy Efficiency Improvement Project in Pyongyang Textile Factory” [sic] for carbon offsets on May 23, 2011. According to the UNFCCC web page, the project is in the portfolio of the Carbon-Trade Division, GBCIO, Ministry of Foreign Trade.

UPDATE 3 (2011-7-11): DPRK begins construction of Ryesonggang Power Stations 3 and 4

On June 25th the DPRK evening news featured footage of the construction of the Ryesonggang Youth Power Station No. 3 (례성강청년3호발전소). I have uploaded the footage to YouTube and you can see it here.

On June 28th the DPRK evening news featured footage of the construction of the Ryesonggang Youth Power Station No. 4 (례성강청년4호발전소). I have uploaded the footage to YouTube and you can see it here.

UPDATE 2 (2011-3-11): The DPRK has apparently registered eight power plants with the UNFCCC. According to Reuters:

North Korea has registered eight hydroelectric plants with the United Nations, and if approved, could allow the world’s most reclusive state to sell carbon offsets to earn precious hard currency.

These hydropower projects were registered with the United Nations Framework Convention on Climate Change (UNFCCC) for prior consideration in getting carbon credits, some of which have a capacity of 20 megawatts, the UNFCCC website showed.

Prior consideration is the first step for accreditation toward the U.N.’s Clean Development Mechanism that allows developing countries to earn tradeable carbon credits for emissions from clean-energy projects.

Bernhard Seliger, a messenger for North Korean officials on these projects, said the United Nations uploaded the information on Thursday after he submitted related forms on behalf of the North Korean government’s carbon trade division in late February.

“I have no idea when the U.N. makes a decision… North Korea has to finish the power plants, which up to now are only half-finished dams,” Seliger, Hanns Seidel Foundation’s representative in South Korea, told Reuters via email.

Analysts questioned the demand for carbon credits from North Korea, concerned the money might be siphoned off to nuclear arms or other military projects.

According to the UNFCCC web page (select Democratic People’s Republic of Korea in the “Host Party” box), these are the eight power stations that have been submitted for consideration:

Hamhung Hydropower Plant No.1 (AKA Hamhung Youth Power Station No. 1)
Hamhung 20MW Hydropower Plant No. 2 (AKA Hamhung Youth Power Station No. 2)
Kumya Hydropower Plant (AKA Kumyagang Power Station No. 2)
Paekdusan Songun Youth 14MW Hydropower Project No.2 (AKA Paektusan Songun Youth Power Station No. 2)
Ryesonggang Hydropower Project No. 3 (AKA Ryesonggang Youth Power Station N. 3)
Ryesonggang Hydropower Project No. 4 (AKA Ryesonggang Youth Power Station N. 4)
Ryesonggang Hydropower Project No. 5 (AKA Ryesonggang Youth Power Station N. 5)
Wonsangunmin 20MW Hydropower Project No. 1 (AKA Wonsan Army People Power Station No. 1)

And according to an email from the UNFCCC:

This list contains all the projects which have already started and for which a notification of CDM prior consideration has been submitted. This notification is necessary to prove that the incentive of the CDM was a decisive factor for taking up the project when a project has started before a project design document (PDD) has been published for global stakeholder consultation or a new methodology in connection with the project has been submitted. However, kindly note that these projects have not yet entered the CDM project cycle as lined out in the CDM rules, requirements and procedures, and to submission for registration has yet been made.

Further details on the CDM project cycle are available here: http://cdm.unfccc.int/Projects/diagram.html

UPDATE 1 (2011-3-8): According to the Guardian:

North Korea hopes to earn much-needed hard currency by selling UN-backed carbon offsets from a series of hydro-power projects, as the country faces sanctions over its nuclear weapons programme.

If approved and registered by the UN, these would be the first projects for North Korea under a scheme called the Clean Development Mechanism (CDM). This allows developing countries to earn tradeable carbon credits for emissions reductions from clean-energy projects.

Some analysts questioned the demand for carbon credits from North Korea, with fears the money might be siphoned off to nuclear arms or other military projects.

The government has asked the Hanns Seidel Foundation of Germany, which focuses on humanitarian issues, to act as a go-between by working with UN-approved verification agency TUV Nord.

According to Bernhard Seliger, the foundation’s representative in South Korea, North Korea is initially looking at trying to get approval for three hydro power plants of 7-8 megawatts (MW).

Seliger visited the three hydro-plant construction sites in the north-east corner of the country in January.

