Smugglers’ Paradise

October 14th, 2007

Korea Times
Andrei Lankov
10/14/2007

When I was looking at the narrow and shallow Tumen River which delineates the eastern part of border between China and Korea, I can not help but think that this area is very conducive for smuggling.

Indeed, the river can be waded over at many spots, the area is sparsely populated (by the Chinese standard, that is), the border is almost unguarded from the Chinese side and a large number of the locals have families on the other side of the border.

Indeed the area is frequented by North Korean traders, who until few years ago were mostly illegal border-crossers, essentially smugglers. In most cases they did not cross the river by stealth, hiding under the cover of darkness, but preferred to bribe the border guards instead.

North Korea is a very corrupt place these days, so the guards are ready to receive a hundred dollars, an equivalent of their small annual salaries, from a professional smuggler and then allow him or her to move bulky merchandise almost openly.

From around 2003 North Koreans could also apply for special permission, which allows them to visit China regularly and come back with merchandise. Only people with politically sound background are issued such permits, and in most cases the procedure includes heavy bribing.

Nonetheless, legal travel has become possible. On the other hand, all ethnic Korean residents of the Yanbian Autonomous Prefecture, an ethnic home of Chinese Koreans, can visit North Korea. There are no problems with obtaining a special travel pass from the Chinese authorities even it involves some payments (official, in this case).

In most cases the travel is of purely commercial nature: the visitors bring with them sacks of merchandise. Needless to say, customs officials expect their fair share of both legal fees and bribes. A local Korean, who occasionally goes to visit his relatives, described his usual experience.

“They are so greedy. Officials take bribes in China, too. But perhaps nowhere in the world are the officials so hungry for bribes as they are in North Korea. At the customs, they slowly go through the luggage and sometimes put aside a few things they like, and then they say that those things are not allowed into North Korea.

This is the hint, and I have no choice but to tell them to take those things, some dress or small items. And it is a tradition that everybody who checks you should be given some foreign cigarettes. Last time I took five cartons of cigarettes with me, and only one reached my relatives.

All others I had to give away to the officials.” A particular role is played by the so-called “chogyo,” those North Korean citizens, who permanently reside in China. This is a small group, numbering from 5,000-10,000 people, but their economic and social role is out of proportion to their modest numbers.

Their unusual legal standing allows movement between China and North Korea almost at will, and this means that they have great opportunities for very profitable trade. In the past, chogyo were often feared and distrusted since they were widely believed to be North Korean espionage agents.

This might have been the case, since their families in North Korea were indeed hostages to the Pyongyang authorities. Nowadays, however, these people came to understand that they are unlikely to earn much by serving as loyal soldiers of the “Dear Leader,” and switched to business instead.

They still are said to maintain special relations with North Korean secret agencies, but these agencies are also being increasingly driven by profit-seeking. A similar group, known as “hwagyo,” consists of Chinese citizens who are allowed to live permanently in North Korea.

The hwagyo also number just a few thousands, and in North Korea they enjoy a number of privileges, including the right to go overseas with relative ease. Nowadays, as my interlocutors never fail to stress, the hwagyo have become the most prosperous social group in North Korea.

From the Chinese side, the consumption goods are largely sold. The trade items include home appliances, footwear and garments. Used fridges are often sold, being seen in North Korea as an important status symbol. The VCRs and DVD players are also highly demanded, as well as tapes and DVDs of South Korean movies, dramas and shows.

Such items are prohibited, but bribes and ingenuity help to smuggle the subversive material across the border. The North Korean traders sell a rather limited number of items, since North Korea is not capable of producing a large array of products. The North Korean private export seems to be dominated by seafood. Dried squid, pollack and the like sell well in landlocked parts of China.

Some traders dare to deal in more dangerous items, such as gold or antiquities, secretly (and illegally) dug up by North Korean grave robbers. The recent decade was a time when capitalism began to spread to the North, and most of the capital, ideas and markets which made this quiet transformation possible, came from China.

In a sense, the North Korean grassroots capitalism of black markets, old trucks, female traders with huge and unwieldy sacks on their back was conceived in China, in the vast mountainous areas of Yanbian or on the plains of Southern Manchuria which stretch along the Yalu.

