North Korean Economy Watch

Back in 2011, an experimental project saw the shipment of coal from Hunchun (China) to Shanghia via the North Korean port of Rason. Since then, no such effort is known to have been repeated.

Until now, apparently…

According to UPI:

A maritime route that includes the North Korean port of Rajin has enabled Chinese shippers to significantly reduce costs over a more time-consuming land route, South Korean news agency Yonhap reported.

Chinese cargo from the northeastern city of Hunchun has made the journey to bustling Shanghai twice in June, according to Chinese authorities.

Hunchun officials said 38 containers that left the city on June 24 arrived in Shanghai on June 27, and on June 11, 42 containers were delivered to China’s eastern coast – all using Rajin as a key point where cargo could be loaded onto ships.

I have not been able to locate any additional information.

Read the full story here:
China, North Korea cooperate on Rajin shipping route
UPI
Elizabeth Shim
2015-7-2

According to Xinhua:

An oft-suspended tourist route between China and North Korea has been reopened after its latest closure.

A charter flight carrying 73 tourists left from Yanji, in the Korean autonomous prefecture of Yanbian in northeast China’s Jilin province, for Pyongyang in North Korea on Thursday.

The route will be open until early October, with a planned 32 charter flights on Thursdays and Sundays. All seats on the flights in June have been booked, according to Yanbian Tianyu Travel Agency, which runs the route with North Korea’s Air Koryo.

A four-day trip costs 3,980 yuan (US$650) per person while a five-day trip costs 4,480 yuan (US$720) per person, according to the agency.

The route between Yanji and Pyongyang was first opened in July 2012, but it was closed for the whole of 2013 due to tensions in North Korea. It resumed on June 29 last year and was suspended again in October. A total of 90 flights had been completed on the route by October.

Read the full story here:
Yanbian-Pyongyang tourist route reopens
Xinhua
2015-6-21

Pictured Above (Google Earth): The new Samjiyon railway line route (in blue) and the original narrow gauge line (in white)

UPDATE (2015-11-18): According to the Pyongyang Times:

Broad-gauge railroad construction makes good headway

The project for building a broad-gauge railway between Hyesan and Samjiyon is being pushed briskly.

According to information available, the work for roadbed has been carried out by 80 per cent and that for small structures by over 70 per cent as of mid-November.

The field construction headquarters set a goal to speed up the construction of roadbed, railway bridge, tunnel and retaining wall for the first-stage assignment and complete the building of small structures by the end of this year, and is concentrating all efforts and means on its implementation.

To wind up wet project before the soil is frozen it is organizing the guidance over the execution of construction scrupulously while seeking the ways to carry on construction uninterruptedly even in winter.

Every construction group ensures that the flames of creating a new Korean speed flare up in all construction sites by arousing the enthusiasm of members of the shock brigade.

In the wake of having cut two tunnels through, the members of the South Hwanghae provincial construction group are pushing the projects for roadbed, retaining walls and small structures in a three-dimensional way.

Ministries and national agencies, the Pyongyang municipal construction group and the northern railway construction youth shock brigade have completed the construction of three railway bridges.

The flames of innovation for rounding off the projects as soon as possible are also blazing up at the workplaces of the North and South Hamgyong provincial construction groups.

Though working at the section with the most unfavourable working conditions, the members of the Jagang provincial construction group overfulfil their assignments two or three times every day.

Builders are making collective innovations in every workplace while putting the main stress on ensuring the speed and quality of construction.

UPDATE 3 (2015-10-7): Naenara announces that work has begun on the new line. You can read the PDF here.

UPDATE 2 (2015-6-17): I discuss this new railway project on Radio Free Asia.

UPDATE 1 (2015-6-4): KCNA announces work on Samjiyon railway line. According to the article:

A broad-gauge railroad from Hyesan to Samjiyon will be constructed.

A ground-breaking ceremony took place before the Samjiyon Grand Monument on Thursday.

Present there were O Su Yong, secretary of the C.C., the Workers’ Party of Korea, officials concerned, builders and working people in Samjiyon County.

The participants laid bunches of flowers before the statue of President Kim Il Sung at the Samjiyon Grand Monument and paid tribute to him.

O Su Yong made a report to be followed by speeches.

The reporter and speakers said the construction of the new railroad is a sacred work for glorifying forever the immortal exploits performed by Kim Il Sung and leader Kim Jong Il in the area of Paektu and their revolutionary careers.

They called on all builders to wind up the project as scheduled by overcoming hardships and difficulties.

ORIGINAL POST (2008-10-19): According to the Daily NK:

North Korean authorities have started construction for expanding the railway connecting Hyesan, Yangkang Province and Samjiyeon from a narrow to a broad railroad.