In a statement, TUV Nord confirmed the foundation had engaged their services.

“In this respect, TUV Nord intends to verify hydropower dams in North Korea once pre-registered with United Nations framework conventions on climate change [UNFCCC] via the Beijing branch of its Chinese subsidiary TUV Nord Guangzhou,” it said.

If registered, the plants could yield millions of euros over several years.

Beijing-based lawyer Tom Luckock, who specialises in projects that curb greenhouse gas emissions, estimated that an 8 MW hydro plant could yield about 23,000 UN offsets a year.

The offsets, called Certified Emissions Reductions (CERs), are generated from registered CDM projects, such as wind farms, that are rewarded for reducing greenhouse gas emissions.

The offsets currently trade at nearly €12 (£10) each and are bought by governments in rich nations that need to meet UN emissions reduction targets.

Europe is the biggest buyer, with large polluting firms allowed to buy the offsets to meet a portion of their emissions reduction targets under the EU’s emissions trading scheme.

“Finding ways to secure foreign currency is the priority for North Korea, which is linked to everything from food to raw material imports to boost reduced productivity,” said Cho Myung-chul, a senior researcher at the Korea Institute for International Economic Policy.

…

Seliger said North Korea, which signed the UN’s Kyoto Protocol climate pact in 2005, was also interested in biomass power generation projects under the CDM.

The UN-approved national agency that assesses and approves CDM projects in North Korea was not available for comment.

Questions remained on demand for North Korean CERs.

“Even if they open up, who in the world wants to pay for North Korea that is blamed for its nuclear weapons programme?” said Choi Soo-young, a senior researcher at the Korea Institute for National Unification.

Cho said the UN needed to prevent outside cash going into its nuclear development activities, while Luckock, of global law firm Norton Rose, said: “Their limited access to hard currency has to be a concern for buyers – the damages clauses will carry limited weight without some security there.”

Another challenge is that North Korea would have to make public its energy consumption and generation data and disclose information on the amount of energy linked to the hydro project.

“Annual inspection, constant measurement and energy flow posting on the [UNFCCC] website – all these things are new for North Korea,” Seliger said.

According to the AFP:

“We are talking about eight power plants, with the smallest size about 7.5 megawatts. These are not big projects but small or medium-sized projects,” Bernhard Seliger told AFP.

None has yet been completed, he said.

“I saw some (construction) sites in South Hamkyong province but that’s not all. There are other plants in other regions,” Seliger said, adding that some of the projects are led by the UN Development Programme.

The Hanns Seidel Foundation has been working since 2003 to build the North’s development capacity, and in 2008 organised a seminar on carbon trading for Pyongyang officials at their request.

The tradeable credits, called Certified Emissions Reductions, are awarded for approved clean-energy projects such as hydropower plants or wind farms.

Big polluters elsewhere in the world can buy them as part of their efforts to cut emissions.

Seliger said his foundation is helping the North to prepare for the auditing process required to join the UN carbon credit trading system known as the Clean Development Mechanism.

“One good thing about this project is that it is very transparent, involving monitoring and auditing on an annual basis… I think it is very good for North Korea to participate in such an international regime,” said Seliger.

An official at a South Korean state agency, the Korea Energy Management Corp, said registration would take at least a year or two and it was unclear how much the North would be able to earn if approved.

The official, who declined to be identified, said a typical eight-megawatt hydropower plant could yield about 19,500 carbon credits each year, each of which was currently traded at 12 euros in global markets.

This would amount to around $327,000 a year.

But some buyers may shun the communist state, given its history of nuclear and missile development which has led to international sanctions.

“Government buyers will certainly shy away from dealing with the North,” said Koo Jung-Han, a researcher at the Korea Institute of Finance.

“But private companies have few reasons not to buy credits from the North as long as it can offer a competitively low price. However, the big question is whether the North will be able to build the plants without outside financiers.”

Koo said that countries hoping to buy carbon credits from upcoming overseas projects often encourage investment in the ventures by their own finance companies.

“But what kind of financial companies will take a plunge in projects in such a volatile, politically risky country like North Korea?”

The North suffers persistent power shortages even in the showpiece capital Pyongyang.

Many rural areas receive power only during key agricultural seasons, and must rely for the rest of the year on alternative fuels, according to a recent policy paper published by the Nautilus Institute think-tank.

Here are the web pages for the Hanns Seidel Foundation and the UNFCCC Clean Development Mechanism (CDM) Program.

