Archive for the ‘Third Building Secret Service’ Category

DPRK courting Coca Cola?

Wednesday, October 5th, 2011

Pictured above, the DPRK’s local cola logo. Image source here.

UPDATE 1: Stephan Haggard believes this is a non-story.

ORIGINAL POST (2011-10-5): According to Forbes:

Global capital is an inherently lonely trade, but as Gabriel Schulze ambles into the conference room of Yanggakdo International Hotel, a towering edifice separated by a ring of water from the rest of Pyongyang, the most impenetrable capital in the world, it’s hard to imagine a more isolated business meeting.

“We warmly welcome you, the Coca-Cola delegation, with Mr. Schulze as your leader,” says Park Chol Su, the president of North Korea’s Taepung International Investment Group, singling out the 6-foot-7 American from his entourage of four people. “I hope this will be a good opportunity to make progress in the relations between the U.S. and Korea.”

Why is a U.S. businessman in Pyongyang pitching America’s most iconic consumer brand to the world’s most inhospitable marketplace? Because, surprisingly, the Democratic People’s Republic of Korea is ready to buy, and eager enough to flex its atrophied capitalistic muscles that it let a FORBES reporter follow along–and record everything–as the Coca-Cola discussions heated up.

Park says his Taepung Group, established by Kim Jong Il himself, wants to bring market principles to a planned economy, even down to setting what price a bottle of Coke made in Pyongyang would go for–sort of. “Costs are based on the demands of the market, but we will respect your price,” Park tells Schulze’s delegation. “If the price is too high, it will be restricted.”

North Korea, the most hidebound and repressive of socialist states, is slowly inviting not only China but also the wider Western World to invest in its near-moribund economy. Officials claim the country is open for business with outsiders, and that the political stripes of the investors do not matter as much as the money in their pockets and the willingness to deal. Chinese companies have signed a number of multimillion-dollar deals to extract resources and build and repair infrastructure, such as making port improvements in the northeastern region of Rason and paving a road from there to the Chinese border. Taepung also claims to have inked billiondollar contracts, including one to develop a huge coal mine, but those deals haven’t been nailed.

American signature brands may actually be most welcome, despite or perhaps because of decades of propaganda casting the U.S. as the devil incarnate. Pyongyang’s economic representatives made clear in this and other meetings, with focus and determination, that they want Yum Brands to open up KFC franchises.

Extreme wishful thinking though this may be, it’s linked to a planned ten-year revamp of the North Korean economy to expand national GDP from a meager $30 billion last year to $1 trillion by 2020. (The country can’t even feed its people; there is severe malnutrition in the countryside.) That all but impossible goal cannot be approached without an unshackling of enterprise, which may never occur, and massive help from the outside world, which may never come. The expression “reform and opening,” so familiar in China, is not yet politically acceptable language in Pyongyang. But North Korea’s courtship of the West has begun.

“Coke is strategic. I hope that Coke will serve as a bridge for relations between the two governments,” says Park, a slight man with a toothy smile and a taste for liquor, over a traditional Korean hot pot lunch and beer. Then, perhaps, sanctions could be lifted and more substantial investments could follow. “The door will be open to the whole world, not only China–even the U.S., even Western countries.”

But so far the West hasn’t come calling. North Korea remains in the dysfunctional totalitarian grip of Kim Jong Il. The regime is a defiant nuclear provocateur linked to proliferating weapons, drugs and counterfeit cash abroad, while operating a terrifyingly effective police state at home. Western companies will require more than the usual amount of persuasion. They will want something the North Koreans can’t possibly provide: a blessing from the White House.

That’s where Gabriel Schulze, scion of the Newmont Mining fortune, with a prospector’s taste for risk and opportunity, comes in. He has been surveying this forbidden market on the strength of informal connections to Coke and one of its bottlers, SABMiller, without either company’s toplevel approval–a Cold War-style mission that affords the higher-ups plausible deniability.

SABMiller sent a regional executive, at Schulze’s invitation, to the May meeting with Taepung Group, adding in a statement for this story, “We have no plans to invest in North Korea.” Coke turned down a request from Taepung Group (via Schulze) to visit this summer, and distanced itself from the remotest hint of soft-drink summitry with this statement: “No representative of the Coca-Cola Co. has been in discussions or explored opening up business in North Korea.”

Coke’s skittishness is striking from a company with a history of selling into almost any market–including such villainous or pariah states as Hitler’s Germany in the 1930s, Franco’s Spain and Pyongyang’s historical sponsors, China and the Soviet Union, in the 1980s (though Pepsi got to the Soviet Union first). North Korea is one of the last frontiers. “That is your task, to become a pioneer,” says Jang Gwang Ho, the senior North Korean official in the coterie greeting Schulze’s group.

Tall, blue-eyed and devout, Schulze is full-blooded pioneer. The great-great-grandson of Newmont founder William Boyce Thompson, he runs a family investment office out of Beijing, Schulze Global Investments, which specializes in China and difficult emerging markets.

While he has close ties to Republicans in U.S. politics, Schulze’s forays abroad, such as a cement plant in Ethiopia, are far from conservative. Schulze Global seeks “double bottom-line returns,” he says, profiting while helping poor emerging markets develop. Bringing Coke to North Korea would be historic, but he knows engagement with Pyongyang might be seen as a folly back home, both financially and politically.

“We understand that there’s a high likelihood that there could be all sorts of trouble and that we could end up losing money,” Schulze tells me after his trip. “There’s a lot of [U.S.North Korea] mistrust, there’s a lot of gamesmanship, and for us it’s not about pretending that that’s not there. We’re not in a little bubble of happiness.”

Would it even be legal for Coca-Cola to do business in North Korea, given international and U.S. sanctions? Those sanctions have proven to be narrow and permissive in practice, and there is no stricture against soft drinks (a sip of CocaCola is already imported, mostly from China, and sold to the few with disposable hard currency).

