Archive for the ‘Tourism’ Category

Hyundai Asan chief offers resignation over Kumgangsan

Thursday, March 18th, 2010

According to Yonhap:

The chief of Hyundai Asan Corp., a South Korean firm that runs tours to North Korea, expressed his intention to step down on Thursday to take responsibility for failing to resume the inter-Korean tour business.

“(I) couldn’t settle them even after running to revive tours (to Mount Kumgang and Kaesong) and normalize business,” Hyundai Asan President Cho Kun-shik said in an e-mail sent to company employees. “I thought taking clear responsibility for results as a president was critical for the firm and the business”.

He intends to resign after a shareholder meeting scheduled for next Wednesday.

Hyundai had been operating tourism projects to the scenic Mount Kumgang on North Korea’s east coast and Kaesong, the ancient capital of the Goryeo Dynasty (A.D. 918-1392).

Cho, a former vice minister with the Ministry of Unification, took the company’s helm in August 2008, a month after tours to the famed mountain resort were suspended following the shooting death of a South Korean woman in the area. Visits to Kaesong were stopped in December of the same year.

He took office vowing to reopen the tour programs, which remain on hold as the two Koreas have yet to reach an agreement over terms for their resumption.

The postponement in relaunching the tours has prompted almost 70 percent of the company’s employees to leave the firm. “I felt regretful for not having reinstated those who had left,” Cho said.

Last week, North Korea accused the Seoul government of effectively blocking South Koreans from visiting its tourist attractions and warned it could revoke all deals covering inter-Korean tours.

But Seoul has demanded an official apology for the shooting death and a pledge that such an incident will not occur in the future, while saying a formal investigation must be carried out to determine why the shooting occurred.

As of February, Hyundai Asan suffered a loss of 257.9 billion won (US$228.1 million) in sales stemming from the travel suspension, according to the company.

Amid growing losses, the firm sold off part of its assets, previously used for the tour program, including 51 tour buses and 41 heavy vehicles.

Mount Kumgang had been a popular tourist spot for South Koreans since it was opened to them in 1998 as a symbol of inter-Korean rapprochement spearheaded by the liberal government of Kim Dae-jung at that time.

Read the full story here:
Hyundai Asan chief offers to resign over suspended inter-Korean tour program
Yonhap
3/18/2010

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China border tourism to North Korea set to rise, South Korean airlines may be involved

Thursday, March 11th, 2010

By Michael Rank

Chinese officials have announced plans to increase the number of Chinese tourists visiting North Korea from the border region of Yanbian 延边 and are hoping to involve South Korean airlines and to include Vladivostok on the itinerary, a Chinese website reports.

The head of the Yanbian tourism bureau, Jin Chengwen 金成文 (Kim Seong-mun), was quoted as saying they were investigating plans for tours starting in the main city in the region, Hunchun 珲春, which would take in the Russian Pacific port of Vladivostok and Baekdusan 백두산, a mountain on the Sino-Korean border that is the purported birthplace of leader Kim Jong-il, as well as tours from the North Korean port of Rajin 라진 to Pyongyang and Panmunjom.

He said he hoped Korean Air and other South Korean and Chinese airlines would become involved, but gave no details. It was hoped that Chinese tourists would not need passports to visit North Korea, he added.

Another Yanbian tourism official said there were already tours from the border town of Sanhe 三合 to the industrial city of Chongjin 청진 and Baekdusan and to Samji lake (Samjiyeon 삼지옌), a scenic spot near Baekdusan, and Pyongyang, and they were hoping to add a Rajin-Pyongyang-Panmunjom tour. “North Korea is hoping more Chinese tourists will come and tour their country,” he added.

The report said the tourism plans were connected to an agreement announced this month under which China gained the use of a pier at the port of Rajin 라진 for 10 years to help the development of the border region and give Jilin province access to the Pacific.

As NKEW reported last year, Chinese officials are also talking about cruises from Hunchun to the North Korean port of Raseon 라선 (Rasŏn/Naseon/Nasŏn) (which somewhat confusingly seems to be the same as Rajin), Sokcho 속초 in South Korea, just south of the DMZ, and Vladivostok.

North Korea is also hoping to attract tourists from southern China, and has cast its eye on Guangdong province as well as Shanghai.