A reader writes in with the following comments:

I would like to share some comments on the potential CDM projects in north Korea as i have been working on this field for many years now.

Concerning existing hydro-power plants:
To be eligible as a CDM project, one of the first criteria is the additionality of the project. You have to prove (the rules are very strict) that the project would not have been launched without the consideration of the revenues from the reselling of the CERs. So the dams that have already been buit are not eligible.

Concerning hydro-power plants that are being implemented:
The first step of a CDM project is to notify to the UNFCCC secretariat and to Designated National Authority (in this case the Secretariat of the National Coordinating Committee of Democratic People’s Republic of Korea for Environment) that you are seeking to establish your project as a CDM project. Up to now, no such notification has been received by UNFCCC so it would be quite difficult for projects being implemented to ask for the CDM status (I mean nearly impossible).

Some facts concerning future hydro-power projects:
From the day you send the notification that you are seeking the CDM status to the day you are actually given the status, it takes in average 2 to 3 years (they would have to build the plants during this period). Then it can be at least another year before you receive the CERs. The price of 12 euro for a CER is for secondary market. The price for primary CER (directly sold by the producer) would be much less than 8 euro.

The figure of 20 000 CERs/year is completely unpredictable for the moment, here is a simplification of the calculation: One CER is equal to one tonne of CO2 equivalent that would be avoided by producing clean electricity. For example when you produce 1 MW electricity from coal, the process releases X tonnes of CO2 in the atmosphere but when you produce 1 MW from a hydropower plant, you do not release CO2. In order to calculate what the CDM project would be able to claim, we would have to know the CO2 emission factor of the North Korean grid and then multiply it by the amount of MWh produced by the CDM project. If most of the electricity produced these days in North Korea already comes from hydro-power plants, then the national emission factor will be low and the CDM project will not avoid a lot of CO2 emission (and so not earn a lot of €) Without the capacity of the future project and the national emission factor, it is impossible to estimate the amount of CERs the project could generate.

The CDM status seems quiet unrealistic to obtain for North Korean projects but other international agreements are discussed these days and their outcome may be more adapted.

ORIGINAL POST (2011-1-31): According to Radio Free Asia:

Nuclear-armed but cash-starved North Korea has expressed interest in joining the world carbon market in an apparent bid to earn precious hard currency and avoid international sanctions, an expert told RFA.

But the secretive Kim Jong Il regime has to disclose critical information, such as energy consumption data as well as methods by which it derives energy, to be eligible for funding under the United Nations’ Clean Development Mechanism (CDM), said the North Korea expert, speaking on condition of anonymity.

The CDM is aimed at encouraging companies or organizations in the developed world to invest in carbon dioxide emissions-saving projects in developing countries.

In return for funding and technology transfer, investors receive carbon credits, which can then either be traded on carbon markets or used to reduce their own emissions tally if they are subject to a domestic cap.

The Kyoto Protocol set emission caps for 38 countries through 2012, establishing the CDM as a worldwide carbon market. It is a cornerstone of the group’s efforts to tackle global warming.

The North Korea expert told RFA on Jan. 13 that Pyongyang intended to apply for funding via the CDM and that the regime might list its proposed hydro-electricity power projects under the U.N. mechanism.

UN refrains from comment

When contacted on the North Korea move, the U.N. Framework Convention on Climate Change (UNFCCC), the secretariat charged with implementing the global environmental treaty to stabilize greenhouse gas concentrations, said it would refrain from commenting on individual country projects.

The North Korea expert estimated that one ton of carbon dioxide would trade for about U.S. $26 dollars and if a hydro-electric power project was registered under the CDM, depending on the carbon credit bid price, about U.S. $1 million dollars could be earned annually.

A hydro project registered under the CDM would need to be evaluated by U.N. inspectors for it to qualify for carbon credits. Usually, it would be evaluated continuously for about 14 years.

Details, including the amount of energy linked to the hydro project and potential reduction of greenhouse gas emissions, would have to be submitted.

North Korea has been mostly reluctant to share information about its energy generation activities.

According to the expert, North Korea has recently displayed “great interest” in the possibility of operating hydro-electric power stations to alleviate its domestic energy shortages and to acquire “carbon credits” that it could, in turn, sell on the international carbon market.

Hard currency

As North Korea’s economic crisis worsens, Pyongyang is seeking ways to earn hard currency following a failed currency reform and due to sanctions imposed by the international community over its nuclear and missile developments and provocations targeting South Korea.

