Western Aid: The Missing Link for North Korea’s Economic Reviva

May 9th, 2011

AEI Working Paper
Nicholas Eberstadt

Download PDF here

[T]his past January, for the first time in over two decades, Pyongyang has formally unveiled a new multi-year economic plan: a 10-year “strategy plan for economic development” under a newly formed State General Bureau for Economic Development. The new economic plan is intended not only to meet the DPRK’s longstanding objective of becoming a “powerful and prosperous country” [Kangsong Taeguk] by 2012 (the 100th anniversary of the birth of Kim Il Sung), but also to promote North Korea to the ranks of the “advanced countries in 2020.”

Details on the new 10-year economic plan are as yet sketchy. South Korean analysts report that the plan envisions massive amounts of new investment in North Korea: up to $100 billion, by some accounts.3 But even if the investment target is more modest than such rumors suggest, North Korea will be counting on more than just domestic capital accumulation to secure this funding. It will have to rely upon major inflows of both foreign private capital–and foreign aid.

Additional Information:

1. This report has been added to the DPRK Economic Statistics Page.

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The DPRK and national/multilateral development and trade agencies

May 9th, 2011

Marcus Noland has an interesting post on the plethora of obstacles the DPRK must navigate before it can take advantage of the full range of trade and development programs across the globe.

Read his post here.

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China Exim Bank delegation visited DPRK in April

May 9th, 2011

According to the Donga Ilbo:

Members of the credit rating agency under the Export-Import Bank of China are known to have visited North Korea around the “Day of the Sun” on April 15, otherwise known as the birthday of the Stalinist country`s founder Kim Il Sung.

A source in Beijing said, “Around 10 people from the Export-Import Bank of China made a 10-day trip to North Korea ahead of the Day of the Sun. They not only visited Pyongyang but also other cities.”

The agency provides sovereign credit ratings for countries around the world. Critics say the members visited the North to seek further economic cooperation, adding their trip holds more meaning than attending the holiday event because they also visited other cities.

Another source in Beijing said, “The Chinese government is mulling financial benefits including no-interest loans to Chinese companies investing in the [North’s] city of Rason.”

Beijing seems to be preparing to invest in the Hunchun-Rason area near the Tumen River and Dandong-Sinuiju’s Hwanggeumpyong region near the Yalu River, where Pyongyang-Beijing economic cooperation is vital.

Read the full story here:
China`s Exim Bank delegation visited N. Korea last month
Donga Ilbo
2011-5-9

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Statistics on DPRK migration to the USA

May 9th, 2011

According to the Joong Ang Daily:

The United States has received 101 North Korean refugees in the past few years under legislation to help improve human rights conditions in the reclusive state, statistics showed Saturday.

The total breaks down to nine for 2006, 22 for 2007, 37 for 2008, 25 for 2009 and eight for 2010, according to figures released Saturday by the Office of Immigration Statistics at the Department of Homeland Security.

Hundreds of thousands of North Korean refugees are also believed to be in China.

Most North Korean refugees, fleeing poverty, aim to make their way to South Korea via neighboring China.

South Korea has received more than 20,000 North Korean defectors since the 1950-1953 Korean War.

China has come under criticism for repatriating North Korean refugees under a secret agreement with North Korea, categorizing defectors as economic immigrants rather than refugees, despite the danger of them being persecuted back home.

The North Korean refugees were admitted into the U.S. under the North Korean Human Rights Act of 2004, which calls for the provision of financial aid to help improve North Korea’s human rights and accept North Korean defectors into the U.S.

In 2008, Congress approved the North Korean Human Rights Reauthorization Act for another four years, calling for “activities to support human rights and democracy and freedom of information in North Korea,” as well as “assistance to North Koreans who are outside North Korea,” and 12-hour daily broadcasting to North Korea.

The 201 Office of Immigration Statistics Annual Flow Report also showed that 73,293 people were admitted to the U.S. as refugees in 2010.

The leading countries of nationality were Iraq (18,016), Burma (16,693) and Bhutan (12,363).


Read the full story here:
U.S. takes 101 North Korean refugees
Joong Ang Daily
2011-5-9

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Number of South Koreans in Kaesong zone increases

May 8th, 2011

According to Yonhap:

A daily average of more than 600 South Korean workers are currently staying at the Kaesong Industrial Complex in North Korea, up from the 500-level in the past several months, according to a Seoul ministry Sunday.

The increase reflects a reduction in military tensions between the two Koreas, officials at the Unification Ministry that handles inter-Korean affairs said.

The ministry’s data showed that around 650 South Koreans stay at the industrial park, located just north of the inter-Korean border, per day starting last month.

“With regard to the number of production-related manpower, we are granting permission to stay (there) with more flexibility starting in the middle of April,” a ministry official said, requesting anonymity. “The number is expected to gradually increase down the road as well.”

He said the ministry’s flexible stance is attributable to petitions from companies in the Kaesong complex and the alleviation of security concerns of South Korean workers as inter-Korean tensions have eased a bit.

