North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
2011-12-8

It has been two years since the implementation of North Korea’s currency revaluation and the South Korean government recently has presented an assessment of it, evaluating it as a complete failure, as exchange rates have skyrocketed and inflation set in.

It has been largely evaluated as having weakened the government control over the market and the people.

In the report released by South Korea’s Ministry of Unification (MOU), the prices of rice and exchange rates have returned previously to the level before the measure went into effect. The prices of rice per kg that cost between 20 to 40 KPW in December 2009 has jumped to 3,000 to 5,000 KPW as of November of this year, which is more than a 2,300 times increase.

The price of rice that went for 2,400 KPW early this October is believed to be close to 5,000 KWP currently.

The fluctuation of rice price is allegedly associated with preparation for next year’s celebration (i.e., of North Korea becoming a “strong and prosperous nation”). According to an anonymous North Korean government official, rice is being stockpiled to be released next year during the celebration period.

North Korea has self-proclaimed 2012, the centennial birthday of Kim Il Sung, as the first year of the “strong and prosperous nation.” While it may be ephemeral, it said it will normalize rice distribution for next year.

The exchange rate for KPW in December 2009 was 35 North Korean won to one USD; a year later, it soared to 2,000 won, and it is currently worth 3,800 won.

At the time of the currency revaluation, the usage of foreign currency was completely banned. This in return made the exchange rate spiral up. In February of this year, North Korea eventually abandoned this measure.

One Chinese yuan is also worth about 400 KPW, standing shoulder to shoulder with the value of the US dollar. About 300 markets that exist currently in North Korea are affected by the soaring exchange rate of the yuan, raising the prices of Chinese products on the market.

North Korea also has increased wages for the workers a hundred fold during the currency redenomination; but life for the people has become harder due to hyperinflation.

The average monthly salary of a North Korean worker is about 3,000 KPW; however, the monthly expenses for an average family of four hovers around 100,000 KPW.

The MOU has announced that the currency reform implemented by the North Korean government two years ago was intended to weaken the role of the markets, and regulate the new-rich, generate supplies of capital for the construction industry, and adjust the amount of domestic currency in circulation. In the end, the reevaluation ended up achieving the opposite.

At the time, the government prohibited sales of imported and industrial products on the market and promoted marketization of agricultural goods. But the people’s dependency on markets is as high as ever, leading to a relaxation of market regulation in February 2010.

The MOU also stated, “There is growing distrust of the government among North Koreans from the failed policy which in effect undermined the power of the government to control the market and the people.”

The Daily NK also reported some similar information:

The price of rice in North Hamkyung Province and other areas along the Sino-North Korean border has passed 5,000 won per kilo. This represents a rise of over 1,000 won in little over a fortnight, after similar reports came out two weeks ago asserting that the price had passed 4,000 won in late November.

Sources have independently reported that the 5,000 won mark has been passed in markets in the cities of Hoeryeong and Musan, both in North Hamkyung Province, and Hyesan in Yangkang Province. The exchange rate of the Chinese Yuan against the North Korean won has simultaneously jumped from the low 700s to 800 in Hyesan and over 1,000 in Musan and Hoeryeong.

Reporting the news, one Hoeryeong-based source told The Daily NK, “The price rises have left people living hand-to-mouth, and the endless government controls and crackdowns mean people have no idea what to do. The atmosphere in the jangmadang has gotten really ugly on rumors that prices are going to rise further.”

A source from Musan pointed out, “The Yuan seems to go up every day, and now that rice has passed 5,000 won a kilo people have no idea what they’re going to eat to survive.”

“We’ve already given up on the idea of eating rice cake for the Chinese New Year,” the trading source from Hyesan said, going on, “Chosun rice now costs 5,000 won a kilo while Chinese rice is 3,800 won. Wherever you go people are up in arms about it.”