The interest in the CDM is likely to be part of this search.

The North Korea expert also said that earning hard currency through “carbon credits” would not be subject to sanctions imposed on Pyongyang under UN Security Council resolutions, and that any North Korea’s application for participation under the CDM “may stand a chance.”

“For North Korea, this could be an opportunity to earn hard currency without engaging in illegal armament sales, while operating an electric power station in transparent fashion, and accepting strict monitoring by the UN, and abiding by applicable international standards.”

The United States has been pressing China to use its influence to persuade North Korea regime to end recent provocations and return to disarmament talks involving the three countries and South Korea, Russia and Japan.

The six-party nuclear talks were last held in 2008. The impoverished North has been seeking a restart to the nuclear negotiations, which propose to reward its gradual nuclear disarmament with phased infusions of economic aid.

In a bid to renew dialogue and ease chances of conflict, South Korea recently proposed holding a preliminary meeting with North Korea on Feb. 11 to prepare for high-level defense talks. On Friday, the North suggested parliamentary talks between the two sides.

Read the full story here:
North Korea Eyes Carbon Market
Radio Free Asia
1/29/2011

According to the Daily NK:

Japanese-made vehicles are disappearing from the streets of North Korea, six years after Kim Jong Il decreed that it should happen. Indeed, just two years ago it seemed that a majority of the vehicles on the streets were still those made by Toyota, Nissan and Mitsubishi, but this is no longer the case.

According to a Chongjin source who spoke with Daily NK yesterday, “In accordance with a 2010 National Defense Commission order saying that all Japanese cars had to be off the streets by last December, now you can hardly see any Japanese private cars or vans in the entire country.”

The NDC order reportedly pertained to private cars and vans of 1.5T or less, although the source said that trucks of Japanese origin are also meant to be phased out over the next couple of years as well.

The move is said to relate to a decree issued by Kim Jong Il in 2006 in which he demanded that all Japanese cars had to be gotten rid of. He apparently issued it after watching unhappily as a Japanese car overtook his own on the Pyongyang-Wonsan highway.

Another case is instructive in showing the degree of official dislike. In 2008, Namkang Trading Co. had already been importing second hand Japanese cars through Rasun for some time. However, a provincial Party secretary received a report on the removal of Japanese cars, and as a result more than 300 such cars were gathered in a local stadium and turned into scrap metal using fork cranes as cadres watched on.

But it was not really until four years after Kim’s original decree that implementation hit its stride, because it took some time to secure sufficient replacement vehicles. Pyongyang municipal, Party, state and security organs were the first to lose theirs in 2010, followed in 2011 by factories, enterprises and foreign currency earning units.

According to the source, “At the time, there were more than 100 perfectly good vehicles taken from North Hamkyung Provincial Party Committee alone.” The transportation head in the province apparently commented that “tens of thousands of perfectly sound vehicles have been gotten rid of nationwide.”

However, in October, 2010, Kim Jong Il delivered cars as gifts to key individuals and organizations. There were nationwide events held to celebrate receipt of the vehicles. Cadres at provincial Party departmental head and above received Chinese vehicles, while local Party secretaries and people’s committee chairmen received Russian ones. Factories and enterprises were subsequently ordered to purchase vehicles produced domestically in Nampo by ‘Pyeonghwa Motors’, a joint venture with the Seoul-based Unification Church, but this didn’t always happen.

The relative popularity of Japanese vehicles in North Korea stems in part from their build quality, which allows them to traverse the often sketchy North Korean roads, and in part from the fact that they used to represent a good trading opportunity in the 1980s and 90s. At that time, such vehicles could be imported from Japan and sold on to Chinese businesses at a profit margin of up to 400%. Domestic popularity was one of the inevitable side-effects of this trade.

Previous posts on this topic here (2007-7-11) and here (2007-7-27).

Read the full story here:
Japanese Cars Crashing Out
Daily NK
Choi Song Min
2012-5-31

According to the Daily NK:

On the 22nd, North Korea handed down a ‘farming support battle mass mobilization order’ in the name of the Supreme Command of the Chosun People’s Army. The order commands the military to take the lead in the battle to increase food production.

At the same time, Rodong Shinmun ramped up the propaganda side on the 21st, publishing a couple of articles on agricultural topics including one about Yeokpyeong Cooperative Farm in Huicheon, Jagang Province entitled, ‘There Is Nothing You Cannot Do as Long as You Are Determined’.

