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South urges DPRK agricultural reforms

Wednesday, April 25th, 2012

According to Yonhap:

President Lee Myung-bak on Friday urged North Korean leader Kim Jong-un to give up the collective farm system and privatize state-owned agricultural land to help enrich the North and its residents.

…

“North Korea should abandon its collective farm system and shift to the privatization of agricultural land. If so, rice will be abundant in two to three years. Farmland privatization will help individuals earn more and the state increase revenues,” Lee was quoted by his spokesman Park Jeong-ha as saying in the lecture.

“(Farmland reform) is a must for North Korea. All the young leader has to do is the (reform). It is the most urgent matter and has to precede its market opening. Continued dependence on aid will only produce beggars.”

President Lee’s statement stresses the short-term economic benefits of moving away from collective farming: More food, higher incomes to farmers, improved fiscal position, and thus, increased political legitimacy for the Kim Jong-un government. However, from a political and strategic viewpoint he is probably hoping that North Korean agricultural reform will pave the way for broader economic reforms — as was the case in China. However, it is worth noting that China’s agricultural reforms, which ended the misery of the Great Leap Forward and laid the foundation for broader economic reforms, were not created in Beijing.  They were developed and implemented by a single village of scared, hungry farmers:

Pictured above (via Marginal Revolution): Farmers from 18 households in Xiaogang village (Fenyang County, Anhui Province) signed this contract bringing a de facto (not de jure) end to collective farming.

Economists Tyler Cowen and Alex Tabarrok said the following of the Xiaogang Contract:

The Great Leap Forward was a great leap backward – agricultural land was less productive in 1978 than it had been in 1949 when the communists took over. In 1978, however, farmers in the village of Xiaogang held a secret meeting. The farmers agreed to divide the communal land and assign it to individuals – each farmer had to produce a quota for the government but anything he or she produced in excess of the quota they would keep. The agreement violated government policy and as a result the farmers also pledged that if any of them were to be killed or jailed the others would raise his or her children until the age of 18.

The change from collective property rights to something closer to private property rights had an immediate effect, investment, work effort and productivity increased. “You can’t be lazy when you work for your family and yourself,” said one of the farmers.

Word of the secret agreement leaked out and local bureaucrats cut off Xiaogang from fertilizer, seeds and pesticides. But amazingly, before Xiaogang could be stopped, farmers in other villages also began to abandon collective property. In Beijing, Mao Zedong was dead and a new set of rulers, seeing the productivity improvements, decided to let the experiment proceed.

The rapid increase in China-DPRK trade and information exchanges raises the question of just how many North Koreans have heard of the Xiaogang contract or how many villages have implemented similar measures?

For its part, the Workers Party has employed a mixture of both top-down agricultural policies and accommodation of bottom-up economic innovations to increase food availability. From a top-down perspective, the DPRK has promoted “technological inputs” (fertilizer production, terraced hillsides, large irrigation projects, land reclamation, land rezoning, new foodstuff factories, improved management techniques, CNC) and multilateral aid outreach (official and private food aid from abroad). From a bottom-up perspective, the DPRK has offered and expanded economic incentives (kitchen/private plots, farmers’ markets, general markets, July 2002 Measures, 8.3 Measures, accommodation of some illegal activity,  family-based work team units on collective farms).  The combination of all these efforts, however, has obviously not resulted in food security–for a number of reasons that are too  lengthy for a simple blog post.

If you are interested in learning more about the DPRK’s agricultural policies, I have posted below some papers (PDF) covering different stages in the North Korean agriculture sector: Pre-war, post war (collectivization), and post famine (arduous march). They are all well worth reading:

1. Lee Chong-Sik, “Land Reform, Collectivisation and the Peasants in North Korea”, The China Quarterly, No. 14 (Apr. – Jun., 1963), pp. 65-81

2. Yoon T. Kuark, “North Korea’s Agricultural Development during the Post-War Period”, The China Quarterly, No. 14 (Apr. – Jun., 1963), pp. 82-93

3. Andrei Lankov, Seok Hyang Kim, Inok Kwak, “Relying on One’s Strength: The Growth of the Private Agriculture in Borderland Areas of North Korea”

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Posted in Agriculture, Black markets, Economic reform, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market) | 1 Comment »

North Korea redefines ‘minimum’ wage

Wednesday, April 25th, 2012

Andrei Lankov writes in the Asia Times:

When one talks about virtually any country, wages and salaries are one of the most important things to be considered. How much does a clerk or a doctor, a builder or a shopkeeper earn there? What is their survival income, and above what level can a person be considered rich?

