North Korean Economy Watch

Yonhap
9/20/2007

[excerpt] 

The South Korean government plans to ask the National Assembly to significantly increase its budget for inter-Korean cooperation projects and aid programs for North Korea, the Ministry of Planning and Budget said Thursday.

Seoul hopes to increase the fund for its cross-border projects to 750 billion won (US$812 million) next year from 500 billion won this year, according to the ministry.

The amount of money allocated for its humanitarian projects will also increase 14 percent to some 530 billion won, the government said.

“The increased budget for humanitarian programs will go to providing half a million tons of rice and 400,000 tons of fertilizer,” each up 100,000 tons from what Seoul provided this year, a government official said while asking not to be identified.

The requests for budget increase are still subject to approval by the parliament, but observers believe the amount of Seoul’s economic aid or assistance will be significantly increased next year following the upcoming summit of South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il in Pyongyang from Oct. 2 through Oct. 4.

The government was widely expected to promise large assistance and economic cooperation at the summit, only the second of its kind since the two Koreas were divided at the end of 1950-53 Korean War.

Meanwhile, the government also said it would request a total of 895 billion won for its official development assistance next year, up 23.3 percent from some 725 billion won in 2007, as part of efforts to boost its grants and soft loans for developing and under-developed nations to 0.12 percent of its gross national income from 0.08 percent.

Chosun Ilbo (h/t Tim Beal)
9/19/2007

The government is seeking to incorporate the cost of electricity supply for the Kaesong Industrial Complex in North Korea into South Korea’s own electricity fee system. Combining the two would allow losses from the Kaesong complex worth several billions of won a year since 2005 to be absorbed by the overall scheme. But that would mean the South Korean public has to shoulder the cost.

Grand National Party lawmaker Eom Ho-sung on Tuesday released official documents exchanged between the Unification Ministry and power monopoly KEPCO. “According to a feasibility study by Deloitte HanaAnjin accounting firm commissioned by KEPCO, electricity transmission to Kaesong costs the South an annual W19.3 billion (US$1=W930) and an estimated total of W966.8 billion by 2054,” he said. It cost the South W5.8 billion in the 2005/2006 fiscal year.

Electricity used at Kaesong is rated as industrial-use costing W4,190-5,520 per kilowatt, cheaper than for South Korean homes, so a loss is inevitable. According to the documents released Tuesday, the ministry told related departments in June to review a way to compensate for the fee loss at Kaesong, by using the Inter-Korean Cooperation Fund to fill in for the past loss and combining the Kaesong fees with the domestic electricity bills in the future.

Daily NK
Kim Min Se
9/19/2007

It was reported that the North Korean high officials and Chinese emigrants have been using the satellite antennas in Pyongyang and major cities in North Korea to get access to South Korean TV.

Previously it has been reported that the high quality antenna (Yagi Antenna) smuggled from China was used to intercept the South Korean ground waves, which allowed them to listen and watch South Korean news and drama through Japanese televisions in secrecy in Kaesung and Pyongyang.

The “Yagi Antenna” is a VHF receiver which is intercepted for television. This type of antenna is utilized as a receiver for waves from South Korean soil which has high risk of being detected by outside and enforces its usage around nighttime.

However, recently the high officials in North Korea use satellite antennas in secrecy to watch South Korean news and drama. Due to the restriction, the number of people utilizing this satellite service is restricted.

Song Myung Hak (pseudonym), a Chinese trader who went to Pyongyang last month said, “I was surprised to get a request from a friend of mine who worked as a North Korean diplomat on his request to obtain the CD of ‘Ways to Meet a Perfect Neighbor’ (South Korean drama series broadcasted on SBS). He said that he is watching it via satellite but he wanted to recap the episodes he missed.”

Song stated that, “The former diplomat had the satellite dish in his veranda and his entire family was watching South Korean TV. With the expansion of the culture of viewing South Korean TV, Kim Jong Il issued a ban, which is making everyone a bit nervous.”

He said, “If they get caught watching South Korean TV, the family could suffer.” He also added, “Because he was a former diplomat, who was used to living overseas and the life abroad, it was difficult for him to resist the temptation of watching South Korean TV and foreign news. I’m sure it’s the same way for all people.”

Song stated that, “The satellite dish is imported through China to North Korea. The most recently produced satellite dish is quite small in size and China takes care of the maintenance so all they have to do in North Korea is connect it to the TV.”