Read the full story here:
Number of S. Koreans at Kaesong rebounds amid letup in tension
Yonhap
2011-5-8

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Koryolink employee numbers and other info…

May 8th, 2011

Pictured above: Locations of Koryolink (Orascom) moblie phone towers I have identified in the DPRK.  Supposedly 300 exist in total.

The German Financial Times published a story on Orascom.  Much of it was familiar material, but it did contain one interestign nugget I had not seen before:

Etwa 20 Ägypter und mehr als 200 Nordkoreaner arbeiten für Koryolink – die meisten der Expats im Management, ein Großteil der Nordkoreaner als Techniker und im Service. Für die Kundenbetreuung wurde ein modernes Callcenter eingerichtet. Das Netz deckt die Großstädte, die Autobahnen und die Schienenwege ab, insgesamt etwa 15 Prozent der Staatsfläche. In dem Gebiet leben 91 Prozent der Bevölkerung.

And putting this through Google Translate we get:

Throughout the country, told Heikal, meanwhile, more than 300 transmitters spread. Some 20 Egyptians and more than 200 North Koreans work for Koryolink – most of the expatriates in management, the majority of North Koreans as a technician and service. For customer support a call center was established. The network covers the major cities, highways and rail lines, totaling about 15 percent of state land. In the field 91 percent of the population live.

The service has grown to over 500,000 users but still remains out of the hands of the vast majority of the population:

Auch wenn jetzt theoretisch jeder ein Handy haben darf, sind die Tarife für die meisten Nordkoreaner unbezahlbar. 200 Freiminuten und 20 SMS kosten im Monat 800 nordkoreanische Won, nach offiziellem Wechselkurs sind das rund 5,50 Euro. Dazu kommen die Freischaltgebühr und die SIM-Karte für 50 Euro – zahlbar in Devisen. Wer sich nichts in der wuchernden Schattenökonomie dazuverdient, kann sich das nicht leisten.

And again, via Google Translate:

Even though now may theoretically have a cell phone each, the rates for most North Koreans are priceless. 200 free minutes and SMS cost 20,800 North Korean won per month, according to the official exchange rate is around 5.50 €. Then there are the activation fee and the SIM card for € 50 – payable in foreign currency. Anyone who does nothing, earned in the sprawling shadow economy can not afford that.

And on the human resources front…

Auch bei seinen nordkoreanischen Mitarbeitern bemerkt er Veränderungen. “Vom technischen Können her sind sie sehr gut, die Herausforderungen lagen eher im kaufmännischen Bereich und im Marketing”, sagt Heikal. “Aber wir bilden sie im Unternehmen aus, und wir organisieren für sie Trainings im Ausland, vor allem in China. Ich spüre, dass sich ihre Mentalität über die vergangenen drei Jahre gewandelt hat. Sie beginnen, das Geschäft zu kapieren.”

Bisher sind nordkoreanische Angestellte noch nicht ins oberste Management vorgestoßen, aber mittelfristig sollen sie die ägyptischen Expats ablösen. Natürlich wünscht sich das Regime, dass die eigenen Leute dort die Verantwortung übernehmen – und hegt trotzdem, wie so oft, schwere Bedenken dagegen. “Auf der Managementebene muss man mit der Außenwelt kommunizieren”, gibt Heikal zu bedenken. “Wir diskutieren das mit den Behörden. Sie verstehen das Problem, aber ich denke, das wird noch etwas dauern.” Er lächelt. “Im Rückblick erkennt man enorme Verbesserungen und Veränderungen, aber wir haben noch viel vor uns. Eine ganze Reihe von Dingen wird noch eine Menge Geduld brauchen.”

via Google Translate:

Even with his North Korean employees, he noticed changes. “From her technical ability, they are very good, the challenges were more in the commercial sector and in marketing,” says Heikal. “But we are training in the company, and we’ll arrange for her training abroad, especially in China. I feel that their mentality has changed over the past three years. You begin to understand the business.”

So far North Korea’s workers are not pushed into top management, but the medium they are to replace the Egyptian expatriates. Of course, the regime hopes that their own people over there take the responsibility – and still cherishes, as so often, serious concerns about it. “At the management level needs to communicate with the outside world is,” says Heikal pointed out. “We discuss with the authorities. You understand the problem, but I think it will take some time.” He smiles. “In retrospect, there are vast improvements and changes, but we still have a lot to us. A whole series of things still need a lot of patience.”

Read the full story here:
Die Pyramidenbauer von Pjöngjang
German Financial Times
2011-5-8

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DPRK mineral exports top US$860m last year

May 7th, 2011

According to Yonhap:

North Korea’s exports of mineral resources jumped 17-fold in a decade with its outbound shipment of coals and iron ores leading the growth, a U.S. report showed on Saturday.
According to Radio Free Asia (RFA), the communist state’s exports of mineral resources reached US$860 million last year, compared with some $50 million in 2002.

Citing data compiled by the Korea Trade-Investment Promotion Agency [KOTRA], the RFA said exports of such minerals as coal and iron ore accounted for 63 percent of its total exports to its strongest ally China.