Such questions are pertinent to impoverished North Korea, but this is the Hermit Kingdom, so answering such seemingly simple questions creates a whole host of problems.

Read the full story below:

(more…)

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Posted in 1990s Famine, 2002 Economic reforms, Arduous March, Black markets, Finance, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market), Labor conditions/wages, Public Distribiution System (PDS) | 1 Comment »

Border Security Goes Back to NSA

Sunday, April 22nd, 2012

According to the Daily NK:

Information from inside North Korea suggests that jurisdiction over border security has been moved from the Ministry of People’s Armed Forces to the National Security Agency(NSA), in a special order given by new leader Kim Jong Eun which has seen border security units undergoing an administrative switch to the NSA on April 16.

Read more below:

(more…)

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Posted in Black markets, Ministry of People’s Armed Forces, Ministry of People’s Security (Criminal Police), Ministry of State Security (MPSS, NSA, SSD), National Defense Commission | Comments Closed

Japanese police bust computer smuggling operation

Sunday, February 19th, 2012

UPDATE 1 (2012-2-28): The Japanese police have raided the heaquarters of Chongryun (Chosen Soren), the Pro-DPRK General Association of Korean Residents in Japan, over its alleged ties to the computer smuggling ring. According to the BBC:

Japanese police have raided the offices of a pro-North Korean organisation suspected of a role in the illegal shipment of computers to North Korea.

Japan maintains a total ban on exports to North Korea.

It is part of a range of sanctions over North Korea’s nuclear programme and its abduction of Japanese nationals in the 1970s and 80s.

Earlier this month police arrested a businessman accused of exporting PCs to North Korea through China.

On Tuesday, about 100 riot police entered the Tokyo offices of an organisation connected to the Pyongyang-affiliated General Association of Korean Residents in Japan, officials say.

Because there are no diplomatic relations between the two countries, the association has functioned as North Korea’s de facto embassy in Japan.[

The raid came after prosecutors last week indicted Lee Soon-Gi, 49, who is accused of illegally exporting 100 second-hand personal computers to North Korea through China, officials said.

The affiliate organisation may be involved in the shipments, police say.

But the association has strongly criticised the raid which it described as an “unjustified and illegal investigation”.

ORIGINAL POST (2012-2-19): According to the Yomuri Shimbun:

The president of a Tokyo-based dealer in secondhand personal computers exported more than 4,000 items to North Korea, according to investigation sources.

Many of the items are believed to have been sold on the black market to senior members of the ruling Workers’ Party of Korea, the sources said.

Lee Sungi, president of Popura-Tec, was arrested earlier this month by the Metropolitan Police Department’s Public Safety Department on suspicion of violating the Foreign Exchange and Foreign Trade Law.

The 49-year-old has been arrested on suspicion of exporting 100 notebook computers to North Korea. In addition, Lee has told police that he shipped more than 4,000 personal computers and liquid-crystal displays to that country on four occasions from 2008 to 2009.

A North Korean trading company based in Dalian, China, brokered the deals, selling the products to a computer shop in Pyongyang, the sources said.

The shop was run by a North Korean computer engineer who once worked at a Chinese company as a software developer. He reportedly contacted Lee in March 2007, saying: “There’s demand for about 1,000 personal computers a month [in North Korea]. I’m interested in buying Japanese products,” according to the sources.

E-mails he sent to Lee suggested there were hundreds of computer shops throughout North Korea, of which 20 were in the capital. However, most of the country’s computer users do not use these shops because they cannot afford to buy their products.

Instead, they usually buy their computers through the black market, the sources said.

Most of the personal computers Lee exported from Japan were secondhand products, including some that had been leased to central and local government offices, according to the sources.

The North Korean computer engineer reportedly sold about 500 products per month to the black market, setting prices at 200 dollars or less for a desktop computer, and a maximum of 300 dollars for a notebook computer, the sources said.

This was still expensive for North Korea, which meant only senior members of North Korea’s ruling party and other wealthy individuals could purchase them, according to the sources.

It is reportedly common for North Korean computer users to buy new products when their items break down because there are almost no after-sales services in the country, according to the sources.

