North Korean Economy Watch

Korea times
Lee Jin-woo
3/6/2007

The Ministry of Unification said Tuesday it has provided some 400 million won ($400,000) to help North Korea stem the spread of scarlet fever, an infectious disease, a ministry official said.

Yang Chang-seok, spokesman for the ministry, said the money has been provided to an association of some 51 local private relief organizations.

As the money was financed by the inter-Korean cooperation fund under a matching fund system, the association promised to provide some 200 million won for the aid program.

Yang said the decision was made at a government meeting on Feb. 12.

The spokesman, however, said the decision was not in opposition to Unification Minister Lee Jae-joung’s earlier remarks not to provide any government-level assistance over the infectious disease in the impoverished North.

During a press briefing in January, the minister stated that the government would not provide medical aid to the North as scarlet fever is not a fatal infectious disease.

“Given the nature of the disease, we believe that North Korea itself will be able to solve the problem,” Lee told reporters on Jan. 11.

The spokesman said Minister Lee was referring to government-level aid through the Korean National Red Cross (KNRC), not financial assistance from private relief organizations.

South Korean humanitarian aid groups have shipped various types of medicine including penicillin and other antibiotics to Pyongyang since last December. Scarlet fever broke out in northern Ryanggang province last October.

Scarlet fever is intrinsically not a serious communicable disease, but if not treated properly it can become serious like cholera or typhoid. The impoverished North lacks medicine.

South Korea suspended its government-level humanitarian aid to North Korea after the North’s missile tests last July. A possible resumption of the aid was blocked due to the North’s nuclear bomb test in October.

During ministerial talks in Pyongyang last week, the two Koreas agreed to hold a series of meetings to restart the aid project. 

Associated Press (Hat tip DPRK Studies)
3/3/2007

Three North Koreans ended a rare and discrete visit to Oregon this week after visiting Oregon State university scientists, orcharists in the Hood River area, the Nike campus, Gov. Ted Kulongoski and attending a Trail Blazers basketball game.

Because of sensitive six-way talks on North Korea’s nuclear program, Mercy Corps, which hosted the visit, declined to release the officials’ names.

Portland-based Mercy Corps is among a handful of humanitarian agencies running programs involving North Korea, which has no diplomatic relations with the United States.

Over 12 years, Mercy Corps has supplied fish and fruit trees for farm projects in North Korea, which has chronic food shortages.

The North Koreans, representing Mercy Corps’ main partner organization, the Korean American Private Exchange Society, arrived Tuesday and were to leave Saturday.

Mercy Corps President Nancy Lindborg said the three visited OSU, which has made scientists available to advise on the agricultural projects. On the way back they met with Kulongoski. They visited orchards in the Hood River area Friday.

At Nike headquarters near Beaverton, they met with managers who gave a presentation on e-commerce, an Internet activity with undetermined relevance in a socialist nation with limited Web penetration.

“I don’t have a specific point of view to share on their visit and the possible opportunities North Korea may present,” said Bob Applegate, a Nike spokesman.

The visit was perhaps the 10th in a series of low-profile North Korean delegations here over the years, Lindborg said. In North Korea, she said, “Oregon is very well-known.”

At the Rose Garden on Thursday the visitors watched the Trail Blazers dismantle Charlotte.

“They’re fans,” said Lindborg, who also attended the game. “Two of them actually play basketball.”

Korea Times
Kim Yon-se
2/26/2007

Hyundai Asan is considering building three golf courses in Kaesong, North Korea, by 2012 as its first round of development projects at the Kaesong Industrial Complex have almost been completed.

According to sources, the inter-Korean tourism operator of Hyundai Group is in talks with the North to build an 18-hole golf course in the North Korean city by 2010 and two more by 2012.

A Hyundai Group official said the proposed golf course would be the second of its kind. One golf course has already been developed near Mount Kumgang and is scheduled to open to South Korean tourists later this year.

In a statement, however, Hyundai Asan predicted that it will take some time before the plan is realized as the North’s stance has yet to decided.

The company said talks between the two countries for the second development project would be possible after the first project is completed.