Most locals blame the rapid rise in the cost of living on the strength of the Yuan against the North Korean won. In this way, the lack of confidence in the local currency promoted and enhanced by the 2009 currency redenomination seems to be having a direct effect on the price of rice.

“Everybody prefers to use Renminbi to Chosun money, so by the time you wake up in the morning the thing which has risen again is the price of the Yuan. Because the exchange rate is rising, it is inevitable that the price of rice goes up as well,” the source from Hyesan explained.”

Interestingly, according to the border region sources there is no great difference in the physical volume of rice in the market. However, because the Yuan has become the main currency for both the supply and demand sides of the market, prices have risen in accordance with the change in the exchange rate. The use of the Yuan as the medium of exchange between locals was already becoming institutionalized even before the recent rises.

The rapid price rises are also encouraging traders to try and obtain more locally-grown rice.

The source from Hyesan said, “Train stations in North Hamgyung and Hwanghae Provinces are in complete chaos when there is a train because of all the traders trying to bring in local rice, as well as the agents regulating them,” while the source from Musan said, “Many people are stocking up on food while they can because of reports that food prices will keep rising until next spring.”

Marcus Noland also blogged about the price of food and US$ exchange rate in the DPRK last week.

Read the full Daily NK story here:
Rice Tops Key 5,000 Won Mark
Daily NK
Lee Seok Young
2011-12-13

Story 1 (Daily NK): Ministry strikes out currency swap (2011-12-1):

The Ministry of Unification has concluded that the currency redenomination implemented by the North Korean government two years ago was, as is already widely accepted, an utter failure in most regards.

According to the ministry, which revealed its assessment today, North Korea intended to use the currency redenomination to weaken the role of the markets, generate supplies of capital for the construction industry and adjust the amount of domestic currency in circulation, but ended up achieving the opposite.

Instead, the overall economy slowed, while markets have now made a comeback, recovering to their state they were in before the event.

The process was simple. Straight after the currency redenomination, the flow of commodities rapidly froze up due to contracting supply and weakening purchasing power. According to the Ministry of Unification, factories and enterprises that relied heavily on materials and capital from the market were fatally undermined. This immediately added to extant difficulties securing daily necessities, and forced the authorities to tolerate the markets once again. Commodity flows are still in the process of recovering.

But worse, the value of the domestic currency fell and people’s preference for US Dollars and Chinese Yuan deepened further, setting exchange rates and prices in a continuously increasing inflationary spiral.

This can be seen in the case of rice, a good proxy for overall economic conditions. In 2009, rice cost between 20 and 40won, but within a year had increased abruptly to approximately 1,500won, and as of November, 2011 was more than 3,000won. Despite the 100:1 ratio of the redenomination, prices have returned to their level before the currency redenomination.

The North Korean authorities even attempted to ban the use of foreign currency in January, 2010, causing various problems which resulted in the withdrawal of the plan in the following month. In December, 2009, a US Dollar was worth 35 North Korean won, but by a year later had soared to 2,000 won, and is currently worth 3,800 won.

The North Korean authorities said the currency redenomination would improve the lives of the people, but in truth because of hyperinflation people’s lives have actually gotten more difficult.

At the time of the currency redenomination, they emphasized care for the common worker, giving them wage increases and cash payments; a one-off bonus (500won per person) to laborers and an additional payment to farmers (150,000won per person). However, nominal wages subsequently increased 100 times, and with a lack of food, necessities and soaring inflation, made the people’s lives worse.

The average worker’s salary is now 3,000won, but the living expenses of a family of four are approximately 100,000 won per month.

In conclusion, an official from the Ministry of Unification declared, “As long as there is deepening popular distrust of the North Korean authorities, it looks like the power to implement future policy will weaken. The decisions made by the authorities that decreased the quality of people’s lives deepened the distrust.”

“The seizure of property, which in the short term alleviated polarization, ended up causing more poverty among the general population and had a relatively minor effect on the people who hold a lot of foreign currency.”