Also see “China to Offer Railway Tours to N.Korea” in the Choson Ilbo:

A new train service is being offered in China for tours to North Korea. One news website based in China’s Zhejiang Province reported on Wednesday that a large travel agency in the region will offer railway trips from Hangzhou to Sinuiju from April 20.

The trains have 14 sleeper carriages and can transport 800 passengers. They pass Beidahu in Hebei Province and Dandong, Liaoning Province before arriving in Sinuiju, where Chinese passengers will transfer to a North Korean train and embark on an 11-day tour that includes stops in the border truce village of Panmunjom, Mt. Myohyang and the childhood home of former North Korean leader Kim Il-sung. The tours will cost 5,280 yuan for first-class compartments and 4,680 yuan for regular ones.

“Until now, people in Zhejiang Province visited North Korea by flying from Hangzhou either to Beijing or Shenyang and transferring to trains,” said a spokesman for the tour agency. “But the train tours are both cheaper than existing options and offer more sightseeing stops including Beidahu and Dandong, so more than 300 people have signed up already.” China halted tours to North Korea in February of 2006 but decided to start them again this year.

Chinese tourists will not be able to bring mobile phones into North Korea and will also be banned from carrying cameras with zoom lenses and face restrictions on traveling alone in the communist country.

Finally, more information on Chinese tourism has been published in the Donga Ilbo:

Tours of North Korea for Chinese tourists resuming next month have started to be sold in Beijing and Guangdong province, the China Daily said yesterday.

Five to six licensed tour agencies are recruiting Chinese tourists for travel in North Korea in mid-April. As many as 200 people from Beijing alone will visit next month, the daily said.

A few tour packages are up for grabs. A Chinese state-run travel agency is offering a six-day package and a three-day package. For both, tourists will travel by plane but must do so via Hangzhou, Beijing, the North Korean capital of Pyongyang, and Shenyang, so two full days will be needed to get to and from North Korea.

The three-day package is a brief visit to Pyongyang and costs 3,380 yuan (495 U.S. dollars). The six-day tour costing 6,280 yuan (920 U.S. dollars) covers many parts of North Korea. Tourists will visit the day after their departure Mansudae Grand Monument and Chollima Statue in Pyongyang. From the third day, they will go to Panmunjom in Kaesong, beaches in Wonsan, Mount Kumgang, and then back to Pyongyang.

The six-day package could also include a tour to Mount Myohyang. Tourists can also choose to attend a performance celebrating the birthday of North Korea’s late leader Kim Il Sung April 15.

The tourists will also receive a long list of “don’ts.” They will be banned from making noise, mimicking Kim’s postures in front of his statue, and commenting on North Korea’s leaders, politics, military and economy.

Another big no-no is the taking of photos on the trip from Shinuiju to Pyongyang, streets and markets, and images conveying a negative impression of the communist country.

Tourists also must call South Korea “South Korea” instead of the Republic of Korea. They will also be required to leave at immigration offices mobile phones, products with the South Korean or U.S. flag and other symbols of these nations on them, and magazines with open covers upon entering North Korea.

The list also says few public phones are on North Korean streets, adding tourists can make phone calls only at hotels for 16 yuan (2.30 dollars) per minute.

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DPRK threatens to scrap Kumgang agreement

Thursday, March 4th, 2010

According to Yonhap:

North Korea threatened Thursday to revoke its contracts with [Hyundai Asan] for tours to its Mount Kumgang unless the Seoul government agrees to quickly resume the tourism program that was suspended two years ago, following the shooting death of a South Korean tourist.

Officials from South and North Korea held a fresh round of talks early last month, but failed to reach an agreement on measures that will ensure the safety of South Korean tourists traveling to the communist nation.

“If the South Korean government continues to block the travel route while making false accusations, we will be left with no choice but to take extreme measures,” an unidentified spokesman for the North’s Asia-Pacific Peace Committee said in a statement carried by the country’s official (North) Korean Central News Agency.

The spokesman added such measures will include the nullification of contracts with South Korea’s Hyundai Asan for the mountain tour program.

Yonhap notes that Seoul is demanding an official apology for the death of the female South Korean tourist in 2008.  In the past, however, Seoul has made multiple demands to the DPRK for resumption of Kumgang Tours. The South Korean government does not plan to allow tourists to return to Mt. Kumgang until the DPRK:

1. Cooperates in an investigation of the shooting of a South Korean tourist last year.

2. Implements measures to prevent a recurrence.

3. Guarantees tourist safety.

4. Provides more transparency about how it spends the money it receives from the Kumgang resort.

Accordong to Yonhap, the DPRK is willing to implement No. 3.