Hundreds of foreign businesses, most of them Chinese, have come into North Korea despite cautionary tales of investments gone bad, of officials changing the terms or the rules, soliciting bribes, demanding substantially higher payments or expropriating joint ventures.

And these businesses have made money. In a 2007 survey of 250 Chinese operations in North Korea, scholars Stephan Haggard and Marcus Noland found 88% saying they could turn a profit. (A majority also reported paying bribes.) Enterprises routinely encounter difficulties, yet many persist, hopeful for economic liberalization.

At least one American investor has profited in North Korea as well: Schulze Global. Three times in 2008 it made loans of hundreds of thousands of dollars to mining companies to buy equipment and expand, and each was repaid. This summer Schulze lent an additional $1 million to finance a North Korean conglomerate’s purchases of corn to feed its workers. (He consulted with sanctions lawyers in America before making the loans and has filed notices with the U.S. Treasury Department.)

“That opened the doors” to the Coke project, Schulze says. Making the world’s favorite carbonated beverage in Pyongyang would be quite another matter, though. The country still operates on a planned economy and has difficulty even manufacturing plastic bottles and cans. The government barters for sugar from Castro’s Cuba and would probably have to import steel to build a Coke factory. And although the estimated per capita income is $1,200 a year, the Coke factory’s workers would be paid barely more than a dollar a day (low wages are a key selling point to foreign investors). Further, the nation is plagued with persistent food shortages that force the regime to rely on international aid. Does a country this poor have consumers for the iconic American drink?

The answer is yes, at least in the capital. Home to the privileged upper crust, or an eighth of the nation’s 24 million people, Pyongyang has a visibly robust elite economy. The city’s wide Stalinist thoroughfares, bereft of private automobiles five years ago, are now filled with tens of thousands of foreign cars, including American and Japanese brands.

Mobile phone use is common, with more than 300,000 accounts in the capital using the 3G network built by Egyptian telecom Orascom. That includes some of the city’s traffic women, famous for white gloves and powder-blue uniforms. With traffic lights now doing most of their work for them, one was spotted on the sidewalk jabbering into her cellphone.

The city’s new Pothonggang Department Store was fully stocked with imported fare to be had at prices in North Korean won that are affordable only at the black-market exchange rate (2,500 won to the dollar at the time, compared with the official rate of 100 won). Name brands like Heinz Ketchup (the equivalent of $4 a bottle), Mars bars (a little more than $4 per bag) and all manner of high-end liquors and cigarettes are on offer, usually imported from Europe or Asia. On another floor you can find imported sweaters, dresses and shoes.

The checkout lines run briskly in midafternoon, the shopping done mostly by women, many of them likely the wives of government officials and army officers. (Kim Jong Il showcased the store with a visit in December.) Out on the streets the proles shop for snacks and locally made sodas–typically fruity concoctions in glass bottles–at hundreds of kiosks throughout the city, mostly priced at the black market rate of 20 cents to 40 cents.

Those prices would be 25 times higher at government exchange rates and thus out of reach for almost all North Koreans on their official salaries–but hard currency is flowing into the capital, “through this and that channel,” Jang says, and is spent. “Although officially they are not receiving the salaries from the government in hard currency, they have! So they like to spend the hard currency for their children because the children like to drink the Coke,” he explains.

Jang, of course, is not a commoner or for that matter a typical North Korean apparatchik. He speaks fluent if idiosyncratic English, was educated partly in the U.K. and is married to a doctor. First vice president of Taepung Group, he has a dual appointment on a government body overseeing economic development. Over two days of meetings Jang exudes an almost relaxed air of detachment. He typically parries questions with humor and stories while puffing on Dunhill cigarettes and flashing a Longines watch. (The president of Taepung, Park Chol Su, is a Chinese national, chosen in part for his Chinese contacts and experience.)

Do North Koreans like to drink beer? asks Anton van Heerden, a South African who runs SABMiller’s Asian supply chain. Yes, especially a growing cadre of retirees. “I can see so many old men, over 60, normally in the evening if we look around the city, they are making a queue to buy the beer,” Jang says, adding with a laugh: “There are crazy people! A lot of people drink the beer–30 bottles in the evening! I don’t know how.”

Friendly though they are with Schulze, Jang and Park both make clear that they answer to a higher power, the leader they refer to only as “the top man,” “the General” or the “Dear Leader”: Kim Jong Il. Park was born to Korean parents in northeastern China in 1959, as Kim Il Sung’s regime recovered from the Korean War. Park built relationships with North Korean officials by selling them much-needed gasoline in the 1990s. He is a salesman again, puffing up his chest as he blusters about the will of the General to change North Korea’s economy, led by his Taepung Group.

Parse the bombast and you get a rare glimpse inside the complexities of power relationships. Park says he has never met the top man and instead takes his instructions from a close Kim confidant, 73-year-old Kim Yang Gon, who is chief of the United Front Department, an intelligence arm of the Korean Workers’ Party, and chairman of the Taepung Group. Still greater power at Taepung likely lies with another member of the board of directors, Kim Jong Il’s brother-in-law Jang Song Taek, who as vice chairman of the National Defense Commission is considered North Korea’s second-most-powerful man. The National Defense Commission, chaired by Kim Jong Il, is also Taepung’s controlling shareholder.

To some Western analysts the tight control of Taepung signals that Kim’s coterie is not an agent of change and reform but precisely the opposite–a means to tighten its grip over the North Korean economy. The reasoning: Kim wants Taepung to bring in multibillion-dollar deals for resources, power plants, ports and roads, they say, so that he and his cronies can control the spoils.