North Korea has stirred controversy by negotiating with a small South Korean company, Unico, to build a golf course despite its initial contract with Hyundai Asan to develop golf courses around the Kaesong Industrial Complex.

Since last July, the North has banned South Korean visitors to the industrial complex from visiting the city’s downtown area including historic sites.

Hundreds of South Koreans, mostly businesspeople and government officials, had been allowed to make an excursion to the city of Kaesong during their visit to the industrial complex.

Hyundai had signed a memorandum of understanding (MOU) with Emerson Pacific Group, which has been constructing golf courses at the scenic resort area at Mount Kumgang, for the project in Kaesong.

Korea Times
2/20/2007

Pope Benedict XVI has addressed a letter to North Korea’s Catholics to be delivered by a South Korean delegation of the Catholic humanitarian organization Caritas at Pyongyang, the Agence France-Presse (AFP) reported Monday quoting a Caritas spokesman.

The visit by the Catholic relief organization will take place on March 27-31 and is intended to “strengthen relations with the authorities and analyze needs,’’ AFP quoted Caritas spokeswoman Nancy McNally as saying.

Caritas is a confederation of 162 Catholic relief, development and social service organizations working to build a better world, especially for the poor and oppressed, in over 200 countries and territories.

The global news agency said the letter is a reply to a Christmas address sent to the pontiff by the National Korean Catholic Association.

There are reportedly around 3,000 to 4,000 Catholics in North Korea, who are members of a church which comes under the control of the North Korean government and has no official ties to the Vatican.

Last November the Pope urged the international community to intensify humanitarian aid to the world’s most vulnerable countries, particularly North Korea.

Daily NK
Kang Jae Hyok
2/20/2006

Every year when spring arrives, North Korea faces yet another food crisis. 10 years after the “march of suffering,” North Korea has still made little change.

The greatest change that has occurred is by the North Korean people. The most of North Koreans have surpassed the ‘march of suffering’ and have survived by relying on themselves

In comparison to last year, the Korea Rural Development Administration (RDA) estimated that North Korea had experienced a loss of 1.8% (60 thousands tons) in agricultural production at 4.48 million tons of cereal. The World Food Program (WFP) also predicted similar figures at 4.3 million tons.

On the other hand, a national North Korea aid organization Good Friends reported that only 2.8 million tons of agricultural production had been made and that if any less than 1.5 million tons of food aid was supported, North Korea would be faced with another severe food crisis.

In the 90’s foreign aid could block mass starvation

During the “march of suffering” that began in the mid-90’s, food distributions were suddenly terminated. Nonetheless, people went on working, starving, believing that food distributions would begin once again.

However, one month passed then two, and still the distributions did not resume. In the end, the number of deaths from starvation began to arise. Yet, North Korean authorities did not respond with any countermeasures. As a result, in 3~4 years, 3mn North Korean citizens died of starvation.

Nonetheless, the tragic mass starvation that occurred at the time could have been stooped if it weren’t for the irresponsible acts of North Korean authorities. We can view this by analyzing the figures denoting the amount of aid supplied from 1995~1999.

Year   1995   1996   1997   1998   1999
Production of food
         3490   2500   2680   2830   4280
Aid from FAO
           980   1070   1440   1490   1190
Aid from S.Korea
           960   1050   1630   1030   1070
Food distributions in North Korea
         4450   3550   4120   3860   4450
       ~4470 ~3570 ~4310 ~4320 ~5476
Death rate 
               615    1704     549 
         (Unit: 1,000 tons, million persons)
 
Table of North Korea’s food production and foreign aid in the 90’s in comparison to the death rate. (Good Friends 06.12.22)

According to the table above, South Korea and the Food and Agriculture Organization of the United Nations (FAO) aided North Korea with 2mn tons of food annually from 1995~1999.

If we consider that only 10,000 tons of food is needed to provide the whole of North Korea a day, then there would be no reason for a shortage in food distributions with a total of 3.7mn tons of food aid being supplied. According to the table above, annual aid provided to North Korea was 3.55mn tons at the minimum and 4.45mn tons maximum. This equates on average at 4.09mn tons of supplies.