Kang Myung Gil (pseudonym), a South Korean businessman selling regular satellite antenna and satellite broadcasting Skylife on commission in Dandong, China, explained over the phone that, “The normal satellite antenna (antenna and receiver) costs 600 Yuan (approx. USD86) in total, including the installation costs. We are also receiving the service of Koreasat Mugunghwa 2 which can be received from North Korea as well.”

Kang said that, “There is no technical difficulty in receiving South Korean TV if they are on an elevated apartment with spacious veranda heading the Southern direction. All of the 7-8 channels including KBS1, KBS2, SBS, MBC, EBS, China HAO TV and others can be directly received.”

Jin Hee Myung (pseudonym), an Chinese emigrant originally from Shinuiju, also installed satellite broadcasting service in her apartment. He said that even though overseas Chinese are also under surveillance, they do not receive as harsh of treatment by the North Korean authorities.

He added, “My wife loves to watch South Korean drama so much that I had to risk the consequences and install it. The satellite dish is so small that unless our house is searched thoroughly, there is no worry of being caught.”

In North Korea, if one is caught watching South Korean TV for a long time, they may be put into jail or receive harsh punishments. However, it is the experts’ general analysis that with the expansion of foreign cultures, it will be more difficult for North Korea to control this trend.

Daily NK
Kim Chan Ku
Institute for Far Eastern Studies
9/19/2007

(UPDATE: On Oct. 23, [2008] the State Department blacklisted two North Korean companies, Korea Mining Development Corp. and Korea Taesong Trading Co., for violating U.S. bans on the sale of equipment used in building missiles or other weapons of mass destruction to Iran and Syria. Citation: “North Korean Plane Was Grounded at U.S. Request “, Wall Street Journal, Jay Solomon, 11/1/2008 )

Kimchaek boasts one of the largest steel factories and fishing ports in North Korea especially that of Daesung General Company’s east coast headquarters.

However, at once-famous seaport everything including ship, freezer, packing factory was obsolete and rust. Most of the Soviet-built machines in factories were at least 20 to 30 years old. And there were neither enough spare parts to fix machinery nor job orders, so the factories had stood still for a long time.

I consulted with local North Korean officials in Kimchaek and reached an agreement: ship repair dock will be built in Kimchaek, steel products necessary for building floating dock would be Daesung General Company’s responsibility, and other issues concerning building land factory and management of joint-stock company would be decided in Pyongyang.

Also we finished negotiation over fish export and Pollack fishing by trawler. Thus basic problems were solved.

I came back to Pyongyang on September 30. And another businessperson, Mr. Kim Sung Chan of Pamco Trading, told me his will to invest fifty percent of the capital.

All of sudden, Daesung General Company notified us that among our previous agreements, only the site of repair dock was decided and asked us to wait, promising final decision would delivered in one month.

To start first phase of building factories, it was most critical to have steel products ordered from state. We believed the promise from the North (to take responsibility of providing iron plates) and returned to America.  However, after two month had passed, there was no news from Pyongyang. Curious, I called back and was told to visit North Korea as soon as possible.

On December 9, 1989 I arrived at Sun An International Airport. In Pyongyang, vice president of Daesung General Company (president was absent, traveling abroad) said “we asked the state for iron plates, but production plan was omitted in 1990 fiscal year so one more year of waiting is inevitable, or send us steel plates.”

In other words, our business plan was totally embarrassed and we had to make a new one.  Again, I conferred with Mr. Kim and found out a solution, which was to buy a used floating dock from an American port. There was a fifty-year old used floating dock in Miami, Florida that we were able to buy. If repaired, it seemed available for another twenty years.

Finally, two obstacles had our plan failed. Firstly, it was supposed take at least three month and five hundred thousands US dollars (twice the price of dock) to convey the floating dock by sea. Secondly, (and more fundamental problem) the US government would not permit to sell the dock to North Korea. We were not even possible to transport the dock to Hong Kong and then to North Korea.

Because acquisition of required steel plate for floating dock was failed ultimately, the daring business had gone nowhere. Wasted much money and more than a year of time, I was so depressed at that time[.]

Daily NK
Jeong Jae Sung
9/18/2007

North Korea has requested for negotiations to begin at the Inter-Korean Summit Talks on the co-development of the Kaema Plateau, also known as “the roof of Korea.” The request was taken into consideration by the Ministry of Unification.

