Daily NK interviews a state security agent on sanctions, defectors, and life in North Korea

August 8th, 2018

Benjamin Katzeff Silberstein

Daily NK:

As changes to the political situation on the Korean Peninsula continue in the wake of the inter-Korean, US-DPRK (abbreviation for North Korea’s formal name) and Sino-DPRK summits, Daily NK recently met with an official from North Korea’s Ministry of State Security (MSS) in China to talk about international sanctions toward North Korea and the inter-Korean relationship. The MSS officer displayed a clear anti-American bias with his own ideological convictions, but also offered some objective evaluations of the North Korean regime.

Following is a transcript of the full interview.

Daily NK (DNK): International sanctions are still in effect for North Korea, as you know.

Ministry of State Security official (MSS): They are hard to accept. I’m not sure whether South Korea is trying to make itself look good in the eyes of Trump as it accepts the continued sanctions against North Korea, but in any case, they [the sanctions] are an irritant. There are many [North Korean] restaurants in China. The sanctions have made it impossible for new workers for these restaurants to enter China, and those who are here must return to North Korea next year.

I can understand [the international community] criticizing North Korea for not living as well as capitalist countries after moving away from socialism and operating in the international market like other countries. However, I’m angry that China, Russia and the South have come together to sanction us and that the US makes us a very poor country by preventing our goods from entering the international market.

If you ask anyone in North Korea – young or old – they will respond that North Korea must fight and drop a nuke on America. I think that Chairman Kim Jong Un got rid of nuclear weapons so that the sanctions would be lifted and our lives would improve, but personally speaking, I think we should drop a nuke on New York or Washington, D.C.

Why are South Koreans so angry about us making intercontinental ballistic missiles? We are seeking peace by destroying our [nuclear] underground facilities, but the US has simply stopped its military exercises. They could restart them again [at any time]. They claim they will get rid of the sanctions eventually but it’s hard to believe that.

DNK: The inter-Korean atmosphere, however, is focused on continuing exchanges and cooperation.

MSS: The sanctions must be lifted first for anything to really happen. With the sanctions still in effect, I could accept that President Moon Jae-in is the “trailblazer of the Korean people,” but he continues to look to America for guidance. We could ask South Korea to lift the sanctions, but they just do what America tells them to do. We are a brave people made up of the worker class, who form the basis of the socialist revolution. We have nothing to lose from a war. South Korea would hate to go to war, but the majority of us [North Koreans] would go to war without hesitation.

DNK: Have you ever watched South Korean dramas before?

MSS: Yes, I’ve watched them in secret in China. I have seen defectors on South Korean dramas like ‘Now on my way to meet you’ and ‘Moranbong Club.’ They don’t necessarily lie about everything; they get some things right. It is true life in North Korea is hard and that there are almost no rations from the government. There are some places that only give two-weeks worth of rations and people make up for the lack of food by going into business and cooking corn porridge, and some people even die due to the lack of food.

However, some defectors say that residents just walk by dead bodies on the street. How could that even be possible in a place inhabited by human beings? Even during the Arduous March [widespread famine of the mid-1990s], that wasn’t the case. Soldiers and inminban [neighborhood watch-like units] dug graves to bury the dead. That [walking by dead bodies] wouldn’t have even happened in Korea’s feudal period.

When I asked someone why the defectors lie like that, I was told that they are given money to appear on such TV shows. They received free education and healthcare in North Korea, but now they turn around and spit on their own country. They talk trash about their own country. I can acknowledge that life is tough in North Korea, and that people are hungry and there is no electricity so it’s difficult for factories to operate. But they [defectors] exaggerate too much.

Generally speaking, the women that go to South Korea end up living fairly well and the reality is that people [North Koreans] go to South Korea. However, half of them have committed some type of crime. They have fled because they have the police on their tail. At least half of them are in this situation. They have run away because they have committed a crime like borrowing money from people, and being unable to pay the money back, they have run away before getting caught by the police and being sent to a labor camp.

It is these types of people who come out on TV, crying and telling lies. I would be extremely upset if I lived [in the type of country they are describing]. There are difficulties in North Korea, but real people live there.