However, during this period 3mn people died of starvation and 30mn people defected from North Korea. Contrary, there has never been a time where so much foreign aid was supplied to North Korea. Why then at a time where greatest aid was given to North Korea, was there the greatest number of deaths?

One of the essential reasons behind this occurrence was the fact that foreign aid never reached the provinces of North Hamkyung, Yangkang and Jakang where food was most needed. If food aid had been distributed to the areas most dire of starvation, then at the least, this incident would not have occurred.

At the time, most of the aid was distributed preferentially to soldiers, authorities and powerful ministers in Pyongyang. On the whole, aid to North Korea had been sent via ship through Nampo, Haeju and Wonsan harbor, then supplied to Pyongyang and South Pyongan province.

During the 90’s, transportation of cargo was practically immobilized due to the shortage of electricity and lack of fuel which ultimately led to the suspension of locomotives. On the whole, goods are transported via railroad, however, in the 90’s, both passenger and freight trains had come to a halt.

Basically, it takes about a fortnight to travel return, from Wonsan, Gangwon province to Najin, North Hamkyung on train 21. The Pyongyang-Tumen River train which departs from Pyongyang to Sunbong, North Hamkyung on train 1, also takes more than 10 days travel return.

Back then, it took twice as long to for a freight train to reach its destination in comparison to a passenger train. 10,000 tons of foreign aid that arrived at Wonsan harbor took 2~3 months to transport from North Hamkyung to Chongjin. In other words, it would take more than 2 years to distribute 100,000 tons of food to Wonsan in Gangwon province to Chongjin in North Hamkyung province. Hence, it is pointless to rely on railroad to distribute goods.

Losses incurred while transporting aid

Further, 30~40% of goods go missing while being transported. Every time a cargo train stops, guards responsible for the goods sell rice to traders at wholesale prices so they can use the profits to live. Also, street kids and thieves often steal the goods so that the intial 1,000 ton of rice is often depleted to 600~700 tons upon arriving at its destination.

The problem is that North Korean authorities well aware of this fact that are unwilling to modify the routes or assert change. Ultimately, foreign aid is distributed throughout the regions of Pyongan province where the situation of food is relatively good in comparison to the rest of North Korea.

As rice only lands in the hands of people living in Pyongyang and Pyonan where influential ministers and Kim Jong Il’s elite reside, it can only be analyzed that this situation is occurring under specific motives. In the end, the majority of deaths occurred in Hamkyung, Yangkang and Jakang, and the situation has remained the same until today.

Following the missile launch and nuclear experiment, last year South Korea and the international community suspended food aid to North Korea, and in Feb 13th, the third phase of 5th round 6 Party talks ended with the South Korean government confirming that food aid would resume.

Undoubtedly international food aid is important but unless rice is distributed to the areas in most need, a similar situation to the 90’s will occur once again.

More importantly and urgently, aid must be delivered directly to the provinces of Yangkang, Hamkyung and Jangang. Thinking that North Korean authorities will wisely distribute food aid throughout the country is merely a South Korean fallacy.

BBC
2/20/2007

North Korea has been hit by a measles epidemic that has killed four people and infected some 3,000, the Red Cross has said.

Measles has been found in 30 counties since the outbreak began in November, the International Federation of Red Cross and Red Crescent Societies said.

Pyongyang has requested five million doses of vaccine to fight the epidemic.

Correspondents say medicine is in short supply and years of malnutrition has weakened resistance to disease.

In a statement, the IFRC said North Korea had confirmed two children and two adults had died from measles and its complications such as pneumonia.

More than 1,000 people are still receiving treatment for the disease.

The authorities in Pyongyang only confirmed the measles outbreak last week because the disease was believed to have been eradicated from the country in 1992, the federation statement added.

The Red Cross, the World Health Organization and other international bodies are now helping to tackle the outbreak.

There have been recent reports of outbreaks of scarlet fever and typhoid in the reclusive Communist state, where most people are faced with daily food shortages and a dilapidated health service.