“North Korea tried to restore their socialist economy via the currency redenomination, but in reviewing the comments and perspectives of various North Korea experts and defectors we can see that the currency redenomination was an overall failure.”

That being said, he noted, “There is a limit to the ability of collective discontent to turn into collective political organizing.”

Story 2 (Yonhap): Botched currency reform destabilizes N.K. rice prices, exchange rates (2011-12-1):

North Korea’s currency reform has failed to stabilize rice prices and its currency while the nation still endures lack of food and supplies, Seoul’s Unification Ministry said Thursday.

The North carried out a massive currency reform two years ago to try to rein in galloping inflation, squash free market activities and tighten state control over the economy. The measures failed to halt massive inflation and worsened food shortages and public backlash.

The North Korean won was traded at 35 won to one U.S. dollar in markets right after the currency reform in late 2009. But one dollar was traded at around 3,800 won in November, up from around 2,000 won in 2010, according to the ministry.

The ministry, which handles inter-Korean affairs, also said rice prices have risen to pre-currency reform levels in a sign of food shortages in North Korea.

A kilogram of rice cost up to 40 won in 2009 before skyrocketing to about 3,000 won in November, the ministry said in an assessment of the North’s currency reform.

The dire assessment comes as the North is struggling to achieve its goal of building a prosperous nation by next year, the centennial of the birth of the country’s late founder, Kim Il-sung, the father of current leader Kim Jong-il.

The rice prices started to soar in Pyongyang on rumors that Kim failed to secure much aid during his trip to Russia in August, Good Friends, a Seoul-based private relief agency, said in September.

Rice is a key staple food for both South and North Koreans.

The botched currency reform is “expected to further deepen public distrust of the authorities and undermine their control on the people,” the ministry said in an assessment report.

Still, North Koreans are unlikely to display any collective action, because there is no organized political force, the ministry said.

Kim has been ruling the country with an iron fist, and tolerates no dissent.

There have been reports of growing discontent in the communist country over chronic food shortages and political oppression, though no organized opposition has emerged to challenge the leader.

Story 3 (Daily NK): Rice and Yuan zooming up in Ryanggang (2011-11-28):

The price of North Korean rice and the Yuan exchange rate have both reached post-2009 record levels in Yangkang Province, with domestic rice surpassing 4,000 won/kg and 1 Chinese Yuan selling for 720 North Korean won on November 28th.

Although a geographically remote location when seen from within North Korea, Yangkang Province act as a barometer for the situation in other areas because it stands alongside the capital Pyongyang and the Shinuiju-Dandong area as one of the most marketized, active trading locations of all.

Speaking with Daily NK today, a source from the province commented, “In the daytime on the 27th, the Yuan price, which had risen to 780 won, fell back to 720 won; however, the discomfort of the people is continual,” before adding, “Because of the rising exchange rate, the rice price also went up to 4,000 won.”

According to the source, as the price of North Korean rice hit 4,000 won/kg, that of Chinese rice also reached 3,200 won and sticky rice 5,000 won.

This means that the price of rice in Hyesan, the provincial capital, has now risen 500 won in two weeks, while the value of the North Korean won has depreciated by 120 won over a similar period.

The cause of the problem stems from a number of sources, but at the top of the list is a lack of faith in the North Korean won and the continual desire on the part of people who hold currency not to do so in domestic money.

As a result, the source said that traders are not selling their products, preferring instead to watch for changes, and with customers less likely to buy at such inflated prices, the overall effect is that trading volumes in the market have fallen drastically.

He explained, “There is even one rumor out there suggesting that by year’s end the price of the Yuan will have reached 1,000 won and that before long rice will have gone over 5,000 won. Rice traders are not selling their stock, saying that ‘if it gets more expensive, I’ll sell’, and so those citizens who are unable to get food together are looking pretty uneasy.’

Meanwhile, the new price records present a sense of cruel irony for a country about to commemorate the 2nd anniversary of the November 30th, 2009 currency redenomination.

