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North Korean authorities call street vending a “crime against the people”

Wednesday, December 8th, 2021

Benjamin Katzeff Silberstein

Reports Daily NK:

North Korean authorities recently designated streetside commerce as a “crime against the people” and have begun ideological education efforts to tamper down discontent surrounding government crackdowns on street merchants.

Daily NK recently obtained “political activity materials” written by the Central Committee’s Propaganda and Agitation Department entitled “Let’s Completely Eliminate the Phenomenon of Commerce near Markets and in the Streets.” The materials were used during lectures at factories, enterprises and inminban (people’s units) throughout the country from early to mid-November.

The materials start by saying, “COVID-19 is causing great anxiety and concern in the international community as it spreads throughout the entire world, while the appearance of variants is causing a major global disaster.”

The materials then say that with the authorities declaring a national quarantine emergency and closing the border to stop infections, some “unawake” people were in a flap over “temporary difficulties” and obstructing quarantine efforts by carrying out “chaotic” commerce near markets and on the streets. Essentially, the authorities are stressing the justification for the controls on streetside commerce.

Daily NK previously reported that North Korean authorities — led by the Ministry of Social Security — have strengthened their controls on streetside commerce since March, forcefully confiscating the wares of so-called “grasshopper merchants,” as streetside merchants are called in North Korea. They have gradually strengthened their crackdown since then, dragging off people involved in the trade to forced labor camps.

Despite the “mop-up operation,” however, locals reportedly continue to engage in streetside commerce to overcome economic difficulties brought on by the COVID-19 pandemic, evading surveillance by regulators. People have also expressed considerable bitterness over being prevented from doing business as they like. Aware that people are very unhappy, the authorities have begun ideological education efforts in response.

The materials condemned “many people” for “creating disorder near markets and on the street, failing even to wear masks” and “threatening quarantine efforts by serving food of questionable sanitation and safety,” all out of an obsession with “earning just a few coins more.”

(Source: Kim Chae Hwan, “North Korea calls streetside commerce a ‘crime against the people’,” Daily NK, 6/12/2021.)

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North Korea’s tense food situation

Tuesday, December 7th, 2021

By Benjamin Katzeff Silberstein

As usual, it’s very difficult to get a read on the domestic availability and production of food in North Korea. Nonetheless, the overarching picture continues to be grim, and the fears over the Omicron-variant seems to be making it all worse. This is also what the South Korean government assesses:

The cost of groceries and daily necessities in North Korea is estimated to be rapidly increasing in the face of a prolonged border lockdown to stave off the COVID-19 pandemic, Seoul’s unification ministry said Monday.

The North has imposed a strict border control since last year, which is believed to have taken a toll on its economy already hit by crippling sanctions.

“North Korea is experiencing chronic food shortages with around 1 million tons of foods falling short every year,” ministry spokesperson Lee Jong-joo told a regular press briefing. “As the coronavirus-driven border lockdown has prolonged, it is likely to be having difficulties in securing necessary foods from abroad.”

The North was seen preparing to reopen its land border with China, with South Korea’s spy agency estimating its cross-border rail services could resume as early as in November. But the spread of the omicron variant is apparently delaying the reclusive regime’s planned border reopening.

“Though we do have limits in having access to accurate information, the government’s estimation … is that the volatility of foods and necessities prices is growing (in North Korea) and some items are witnessing a rapid price hike,” Lee said.

Yet, referring to experts’ assessments the North’s crop output could improve this year due to better weather conditions, she said the government will continue monitoring its situation in line with a review on the need for a humanitarian cooperation.

(Source: “Prices of food, daily necessities estimated to be rapidly soaring in N. Korea: gov’t,” Yonhap News, 6/12/21.)

The last paragraph here is a crucial caveat, as North Korea’s food production is highly volatile and dependent on weather conditions. Over the past few years, there have sometimes been reason to suspect that the state has exaggerated the direness of its food situation rather than the other way around.

Nonetheless, it’s clear that the prolonged border closure is hitting hard against the economy as a whole. There have been several reports over the past few months indicating that Pyongyang might soon unseal the border, but no major changes seem to have taken place. I’m not sure that means those reports were necessarily wrong. Rather, the government may well have planned to ease the border lockdown at several points only to back down in the face of a new development, be it Covid-19 spreading in China’s northeast, or the rise of the Omicron variant.