DNK: Does the North Korean state still have ironclad control over the country?

MSS: It is still difficult for people to move around freely. Nobody can go from the provinces into Pyongyang. You must have a pass to do that. I hope that the country will soon become like China where you only need a residence card to travel. We have a lot of problems. I hope that these problems will be resolved.

In China, people can send instant messages to those living in Germany or England. North Koreans can take pictures with their cellphones, but cannot use the internet. North Koreans cannot make international calls, either. They couldn’t even dream of it.

The state is worried about the impact of bringing in ‘capitalist-related things’ into the country because they could dampen the people’s ideological stance. I think in some ways the state’s restrictions on foreign things has helped keep North Korea’s ideological stance free of contamination.

Article source:
North Korean state security agent shares thoughts on sanctions, defectors and life in North Korea
Kim Song Il
Daily NK
2018-08-08

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Posted in China, Political economy, South Korea | Comments Closed

North Korean officials disheartened over this year’s harvest

August 8th, 2018

Benjamin Katzeff Silberstein

Daily NK:

As North Korea continues to reel from an unprecedented heat wave, the authorities are conducting a nationwide assessment of the damage that has been inflicted on crops as well as on-site farm visits, report sources in the country.

“The temperature has risen daily and there’s no rain, so crops all over the country are drying out,” said a North Hamgyong Province-based source on August 6. “The authorities are investigating the damage done to the agricultural fields.”

The source said that the authorities have sent investigative teams to farms throughout the country who are taking photos of the damage and sending them back to central headquarters.

The roots of the corn crops have yellowed because they have dried out from the lack of rain. North Koreans consider the agricultural season to be “finished” this year. Farmers have suffered from both the double impact of intense heat and drought.

In Musan County, where mining activities have stopped, many miners have sought to obtain land after facing significant difficulties. The intense drought has created concerns about how they will feed their families.

“There are many people saying that the ‘weather is killing us’ while beating their fists against their chest in front of their dying crops,” said a source in Ryanggang Province.

“The authorities likely wanted to show people that they are keeping an eye on things and making an effort to improve the situation.”

Officials who are part of the investigation teams, however, are reportedly saying that there is no hope in recovering from this year’s agriculture troubles.

“Officials have dwindling hope about this year’s harvest, and some even say the only thing to do is wait for the intense heat to end,” the Ryanggang-based source added.

Meanwhile, the state-run publication Rodong Sinmun has reported, “Farmers are taking it upon themselves to conduct a powerful campaign to prevent damage [to the crops] from high temperatures and drought.” The state authorities are emphasizing “self-sufficiency” as a tool to combat damage to crops, which also hints that the authorities have little in the way of clear cut measures to deal with the situation.

Article source:
Disheartened North Korean officials label this year’s harvest ‘dead in the water’
Kim Yoo-jin
Daily NK
2018-08-08

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Posted in Agriculture, Food, General markets (FMR: Farmers Market) | Comments Closed

South Korean officials in North Korea for joint forest inspection

August 8th, 2018

Benjamin Katzeff Silberstein

Yonhap reports:

A group of South Korean officials left for North Korea on Wednesday to conduct a joint inspection of forests and protect trees from harmful insects and diseases, the unification ministry said.

The officials led by a senior forest agency policymaker crossed into Mount Kumgang on the North’s east coast, where they will jointly examine the forests there, according to the ministry.

They will return home later in the afternoon.

The one-day trip follows up on the agreement reached during working-level inter-Korean talks early last month for forestry cooperation.

They agreed to cooperate in protecting forests along the inter-Korean border and in other areas from damage caused by harmful insects and diseases.

The two Koreas conducted a similar on-site inspection in July 2015 near Mount Kumgang. Two months later, they carried out efforts to fight insects and other damage, which was said to have cost them over 100 million won (US$89,400).

Meanwhile, the North will send six transport officials to the South on Thursday to hold a meeting and discuss details related to their cooperation in modernizing and possibly connecting railways over their border, the ministry said.

The meeting, the second of its kind, will be held at the Customs, Immigration and Quarantine (CIQ) office in Paju, just south of the inter-Korean border.