An inside source from Yangkang Province relayed in a phone conversation with the Daily NK on October 16th, that “Since the 1st of this month, the ‘Shock Brigade for the Propagation of Party Ideology (the June 18th Shock Brigade)’ came and started preparing for expanding the railway between Hyesan and Samjiyeon. Now, they are building housing for brigade members who will begin construction in early November.”

According to the source, the Hyesan-Samjiyeon railway was a “narrow gauge (railroad)” which connected the rail between Hyesan and Bocheonbo to Samjiyeon Lake in the mid-1980s and only small cars which fit 38 people could travel on it. Not only was it a railroad on which small trains could travel, it suffered significant damage in the 1994 mass flood and ceased operations until recently.

The North Korean authorities believed that Samjiyeon played an important role to propagandize Kim Il Sung and Kim Jong Il’s revolutionary ideology, so they attempted to build a “broad gauge” between Hyesan and Samjiyeon when Kim Il Sung was alive. However, the project is still under construction due to the nation’s weak financial predicament and rough construction environment.

The source relayed, “The number of construction workers totals approximately 50,000 people, including 30,000 ‘June 18 Shock Brigade members and 20,000 others mobilized from rural areas, enterprise officials, and farms. The area of construction is approximately 70km, but it is a rough, mountainous terrain, so the construction will not be easy.”

He also stated, “Currently, a part of the Shock Brigade have come in to build housing, but at the end of October, all members will come. The Shock Brigade is in charge of doing construction far from the city and in some places near the city, and the enterprise officials or farmers will take charge and lead the construction.”

At the news of the beginning of the railroad construction, citizens showed a welcoming and a concerned response.

The source said, “The merchants are glad at the opportunity to make money, but the farmers are all concerned that the number of thieves will increase on the farms. The place where construction will take place is near the border region, so smugglers are concerned that the border patrol will become toughened.”

The source added that, “The Shock Brigade mobilized for the construction has said that the construction has to be completed before the 100th anniversary of the Supreme Leader’s (Kim Il Sung) birthday in 2012. That is why people have been rushing to begin construction despite the coming of winter.”

The Los Angeles Times reported on the 27th of last month that the construction of high buildings has been rapidly taking place in Pyongyang and hotels and theaters have also been refurbished. The construction of the 107-story Ryukyung Hotel, which has been left under construction for a long time, also has resumed.

The LA Times pointed out the fact that such construction is taking place when the World Food Programme (WFP) has warned of an economic crisis as serious as in the mid-1990s, during which 2,000,000 starvation deaths resulted in North Korea, is simply miraculous and outrageous.

Read the full story here:
Railway Construction by Kim Il Sung’s 100th Birthday Takes Precedence
Daily NK
Lee Sung Jin
2008-10-19

According to Radio Free Asia:

North Korea’s military police force, which operates outside of the control of the normal authorities, is the driving force behind smuggling in the country, despite a nationwide crackdown on the practice, according to sources inside the hermit kingdom.

Sources said that as a result of North Korea’s “military first” policy, the military police wield a vast amount of influence over a far-reaching network of contacts in the nation, which allows them to facilitate smuggling by soldiers along the border with China.

“Most smuggling has been carried out by soldiers, and it’s particularly difficult to smuggle in massive quantities without the help of the military police,” a source in North Hamgyong province on the border with China recently told RFA’s Korean Service.

“The military police smuggle precious metals, such as gold, silver, copper, nickel, industrial diamonds and molybdenum. They also smuggle resources belonging to the nation, and plants and animals, as well as historical items, cultural artifacts, drugs, and medicinal herbs,” the source said, speaking on condition of anonymity.

Military police help smuggle the goods into China in return for consumer goods, such as food, fertilizer and daily necessities, which are then peddled inside of North Korea, he said.

North Korea’s military police force is divided into the Pyongyang Military Police under the direct control of the military’s central General Staff Department, the Mobile Military Police, the Garrison Military Police serving each provincial branch of the military, and the Train Crew Military Police, the source said.

The Garrison and Train Crew divisions are those most directly involved in smuggling, he said.

A second source living in Yanggang province, which also borders China, confirmed that the Garrison Military Police have been particularly helpful in furthering the work of the nation’s smugglers.

“There’s no problem using trains and cars [to smuggle] with the help of the Garrison Military Police, and people say, no matter how severe the crackdown is, all paths lie open if you have pull with that division,” said the source, who is a resident of Yanggang’s capital Hyesan.

“A few days ago in Hyesan, a military policeman stopped a vehicle and forced the people to get out and load [smuggled] goods sent for a military camp, but driver and passengers couldn’t say a word [in protest].”

