The evolving clandestine leaflet market

January 28th, 2009

UPDATE 3: February 26, 2009. According to Yonhap:

Prosecutors on Thursday questioned two activists who brought in North Korean bills for their leaflet campaign criticizing North Korea, allegedly in violation of South Korean law.

The South Korean government has not restricted the controversial leaflet campaign, which criticizes North Korean leader Kim Jong-il as “the most vicious dictator and murderer,” saying there was no law to stop it.

But the Unification Ministry requested a probe for the first time last week, after the activists attached North Korean banknotes to their flyers to encourage North Korean citizens to pick them up. 

Bringing North Korean money into South Korea is permitted only for trade purposes or for personal possession. Violations can result in up to three years in jail or 10 million won (US$6,562) in fines, according to the law on inter-Korean exchange and cooperation.

A North Korean defector, Park Sang-hak, and Choi Sung-yong whose fisherman father is allegedly being held in North Korea, flew scores of North Korean banknotes attached to some 20,000 propaganda leaflets toward North Korea via gas-filled balloons on Feb. 16, Kim’s birthday. Most of the flyers never reached the North, however, because of unfavorable winds.

Prosecutors said they questioned the activists about how the North Korean money was brought in. Other details were not available.

“They asked us how we acquired the North Korean bills and how much we have,” Park said. 

UPDATE 2: February 16, 2009.  Kim Jong Il’s official birthday.  The activists called Seoul’s bluff and sent the flyers across the DMZ with DPRK won in tow.  Nothing has happened. Pyongyang has not yet complained in the press (as of 2/24). 

UPDATE: South Korean government declares the use of DPRK won by groups is illegal:

“It is against the law for civic groups to bring in North Korean currency [into the ROK] without Unification Minister authorization and enclose it in leaflets,” ministry spokesman Kim Ho-nyeon said at a news briefing.

“It is the related ministries’ position that such a request for authorization, if it comes, is likely to harm the order of South-North cooperation and thus will not be granted.”

In other words: “You need permission to do this and we will not give it to you.” But according to Yonhap:

Defying the announcement, organizations of North Korean defectors and families of abducted South Koreans vowed to go ahead with a plan to fly a fresh batch of propaganda leaflets across the heavily fortified border in February. They said the new leaflets will be flown with North Korean bills attached to encourage people to pick them up.

If they go through with this plan, the stage will be set for what I assume will be a well-publicized showdown between the police and North Korean defector groups.

ORIGINAL POST:
South Korea-based human rights groups garnered headlines last year by sending hundreds of thousands of leaflets about Kim Jong il’s lifestyle into the DPRK attached to balloons.  (A copy of the leaflet and a rough English explication can be found here).  Not only did these leaflets promt repeated public complaints from Pyongyang, but they were also blamed for the North’s unilateral “renegotiation” of inter-Korean cooperation projects in Kaesong—which reduced cross border civilian traffic to 880—about 20% of the 4,200 licensed to enter the Kaesong Complex.  Of course closing down these projects was also a goal of the human rights groups, so in the end Pyongyang delivered its most vocal critics a double victory: South Korean subsidies to the North via Kaesong have been drastically curtailed and the balloons, which were temporarily suspended, have resumed. 

As an aside, there is evidence that the Kaesong projects were curtailed for other reasons, most notably internal political concerns and/or the politics of North-South relations.  No matter the true cause(s), Pyongyang publicly blamed the leaflets.

Although Pyongyang has discovered it had little political leverage over the supply side of the leaflet market, it retains significant leverage over the demand side.   Quoting from Yonhap:

North Korea is arresting citizens who possess U.S. one dollar bills as a way to crack down on packages of anti-Pyongyang propaganda leaflets sent by South Korean activists that include the currency, an activist here said Wednesday.

The North’s spy agency, the State Security Agency, issued the directive in early November to stop citizens from collecting the leaflets that criticize leader Kim Jong-il and his communist regime, said Park Sang-hak, a North Korean defector and leader of Fighters For Free North Korea in Seoul. 

So now we move to round three.  How will the human rights groups respond?

South Korean activist groups will attach N. Korean currency to anti-Pyongyang leaflets sent into North Korea, replacing US$1 bills, following rumors that citizens found with the notes are punished, an activist said Thursday.

Seoul’s National Intelligence Service confirmed that North Korean authorities arrest and interrogate those who possess U.S. dollars that allegedly came with the leaflets from South Korea. But the spy agency declined to comment on what kind of punishment they face.