“This is all the fault of the government, which organized the currency redenomination and destroyed the value of Chosun money,” the source agreed, complaining, “The price of everything is soaring, so the time has come where we can’t even buy blocks of tofu to eat.”

From the Choson Exchange web page (November 5):

In October 2011, John Kim, a board director of the Choson Exchange, visited the Rajin-Sonbong Special Economic Zone. The following is a summary of some of his findings based on site visits and talks with senior officials in the SEZ. An longer account of his travels and impressions will be available soon. This information helps elaborate on our report from August.

Rajin Port
The Rajin Port employs 1400 workers. The Chinese have conducted feasibility tests regarding two new piers, but currently the port houses three piers with 9-9.5 meters draft. A 30,000 metric ton coal storage warehouse was built at Pier 1 by the Chinese, who moved 80,000 metric tons through the facility in five shipments from January to September. Pier two, largely dedicated to container shipment, is currently dormant and a Swiss company is currently using Pier 3 to ship manganese and talc out of the region. The Russians also have a 49 year lease agreement signed in 2008.

Oongsang [Ungsang] Port
Oongsang Port exported Russian lumber until 1985, but remains largely quiet now except for the occasional fishing boat. The present draft of 7 meters constricts any major future activity, so the North Koreans hope to bring in over $100M to widen the draft to 9 meters. After Rajin Port activity surpasses capacity there, Oongsang Port will become the next regional hub for drybulk activity.

Sonbong Port
Originally opened in the early 70’s, the draft within the port is 7 meters, but a fully laden Very Large Crude Carrier containing 270,000 metric tons of oil can offload at an offshore facility further out at sea. Two pipes, 63 cm in diameter, run for 9km underground before reaching the storage facility at “Victory Petrochemical”, a simple refinery that was designed to refine crude and send oil products (gasoline, naphtha, jet fuel, diesel and fuel oil) back to the port for export. In addition to this two way flow, fuel oil also arrived sporadically at the port as part of aid packages from 1994 to 2008.

Sonbong Power
This power plant was originally designed to take fuel oil from Victory Petrochemical as feedstock and generate power to feed back to Victory. Since the refinery has been offline, Sonbong Power has at times provided electricity to the region, but with fuel oil prices close to $700/metric ton and current electricity prices at 6.5 eurocents/kwh, the economics of running the plant do not work leaving the 800 workers employed here largely idle.

Victory [Sungri] Oil Refinery
Literally translated as “Victory Chemical Plant”, this refinery was completed in 1973 with a 40,000bbl/day crude distillation unit that typically yields 40~50% residual fuel oil for an average crude feed. Investment into upgrading capacity in the international market has led to an eroding of margins for simple refineries like Victory. Currently the refinery is idle and would need over $500M in investment to become competitive.

Hye Song Trading Company
Mr Kim visited a Sewing Factory owned by Hye Song, which runs 8 such factories employing 2000 workers. Output is recorded for the entire year on a bulletin board at the front entrance of the company. All employees except the handyman were women.

Cell Phone use more prevalent
The number of cell phone users in the DPRK crossed 1 million earlier this year and one official commented that the overwhelming majority of urban households have at least one cell phone. This particular official had 4 phones for a household of 3. Foreigners are allowed to use cell phones on a different network, and users of the domestic and foreign network can not call each other. All usage is prepaid.

Handset Type: Local
Purchase Cost: 1570-2200 RMB
Usage Cost: 250 minutes and 20 text messages, while each additional minute is charged at 60 NKW (about .1 RMB/min)

Handset Type: Foreigner
Purchase Cost: 1800-2400 RMB
Usage Cost: Does not include any free minutes and are charged at 2RMB/min

Banking System has room for growth
There are two banks in Rason, the Central Bank, which is focused on domestic transactions, and the Golden Triangle Bank, which is focused on foreign currency transactions. Transactions for goods and services are conducted almost entirely in cash, usually in RMB or NKW. Mechanisms for savings are credit have room for development. As banks take a fee to deposit and withdraw cash, merchants prefer to hold money in cash (usually RMB). Credit is also available almost exclusively through friends or family.