On February 2, 2012 we learned about a separate PC smuggling ring which moved computers from Japan to the DPRK.

Read the full story here:
4,000 PCs, displays said exported to North Korea
Yomuri Shimbun
2012-2-19

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Posted in Black markets, Computing/IT, International trade, Japan | Comments Closed

On DPRK remittances

Wednesday, February 15th, 2012

Chico Harlan writes in the Washington Post:

Recent North Korean defectors in South Korea sometimes joke that their transition to capitalist life begins with two key steps. First, they buy a smart phone. Then, they get a lesson about phone banking.

With those two things, defectors can then transfer money back to North Korea, where many still have family or friends. The money doesn’t go directly to the North; rather, it’s channeled through a series of brokers, routed through China, and trimmed by handling fees and commissions.

But as underground systems go, this one is quite functional. Some 50 percent of North Korean defectors have transferred money back home. Those who try once almost always do it again.

Just a decade ago, almost no money flowed back to the North in the form of remittances. But the number of defectors here has skyrocketed, and the amount of cash they send back home has surged as well.

Some 23,000 defectors now live in South Korea, with the number jumping more then 2,500 every year. (Just 12 years ago, a total of 1,400 North Koreans lived in the South.)

The defectors don’t make much money — about $1,000 per month on average — but that doesn’t stop them from sharing it generously, shipping it back to a country where $1,000 can feed a family for a year.

According to a January 2011 survey from the Database Center for North Korean Human Rights, some 56 percent of defectors who send money give more than $900 (1.01 million won) annually. Another 12.5 percent give more than $4,500 (5.01 million won) annually.

North Korea scholar Andrei Lankov, in this April 2011 essay, estimated that the total money given each years totals $10 million–an enormous influx of cash into the extremely impoverished North.

One recent defector, Ju Kyeong-bae, described during a recent interview at his apartment in Seoul how he transfers money to his friends in the North, who live in a village some 25 miles from the Chinese border.

First, one of his friends — let’s call him Mr. Jeong — calls Ju from North Korea, using a Chinese cell phone that gets a signal from towers just beyond the border.

Mr. Jeong provides a telephone number for a broker in China. Ju calls the broker.

The broker then gives Ju the name of a bank in South Korea, along with a particular account number.

Ju determines the amount of money he wants to send, punches a few buttons on his iPhone, and transfers the money, which then pinballs from the South Korean bank to a Chinese bank, using two brokers.

The Chinese bank account belongs to a businessman (let’s call him Mr. Kim) who does frequent work in North Korea — and who holds lots of private wealth stashed away in the North. When Ju’s money lands in Mr. Kim’s account, Kim just lets it sit there. He never withdraws it and takes it across the border. Rather, he distributes money he already has stashed in North Korea to Mr. Jeong, who in turn gets it to the person Ju’s payment is intended for.

Mr. Jeong then places another call to Ju — a confirmation.

“Some of the middle men, I never even know their names,” Ju said. “It’s all based on trust. If you don’t trust the system, you’re better off not even sending money.”

According to the 2011 survey of defectors, the commission on transfers is generally between 21 and 30 percent. It’s almost never higher than 50 percent. Some 90 percent of defectors say they receive a phone call from their friend or family member confirming that they received the payment.

One of every two defectors thinks his or her money transfers will spark admiration toward the South. About one in every 10 thinks the money will raise resistance against North Korean society.

South Korea technically bans the transfers, but an official at Seoul’s Ministry of Unification, which handles North Korea policy, says that the government has little incentive to stop the remittances.

“They fall into a gray area,” said the official, requesting anonymity because he was unauthorized to speak about the policy on record. “We always say no money should be sent to North Korea in case it is diverted for military purposes. But in this case, we’re not talking about huge amounts. And it’s for humanitarian purposes. So long as that’s the case, we won’t pursue it.”

Additional posts on remittances:

1. ROK moves to control inter-Korean remittances (2011-5-26)

2. ROK seeks to gain greater control of sanctioned cash flows to DPRK (2011-05-25)

3. Remittances from North Korean defectors (2011-4-21)

4. Defectors remit US$10m a year to DPRK (2011-2-23)

Read the full story here:
North Korean defectors learn quickly how to send money back home
Washington Post
Chico Harlan
2012-2-15

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Posted in Banking, Black markets, Emigration, Finance, International Aid, South Korea | Comments Closed

DPRK takes steps to reduce access to foreign media

Monday, February 13th, 2012

According to the Daily NK:

A new unit was formed in mid-January to deal with the amount of ‘illegal’ media circulating in North Korea.