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A Footage of North Korean Jangmadang Captured by Asahi TV

October 14th, 2007

Daily NK
Yang Jung A
10/14/2007

The Asahi TV of Japan broadcasted in the evening of October 9th recent video footage of the market which is thriving across the North Korea. The released footage was filmed by an underground journalist, Lee Jun who operates in North Korea.

The footage captures the scenes of local people’s making transactions at the markets in Pyongyang, Chongjin, and Hamheung

Filmed last August, the scene from the Sungyo market in Pyongyang with its bustling crowd was distinguishable from the markets in the other parts of the country. Many different kinds of goods were available at the market.

Women’s dresses being sold at the market were trimmed with lace, and had floral design in splendid color. There were also clothed mannequins with heart-shaped price tags. If customers wanted to try on clothes, they could do so on the scene.

Storekeepers at grocery stores were wearing an apron, trying to keep their store clean and tidy.

Some female peddlers were engaging themselves in business at places other than the markets permitted by the state such as bus stations where there were many people. Among the peddlers were those wearing the badge of Kim Il Sung. Around parks or high-class apartments, there appeared small-scale markets where people could buy fruit such as apples or watermelons or some snack like doughnuts.

A 35-year old defector, Han Young Ju who had lived in Pyongyang until 2003 said, “The ordinary people frequently visit the Sungyo market. Judging from the video footage, I could see that the market became more crowded as the number of people engaged in business without permission has increased.”

“Back in 2003, the market was very clean because there were managers who kept the place in order and regularly directed cleanup activity. But, now, the place seems to be out of control because too many people are gathering around the market to do business,” the defector said, adding, “As I look at the types of clothes or shoes these people are wearing, I think the living conditions are worse off than before.”

Jiro Ishimaru, the chief editor of Asia Press International, said in his interview with Asahi TV, “We can see that the market economy is developing in Pyongyang.” The chief editor proceeded, “Nowadays, the North Korean people engage themselves in economical activities in order to improve their standard of living.”

The chief editor added, “For the past ten years, the market economy has been spreading into North Korea. And its power has been reshaping the country to the point that the state authorities cannot stop it.”

A market in Chongjin of North Hamkyung province did not look as vigorous as did the Sungyu market in Pyongyang. People in the market in Chongjin are wearing shabby cloth if compared to their counterparts in Pyongyang. Some women engaged in business at the market were notable with their baseball caps with visor.

There were many Kotjebi (street children) roaming around the markets in the Hamheung areas.

The footage featured a scene where the cameraman spoke with a homeless family. They were picking up usable stuff in a dumpster adjacent to the market. Lately, the number of families who were driven out of their homes into the street because of debt has been rising in the county.

The footage also showed a Kotjebi singing and begging for money, and an old man lying down in front of the railroad station but later being pulled along by a superintendent. Jiro Ishimaru explained about the rising of homeless families, saying, “It seems that we are observing ‘bankruptcy,’ one of many phenomena under capitalism occurring in North Korea.”

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.kp domain

October 13th, 2007

Via DPRK Forum and “hapo”–

DPRK Forum posted a thorough rundown on the DPRK’s internet domain.  I could not do a better job than him, so I will just copy his comments:

——————————-

The .kp TLD is up and running. There seems to be only one publicly accessible site, and is thinking of accepting registrations soon. What the conditions of registring is unclear, but is interesting all the same. If there are other sites, I do not know.

Will all the pro-DPRK sites go to the new domain? After all, North Korea is not too fond of Japan. If you have not seen it yet, here are some links for you:

Whois information

ICANN statement

Meeting from the board of directors

ANA Report on Delegation of the .KP Top-Level Domain

Korean Computer Center

Naenara

 

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North Korean Students Know about Keynes and Freedman?

October 11th, 2007

Daily NK
Yoon Il Gun
10/10/2007

A famous professor at Sunchon University in South Korea, Kim Yong Ok, who was invited to the Summit, opened to the public his discussion with Sung Ja Rip, the president of Kim Il Sung University, on October 8th in a JoongAng Daily Newspaper interview.

According to the article, Kim asked President Sung, “Did you study Freeman?” and the Chancellor answered, “Aren’t theories of Keynes and Freedman the basics?”