Likewise, he said, smuggling has been carried out systematically by members of the Garrison Military Police along the border with China.

Sources in North Korea agreed that as long as the economy remains in shambles and the “military first” policy remains in effect, not only resources belonging to the nation, but historical items and cultural artifacts, will continue to flood out of the country into China.

Lucrative practice

In March, sources told RFA that authorities in North Korea were offering a variety of incentives, including increased food rations and Workers’ Party membership, to informants on would-be smugglers who try to cross the frozen Tumen River into China during the lean months of the winter season.

The sources said the rewards appeared to have been ordered by the Kim Jong Un regime as part of a bid to crackdown on the country’s pervasive smuggling problem.

In January, sources said that demands by North Korean border guards for a greater share of the profits of smuggling had slowed the movement of commodities across the border with China, causing hardships for North Koreans who earn a living by trafficking in goods.

They said at the time that because of tightened security measures put in place over the last year, the fees charged by guards delivering goods across the border had risen as high as 30 to 40 percent of the smugglers’ profit compared to 11 percent previously.

Read the full story here:
Radio Free Asia
Jieun Kim
2015-6-12

According to Port News:

In 2014, foreign-trade cargo transportation through the border crossing Khasan (Russian border)–Tumangan (North Korean border) increased 3.2 times over 2013. At the same time, the transportation of coal increased 24 times. In the first quarter of this year, this trend continued. The volume of transported goods increased several times—up to 432 000 t.

Such data were presented by President of Russian Railways Vladimir Yakunin at the OSJD Railway Summit in Seoul.

In 2014, 280 000 t was transported, of which 238 200 t was coal. In the first quarter of 2015, 408 000 t of coal was sent to the port of Rajin.

In total, according to Mr. Yakunin, it is planned to transport 1.5 million t of coal to the port of Rajin in 2015.

Recall that Russian Railways has implemented the reconstruction of the Khasan (Russia)–Rajin (North Korea) railway section and the construction of a cargo terminal in the port of Rajin. The cost of the project amounts to 10.6 billion rubles.

“In fact, the restoration of the site is a pilot project in the reconstruction of the Trans-Korean Railway, which in the future will provide communication between North and South Korea,” said Mr. Yakunin.

Since November 2014, four experimental coal transportation runs have been carried out through the port of Rajin to South Korea.

“The main task today is to ensure the involvement of enough traffic to complete the work of the railway and the terminal and provide a return on investments,” emphasized the head of Russian Railways.

The capacity of the Khassan–Rajin site and the terminal is 5 million t of cargo a year. In the future, when a favorable situation is created, the terminal may be employed for the transport of containers.

“In cooperation with South Korean companies POSCO, Korail, and Hyundai Merchant Marine, a due diligence investigation was conducted and we are discussing the possibility of creating a joint venture for the operation and development of infrastructure. This project is the first practical step in the development of trilateral cooperation on the development of Trans-Korean Railway. In this venture, we count on the support of South Korean businesses, the government, and the President of the Republic of Korea,” said Vladimir Yakunin.

Read the full story here:
Russian Railways transports 420,000 t of cargo to the Port of Rajin in QI’15
Port News
2015-6-1

According to RBTH:

North Korea and the Russian Far East will be connected by a pontoon bridge, under a wider road transport agreement signed between the two countries last week, Minister for the Development of the Russian Far East, Alexander Galushka said.

Russia has already commenced working on the project documentation for the construction the bridge at the Khasan border crossing point Khasan in the Primorye Territory the Ministry for the Development of the Russian Far East said Monday.

At the moment, a railway bridge over the Tyumen River is the only surface transport connection between the neighbours.

Read the full story here:
North Korea and the Russian Far East to be connected by a pontoon bridge
RBTH
2015-5-6

UPDATE 3 (2015-8-4): US group seeks seizure of Mudubong. According to the Financial Times:

The family of a South Korean man believed killed in North Korea are trying to seize a Pyongyang-owned vessel being held in Mexico, in a new sign of how legal snares are complicating the regime’s international trade.

Kim Dong-sik, a 53-year-old pastor, was abducted by North Korean agents in China in 2000 and can be presumed dead, a US court ruled in April. It ruled that Pyongyang should pay $330m to Mr Kim’s family, who are US citizens.

The family have seen an opportunity to secure a first instalment of this sum, in the form of the Mudubong, a North Korean cargo ship held by Mexican authorities since colliding with a coral reef last July.

On Tuesday their lawyers vowed to appeal after a Mexican court declined to consider their petition to place a lien on the Mudubong, which would give them the legal right to seize it. The court ruled on Monday that the case did not fall under its jurisdiction.