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After Hours: Pyongyang

Tuesday, February 2nd, 2010

I do not usually enjoy reading about people’s visits to the DPRK, but I actually learned a few details from this one.  According to the Wall Street Journal:

For all that, Pyongyang doesn’t actually shut down when the sun sets. To serve its trickle of visitors, the city offers its own version of nightlife. Besides foreign envoys shuttling in for nuclear discussions and businesspeople looking to make deals, about 2,000 Western tourists come to Pyongyang each year, many, like me, to attend the famous, stadium-size show called Arirang. It’s a spectacle of mass gymnastics, dance, military marching and incredible animated pictures created by thousands of people flipping colored cards.

The number of visitors could edge up. According to Koryo Tours, a Beijing-based agency specializing in trips to North Korea, the government has notified it that more Americans will be let in during the non-Arirang season (the show generally runs from August to October).

For tourists, the days are filled with sights that have what ruler Kim Jong Il calls “high ideological content.” (A government-supplied guide and minder comes along, day and night.) High on the list is the Mansudae Grand Monument, boasting a massive statue of the country’s late founder, Kim Il Sung, where visitors lay flowers and line up to bow in an orderly fashion. Another must-see is the USS Pueblo, a U.S. Navy intelligence ship captured off the coast of North Korea in 1968; conducting the tour the day we visited was an elderly man dressed in navy whites who was one of the sailors in the original boarding party. And then there’s the underground train system, with its mosaics of peasants revolting and huge chandeliers meant to look like stars.

But there’s also the unexpected, like the Pyolmuri Teahouse, a Western-style cafe whose name translates roughly as “constellation of the stars.” Opened in 2005 with the help of the nonprofit Adventist Development and Relief Agency, the cafe — equipped, as it proudly points out, with German-made ovens and Italian pasta-making machines — offers a tasty apple pie, a surprisingly decent cappuccino and a great chance to people-watch. Egyptian telecommuncations provider Orascom brought mobile technology to North Korea last year, and now demurely dressed teenage girls are accessorizing their hanboks, or traditional Korean dresses, with platform shoes and colorful, decorative, straps on their cellphones. (We tourists had surrendered our phones at the airport, along with our passports; they were returned just before we boarded the return flight.)

As evening approaches, take a stroll (minder in tow) along the deserted embankment of the Taedong River to Kim Il Sung Square. From this vantage point, you can photograph some picture-postcard views while it’s still light. An ideal place to watch the sunset is from the Tower of the Juche Idea, named for the country’s official ideology, a word typically translated as “self-reliance.” The 170-meter tower, built on the occasion of Kim Il Sung’s 70th birthday, is said to contain one white stone block for each day of his life to that point. (He died in 1994, at the age of 82, and while his son is now ruler, the elder Kim is “eternal president.”)

From the top there’s a panoramic view over the capital out to the surrounding mountains. The lack of cars on the roads — vehicles aren’t freely available for purchase — and scarcity of heavy industry means the air is remarkably clear.

Then it’s time to think about where to have dinner. Don’t dawdle; most Pyongyang eateries generally close by 9 p.m. The choices range quite widely, from hot pot at Chongryu Hot Pot restaurant to roast duck at Pyongyang Duck Barbeque Restaurant No. 1to Macanese fare such as egg tarts at the imaginatively named Macau Restaurant.

Whatever you pick, forget dining by candlelight. Here, it’s more likely to be by flashlight. On my first night, just as my tour group was tucking into a typical Korean meal of naengmyon (cold noodles) and bulgogi (barbecued beef) at Mangyongdae KITC restaurant, the lights went out. But the waitresses have come to expect power outages, and before we knew it they were coming around with huge flashlights, one for each table. The room lights still hadn’t come back on by the time we left about an hour later.

Checking out the city’s after-dinner scene is easy: There’s one nightclub and one casino, both located in the same place, the 1,001-room Yanggakdo Hotel, one of about a dozen hotels where foreigners are allowed to stay. (All the tourist hotels do offer some evening activities — like a karaoke bar — but the Yanggakdo is the place to be.) You won’t see any locals here; the entertainment venues are off limits to North Korean citizens.