Schulze hears the skeptics. But he notes that a Coca-Cola investment would be far more symbolic than lucrative. The total ante probably wouldn’t exceed $10 million (with Schulze Global’s share at $2 million)–tiny by comparison with some resource deals. He also argues that the only realistic way to engage with North Korea is precisely through those in power. “People say this is the leadership looking to benefit itself, and I would say yes, that is absolutely true.” But, he adds, “it doesn’t negate the fact that selfish ambition can still drive positive change and development, particularly in the economy, which can make a real difference in the lives of North Koreans.”

His groundwork laid in North Korea, Schulze will continue his quixotic quest to lobby not only Coke but also Capitol Hill and the Obama Administration. He is, in a way, following in the footsteps of his great-great-grandfather Thompson, the mining magnate. Thompson shocked his friends in the business establishment when, after returning from Russia after a trip in the fall of 1917, he urged that the U.S. and Britain engage with the new communist regime there to moderate the impulses of Lenin and Trotsky. No one, obviously, followed that advice.

Read the full story here:
Invading North Korea
Gady Epstein


South Korean churches change DPRK strategies

Thursday, June 23rd, 2011

According to the Daily NK:

For the ten years from 1995 to 2004, churches in South Korea sent a total of 270 billion South Korean won in aid to North Korea’s Chosun Christians Federation to fund projects including the building of an orphanage.

This money represented fully 77% of all private donations sent to North Korea in the same period. However, the truth is that nobody knows how the money has been spent, or by whom.

Such religiously motivated support for the Chosun Christians Federation results in not only problems for other missionary work, but also prolongs the suffering of the people, according to Yoo Suk Ryul, the director of Cornerstone Church, an active missionary group working along the North Korean-Chinese border. He has just released a new book, ‘The Collapse of the Kim Jong Il Regime and North Korean Missionary Work.’

In it, Yoo writes, “The Chosun Federation first came to our attention as an association affiliated to the United Front Department of the Chosun Workers’ Party so, to that extent, funds from missionary organizations are obviously propping up the Kim Jong Il regime.”

“The rebuilding of the church should not be done through an organization affiliated to the Kim Jong Il regime or the Chosun Workers’ Party,” Yoo therefore asserts. Rather, he believes assistance should be rendered to underground churches, to begin the spread of the gospel from the bottom up.

In addition, “To date, Chinese-Koreans and our defector brethren have received training in China, and through this indirect method have entered North Korea to establish underground churches.” However, “North Korea’s situation both at home and abroad is change rapidly now, so missionaries need to turn to a strategy that is more direct.”

Additionally, he goes on, “The Bible, radio, TV and DVDs should continue to be sent by balloon, along with all other methods of advancing the spread of the gospel,” and explained, “This is a strategy to force Pyongyang’s fall through the gospel.”

Yoo has invested much time and effort into persuading Korean churches to end their existing missionary work in North Korea, and follow a new path. “Missionary work in North Korea is not something that can be accomplished with a strategy of passion alone,” he writes, “This missionary strategy does not grasp the essence of the North Korean system; it is a house of cards.”

Read the full story here:
New Religious Strategy Is Needed
Daily NK
Cho Jong Ik


DPRK ministerial shakeup and SPA elections announced

Monday, January 5th, 2009

UPDATE 3: According to numerous media sources, Choe Sung Chol has been shot (h/t Marmot). Read more here: Bloomberg, Reuters, Korea Times.

UPDATE 2: According to the Joong Ang Daily:

North Korea’s point man on South Korea, who was earlier said to have been sacked for misjudgment, is said to be undergoing what sources called “severe” communist training at a chicken farm, sources here said yesterday.

Choe Sung-chol, once a vice chairman of the Asia-Pacific Peace Committee, the North’s state organization handling inter-Korean affairs, was reported to have been dismissed in early 2008 for what sources called his lack of foresight on South Korea’s new conservative administration under President Lee Myung-bak.

Political dissidents in North Korea are said to often undergo training on the communist revolution. This includes hard labor in harsh environments, such as mines or in labor camps.

Choe, 52, became better known to South Korean officials and the public in 2007, when he escorted then-President Roh Moo-hyun throughout his visit to Pyongyang for a summit with North Korean leader Kim Jong-il.

He is also known to have played a key role in arranging the summit.

Officials in Seoul have acknowledged the dismissal of Choe, but could not confirm his whereabouts or why he was sacked.

“He has been undergoing training for about a year now, so it really is hard to tell whether he will be reinstated or not,” another source said, also speaking on condition of anonymity.

(UPDATE 1) Shortly after the DPRK’s ministerial and leadership changes were dscovered, the DPRK announced the Supreme People’s Assembly will be recomposed in March.  According to Reuters:

The reclusive North’s official media said in a two-sentence dispatch the election for deputies to its Supreme People’s Assembly would be held on March 8, without offering details.

North Korea wants to promote economic elite to the assembly to help lay the groundwork for the next generation of its leadership, a think tank affiliated with the South’s intelligence service said in a report in December, Yonhap news agency said.

However, analysts cautioned against reading too much into the leadership changes, saying Kim Jong-il and his inner circle hold the real power while ministers and other government officials have almost no influence in forming policy.

The assembly session that typically meets in April each year is a highly choreographed affair focused on budget matters where legislation is traditionally passed with unanimous approval.

North Koreans can vote only for the candidates selected by supreme leaders who allocate assembly seats to promote rank-and-file officials and purge those no longer in favor.

“Even if we know that someone was replaced, everything related to it is pure speculation because we have no clue as to the individual inclinations of these people,” said Andrei Lankov, an expert on the North at the South’s Kookmin University. (Reuters)

The Joong Ang Ilbo provides some additional facts:

The election is also a mere formality in the North because the candidates are hand-picked by the Workers’ Party and then approved by North leader Kim Jong-il.

The five-year terms of the 687 representatives, selected in 2003, were supposed to end last September. North Korea watchers have speculated that Kim’s health was linked to the election delay. According to intelligence sources in Seoul, Kim suffered a stroke in August.