“We want to get the boat into our hands and sell it, and put the money towards the judgment against North Korea,” said Nitsana Darshan-Leitner, the family’s lead lawyer, who represented the family in the successful US action and who has previously won cases resulting in the seizure of Iranian-owned assets in the US.

Some legal experts consider the move a long shot, given that the US ruling would first have to be recognised in Mexico — an opinion seemingly endorsed by the Mexican court’s initial ruling. However, Alberto Mansur, the lawyer representing the family in Mexico, maintains that the case is on firm ground.

“This has never been done when the defendant is a sovereign nation but the recognition procedure is pretty straightforward,” he said.

The North Korean embassy would be the defendant in the case, he said. “Our laws provide for the attachment of assets when enforcing a claim,” Mr Mansur added.

The lawsuit brings a new twist in an affair that reflects the complexity of efforts to implement UN sanctions against Pyongyang. Two weeks after the Mudubong ran aground off the Mexican coast, the UN Security Council and US Treasury issued new sanctions against Ocean Maritime Management, which was accused of involvement in illicit arms trading. OMM is the Mudubong’s ultimate owner, according to a panel of experts appointed by the Security Council.

In an attempt to sidestep this measure, the panel of experts reported in February, North Korea has attempted to conceal the fact that OMM controls Mudubong. The registered owner, Mudubong Shipping Company, was quoted by North Korean media in May as saying: “Our company is a corporate body independent of [OMM] . . . There is . . . neither reason nor ground . . . to make the ship subject to ‘sanctions’.”

But the experts’ report said they still considered the Mudubong an asset of OMM, and had conveyed this to Mexico’s government. The report criticised weak implementation of sanctions against OMM, with at least six nations inspecting OMM vessels but failing to impound the ships.

“The Security Council confirmed on May 6 the Mexican government’s obligation to continue freezing the Mudubong. Mexico will continue to abide by this decision for as long as it is not modified or withdrawn by the Security Council,” the Mexican foreign ministry said in an emailed response to questions.

The ministry did not respond to a question about what it planned to do with the ship.

UPDATE 2 (2015-7-17): Mexico has repatriated the remainder of the crew. According to UPI:

All 33 North Koreans on board a ship that had drifted into a coral reef near Mexico have been repatriated after a year of custody.

Mexico media outlet E-veracruz reported Friday a port operations manager in Tuxpan, Veracruz said 13 remaining North Koreans were sent home on Wednesday.

33 North Korean nationals were on board the Mu Du Bong when the ship had fallen off its designated sea route, and 20 detainees were released earlier this year, South Korean news agency Yonhap reported.

Two members of the North Korean embassy in Mexico had visited the port city to urge the release of the remaining 13 on Tuesday.

The 6,700-ton Mu Du Bong had left from a Cuban port in July 2014 before it was stranded on the reef 9 miles from Tuxpan.

Mexico had detained the ship’s personnel because the two countries were in disagreement over the ownership of the Mu Du Bong.

Mexico had said the ship belonged to North Korea’s Ocean Maritime Management, a firm blacklisted by the U.N.’s North Korea sanctions committee for engaging in illicit arms trades in the past.

In response, North Korea’s top envoy to the U.N. denied any links between the Mu Du Bong and the blacklisted company.

Read the full story here:
Mexico repatriates all 33 North Koreans on board ship Mu Du Bong
UPI
Elizabeth Shim
2015-7-17

UPDATE 1 (2015-5-9): DPRK unhappy with UN freeze on Mudubong. According to Xinhua:

The Democratic People’s Republic of Korea (DPRK) slammed the United Nations Security Council on Friday for slapping sanctions on “Mudubong,” a DPRK’s cargo ship that has been held for almost ten months in Mexico after it struck a coral reef off the coast.

The UN Security Council decided to freeze the Mudubong ship on Wednesday because it believed the ship belongs to Ocean Maritime Management (OMM) Co., Ltd, a company blacklisted by the United Nations in July 2014 for shipping embargoed arms.

But the manager of Mudubong Shipping Co., Ltd., whose name was not given, claimed that Mudubong is a legitimate commercial ship operated by Mudubong Shipping Company and has no links to the OMM, according to the KCNA news agency.

“Our company is a corporate body independent of the Ocean Maritime Management Co., Ltd. as it is a social cooperative organization established according to relevant laws of the DPRK,” the manager said in a statement.

“I vehemently denounce the step as a provocation of the hostile forces to lay a hurdle in our shipping business, a wanton breach of international law, undisguised disregard of domestic laws of the sovereign state and … a grave encroachment on the sovereignty of the DPRK,” the KCNA quoted the manager as saying.