Seemingly, it sounds as if North Korean college students and intellectuals can freely study about economic theories of modern capitalism or modern thought.

Unfortunately, this is not true. Only cadres of the Party or those favored by the regime could have access to foreign books on modern thinking.

Kim Myung Chul (32, pseudonym) defected from the North while he was still a student at Kim Il Sung University. Mr. Kim’s testimony is as follows.

“There is a ‘closed library’ on the fourth floor of the Grand People’s Study House in Pyongyang. Foreign books at the library are only available for cadres of the Party or VIPs. Chancellor Sung Ja Rip must have read the theories of Keynes and Freedman at ‘the closed library’,” Mr. Kim said.

“There is discrimination in access to books and data against the general public,” Mr. Kim said, “general college students have no chance to study Keynes and Freedman.”

Since Kim Il Sung’s “May 25 Instruction” in 1967, most of books on western literature and philosophy have been burnt or smeared with ink, or pages have been torn out of books. Such vandalism was carried out under the so called “Book Arrangement Activity.” For some time thereafter, the general public had no access to books, even to those related to Karl Marx.

“Pyongyang Foreign Literature Publishing House” began to publish foreign books in 1984. From then on, the western classics in literature were made available. However, books on modern economics and modern thought are accessible only to the Party officials or some special groups at the “closed library.”

Mr. Kim said, “I had a chance to read the classics in North Korea but nothing on modern thought or economic theories. Only state-approved foreign books are readily accessible to the public. Ideologies or theories that seem to challenge the system are thoroughly denounced.”

Mr. Kim added, “In the late 1990s, the state education authorities approved classic economics and classic philosophy for public reading in order to stress the superiority of socialist economic theory and Juche Ideology.”

“In the 1990s, I checked out from library and read the classics such as Marx’s ‘Das Kapital,’ Engels’ ‘Ludwig Feuerbach and the End of Classical German Philosophy,’ ‘The Holy Family,’ and Lenin’s ‘The State and Revolution.’ But the books were so old that the pages were worn out and yellow,” said Mr. Kim.

Mr. Kim also borrowed some books from those who had access to “the closed library.” The books he secretly borrowed and read were “How to Win Friends and Influence People,” by Dale Carnegie, “From the Third World to First” by Lee Kuan Yew and “The Decameron” by Giovanni Boccaccio.

“Only approved literary works are translated and published. Many literary works which do not threaten the current system have been published,” Mr. Kim said, adding “When I was in college, I read many foreign books including novels written by Pushkin, John Byron, Heine, Shakespeare, Moliere, Stendhal, Tolstoy, Dumas, Victor Hugo, and Cervantes”

Unfortunately, Mr. Kim said, “I had never had a chance to read modern novels because only classics were made available. North Korea censors any books or information that it regards as a threat to the system or seems to produce illusions of capitalism.”

“Translations of up-to-date technology and information are weak,” Mr. Kim said, “When college students write their dissertations, they use outdated books as a reference.”

Mr. Kim also recalled that around 2001, it was all the rage among college students in Pyongyang to read “Gone with the Wind” by Margaret Mitchell, and “An American Tragedy” by Theodore Dreiser.”

Ever since the former US President Jimmy Carter gave Kim Il Sung “Gone with the Wind” on video tape as a present upon his visit to Pyongyang in 1994, such American novels have been translated and published.

Kim Myung Chul added, “The authorities approved of publishing such books because they did not consider the books challenging to North Korea’s system or status quo. However, those college students who read the American books loved the opportunity of reading them, for it served as a chance to learn about America.”

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N. Korea sees Koguryo legacy as way to promote inter-Korean relations

October 11th, 2007

Yonhap
10/11/2007

North Korea sees the legacy of Korea’s ancient kingdom of Koguryo, which controlled northern Korean Peninsula and northeastern China for more than 700 years, as a means of improving inter-Korean relations and an eventual unification of the two Koreas, a senior North Korean official said Thursday.

“I’m passionate about opening this exhibition, as I am confident that it will further boost our people’s struggle to achieve a unified powerhouse nation and promote the improvement of (North) Korea and Japan relations based on a drastic clearance of their past,”said Hong Son-ok, a North Korean official in charge of external cooperation in cultural cooperation.