To prevent further arrests, Park Sang-hak, a North Korean defector and head of Fighters for Free North Korea in Seoul, said his organization and another activist group will send 5,000 won North Korean notes — the highest denomination in the country — when they fly a fresh batch of balloons into North Korea next month.

The amount is just enough to purchase about 2kg of rice, officials and aid workers say, and is a little more than the average monthly salary for urban workers. A North Korean household needs at least 20,000 won a month to survive, they added.

This is an interesting move as it increases the demand for leaflets in the DPRK in two important ways.  The first, is that low-level workers and cadres will find it much easier to possess and spend DPRK won (compared to $US), particularly in the southern provinces.  Secondly, the DPRK-US$ exchange rate is about W3,000/$1, so the switch represents a 66% increase in purchasing power per collected note! 

Of course this raises the question of where they will get the DPRK won:

Park refused to elaborate on how he acquired the North Korean bills, except to say that they passed through China’s border region with North Korea.

South Koreans can bring North Korean money into the country only for trade purposes and must first receive government approval to do so. Failure to abide by these restrictions can result in three years in jail or a 20 million won (US$15,198) fine. The ministry is reviewing whether the activists’ possession of North Korean bills was legitimate.

But other than creating routine problems for North Korean state security, I am not sure what specific results human rights groups seek from these activities.  North Korea’s information blockade cracked over a decade ago—even in the southern provinces where the balloons drift.  Although people in these areas might possess little positive information about the outside world, they probably have a general sense that the state of global affairs is not as their leaders portray.  So, breaking the information blockade is a necessary but not sufficient condition for social change in the DPRK.  

Unfortunately, the information on the leaflets is predominately non-actionable.  Rather than condemning Kim Jong il’s lifestyle, the leaflets should provide instructions on accessing foreign radio and television broadcasts, tactics for clandestine organization, case studies in successful defection, business and smuggling opportunities, local prices, and even mundane news like sports scores, movie reviews, etc.  This would likely be much more valuable to the North Koreans than political propaganda. 

This is an interesting tactic, however, and I look forward to seeing what the next moves will be from players in both the North and South.

Read the full articles here:
N. Korea arresting carriers of $1 bills to stop anti-Pyongyang leaflets: activist
Yonhap
Kim Hyun
1/7/2009

Activists to send N. Korean currency with anti-Pyongyang leaflets
Yonhap
Kim Hyun
1/8/2009

North Korea cash sent with leaflets illegal: Seoul
Reuters
Jack Kim
1/27/2009

Seoul bars activists from bringing in N. Korean currency
Yonhap
1/28/2009

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Posted in Political economy, South Korea | 6 Comments »

Johns Hopkins: US-Korea Institute Working Papers

January 27th, 2009

2008 Working Papers   
 
WPS 08-9: Alliance of “Tooth and Lips” or Marriage of Convenience? The Origins and Development of the Sino-North Korean Alliance, 1946-1958, by Shen Zhi-Hua, traces the development of Sino-North Korean relations and challenges the “tooth and lips” myth often purported as the basis of their alliance.
 
WPS 08-8: Dependence and Mistrust: North Korea’s Relations with Moscow and the Evolution of Juche, by Kathryn Weathersby, Ph.D., discusses North Korea’s diplomatic history with the former Soviet Union and the Soviet Communist Party, identifying key events which catalyzed the deterioration of the Soviet-North Korean alliance.
 
WPS 08-7: Ending the Korean War: Considerations on the Role of History, by Kathryn Weathersby, Ph.D., argues that as the complex task of constructing a peace regime on the Korean peninsula begins, constant confrontation with historical inquiry, which undercuts the natural tendency to simplify and distort the past into national myths that hinder reconciliation, will be necessary.
 
WPS 08-6: Japan and North Korea: The Long and Twisted Path towards Normalcy, by Gavan McCormack, Ph.D., discusses the diplomatic history of North Korea-Japan relations, including the tensions over the issue of Japanese abductees.
 
WPS 08-4: How Korea Could Become a Regional Power in Northeast Asia: Building a Northeast Asian Triad, by Im Hyug Baeg, Ph.D., presents strategies for increasing South Korea’s soft power and smart power around Asia in order to close the power gap with its Northeast Asia neighbors, China and Japan.
 
WPS 08-3: Necessary Enemies: Anti-Americanism, Juche Ideology, and the Tortuous Path to Normalization, by Charles Armstrong, Ph.D., chronicles the development of U.S.-DPRK relations from 1942 to the present, including such contentious issues as the USS Pueblo Incident and North Korea’s nuclear ambitions.
 