The manager insisted Mudubong is “a peaceable civilian trading ship which has neither violated international law nor handled any prohibited cargo,” adding that the Security Council has no justification to impose the sanctions.

The manager requested Mexican authorities to provide cooperation on the principle of humanitarianism in letting free the ship together with its crew members.

Read the full story here:
DPRK slams UN freeze on Mudubong cargo ship
Xinhua
2015-5-9

ORIGINAL POST (2015-4-23): McClatchy post solid summary of Mudubong case:

The cargo holds were empty and the 430-foot-long North Korean freighter Mu Du Bong was riding high in the water when the vessel slammed into a coral reef in Mexican waters in the Gulf of Mexico last July 14, thudding to a halt.

The freighter did more than tear up staghorn and elkhorn coral. It also crashed into U.N. sanctions that have trapped it in the hands of the Mexican government.

Salvage vessels pulled the freighter off the reef 12 days later and brought it to port in Tuxpan, where it’s been idle for nine months, moored to a wharf on the Tuxpan River. North Korea has declined to repatriate the 33 crew members, and they occasionally can be seen fishing off the freighter’s deck.

Earlier this month, North Korea’s deputy representative to the United Nations made some slightly menacing remarks demanding that Mexico terminate what he called a “complete abnormal situation.”

“We will take necessary measures to make the ship leave immediately,” envoy An Myong Hun said at a news conference April 8 in New York.

It’s an odd standoff in a corner of the world far from North Korea and the chambers of the U.N., where diplomats knowingly mention 1718, 1874 and 2094, the Security Council resolutions aimed at shutting down North Korea’s nuclear program and reining in its weapons proliferation efforts.

It was those arms-trafficking practices that led the U.N. Security Council to impose sanctions on a North Korean concern, Ocean Maritime Management Co. Ltd., that counts the Mu Du Bong among its 14 oceangoing freighters.

Another of the company’s vessels was intercepted in Panama nearly two years ago, its cargo holds piled high with sacks of Cuban sugar. When inspectors removed the sacks, they discovered two MiG-21 fighter jets, 15 jet engines and radar control systems for missile launches. The freighter, the Chong Chon Gang, had left Cuba bound for North Korea and was about to transit the Panama Canal when Panamanian inspectors boarded it. Cuba claimed the war materiel was being sent to North Korea to be refurbished and was to be returned.

The harbormaster at the Port of Tuxpan, Alberto Orozco Peredo, said the captain of the Mu Du Bong had a far humbler mission than smuggling weaponry.

“He was coming for fertilizer,” Orozco said, adding that the freighter had been chartered in Cuba for a single excursion to Tuxpan to pick up the shipment and return to the island. “Maybe they (the North Koreans) offered to do the shipping for cheap.”

Orozco said he’d accompanied members of a U.N. Security Council sanctions committee when they inspected the moored ship. He said they’d found nothing.

“For a 30-year-old ship, it was in a good state of repair. You can see that it’s clean,” Orozco said. “The vessel complies with all security standards.”

The crew members have shore passes but rarely leave the vessel. When six months had passed, their temporary visas expired. In recent days, immigration officials have begun the work of granting them indefinite humanitarian visas.

While North Korea can’t dislodge its ship, the reason it keeps all the crew members in Mexico is unclear.

“From day one, they have been free to move wherever they want to go, within or outside Mexico,” Ricardo Alday, political coordinator of Mexico’s mission to the U.N., said in an email.

A local shipping agency, Tajin Consignaciones, arranges through the North Korean embassy in Mexico City to provide food to the crew. Agency director María de los Ángeles Monsivais declined to speak to a reporter.

The U.N. Security Council hit Ocean Maritime Management with sanctions last July, and the company scrambled to keep its ships on the high seas without seizure, often with their maritime transponders turned off.

“Thus far, 13 of the 14 vessels controlled by OMM have been renamed, their ownership transferred to other single ship-owner companies . . . and vessel management transferred to two main companies,” said a preliminary U.N. report dated Feb. 23.

The freezing of the Mu Du Bong has put Mexico in a tough position.

“There is no set procedure for what to do once they seize the ship,” said Jeffrey Lewis, director of the East Asia Non-Proliferation Program at the Center for Nonproliferation Studies, part of the Monterey Institute of International Studies in California.

Some experts think that going after North Korean freighters engaged in ordinary trade is only likely to drive Pyongyang away from any negotiations.