North Korea watchers said Kim’s appearance at a polling station will put an end to speculation about his health. Kim had cast ballots in the 1998 and 2003 elections, according to past North Korean media reports.

With the upcoming election, Kim’s regime will enter its third term. The newly formed legislature will, on paper, form a cabinet, devise a national budget plan and conduct foreign policy.

Following former leader Kim Il Sung’s death in 1994, the Supreme People’s Assembly did not meet for four years. At that meeting, it elected the younger Kim as the National Defense Commission chairman and officially launched his regime. At the time, the legislature also amended the Constitution and undertook a dramatic cabinet shakeup.

According to the Joong Ang Daily:

Yu Yong-sun, a 68-year-old Buddhist leader, has become North Korea’s senior South Korea policy maker, a top Seoul official told the JoongAng Ilbo yesterday.

Choe Sung-chol, deputy director of the United Front Department of the North Korean Workers’ Party, was in charge of Pyongyang’s South Korean affairs until early last year. After he lost the job, Yu, head of the Korean Buddhists Federation, was appointed to the post, the source said.

“Yu succeeded Choe in March last year,” the source said. “Choe was once deeply trusted by [North Korean] leader Kim Jong-il, but he stepped down because he had failed to accurately assess the outcome of the 2007 presidential election in the South, the Lee Myung-bak administration’s North Korea policy and the outlook for inter-Korean relations.”

The source also said corruption scandals involving the overseas North Korean assistance committee under the United Front Department played a role in Choe’s sacking.

Choe played a crucial role in arranging the second inter-Korean summit between the president of South Korea at the time, Roh Moo-hyun, and Kim in 2007.

Yu, the successor, is not an entirely new face in inter-Korean affairs. Since 2000, he represented the North in several rounds of inter-Korean ministerial talks. He has led the Buddhist group since May 2006.

“We’ve also obtained intelligence that Kwon Ho-ung, who used to be the chief negotiator for the inter-Korean ministerial talks, stepped down from the post and has been put under house arrest,” the source said.

The North reshuffled its cabinet recently, according to the South’s Unification Ministry. Ho Thaek, vice minister of the electric power industry, was promoted to minister. Other minister-level promotions also took place at the Ministry of Railways, Ministry of Forestry and Ministry of Foreign Trade. (Jeong Yong-soo, JoongAng Ilbo)

The Choson Ilbo reports on some more ministerial changes:

North Korea has reshuffled two cabinet ministers and appointed a new man to a key post in the Workers’ Party. North Korean state media reported that Kim Tae-bong was appointed new metal industry minister and Hur Tack new power industry minister. They replace Kim Sung-hyun and Pak Nam-chil. Kim Kyong-ok as newly-named first deputy director of the ruling party’s Organization Guidance Department that controls the party, Army and administration and is headed by leader Kim Jong-il.

It is rare for reshuffles to be announced separately. The new economic appointments may be related to the emphasis on “economic recovery” in a New Year’s statement released in the state media last week that is the closest the North has to an annual message from Kim Jong-il, a government official here speculated. The statement described the metal industry as the “pillar of the independent economy of socialism” and said the electricity, coal and railroad sectors “should take the lead in the people’s economic development through reforms.” Hence replacement of the metal and power industry ministers, according to the official. He admitted little is known about the newly appointed ministers.

The Organization and Guidance Department’s new first deputy director Kim Kyong-ok is reportedly in charge of regional party organizations.

“If the power succession is to move smoothly, the economy must be revived and control of the party organization is essential,” an intelligence officer here said. He predicted noticeable changes in the North’s power structure this year. A researcher at the Korea Institute of National Unification said North Korea “is going to take various steps in a bid to prevent Kim Jong-il’s authority from weakening due to ill health.”

And from Yonhap:

North Korea promoted industrial veterans to top posts in its latest Cabinet reshuffle, signaling Pyongyang’s stepped-up drive to rebuild the country’s frail economy, Seoul officials and analysts said Tuesday.

A reshuffle in the communist state is usually inferred when new faces appear in its media, as the country does not publicize such moves.

Five new names were mentioned as the North’s ministers of railways, forestry, electricity, agriculture and metal industry in the North’s New Year message and reports in October, Seoul’s Unification Ministry Spokesman Kim Ho-nyoun said.

“They are formerly vice ministers or those who climbed the ladder in each field. The reshuffle considered their on-spot experiences and expertise,” the spokesman said.

It was not clear when the reshuffle took place, he said.

North Korean media have been reporting a brisk campaign to rebuild the country’s ailing industrial infrastructure, following up on the New Year economic blueprint rolled out by leader Kim Jong-il. Kim called on citizens “to solve problems by our own efforts” and increase production in electricity, coal and daily equipment.

In the reshuffle, Jon Kil-su was named minister of railways; Kim Kwang-yong minister of forestry; Ho Taek minister of power industry; Kim Chang-sik minister of agriculture; Kim Tae-bong minister of metal industry.

Kim Kwang-yong and Kim Chang-sik were vice ministers and Jon held a senior post in their respective ministry. Ho was formerly a power plant chief, while little was known about Kim Tae-bong, Seoul officials said.

The shakeup was rumored to have affected more posts, but the Seoul spokesman could not officially confirm it.

Koh Yu-hwan, a North Korea studies professor at Seoul’s Dongguk University, said the reshuffle is a sign that the North is shifting its focus to the economy from the military. In its New Year message, Pyongyang pledged to build a “prosperous and powerful nation” by 2012, the 100th anniversary of North Korean founder Kim Il-sung’s birth, he noted.

“The key word this year is the economy,” Koh said. “The reshuffle seems to suggest officials with technical expertise should take the initiative to develop the economy.”