“Unit 114 has been formed following a January 14th order handed down by General Kim calling for a concentrated crackdown on suspicious songs, recorded materials and impure published media,” a source from Yangkang Province told Daily NK on the 12th.

The source went on, “The unit has been organized by the Propaganda Department of the central Party, but the interesting thing is that it also contains people from the National Security Agency.” Interesting, the source noted, because such units, also a very regular feature of the Kim Jong Il era, are commonly made up of people dispatched by the central Party. Indeed, there is already Unit 109 similarly charged with dealing with inflows of outside media.

In addition, the format of the unit’s activities is in marked contrast to some of the past, the source said. “These inspections have not been announced in people’s unit meetings and, since the inspectors are circulating undercover in the jangmadang, people are much more frightened,” she explained. “Someone who was caught selling CDs in the area in front of the jangmadang here told me that the investigation was done by an NSA agent and someone from the central Party Propaganda Department.”

According to the source, the trader in question was selling copies of a recently released North Korean film, ‘Brotherly Love’, when he came under suspicion. Even though it is a North Korean film which portrays Chinese troops in the Korean War and the lives of North Koreans at the time, the trader nevertheless got in trouble because the film was copied rather than being an original.

“The trader made and signed a written statement saying ‘I will not sell copied films again’ and so was let go, but as he was leaving he was asked by an NSA agent to report people possessing or selling South Chosun films and songs or American films. He got really shocked by the experience, and is now at home resting up,” the source said.

“A lot of traders who used to make a living selling CDs are now in hiding. The investigation is harsh, so people with experience selling South Korean CDs in the past are hiding to avoid getting caught.”

Read the full story here:
More Pressure on Illicit Media
Daily NK
Lee Seok Young
2012-2-13

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Posted in Black markets, Civil society, Domestic publication, Economic reform, Film, Music | Comments Closed

DPRK exercising stricter enforcement of official prices

Tuesday, February 7th, 2012

According to the Daily NK:

At the beginning of last month, the North Korean authorities ordered local commercial management offices to strengthen oversight to ensure that products were being sold at official state prices, according to a source from Shinuiju on February 6th.

Meeting with Daily NK on a visit to Dandong, China, the source explained, “Friction has started up again between market managers and traders because of orders at the start of the year to make sure that everything is sold at the state-designated price. They do this every year, but this year they are confiscating products and transferring them for sale in state stores.”

Price-related orders are issued annually in North Korea, where the authorities are still reluctant to countenance market price autonomy despite fifteen years of ad hoc marketization. As such, the Ministry of Procurement and Food Policy sets the prices of key goods and posts them at the entrance to markets. These prices are approximately uniform across the country.

Only ‘regional’ items being treated differently; prices for these items are set by pricing bureaus established under provincial People’s Committees. Most obviously, the state price of seafood is cheaper in coastal areas than in inland parts of the country.

However, real price differentials make selling at these state prices untenable; for example, the market price of a kilo of rice in Shinuiju is currently hovering around 3,200 won, while that for corn is 2,200 won, yet the state prices are 1,600 won and 690 won respectively. Therefore, traders traditionally simply pretend to sell at state prices when inspectors turn up, before resuming trade at market prices once they have left.

But the problem this year is that enforcement is stricter than usual, with illegally priced products being confiscated, transferred directly to state stores and sold at state prices. According to the source, “In the past state prices were only symbolic and inspectors didn’t enforce them. Even if they confiscated something you could pay them a little and get it back. But now they are just selling those products directly at state prices, so a lot of people who have ignored the crackdowns are ending up in a real fix.”

Not only that. “People who are caught like this are banned from trading from a stall for a month,” the source added. “Traders are reacting very carefully now as a result.”

However, history has taught traders that the crackdown is unlikely to last too long, and anticipate a return to less strict oversight in due course.

Read the full story here:
Annual Market Crackdown Ensnaring the Careless
Daily NK
Park Jun Hyeong and Jeong Jae Sung
2012-2-7

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Posted in Black markets, Economic reform, Food, General markets (FMR: Farmers Market), Ministry of Procurement and Food Policy, Price liberalization | Comments Closed

New year seeing active trade

Wednesday, January 18th, 2012

According to the Daily NK:

There has been an upswing in prices and exchange rates in North Korea as East Asia moves towards the lunar New Year’s holiday, which falls on the 23rd.