However, sources in North Hamkyung Province confirm that neither the propaganda nor the orders from above reflect the difficult reality on the ground during the annual ‘spring hardship period’ which last until the early part of May. In effect, the North Korean authorities are calling for mass mobilization to secure the nation’s food supplies without ensuring food for those being mobilized.

According to one, “The spinach which we prepared for soup is already gone. There are now ‘side dish support teams’ out looking for wild plants and herbs for side dishes.”

To try and solve this problem in situ, anyone who is able to offer 50kg of rice or equivalent is handed a month of vacation time during the farm support period. If rations amount to 600g per day then a single worker will go through 24kg of rice or corn over the course of the 40-day mobilization period; thus, giving 50kg means taking responsibility for feeding two other people, and this is enough to get an exemption from labor for oneself.

However, when those able to give food and those out collecting food from the mountain-sides are combined, it means half the people who are meant to be supporting the farming work are not doing so directly. Not only that; according to the source, “The people left behind on the farms are in a lifeless state, so it’s pretty hard to get any work done.” They are very cynical, too, reportedly pointing out that they will gain strength by eating corn, not by yelling slogans.

Given that there are also cases of support workers stealing from nearby farmhouses, local people are said to be waiting for the day when the support workers will be allowed to leave.

Official controls have also been heightened for the support period. Weddings, funeral and ancestral rites are prohibited, and there is no travel permit issuance going on either. In addition, only immediate family members of deceased persons may move around locally.

Read the full story here:
50kg the Only Relief from Hardship Period
Daily NK
Choi Song Min
2012-5-24

A quick note related to the story below: I have located on Google Earth the Workers’ Party headquarters, headquarters of the Democratic Women’s Union of Korea, headquarters of the Kim Il-sung League of Socialist Working Youth, and the headquarters of the General Federation of Trade Unions of Korea. The headquarters of the Union of Agricultural Workers of Korea, however, eludes me.  If you have any idea of its location please let me know…

Andrei Lankov writes about the purposes of these organizations in the Asia Times:

In the early 1980s, when the present author was a student at the Soviet University, my teacher often described North Korea as a “country where meetings never end”. Having grown up in Stalin’s Russia, he knew a thing or two about meetings and indoctrination, but the North Korean standards appeared excessive even to him.

The more I interact with North Koreans, the more skeptical I become about how outsiders understand the working of a repressive system.

For outsiders, regime repressiveness is usually associated with an omnipresent political police, but it appears that other, less sinister-looking, institutions have played a major role in shaping the consent of the North Korean populace.

Read more of the article below…

Since its foundation in the late 1940s, the North Korean state has followed a zero tolerance approach in its dealings with dissent. The authorities strive to discover and punish/correct even minor deviations from the prescribed way of thinking.

But the political police only get involved in rare and extreme cases. In most cases, the real and alleged offenders are disciplined by their own peers and immediate supervisors within their “organization”.

Indeed, so-called “organizational life” has been a peculiar and omnipresent feature of North Korean life since the 1960s, even though it has declined in the past two decades.

Every single North Korean must belong to a cell of one (and only one!) organization, and this cell, usually consisting of one or two dozen people, has multiple opportunities to control and correct his/her behavior. There are five such organizations in the North, with each having easily definable and mutually exclusive membership – the Korean Workers’ Party (KWP), the Youth Union, the Trade Union, the Farmers Union and the Women’s Union.

Once a North Korean turns 14, he or she is expected and, indeed, required to join the Kim Il-sung Youth Union and stay there until the age of 30 (unless he or she is lucky enough to be admitted into the KWP at young age).

After 30, the lucky and socially ambitious can still theoretically join the party (not an easy undertaking), while the rest become members of the Trade Union or Farmers Union, depending on whether they work in the fields or on a production line. Even housewives, without a job, are not left out, since they are required to be members of the Women’s Union.

The rules are simple and unambiguous. An industrial worker in his late 20s will attend meetings and other activities of the Youth Union in his work place. Once he turns 30, he is required to switch membership to the Trade Union. He might marry a woman from the same factory, but if she decides to become a housewife (a very common occurrence), she would switch membership to the Women’s Union.

Typically, every organization holds three meetings every week, each one lasting between one and two hours. Two of the three weekly meetings are indoctrination sessions. Their participants are lectured about the greatness of the Kim family, the glories of the socialist economy and the depraved nature of the pro-American South Korean puppet regime, as well as about other similarly lofty, ideologically useful topics.