Bottlenecks
A number of issues require solving if Rason is serious about attracting large scale foreign investment. Among these are reliable access to travel visas, reasonable communications costs with the outside world, a more mature banking system with savings and credit mechanisms and favorable tax treatment with a consistent legal framework. The mere fact that Rason is experimenting with market reform is encouraging, and Mr Kim is optimistic about economic development in the region and the nation as a whole.

Source here. Hat tip to a reader.

According to the source, the reverse side of the document reads:

The Government of the DPRK issues an Economic Development Bond for democratic people in the amount of 50, 100, and 500 won for a total amount of 1,500,000,000 won with the period of ten years, from October 1, 1950-October 1, 1960.

Reading further, however, it becomes obvious that this is not a bond at all (in the traditional sense)–it is more like a very complicated lottery ticket.  This method of issuing “bonds” was probably copied from the Soviets, and as of 2008, the DPRK still practiced this method of domestic “bond” financing.

By the way, if you have any North Korean bonds you would like to sell, I know someone who is interested!

Dr. Bernhard Seliger of the Hanns Seidel Foundation writes in to notify us about the DPRK’s new Koryo Bank (고려은행) debit card.

Click image above to see the front and back of the card.

There is an information flyer available in the DPRK:

According to the translator this is what it says:

Electronic Paying Card (Debit Card)

1. Introduction
* Electronic Paying Card is a cash card with which cardholders can make a payment when buying a merchandise or receiving a service instead of money. We provide the very best customer service, convenience and security.
* Cardholders (including foreign cardholders) can freely make a payment in foreign currency at electronic paying card affiliates.

2. Instruction
*Issuing a card and making a deposit: Card is issued at Koryo card issuing branches. Foreign currency is converted into equivalent North Korean won at a current exchange rate (purchasing price) when cardholders or to-be make a deposit. Issuing a new card is free of charge. Issuing a card, cardholders should register a private password to prevent use of a third party. Using the card cardholders should remember the password to verify identity.

*Procedure of the payment: Card holders are allowed to purchase goods and services within the available balance of the account. Card payment machine verifies identity by crosschecking with the password you enter. If the information is confirmed to be correct upon identification, merchants or acquirers proceed to make the payment. After purchasing, the balance is diminished by the payment.

*Cash Withdrawal: Cardholders who want to withdraw a part or the entire of the remaining balance can be served at Koryo Bank Card issuing branches. The exchange rate is the current selling price.

3. Notice: Cardholders observe the followings as regards to using the card.
*Due to its delicate electronic procedure while the card is to be used, it is recommended not to damage the electronic part of the front.
*Remembering and entering the password correctly is important, since the payment procedure is suspended after 3 times of password errors.
*If the card is destroyed or lost, cardholders should go to the Koryo bank where the card is issued and report the loss and the damage.
*With verifying identity and the balance of the card, a new card is issued.
*Cardholders shall remain liable for the loss incurred by their negligence.

4. Questions and hot line
*When there is a question, a loss, duplication or a lost electronic paying card, Call 462-6315.

Koryo Bank

This is not the only debit card available to foreigners in the DPRK. Dr. Seliger also wrote in earlier this year to inform us of the DPRK’s Narae (나래) debit card.

Here are previous posts on Koryo Bank.

According to Yonhap:

North Korea owes about 1.8 trillion won (US$1.5 billion) to South Korea in food and other shipments, with its first repayment due next June, but chances of repayment are slim given the country’s crumbling economy, a government report said Monday.

The debt is for food, railway equipment and raw materials South Korea has provided to its impoverished communist neighbor in the form of loans over the past decade, according to the Unification Ministry report submitted for the annual parliamentary audit.