WPS 08-2: In Pursuit of Peaceful Development in Northeast Asia: China, the Tumen River Development Project and Sino-Korean Relations, by Carla P. Freeman, Ph.D., examines the changing dynamics of China’s relations with both North and South Korea, as well as with ethnic-Korean populations within China, and the implications of these complex relationships for East Asian regional security and cooperation.
 
WPS 08-1: Korea: An Important Part of India’s Look East Policy, by Walter Andersen, Ph.D., presents a multi-faceted look at growing India-Korea cooperation, including the strengthening of institutional mechanisms for increased trade and investment, and key opportunities and obstacles for increasing strategic cooperation.
 
Find more about USKI’s Working Paper Series here.

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Daily NK reports DPRK train wreck

January 27th, 2009

From the Daily NK:

A source from Yangkang Province reported on the 27th in a telephone conversation with the Daily NK that, “On the 15th in Woonheung, 8 freight wagons carrying a total of 480 tons of gasoline and diesel overturned at dawn. The National Security Agency and the provincial security agency are examining the causes of the incident.”

In Youngha Workers-gu, which adjoins Baekam where this incident occurred, a train on the Hyesan-Pyongyang line overturned on March 27th, 2008, killing or wounding hundreds.

According to the source, there were 16 casualties, including merchants and an engineer on the freight train. 8 freight wagons completely overturned, causing the spill.

Right after the incident, North Korean authorities mobilized citizens to deal with it and dispatched the NSA to examine the causes.

The source said that, “As the train was going down a slope, a blackout occurred so the brakes did not work. However, the NSA presumes it happened deliberately, because similar incidents have occurred in this region.”

The North Korean authorities have been claiming to citizens that such incidents, which happen every year in Youngha Workers-gu, Woonheung and Baekam in Yangkang Province, are maneuvers by enemies. However, no criminals have been detained.

Thoughts:
1. The DPRK’s railway system is outdated to say the least.  Many of the lines were laid during the Japanese occupation of the peninsula (pre-WWII).  After the Korean war, large sections were reconstructed, but needless to day, for the last 50+ years the system has suffered severe under-investment.  Recently it has been targeted as a major focus of the policy to create a “strong and prosperous nation” by 2012. 

2. We know from multiple tourists that the Pyongyang-Sinuiju line is operational.  We now know that the line from the Russian border to Pyongyang is operational.  Other than these two lines, the functionality of the DPRK’s railway system is largely a mystery to the outside world.

3. The Daily NK also reported a DPRK railway accident in April 2008 (here and here).

4. No word yet on whether the DPRK purchased life insurance for the passengers!

5. An excellent map of the DPRK’s railway system can be downloaded to Google Earth here.

6. You can read past blog posts about the DPRK’s railway system here.

You can read the full Daily NK story here:
Freight Train Overturned in Yangkang, 16 Casualties
Daily NK
Lee Sung Jin
1/27/2009

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Posted in Energy, Gasoline, Oil, Railways, Transportation | Comments Closed

UNDP to return to DPRK

January 26th, 2009

UPDATE (h/t Mike):
According to this UNDP board meeting in September 2008 (p.13):

84. The President of the Executive Board chaired an informal consultation on the Democratic People’s Republic of Korea. He invited statements by the Associate Administrator and by the Assistant Administrator and Director, Regional Bureau for Asia and the Pacific, UNDP.

85. The Regional Director presented a proposed ‘road map’ for the possible resumption of UNDP activities in the Democratic People’s Republic of Korea. He detailed a proposed five-step process to be completed by early 2009, including: first, dialogue with Member States on the best way forward; second, technical discussions with the Democratic People’s Republic of Korea on human resources, finance and programmatic issues, which would build on preliminary discussions on the recommendations emerging from the independent investigative review (the Nemeth report), as well as the report of the external Board of Auditors and relevant Board decisions; third, the dispatch of a technical team to Pyongyang, following Board endorsement of the road map, to reach agreement on the modalities and content of the UNDP programme; fourth, following the successful completion of detailed discussions, submission to the Board for approval of a package of measures and a country programme to facilitate resumption of UNDP activities; and fifth, subject to approval by the Board, mobilization and recruitment of staff and establishment of physical facilities to initiate programme activities. 