Kim Young-yoon, a researcher with the Korea Institute for National Unification, said Pyongyang is turning to its natural resources amid suspension of South Korean aid. The Seoul government halted its customary aid of rice and fertilizer this past year as Pyongyang refused offers of dialogue.

“North Korea has no other way but turn to its own natural resources as long as inter-Korean relations and the nuclear issue are in limbo,” he said.

Read the full articles here:
Buddhist leader gets North’s South policy spot
JoongAng Daily
Jeong Yong-soo

N.Korea Reshuffles Economic Posts
Choson Ilbo

N. Korea promotes industry veterans in Cabinet reshuffle
Kim Hyun

North Korea says to elect MPs in government shake-up

North to hold parliamentary election
Joong Ang Ilbo
Ser Myo-ja

Top North official said to be getting re-educated
Joong Ang Daily


Know the Party before Getting to Know Kim Jong Il

Wednesday, October 8th, 2008

Daily NK
Namgung Min

As rumors regarding Kim Jong Il’s illness surfaced during North Korea’s 60th anniversary celebrations, opinion was divided on whether the military or the Party will rise in power post-Kim Jong Il.

It is true that the power of the military rose post-Kim Il Sung, according to the “military-first” political line. The National Defense Commission (NDC) began leading various agencies and councils, and came to hold greater power because Kim Jong Il was introduced as the National Defense Commission Chairman during North-South Summits.

Thus, the National Defense Commission under military-first politics began to appear to be North Korea’s sole power base, as news on general-level promotions was released publicly by the National Defense Commission.

However, despite military-first politics, it remains the Chosun (North Korea) Workers’ Party that fundamentally controls the North Korean regime. Therefore, in order to understand the North Korean regime, one must understand the Chosun Workers’ Party.

Upcoming October 10th is the founding anniversary of this most important of organizations. The eyes of the world are focused on whether Kim Jong Il will appear on this day or not.

Therefore, it is time to closely examine what the Chosun Workers’ Party does and how it controls the North Korean regime.

The Korean Workers’ Party claims to be the direct heir to the North Korean Branch of the Chosun Communist Party that was established during “The Chosun Communist Party Convention of Leaders and Devotees of the 5 Northwest Provincial Party Committees” held on October 10th, 1945. Hence the founding date is October 10th. In April, 1946 the name was changed to the North Chosun Communist Party, which then became the Chosun (North Korean) Workers’ Party after being merged with Chosun New People’s Party in August of the same year.

North Korea is operated under the leadership of the Chosun Workers’ Party, as previously seen in other socialist countries; the nation’s power is concentrated in the Party. This implies that as the Party controls the country, the country is evolving into a socialist society and from there into a communist society.

The Workers’ Party, venerable as it is, not only holds the highest position of authority in North Korea but thus stands above other national agencies, organizations or the military.

I. The positions and roles of the Chosun Workers’ Party

The positions and roles of the Workers’ Party are described in detail in the “Rules and Regulations of the KWP,” “Ten Principals for the Party’s Unique Ideological System” and the “Socialist Constitution of North Korea.”

It is written in Article 11 of the Socialist Constitution, amended in 1998, that “The DPRK shall conduct all activities under the leadership of the Workers’ Party.” Furthermore, the Workers’ Party is stated to be an organ that controls other agencies and organizations as the highest revolutionary organization leading all other working organs.

However, the socialist constitution and the rules of the Party are only for the purpose of propagating the notion of the rationality and legitimacy of North Korea abroad while concealing a dictatorship. The reality within North Korea is completely different from the actual contents of the constitution.

In actuality, the socialist constitution and the rules and regulations of the Party defines that all sectors such as government, military, administration, judiciary, and even public prosecutor’s office are led by the Party, while being utilized as the apparatus for Kim Jong Il’s Stalinist dictatorship. That is, the regulations recognize the Party’s leadership of the country and simultaneously state that the Party can only be operated and led by Kim Il Sung and Kim Jong Il.

The Workers’ Party in legal terms is an organ that guides North Koreans, but in reality it is only an organ under the iron command of the supreme Leader. Therefore, the Leader stands in the highest position, above the Party, nation and sovereign organs.

II. The structure and functions of the Chosun Workers’ Party

The utmost decision-making organ of the Workers’ Party is the National Party Congress.

According to the rules and regulations of the Party, all decision making of the Party regarding policies, strategies, and tactics should be passed through the National Party Congress. However, in actuality the Party Congress only rubber stamps the decisions that were already made by the Central Committee of the Party.

It is theoretically a ground rule that the Party Congress meets once every 5 years. The first congressional meeting was held in August 1946, the Congress met for the 6th time in October 1980, but has failed to meet since; 28 years. The fact that the Congress is not meeting regularly signifies that the regime system is not operating according to accepted principles of socialist states in the past.

If the Congress fails to meet, the Central Committee of the Party functions as the highest decision-making organ. The Central Committee should meet and discuss issues once every 6 months.

During these meetings, the General Secretary, committee members and the Presidium of the Politburo and committee members of the Central Committee of the Party should be elected. The Central Committee also has the authority to organize the Secretariat and the Central Military Commission.

However, even these twice annual meetings have not been held since the 21st meeting of the 6th cohort in 1993. When the meetings are not held, then the Politburo needs to take authority. However, the Secretariat of the Central Committee, whose General Secretary is currently Kim Jong Il, currently does so.

The highest organ in a communist society is officially the Presidium of the Politburo. In North Korea, Kim Jong Il is the only left in the presidium after the deaths of Kim Il Sung and Oh Jin Woo. This is why North Korea is sometimes called a totalitarian state. In the Chinese government, the Politburo presidium is properly functioning and decisions are made here. From a “democratic” perspective, the Chinese Communist Party and the Chosun Workers’ Party are completely different.