South Korea had been one of the largest aid providers to the North, but such shipments were halted after President Lee Myung-bak took office in early 2008 with a pledge to link aid to progress in efforts to end Pyongyang’s nuclear weapons programs.

Repayment of the loans was scheduled over 20 years with a 10-year grace period, at 1 percent annual interest. The North is scheduled to make its first repayment in June of next year for a $5.83 million food loan extended in 2000.

South Korean officials, however, have cast doubt on that repayment given the North’s dire economic situation.

The DPRK remains in debt default from loans taken in the 1960s and 1970s. The Russians are in talks to forgive DPRK debts (Likely in connection with developments of the Rason economic zone and/or natural gas pipeline).

You can learn more about speculating on the repayment of North Korean debt here.

Pictured Above (Google Earth): The Taedong Credit Bank offices at the Potonggang Hotel.  See in Google Maps here.

London UK/Pyongyang DPRK, 26 August 2011
The Board of Daedong Credit Bank is pleased to announce that the foreign shareholding in Daedong Credit Bank has been sold to a Chinese based corporate entity, the “Nice Group”.

The foreign-appointed directors on the Board of Daedong Credit Bank have resigned with immediate effect, and have no further interests (financial or fiduciary) in the company.

Outgoing CEO of Daedong Credit Bank, Nigel Cowie noted:

“I am now heavily involved with a second joint venture company in the DPRK, Hana Electronics JVC. Established in 2003, this company has enjoyed solid commercial success and has recently opened its new headquarters building, together with the expansion of its business lines.

The success of both ventures has been such as to necessitate a decision to focus on one or the other, and a commercial decision had to be made.

The bank is continuing to enjoy the commercial success it has seen for the past 16 years, but ironically the decision has been made easier by the general sanctions-laden environment in which financial business here is framed these days.

As to the possibility of ever re-entering the bank, any decision we make will be based purely on commercial considerations.”

Both Hana Electronics and Phoenix Commercial Ventures bank with DCB, and will continue to do so.

About Daedong Credit Bank

Daedong Credit Bank is a joint venture retail bank based in Pyongyang. It was established in 1995 as “Peregrine Daesong Development Bank”. The Bank underwent a change of name and foreign ownership in 2000.

The wealth of experience garnered over Daedong Credit Bank’s 16 years of successful operation is unrivalled.

Daedong Credit Bank was the first, by fifteen years, foreign majority held bank in the DPRK. DCB is proud to be regarded as a flagship successful joint venture in the DPRK, and a key part of the infrastructure needed to assist the foreign-invested joint ventures, which contribute to the country’s economic development.

The bank’s principal function is to offer normal “high street” banking facilities in hard currency to foreign companies, joint ventures, international relief agencies and individuals doing legitimate business in the DPRK.

Daedong Credit Bank was the first bank in the DPRK to introduce, and vigorously implement, a comprehensive set of anti-money laundering procedures. DCB’s anti-money laundering procedure manual was introduced eight years ago, and subsequently updated based on anti-money laundering guidelines provided by the Asian Development Bank. The manual has been sent to, and accepted by, DCB’s international correspondent banks.

Daedong Credit Bank also maintains strict procedures for the detection and rejection of counterfeit bank notes; it uses regularly updated note checking machines, and has personnel with over 15 years of experience of handling notes.

Daedong Credit Bank is strongly positioned in relation to the future economic development of the DPRK, and, being the oldest established foreign invested commercial bank in the DPRK, it is the intention of the bank to capitalise on these advantages.

CONTACT INFORMATION
Daedong Credit Bank office address in Pyongyang is:
Daedong Credit Bank
Suite 401, Potonggang Hotel
Ansan-dong
Pyongchon District
Pyongyang
Democratic People’s Republic of Korea
www.daedongcreditbank.com

UPDATE 1 (2011-8-17): The recently sanctioned bank denies it has ties to Iran and the DPRK. According to Lebanon’s Daily Star:

The Lebanese subsidiary of a Syrian bank sanctioned by the United States denied on Wednesday “unfounded political allegations” that it dealt with North Korea and Iran.