It came after their first meeting in Kaesong last month to discuss the outcome of an inspection of the conditions of the 15.3 kilometer-long railways from the North’s border town to the Military Demarcation Line (MDL) that separates the two Koreas.

Article source:
S. Korean officials visit N. Korea for joint inspection of forests
Yonhap News
2018-08-08

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Posted in Agriculture, Forestry, International Aid, Ministry of Forestry, South Korea | Comments Closed

Regime takes two thirds of worker’s salaries for ‘loyalty funds’

August 8th, 2018

Benjamin Katzeff Silberstein

Daily NK:

As the North Korean authorities shift the financial burden of preparing for the anniversary of North Korea’s establishment on September 9 and the development of the Wonsan-Kalma Marine Tourist Zone, residents are increasingly voicing their complaints over the inherent unfairness of the situation.

“Employees at a joint Sino-North Korean enterprise [name redacted for the safety of the source] located in Rason usually receive 300 yuan (around 50,000 South Korean won) per month, but this month they were only paid 100 yuan,” said a source in North Hamgyong Province on August 6. “Without any prior notice, 200 yuan was taken out of their salaries to be used as funding for regime projects.”

The North Korean authorities have placed great importance on the development of the Wonsan area along with events surrounding the 70th anniversary of the establishment of the nation on September 9. State officials are forcibly taking money from the pockets of ordinary citizens to pay for these projects, according to the source.

“In the past, the state took some money from people’s salaries but never a full two-thirds,” he said. “It’s difficult enough surviving on 200 yuan, so people are very worried about how to survive off a measly 100 yuan.”

One family working at the enterprise typically earns 400 yuan a month but received just 200 yuan this month, he said, explaining that “it’s not enough to even get them through the month […] They have no money saved up and are worried that more money will be taken out of their salaries next month as well.”

Overseas workers are also being forced to contribute part of their salaries to what is referred to as a “loyalty fund.”

“There is money that we have traditionally given to the state each month, but now they have told us we need to give them 2,000 yuan more per month […] Business is difficult these days, which forces us to take money out of our employees’ salaries to pay state officials,” the manager of a North Korean restaurant in China’s Liaoning Province said.

The manager also noted that the authorities were asking for more money to be paid at ever more frequent intervals of time. “Our employees are usually forced to give money [to the loyalty fund] each month, but our employees are up in arms about the amount taken out by the state this month,” the manager said, expressing concern that feelings of discontent among their employees could lead to them running away or even defecting to South Korea.

Full article and source:
Regime takes up to two-thirds of salaries from workers for ‘loyalty funds’
Ha Yoon-ah
Daily NK
2018-08-08

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Posted in Construction, Economic reform, Labor conditions/wages, Political economy, Statistics | Comments Closed

North Korea exports coal as ‘Russian’ to get around sanctions

August 7th, 2018

Benjamin Katzeff Silberstein

Reports Radio Free Asia:

In a move aimed at evading U.N. sanctions, North Korea is exporting coal to foreign buyers by sending shipments first to Russian ports, where the coal is falsely labeled as Russian-origin, North Korean sources say.

The export of North Korean coal is strictly banned under international sanctions punishing Pyongyang for its illicit nuclear weapons program, but North Korea has now opened new routes for trade with Russian help, a trade worker in North Pyongan province told RFA’s Korean Service.

“As sanctions on North Korea came into effect a couple of years ago, export routes for coal were blocked,” RFA’s source said, speaking on condition of anonymity.

“So North Korean trading companies have been shipping coal to the ports of Nakhodka and Vladivostok in the southern part of Primorsky Krai, in Russia. North Korean coal is then disguised as having come from Russia and is sent on to other countries under fake documents,” he said.

Loading ports for North Korean coal were formerly at Nampo and Songrim, on North Korea’s west coast close to China, but have now been moved to Chongjin and Wonsan, on the country’s eastern coast close to Russia, he said.

“When North Korean coal arrives at Nakhodka, a Russian company records its time of arrival, the length of the ship’s stay in port, and the amount of coal taken off. They then create false papers including a statement of the coal’s quality,” he said.

