North Korean Economy Watch

The BBC ran an interesting video story on North Korean loggers felling trees in Russia.  Of course this has been going on for a long time. However, this is the first video footage of the logging facilities that has appeared in the Western media.

According to the video, North Korea’s logging concessions are managed by a company called “Association No. 2,” which is housed in a compound in northern Tynda, Russia.  According to the story, Association No. 2 receives 35% of proceeds of logging (appx $7m) some fraction of which is repatriated to the DPRK’s Ministry of Forestry.  Using the video, I located the Association No. 2 compound on Google Earth. Here is an image:

(Click on image for larger version.  You can see it in Google Maps here.)

Additional Notes:

1. I have not been able to locate the other North Korean logging camps in Russia.  If any readers can find them, please let me know.

2.  The DPRK appointed a new Minister of Forests last October.

3. Bertil Lintner on North Koreans working in Russia.

4. Andrei Lankov on the loggers.

5. Claudia Rosette on the loggers.

6. YouTube video on NKs in Russia.

Institute for Far Eastern Studies (IFES)
IFES Forum No. 09-8-18-1
Choi Eun-suk, Research Professor, IFES, Kyungnam University
8/18/2009

Detention of U.S. Journalists

Korean-American Euna Lee (Lee Seung-eun) and Chinese-American Laura Ling, reporters for the U.S.-based Current TV, were detained by North Korean soldiers on March 17, 2009 while near the Tuman River border between North Korea and China. On June 8, the Central Court, the highest court in North Korea, sentenced each of the two to an unprecedented 12 years of ‘Reform through Labour.’ However, after less than two months, a visit by former U.S. President Bill Clinton on August 4 led to the ‘special pardon’ of the two women, bringing a relatively swift conclusion to their plight.

What laws were enforced against the two American reporters? North Korean criminal code article 69 (Jo-seon-min-jok-Jeok-dae-joi, or literally, Korean Nation Antagonism Crime) states, “If a foreign person resides abroad with the intention of antagonizing Korea or injuring the body or assets of a sojourning Korean, or if national discord arises, they shall be faced with a sentence of more than 5 and less than 10 years of Reform through Labour (Ro-dong-Ky-ohwa-hyeong). In serious circumstances, [the person] faces a sentence of more than 10 years Reform through Labour.” Criminal Law article 233 (Illegal Border Crossing) dictates that “A person illegally crossing the national border faces less than 2 years of labor discipline (Ro-dong-dan-ryeon-hyeong). In serious circumstances, [the person] faces less than 3 years of reform through labour (Rodong Kyohwa-hyeong).

North Korea’s Criminal Procedures and the Accused’s Right to Council

The North Korean legal system maintains a 3-tier, 2-trial system. That is, the courts are divided into three levels, but actually, trials may only be heard twice. However, in the case of the two reporters, the trial was directly handled by the Central Court, meaning that only one trial would be held, and there was, of course, no chance to appeal.

Examining the North’s judicial system and criminal law, one can see that the DPRK constitution divides power among the Central Court, Provincial Courts, People’s Courts, and Special Courts (Constitutional Law, article 153). In addition, according to North Korea’s Criminal Procedure Law, the Central Court was established in order to handle appeals when verdicts handed out by lower courts were challenged (Criminal Procedure Law, article 129, clause 1), and it was designated the supreme court in the North Korea (Constitutional Law, article 161). The law also allows for the direct intervention of the Central Court, or for a case to be sent to a court on the same level or of the same kind as the court giving the initial verdict (Criminal Procedure Law, article 129, clause 2). Furthermore, according to the system established by these codes, after a case is opened in one of these courts, it must be completed within 25 days (Criminal Procedure Law, article 287). In the case of the two American reporters, the prosecution received notice of their charges on May 14, meaning that if they were to be prosecuted, the trial would have to have been completed by June 7.

When the Central Court holds the initial hearing in a prosecution, there are two possibilities for retrial. Only “in the event that it becomes known that the evidence upon which a decision is based was false,” or, “facts become known that could influence a decision and that were not known at the time of the trial,” can a Central Court case be reheard (Criminal Procedure Law, article 409). The decision to retry is in the hands of the North’s judicial authorities, meaning that it would have been difficult to find a route to appeal or retrial for the two reporters.