Start at the aptly named Revolving Restaurant, also known as the Swivel Restaurant, on the 47th floor. It has all the glamour of a 1980s airport lounge, but still attracts businesspeople and Russian exchange students. Grab a seat by the window and admire the lack of city lights as you circle around. Order a serving of soju. Traditionally made from rice, although sometimes also from acorns, it’s the national liquor.

Less-adventurous travelers could sample some of the country’s homegrown beer. The best-known brands are Ryongsong, Ponghak and Taedonggang. Taedonggang, which last year was bizarrely the subject of an advertisement on state TV, is made using equipment that once produced the likes of Brown’s Bitter and Mann’s Best Ale in Trowbridge, England. North Korea bought the shut-down brewery from its U.K. owner and had it dismantled and shipped over in 2000. The restaurant stays open until 1 a.m. or 2 a.m, or when the last customer leaves.

Sufficiently mellowed, head for the nightclub on the lower ground floor. You can groove to the beat of familiar pop tunes from the ’70s and ’80s (was that the Bee Gees'[nbsp ]”Stayin’ Alive,” or too much soju?) until about 3:30 a.m. if there’s enough business; otherwise the staff close the doors at about 1:30 a.m.

If you’re still not ready to call it a night and you’re feeling lucky, pop next door to the Egypt Palace casino. Replete with slot machines and tables for card games including blackjack, the casino is generally open until 4 a.m. But if you aren’t staying in the hotel, how long you can play depends on what kind of deal you can strike with your minder.

After that, there is only the 7 a.m. “workers’ siren,” a citywide wake-up call. It might serve to tell you whether you had too much soju.

On your last day in Pyongyang, by the way, brace yourself for one final, unexpected spending opportunity, befitting a state eager for hard currency. We’d already experienced one big earner, the shop selling souvenir stamps (such as an envelope bearing a Mona Lisa stamp, postmarked on the day of issue, about $7) and hand-painted propaganda posters (such as one showing flying pens attacking former U.S. President Richard Nixon). Now some tourism officials rushed onto our airport-bound bus with something more modern: videos of our three-day stay, going for just under $30. I couldn’t resist.

Courtesy of the advertising department of Korea International Travel Co., the 45-minute video compact disk features me and my 24 traveling companions as we played tourist, drinking beer at lunch and riding the escalators of the underground-train stations. These scenes are interspersed with footage of 80,000 performers at the Arirang mass games, and the whole thing is set to a rousing soundtrack mixing modernized folk songs, swelling orchestral passages and the worst elevator music I’ve ever heard.

Thankfully, there is no record of my night out. At least some things that happen in Pyongyang, stay in Pyongyang.

Couple of extra notes:

1. The Pyolmuri Cafe is the first place in Pyongyang to offer pizza.  They were delivering to the Koryo Hotel before the much publicized Italian Food Restaurant opened on Kwangbok Street.

2. Were is the Macao Restaurant?  Is that in the Yangakdo Hotel?

3. Where is the Mangyongday KITC restaurant?

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DPRK to permit US tourists year-round

Tuesday, January 12th, 2010

According to a press release from Koryo Tours:

Koryo Tours has been informed that a more general opening of the DPRK (North Korea) to US tourists is likely to take effect in 2010. It is expected that American citizens, who had previously been restricted to visiting North Korea only during the annual Arirang Mass Games festival which runs from August to October may now be permitted to enter the country year-round. Normal restrictions on American tourists also include staying in North Korea a maximum of 4 nights and only being permitted to enter and exit the country by plane from China, there is also a 4 times weekly train that runs from Pyongyang to Beijing, as yet it is unclear whether these restrictions will also be dropped but a decision is expected before too long.

Koryo Tours has been operating trips to North Korea since 1993 and is universally recognised as the only specialist/expert in this unique area. Unlike the competition, we are also regular visitors; rather than ship our clients off and hope for the best, we work in conjunction with the Korean tour guides as cultural conduits. ensuring everyone has the optimum experience from this journey of a lifetime. Recommended by all the North Korean guidebooks, we consult with international media regarding information and analysis on DPRK tourism and have produced three award winning documentaries on North Korea in association with the BBC (www.koryogroupcom). There’s more to see in North Korea than most people imagine, and with this new policy it seems likely that Americans will now have the opportunity to see more than ever.