In the first quarter of the year, the North earned around $154 million by exporting coal to the neighboring country, compared with $9.68 million seen a year earlier.

North Korea’s mineral reserves are believed to be among the largest in the world, worth some 7,000 trillion won, based on 2008 prices, according to an earlier report by the Unification Ministry.

I am unable to locate either the RFA story or the KOTRA report so I don’t have much to say on this.  If you have a link please send it to me.

Read the full story here:
N. Korea’s exports of mineral resources top US$860 mln last year
Yonhap
2011-5-7

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Hyesan rail incident reported

May 6th, 2011

Pictured above (Google Earth): Komsan Station in Hyesan

According to Open Radio:

A source in Yanggang province reported May 4th, “A Hyesan – Pyongyang train derailed on May 2nd somewhere in the region of Geomsan station in Hyesan killing at least ten passengers and injuring many others.” The injured are being treated at a nearby hospital but the dead have not been formally identified and are yet to be transferred home.

“The North Korean police and security agencies are both investigating the case,” said the source. “So far they have been unable to establish the incident’s cause.” They are said to be investigating the possibility that a track sleeper became unhinged.

The possibility, however, that this is not merely an accidental occurrence is raised by the fact that the Pyongyang – Hyesan line is known by the population not just to be a route used by citizens travelling between the cities but is also one of national significance.

There are both a security agency detention center and a munitions factory in the Geomsan area of Hyesan. Before he died Kim Il-sung travelled only via station number 1 at Geomsan.

Five of twelve passenger carriages were overturned when they became disconnected from a connecting link. Subsequent repair operations have caused much disruption to regular line service. Stranded passengers are staying in the station’s vicinity as locals take advantage of the situation, catering to them with impromptu vending operations.

Read the full story here:

Ten Die in Pyongyang – Hyesan Rail Incident
Open Radio
2011-5-6

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100,000 Chinese visit Sinuiju in past year

May 6th, 2011

According to Yonhap:

The number of Chinese visitors to North Korea’s border town of Sinuiju has reached 100,000 over the past year after Beijing lifted a four-year ban on Chinese group tours from the Chinese border city of Dandong, a news report said Friday.

Dandong, which borders Sinuiju, is a major trade route between North Korea and China.

The Chinese government resumed the group tours to Sinuiju from Dandong in April last year, a Dandong newspaper said, adding the number of Chinese tourists to Sinuiju is likely to go up in the coming months.

The one-day group tour program allows the Chinese to visit Sinuiju without visas.

China is the North’s last remaining ally and benefactor.

Read the full story here:
Chinese visitors to N. Korean border city top 100,000 in one year
Yonhap
2011-5-6

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Migration to Thailand on rise

May 6th, 2011

According to the Bangkok Post:

Thai authorities have rejected South Korea’s proposal to build a coordination centre to deal with North Koreans illegally entering the country over concerns that it might encourage more inflows of migrants from the communist nation.

South Korea reportedly asked the government early this year to build the centre in Chiang Rai province, a popular entry point for illegal North Korean immigrants into Thailand.

Most of the immigrants have escaped economic hardship in North Korea and travelled to Thailand for temporary refuge in the hope of being able to resettle in third countries, usually South Korea, a source at the Internal Security Operations Command (Isoc) said.

From October last year until April this year, 899 North Koreans were arrested for illegal entry, said Isoc spokesman Maj Gen Dithaporn Sasamit. The source said South Korea had offered to pay to take care of the illegal migrants. However, the government had turned down the proposal because it had no policy to open a new refugee centre.

The South Korean government has played an important role in helping North Koreans by allowing them to resettle in its country.

Pol Maj Gen Phansak Kasemasanta, deputy chief of the Immigration Bureau, said that North Koreans illegally entering Thailand would be arrested.

After being tried in court, the immigrants would be detained at the Immigration Bureau while awaiting deportation.

The immigrants normally protest at being sent back to North Korea, allowing South Korean officials to step in and help, Pol Maj Gen Phansak said.

He added that instead of building a new centre for the North Korean migrants, South Korea could help improve the present detention centre at the Immigration Bureau.

North Koreans could stay there along with other illegal immigrants from other nations, he said.

According to the Isoc and the Immigration Bureau, North Koreans are normally helped by human trafficking gangs to travel to China.

They are then put on board Chinese cargo boats to Laos before boarding smaller boats or travelling on foot to Chiang Rai’s Chiang Saen and Chiang Khong districts.

“The trips are arranged by gangs made up of North Korean, Chinese and Thai nationals,” said Maj Gen Thawip Bunma, a senior Isoc official.

The Isoc and the Immigration Bureau have been tracking down people involved in the human trafficking gangs.

However, Pol Maj Gen Phansak said police still have no evidence to confirm that Thais were involved.North Korean migrants who have been arrested have told officials that they had to pay at least 100,000 baht to the gangs to help arrange their trips to Thailand.

Most of the migrants were willing to turn themselves in to Thai authorities, seeing it as the first step for them to travel on to the third countries they ultimately wish to settle in.

Read the full story here:
Illegal North Korean migrants on rise
Bangkok Post
2011-5-6

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