The verdict in an initial trial is decided by a judge and two civilian jurors, although in special cases a panel of three judges is allowed (court organization law, article 9). Any North Korean citizen with the right to vote can be a judge or civilian juror (Court Organization Law, article 6), and judges and jurors are chosen through democratic elections (Court Organization Law, article 4). A criminal case in North Korea follows a process of investigation, pretrial hearing, indictment, and trial (in that order). A detention order must be signed by a public prosecutor within 48 hours of a suspect’s arrest, and charges must be filed within 10 days (Criminal Procedure Law, article 144, clause 1).

The two reporters were apprehended March 17, and were not transferred to the court until May 14, almost two months later. According to North Korean law, a preliminary hearing must be held within two months of opening a pre-trial investigation (Criminal Procedure Law, article 151, clause 1). If investigators want to extend the investigation period, they must receive permission from a public prosecutor, and then can only extend the investigation for an additional two months (Criminal Procedure Law, article 152). Charges of crimes against the state or against the nation are investigated by the State Security Department (Criminal Procedure Law, article 124). In the case of Lee and Ling, investigators did not apply for an extension, and handed the case over to the courts within the allowed two-month period.

The North Korean constitution guarantees a public trial and the guaranteed the right of defense, although in some cases courtrooms are allowed to be closed (Constitutional Law, article 158). The constitution also guarantees that a foreigner will be able to speak in their native tongue during a hearing (Constitutional Law, article 159). A defendant has the right to choose their legal counsel, and that choice can include family members or a representative from work (Criminal Procedure Law, article 108), as well as the freedom to waive their right to council (Criminal Procedure Law, article 109). The right to choose one’s lawyer is directly related to one’s basic freedoms. In the case of the two American reporters, Laura Ling retained council, while Euna Lee chose not to be represented or give any statement.

The North Korean Central Court sentenced Lee and Ling to ten years of reform through labour for ‘Korean Nation Antagonism Crime’ (Criminal Law, article 69) and an additional four years for illegally crossing into the country (Criminal Law, article 233). However, in the North, in the case of multiple charges, the sentence for the more minor charge is halved, then added to the sentence of the more serious offence, meaning a 12-year sentence for the two reporters. This sentence was to begin within 10 days of the verdict. North Korean law dictates that reform through labour be carried out in reform institution (Judicial Conduct Law, article 25). When a defendant is sentenced, they are to be sent to a reform institution within 10 days, along with a copy of the court’s decision, detention orders, and all other relevant paperwork (judicial conduct law, article 33). This, in a nutshell, is the North Korean legal system, from arrest to starting to serve a sentence.

Kim Jong Il’s Power of Pardon and the Release of U.S. Journalists

When North Korea released the two U.S. reporters, the government claimed to do so based on its “humanitarian and peace-loving policy,” and stated that former President Clinton’s visit deepened understanding and helped to build trust between Washington and Pyongyang. This was an interesting use of Kim Jong Il’s power of pardon. It appears that last April, at the first session of the 12th Supreme People’s Assembly, there was a constitutional revision that transferred the ability to grant pardons from the SPA Presidium to the Chairman of the National Defense Commission (NDC). According to a ‘report’ of Clinton’s visit released by North Korean authorities on August 5, “In accordance with the Socialist Constitution Article 103, pardon is granted to two U.S. reporters sentenced to reform through labour; the Chairman of the National Defense Commission of the Democratic People’s Republic of Korea passed down the order for [their] release.”

After the previous constitutional revision, coinciding with the launch of the Kim Jong Il regime in September 1998, article 103 clause 5 specified the duties and powers of the chairman of the NDC, but there was no mention of the ability to pardon. However, article 110, clause 17, which defines the duties and powers of the SPA Presidium, states that it “exercises the right to grant general amnesties or special pardon.” In the past, when pardons were granted on national holidays or in conjunction with other important events, they were done so in the name of the SPA Presidium. North Korea has yet to publicize what constitutional changes were made in April, but with the release of the two Americans in the name of Kim Jong Il, it can be seen that the ability to grant general amnesty has been transferred to the NDC chairman. Earlier, on May 22, the Japanese newspaper Nikkei (日本經濟新聞) quoted members of a delegation from the Economic Research Institute for North East Asia (ERINA) as saying that their North Korean counterparts had explained that the power to ratify and nullify treaties, to grant amnesty, and to issue announcements in times of emergency had been transferred to the chairman of the NDC.