I have visited the DPRK twice (though not wth Koryo Tours) and I recommend the trip. Koryo’s tour dates can be found here—although the dates for American tourists will likely be expanded.

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DPRK bans use of foreign currency

Friday, January 1st, 2010

According to ABC News:

North Korea has banned the use of foreign currency, another sign its hard-line communist government is intent on reasserting control over the country’s nascent market economy.

Reports say the decree warns of severe punishment for anyone using U.S. dollars, euros, yuan and other non-North Korean currencies. Foreign currencies previously were accepted in some shops, restaurants and other outlets, particularly those catering to foreigners.

The order, issued by North Korea’s state security bureau and going into effect Jan. 1, aims to “forbid the circulation of foreign currency,” China’s state-run CCTV television said in a brief report late Wednesday.

The Daily NK, a Seoul-based online news outlet, said the order prohibits all individuals and organizations apart from banks from possessing foreign currency. It said the decree was posted in public and at workplaces, and went into effect Dec. 28.

There was no mention of the new ban Thursday in official North Korean state media. In Seoul, a South Korean official confirmed the ban, speaking on condition of anonymity because he was not authorized to speak to the media on intelligence matters.

The order comes weeks after the government redenominated North Korea’s currency, the won, as part of a far-reaching currency overhaul aimed at curbing runaway inflation and reasserting control over the economy.

The latest currency decree gives businesses 24 hours to deposit all foreign currency in banks. “When it is needed for trade, it can be withdrawn after obtaining approval,” it said, according to the Daily NK.

The ban is aimed at seizing foreign money tucked away by those still engaging in private market commerce, analysts said.

“North Korea has a problem with people trying to exchange their money for foreign currencies, and then storing the savings in their cabinets since they don’t know how the value of the local currency might change, said Jeong Kwang-min, a research fellow at the state-run Institute for National Security Strategy in Seoul.

The new ban shows the regime’s intention to “firmly” resolve and bring the black market under control, Jeong said.

“The ban is meant to root out people still trading at markets,” said Yang Moo-jin of Seoul’s University of North Korean Studies. “More broadly, it’s aimed at smoothly completing the currency reform by restricting the use not only of local currency but also foreign currency.”

The latest ban also applies to foreigners, who must exchange foreign bills into North Korean won in order to purchase items, reports said.

Sweden’s ambassador to North Korea, Mats Foyer, said by e-mail Thursday that he had received no official notification of the decree.

If this policy change does take effect, it will represent the republic’s third foreign exchange management regime.

Initially, the DPRK (like most communist countries) used Foreign Exchange Certificates (FECs) to control the circulation of foreign currency.  When foreigners arrived in Pyongyang, they changed their local money for FECs which could be spent in various sanctioned retail outlets. The DPRK’s Foreign Trade Bank issued FECs which were different from local North Korean won (issued by the central bank) in both color and and purchasing power.  Capitalist Westerners received green FECs and expats from fraternal socialist governments received red FECs.  Coins were also differentiated.

Shopping could be a bit confusing, however.  Price tags could potentially hold three numbers: the green FEC price, the red FEC price, and the won price.  I believe that shops that catered to repatriated Japanese Koreans (such as the Rakwon Department Store near the Changwang Health Complex) were priced in actual yen, but it is possible these individuals were forced to exchange their yen into green FECs.  Expats from fraternal socialist countries reportedly complained because although their governments were underwriting the DPRK, the red FEC prices in department stores were often higher than the green prices.

As in China, FECs were eventually abandoned and hard currency shops and state-owned retailers began accepting hard currency directly. I am not sure how, why, or when this transition occurred, but it was in effect until this week.  Under this regime, tourists, diplomats, business persons and other visitors spent their dollars, euros, yen and yuan directly on goods and services in the DPRK, but the retail outlets in which they were allowed to make purchases were severely limited.  Prices were originally denominated in dollars but in 2004 they were changed to euros (though dollars remained just as acceptable).

Under this regulatory regime, most visitors to the DPRK could arrive and leave without ever seeing any local currency.  Some percentage of the foreign exchange undoubtedly ended up in KWP, KPA, and state coffers, however it is likely that quite a bit was skimmed off the top, legally or otherwise, in the process.  This would explain the shift to the new regime.