A source from Hyesan in Yangkang Province told Daily NK this afternoon, “The number of people in the jangmadang is rising and trade is getting more active, and so the Yuan exchange rate and rice price are both on the up.” According to the source, the Yuan is trading for 680 North Korean Won, while rice is hovering at approximately 4,300.

A source from Musan in North Hamkyung Province previously reported similar circumstances to Daily NK on the 16th, with the Yuan at 780 Won and rice and corn at 4,500 Won and 800 Won respectively in the jangmadang there.

The current situation follows on from a price spike before Kim Jong Il’s death on December 17th [see here and here], the following mourning period (to the 29th) and criticism sessions (to January 8th). However, while at its height last month the price of the most expensive rice had hit 5,000 Won, by January 11th-14th it had declined to 3,000-3,500 Won in eastern regions. Now, however, with the holiday period ahead, prices are rising again.

“Although the self-criticism period ended, we still had to keep an eye on the security forces so the number of sellers in the jangmadang was what it used to be, but from a few days ago people started using the jangmadang as normal and the rice and Yuan prices started rising a bit,” the Hyesan source explained.

Interestingly, while the authorities have tried a number of measures to regulate the Sino-North Korean border and limit the use of foreign currency of late, sources report that the measures have only had a minor effect on prices and have not daunted the will of local people to trade at all.

Overseas currency is even being traded publicly somewhat more frequently now, sources report, showing the skepticism with which the people view official threats to stop the use of Yuan and U.S. Dollars in the market.

As the Musan source commented wryly, “People are saying that ‘If his dad couldn’t stop it, what is the young one going to do about it?’ and ‘As long as the Tumen River keeps flowing, they can’t stop the Yuan, the smuggling, or the defection.’”

Read the full story here:
New Year Seeing Active Trade
Daily NK
Lee Seok Young
2012-1-18

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Posted in Agriculture, Black markets, Economic reform, Finance, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market), Price liberalization, Statistics, Trade Statistics | Comments Closed

“Ponghwajo” reports

Wednesday, January 18th, 2012

UPDATE 1 (2012-1-19): Writing in the Asia Times, Michael Rank offers an update on the Ponghwa group (Ponghwajo, 봉화조):

It is widely assumed that if anyone knows what the North Koreans are up to, it’s the Chinese, and Chinese-language Internet sites have provided news stories about drug smuggling and border-crossing refugees. But there seems to have been a clampdown in the last year or two and these sources have dried up.

However, the Beijing magazine Kan Tianxia published a noteworthy article after Jong-il’s death highlighting the so-called Ponghwa group consisting of the sons (and presumably the occasional daughter) of the Pyongyang elite.

This privileged clique, which was first formed around 2000, consists of people mainly in their 30s and, the magazine claims, included Jong-eun himself after he returned home from his studies in Switzerland.

It says the group’s purpose is to strengthen Jong-eun’s power base and to act as his backstage support.

The article quotes an informed source as saying the Ponghwa group are mainly graduates of Kim Il-sung University, Pyongyang Foreign Languages University and other elite institutions, and that they tend to work in the security and intelligence apparatus and in top government organs such as the supreme procuratorate (prosecutor’s office).

The word Ponghwa means “smoke of battle” and also has connotations of “advance guard”. It is the name of the area of Pyongyang on the Taedong River that was the home of Kim Il-sung’s mother Kang Pan-sok; it is also the name of Pyongyang’s most elite hospital and there is a Ponghwa underground station.

The group is said to be headed by the sons of two generals. One of these is O Se-hyon, the second son of General O Kuk-ryol, who, according to the North Korea Leadership Watch (NKLW) blog, participated in a crucial meeting hours after Jong-il’s death which “began the order of operations which publicized KJI’s [Kim Jong-il’s] demise and taking on KJI’s remaining administrative and command mechanisms”.

The other leader is Kim Chol, son of General Kim Won-hong, who, according to rumors, was involved in various scandals but was nevertheless promoted to full general in 2009. General Kim, like the fathers of several Ponghwa members named in the article, belongs to the super-elite as is clear from his listing as a member of Jong-il’s funeral committee.