After 142 days, Euna Lee and Laura Ling have finally returned to their families.

Kim Jong il sets sights on increasing processed food rationing in order to improve the daily lives of the people
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-8-10-1
8/10/2009

North Korean authorities, recognizing that rationing of processed foods is directly linked to the daily lives of the residents of North Korea, are concentrating on a policy of increasing distribution as part of the campaign to build a ‘Strong and Prosperous Nation’ by 2012. The policy calls for the construction of regional food processing facilities throughout the country and using domestic ingredients for all processed foods. In addition, the government plans to undertake diversification of small-scale factories in order to produce soybean paste, soy sauce, cooking oil and other staples, as well as noodles, rice-cake and other foods, all kinds of side dishes, and alcoholic beverages.

This movement was announced in concurrence with Kim Jong Il’s visit to the Samilpo Special Products Factory and Store, both run by the military, on April 7, just two days after the North’s launch of a long-range rocket. This factory, on the bank of the Daedong River, produces over 350 kinds of edibles, including noodles, rice-cakes, oil, sweets, alcoholic drinks, processed meats and fish products. During his visit, Kim Jong Il is said to have stated, “Today, I am happier than during the launch of the Kwangmyeongseong 2,” emphasizing his interest in boosting food production.

On July 15, (North) Korean Central Broadcasting announced the formation of construction offices in Jagang, North Pyongan and other provinces to oversee the building of food production complexes, and the dispatch of “shock troops” to bolster construction efforts.

Recently, the construction of large-scale factories to produce foodstuffs out of each region’s local stock has been pursued in every province in the country. Even at the Cabinet level, a ’Production Workers’ Conference’ was held, bringing together responsible authorities and local production experts to discuss a course for quickly improving services provided to the general population.

In order to effectively implement the North’s policy of increasing rations of foodstuffs, the Standing Committee of the Supreme People’s Assembly issued an order to establish a Ministry of Foodstuff and Daily Necessities Industry.

As North Korea tries to implement this type of measure to boost production and rationing, failure to improve food shortage conditions and economic hardships while at the same time mobilizing the population in a drive to establish a Strong and Prosperous Nation has led to growing outcries among residents. North Korean authorities appear to be introducing these measures in order to placate these complaints.

According to the Dow Jones Newswire:

The U.S. Treasury Department Tuesday announced sanctions on the Korea Kwangson Banking Corp., a bank the department says is tied to North Korea’s nuclear and weapons trade.

Treasury alleges that North Korea used the Korea Kwangson Banking Corp., or KKBC, to hide nuclear proliferation activities.

The department accuses the bank of providing financial support to Tanchon Commercial Bank and a unit of the Korea Ryonbong General Corp., both of which have already been identified by the U.S. government as weapons of mass destruction proliferators.

“North Korea’s use of a little-known bank, KKBC, to mask the international financial business of sanctioned proliferators demonstrates the lengths to which the regime will go to continue its proliferation activities and the high risk that any business with North Korea may well be illicit,” Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey said in a statement.

According to the Associated Press:

The sanctions mean bank accounts or other financial assets found in the United States that belong to the firm are blocked. Americans also are prohibited from doing business with the bank. It is based in North Korea and has operated at least one overseas branch in Dandong, China.

Further information:
1. Here is an earlier post that contains information on other sanctions imposed this year.

2. Aside from the US and UN, China has also “sanctioned” the DPRK this year.  See here and here.  No doubt they will react to the Dandong branch of KKBC as well. 

3. Stephan Haggard Marcus Noland call these kinds of actions “Whac-a-Mole.” Read their analysis here. 

4. Joshua notes that this company was one of the North Korean banks listed in Treasury/OFAC’s June 18th advisory about North Korean financial institutions engaging in money laundering activities.