This third foreign currency management regime is interesting but not for the reasons cited in the media. In addition to striking a blow at the country’s markets, which it most definitely will, this policy brings all of the overseas trading companies operating under the protection of the KWP, KPA, and select ministries, under the indirect control of the Foreign Trade Bank. Whereas these organizations were previously allowed to hold some level of foreign currency on site for discretionary purposes, they will now be forced to deposit these funds in a Foreign Trade Bank branch or exchange them for won at the official rate. Additionally, all of the future earnings that these organizations generate abroad will need to be handed over for won when their agents return from assignments overseas.  It is highly likely that these companies will choose to keep their earnings overseas rather than repatriating them, or use their earnings to purchase cheaper goods which they can import into the DPRK (while pocketing the difference and keeping it in a foreign bank account).

The implications for tourists, visitors, and expats are also interesting.  This new policy would imply that the Korea Trade Bank will set up currency exchange kiosk at the airports, border crossings, retail outlets, and hotels for foreigners to swap their currency for local won.  Although we will have to declare our hard currency when entering the country, the fact that we are carrying local currency makes it easier for us to take advantage of spontaneous purchases–even potentially from private merchants and restaurants.  In other words, knowing that locals will not come into possession of hard currency, the North Korean government might give us more “economic freedom” in our time there.  Of course this is probably just wishful thinking.  The gap between the official and market exchange rate will also give rise to black market currency traders who will seek out foreigners to the best of their abilities.

Overall, it is difficult to see this policy as anything but a power grab.  Foreign exchange will become more difficult to obtain and so will the goods manufactured or grown overseas (including China). North Koreans will be left with fewer choices and as a result will  come under greater control of the state.  I am willing to believe that most North Koreans have enough sense to predict this outcome as well.  It will be interesting to see how well this policy sticks or whether entrepreneurial North Koreans will find ways to evade the new rules as they have done countless times before.

Additional Links:

1. Here is a link to the original ABC story.

2. Here is a wikipedia page about the DPRK’s monetary history.

3. Here is the Daily NK story mentioned above.

4. Here are previous posts related to the DPRK’s currency revaluation.

5. This Reuters article adds additional information.

6. Here is a report by the Institute for Far Eastern Studies (IFES)

7. Here is a rather humorous report on the “benefits” that the currency fiasco is bringing the North Korean people.

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China plans cruises to North/South Korea, Russia and Japan

Tuesday, December 1st, 2009

By Michael Rank

China is planning cruises to North and South Korea, Russia and Japan from the northeastern border city of Hunchun 珲春, according to a Chinese-language report.

Ports of call will include Raseon (Rasŏn/Naseon/Nasŏn) 라선 on North Korea’s northeast coast, Sokcho 속초 in South Korea, just south of the DMZ, and Vladivostok, the report says, quoting Jilin province officials.

“There are still a number of questions to be resolved concerning the cruises, such as different visa requirements among the five countries concerned,” it quotes a Jilin  tourism official as saying. But he also says tourism officials from the five countries have “decided to take joint action and are making great efforts to open this tourist route.”

The head of the Jilin tourism bureau, He Baiping, is quoted as saying Jilin has seven border crossing points and that the number of tourists visiting Russia and North Korea is on the increase, which is good for the local economy.

The report gives no more details, but notes that Hunchun is close to the borders with North Korea and Russia and says the cruises will promote tourism in northeast Asia.

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South Korean conditions for resumption of Kumgangsan Tours

Monday, November 30th, 2009

UPDATE: The South Korean government is showing no eagerness to resume tours to Kumgnagsan.  Its list of conditions for doing so are listed below in the original post.  The last item in the list (The DPRK needs to provide more transparency about how it spends the money it receives from the Kumgang resort) seems to be the most important to the South Korean government at this point.  According to the Joong Ang Daily:

While it appears intent on improving inter-Korean ties at Kaesong, Seoul is in no hurry to resume suspended tourism to the North’s Mount Kumgang. The South Korean government for the first time tied the Mount Kumgang tours to international sanctions, saying providing cash payments for the program would run counter to an existing United Nations Security Council resolution.

Speaking to reporters late Wednesday, a high-ranking Unification Ministry official said Seoul was reviewing the possibility of replacing cash with goods to pay North Korea for tours to Kumgang. “The issue of compensating the North for the tourism is related to UN Security Council Resolution 1874,” the official said.