In any case, within the Secretariat of the Central Committee there are specialty departments such as the Guidance Department, Propaganda and Agitation Departments, and the United Front Department, and it also includes departments that supply secret funding to Kim Jong Il such as the 38th and 39th Departments.

The provincial organs of the Party consist of party committees of provinces, cities and counties that even include the most basic low-level party committees such as elementary party committees and sector party committees.

The structure of the Workers’ Party can also be divided into permanent party organs and temporary collective leadership groups. The permanent party organs include all members who work in any specialty departments, from the Central Committee down to low-level provincial party organs. Temporary collective leadership groups signify councils of high-level or low-level leaders of the central and provincial organs, made to implant permanent authority within the society through various meetings.

There are approximately 4,000,000 members of the Workers’ Party, including Kim Jong Il, high-level officials to low-level members, and figures from the legislature, judiciary, and the administration.

III. Main Departments and Their Roles

The main government complex of the Central Committee of the Worker’s Party is located in Changkwang-dong, Joong-district of Pyongyang. There are many buildings in the complex which include Kim Jong Il’s personal office and most of the Central Committee departments.

The second government complex is located in Junseung-dong, Moranbong-district of Pyongyang. The Social Culture Department, United Front Department and Operations Department are included in this complex.

The Workers’ Party has placed all specialty departments under the authority of the Secretariat, to function as restriction and guidance on all areas of the party members, citizens and North Korea. There is a Guidance Department that observes party members then there are other departments that exercise political functions.

The Guidance Department actualizes party guidance and restraint within communities. The department functions as Kim Jong Il’s right hand and as the core department by restraining the lives of all officials, members and citizens within the party.

The Guidance Department sub-divides into the inspection department, official department, party-member registration department, administration department and a communication department that allows direct reports regarding any incident or accident. The Guidance Department also manages the judiciary and the public prosecutor’s office.

The inspection department is responsible for inspecting any anti-party, non-party, undisciplined or unreasonable activities that develop within the regime or leadership of the Party and report to Kim Jong Il. The Guidance Department inspection section is strictly separated from other departments and North Korean party members or officials are all fearful of it.

There are approximately 20 specialty departments such as the Propaganda and Agility Department, the 38th and 39th Departments to supply fund to Kim Jong Il, the United Front Department dealing with South Korea, the International Department, the Science Education Department, and the Operations Department that carry out political activities.

Currently the Korean Workers’ Party is in the middle of the process of replacing 1st or 2nd generation leaders with 3rd or 4th generation, often more practical, personnel.


(UPDATED) South Korean tourist fatally shot at Kumgang

Monday, July 21st, 2008

UPDATE 13-August 28:   Yoon Man-jun stepped down as CEO of Hyundai Asan over the July 11 killing of the 53-year-old South Korean woman by a North Korean soldier at the North’s Diamond Mountain resort, the company said in a statement. The company quoted Yoon as saying that he wanted to take “moral responsibility” for the death. (ETN news)

UPDATE 12-August 8: Despite bringing a halt to tourism in Kumgangsan, South Korea sent arrears to the DPRK.  From the Choson Ilbo:

Despite stalemate over the shooting death of a South Korean tourist at North Korea’s Mt. Kumgang, tour operator Hyundai Asan made its July payment for tours to North Korea.

Asan said Thursday it paid US$675,250 to North Korea to cover costs accrued by 10,380 South Korean tourists who visited the mountain resort on July 1-11, until the tours halted after a South Korean tourist was shot and killed by a North Korean soldier at Mt. Kumgang.

Update 11-August 8: DPRK to expel all remaining ROKs from Kumgnag starting August 10.   

UPDATE 10-Auguts 4: KCNA issues statement. 

UPATE 9-August 3: Though no date was given, North Korea intends to expell most remaining South Koreans from Kumgang (Yonhap):

North Korea’s official media said earlier in the day that Pyongyang will expel all “unnecessary” South Korean personnel from the Mount Geumgang resort, where a South Korean tourist was shot dead by a North Korean soldier last month.

More than 260 South Korean workers are stationed at the scenic resort, according to Hyundai Asan, the South Korean tour organizer. 

UPDATE 8-July 26: North Korea succeeds in preventing shooting concerns from being mentioned in official summary of ASEAN meeting.

UPDATE 7- July 23: South Korean government prevents South Korean civic groups from visiting DPRK until the North’s government agrees to participate in shoting investigation. (Donga Ilbo) 

As of Tuesday, six organizations had been offered invitations to visit the DPRK (Donga Ilbo):

One hundred members of the Korean Teachers and Educational Workers’ Union applied for permits to visit North Korea during August. In addition, 120 South Gyeongsang Province officials including Governor Kim Tae-ho are reportedly planning to visit the regime.

Humanitarian organizations such as Good Neighbors International, Nanum International and the Korean Sharing Movement will reportedly send 40-150 delegates to the North in August (for the former two) and September. In addition, North Korean officials invited around 120 members of Peace Three Thousand, and the representatives of the two will meet in Gaesong on Saturday to discuss the invitation.

These organizations [would] stay two to four days in North Korea and [] attend joint meetings with the North Korean Teachers’ Union, visit North Korean industrial facilities, tour Mount Baekdu, and attend an Arirang performance – a play propagandizing the regime.

UPDATE 6- July 21: Suspension of the Kumgang Tours will cost the DPRK $20 million per year.  If South Korea suspends the Kaesong tours (to the city, not the industrial zone) it will cost the DPRK government $15 million. (Choson Ilbo)

Maybe these numbers are sinking in. According to the Donga Ilbo:

North Korean officials recently followed one after another in expressing their perplexity regarding the incident, and fell over themselves to invite a horde of South Korean civic groups in August. These recent moves by the North have led some to believe that the North Korean authorities have somehow changed its stance towards the South.

An American source who recently met with North Korean officials in China and a working-level official at a South Korean civic group also said, “North Korean authorities told us that the shooter was a ‘very young’ person.”