It’s difficult to see what could really change if the government continues to both refuse to let the outside world assist in a vaccination campaign, and at the same time responds to each new wave or variant of the virus by further tightening or extending the border lockdown. It’s not a sustainable strategy but given the regime’s fear of the havoc that a significant spread of the virus could wreak in society, given its very fragile health system, it might not change anytime soon.

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North Korea’s convenient but remarkable admission of likely Covid-19 case

Sunday, July 26th, 2020

By: Benjamin Katzeff Silberstein

So, it finally happened: North Korea has officially admitted the suspected existence of a Covid-19 case in the country. State media claims the virus was brought over by a so-called re-defector, who first left for South Korea a few years ago only to return now, reportedly by swimming across the Imjin river. Some South Korean media speculation seems to confirm that a re-defection did happen, reportedly by someone swimming across the Imjin river, though none of this is confirmed. Here is the North Korean statement in full:

Pyongyang, July 26 (KCNA) — Amid the intensified anti-epidemic campaign for thoroughly checking the inroads of the world’s threatening pandemic, an emergency event happened in Kaesong City where a runaway who went to the south three years ago, a person who is suspected to have been infected with the vicious virus returned on July 19 after illegally crossing the demarcation line.

The anti-epidemic organization said that as an uncertain result was made from several medical check-ups of the secretion of that person’s upper respiratory organ and blood, the person was put under strict quarantine as a primary step and all the persons in Kaesong City who contacted that person and those who have been to the city in the last five days are being thoroughly investigated, given medical examination and put under quarantine.

The Political Bureau of the Central Committee of the Workers’ Party of Korea convened an emergency enlarged meeting in the office building of the Central Committee of the WPK on July 25 as regards the dangerous situation in Kaesong City that may lead to a deadly and destructive disaster.

Kim Jong Un, chairman of the WPK, chairman of the State Affairs Commission of the Democratic People’s Republic of Korea and supreme commander of the armed forces of the DPRK, was present at the meeting.

Attending the meeting also were members and alternate members of the Political Bureau of the C.C., WPK.

Present there as observers were members of the Central Emergency Anti-epidemic Headquarters.

Party and administrative leading officials of the Cabinet, ministries and national institutions, members of the executive committees of provincial Party committees and senior officials of the leading institutions at provincial level were present in the video conferencing rooms as observers.

Upon authorization of the Political Bureau of the C.C., WPK, Supreme Leader Kim Jong Un presided over the meeting.

Despite the intense preventive anti-epidemic measures taken in all fields throughout the country and tight closure of all the channels for the last six months, there happened a critical situation in which the vicious virus could be said to have entered the country, the Supreme Leader said, adding that he took the preemptive measure of totally blocking Kaesong City and isolating each district and region from the other within July 24 afternoon just after receiving the report on it.

To tackle the present situation, he declared a state of emergency in the relevant area and clarified the determination of the Party Central Committee to shift from the state emergency anti-epidemic system to the maximum emergency system and issue a top-class alert.

He specified tasks for each sector to be immediately implemented by Party and working people’s organizations, power organs, public security and state security institutions, anti-epidemic and public health institutions.

The meeting unanimously adopted a decision of the Political Bureau of the Central Committee of the WPK on shifting from the state emergency anti-epidemic system to the maximum emergency system.

He instructed all the participants to immediately conduct follow-up organizational work to carry out the decision of the Political Bureau of the Party Central Committee in their fields and units, and party organizations at all levels and every field to ensure and guarantee the most correct implementation of the directions and assignments of the Party Central Committee with a sense of boundless responsibility, loyalty and devotion.

He underscored the need to thoroughly maintain tough organizational discipline and ensure the unity in action and thinking throughout the Party and society, to keep order by which everyone absolutely obeys and moves as one under the baton of the Emergency Anti-epidemic Headquarters and the need for party organizations at all levels to perfectly perform their role and duty.

Saying that everyone needs to face up to the reality of emergency, he appealed to all to overcome the present epidemic crisis by not losing the focus of thinking and action, practicing responsibility and devotion to be faithful and true to the leadership of the Party Central Committee, being rallied closer behind it so as to defend the welfare of the people and security of the country without fail.