In light of North Korea’s request, the Ministry has recently conducted a survey of North Korean defectors from South Hamkyung, Yangkang and Jagang, where the Kaema Plateau is located, regarding the significant geographical features, the status of current development at the plateau, and the intentions of the North Korean government.

Kim Hyung Seh (pseudonym), a North Korean defector from Yangkang, stated that “I was told by interested parties at the Ministry of Unification that right after the Summit Talks North Korea will deliberate the Kaema Plateau development issue and that they needed my cooperation for a sound investigation.”

According to Kim, the questions asked focused on the North Korean government’s purpose in developing the Kaema Plateau, the potential value of this site as a tourist resort, and wether or not there is enough possibility for tourism given the ever increasing number of visitors from Mongolia.

He asserted that “the Kaema Plateau is a huge forest which has no value as a tourist attraction at the moment. All the particular tourist attractions in North Korea retain villas owned by Kim Il Sung and Kim Jong Il, but there are none at Kaema Plateau, which speaks for itself.”

Kim also added that the affiliates of the Ministry of Unification did not know where the Kaema Plateau was.

“It is difficult for North Korea to develop the area around Kaema Plateau, which is why they followed the shoreline to develop their railways. In order to make this project possible, the basic transportation infrastructure such as airline facilities, roads and railroads must be established first” advised Kim.

The Ministry of Unification has denied every having conducted these surveys. Regarding the interviews with defectors, one affiliate of the Ministery said “We have not held such meetings,” and another said that “We have met [with the defectors], but we never asked about the Kaema Plateau issue.”

Kim Joong Tae, the Director of the Ministry of Unification’s Inter-Korean Economic Cooperation Team, who interviewed Kim, told the DailyNK that “North Korea has never suggested the development of Kaema Plateau. The Ministry merely asked North Korean Defectors about tourism development at Mt. Baekdu.”

The Kaema Plateau is situated across the Middle and Southern region of Yangkang Province, South of Northwest Hamgkyung and East of Jagang. The total area is 14,300 km2 and the height is 1,340m. It is the highest and widest plateau in the entire peninsula, also known as “the roof of Korea.”

Kaema Plateau has abundant forest resources which provide avariety of material lumber. There is also a rich supply of mineral resources, including steel, magnesite, gold, apatite, and copper.

The only source of transportation infrastructure is the military airfields in Pungseo and Jangjin.

It is probable that North Korea’s reason for suggesting the development of Kaema Plateau is to make it tourist site, showcasing various amusment parks and ski resorts. As it is now, this area is completely restricted to civilian traffic. If transportation in the high region is developed, this could be applied for military purposes.

Lee Jin Young (pseudonym), a defector currently residing in South Korea’s Yangcheon district, explained that “the Kaema Plateau is so treacherous that it is only used as a military training field for Special Forces. This was the one area that allied forces could not get control of, even during the Korean War.”

She also added that, “rather than developing Kaema Plateau as a tourist attraction, they should develop the Baekmoo Plateau which includes Mt. Baekdu. The suggestion to develop the Kaema Plateau can only be seen as their intention to construct a better transportation infrastructure.”

Therefore, even if South Korea were to agree to the co-development of Kaema Plateau, there will be huge difficulties regarding the expansion of the social infrastructure and compromising with the military. In particular, the construction of Korean roads, railroads and airfields in the region is sure to cost a lot of money.

Daily NK
Lee Kwang Baek
9/18/2007

According to the newsletter of “Good Friends” published recently, the students living in the dormitories of technical colleges have not been able to eat anything due to the shortage of food for more than 10 days.

If this were to be true, there is a sentiment of utter despair and helplessness since there is both the South Korea and the international society’s food support going into North Korea at the moment. There has been a food supply of 400,000 ton being exerted to North Korea since July, and there is continually a grand supply of food to assist the flood victims. How is it possible that in spite of all these efforts, there are still starving North Korean youth?

According to the newsletter, the situation has worsened to the point where the teachers and principles in schools and kindergartens have to go out on a limb to retain some food supply. In Wonsan, children of the school age are unable to attend school. They are spending their time at the market selling ice cream, vegetables or carrying goods to earn money for living. There have been schools in Hamkyung province reported to have stopped running due to this reason.