Ponghwa members also include the son of former veteran ambassador to Switzerland Ri Chol (Ri Tcheul) who is said to have been close to the young Jong-eun when he attended the International School in Bern, as well as the son of vice premier Kang Sok-ju. Kang was until 2010 the senior vice minister of foreign affairs and is, according to NKLW, a cousin of Jong-il; he also has has ties to Jong-eun’s mentors and uncle and aunt, Jang Song-taek and Kim Kyong-hui.

Members of elite groups such as the Ponghwa set are visible to the foreign community in Pyongyang where they frequent hard currency shops and restaurants, and have a clear parallel in China where the sons and daughters of top officials are assiduous in exploiting family connections.

Although Jong-eun is said to be as omniscient and omnipotent as his father and grandfather, almost nothing is known for sure about him. There is little doubt that he went to school in Switzerland, and the Chinese magazine claims this has been confirmed in North Korean “propaganda documents” – probably internal briefing materials distributed to senior officials.

Pyongyang watchers experienced a mild frisson when his mother was mentioned in a television documentary earlier this month, as this was the first time there had been official recognition that he has a mother. She has never been officially named, apparently because she was a Japanese-born Korean, and also because her relationship with Jong-il was not a happy one. She is said to have died in Paris in 2004.

Nobody is sure if Jong-eun was born in 1983 or 1984. According to a book written by his father’s former live-in chef [Kenji Fujimoto], his birthday is on January 8, but there were no signs of celebration in Pyongyang on that day. Perhaps it was considered unfitting to celebrate so soon after his father’s demise.

The only utterance attributed to Kim Jong-eun is a paean of praise to the joys of working all night. “Even when I work night after night, once I have brought joy to the comrade supreme commander, the weariness vanishes and a new strength courses through my whole body. This is what revolutionaries should live for.”

His father and grandfather were also fond of lauding the joys of working through the night, and there’s nothing North Korean leaders fear more than original thinking.

ORIGINAL POST (2011-4-18): Today the media was abuzz with rumors of the DPRK’s most exclusive club: Ponghwajo (aka: Bonghwajo, 봉화조).  This club is composed of the children of ruling elites, and according to the rumors, they not only generate substantial sums of hard currency, but they also know how to spend it.  Below are some stories about the group:

Choson Ilbo:

When Kim Jong-chol, the second son of North Korean leader Kim Jong-il, spent 10 leisurely days in Singapore in February going on a luxury shopping spree and attending an Eric Clapton concert, he was apparently joined by a brat pack of children of powerful officials in North Korea.

An official source here said Sunday intelligence information reveals Kim Jong-chol (30) and members of the so-called Ponghwajo or torch group not only visited Singapore, but also went to Macao and Malaysia to gamble and shop.

The Ponghwajo consists of the regime’s princelings, not to be confused with the children of early high-ranking officials who fought as revolutionaries along with former North Korean leader Kim Il-sung. These sons of the revolutionaries are now in their 50s and 60s and have recently been tapped to serve in key positions under North Korea’s heir apparent Kim Jong-un.

But the Ponghwajo are in their 30s and 40s and are not viewed favorably by the regime’s leadership. Though they are often engaged in activities that generate dollar revenues through drug sales, counterfeiting and black market trade, they apparently do not wield much political power.

The group was formed in the early 2000s by O Se-won, the son of Gen. O Kuk-ryol, a senior leader in North Korea’s powerful National Defense Commission, and Kim Chol, the son of Kim Won-hong, head of the People’s Army Security Command. Its members include Ri Il-hyok, the first son of Ri Chol, former North Korean ambassador to Switzerland and the official in charge of handling Kim Jong-il’s secret bank accounts, as well as Kang Tae-seung, the eldest son of First Vice Foreign Minister Kang Sok-ju and Jo Song-ho, the eldest son of the late Jo Myong-rok, first vice chairman of the National Defense Commission who died last year.

Donga Ilbo:

Certain members of Bonghwajo, a club of the children of North Korea’s power elite, accompanied Kim Jong Chul, 30, the second son of North Korean leader Kim Jong Il, when the junior Kim attended Eric Clapton’s concert in Singapore in February.

Like “Crown Prince Party, or The Princelings,” a group of the children of prominent and influential senior communist officials in China, Bonghwajo is comprised of children of ranking officials of the North Korean Workers’ Party, military and senior members of its Cabinet.