The meeting sternly took up the issue of the loose guard performance in the frontline area in the relevant area where the runaway to the south occurred, and decided that the Central Military Commission of the WPK would get a report on the results of an intensive investigation of the military unit responsible for the runway case, administer a severe punishment and take necessary measures. -0-

(Source: “Supreme Leader Kim Jong Un Convenes Emergency Enlarged Meeting of Political Bureau of WPK Central Committee,” Korean Central News Agency, July 26th, 2020.)

This is of course makes for extremely convenient optics for the North Korean regime, and raises lots of questions.

First, to state the obvious: this would make for an extremely convenient way for the regime to admit the existence of Covid-19 in the country. I have written previously about how unlikely the regime claim of zero cases is. The message is: our anti-epidemic measures, such as closing the northern border, were flawless. But one case still slipped through the cracks. Having a first confirmed case coming in from the south relieves the regime of any awkwardness vis-a-vis China.

Second: this is all still very strange. How can the political and strategic cost be smaller of admitting a glitch in the southern frontline defenses? Look at the text in the statement: “loose guard performance in the frontline area” is not a small thing to admit. It’s far from unprecedented criticism, but still. What does it say about morale and readiness within the army that even at a time of relatively high tensions, “loose guard performance” can happen?

Third and relatedly: this is a lot of fuss for a suspected case. Kim Jong Un not only called an emergency politburo meeting, a major event in its own right. The state has also placed all of Kaesong under lockdown and required anyone that traveled to the city within the past five days to go into quarantine. Just imagine how many people in North Korea must be going around with symptoms that should cause suspicion of Covid-19. The sniffles and a subpar sense of smell and taste should be enough. And yet, this is the first time we’ve seen this sort of alarm.

Fourth: how was this detected, and why was this person specifically taken in for testing? Judging from the statement, he was able to slip back into North Korea undiscovered, only to proceed to move around freely in Kaesong and potentially spread the virus. Was he brought in for testing because he came in from South Korea, or because of specific symptoms? What happens to the undoubtedly more numerous arrivals from China – are they all placed under stringent quarantine? Kaesong is far less connected to the outside world than are other parts of North Korea. The chances of it spreading there but not in the north are…extremely, incredibly slim, at best.

In short, it’s very difficult to buy this as a credible explanation or excuse for a Covid-19 outbreak in North Korea. The virus has most likely been around for some time, perhaps something has now prompted the authorities to need to make an official admission. As always, all we can do is await more information and hope that some questions are answered.

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North Korea gearing up for hard times

Friday, July 10th, 2020

By: Benjamin Katzeff Silberstein

An editorial in today’s Rodong Sinmun emphasizes that fighting the “global pandemic” is more important than economic construction. For Korean-speaking readers, the message comes near the end of the editorial on Friday July 10th, and reads:

그것은 인민들의 생명과 건강을 보호하고 증진시키는것을 최급선무로, 가장 영예로운 혁명사업으로 간주하고있기때문이다.그 어떤 경제건설성과보다 대류행전염병의 침습을 막는것을 더 중요하게 여기고 이 사업에 최선을 기울여야 한다는것이 우리 당의 요구이다.

(Source: 김병진, “인민의 생명안전을 굳건히 지키는것은 우리 당의 제일중대사,” Rodong Sinmun, July 10th, 2020.)

This is not a new message, and it’s been re-stated in various forms in North Korean state media over the past few months. As I write in this article at 38 North, the recent emphasis on the chemical industry carries the same message: don’t expect any major changes in the external economic environment anytime soon, whether it be in conditions relating to sanctions or Covid-19.

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Trends in the time of Corona: North Koreans increasingly gifting each other cell phone minutes

Thursday, June 11th, 2020

Benjamin Katzeff Silberstein

Daily NK reports on an interesting trend:

North Koreans in Pyongyang are increasingly sending mobile phone minutes to others as gifts instead of attending birthdays or weddings as the country continues to restrict face-to-face meetings due to the COVID-19 pandemic.

“With restrictions on movement, events and meetings due to the coronavirus, it is becoming commonplace for people to send others ‘mobile money’ as a celebratory gift,” a source in Pyongyang told Daily NK on June 8.

“Mobile money” refers to a service where users can exchange minutes with other mobile phones users, essentially allowing people to “top-up” others who do not have enough minutes for voice calls.