He was referring to the resolution adopted in June, following North Korea’s second nuclear test in late May. The resolution states that member states must not provide financial assistance to North Korea, except for “humanitarian and developmental purposes directly addressing civilian needs.” The resolution also says that UN members must not provide “public financial support” for North Korea where such aid “could contribute to the country’s nuclear-related or ballistic missile-related or other [weapons of mass destruction]-related programs or activities.”

The Kumgang tours have been suspended since July of last year after a female South Korean tourist was fatally shot by a North Korean soldier in a nearby restricted zone. Last week, the North sent a message through Hyundai Group, the South Korean operator of the tours, that it wanted to talk to the South about the resumption of the tours, but Seoul has been lukewarm to the overture. The Mount Kumgang tour had been regarded as a major cash cow for North Korea. Since it is difficult to verify the use of cash in the North, the question of the program’s possible violation of the resolution has been raised in the past.

When the North made the proposal through Hyundai, one government official said he was “none too pleased” with the North because it could have sent its message through official channels.

I expressed some skepticism for “alternative payment mechanisms” below.

ORIGINAL POST: The South Korean government does not plan to allow South Korean tourists to return to Mt. Kumgang until the DPRK:

1. Cooperates in an investigation of the shooting of a South Korean tourist last year.

2. Implements measures to prevent a recurrence.

3. Guarantees tourist safety.

Recently, however, the South Korean government added another item to the list:

4. The DPRK needs to provide more transparency about how it spends the money it receives from the Kumgang resort.

According to the Hankyoreh:

The government’s attitude is in line with a statement given by President Lee Myung-bak in an interview with European news channel EuroNews on July 7, in which he namely said that there are suspicions that the massive aid given to North Korea over the last decade had been used to develop nuclear weapons. A government official said they were unable to block all of the cash entering North Korea from tourists spending money at Mt. Kumgang, but the government has concluded that at least the tourism fees should be transparent. Up until the project was suspended last July, Hyundai Asan, the company that operates the Mt. Kumgang tourism project, had sent North Korea 30 dollars per person for same-day tours, 48 dollars for two-day, one-night tours and 80 dollars for three-day, two-night tours. In total, Hyundai Asan had given North Korea an estimated 15 million dollars per year.

How can they achieve “transparency”? The Hankyoreh reports on a couple of ideas:

1. Pay North Korea in goods such as grain or sugar.

2. Open up an escrow account for North Korea that would limit the DPRK government to transferring money only for the import of specific non-military-use items.

I am skeptical that these latter two ideas could accomplish their goal.  If South Korea paid the DPRK in goods (food, fertilizer, equipment), these could simply be resold to China for cash–as previous aid has been.

If South Korea set up an escrow account for the North Korean government which would be restricted somehow, such as prohibitions on the purchase of dual-use technologies, (would I be too cynical to predict that funds in the account would be limited to purchases of goods made in South Korea?) not much changes from the example above–although now there is a greater opportunity for the DPRK to engage in strategic arbitrage.  If I was the DPRK official in charge of the escrow account, I would look for price differences in commodities and capital between South Korea and China.  When I saw a price differential, I would buy the cheap goods in South Korea using the escrow funds and sell them for a profit in China. This could potentially net the DPRK more money than the previous policy proposal, but it does bring the DPRK one step closer to trading futures contracts!

Even if the DPRK did not get into the arbitrage game, there is no getting around fungibility.  For example, if the DPRK spent the entire escrow account on food, it could  steer domestic resources towards more profitable exports and get the cash that way.

Either way, most of the money goes where the leadership wants it to go.

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Korea Business Consultants Newsletter

Thursday, November 19th, 2009

Korea Business Consultants has published their October 2009 newsletter.  You can read it here.

Here is the newsletter table of contents:

COVER
– China eyes DPRK’s mineral wealth
– SinoMining acquires 51% of DPRK’s Hyesan Copper Mine
– Transformation and Modernization of North Korea
– DPRK sees peace pact with US as key to disarmament
– US “willing to engage DPRK directly”
– “DPRK Energy Sector Assistance to – Accompany Progress in… Discussions”
– Billy Graham’s son visits DPRK to deliver aid
– Lang visits Seoul

ECONOMY
– DPRK vows to expand trade
– China poised to give substantial aid
– DPRK films looking for joint producers