“That’s a misguided effort. People have to make a distinction between things that are prohibited and normal commercial activity,” said John Merrill, a former chief of the Northeast Asia division of the State Department’s Bureau of Intelligence and Research. “It seems a little bit ridiculous to keep holding these guys, and it’s going to have consequences.”

Others disagree, saying economic pressure on North Korea is the only way to get its attention and force concessions.

“The purpose of the sanctions is to buy time for diplomacy. If the sanctions are not being enforced, then there’s no pressure at all on North Korea,” said William J. Newcomb, a visiting scholar at the School of Advanced International Studies at Johns Hopkins University who’s a former member of the U.N. Security Council’s panel of experts on North Korea sanctions.

Newcomb noted that the Mu Du Bong’s travels were similar to the activities of the Chong Chon Gang before it was caught carrying Cuban weapons.

“It had all the earmarks of an arms transfer,” he said.

Mexico reportedly was about to free the ship late last year, but An, the North Korean envoy, said the nation had received a warning from a senior U.N. official.

“Suddenly, the Mexico government revoked its position. They said they have received advice from an unnamed undersecretary-general of the United Nations for the continued detention of the ship,” An told reporters.

Now, Mexico’s posture is that the ship will be retained indefinitely.

“The ship will be held (as long as) the company that owns it remains under U.N. sanctions,” Alday wrote in his statement, noting that Mexico “is obliged to comply with U.N. Security Council resolutions.”

A former senior Mexican diplomat, Andrés Rozental, said Mexico wasn’t worried about any possible retaliation from North Korea.

“They’re obviously not going to send their military here to free that boat,” he said.

According to the Daily NK:

More independent transportation companies, run by the donju, or new affluent middle-class, are springing up in North Korea’s main transit hubs and driving up fares.

“There is a growing number of bus and truck companies operating not only in Pyongyang but nationwide,” a source from North Hamkyung Province told Daily NK last Friday. “People are buying buses or trucks and then paying the state a certain fee to open up transportation companies authorized by the central authorities.”

She explained that those members of the donju with significant amounts of money establish contacts with central bodies and win over the right to operate. “The ‘Pyongyang Transit and Trade Company’ and the ‘General Bureau of Transportation,’ which fall under the Cabinet, write up permits for individual donju and are authorizing the operations in exchange for a certain amount of the profits,” she said, adding that each region has bus companies that come from those two Pyongyang-based offices, creating a de facto public-private collaborative operation.

The donju, by importing second-hand buses from China for 3,000 to 4,000 USD, are overtly raking in profits and revolutionizing bus transportation in North Korea; personal bus transportation was only available in two to three cities in the early 2000s, including Pyongyang, but now it has spread nationwide. According to the source, some companies own anywhere from dozens to hundreds of buses.

“The fare between Chongjin and Musan used to be 8,000 KPW [1 USD] until just two years ago, but now it has jumped to 50,000 KPW [6.25 USD]. The bus that runs between Chongjin and Kim Chaek is currently 80,000 KPW [10 USD] – ten times the original price,” she noted. “Donju are raising the fares to whatever they want depending on the oil prices and exchange rate with the Chinese yuan.”

In the North’s main cities, state-run trams, trolleys, and long-distance buses do operate, but the vehicles are old and the companies beset by economic difficulties. The number of donju-run companies, however, is increasing by the day, leaving the state no choice but to accept their money and grant them license to operate.

“People are happy that there are more options for transportation but there are a lot of complaints about the expensive fares,” the source said. “Some say it’s not unusual for such companies to be operating in the way they do considering the dilapidated condition of state companies, but in the end it’s the regular people who bear the brunt of it all.”

Additional posts on the DPRK’s bus networks here.

Read the full story here:
Transportation Options Taking Off
Daily NK
Choi Song Min
2015-04-01

According to the Daily NK:

The North Korean railway system, a popular form of public transportation, is the latest mechanism through which the authorities are raking in profits. Railway officials are charging more than 100 times the regular state price for tickets on the most popular routes– a move specifically targeting the donju [new affluent middle class] and their money.

“Following orders handed down from the Ministry of Railways, diesel engines started towing train cars at the beginning this year, allowing the trains to run on time,“ a source in North Hamkyung Province reported to Daily NK on March 4th. “Previously it was hard to operate the 23~24 trains, which run between Pyongyang and Chongjin, due to shortages of electricity. However, this problem was solved by utilizing diesel engines that replaced the electric trains.”

He went on to explain that diesel engines, free from reliance on electricity, allow trains to depart and arrive on time despite shortages in power. Needless to say, this reliable option is extremely popular, particularly among those reliant on them to do business, which the railways are using to their advantage by charging exorbitant fees for their services.