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-7-28-1
7/28/2009

The Standing Committee of the North’s Supreme People’s Assembly announced, through a cabinet order on July 22, the establishment of a new Ministry of Foodstuff Manufacturing. According to (North) Korean Central Broadcasting, the standing committee created the new bureau with Cabinet Order 161, but no further details were revealed. The designation of ‘Ministry’, however, indicates that the new entity will be under the control of the Cabinet.

At the first session of the 12th Supreme People’s Committee, last April, the Cabinet identified 37 government facilities, including three committees, thirty ministries, two bureaus, one institute, and one bank; the establishment of this new Ministry of Foodstuff Manufacturing brings the number of offices under Cabinet control to 38.

It appears that the establishment of such a ministry is closely tied to the regime’s efforts at improving the daily lives of the people of North Korea as it strives to achieve a ‘Strong and Prosperous Nation’ by 2012. North Korean authorities have shown an awareness of the need to raise the standard of living for the average resident. After inspecting the Samilpo Special Product Factory and the factory-run store, both operated by the military, Kim Jong Il declared that the store was an example of a significant turn-around in public service activity for the residents of the country.

On July 14, a ‘Commerce Sector Leaders Conference’ was held in Pyongyang, with Cabinet Vice-Minister Kwak Beom Ki and Minister of Commerce Kim Bong Cheol in attendance. Discussion at the conference focused on “Tasks and Means for Turning Around Public Service Activities for the People.” Just as was seen last year, North Korea continues to emphasize improving the lives of the people, while focusing on resolution of food shortage issues and ensuring adequate supply of daily necessities, as well as continuing to build housing in Pyongyang. Despite these calls for improvement, however, the continued prioritization of military and heavy industry development, combined with raw material shortages means that no real progress has been made. 

ORIGINAL POST: According to Yonhap:

North Korea said Wednesday it has created the Ministry of Foodstuff and Daily Necessities Industry as the country strives to resolve its food shortage within years.

The Presidium of the Supreme People’s Assembly issued a decree on setting up the ministry, the official Korean Central News Agency said in a one-sentence dispatch. It gave no further details.

According to KCNA:

Decree of DPRK SPA Presidium Issued

Pyongyang, July 22 (KCNA) — The Presidium of the DPRK Supreme People’s Assembly issued a decree on setting up the Ministry of Foodstuff and Daily Necessities Industry on July 22.

Read the full story here:
N. Korea sets up food ministry
Yonhap
6/22/2009

On Thursday the UNSC adopted a travel ban on five North Koreans, an asset freeze on five DPRK organizations (and the five individuals), and banned the export of graphite and para-aramid fiber to the DPRK.  Below are the details:

UNSC Sanctions effective: July 16, 2009.

Officials named:
1. Ri Je-son, director at North Korea’s General Bureau of Atomic Energy (GBAE)
2. Hwang Sok-hwa, director at North Korea’s General Bureau of Atomic Energy (GBAE)
3. Yun Ho-jin, director of Namchongang  Trading Corp.
4. Ri Hong-sop, former director of North Korea’s Yongbyon nuclear research center
5. Han Yu-ro, director of Korea Ryongaksan General Trading Corp.

Organizations named:
1. General Bureau of Atomic Energy (GBAE)-DPRK weapons agency
2. Namchongang Trading Corp-alleged to have procured Japanese vacuum pumps and aluminum tubes used to enrich uranium.
3. Hong Kong Electronics-transferred millions of dollars to Tanchon Commercial Bank and Korea Mining Development Trading Corp., both subject to sanctions by Security Council agreement in April.
4. Korea Hyoksin Trading Corp
5. Korean Tangun Trading Corp-primarily responsible for the procurement of commodities and technologies to support” North Korea’s defense research and development program

Further Notes:
1. The North Korean’s actually have a web page for the Hyoksin Trading Corp.

2. Here is a previous post summarizing most of the sanctioning activites this year.

Read more below:
U.N. council sanctions North Korea entities, officials
Reuters (via Washngton Post)
Patrick Worsnip
7/17/2009

North Korea Officials Sanctioned by UN for Travel, Nuke Program
Bloomberg
Bill Varner
7/17/2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-7-15-1
7/15/2009

Despite the fact that inter-Korean relations continue to be stalled, North Korea authorities reportedly provided approximately 1,300 new workers in June for businesses entering the Kaesong Industrial Complex (KIC). Despite the fact that there has been no progress in inter-Korean working-level talks between authorities involved in the KIC, the North is continuing to provide a labor force for South Korean businesses in the complex.