4 Dies From Measles Epidemic in North Korea
Korea Times
2/20/2007

A measles epidemic has claimed at least four lives and infected about 3,000 people in North Korea, the International Federation of Red Cross and Red Crescent Societies said Monday.

The federation said in a statement that measles has been found in 30 North Korean counties since the outbreak started in November last year.

It added that four deaths were reported on Jan. 4 when two children and two adults died from measles and its complications such as pneumonia. Around 3,000 North Koreans were confirmed to have infected with the disease.

Pyongyang has asked international organizations for massive doses of vaccine to prevent further spread of the epidemic.

The North has requested 5 million doses of measles vaccine to immunize its citizens aged from seven to 45.

The requested doses cost $1.5 million, and North Korea will pay the costs for transportation, distribution and staff training.

UNICEF is expected to lead the immunization campaign and keep the related organizations informed of developments.

North Korea’s Ministry of Public Health confirmed the measles epidemic last Thursday, and the information was immediately discussed in a joint meeting the following day by the North Korean Red Cross, the World Health Organization (WHO) and UNICEF.

The federation said the disease was initially believed to be rubella. The first identification of measles came on Nov. 6 in the northern region of the country.

It added that the communist country has failed to bring the epidemic under control and the disease spread throughout the country.

The WHO supplied Pyongyang with testing kits in January, but there were constraints because North Korea was thought to have eradicated the disease in 1992.

The country’s health care workers were thus not familiar with the disease, the federation pointed out.

http://www.northkoreanrefugees.com/2007-02-supply.htm
2/15/2007

The operation to distribute emergency supplies in Hamgyong-bukto, North Korea was a success. Through one of our clandestine local networks, we were able to provide extremely needy people with a total of one ton of rice, as well as clothing and antibiotics. The value of all items supplied equaled 300,000 yen (about US$2,500). The extra supplies were financed by recent donations. Late November of last year, five members of LFNKR’s local group JYO entered Hoeryong-si, North Korea from China, carrying several boxes filled with winter clothing, antibiotics and penicillin.

To avoid indefinite delays at customs, bribes had to be paid to the North Korean customs personnel. Beyond the customs gate, many hungry day workers waited, hoping to earn money by carrying boxes. The JYO members had to keep a firm grip on their supplies so they wouldn’t be snatched away. The rescue team stayed in Hoeryong-si 10 days completing the mission.

They found that the people in the area are cut off from aid from abroad. Local prices are soaring, which adds to the people’s frustration. Although Hoeryong-si has open marketplaces, business hours are restricted. They may only stay open for the 9 hours from 8:00am to 5:00pm. Transactions earlier or later than the specified hours are strictly prohibited. One of the merchants who owns a small market stall (1m x 2m) complained that the restrictions are so severe, he hardly makes enough to survive.

In early September, the marketplace managers were repeatedly confronted by merchants protesting the strict business rules, including the tight business hours. During one protest, the national security guards in Hoeryong-si were called out to suppress the crowd of protesting merchants because one of the protesters had been trampled to death and several others were injured during the demonstration. But the severe restrictions on market activities continued, and that provoked another large demonstration in November. At this protest, 20 to 30 people were reportedly arrested.

The reason for the ongoing protests is simple. A majority of people in North Korea are still starving, and their only option is to engage in trade. Meanwhile, the authorities place unreasonably tight controls on merchandise and free trade at the marketplaces.

According to our local members, the authorities have been strictly limiting the number of people they allow to travel into China. Even with people bribing the authorities, only 2 or 3 out of every hundred applicants are issued permits.

Recently, Chinese people seeking to visit relatives are no longer allowed to enter North Korea unless they are properly registered and can prove they are related. Even tighter restrictions have been placed on North Koreans wishing to visit relatives living in China. In addition, no one is allowed to invite relatives from China without submitting beforehand a set of registration documents showing detailed descriptions of the relatives for identification. The documents are minutely scrutinized by all relevant agents, including the local foreign affairs office, the national security department, and the customs house. Incidentally, the fee for this process is 6,000 won.