With these documents declaring the coal to be of Russian origin, “North Korea now has no problem exporting coal to other countries,” he said.

“The name of the Russian company that my company has been working with is Greenwich, and is located at the port in Nakhodka,” RFA’s source said. “They ask for two dollars per ton to disguise North Korean coal as Russian, and the North Korean trading company pays them right away.”

Still in demand

Also speaking to RFA, a North Korean trade worker based in the Chinese border city of Dandong said that North Korean representatives based in South and North Pyongan provinces collect information on countries needing coal and act as brokers for its export.

“Coal from these western-district mines is very high quality, so there is still a demand for it from other countries even though sanctions are in force,” he said.

A 30 percent deposit from the buying countries is required before the coal begins to move, with 30 percent of the balance due when the coal leaves its Russian port. The remaining 40 percent is then paid when the coal arrives at its final destination, the source said.

“For this three-step payment process, the money is deposited in a “borrowed” Chinese bank account, with the North Korean trading company paying banking fees,” he said.

Some of the coal sent from Russia now goes to South Korea and Japan, RFA’s source said.

“But North Korean company names don’t appear on the shipping papers, so the North Korean trading firms aren’t worried at all,” he said.

Resolve questioned

South Korea’s foreign ministry on Tuesday dismissed allegations that a foreign-flagged ship seen earlier at Nakhodka had delivered North Korean coal to South Korea’s southeastern port of Pohang, claiming the ship’s cargo was of Russian origin, according to an Aug. 7 report by the Yonhap news service.

“Critics here question the left-leaning Moon Jae-in administration’s resolve to curb the transport of North Korean coal,” a source of hard currency for the sanctions-hit Pyongyang regime, Yonhap said.

“But the government has stated that it remains committed to strictly abiding by U.N. mandates despite inter-Korean reconciliation,” Yonhap added.

The United States has meanwhile pointed to what it calls credible reports that Russia is in violation of U.N. sanctions against North Korea, with Secretary of State Mike Pompeo on Aug. 4 urging full compliance with measures aimed at forcing the North to give up its nuclear weapons program.

Article source:
North Korea Exports Coal as ‘Russian’ in Bid to Beat Sanctions
Hyemin Son
Radio Free Asia
2018-08-07

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Posted in Coal, Energy, International trade, Ministry of Power and Coal, Political economy, Russia | Comments Closed

The economics of coal trade, sanctions, and rice prices in North Korea

August 6th, 2018

By Benjamin Katzeff Silberstein

This may just be one piece of anecdotal evidence, but it’s interesting to note that sanctions haven’t necessarily leading to coal exports stopping – as we know from the multitude of evidence that North Korean coal ships have still been making their transport rounds – but primarily to drastically slashed prices, and surely to significantly smaller volumes being shipped as well. This reinforces the point that even if trade continues, sanctions put a large premium on trading with North Korea. Importers of North Korean coals, simply put, have to get charged less because of the risk they’re taking, and those exporting North Korea need to be paid more for the endeavor to be worth it.

(UPDATE on August 12th): I realized I may have misread the article – the source that Daily NK spoke with appears to be referring to domestic prices for coal, not export prices. Still, since we know that coal is in fact being exported through various evasion methods (albeit in fairly small quantities, perhaps), the point stands.

The article also makes an interesting point about the market prices for rice. It is remarkable how little prices have changed through the past year, when sanctions have been in place and enforced by China to a much greater extent than before. Still, according to this piece, prices aren’t dropping even though people’s incomes in fact are going down significantly, at least in parts of the country. So it may be that prices were already at or close to the “reservation price” for suppliers, i.e., the lowest point at which they’re willing to sell at all. Hard to confirm or check, but it is a plausible partial explanation for the strange dynamics of market prices in North Korea over the past year.

Daily NK:

As coal exports have slowed to a crawl due to international sanctions, North Korea’s coal country of Kaechon, South Pyongan Province, and Kujang County, North Pyongan Province, have been suffering under intense economic difficulties. Most residents in these areas were dependent on the export of coal and are directly feeling the effects of the trade stagnation.