The source added, “North Korean authorities told us that the incident equally took them aback. They added that especially at a time when the South Korean authorities are anxious to give them 50,000 tons of corn, those who thought the incident was intentional simply do not know anything about their regime.”

Unification Ministry spokesman Kim Ho-nyun also confirmed the Dong-A Ilbo’s report that North Korea invited a large group of South Korean visitors to Mount Baekdu and Pyongyang.

The Choson Ilbo remains skeptical

UPDATE 5 – July 17: The North’s story has changedDPRK rejects South’s inspectors. Seventy percent of officials of the United Front Department who were in charge of foreign affairs with South Korea were expelled from their positions early this year. It seemed to be an initiative step for taming the Lee administration and controlling the South’s policy (Daily NK).

UPDATE 4 – July 15: South Korea ups the ante by threatening to suspend tours of Kaesong unless the DPRK participates in the Kumgang shooting investigation (Bloomberg). 

NKeconWatch analysis: Suspending tours to Kumgang is relatively expensive for both North and South.  Hyundai and the South Korean government spent a lot of money developing the facilities, and by this time, the North Koreans who were earning from the project have grown accustomed to the cash flow.  The tours of Kaesong are different, however.  The South invested relatively little capital in the Kaesong tours, so suspending them idles few of their resources but hits the pocketbooks of the North Koreans who sponsor the program.  Could the Kaesong Industrial Zone be turned into a bargaining chip? 

UPDATE 3 – July 14: South Korea officially casts doubt on North Korea’s portrayal of events leading up to the shooting based on CCTV video and an eyewitness account. (Choson Ilbo) 

UPDATE 2: This story in the Korea Times (h/t ROK Drop) seems to indicate that there was a witness to the shooting and that there were no substantial barriers or warnings that vacationers could wander into a restricted military zone.   

UPDATE 1: The North Koreans expressed regret for the shooting, but says the responsibility lies entirely with Seoul.  They also refuse to cooperate with the South Korean government in an investigation of the incident citing that they have already sorted things out with Hyundai Asan. Although South Korea’s President Lee Myung-Bak ignored the situation in a parliamentary speech he gave shortly after the shooting, the Unification Ministry has now publicly stated that the shooting was “wrong by any measure, unimaginable, and should not have occurred at all.” 

ORIGINAL POST:Tourism numbers at the Kumgnag resort were up this year, despite high political tensions. 

From the AP:

A North Korean soldier fatally shot a South Korean tourist Friday at a mountain resort in the communist North, prompting the South to suspend the high-profile tour program just as South Korean’s new president sought to rekindle strained ties between the divided countries.

The news of the unprecedented shooting of a 53-year-old woman at Diamond Mountain resort emerged just hours after new President Lee Myung-bak delivered a nationwide address calling for restored contacts between the two Koreas, which have been on hold since he took office in February.

Kim said South Korea would suspend future Diamond Mountain tours until it completes an investigation. The other some 1,200 tourists already at the resort are to complete their tours as scheduled by as late as Sunday, said Hyundai Asan, the South Korean company that operates the resort.

Links to full stories below the fold:



North Korea launching massive anti-corruption drive

Monday, February 11th, 2008

Last Friday, Yonhap reported that Kim Jong Il has ordered an anti-corruption investigation of two key agencies, both of which manage South Korean investments in the DPRK: the United Front Department (which Lankov claims is involved in clandestine operations) and the National Economic Cooperation Council.

North Korea is in the midst of a massive anti-corruption drive which has already resulted in the arrest of one of its top officials handling business with South Korea, informed sources in Seoul said Saturday.

The campaign, ordered by leader Kim Jong-il, was prompted by widespread allegations that some top party and administration officials took bribes as they pushed business projects with South Korean industrialists, said the sources well versed in North Korean affairs.

“The probe was launched as National Defense Commission Chairman Kim Jong-il said there was a lack of supervision over the United Front Department [a key party organization that supervises inter-Korean affairs], although lots of suspicions were raised over the department’s corruption,” one source told Yonhap News Agency.

According to the sources in Seoul, the North Korean leader was enraged after getting a report that some party and government officials allegedly pocketed bribes and diverted food and other aid from South Korea to black markets.

Also under investigation is the National Economic Cooperation Council, a government body that handles business with South Korean entrepreneurs, the sources said.

The Council’s chief, Jeong Woon-eop, remains under arrest pending investigation into allegations that he took “huge amounts” of bribes, said the sources, who wanted to remain anonymous. (Yonhap excerpted)

Frequently “anti-corruption campaigns” in developing countries have nothing to do with making the bureaucracy more accountable or responsive to public demands, but rather are political maneuvers to prevent “rents” or funds from being channeled to uses that lie outside the leadership’s control (or some faction of the leadership).  In other words, they are regime enhancing.  The announcement of this campaign demonstrates two important principles that deserve explicit mention:

1. Not all profits earned by North Korean joint ventures are channeled to the leadership, and in fact many of them are siphoned off by middlemen who actually control the financial machinery.  Once skimmed off the top, it is likely that these funds are used in illicit private commercial operations since they cannot be legally declared by the owner (unless there are domestic channels for laundering money in North Korea).

2.  If funds are being siphoned off of high-profile official joint venture operations, then the leadership is not in control of its internal fiscal affairs.  Indeed it is likely that, as in the Soviet Union, the people who keep the private economy running are the trusted mid- to senior-level officials who can skirt the rules and know how to actually get things done within the system.

Update 2/24/2008:

North Korean authorities have been investigating the chief of a North Korean committee in charge of inter-Korean economic cooperation for months after seizing $20 million from his house, a report said Friday.