Here are a few typical prices of food items in Hoeryong-si in December 2006 (unit: NK won):

Rice (1kg): 1300W
Corn (1kg): 550
Sugar (1kg): 1800
Wheat flour (1kg) 750
Pork (1kg): 3300 

Our JYO rescue team handed out winter clothing to people who could not afford to buy warm garments, and also distributed antibiotics to those needing them. The shortage of medicines in the market places is obvious. A single package of antibiotics was selling for at least 12,000 to 16,000 won, while in China it is sold for less than half that, or 15RMB (about 6,000 won).

After the JYO team’s return from North Korea, they received news that the marketplace closing time had finally been extended to 7:00pm as a result of the two large protest demonstrations. The authorities were forced to accept the fact that the merchants can barely survive unless they work extra hours, even if they have to use kerosene lamps to continue business after dark.

Korea Times
2/9/2007

A Korean-American aid group based in the United States said Thursday it was sending its 17th shipment of medical relief goods worth $4.8 million to North Korea, according to the Yonhap News Agency.

The Institute for Strategy and Reconciliation (ISR), a think tank also active in international assistance, said the shipment this month will go to helping more than 20,000 North Korean children and the handicapped by providing antibiotics, wheelchairs and crutches.

Yonhap reported the aid will also include stethoscopes and various surgical and medical equipment.

“The latest assistance will leave from San Francisco and will reach North Korea’s Nampo Port by the end of March,” the group said in a press release.

The group will also provide individually tailored artificial limbs while the staff is in the North, the first American relief group to do so.

ISR began its North Korea program in 1998 with the approval of the U.S. Treasury. As of this month, the group has provided medical assistance valued at approximately $27.4 million.

The group is also recruiting volunteers through the end of this month to help post-surgery rehabilitation programs for children and the handicapped in North Korea.

Joong Ang Daily
Jo Dong Ho
2/3/2007

The New Year editorial is a frank admission of failure by Pyongyang.

After Kim Il Sung, the founder of North Korea, issued his first new year’s message, “Announcement to all North Korean people on the occasion of the New Year,” in 1946, those New Year’s Day messages have been an annual event in North Korea. Before the death of Kim Il Sung, they were messages of hope to the people, delivered by the Great Leader live on the achievements of the past year and plans for the new one.

So on New Year’s Day, North Koreans used to gather in front of radios or later, televisions, to participate in the “sacred ceremony” of listening to the leader’s message.

After his death, the live New Year message was replaced by a joint editorial of three newspapers, the organs of the North Korean Workers’ Party, the People’s Army and the Youth Vanguard.

That pattern was set only in 1995, but the nature of the message, the “message of hope,” was not changed at all.

But this year’s message has changed; it is gloomy rather than hopeful. Although the title, “With the high spirit of triumph, let’s open the golden days of the military-first Korea,” is colorful, in the text there are paragraphs that frankly admit the poor living conditions of today and give no hope for improvements in the near future. The text also confesses that there are no special means available to solve the many problems facing the isolated nation.

The joint editorial this year highlighted “economic revival” as the most urgent task North Korea is now facing. Departing from the traditional rhetoric of mentioning political ideology first and then going on to military affairs and the national economy, this year’s message referred to the economy first, which is unusual. Especially, this is the first time that the expression “economic development is our desperate need” has been found in a joint editorial since they were first published in 1995.

Unlike in the past, there is no detailed explanation of last year’s economic achievements. To the contrary, the editorial admitted that the economic difficulties, including food shortages, have persisted until now. The editorial says that North Korea has endured “its worst difficulties in the past 10 years” and has to solve the problem of feeding people “as it did in the past.”

That means that the North Korean economy is in very serious difficulty. Actually, there is a possibility that the North’s economy might have have had negative growth last year for the first time in seven years. Inflation is worse than ever, and the juche, or self-reliant, economy has rather crumbled into a U.S. dollar-reliant economy. The economy has deteriorated to the state where most North Korean residents cannot survive if they don’t engage in some sort of business. The focus of economic policy this year is on the improvement of people’s lives. It is unusual for North Korea, but the editorial frankly admitted that North Korea is “in desperate need” of consumer goods and even declared that the improvement of people’s lives was the “ultimate principle” that the North Korean authorities should work on attaining.