86. Delegations expressed support for the resumption of UNDP activities as proposed. Some suggested that three extensive reviews had failed to confirm the initial allegations of wrongdoing, and one delegation asserted that the cessation of activities without the approval of the Executive Board had been inappropriate. While acknowledging that the reviews had revealed grounds for improvement in accountability and oversight throughout the organization, several delegations urged the Board to weigh the human development needs of the local population against the severity of those shortcomings. Most recognized the proposed road map as a viable means of moving from discussion to action, while others expressed support for further consultations on implementation of the ‘road map’.

87. Delegations encouraged UNDP to heed the findings and recommendations that had emerged from the investigations. Many urged the Board to bring the matter to a prompt resolution.

88. One delegation put forth a list of procedural questions regarding the overall management of the process of suspending, discussing and possibly resuming activities in the Democratic People’s Republic of Korea.

89. The President recommended that UNDP proceed with the agreed ‘road map’. The Board approved the inclusion of the Democratic People’s Republic of Korea under the country programmes agenda item in the tentative work plan for the first regular session 2009. 

I am not sure about the specifics in the above mentioned “road map.”  Here are a couple of strategy documents from the recent past: September 2006, Summer 2008.

ORIGINAL POST:
According to Reuters:

The U.N. Development Program’s executive board “authorizes the resumption of program activities” in the reclusive and impoverished communist state, said a board document dated Thursday and obtained by Reuters.

The decision came after an external review last year cleared the agency of major financial wrongdoing, although it found fault with some practices.

The report said programs that UNDP would resume included rural energy development, wind power promotion, seed production and reduction of post-harvest losses in North Korea, which has suffered from flooding and famine in recent years.

The executive board also authorized the head of UNDP to approve other projects on a case-by-case basis. UNDP officials said it would take some months for the agency to resume operations in North Korea and gave no exact date.

So why did the UNDP leave the DPRK in the first place?  That is a long story…but here are links to three previous posts on the topic:

1. Here is a link to a previous post on the US Senate investigation of the UNDP’s activities in the DPRK.

2. Here is a link to the UNDP’s response to the US Senate report.

3. Here is a link to a post on the UN’s Nemeth Report which exonerated the UNDP.

How did US concerns influence the management strategy of the UNDP’s DPRK portfolio?

The UNDP report approved by the board this week said recruitment of local staff in North Korea would in future take place “on a competitive basis” and not depend on appointments by Pyongyang. Such staff would be paid directly and not through the government.

The report made clear, however, that the North Korean government would continue to have a role in finding local recruits, although UNDP would make the final decision. Agency officials said the proportion of international staff would be higher than before.

The report said under an agreement with Pyongyang, UNDP payments to the government and to local staff and vendors would be made in a convertible version of the national currency.

UNDP would bank with the state-run Korea Foreign Trade Bank, but this would have to meet the agency’s global standards for the services it provided.

When the agency’s board considered a possible return to North Korea at a previous meeting last year, diplomats said U.S. and some other representatives had expressed continuing concerns about UNDP management failures.

While the new report appeared aimed at allaying those concerns, the board’s approval, which officials said was unanimous, came just after the inauguration of the Obama administration, widely expected to have warmer ties with the world body. UNDP officials said that was coincidental.

If a reader out there has a copy of the minutes or a board report from UNDP Executive Board meeting please forward it/them to me. 

Read the more here:
Summary of UNDP activity in the DPRK from the UNDP web page

Censured U.N. agency to return to North Korea: officials
Reuters
Patrick Worsnip
1/23/2009

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North Korea’s real estate black market

January 25th, 2009

Some great qualitative information on the DPRK’s underground real estate market from Radio Free Asia:

Central authorities are investigating the practice in all of North Korea’s major cities and have confiscated the homes of “dozens” of local officials in the city of Chongjin, one well-informed source who asked not to be named said.

Private ownership or sale of homes is forbidden by the North Korean state, which assigns dwellings to its citizens based on its own determination of need.

“Most government officials build their residences in the North Korean equivalent of suburbs, in areas that are close to the city but still have a rural flavor,” the source, a Chinese merchant who does business in North Korea, said.

“They sell them when they retire.”

“If someone sells a 50-pyong (1,800-square foot) house in such an upscale neighborhood, he can then buy a house that is three or four times bigger in a different area,” the merchant said.

Party and state officials receive permits and order state-run construction companies to build homes in suburban areas near the sea, the merchant said.

He added that the value of real estate privately sold in North Korean port cities is now appreciating at twice the rate of real estate sold elsewhere in the country.

High-quality materials, including expensive appliances and wallpaper, are often used in the building of officials’ homes, according to a North Korean defector originally from Chongjin but now living in South Korea.

“Small but elegant” patios are sometimes also included, he said.