“When coal was being exported, it went for up to 130,000 won (16 US dollars) a ton, but now due to the sanctions the price has fallen to 50,000 won (around 6 US dollars) a ton […] The coal must be sold for workers to get paid. The halt in  exports has even led to someone starving to death,” said Kim Woo Chul (alias, male resident of Kujang County), who was traveling in China on August 1.

“In April or May this year a fifty-year-old man died of starvation,” he said, nothing that while corn is provided by the government in July and August, “it lasts for less than two months.”

Kim also said that rice is being sold in the market but most people in the region can’t afford it. “Food is not scarce in the Kim Jong Un era, but people have no money so they can’t buy it,” he emphasized. Kim also noted that there were many empty food stands at the markets because demand has fallen due to the lack of money.

Another resident from Kaechon, South Pyongan Province, named Ri Sung Rim (alias) added, “There is a lot of rice at the markets, and people would buy it if they had money, but they don’t have money because coal is not being sold anymore […] People who ran private businesses selling coal are having a particularly bad time and are starving because they can’t even make corn porridge.”

She explained that a small amount of corn is given to those actually producing coal by the state, but teams that are not producing anything receive no food rations. “They have nothing to eat so there are even people who are taking their children and leaving the region,” she said.

The two interviewees also talked about the chronic electricity shortages in North Korea. While Pyongyang and other major cities are supplied with a relatively steady supply, the rural areas receive very little. People cannot watch television because of the lack of electricity, which means that many in these areas only recently found out that Kim Jong Un had met with the leaders of South Korea and the US.

“Electricity is only supplied for an hour or less in Pyongsong, while those who are wealthy siphon off electricity from factories or use car batteries,” said Kim. “Some of the wealthier people use car batteries to watch KCNA on television sets, but most cannot afford that.”

“Production teams get electricity, but residents don’t get electricity in their homes […] Car batteries need to be recharged to supply electricity at home, but there are no places to recharge them. People get them recharged if they know someone at the factories, but they are out of luck otherwise,” Ri said.

“I only found out about Chairman Kim Jong Un visiting China when I visited the country […] People need electricity to see the news and, since they can’t, they don’t know what’s going on.”

Article source:
Export sanctions lead to hard times for those in coal-producing regions
Ha Yoon-ah
Daily NK
2018-08-06

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Posted in Agriculture, China, International trade, Political economy, Statistics | Comments Closed

Lack of fertilizers behind North Korea’s subdued harvest

August 4th, 2018

Benjamin Katzeff Silberstein

History repeats itself, it seems, and shows how fragile North Korea’s more or less autarkic agriculture still is. Much has changed in the way agriculture is managed in the country, to be sure, but the bottleneck of lack of fuel translating into lack of fertilizer, remains. That’s one of the main reasons this harvest is expected to lag behind that of last year. It remains to be seen what actually happens, as actual harvests don’t always correspond with expectations. In any case, things don’t look great. Korea Times:

“With the record heat, food production in North Korea is expected to be reduced by 5-10 percent this year, said Nam Sung-wook, professor at Korea University’s Department of Korean Unification, Diplomacy and Security.

“In particular, a fall in July precipitation will have a negative impact on rice farming,” said Nam, whose study focuses on North Korean agriculture and economy.

However, he said that there was a more fundamental reason ― a lack of fertilizer, agricultural machinery and agricultural chemicals.

“North Korea’s repeated failure year after year to achieve its crop production goal shows that the country does not have the economic conditions to maximize productions,” Nam said. “For example, North Korea cannot produce chemical fertilizers because they are made out of refined crude oil. North Korea’s crude oil imports have been under sanctions since last year.”

He said North Korea’s media often promoted the development of compound fertilizers to increase agricultural production, but those compounds were organic, and there was a limit. Another problem was the way the socialist cooperative farms operated, with no incentives for workers.

“The development of the general economy and the introduction of private farms to give incentives are necessary to increase food production,” he said. “The Rodong Sinmun reports can also be seen as a signal to both South Korea and the U.S., to offer food aid, while also calling on residents to be patient.”

The workers’ party mouthpiece carried front page reports on Thursday and Friday for two consecutive days about the country’s struggle with drought.