It is difficult to determine whether this phenomenon is spread out nationwide, or simply applicable to some students or specific region. However, in spite of the difficulty in determining the extent of these effects, considering the non-transparent state of the distribution of food provision, it is highly likely that these effects are spread out nationwide.

The newsletter states that students are not only responsible for their own stationeries and backpacks, but they are also for the necessary cleaning tools, desks and chairs, and even the chalks used by the teachers.

North Korean government enforced the students to pay for the operation of schools since the mid 1990s. The government collects fees for school operation, oil, and even the fee for designing tank constructions. It is said that students face hard times in even attending schools if they don’t pay these fees.

The children who should be spending their youth running around and being free are spending their study time in the market earning money. The level of begging has expanded to group theft on the streets. According to the villagers in Donglim, North Pyongan, 1 out of the 3 children is unable to attend school due to the lack of money. This is sufficient evidence of “School Breakdown” phenomenon.

There is a proverb that even God cannot salvage poverty. However, perhaps North Korea may be an exception to this proverb. The fault of school breakdown and poverty lies not in the civilians, but solely in Kim Jong Il. All of these phenomenons after one another are tragic ramifications of the ignorance and inhumane dictatorial leadership of Kim Jong Il. It is difficult to hide our distress and sorrow on the issue.

However, in retrospect, this phenomenon of school breakdown can also be perceived as the breakdown of North Korean free education system. What is the “free education system” that Kim Jong Il has so much bragged about? The nature of North Korean education is nothing but a systematic tool to make children as bullets and bombs to protect Kim Jong Il.

Was it not a tool to crush the creativity of young, intelligent minds to force them into becoming the slaves of the system? It wouldn’t be an exaggeration if we were to say that it was this education system that has created the North Korean society of today.

School breakdown phenomenon can also be interpreted as the destruction of idolization education revolved around Kim Jong Il glorification. The ideology inculcation system that bound all children and students in North Korea is finally coming to collapse.
The reason for the collapse is simple. Kim Jong Il regime is losing the strength to control it. We must carefully analyze this trend. While we must strive to stop the phenomenon of children starving and/or dropping out of schools, we must actively be supportive of the current situation that the North Korean government is losing its reign of its people.

We must focus our attention to the independent economic activities taken by the North Koreans, rather than them being dependent on the government sponsored rations. We must put our focus on restoring the practical right to live for the North Korean civilians and allow them to feel more connected to the international society, rather than Kim Jong Il ‘s regime.

The international community must come up with discerning measures to support the students and the parents to experience their independent economic activities and understand the vanity of the glorification-based education system of North Korea. It is time to carefully discern the possible remedies for individual schools and students, rather than continuing the sponsorship through Kim Jong Il regime and South Korean government.

Frontline Club (h/t Kitten Wars)
1/17/2007

Paul French, Director of Access Asia–a market research and business intelligence company specialising in China and North Asia’s economics and markets, spoke to the Economist’s Simon Long about what he has witnessed and learned about North Korea.

He focuses mainly on his perceptions of the US/DPRK relationship, but he also talks about the difficulties of bringing investment capital into the DPRK.

Click on “Frontline club” at the top of the picture above to see the video.

Korea Times
Jung Sung-ki
9/17/2007

Former Unification Minister Park Jae-kyu said reducing economic inequality between the two Koreas is the foremost task to achieve reunification of the two Koreas.

In an exclusive interview with The Korea Times in Seoul on Sept. 6, the former point man on North Korean affairs reiterated the importance for closer cross-border economic ties, which he said would make the North open to the outside world and eventually help achieve reunification.

Park, however, said a “unilateral give-away”policy centered on huge inter-Korean business projects should be refrained from and any economic assistance for North Korea should contribute to opening up the communist neighbor, as well as proceed in tandem with progress in six-party talks over the North’s nuclear program.

He also said big-budget programs for the North, a so-called “Marshall Plan,” touted by some of President Roh Moo-hyun’s aides, is premature and not feasible.

“But a proposal for a second industrial complex on the Gaeseong model may be within the realm of feasibility,” he said. “Even though few people expect the Roh government to make any covert cash payments to the North either before or after the second inter-Korean summit, the possibility that a huge economic cooperation project may be unveiled cannot be ruled out.”

Lee Hae-chan, who served prime minister and as Roh’s political adviser, said last month that President Roh would propose several joint economic projects to North Korean leader Kim Jong-il at the Oct. 2-4 summit in Pyongyang.