To justify the construction and occupancy of a larger space, local officials build multi-unit structures and fill them with relatives or people of more modest means, the defector said. 

When the officials retire, they pay the other occupants to move and then sell the entire structure.

North Korean authorities have now sent “task forces” to each of North Korea’s major cities to investigate real estate deals by local officials, the border merchant said, adding that a 40-member group was recently sent to Chongjin, where the homes of dozens of officials were seized.

An official in the city’s Songpyong Ward has reportedly been demoted and reassigned to a more backward part of the country, and fines equal to the actual value of transactions have been imposed on citizens who bought or sold homes.

Some thoughts:
1. IFES reported that private real estate transactions were quite common last september.

2. This report, combined with previous accounts, indicates that, although illegal, the DPRK’s real estate market is quite rational.  Construction quality and location influence housing prices.  According to the Daily NK, the qality of the chairman of the neighborhood people’s committee also influences the price.

3. Could the effort to crack down on these transactions be part of the plans to achieve a “Strong and prosperous nation” by 2012?

Read more here:
North Korean Economy Watch: real estate posts

North Korea’s Black-Market Housing
Radio Free Asia
Jung Young
1/23/2009

Private sector real estate activity booming in the DPRK
Institute for Far Eastern Studies (IFES)
NK Brief No. 08-9-4-1
9/4/2008

Who Is the Chairperson of the People’s Unit?
Daily NK
Moon Sung Hwee
8/18/2008

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Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Black markets, Construction, Economic reform, Private property, Real estate | 2 Comments »

DPRK responds to US intelligence report on public health

January 25th, 2009

In December 2008, the office of the US Director of National Intelligence issued a report titled, “Strategic Implications of Global Health (ICA 2008-10D).”  In this report, the DNI made the following comments about the state of public health in the DPRK and its effects on economic growth and military preparedness:

North Korea (p.46)
WHO Ranking of Health Systems (out of 190 countries rated): 167
NCMI Ranking of Health Care Capabilities: 5 (Unsuitable)

1. Economic crisis and famine of 1990s fueled breakdown of once-efficient health-care system.
2. Lack of medicine, equipment, sanitation, and reliable energy supplies make quality healthcare virtually unobtainable outside of Pyongyang.
3. Persistent refusal of international health expertise and assistance makes significant short-term improvements unlikely.

Most Urgent Health Problems:
1. TB, scarlet fever, and measles particularly prevalent, although Pyongyang’s secretiveness makes outbreaks extremely difficult to verify and track.
2. Chronic diseases account for an estimated 40 percent of deaths.
3. Even after the widespread famine of the 1990s, prolonged and severe malnutrition persisted; more than half of North Korean children are stunted or underweight, while two-thirds of young adults are malnourished or anemic. The World Food Program currently warns that a new food crisis is in the making as the result of floods and North Korea’s refusal to accept food aid from a new South Korean government that is highly critical of Pyongyang.

Other:
1. North Korean-manufactured illicit drugs—an effort to earn hard currency—increasingly used by citizens of that country as substitutes for scarce medicines or to relieve hunger or boredom.
2. HIV/AIDS prevalence is negligible.

Strategic Considerations:
1. Widespread malnutrition and accompanying physical and cognitive disabilities among DPRK children and young people likely inhibitors of economic growth—with or without opening to the outside world or reunification with the South.
2. If reunification occurs, South Korea will face costs not only of incorporating an economic void, but also those of a huge health-care burden. Seoul could look to other countries or to multilateral organizations to help defray expenses.
3.  Poor health is weakening military readiness because capable new recruits are in short supply. Loyalty may also erode over time, according to Eurasia Group; even when soldiers are well fed, they may be concerned about their malnourished family members.
4. The famine of the 1990s destroyed absolute state control of food rationing, internal movement of citizens, and information as North Koreans were compelled to defy state restrictions in their struggle for survival—and as those who had escaped to China in search of food and work returned with news of the outside world, according to Human Rights Watch.

Potential Opportunities:
1.  Health cooperation (amelioration of North Korea’s heavy health burden) could serve as a means of “diplomacy through the back door.”