“A limited number of tickets for these trains are sold in the official railway offices for 1,300 KPW [10 RMB] to regular customers. But it’s all a facade. Behind the scenes, dozens of women are being mobilized to sell tickets for 100 times the actual price,” he said. “It’s already difficult enough for most travelers to purchase tickets for a train bound for Chongjin from Pyongyang, and now the only real option is to get them on the black market, where the cost is exponentially higher.”

In this burgeoning black market arena, ticket prices have skyrocketed 100 RMB [135,000 KPW] and make up 80% of total sales; only 20% of ticket sales take place at official train station ticketing offices. Areas surrounding the stations are filled with female brokers selling tickets, who, according to the source, constantly holler out, “Get your ticket for the express train—100 RMB!”

For the donju, trains serve as an integral part of their business operations–and time is money. “Trains other than the Pyongyang-Chongjin train take more than fifteen days to travel 800 km,” the source explained. “Late last month, it took a 9~10 train from Pyongyang bound for Musan twenty days to arrive at its destination.”

The 7~8 train, which runs from Pyongyang to the Tumen River, was originally an international express bound to Russia, while the 9~10 train transported civil servants to various locations for international business trips. The 23~24 train, however, is the most widely used train in modern North Korea, designated specifically for business purposes since the proliferation of market activity at the start of the 21st century.

Read the full story here:
Railways Profit on Donju Cash
Daily NK
Choi Song Min
2015-3-5

The report is dated February 23, 2015 and you can download the PDF here.

Andrea Berger commented on the report in this article at 38 North.

Media coverage of the report has focused on two aspects: 1. North Korea has changed the name of the ships in its commercial fleet to avoid sanctions enforcement. 2. North Korean spies managed to infiltrate the UN World Food Program and UNESCO.

Here is Reuters on the report:

“Exclusive: Sanctioned North Korea shipping firm still active, renamed ships – U.N. panel”

A U.N.-blacklisted North Korean shipping company has renamed most of its vessels in a bid to disguise their origin and continues its illicit shipments in violation of United Nations sanctions, according to a U.N. experts report seen by Reuters on Wednesday.

The U.N. Security Council’s Panel of Experts on North Korea, which monitors implementation of sanctions on Pyongyang, also said in the 76-page report that North Korea “continued to defy Security Council resolutions by persisting with its nuclear and ballistic missile programs.”

North Korea is under United Nations sanctions because of its nuclear tests and missile launches. In addition to arms, Pyongyang is banned from importing and exporting nuclear and missile technology and is not allowed to import luxury goods.

The experts’ report also said the sanctions have not curbed food or humanitarian aid to the impoverished hermit state, but it recommended that the U.N. spell out which items for such use are exempt.

The council last July blacklisted shipping company Ocean Maritime Management Company (OMM) for arranging an illegal shipment on the Chong Chon Gang ship, which was seized in Panama and found to be carrying arms, including two MiG-21 jet fighters, hidden under thousands of tonnes of Cuban sugar.

“Following the designation of OMM … (North) Korea acted in order to evade sanctions by changing the registration and ownership of vessels controlled by the company,” the report said.

“Thus far, 13 of the 14 vessels controlled by OMM have been renamed, their ownership transferred to other single ship owner companies (with names derived from the ship’s new names) and vessel management transferred to two main companies,” it added.

The report said OMM worked with individuals and entities based in countries such as Brazil, China, Egypt, Greece, Japan, Malaysia, Peru, Russia, Singapore and Thailand.

The panel recommended that the council’s sanctions committee blacklist 34 OMM entities (shell companies), including Chongchongang Shipping Co, Amnokgang Shipping and Biryugang Shipping. It also recommended sanctioning OMM Vice President Choe Chol Ho, Chongchongang Shipping President Kim Ryong Chol and three Chongchongang directors.

It said that North Korean diplomats, officials and trade representatives played key roles in illegal weapons and missile deals. They often were involved in illegal funds transfers.

The panel also said North Korean intelligence agents aided the movement of money believed to be linked to weapons transactions.

The report said agents of the Reconnaissance General Bureau (RGB), North Korea’s main intelligence agency, had worked at international organizations and were using those positions to support activities aimed at skirting sanctions.

It cited as an example the French government’s decision to freeze assets of Kim Yong Nam, an RGB officer working under cover as an employee at UNESCO, the U.N. cultural and scientific organization in Paris, and his son and daughter. His son Kim Su Gwang, also an RGB officer, was working at the U.N. World Food Program.

The panel said Kim Young Nam’s daughter, Kim Su Gyong of the Korean United Development Bank, “was engaged in financial activities under false pretences in order to conceal the involvement of her country.”