He cited plans to build industrial parks in the North’s port city of Nampo and other cities, modeled after the Gaeseong industrial park, as well as invest in the North’s public infrastructure projects, including the renovation of the 170-kilometer Pyongyang-Gaeseong highway.

Launching South Korean-backed tourism projects in the North’s scenic mountains modeled on the Mount Geumgang program is also considered, said Lee, a presidential hopeful of the pro-government United New Democratic Party.

Roadmap for Korean Unification

Park referred to the German reunification process as a case in point from which South Korea should take a cue for the reunification of the peninsula.

“Since March 1970, East and West Germany had held a total of nine summit talks for about 20 years before they achieved the goal of reunification,” said Park, president of Kyungnam University.

“Through the summits spanning two decades, West Germany focused on exchanges and economic cooperation with East Germany,”he said. “In return, the West demanded of the East offsets like the opening of news media and exchanged visits by separated families. Such efforts bore fruit and paved the way for eventual reunification.”

West Germany provided East Germany with $2 billion-worth economic support annually before the reunification. Even after reunification, however, a disparity in economic strength between the sides has caused many social problems in Germany, he said.

“When the two sides were reunified, a gap in economic powers between West and East Germany was a three-to-one level. The West continued to offer $150 billion worth support to the East annually for 16 years after the reunification,” he said. “Still, Germany sees a jobless rate between 15 and 20 percent and has various social problems.”

The German reunification model should serve as an important lesson for South Korea to not try to achieve Korean reunification in a hasty manner without proper preparations, said Park, who served as unification minister between 1999 and 2001 under former President Kim Dae-jung.

“I expect inter-Korean reunification will be achieved 20 to 30 years from now under the condition that a gap in economic capabilities between the South and North is to be narrowed to a five-to-one level,” he said.

“But we should not forget we are still in theearly stage of inter-Korean cooperation. It, therefore, behooves us not to make haste, although envisioning and conducting in-depth research on various ways of attaining unification should not be discouraged,”he said. “If the two Koreas are to be reunified suddenly without preparation, the unified Korea will face severer social problems and conflicts than experienced by Germany.”

Park said the idea of establishing an inter-Korean federation or confederation on the heels of the Joint Declaration issued at the end of the historic 2000 summit is premature at the moment.

The former unification minister added setting the stage for institutionalizing the inter-Korean summit should be a small but most important goal for the upcoming Roh-Kim summit.

“In Germany’s case, the institutionalization of the summit had contributed significantly to exchanges and economic cooperation between East and West Germany, laying the groundwork for tearing down the Berlin Wall,” he said. “The same is the case with Korea. Institutionalizing the inter-Korean summit is a key step toward the reunification.”

POWs, Abduction Issues

Besides issues of the North’s nuclear program and peaceful reunification, PresidentRoh should put high priority on the issue of South Korean abductees and prisoners of war (POWs) in the planned talks with Kim Jong-il, Park said.

“I cautiously anticipated that Kim will make a bold decision on the topic in exchange for Roh’s possible offer for social overhead capital investment in North Korea,” Park said, referring to the meeting between Kim Jong-il and then Japanese Prime Minister Junichiro Koizumi in 2002.

In the summit in September 2002, Kim apologized to Koizumi for the kidnapping of Japanese nationals in return for normalizing ties with Japan. After Koizumi’s second visit to Pyongyang in 2004, the North allowed five victims to return to Japan. Japan calls on the North to allow the other victims to return home.

“It is of utmost importance that Roh broach the topic in a conciliatory way, summoning all of his diplomatic skills, love for compatriots, and humanistic instincts,” Park said. “He should find a way of accentuating the benefits that would accrue to the North should it display a constructive attitude.”

“Chairman Kim may be the only person who can spring a surprise that may spawn unexpected consequences, both positive and negative,”he continued. “`Let us hope that the surprise that will emanate from the upcoming inter-Korean summit will be of a positive variety.”

The Seoul government has been reluctant to take up the kidnapping issue not to harm relations with North Korea, especially since the Kim Dae-jung administration that advocated engagement policies toward the North.

NLL Controversy

As for a controversy over a redrawing of the Northern Limit Line (NLL) in the West Sea, Park said it is not desirable for the issue to be included in the summit agenda.