Other Comments:

Widespread ill health in the youth cohort may reduce a country’s pool of healthy and capable military recruits, a phenomenon that is currently playing out in Russia and North Korea. Deployed military forces will continue to be vulnerable to the ravages of infectious diseases, and the capability of a government to provide adequate health protection for its troops will significantly impact its ability to project force abroad. (p.5)

Malnutrition-related cognitive disabilities among North Korean children and young people likely will impact future economic growth in that country regardless of when Pyongyang opens to the outside world or reunifies with the South. Nationwide malnutrition has compelled Pyongyang to lower minimum height and weight requirements for military service, and an estimated 17 to 29 percent of potential North Korean military conscripts between 2009 and 2013 will have cognitive deficiencies disqualifying them for service. (p.6)

Along these lines, it is likely that malnutrition-related cognitive disabilities among North Korean children and young people—resulting from the 1990s famine, as well as the widespread hunger that persists to this day—will inhibit future DPRK economic growth, with or without opening to the outside world or reunification with the South. (p.24)

As a consequence of early childhood malnutrition, an estimated 17 to 29 percent of potential North Korean military conscripts will have cognitive deficiencies severe enough to disqualify them for service by US standards (This figure does not include individuals who are mentally capable but have physical conditions disqualifying them from service). The National Center for Medical Intelligence estimates that mental fitness of North Koreans subject to military conscription will be at its weakest during the period 2009-2013 as children born during the severe food shortages and famine of the 1990s reach military age. (p.28)

For the record, the UN WHO ceased publishing the Ranking of Health Systems in 2000 due to the “complexity of the task.” My suspicion is that it was actually ended because member governments did not appreciate being ranked in this field.  However the DPRK’s score of 167 dates from the final publication eight+ years ago. I am unable to investigate the DPRK’s score from the NCMI because this report is not publicly available (as best I can tell).

Although this report offers a decent summary projection of the effects of poor health on the DPRK’s strategic options, there is not much new, or newsworthy, about the report (at least as it pertains to the DPRK).  Most of this information has been floating around the public domain for some time. In fact, I probably never would have heard of this study if the North Korean’s had not publicly complained about it in KCNA. (Click here to read KCNA story) 

Quoting from Yonhap:

“They floated the cock-and-bull story,” the KCNA said, “It is an open secret that the ill-famed intelligence and plot-breeding institutions of the U.S. including the CIA are hell-bent on releasing false reports about its hostile countries.”

“It is the unpopular healthcare system in the U.S. which should be overhauled or replaced by a new one,” the report said.

“However, they released the false report, finding fault with the advantageous healthcare system in the DPRK in a bid to hurt the prestige and dignity of the DPRK in the international arena and stir up ‘ill feelings’ in society,” it said.

This report is 55 pages long and the portions on North Korea (listed above in full) barely fill two pages.  I am not sure why the North Korean’s chose to draw attention to it by complaining in KCNA.  

You can read the Yonhap story here:
N. Korea condemns U.S. intelligence report on its combat ability
Yonhap
1/24/2009

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Posted in Disease prevention, Epidemics, Health care, Pediatrics, Pharmaceuticals | Comments Closed

DPRK outlines region-specific economic growth plans

January 24th, 2009

Institute for Far Eastern Studies (IFES)
Nk Brief No. 09-1-23-1
1/23/2009

Following the recent North Korean New Year’s Joint Editorial and its calls for economic measures, on January 5, more than 100,000 people attended a rally in Pyongyang at which customized economic tasks were presented for each of the North’s provinces, taking into account each region’s particular industrial concentration or specialty.

According to North Korean media reports on January 20, Pyongyang stressed reforms in steel, power, coal, railway, and other sectors it considers ‘Priority Sectors of the People’s Economy.” It also presented tasks for the promotion of housing construction, refurbishment of pig farms, and the increase in production of farms and light industries providing daily necessities to the people of the North.

South Pyongan Province was tasked with increasing the production of ‘Juche’ steel’ at the Chollima Steel Complex, which kicked off the “new revolutionary upsurge” late last year during an on-site inspection by Kim Jong Il, as well as full operation of the newly built ‘superpower electric furnace’, and called on all the people of the province to increase production of organic fertilizer in order to boost food production.

For North Pyongan Province, “mass reforms” for the metalworks sector and concentrated efforts to increase electrical production at the Supung and Taechon power plants were called for. In addition, increased production at the Kujang Earth Colliery Complex, Rakwon Machinery Complex, and the Sinuiju Cosmetics Factory were ordered, as was the institution of advanced agricultural management methods.

Efforts in South Hwanghae Province are to be focused on increasing iron ore mining and scrap iron collection at sites such as the Eunryool and Jaeryung mines, and agricultural production goals are to be met through the introduction of high-yield crops and double-cropping.