“Since the establishment of our institution, we have never had any operation with either a North Korean or an Iranian entity even before the existing sanctions,” the Syrian Lebanese Commercial Bank said.

“As a result, we deny all accusation of being involved in any illegal activity with any suspected country,” a statement added.

The United States Treasury has charged that the state-owned Commercial Bank of Syria allegedly supported Syria and North Korea’s efforts to spread weapons of mass destruction.

Washington last week imposed sanctions on the bank, the Syrian Lebanese Commercial Bank and telecoms company Syriatel over President Bashar al-Assad’s increasingly brutal crackdown on pro-democracy protests.

The move freezes the US assets of the businesses targeted and prohibits US entities from engaging in any business dealings with the two banks.

ORIGINAL POST (2011-8-14): The US has sanctioned a Syrian Bank for its involvement in DPRK proliferation activities.  According to Yonhap:

The Treasury Department said the Commercial Bank of Syria has provided financial services to North Korea’s Tanchon Commercial Bank and Syria’s Scientific Studies and Research Center, both of which were blacklisted for the proliferation of weapons of mass destruction.

The Syrian bank’s Lebanon-based subsidiary, Syrian Lebanese Commercial Bank, and Syriatel, the largest mobile phone operator in Syria, were also sanctioned under Wednesday’s measure.

“By exposing Syria’s largest commercial bank as an agent for designated Syrian and North Korean proliferators, and by targeting Syria’s largest mobile phone operator for being controlled by one of the regime’s most corrupt insiders, we are taking aim at the financial infrastructure that is helping provide support to (President Bashar) Asad and his regime’s illicit activities,” Under Secretary for Terrorism and Financial Intelligence David S. Cohen said in a press release.

The Commercial Bank of Syria also holds an account for Tanchon Commercial Bank, the primary financial agent for the Korea Mining Development Corp., North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons, according to the department.

The U.S. is stepping up efforts to isolate the Assad regime amid its brutal crackdown on anti-government protesters.

NTI has additional information here.

Other DPRK-Syria stories below:
1. Syria and the DPRK collaborated on the construction of Syria’s nuclear facility which was destroyed in 2007 by an Israeli air strike.

2. According to Joshua Pollock, over the last decade the DPRK and Syria have cooperated on missile development.

3. The UNSC was investigating a shipment of North Korean chemical safety suits to Syria.

4. Syria’s Tishreen War Museum was designed and built by North Koreans!

It has been a couple of years since we heard from Sean Garland, but the Irish Times reports that the alleged purveyor of alleged North Korean “supernotes” is fighting his exztradition to the US at Ireland’s high court.  According to the story:

A veteran republican handed over almost $250,000 in Russian hotels in an international plot to spread the notes across Europe, a court heard.

Authorities in the US have accused Sean Garland of being the ringleader of a massive forgery racket that distributed the top grade counterfeit $100 bills.

The former IRA leader is fighting his extradition to the US at the High Court in Dublin, which heard Garland met a co-conspirator twice in Moscow with the fake cash.

Garland, 77, also the ex-president of the Workers’ Party of Ireland, denies the allegations.

In an affidavit to the court, Brenda Johnson, assistant US attorney, said: “This case involved a long-standing and large-scale supernotes distribution network (the Garland organisation) based in the Republic of Ireland and headed by Sean Garland, a senior officer in the Irish Workers’ Party.”

The US Secret Service (USSS) discovered the ‘supernotes’ were sourced in the Democratic Republic of North Korea, she said, and were transported around the world by North Korean officials travelling under diplomatic cover.

They also allege Garland and six co-conspirators used couriers to transport supernotes and payments to avoid detection themselves.