Due to their parents’ influence, the children reportedly landed jobs at powerful organizations and are earning money through illegal activities such as counterfeiting and narcotics trafficking.

A source on North Korea said, “Kim Jong Chul is forming a closer relationship with Bonghwajo members after his younger brother Jong Un was named Kim Jong Il’s heir apparent.”

“When Jong Chul went to Singapore to watch Eric Clapton’s concert, certain Bonghwajo members accompanied him and paid all of the costs for his stay and shopping in Singapore.”

The source said, “Jong Chul and Bonghwajo members visited not only Singapore but also Macau and Malaysia in February,” adding, “Visiting the three countries, they gambled with up to 300,000 U.S. dollars and purchased expensive products at department stores.”

Formed in the early 2000s, Bonghwajo is reportedly led by O Se Hyon, second son of National Defense Commission Vice Chairman O Kuk Ryul, and Kim Chul, first son of the General Political Department Director Kim Won Hong at the People`s Army. Kim Jong Un joined the club when he turned 20, while Kim Chang Hyok, son of Kim Chung Il, deputy director of Kim Jong-Il`s personal secretariat, also became a member.

Bonghwajo was named after the village of Bonghwa in Pyongyang`s Kangdong County, where Kim Jong Il’s grandmother Kang Ban Sok lived. Bonghwa is construed as meaning “frontier” in North Korea.

Bonghwa Medical Center, the North’s top hospital, is where Kim Jong Il underwent treatment when he suffered a stroke in 2008.

Bonghwajo is also known to deal in illegal activities such as counterfeiting and drug trafficking. The Washington Times reported in May last year that Bonghwajo was involved in illegal activities, including circulation of “super notes,” or ultra-high precision counterfeit 100-dollar bills, and drug trafficking.

U.S. intelligence say O Se Hyon was entangled in the incident of the Bongsu-ho, North Korea’s drug trafficking boat that was caught by Australia in April 2003, and is related with counterfeit bills discovered in Las Vegas in 2004.

Bonghwajo members are said to be habitually taking drugs as well as trafficking them. Kim Chul, who works at the general surveillance bureau under the (North) Korean People’s Army Ministry, is earning money through drug trafficking in China and elsewhere and paying kickbacks to Kim Jong Un and Kim Jong Chul.

The group is even called a narcotics club because drug use is so rampant among members, with leader O Se Hyon undergoing treatment at a detention facility due to heroine inhalation.

Daily NK:

The existence of ‘Bonghwajo’, a grouping of the children of North Korea’s highest leadership including Kim Jong Eun, has made headlines in South Korea in recent days, raising questions about what role this group of powerful youngsters might be playing in the succession.

‘Bonghwajo’ members are said to be involved in foreign currency-earning businesses, many of them illegal, while also working in key areas of the National Security Agency, General Bureau of Reconnaissance, Ministry of the People’s Armed Forces, Central Prosecutors’ Office and other high organs. They reportedly curry favour by financially supporting both Kim Jong Eun and elder brother Kim Jong Cheol.

Therefore, one analysis has it that the Bonghwajo, which is analogous with China’s ‘Princelings’ is both a group for the strengthening of Kim Jong Eun’s power and a private bank through which to finance the successor’s activities.

Cho Young Ki, a professor with Korea University, told The Daily NK today, “Bonghwajo can be read as being Kim Jong Eun’s support group. The Three Revolutionary Teams took the initiative in the establishment of Kim Jong Il’s power, and I presume that Bonghwajo might be performing the same role.”

Professor Cho added, “Kim Jong Cheol, who lost his practical power after publicizing the succession structure, is likely to be providing this group with his support.”

Head of World North Korea Study Center An Chan Il agreed, suggesting, “It appears that Bonghwajo may be intervening in personnel management while offering funds for Kim Jong Eun obtained from foreign currency-earning businesses.”

An went on to describe a group led by Kim Jong Il’s half brother Kim Pyong Il and Oh Il Cheong (the son of former Minister of the People’s Armed Forces Oh Jin Wu) at the time of Kim Jong Il’s elevation.

An said, “Even though we didn’t know their name, there was a group that came before ‘Bonghwajo’, and the nature of ‘Bonghwajo’ could be the same as that of the group led by Kim Pyong Il.” He went on, “Kim Pyong Il worked as the group’s main leader, but then he was put in a ‘sub-branch’ and got sent overseas. But Oh Il Cheong switched line and is now a Lieutenant-General.”