North Hwanghae Province was ordered to focus on increasing production at the Hwanghae Iron Complex, the Yesong River Youth Power Plant No. 1, the 2.8 Madong Cement Factory, the Sariwon Poultry Farm, and the Sariwon Pig Farm. In addition, high-yield crops are to be introduced and construction of irrigation systems is to begin, as land management efforts are to be implemented in order to expand agricultural land in Mirubol. North Hwanghae Province is also to build a new library, a new arts theater, and a new housing.

In South Hamgyung Province, efforts are focused on construction of the Keumya River and Keumjin River Guchang power plants, as well as improving mining capacity at the mines in the Danchun area while renovating production facilities at the Sudong Mines. Aggressive promotion of construction on the second stage of the 2.8 Vinylon Complex was also emphasized. Provincial authorities were also ordered to complete the initial stage of refurbishment in the Heungnam Pharmaceutical Plant, improve production at the Kwangpo Duck Farm and the Hamju Pig Farm, and accelerate home construction in Hamheung City.

North Hamgyung Province was tasked with perfecting ‘North Korean-style steel production methodology’ at the Kim Chaek Iron Complex and Sungjin Steel Complex, and modernizing exploration, mining and processing equipment at the Musan Mining Complex in order to boost output, along with bringing the Seodusu Power Plant and Chungjin Thermoelectric Power Plant fully on-line. Another important task prioritized was the completion of the second stage of the Urangchun Power Plant.

In Kangwon Province, construction of the Wonsan Army-People Power Plant, increased production at the Munchon River Ironworks, modernization of the Wonsan Shoe Factory and the Wonsan Textiles Factory, and the refurbishment of the Munchon Poultry Processing Plant were emphasized, along with the diversification of management in farming communities in order to resolve food shortage problems.

Ryanggan Province, in the northern Gosan region, was tasked with improving management of the Samsu Power Plant, which entered service in May 2007, and construction of the Baekdu Mountain Military-first Centennial Power Plant and other electrical facilities, and the establishment of a ‘hometown of potatoes’ for the quick increase in potato cropping.

The Jagang Province was tasked with modernizing its metalworks sector and increasing electrical production at the Gangye Youth Power Plant and Janga River Power Plant, construction of small and medium-sized power plants, and increasing its logging production. Jagang Province was also tasked with normalizing production in its pig, duck, and chicken factories, and software development for local organizations was emphasized as a priority task for the Electronic Business Research Institute in Ganggye City, which was visited by Kim Jong Il after its grand opening last year.

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Posted in Agriculture, Chollima Steel Kombinat, Coal, Construction, Electricity, Energy, Food, Kim's New Year Address (Joint editorials), Manufacturing, Ministry of Railways, Railways, Transportation | 3 Comments »

Economic rationality in the DPRK

January 24th, 2009

Writing in the Daily NK, guest author “Benji” and an astute reader offer us this little glimpse of economic rationality in North Korean culture.

benji-pektu.jpg

Commenting on the photo above, “Benji” notes:

“A North Korean soldier in front of an amazing view from [Mt. Pektu].  Minutes later, he was to offer me one of his cigarettes.”  

An astute reader made the following comment:

“The cigarette from the Soldier probably wasn’t the kind offer it seemed to be. North Koreans use cigarettes as currency. When they see a western tourist they offer their substandard north korean cigarettes in the hope of receiving western thus more valuable ones in exchange, or if they are especially lucky chinese Double Hapiness“

The pictures and story are worth reading here:
Sacred and Stunning Mountain, Baekdu
Daily NK
“Benji”
1/22/2009

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Posted in Fiscal & monetary policy, Special Economic Zones (Established before 2013), Tobacco, Tourism, Uncategorized | Comments Closed

Sinuiju SAR: Take 4

January 23rd, 2009

sinuiju2.JPGOn September 20, 2002, the DPRK’s Supreme People’s Assembly announced the creation of the Sinuiju Special Administrative Region (SAR) (KCNA announcement here).

The project was to be headed by a Chinese-born, naturalized Dutch citizen, Yang Bin…who was arrested by Chinese authorities shortly after the Sinuiju SAR was announced.  Western analysts interpreted this move as a signal that China was not supportive of either the project or the selection of Mr. Bin as its chief executive.  Needless to say the future of the project lay in doubt.

However, according to a Yonhap report (here), as of March 2007 the North Koreans still seemed interested in launching some kind of SAR/SEZ in Sinuiju, though the location had been moved from the city proper to two islands in the Yalu River, Bidan and Wihwa.