The international probe, which also involved the UK’s National Crime Squad (NCS) – now the Serious and Organised Crime Agency (Soca) – and the interior ministry of Russia (MVD), found the high-grade counterfeit bills were in worldwide circulation from the late 1980s until at least July 2000.

Ms Johnson alleged one of Garland’s alleged co-conspirators, Hugh Todd, later told investigators he purchased more than $250,000 of supernotes from “the Garland organisation” which were redistributed into the world economy through currency exchanges across Europe.

He maintained he first met the Irishman in the Radisson Hotel in Moscow in April 1998, where Mr Garland emptied a leather bag packed with approximately 80,000 dollars of counterfeit US notes on to a bed for $30,000 in genuine notes.

Two months later, the pair met in the Savoy Hotel in Moscow, where between $160,000 and $180,000 of counterfeit US currency was handed over, it is claimed.

Records with Scandinavian Airlines prove Mr Garland was in Russia on both occasions, she added.
An undercover NCS officer infiltrated the group in 1999 and met with members in several pubs and hotels around Birmingham, where they discussed the counterfeit notes and how their boss ’Sean’ sourced them in Russia.

Ms Johnson’s affidavit states Garland knew the Federal Reserve notes were counterfeit, that he travelled circuitous routes and met with other conspirators to discuss the supernotes operation and engage in transactions.

“Some members who were apprehended in possession of or passing notes have admitted that Garland was the source and leader of an illegal supernote distribution organisation and that (Christopher) Corcoran was his direct contact, communicator and negotiator,” she said.

“Their statements are substantiated by documentary evidence, physical and electronic surveillance and other witness accounts.”

Garland, of Beldonstown, Brownstown, Navan, Co Meath, was a former IRA leader in the late 1960s and early 1970s. He was a key figure in securing the official IRA ceasefire of May 1972.

He was initially arrested by the PSNI on foot of an extradition warrant by the US authorities in October 2005 at the Workers’ Party annual conference in Belfast. He fled to the South when released on bail.

He was later arrested outside the Workers’ Party in Dublin in January 2009 and released on strict bail conditions, which included surrendering the title deeds to his family home.

Barristers for Garland maintained the pensioner should not be extradited as the alleged offence happened in Ireland and was based on hearsay.

Michael Forde, senior counsel, argued his client had been accused of a complex, sophisticated trans-national conspiracy, but that the charge fell under Ireland’s own forgery or money-laundering laws.

“The rationale is very simple,” said Mr Forde. “If the offence was committed against Irish law, and a substantial part committed in the State, then the State should prosecute.”

His legal team also argued Garland’s fundamental rights have been infringed, that there had been a delay is making the second extradition order and that the extradition was connected with a political offence.

Mr Forde also claimed the application was hearsay based on hearsay and had not established a prima facie case.

“The question this court has to ask itself is there enough admissible evidence here to justify putting Mr Garland on trial,” he added.

The extradition hearing before Mr Justice John Edwards is listed for four days.

Stories related to the DPRK’s alleged counterfieting activites can be found here.

Read the full story here:
Ex-IRA man Garland ‘led fake dollars plot’, court told
Irish Examiner
2011-7-18

According to KBS:

South Korean firms doing trade with North Korea must will soon make payments only at government-designated banks.

The Unification Ministry said it will revise the law on inter-Korean cooperation and exchange to this effect. It said the measure aims to provide a greater understanding of the monetary flow of inter-Korean trade and secure transparent transactions.

The ministry has announced the qualifications a bank must meet to deal in inter-Korean trade payments and through June third, any of the 18 commercial banks in the country can apply for the designation. Two or three banks will be selected.

The revised law will also state in clearer terms the conditions and procedures relating to cross-border exchanges. It further calls for obtaining government approval when South Korean residents wish to transfer money to families in North Korea or when overseas chapters of South Korean firms seek to invest in North Korea.

The South Korean government is also seeking to gain control over remittances to families of DPRK defectors.

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Designated Banks to Process S-N Trade Payments
KBS
2011-05-25