“Students in Pyongyang who come from areas outside Pyongyang can’t return home due to the coronavirus and are unable to see their friends,” the source told Daily NK. “While confined in their dormitories, students began sending mobile money instead of gifts for various celebrations at home or their friends’ birthdays, and this practice is spreading to other areas of the country.”

AS SIMPLE AS CAN BE

Sending mobile money is relatively simple. Anyone with a mobile money card, which is akin to a checking card for mobile phone charges, can send minutes to others by entering the phone company’s three-digit ID number, the amount to be sent, the phone number of the recipient, and the six-digit password on the card.

For example, a subscriber of Koryolink, the most popular telecommunications provider in Pyongyang, can transmit mobile money to another individual by entering *999* followed by the amount of funds to be transferred, the phone number of the recipient, the six-digit phone money card password and then “#.” Kang Song NET customers would enter *929* instead of *999*.

(Source: Jang Seul Gi, “‘Mobile money’: an increasingly popular way of gifting to others,” Daily NK, June 11th, 2020.)

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April 27th, 2020: Worrying signs of distress in the North Korean economy

Monday, April 27th, 2020

By: Benjamin Katzeff Silberstein

Readers of this blog know that market prices have risen over the past few weeks, largely as a result of North Korea’s anti-COVID19-measures. Over the past few weeks, however, other signs than market prices have surfaced that the economic situation may be getting more difficult, unrelated to Kim Jong-un’s health situation.

  • On April 17th, the Cabinet and WPK Central Committee reportedly announced a ban of all non-essential imports. The reason, ostensibly, is anti-COVID19-protections. One can also imagine it has to do with keeping the country’s hard currency base in place.
  • This measure, and perhaps combined with the overall mood, led to panic buying of import products in Pyongyang shops.
  • Prices on imported goods have increased drastically, Daily NK reports, with the price of imported soybean oil going from 45 RMB to 100 RMB for 5kg.
  • We should also view the issue of the public bonds in this context. In mid-April, the state issued public bonds which it ordered the bureau in charge of constructing the Pyongyang General Hospital to use to pay suppliers. This may be a sign that the state lacks cash of its own to fund the project, and it may expand the bonds issuing program. Moreover, the state may require entrepreneurs to purchase them. If the state begins exerting pressure on economic actors to purchase these bonds, such policies could become measures to essentially confiscate the assets of private economic actors, because the state lacks funds of its own.

Lots of uncertainties as always, but these trends are well-worth keeping an eye on.

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North Korea needs to counter the economic impacts of COVID19, but what can it really do?

Friday, April 10th, 2020

By: Benjamin Katzeff Silberstein

Many countries are adopting stimulus measures to counter the economic impacts of the drastic economic slowdown resulting from measures to counter the COVID19 outbreak. North Korea, too, badly needs to counter the likely devastating impacts of its border shutdown to China, but it has no funds to adopt measures even nearly comparable to ordinary stimulus measures. As Yonhap speculates here, the Supreme People’s Assembly today (Friday April 10th) are scheduled to meet and may announce policies to counter the economic impacts, but it’s unclear what they can really do:

North Korea’s rubber-stamp legislature was to hold a once-or-twice-a-year session on Friday, with economic and public health issues expected to take center stage amid its ongoing fight against the novel coronavirus.

The Supreme People’s Assembly (SPA) usually meets in April every year to address the state budget and Cabinet reshuffling, but it has been closely watched from outside for any glimpse into the reclusive state’s stance on foreign affairs, including its stance on denuclearization talks with the United States.

Friday’s meeting, however, is expected to center on discussions of major domestic issues, given that Pyongyang has been making all-out efforts to block the outbreak of COVID-19 on its soil.

North Korea is among just a few countries in the world that claim to have no coronavirus infections, generating speculation that it might be hushing up an outbreak.

Pyongyang has tightened control of its borders with China, where the coronavirus originated in late December. It has also toughened quarantine criteria and restricted the movement of people and goods.

In particular, the border closure with China could weigh on its already moribund economy long crippled by global sanctions, as it depends heavily on the neighboring ally for its trade.

It is unclear whether leader Kim Jong-un will attend the SPA meeting. Observers say that he is unlikely to be present as he was not among deputies elected in March last year to the parliament.

Kim attended last year’s meeting to give a policy speech at the session.