“Given its controversial nature in politicaland military terms, especially in the context of presidential elections in the South, I believe that it will be prudent to leave the NLL issue for future discussion in inter-Korean military talks,”he said. “But the North is certain to raise it, hence the South should be well prepared to defend its long-standing position on the issue.”

Park said Defense Minister Kim Jang-soo’s planned visit to Pyongyang with Roh would be a good opportunity to help ease tensions between the two militaries.

“Whether it would be an open or closed meeting, if Kim is able to have talks with the North Korean defense chief, that will be meaningful,”he said. “And if the two defense chiefs set a schedule for the second defense ministerial talks, that would be great.”

Kim will be the first South Korean defense minister to visit the North in the 54 years since the armistice was signed at the end of the 1950-53 Korean War. The defense ministers from the two Koreas met in September 2000 following the first summit.

Drawn by the U.S.-led United Nations Command (UNC) at the end of the 1950-53 Korean War, the NLL has served as the de facto maritime boundary between the two Koreas. But the North has refused to recognize the line and insisted it be nullified and redrawn.

Seoul maintains a firm stance that the NLL cannot be a matter of discussion, which it sees as a territorial concession.

The 1992 Basic Agreement stated inter-Korean inviolable borderlines and boundaries are recognized as in the armistice signedat the end of the Korean War. But the agreement added the two Koreas could discuss the matter later.

The NLL has emerged as a hot potato ahead of the summit as some government officials expressed support for discussing the matter at the summit, citing the 1992 agreement.

Presidential Chief of Staff Moon Jae-in told a National Assembly session last week if the North offers to discuss the issue, the South would accept it.

Unification Minister Lee Jae-joung said last month that he believes the NLL isnot a territorial concept open to future discussions. He also said the inter-Korean naval clash in 2002 was caused by Seoul’s refusal to negotiate the NLL.

Park expected that unless the North gives up its “military-first” policy, progress in military confidence building between the South and North would take time, and it is likely to follow the escalation of economic cooperation and the building of a peace structure on the peninsula.

Korea Times
Andrei Lankov
9/16/2007

The late 1990s will go down in North Korean history as years of frantic trade activity. As a witty North Korean once put it: “There are two types of people in North Korea now: those who trade and those who are dead.”

I’ve met a number of former North Korean merchants, and today I would like to tell the story of one such woman. The story is typical in many respects, and I suspect that countless thousands of her peers would narrate something similar.

When the Dear Leader died in 1994 and things began to fall apart, Ms. Yoo was in her early 20s, doing semi-skilled work at one of the offices in the North Korean capital.

By autumn 1996, even in privileged Pyongyang, food rations were coming less and less frequently. Ms. Yoo’s office, like many other offices across the country, decided to shrink its workforce.

Every month all workers were given one week free, on the assumption they would somehow fend for themselves. They were not paid that week’s wages, and did not receive rations either.

Essentially, it was Ms. Yoo’s mother who was the brains and energy behind the entire enterprise. A kindergarten teacher, she was a typical Korean “ajumma” at her entrepreneurial best: charismatic, charming when necessary, clever andquick-witted.

Actually, Ms. Yoo did not know much about her mother’s contacts and plans.

Now, a decade later, she still remains ignorant. However, one thing was clear: the mother had good connections among the personnel of the hard currency shops.

How did she manage to acquire such connections? After all, the hard currency shops are staffed with privileged people, while a kindergarten teacher is not very high in the North Korean pecking order.

We know not. At any rate, these connections existed and this fact sealed the fate of Ms. Yoo. It was not what people would talk about so much, but Ms. Yoo believes that many of her colleagues started private trade in those years, when it began to flourish. She was no exception, but her situation was better since her mother would take care of business planning.

Ms. Yoo’s mother chose cigarettes as their major merchandise. The smuggled Chinese cigarettes sold extremely well, the packs were light and so could be easily moved by the girl in her early 20s, and profits were very high.

In late 1996 a pack of ten would cost 280 won in the borderland areas, but could be sold in Pyongyang for 400 won wholesale. Later, Ms. Yoo found ways to buy the cigarettes even cheaper, at 240 won a pack, purchasing the merchandise directly from the smugglers instead of the local go-betweens.

Mother sold the cigarettes to the hard currency shop. It is not clear what happened to the merchandise eventually. It seems that the shop managers simply pocketed the money they received from the sales of the cigarettes.