INTER KOREAN
– Buddhists from south, north call for reopening of Mount Kumgang tour
– Kaesong factory recognized for quality
– Frayed relations hindering development of mineral resources
– ROK aid to north falls
– Lawmakers call for use of rice surplus as DPRK aid
– Farmers demand rice price stabilization

POLITICAL
– Kenya establishes diplomatic relations with DPRK

CULTURE & SPORTS
– Eriksson to coach DPRK?
– DPRK’s Hong battles for gold at World Gymnastic Championships
– DPRK begins preparations for World Cup

KOREA COMPASS
– Mangyongdae
– Korean Proverb

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Arirang Mass Games 2009 wrap up

Monday, October 19th, 2009

UPDATE: According to Yonhap:

North Korea has wrapped up its Arirang festival, a two month-long mass gymnastics extravaganza, media outlets reported Tuesday.

The festival drew about 1.4 million people from home and abroad since it opened in August at the May Day Stadium in Pyongyang, according to the Korean Central Broadcasting Station, a North Korean radio network.

The 80-minute show was held daily except on Sundays after opening on Aug. 10.

North Korea has held the festival, named after the famous Korean folk song, almost annually since 2002. It features synchronized acrobatics, gymnastics, dances and flip-card mosaic animation. Performed by about 100,000 people, it is believed to be the largest gymnastics show in the world.

Read the full story below:
N. Korea wraps up Arirang gymnastics festival
Yonhap
10/20/2009

ORIGINAL POST: North Korea’s Mass Games (100,000 person gymnastics spectacle) began yesterday.

Mass Games used to be held only on special anniversaries (5, 10, 15, 60, etc.) of special holidays such as the end of the Korean War (Victory in the Fatherland Liberation War), Founding of the Worker’s Party, etc.  Since 2005 (when yours truly watched the show with Kim Jing il), however, the games have been hosted annually.

Although the themes and names of Mass Games performances have changed over the years, this specific performance called “Arirang” has been running since 2002—with slight modifications.

According to the AFP, this year the theme Kangsong Taeguk  (powerful and prosperous nation) was added to the performance. This of course reflects the policy goals the government hopes to achieve by 2012, Kim Il sung’s 100th birthday.

According to KCNA:

Extravaganza “Arirang” Starts

Pyongyang, August 11 (KCNA) — The grand gymnastic and artistic performance “Arirang” for this year started at the May Day Stadium Monday.

The creating staff and performers succeeded in re-representing the extravaganza in a brief span of time; they newly created Scene I of Act III and enriched it with fresh contents more truthfully representing the great mental power and skills of the Korean people and the appearance of the country that has undergone tremendous changes.

Among the audience were servicepersons and people from all walks of life, diplomatic envoys and representatives of international organizations here, foreign guests and overseas Koreans.

The performers made an impressive grand epic representation of Juche Korea that has risen high as a dignified sovereign power after putting an end to the history of the nation’s sufferings under the leadership of President Kim Il Sung and the unshakable faith and will of the army and people of the DPRK to build a great prosperous and powerful socialist nation guaranteeing the eternal prosperity of the nation under the Songun leadership of Kim Jong Il.

The performance was highly acclaimed by the audience for presenting fantastic scenery with a good combination of dynamic mass gymnastics and graceful artistry, ever-changing peculiar background scenes, stage decor and a variety of electronic displays.

Further thoughts:
1. This is one of the few times American tourists are able to visit the country. I recommend as many Americans as possible do so.  Based on personal experience, I know that many in the DPRK do not believe the propaganda they are told about Americans.  North Korea’s third generation is now coming of age and these individuals have neither seen a military conflict with the US nor personally known a relative killed in the Korean War.  The kids in particular are very curious.

2. The western media tends to assume the motivation for the mass games is pure propaganda for both a domestic and international audience–“come and see how united our people are”.  Although this might be compelling strategy, I can’t help but to be reminded of the great economic history book by Fogel and Engerman, Time on the Cross, about slavery in the Southern United States.

In the book, the authors discuss the strategy of plantation owners to create a number of cottage industries and tasks which were not terribly economical, however, they kept the slaves occupied so they did not have time to organize or pursue other sorts of goals that could lead them to “trouble”.  I am beginning to feel the same way about the Mass Games.  Kids who are not in school are ripe for trouble-making and the development of individual pursuits, so why not keep them busy all summer producing “wholesome” goods like the mass games?

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