Earlier in the day, state media reported that Kim has supervised a mortar firing drill. It did not provide details on when and where the drill took place, but such military activity is usually reported a day after it happened.

But there have been no state media reports on a politburo and a plenary meeting of the ruling Workers’ Party, which used to be held with Kim in attendance ahead of an SPA session.

Experts say that the North could announce an increase in its budget to improve public health infrastructure and unveil measures aimed at cushioning the impact of its anti-virus campaign on its economy during the SPA meeting.

(Source: “N. Korea set to hold parliamentary meeting amid nationwide virus fight,” Yonhap News, April 10th, 2020.)

The North Korean government doesn’t entirely lack resources, but it doesn’t have the sort of budgetary flexibility that a government needs to launch serious stimulus programs. It could theoretically ease up on restrictions on economic activity, such as decrease fees for market traders (markets are themselves problematic given the risk of the virus spreading there), ease up on permit regimes for various sorts of economic activity, lower mandatory fees and taxes, and the like. This is unlikely to happen, since the state itself already faces serious economic woes, and local-level government institutions likely will not be content with having a crucial source of income curtailed. More to follow after the SPA meeting results are announced.

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North Korean ships not stopping in Chinese ports

Sunday, March 29th, 2020

Benjamin Katzeff Silberstein

The New York Times reports that North Korean ships that would usually transport goods to Chinese ports are now idle in Nampo:

The Royal United Services Institute satellite analysis shows that on March 3, 139 ships were idled in the Nampo area, which includes the anchorage and several ports, up from 50 ships a month earlier.

The fleet includes vessels previously implicated in sanctions evasion operations, which are often tracked through satellite imagery and aerial or ground surveillance by other states, independent research groups and the United Nations.

The institute’s analysis said the idled ships included some of the “most active and scrutinized oil tankers” used for the illicit import of refined petroleum products such as fuel. For example, the oil tanker New Regent, which had been spotted making unreported deliveries as recently as January 2020, and twice in 2019, according to the United Nations, was seen in Nampo in multiple satellite images. Other ships, too, have been floating unused for weeks, according to satellite imagery provided by Planet Labs, an earth-imaging company in San Francisco, and Maxar Technologies Inc., a space technology company in Westminster, Colo.

(Source: Christopher Koettl, “Coronavirus Is Idling North Korea’s Ships, Achieving What Sanctions Did Not,” New York Times, March 26, 2020.)

As the article points out, coronavirus really is doing what sanctions never fully could. It seems that the only fully confirmed mode of goods transportation between North Korea and China right now are trains (judging by the Rodong pictures of Corona prevention activities), and we don’t know how often they run.

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Of price controls and panic: North Korean market prices under Corona

Friday, March 27th, 2020

By: Benjamin Katzeff Silberstein

(Note: the graphs in this piece are from a shortly forthcoming article on 38 North.)

It’s almost like those mandatory disclaimers that often follow advertisements in the United States, but the statement that all information from inside North Korea is uncertain can sometimes not be repeated often enough. This is especially true in a situation like the current one, where the country’s borders are virtually shuttered, and global anxiety is high to begin with.

With that, let’s take a look at some numbers…

With North Korea’s border closing earlier this year, market prices quickly shot up as consumers most likely hoarded goods in anticipation of future shortages. Particularly curious was the fact that prices seemed to differ so widely between cities, as I wrote about here. This suggested that internal restrictions on movement between localities, a measure the state took to control the spread of coronavirus, were working. A few weeks later, however, both market prices and the differences between cities seemed to go down again.

Differences in rice prices, in percentage, between three North Korean cities, until March 7th. Data source: Daily NK.

So did market prices in general. In the latest price data observation from Daily NK, from March 7th, average rice prices are about 25 percent higher than a year ago, and 29 percent higher than in early December, before the border closure. That’ a lot, but somewhat less than the initial 36 percent increase when the border was closed initially. Even the slightly lower price increase would spell severe difficulties for many North Koreans in buying food. Note: the latest price observation is from March 7th, that is, several weeks ago.

Average rice prices in North Korea, until March 7th. Data source: Daily NK.

So, what happened here? There are two possibilities that I think are more likely and realistic than others. One is that markets overreacted in their initial anxiety. Put simply, people may have thought that supply would become much lower than it ended up being. This is a common mechanism in markets in general. People often react more strongly than called for to anticipated, future changes, and then adapt their economic behavior once it’s clearer what actual conditions of supply and demand are. It’s also possible that the government let up on conditions for imports and trade, easing the burden on supply.