But the North Korean authorities have failed to present any practical strategies except the slogan of self-reliant economic revival. Since the beginning of the 2000s, the slogan “self-reliant revival” had disappeared, but it became the key word of the joint editorial. The editorial of the Rodong Shinmun, the organ of the North Korean Workers’ Party, even explained in its Jan. 8 issue that the spirit of this year’s joint editorial could be summed up as “building an economically strong nation and achieving self-reliant economic revival.” It is a message that “everybody should find their own way of living,” since it is not possible for the government to provide assistance to solve the many economic difficulties. But how can North Koreans solve all the economic problems with their own hands if they are not living in a primitive agricultural society? Ultimately, the North Korean authorities will have no other choice but to rely on outside help. There is no alternative but to seek help from South Korea while the North exerts diplomatic efforts of its own to ease economic sanctions.

Therefore, there is a large probability that the resolution of the North Korean nuclear problem through U.S.-North Korea talks and the six-party talks will progress unexpectedly smoothly. The joint editorial’s intensity of criticism against the United States is considerably lower than in past editorials. The U.S. strategy of using both a stick, freezing North Korean accounts at Banco Delta Asia; and a carrot, the possibility of guaranteeing the security of the regime and giving economic aid, was effective.

In order to get economic aid, North Korea will also engage South Korea in talks, a good opportunity for us. I hope we can fix the problems in that cooperation, such as the Kaesong Industrial Complex, where South Korean companies cannot employ or discharge North Koran workers by themselves or pay wages to workers directly, and rice aid to North Korea that is provided in the form of loans to avoid controversy over unreciprocated aid from Seoul.

*The writer is the head of North Korean Economy Research Team of the Korea Development Institute. Translation by the JoongAng Daily staff.

Korea Times
Lee Jin-woo
1/26/2007

Unification Minister Lee Jae-joung Friday told European businessmen active in South Korea that the government would try its best to guarantee stability and predictability at an inter-Korean industrial complex in Kaesong, North Korea.

“Construction of the Kaesong industrial complex has fallen behind schedule but will proceed as planned,’’ Lee said at a luncheon meeting held by the European Union Chamber of Commerce in Korea (EUCCK) at a Seoul hotel.

The speech was given in English. Lee, who gained his master’s degree from the University of Manitoba in Canada and his doctorate from the University of Trinity College in Toronto in 1988, enjoys delivering speeches in English.

The minister said a power grid with the capacity of transmitting 100,000 kilowatts of electricity will be established at the Kaesong site in the first half of this year. Seoul has discussed the construction of a communication center with Pyongyang to expand the communication network there.

“The South Korean government will foster the best environment to make the Kaesong an attractive investment site,’’ he said. “We’re looking forward to seeing many European enterprises join the upcoming expansion of the complex.’’

Lee said the flow of exchanges and cooperation between the two Koreas has continued and even expanded despite the North’s nuclear test on Oct. 9 last year.

“You may wondering why South Korea is focusing on economic cooperation with the North while putting aside many better investment chances,’’ Lee said. “That’s because we believe economic cooperation is a short cut to ensuring peace on the Korean Peninsula.’’

EUCCK plans to carry out its second visit to the site in March. The chamber’s trip in 2005 was the first visit by foreign enterprises.

“Seeing is believing,’’ Lee said. “If you go and see the factories there, you’ll fully understand what I’ve told you today. I promise to assist your visit to the utmost to ensure that you have a memorable and rewarding experience.’’

On Wednesday, Lee, who took office on Dec. 11, made his first visit to the site.

About 11,200 North Korean men and women are working together with 800 South Koreans at the joint inter-Korean industrial complex. The total production in the complex last December alone was worth more than $10 million.

The complex plans to house 300 companies, which would hire as many as 70,000 workers, when power and water supply grids are completed in the first half of this year.

Currently, the EU accounts for more than half of foreign investment in South Korea and is the nation’s second-largest export market after China. It has provided humanitarian assistance worth about $430 million to North Korea since 1995.