The content of the lectures is supposed to be memorized and tests are occasionally held, but examiners are not excessively strict.

This system makes sure that propaganda messages are delivered to every Korean. It is possible that people do not read newspapers (because North Korean newspapers are seriously boring) or do not listen to official radio, so the major ideas of propaganda are delivered straight to their workplace.

But it is another weekly function that seems to constitute the true core of North Korea’s organizational life – the so-called “self- and mutual criticism sessions”. In most cases, such sessions are usually held on a weekly basis.

During a criticism session, every member of an organization – in other words, every adult North Korean – is supposed to deliver something akin to public penitence and confession. He or she must admit some improper acts that he or she committed in the previous week.

Serious deviations are seldom admitted and discussed; people usually limit themselves to relatively trivial matters like, say, being a few minutes late for a job or not taking proper care when cleaning the shop floor.

Every act of public confession should be accompanied by a proper quote from Kim Il-sung (leader from 1948 to 1994) or his son Kim Jong-ll (leader from 1994 until his death in 2011).

Then a repentant sinner must be criticized by another member of the same organization. Usually both confession and criticism are kept short, taking hardly more than a minute or two per person.

In most cases, these sessions are essentially performances where people admit the sins they know to be relatively minor and hence harmless.

It is also known that future participants of the Saturday performance (“self- and mutual criticism sessions” tend to be scheduled for Saturdays) sometimes make preliminary deals and agree on who should criticize whom and for what.

Nonetheless, there is always the small but real risk of a public denunciation, a situation getting out of control, and therefore the sessions do exercise significant pressure over organization members.

If something more improper has taken place, a more specialized session can be conducted within the organization (often called “the ideological struggle session”).

When this is to be done, the offender is subjected to one or two hours of a verbal harangue, often of a quite offensive and rude nature. Usually, this is the way in which an organization deals with offenses that are too trivial to be dealt with by the police, but are nonetheless seen as relatively serious – like, say, frequent absence from work without sufficient reason, or traveling to another part of the country without obtaining a proper permit (and being caught there).

Through organizational life, the state ensures that every single North Korean is exposed to the official ideology and also gets regular training in the politically correct ways of conduct.

The slow but unstoppable disintegration of Kim Il-sung’s “national Stalinism” in the past two decades seriously undermined the foundations of organizational life. Nowadays, a majority of North Koreans make a living outside the official state economy and they have now become much less dependent on their workplaces and supervisors.

Increasingly, they see organizational life as a troublesome and time-consuming formality. They can nowadays negotiate a deal with their supervisors, getting permission to be absent from the workplace, if they pay a contribution to the factory’s budget – this is known as an “August 3 contribution” (after the date of a government decree that allowed such practice).

Tellingly, this contribution frees the payer not only from attending his/her workplace but also from time-consuming indoctrination and mutual criticism sessions – after all, the average adult North Korean is supposed to spend three to five hours a week attending these functions.

When the functions are conducted, they are much easier than was the case in the 1970s and 1980s. The meetings are shorter nowadays, and absenteeism – once almost unthinkable – came to be ignored if it remained relatively infrequent (or if the “August 3 contribution” had been paid).

This relaxation seems to be especially pronounced in the Women’s Union, since most North Korean housewives are much involved with the black market economy and hence, if compared to workers of state factories, have less time for the boring activities of their local Women’s Union cells.

Like many institutions of the “old North Korea”, organizational life is seemingly on the decline. But this decline is by no means complete, and a majority of North Koreans are still taken care of by their organizational supervisors. And these people make sure that even minor deviations from what is considered to be correct are likely to be discovered and censured.

Read the full story here:
North Korea’s ‘organizational life’ in decline
Asia Times
Andrei Lankov
2012-5-23

According to the Daily NK:

It has been confirmed that North Korea’s Ministry of Commerce now has a new head, with Ri Seong Ho elevated to the post. According to the South Korean Ministry of Unification, the move was announced alongside a number of other Cabinet changes during the 5th session of the 12th Supreme People’s Assembly last month.

The change appears to confirm a February 16th report carried by Daily NK in which it was revealed that the then-incumbent, Kim Bong Cheol, had been killed in a helicopter crash.