Rodong Sinmun also emphasized that solving the food problem was a “pressing task,” as was securing an adequate supply of water.

Article source:

Lack of fertilizers adds to North Korea agriculture crisis
Jung Da-min
Korea Times
2018-08-04

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Posted in Agriculture | Comments Closed

North Korea may issue new ID cards

August 3rd, 2018

Benjamin Katzeff Silberstein

Daily NK:

Rumors are circulating in North Korea that the authorities will be issuing new identification cards from the middle of next month as a related investigation draws to an end, report sources in the country.

“The final stages of an investigation into the issuance of new identification cards has recently been completed,” said a North Hamgyong Province-based source on August 1. “The government is rumored to have said that the reissuance of cards will likely begin in mid-August.”

The source also reported that the investigation into reissuing the cards has been ongoing for several years, but was delayed for some time for unknown reasons before restarting. Local police have been conducting the investigation through local district offices without mentioning any specific reasons for the investigation.

“The local police offices in each region have re-investigated the residential status of constituents through local district offices,” she explained, adding that the heads of neighborhood watch organizations, or “inminban,” have been checking the number of people in each family within their districts together with the resident directors.

“The investigators recorded cases where a family member had died or was actively serving in the military or economy-related ‘shock troops,’” the source said. “There are mixed rumors spreading among the population because the authorities have just been conducting the investigation without specifically mentioning the possible re-issuance of resident cards.”

According to a source in Ryanggang Province, North Korea plans to institute a fingerprint identification system following the digitization of all resident cards, and there are hopes among the people that the new system will help address a number of different issues, including theft and accidents.

Some are also suggesting that the reissuance of the cards could be an attempt by the state to weed out “impure elements” within the population who have committed acts that are considered “anti-state.”

“There was a rumor that started several years ago saying that the cards would be reissued,” the Ryanggang-based source said.

“People went to the local police station in their district to get their fingerprints recorded. The investigation may have been delayed because of issues with the digitization of the prints. Now that electricity is flowing regularly and the electronic system has developed, the biometric approach may now be possible.”

North Korean citizens receive resident identification cards at the age of 17. The first cards were issued on September 1, 1946, and then reissued in 1953, 1958, 1964, 1974, 1984, 1999, and 2004. North Korea was reportedly planning to create a digital database and issue plastic cards in the early 2000s, but these efforts failed due to an apparent lack of state funds.

Article source:
North Korea mulling re-issuance of identification cards
Kang Mi-jin
Daily NK
2018-08-03

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Posted in Ministry of Administration | Comments Closed

Seoul says reopening Kaesong will wait till sanctions are lifted

August 3rd, 2018

Benjamin Katzeff Silberstein

Korea Herald:

“The government’s stance remains unchanged when it comes to the issue of the resumption of the Kaesong Industrial Complex,” Lee Eugene, a deputy spokesperson of the unification ministry, told reporters during a regular press briefing.

“The stance has not been changed either that things will be considered in line with progress in denuclearization efforts and within the frame of sanctions,” she added. “From a broad perspective, it would be desirable to push for its resumption after the lifting of the sanctions.”

Opened in 2004, the industrial park in the North’s border town of Kaesong was hailed as a key symbol of economic cooperation between the rival Koreas as it combined South Korean capital and technology with cheap labor from North Korea. The Seoul government, however, halted its operation in 2016 in retaliation for Pyongyang’s missile and nuclear provocations.

The North has recently ramped up its call for the South to reopen the industrial park amid a thaw in relations, but the US.

Article source:
Seoul says reopening of Kaesong complex should wait until sanctions lifted
Korea Herald/Yonhap
2018-08-03

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Posted in Economic reform, Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), South Korea | Comments Closed

The prospects for commercial, mobile banking in North Korea

August 3rd, 2018

By Benjamin Katzeff Silberstein

A couple of days ago, Korea Times ran an interesting interview with Kim Young-hui of Korea Development Bank (KDB), on the prospects of commercial and mobile banking in North Korea. Kim was optimistic regarding the prospects for mobile banking to take off soon in North Korea:

“I think it could happen in the near future, within a year at most,” said Kim, Senior Research Fellow at KDB’s Korean Peninsula New Economy Center.