An official from the Kaesong Industrial District Management Committee verified that “approximately 1,300 new laborers were supplied last month,” and that “there are some young workers, as well, but the majority are 30 to 40-year-old women.” The official also explained, “the number of laborers was reduced slightly at the beginning of the year; while [their number] was insufficient, laborers continue to come…up until June of this year, while the number fluctuated, an average of around 700 per month [were provided].” Last year, the number of new workers each month was around 1,000.

New workers continue to be provided to the KIC, but there has also been a sharp increase in the number of workers quitting or being removed from their positions. At the end of June, there were 40,255 North Korean laborers; the overall number of workers provided by the North has only increased by 1,324 since the end of last year.

The source explained that at the beginning of 2009, more than 2000 construction workers quit. It appears, according to the numerous reports on the status of employment in the KIC, that the supply of workers is still insufficient, but that the North Korean authorities are working as hard as possible to provide what manpower they can.

North Korea’s Central Special Zone Development Guidance General Bureau recently held a general assembly for all North Korean labor representatives, and ordered them to “work to the max” in order to alleviate all complaints by South Korean businesses. However, as there has still been no resolution to the issue of constructing additional dormitories for the workers, this issue will continue to restrict growth in the number of North Korean laborers, regardless of the attitude in Pyongyang.

On January 21, the day after the Obama administration took office, the White House approved certain trade sanctions–initiated by the Bush administration–to be printed in the Federal Register.  These sanctions targeted specific Chinese, Iranian, and North Korean companies that the US believes were/are violating arms export regulations governing missile technology and other proliferation activities.  [Read more, including Federal Register text, here]

After North Korea conducted a long-range missile test in April, the US pushed the UN Security Council to adopt a presidential statement which blacklists several additional North Korean firms. [Read more here].

After North Korea conducted a second nuclear test, in violation of UNSC resolution, the UNSC adopted a resolution which tightened sanctions on the DPRK. [Read more here]

In June, the South Korean government imposed sanctions on these DPRK companies for the first time [Read more here]

The US followed up the UNSC resolution by announcing an inter-agency team that will focus exclusively on enforcing DPRK sanctions [Read more here] 

Today, the US Treasury Department announced it was targeting Hong Kong Electronics (Kish Island, Iran) [from where a former FBI agent is still missing] for supporting the balcklisted North Korean organizations.  According to Market Watch:

The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

What does this mean? It means that any bank accounts or other financial assets found in the United States belonging to the company must be frozen. Americans also are forbidden from doing business with the firm. This probably does not amount to much economically, but is probably intended to discourage banks outside of the US from doing business with these firms.

UPDATE 1: It looks like the State Departmet is also going after a North Korean company believe to be involved in weapons proliferation today.  According to a statement by the Treasury Department:

The U.S. Department of the Treasury today targeted North Korea’s missile proliferation network by designating Hong Kong Electronics under Executive Order 13382.  E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them, thereby isolating them from the U.S. financial and commercial systems.  Hong Kong Electronics, located in Kish Island, Iran, has been designated for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID).

Tanchon and KOMID have also been designated by the United States under E.O. 13382 and the UN Security Council under Resolution 1718. The Department of State also today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG), a North Korean nuclear-related company in Pyongyang, under E.O. 13382. 

“North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions,” said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world.”

Since 2007, Hong Kong Electronics has transferred millions of dollars of proliferation- related funds on behalf of Tanchon and KOMID. Hong Kong Electronics has also facilitated the movement of money from Iran to North Korea on behalf of KOMID. Tanchon, a commercial bank based in Pyongyang, North Korea, is the financial arm for KOMID – North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

Tanchon plays a key role in financing the sales of ballistic missiles for KOMID. Tanchon has also been involved in financing ballistic missile sales from KOMID to Iran’s Shahid Hemmat Industrial Group (SHIG), which is the Iranian organization responsible for developing liquid-fueled missiles. SHIG has been designated under E.O. 13382 and sanctioned by the United Nations under UN Security Council Resolution (UNSCR) 1737. Since 2005, Tanchon has maintained an active relationship with various branches of Iran’s Bank Sepah, an entity designated under E.O. 13382 and sanctioned by the United Nations under UNSCR 1747, for providing financial services to Iran’s missile program. The U.S. has reason to believe that the Tanchon-Bank Sepah relationship has been used for North Korea-Iran proliferation-related transactions.