But there is another possibility. Both Rimjingang and Chosun Ilbo have reported that the government has instituted price controls to prevent prices from rising. This was only to be expected, as it is one of the few tools the state has at its disposal to control market anxiety. Price controls, however, are rarely (if ever) effective in the long run in countries such as North Korea. Either trade moves to the black market, or sellers run out of goods as they are forced to sell for less than consumers are willing to pay.

Aside from the two aforementioned reports, there are other potential signs that price controls may be in place. The price difference between Hyesan and Pyongyang/Sinuiju went down to a conspicuously low level, one that is actually lower than normal, a very odd coincidence. It got there only over the span of a few weeks, getting close to the 5,000 won-level reported by Chosun as the price ceiling. As far as currently available information can tell, no conditions changed on the ground. It would be reasonable to assume that at some point, the government may let up on restrictions on trade to ease conditions, but we don’t know whether that has happened yet. Reports of harsh measures against smuggling continue, and such measures would signal to the markets that state enforcement of the border closure remains and will remain harsh. So while in theory it makes sense that prices would go down somewhat after the initial spike, conditions on the ground have not changed noticeably, as far as we know.

So, what might have happened is that at least around March 7th, the government was still somewhat successful at enforcing its price ceiling, at least in parts of the country. One of Chosun’s sources reports that as of March 18th, rice cost 6,300 won per kg in Hyesan, much closer to the initial price level after the border closure. Price ceilings can usually only be enforced for a limited period of time, particularly when real shortages loom of essential products. Prices either rise beyond the ceiling, goods run out, or a black market arises. If the regime is indeed enforcing a price ceiling, and it continues to do so for a long time, perhaps we will see an increase in back-alley markets and other type of economic activity that the government has been relatively successful at curbing by integrating the markets into the official economic system over the past decade and a half or so.

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Musan mine at less than half capacity due to coronavirus measures

Friday, March 13th, 2020

By: Benjamin Katzeff Silberstein

The Musan mine, already (at least periodically) hit hard by sanctions, now operates at below half capacity, according to Daily NK. Despite the UN sanctions prohibiting countries from importing North Korean mining products, the Musan mine has kept up a certain level of production (after experiencing severe difficulties under harsher Chinese sanctions implementation), exporting mining products to the Chinese Sanhe region. But now with North Korea itself enforcing a virtual border shutdown, exports, too, have stopped:

“The Musan Mine is operated at less than 50% of capacity,” a North Hamgyong Province-based source told Daily NK on Wednesday. “Only two of the five mining areas in the complex are operating at full capacity. The shutdown of the border with China has led to slowdowns in drilling and ‘ore dressing’ [mechanically separating grains of ore minerals from gangue minerals – mineral processing].”

North Korea closed its border to China at the end of January to prevent the spread of COVID-19. The move reportedly ended all smuggling operations along the border and also impacted operations at the Musan Mine, which is located in North Hamgyong Province.

North Korea has been banned from exporting minerals since the United Nations Security Council adopted Resolution 2397 in 2017. The regime, however, has continued to earn large amounts of foreign currency from the sale of iron ore produced in Musan Mine. Daily NK reported in late 2018 [in Korean] that iron ore from Musan Mine was being smuggled to China’s Sanhe region after passing through Hoeryeong.

North Korea and China reportedly ended their joint production of iron ore at the mine following the coronavirus outbreak. Musan Mine now only produces iron ore for domestic consumption, Daily NK sources said.

BLASTING TO MORE PRODUCTION

Rodong Sinmun reported recently that Musan Mine blasted through 400,000 tons of earth on Jan. 2 at Cholsan Peak. Daily NK sources reported that this at expanding production have largely failed because of the lack of equipment and logistics issues.

The Rodong Sinmun claimed that the blasting had been successful and that expansion of production would enable the complex to produce more iron ore. The newspaper also stated that all necessary equipment was acquired and prepared “without issue” and transported to the mine “on time.”

(Source: “Sources: Musan Mine operating at less than half of full capacity,” Daily NK, 3/13/2020, https://www.dailynk.com/english/musan-mine-operating-less-than-half-full-capacity/.)

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