The ‘Bonghwajo’ group may well consider that it is in the same boat as Kim Jong Eun. Therefore, its members are likely to work to expand their power in the Party, military and foreign currency earning organs so to ensure Kim Jong Eun’s succession and their own access to power and money for the years to come.

The core members of the Bonghwajo are said to be Oh Se Hyun, the second son of Vice Chairman of the National Defense Commission Oh Keuk Ryul, Kim Cheol, who is the eldest son of Kim Won Hong (the vice director in charge of political organization in the General Political Department of the People’s Army), Kang Tae Sung, the eldest son of Vice Premier of the Cabinet Kang Suk Ju, Kim Cheol Woong, the second son of Kim Choong Il (a former vice director in Kim Jong Il’s Secretary’s Office), and Cho Sung Ho, the eldest son of Cho Myeong Rok (former first vice chairman of the National Defense Commission).

However, professor Cho pointed out, “Even if Bonghwajo make an effort to establish Kim Jong Eun’s smooth power succession, it is doubtful whether they can reign properly. The extent of their activities and legitimacy may decide whether or not they are able to support Kim Jong Eun.”

Meanwhile, Yonhap News has claimed that drugs are so prevalent within the group that it is known as a drug club, and Oh Se Hyun has reportedly been treated for addiction.

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Posted in Black markets, Counterfeiting, Drug smuggling, Finance, Fiscal & monetary policy, Foreign direct investment, Illicit activities | 1 Comment »

Celebrate the socialist way!

Tuesday, December 13th, 2011

According to the Daily NK:

The North Korean authorities are currently employing various means to encourage frugality, an idea which has recently come to include ‘kwanhonsangje’ (the four ceremonial occasions; coming of age, marriage, funeral and ancestral rites).

In recent years there has been official criticism of the fact that engagement ceremonies, wedding gift exchanges between families and even the table for ancestral rites have become occasions full of over-spending, empty formalities and vanity.

Recently, Daily NK obtained a copy of the October issue of monthly magazine ‘Socialist Cultural Life’, to which social studies scholar Jang Seong Nam submitted a piece, ‘Let’s Perform Kwanhonsangje the Socialist Way’, in which he declared, “kwanhonsangje should be performed according to the demands of the Party and social development.”

The article emphasized, “We are taking the lead, seeing kwanhonsangje performed in the socialist way as a valid and unavoidable problem in the establishment of the new military-first socialist life.”

“Because old, feudalist, superstitious, empty formalities and bizarre foreign customs are not disappearing, we are strongly demanding action on this problem,” it went on, adding, “Rejecting bizarre foreign customs crushes the Imperialists’ policy of ethnic extermination under the banner of ‘globalization’.”

The article also looked in more detail at problem issues surrounding kwanhonsangjae.

“A sufficient engagement,” it proclaimed, “has two people and their parents meeting to confirm the marriage, and wedding ceremonies should be a gathering at someone’s home.”

Regarding funeral arrangements and ancestral rites, it recommended, “Commemorate a death by placing a medal or honorary certificate before an image of the deceased along with flowers, while the various commemorative services on the 3rd day or the birthday of the deceased should be eliminated.”

Getting into minutae, it added of a groom’s suit color, “Discard the convention of wearing a black or dark blue suit; men should wear bright colors according to season.”

In these ways, the article asserted, kwanhonsangjae becomes an aesthetic and modern set of customs with a uniquely Chosun ethnic color.

The piece appears to show both the state’s desire to restrain consumption but also to reassert ‘socialist’ attitudes and encourage nationalist attitudes, thus pushing back against the impact of foreign ideas coming in via overseas media, South Korean dramas and so on.

‘Socialist Cultural Life’ is distributed monthly to all official organs and enterprises. Its publisher, Labor Group Publishing House, publishes various other magazines including ‘Chosun Women’, ‘Worker’ and ‘Agricultural Worker’. As a part of the Party Propaganda and Agitation Department, its various publications are among the state’s most ubiquitous propaganda weapons after the daily Workers’ Party mouthpiece, ‘Rodong Shinmun’.

Read the full story here:
Celebrate the Socialist Way!
Daily NK
Lee Seok Young
2011-12-9

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Posted in Art, Black markets, Civil society, Dating/Courting, Domestic publication, Economic reform, Religion | Comments Closed

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