Here is the press release by the State Department:

The U.S. Department of State today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG) under Executive Order 13382. E.O. 13382 is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Entities designated under E.O. 13382 are prohibited from engaging in all transactions with any U.S. person and are subject to a U.S. asset freeze.

NCG is a North Korean nuclear-related company in Pyongyang. It has been involved in the purchase of aluminum tubes and other equipment specifically suitable for a uranium enrichment program since the late 1990s.

The Department of the Treasury also today designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID). Tanchon and KOMID were designated by the United States under E.O. 13382 on June 28, 2005 and the UN Security Council under Resolution 1718 on April 24, 2009.

North Korea’s April 5, 2009 launch of a Taepo Dong-2 (TD-2) missile and May 25, 2009 nuclear test demonstrate a need for continued vigilance with respect to North Korea’s activities of proliferation concern. The designations add to continuing U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them.

McClatchy has more here.

UPDATE: IFES has contacted us with an update to this report:

“North Korea exports between 2-3 million tons of coal, collecting approximately 200 million USD.”

Original Post:
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-6-9-1
6/9/2009   

The North Korean military, which has recently taken a hard-line position internationally with rocket launches, a nuclear test and inter-continental ballistic missile (ICBM) launch preparation, appears to be strengthening its position domestically, as well. It has reportedly taken charge of coal exports, previously the responsibility of the Cabinet, and other key economic interests.

According to sources inside North Korea, authority to export anthracite, the North’s most valuable export item, was transferred from a trading company under the control of the Cabinet to a military trading company earlier this year. North Korea exports between 200-300 tons of coal each year, collecting approximately two billion USD in foreign currency. Previously, this was shared among branches of the government, with the military, the Korean Workers’ Party and the Cabinet all similar export quotas.

One source stated, “Recently, China’s trade minister signed a contract for 60,000 tons of coal from a military-run trading company, and delivered one million USD-worth of corn as payment,” noting, “previously, North Korea’s trade partner [with China] was the Cabinet-controlled trade company.” The same source went on to note that it was “exceptional that as North Korea suffers from foreign capital shortages, it demands payment not in cash, but in corn…it looks like it is measure for military use.”

Other sources reported that, as of this year, the military has also taken control of the Bukchang Thermoelectric Power Plant, the country’s largest steam-powered electrical station. The Bukchang plant, built with Soviet supplies in 1968, can produce up to 2 million kW of electricity. It was formerly operated by the Ministry of Electric Power Industry, which is under the control of the Cabinet, but at the beginning of year, some authorities were purged on charges of bribe-taking and providing power designated for government facilities to foreign capital enterprises and other businesses. Since then, the military has run the plant.

The increased number of economic assets in control of the military reflects the military’s recently-strengthened position within the regime. The North Korean economy can be divided into several sectors: Kim Jong Il’s private fund, managed by Party operations; the military-industrial ‘second economy’; and the official economy, under the control of the Cabinet. The military’s increasing control over the official economy appears to be a move to completely implement ‘Military-first Politics.’

Earlier this year the UN Security Council issued a Presidential Statement in response to the DPRK’s April rocket (missile) test. In the Presidential Statement, three North Korean firms were blacklisted–Korea Mining Development Trading Corporation, Tanchon Commercial Bank, and Korea Ryongbong General Corporation–all of whom are suspected of having ties with the North’s missile and nuclear programs.

According to Yonhap, the South Korean government has also blacklisted these firms, though no South Korean firms have realtions with any of them:

This is the first time that South Korea has imposed financial sanctions on a North Korean company in relation to Pyongyang’s ballistic activity, the ministry said.

The ministry said that it will consider taking additional measures if the U.N. comes up with separate actions against the North for conducting its second nuclear test on May 25.

Read the full sotry here:
Seoul slaps sanctions on N. Korean firms for missile test
Yonhap
Koh Byung-joon
6/9/2009