Kim’s forecast is based on the latest edition of the North Korean quarterly journal Economic Research, issued in June, which was about establishing a mobile banking system for smartphone users. The contents of the quarterly were reported by Yonhap.

“A commercial bank should be established first to enable customers to use mobile banking services,” she said. “Once it is established, individuals will be able to make transactions through their smart phones through their own bank accounts.”

In North Korea, the concept of individuals opening a bank account is alien.

Most of North Korean residents deposit their money with individual money traders, making it hard for the North Korean regime to account for the money it prints, Kim said.

Although North Korea established the Commercial Bank Law in 2006, it still does not have a separate commercial bank regulatory system. There are some “commercial” banks, but they only deal with foreign currency, not domestic currency, Kim said.

The Commercial Bank Law enables loan services for individuals, while working with domestic currency as well as foreign currency.

North Korea under Kim Jong-un is now trying to open up to the global economy as he declared in November that the completion of nuclear weapon development left him with one mission of economic development in his Byeongjin policy.

The new smartphone-based financial service would enable North Korean residents to check (their) bank accounts, withdraw cash, transfer money as well as pay at shops. The tool is a smartphone, an “indispensable information communication tools.”

The report also urged the mobile telecommunication organizations in the country to establish a communication infrastructure that can provide information on the purchase of goods while notifying financial transactions to mobile banking users. The infrastructure, once established, will also enable confirming of payments and settlements to both buyers and sellers.

“Unlike other countries where a series of steps have been taken before introducing mobile banking, North Korea is skipping them since smartphones are already prevalent in the country,” the researcher said.

The report also proposed the development and introduction of RFID (Radio Frequency Identification) and NFC (Near Field Communication) technologies as well as the installation of necessary devices to make payment using smart phones at stores and other facilities more quick and accurate.

Full article and source:
‘North Korea will soon open commercial bank, mobile banking’
Jung Da-min
Korea Times
2018-08-01

A few thoughts on this:

First, on methodology, I’m not entirely convinced that one can or should read the North Korean journal that this assessment is based on, Kyungje Yungoo (경제연구) as a blueprint for what policies are in place or will come in the future. For years, and particularly under Kim Jong-un, the journal has run a multitude of articles on private incentives and profits within enterprises and firms, and on topics such as the role of various technologies within the economy, with no large-scale, public policy announcement following. To be sure, much has already changed in the economic realm within most spheres of what the journal covers, but there doesn’t seem to be a clear line between articles there and consistent, thorough changes in economic management. Rather, Kyungje Yungoo is perhaps best read as a map of what topics of conversation and debate (yes, debate) are acceptable in the academic and policy realms in the country. In other words, the regime is clearly thinking about commercial banking and ways to make it work, but that doesn’t mean it’s necessarily on the horizon in the immediate future (which it could well be).

Second, on the issue itself: North Korea’s financial sector is seriously underdeveloped. The lack of a solid banking system is a huge stumbling block for economic development, as assets that could otherwise be used to fuel growth through investments often sit idle. (For those interested in the issue, I wrote about it in this report for the Center for a New American Security a couple of months ago). Part of the problem is that even if the state did take initiatives to create some form of commercial banking sector, public trust in the state is deeply eroded. The government isn’t really an entity that most people want to hand their hard-earned savings to, because economic policy has historically been so erratic and often changes on a whim. Look, for example, at the market crackdowns of the past few months. Much is done by decree and order rather than by law. And the laws that do exist don’t really mean much if there’s no credible mechanism to enforce them. Should the government institutions simply allow for the institutionalization of private, commercial banking, rather than participate in the game themselves, that would be a different story, but the history of economic development in North Korea shows that that’s usually not how things work.

Third: it does make sense that there could be a lot of leap-frogging in sectors like banking in North Korea, given the increasing prevalence of smartphones and other technology. So there’s certainly room for optimism here too.

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Posted in Banking, Cell phones, Communications, Computing/IT, Finance, Fiscal & monetary policy, Internet, Telephones | Comments Closed

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