The panel also opened its first inquiry into the use of drones. Between October 2013 and March 2014, South Korea found wreckage of three drones it determined were from North Korea and had been spying on military facilities.

The Security Council has banned the supply, sale or transfer of complete armed or surveillance drones with a range of at least 300 km (186 miles). The panel said it was unclear if the recovered drones were acquired abroad or made in North Korea.

EXEMPTIONS

The experts found “no incidents where bans imposed by the (U.N.) resolutions directly resulted in shortages of foodstuffs or other humanitarian aid.”

“National legislative or procedural steps taken by (U.N.) member states or private sector industry have been reported as prohibiting or delaying the passage of certain goods to (North Korea),” the report said. “It is sometimes difficult to distinguish these measures from United Nations sanctions.”

The U.N. Security Council says the sanctions are not intended to harm North Korean civilians, but there is no exemption mechanism. For that reason, the experts recommended that exemptions be proposed “provided that such items are confirmed to be solely for food, agricultural, medical or other humanitarian purposes.”

North Korea has said the sanctions are illegal and aimed at toppling the country’s reclusive government. A U.N. inquiry last year reported systematic torture, starvation and killings by the country’s leaders that are comparable to Nazi-era atrocities.

In the Associated Press:

“UN: North Korean company renames ships to evade sanctions”

A North Korean shipping company that famously tried to hide fighter jets under a cargo of sugar later sought to evade U.N. sanctions by renaming most of its vessels, a new report says.

The effort by Pyongyang-headquartered Ocean Maritime Management Company, Ltd. is detailed in the report by a panel of experts that monitors sanctions on North Korea. The report, obtained by The Associated Press, makes clear the challenge of keeping banned arms and luxury goods from a nuclear-armed country with a history of using front companies to duck detection.

The U.N. Security Council holds consultations Thursday on the report, which also says North Korea’s government persists with its nuclear and missile programs in defiance of council resolutions.

North Korea’s mission to the U.N. did not respond to a request for comment.

The council last year imposed sanctions on OMM after Panama in 2013 seized a ship it operated that carried undeclared military equipment from Cuba. Panamanian authorities found two Cuban fighter jets, missiles and live munitions beneath the Chong Chon Gang’s cargo of sugar.

The council’s sanctions committee said that violated a U.N. arms embargo imposed in response to North Korea’s nuclear and missile programs. At the time, U.S. Ambassador Samantha Power said that imposing a global asset freeze on OMM meant that the company would no longer be able to operate internationally.

But the new report says that in the months after the sanctions were imposed, 13 of the 14 ships controlled by OMM changed their owners and managers, “effectively erasing” the company from a database kept by the International Maritime Organization. Twelve of the ships “reportedly stayed, visited or were sighted near ports in foreign countries,” and none were frozen by member states as the panel of experts recommends.

The new report explores the shipping company’s global reach, using people and entities operating in at least 10 countries: Brazil, China, Egypt, Greece, Japan, Malaysia, Peru, Russia, Singapore and Thailand. The report recommends updating the sanctions list with 34 OMM entities and says all 14 vessels should be subject to sanctions.

No interdictions of the kind that Panama made in 2013 were reported in the period between Feb. 8 of last year and Feb. 5 of this year. But the new report warns that the panel of experts sees no evidence that North Korea “intends to cease prohibited activities.”

The report also says diplomats, officials and trade representatives of North Korea continue to “play key roles in facilitating the trade of prohibited items, including arms and related materiel and ballistic missile-related items.”

The panel of experts warns that some U.N. member states still are not implementing the council resolutions that are meant to keep North Korea from further violations.

North Korea also faces an embargo on luxury goods, but the report found that it managed to bring in luxury goods from multiple countries, including with the help of its diplomatic missions. Some items were for the country’s Masik Pass luxury ski report, which opened in 2013. China told the panel of experts that the ski lift equipment it provided was acceptable because “skiing is a popular sport for people” and that ski items are not specifically prohibited.

In another case, a yacht seen alongside leader Kim Jong Un in 2013 was sourced by the panel of experts to a British manufacturer, Princess Yachts International, which the panel said did not reply to a request for more information.

The panel also said it has opened its first investigation into a case involving North Korean drones after the wreckage of three drones was found in South Korea in late 2013 and 2014. The report says the drones had been used for reconnaissance over South Korean military facilities and that the drones contained components “sourced from at least six foreign countries.”

North Korea protests that the U.N. sanctions are harmful to its citizens, but the report says it has found no incidents where they “directly resulted in shortages of … humanitarian aid.” It does recommend that the sanctions committee propose exemptions for purely food, medical or other humanitarian needs.

Here is more in the Telegraph.