Kim was last heard of when his name appeared on a list of attendees at the opening of the 3rd ‘No.1 Department Store Product Exhibition’ on January 3rd this year. However, on February 16th, Daily NK reported his death alongside the head of the North Pyongan Province commercial department and three others in a helicopter crash two days earlier.

A source in the region told Daily NK that the men were all killed while en route to distribute gifts from Kim Jong Il to the residents of outlying islands in the West Sea to celebrate the former leader’s birthday.

Read the full story here:
Commerce Minister Change Confirmed
DNK
Jeong Jae Sung
2012-5-17

By Michael Rank

Independent British energy company Aminex PLC has withdrawn from North Korea, citing ‘”the volatile and unpredictable politics of the area”, just two years after signing a deal covering a 50,000 sq km area off the country’s east coast.

Aminex said it was “in the best interests of shareholders for the Company to withdraw from the Korean exploration programme and not participate in seismic acquisition. This decision will allow Aminex to focus on growing its African portfolio.”

The company first signed an agreement for co-operation in oil and gas with the North Korean government in 2004, but this failed to make progress. In 2010 it introduced a new foreign partner, Singapore-based Chosun Energy Pte Ltd, which provided finance for the initial stages and a regional base in Singapore. Aminex said at the time that “despite challenging international politics,” it had “succeeded in maintaining strong relations with the Korean authorities”, resulting in the production sharing contract signed in May 2010.

But industry sources said Stuard Detmer, who was made Aminex CEO last September, was less enthusiastic about North Korea than his predecessor Brian Hall, who remains executive chairman, and this had contributed to the company’s decision to pull out of the DPRK.

Aminex’s main focus is now on Tanzania, where in February it made the first gas discovery in the onshore Ruvuma basin, having also disposed of an oilfield in Texas.

Aminex said in 2010 that the agreement “involves reprocessing and reinterpretation of old seismic data plus acquisition of new marine seismic data during an initial period. Licence holder] Korex believes that the East Sea has great potential for significant discoveries of oil and gas, while recognising the political challenges in the region and the need to ensure that any international sanctions are strictly observed.”

See previous posts about Aminex here.

According to the Daily NK:

This year, the North Korean authorities are once again emphasizing the need to strive for greater food production as the farming season begins, launching the annual 40-day total farm mobilization period with the words “Let’s mobilize the whole party, the whole nation and all the people to reach the grain production targets.”

Rodong Shinmun published editorials on the subject on both the 11th and again on the 12th, reflecting the emphasis being optimistically placed on solving food security issues in 2012. Kim Jong Eun also emphasized the same in his major statements on the 6th and 27th of last month, understandably so given that farm productivity has the potential to play such a decisive role in stabilizing the first full winter of his rule.

Inside sources say that the mobilization atmosphere is unusually intense this year in farming villages. Cadres and people alike are feeling the strain of Kim Jong Eun’s first season in charge, with the assumption being that this year could see severe punishments meted out for any wrongdoing.

A South Hamkyung Province explained to Daily NK yesterday, “The whole nation is out there supporting the farms, including enterprises affiliated with state agencies, upper middle school and college students and military bases. People are not allowed to be at home or in the streets. Restaurants are not open either. Everybody is out on the farms. It’s just like martial law, really brutal.”

“5 or 6 safety agents have set up a desk in the street and are stopping people passing by, confiscating their identifications and the bikes they are on and sending them to nearby farms,” he went on. “People can only pass if they have a confirmation slip from a cooperative farm management committee.”

“The markets are only allowed to open from 5PM to 8PM after farm work is done for the day, so excluding preparation and organizing time, there is only an hour or so that the market is open. Buyers and sellers are all super busy,” he added.

During the 40-day total mobilization period, school classes are halted and students sent off to farms for forty days carrying their food and bedding. Laborers, workers in administrative organs and members of the Union of Democratic Women all commute from home to local collective farms until the planting and seeding is done.

North Korea has had the policy in place since 2006. Prior to that, students still had to farm every day, but full-time workers and members of the Union of Democratic Women went out just twice or three times a month.

In 2006, five provincial Party cadres from North Hamkyung Province were caught enjoying a spa during the period. They were summarily kicked out of the Party and sent into internal exile with their families.

“Until last year we were able to get confirmation of attendance from farm management committee cadres by giving a bribe, but with this year being the first under Kim Jong Eun, those tricks are unlikely to work,” the source concluded.

Read full story here:

Farming Regions in State of Tension
Daily NK
Choi Song Min
2012-5-15