In August 2007, IFES and the Choson Ilbo reported that preparations were already underway in Sinuiju to convert the city center into a SAR/SEZ.  However, after this initial media hit, most of the news coming out of Sinuiju was related to Jang Song Taek’s 2008 anti-corruption campaign which brought most of the trading companies along the Chinese border back under the control of the Ministry of Finance.

This week, Japan’s Yomuri reports from Shenyang, China, that the Sinuiju SAR is still on and will be located on Wihwa Island:

“The zone will only cover Wi Hwa Island, which will be much easier to control, and only Chinese will be allowed to freely visit,” one of the sources said. “The plan solely aims at expanding trade with China. North Korea isn’t planning any measures that would involve a dramatic opening up.”

According to Chinese statistics, the total value of trade between China and North Korea from January to October last year was 2.12 billion dollars, up 31.7 percent from a year earlier.

Meanwhile, a diplomatic source said, “The move to beef up border trade with China is also aimed at putting pressure on South Korea.”

(FYI: Use of the phrase “beef up” is a pretty good sign that the diplomatic source was an American.)

I know the story of “The Boy Who Cried Wolf.”  I will remain skeptical about the new SEZ until I see evidence of construction myself.

You can read the full Yomuri article here:
N. Korea plans free trade zone on island
Daily Yomuri
Toru Makinoda
1/23/2009

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Posted in China, Economic reform, Foreign direct investment, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), International trade, Sinuiju Special Administrative Region, Statistics, Trade Statistics | 5 Comments »

DPRK bans South Korean, overseas goods from Markets

January 22nd, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-1-20-1
1/20/2009

It was revealed by Open Radio for North Korea on January 19 that DPRK authorities had handed down a decree to begin enforcing a ban the sale of imported goods in markets across the country on January 20. On January 3, North Korean authorities announced a measure to the Sinuiju Citizen Association and in the Chaeha Market banning the sale of imported goods, telling traders in the market to get rid of imported goods they had with them.

According to the report, the market management office in Sinuiju (operated under the control of the City People’s Committee) posted the decree at the entrance to the Chaeha Market, emphasizing that goods manufactured overseas were banned, while goods made domestically with imported materials were allowed to be sold. The report added that among goods banned from sale, those made in South Korea would be cracked down on especially hard.

Authorities are clamping down not only on markets in the city, but are also strengthening crackdowns on homeless vagrants, known as kotjebi, or literally, ‘flower swallows’. The report stated, “The Party, security office, trade association, youth association, and other organizations in Sinuiju are at the forefront of a coordinated crackdown on Kotjebi,” and, “As the crackdown is currently underway, between 20 and 30 vagrants, on average, are caught each day…those captured vagrants at the jail are sentenced to around 6 hours of forced labor in quarries or farms outside of the city, and must work hard before being given food.”

This same source reported that due to the Beijing Olympics last August, security on the border between North Korea and China had been tightened, and as winter rolled around and the river froze, this security was further strengthened, and, “recently, due to strengthened blockade of the border, the price of bribes to cross the river have more than doubled.”

In October 2008, the number of guards along the border near Hyesan was increased, and the distance between guardposts was halved from 200 to 100 meters. In addition, not only were military border patrols dispatched to the area, civilian patrols were also set up, increasing surveillance. This led to the cost (bribe) of a river crossing to jump from 1,000-2,000 Yuan (150-300 USD) in 2008 to as much as 4000-5000 Yuan (approx. 600-800 USD) this winter.

——–
Some immediate thoughts:

1. This is the kind of information that should be posted on the leaflets South Koreans are sending across the DMZ.

2. The Daily NK recently posted the “Top Nine” most popular goods list in the North Korean markets.  Many of these are imported.

3. Lets hope that these restrictions are as difficult to enforce as the previous directives.  As we all know, banning a product does not make it go away—even in North Korea.  It raises the price to the final consumer and enriches smugglers at the expense of the state and party organs (though individual party members and security personnel benefit as smugglers).

4. These trade restrictions, if enforceable, effectively amount to an import substitution policy….a policy that has pretty much been thoroughly discredited.

5. According to this IFES article, markets are controlled by a local “Market Management Office” which is in turn subordinate to each “City People’s Committee.”  According to the Worker’s Party organizational chart (view here), Each City People’s Committee is subordinate to a Provincial People’s Committee (PPC).  All PPCs are subordinate to the Central Committee of the Workers Party.  I am skeptical, however, that this is the only channel of authority.  Are the DPRK’s markets part of any ministry’s portfolio?

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Posted in Central Committee, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, International trade, Worker's Party | 3 Comments »

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