The full article can be found here:
NK Official Suspected of Embezzling Funds From Seoul
Korea Times
Jung Sung-ki

Update 2/12/2008:

The chief of Daesung General Bureau, a division of the 39th Department which manages foreign transactions, was fired on suspicion of embezzling US$1.4 million last fall.” (Daily NK)

The full article can be found here:
North Korea launching massive anti-corruption drive


DPRK Unification Front envoy tours ROK industries

Friday, December 7th, 2007

Institute for Far Eatern Studies
NK Brief No. 07-12-5-2

Kim Yang-gon, head of the DPRK Workers’ Party Unification Front department, led a North Korean delegation to the South, and after two nights and three days, returned to the North on December 1. The last time a North Korean head of the KWP’s Unification Front department visited the South was seven years ago, when, in September 2000, Kim Yong-soon visited Cheju Island. Government authorities are saying that Kim’s trip to the South was publicized in order to facilitate the smooth implementation of the 2007 inter-Korean Summit Declaration

On the day Kim’s delegation arrived, the group visited the Songdo Free Trade Zone, where he and his delegation were moved by a presentation by officials explaining the value of an Inchon-Kaesong-Haeju ‘West Sea Belt’. On the second day, the group visited Daewoo shipyards in Koje, the Busan Customs House, and other facilities.

The trip was reminiscent of when DPRK Cabinet Prime Minister Kim Young-il led a group of more than thirty North Korean entrepreneurs to Vietnam last October, spending four nights and five days walking around tourist areas, an export-processing zone, port facilities, and other industrial areas.

The Unification Front department is but one department within the Workers’ Party responsible for policies toward the South and other countries. Unlike the foreign liaison department, Office 35, and the strategy office, the Unification Front operates openly, but distribution of propaganda leaflets, management of pro-North groups, enticement of overseas Koreans, and other activities are also underway.

The trip South by Kim’s delegation happened just before ROK presidential elections, and highlights the fact that there is barely a month left before North Korea must have its nuclear program frozen and fully disclosed. Kim’s trip to the ROK was promoted and publicized from the beginning, but little information was given to the press, other than coverage of tours of economic facilities.


Spies in Triplicate

Tuesday, July 3rd, 2007

Korea Times
Andrei Lankov

What is the “North Korean KGB?’’ This common question is actually rather meaningless _ not because North Korea does not have an analogue to the Soviet agency (it does), but because the structure of the North Korean “intelligence community’’ is remarkably complicated. In North Korea there are three major independent intelligence services _ and an array of minor sub-services.

Each service has its own field of responsibility and expertise, but in some areas they are compete fiercely. Presumably, such competition makes the North Korean leaders a bit less restive in their sleep: in a dictatorship, an excessive concentration of intelligence in one agency’s hands is fraught with danger.

Since we have mentioned the KGB, let’s start from North Korea’s closest analogue, the Ministry for Protection of State Security or MPSS. Back in the 1950s, the MPSS’s predecessor grew up absorbing a serious influence from the KGB. Like its Soviet prototype, the MPSS combines the functions of political police, counterintelligence, and political intelligence.

As a political police force, the MPSS runs a huge network of informers, manages the camps for political prisoners, and enforces manifold security regulations. As a counterintelligence agency, it does everything it can to prevent foreign spies from effecting infiltration into North Korea. And, finally, it is engaged in intelligence gathering overseas and, to some extent, in South Korea. A special role of this agency is emphasized by the fact that it is headed not by a regular minister but by Kim Jong Il himself. Yes, the “Dear Leader’’ is also the minister of his own security _ a wise arrangement, perhaps, taking into consideration the tendency of intelligence bosses to become too powerful.

However, the mighty MPSS is not very prominent when it comes to operations in South Korea. A North Korean peculiarity is the existence of the party’s own intelligence branch. The Korean Workers Party’s (KWP)own secret service is euphemistically called the Third Building _ after the number of the building in which the relevant departments are located. The Third Building bureaucracy consists of a few departments and bureaus, each with its peculiar tasks.

The KWP’s secret service has survived from the late 1940s when the party operated in both parts of the country. The Communist underground in the South, and the then powerful guerrilla movement, were managed by special departments of the KWP Central Committee. The South Korean Communist underground was wiped out in the early 1950s, but the related bureaucracy in the North survived and found justification for its existence (once created, bureaucracies are very difficult to kill). Its raison d’etre is the need to promote Juche/Communist ideas in the South, with the resurrection of the Communist movement as a supreme goal; a Communist-led unification is a more distant task. In the course of time, these goals were seen as more and more remote, but were never abandoned completely.

In fact, the Third Building is largely responsible for attempts to influence the South Korean political situation, and for gathering intelligence which makes such influence more efficient. The United Front Department, a part of the Third Building, is also responsible for clandestine operations in other countries where it strives to change the local attitudes in North Korea’s favor.

Since the Third Building should aim at starting local insurrections, many of its staff have undergone commando-style training. The only known political assassination in recent years was conducted by the officers of the Operational Department, which is a part of the Third Building. In 1997 they hunted down and shot dead Yi Han-yong, a relative of Kim Il-sung who had defected to the South and published some highly critical books about the North Korean ruling dynasty.

In addition to the MPSS and the Third Building, North Korea also has a military intelligence service whose operations largely target South Korea. Their major interest is the South Korean military and the USFK, as well as any intelligence which may be of use should a new war erupt on the Korean Peninsula.

Many people still remember the September 1996 incident when a North Korean submarine ran ashore on the eastern coast and was abandoned by the crew whose members became engaged in frequent clashes with the police and army. This was a routine operation of military intelligence that went wrong due to a navigational mistake. The commandos were supposed to survey the military installations on the coast, and then move back to the North, but it did not work as intended.

The efforts of North Korean intelligence services are concentrated on the South. But this does not mean that other countries are immune to their activity. The North Korean spies are especially active in Japan, and this was once again demonstrated by the dramatic events of 2001.