A single trip would garner a net profit of some 20,000 won, and she could go once a month (sometimes more frequently). Now consider that Ms.Yoo’s official salary was 80 won a month, and her father, a junior college teacher, received something like 150 won a month, so the black market money from the cigarettes ostensibly appears an outrageously large amount of money.

However, in the world of the Pyongyang black market, which began to emerge around that time, this was not seen as a fortune. Still, Ms. Yoo spent no more than 1,000 won a month on herself buying whatever was her fancy.

One of her more extravagant splurges was on a South Korean cosmetics set which cost 800 won, or roughly her official annual salary. At the time she did not quite realize where the goods were produced, since being a good, politically correct girl, she still believed that South Korea was populated by beggars living in constant terror of the sadistic Yankees!

But what about travel permits? After all, for decades no North Korean was allowed to leave the county without a permit issued by the police. Well, by the mid-1990s the travel permit system was in disarray with a single exception: entrance to Pyongyang remained strictly controlled.

However, in most cases money talked, and permits could be issued for a moderate bribe. However, Ms. Yoo and her mother discovered an even easier way. They did not bribe officials but bribed railway policemen, those who were on duty on the North Korean passenger trains.

For 500-1,000 won, plus free booze and some presents, a policeman would make sure that Ms. Yoo would reach her destination and come back with sacks of cigarettes, and he also would take care of her personal security.

Better still, the 500-1,000 won bribe was sufficient for few round-trip commercial expeditions. The trips were hard. The carriages were unbelievably crowded, with people packed everywhere, sitting on roofs and ladders. As Ms.

Yoo describes, “even on the roof one could not see a square centimeter of paint, people there were sitting that tight.” Another problem was the frequent delays, so the journey of some 400-500 kilometers would normally take 2-3 days. Still, the money was good, and Ms. Yoo enjoyed the adventure, and even now, ten years later, she seems to be proud of her ability strike deals, calculate profits and losses, and find suppliers.

However, Ms. Yoo’s business activity did not last for long. Somewhat against her will, she found herself lured (or kidnapped) to China and soon fate turned in a way which made a return home impossible.

Daily NK
Yang Jung A
9/16/2007

The “Good Friends” reported on the 12th that there has been an arrest of North Korean women who had jumped into the act of prostitution to support their family.

According to the newsletter published by Good Friends, “There was a nation-wide inspection, while there were regular evaluation meetings in the early September. This is when a large sum of the women in the prostitution business were arrested.”

According to the Good Friends, “Most of these women received a sentence of 3 years were sent to Jeungsang, South Pyongan to the labor-detention facility. Most of these women were from poor families who were talked into prostituting themselves by their mothers to supporting their family.”

The arrested women argued that, “If there were more jobs, salary or even rationing, who in their right mind would do such things for a living?”

The newsletter revealed that, “With the worsening shortage of food the number of underage prostitution has been on the rise. In Wonsan, Kangwon province, restaurants were found with rooms on the underground level in which a large group of underage children were forced into be in the activity of prostitution.”

“The seven restaurant owners and managers were sentenced to execution by a firing squad and the 40 underage children that were involved in the prostitution are currently in jail receiving indoctrination.”

The newsletter revealed that, “With the strict inspections being processed per district, the North Korean government is putting a stricter surveillance on prostitution, infiltration and drug smuggling. Last week at Hwoireong, one drug smuggler was executed in public.”

In addition, the newsletter also revealed that there is a shortage of necessities in North Korea nationwide due to the huge flood this summer.

In North Hamkyung province, the civilians are lacking three crucial necessities: rice, water and electricity.

“Due to the paralysis of transportation methods in North Hamkyung, they are not even able to receive the minimum supply for flood victims. Other regions are able to receive the partial amount of the supply for flood victims given by the South, but North Hamkyung is suffering the most out of all provinces.”

There has been a continuance of water shortage in Shinuiju since July.

The newsletter stated that, “There has not been a single drop of water in the entire city of Shinuiju. Only after September 9 were the civilians able to receive some tap water, but the tap water supply only runs from 3:00 a.m. to 4:00 a.m. for one hour.”

“The people in Shinuiju are not able to go to sleep because they are waiting to receive the water. The electricity is provided for five hours each day, but due to the low electric pressure, they are not even able to use the water pump.”