Hong made the statement to Yonhap News Agency at a ceremony here to open an exhibition of photos of artifacts of the Koguryo kingdom co-hosted by Yonhap News Agency and Japan’s Kyodo News Service. Hong’s statement was referring to North Korea’s chilly relations with Japan, which colonized the Korean Peninsula for about 35 years until 1945.

The exhibition is taking place at the Korean Central History Museum here amid signs of warming inter-Korean relations just a week after the leaders of South and North Korea held their second summit in seven years.

North Korean leader Kim Jong-il “paid special care and courtesy” to the exhibition, Hong said.

It is the first time that the South Korean news agency has hosted an event in North Korea. The exhibition of 121 photographs of tombs and murals of the Koguryo Kingdom (37 B.C.-668 A.D.) continues until Nov. 10, and includes World Heritage sites.

“The murals of the Koguryo kingdom, which controlled the northern part of the Korean Peninsula and Manchuria (northeastern China), are an element that links the people of South and North Korea,”Yonhap President Kim Ki-seo said.

Kim cited the popularity in South Korea of television dramas and literature featuring the ancient kingdom, which he referred to as a spiritual root shared by the two Koreas. Kyodo’s president, Satoshi Ishikawa, was also on hand at the opening ceremony.

About 100 Pyongyang citizens attended the ceremony with most of the women guests wearing Korea’s colorful traditional costume, hanbok.

Citizens expressed pride in their ancient legacy.

“It’s a centennial powerhouse in the East,” a North Korean said. “We should inherit the great spirit of our forefathers and develop our nation into a unified powerhouse.”

Horse-riding warriors of Koguryo dominated politics and culture in Northeast Asia until they were defeated by joint attacks from the southern Korean kingdom of Silla and China’s Tang Dynasty.

The Koguryo people left paintings on the walls and ceilings of tombs depicting their daily lives and mythical beliefs. A mural from Anak Tomb No. 3 shows a vivid image of a woman in white stirring soup in a big pot in a kitchen beside a meat storeroom. Other murals show a hunting scene of horse-riding warriors and a nobleman enjoying an acrobatic performance.

A total of 107 Koguryo tombs have been discovered, 76 in and around the North Korean capital of Pyongyang and the rest around the North Korean border with China.

As much of the kingdom was located in what is now northeastern China, Chinese scholars have recently begun claiming that the Koguryo kingdom is part of Chinese history. Last year, Yonhap and Kyodo co-hosted an exhibition in Seoul of photos that Kyodo took at Koguryo tombs in North Korea.

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Washington Considers Representative Office in Pyongyang

October 11th, 2007

Korea Times
Yoon Won-sup
10/11/2007

The United States is considering setting up a representative office in Pyongyang as a diplomatic mission, according to a report Wednesday.

Radio Free Asia said the United States will set up a diplomatic mission in Pyongyang, and its form would most likely be a representative office, not a liaison office or an embassy.

The U.S.-based media quoted a source as saying that the U.S. government and Congress are discussing the level of a diplomatic mission in Pyongyang, which will depend on progress in North Korea’s dismantlement of its nuclear weapons program.

Washington reportedly plans to remove North Korea off its list of terror-sponsoring states this year after North Korea disables its nuclear facilities and declares all its nuclear weapons programs. After the removal, the United States will likely begin the process of normalizing relations with North Korea, according to the report.

Experts showed optimism on the moves to normalize relations with North Korea.

A U.S. official who worked on the creation of a diplomatic mission in Pyongyang in 1994 told the radio station that it would be good for Washington to have representation in North Korea in order to understand it.

The official stressed that the absence of a mission may lead the United States to make policy based on wrong information.

However, the experts agreed that the prerequisite for the diplomatic mission was the denuclearization of North Korea.

“It is not so meaningful a debate to discuss whether to set up a representative- or embassy-level mission in Pyongyang because there will be a U.S. Embassy in the end,” a senior Korean government official said. “But the more important thing is that North Korea moves toward denuclearization for this to be realized.”

The United States promised to establish full diplomatic relations with North Korea, depending on North Korea’s actions toward denuclearization on the Oct. 3 agreement reached at six-party talks involving the two Koreas, the United States, China, Russia and Japan.

U.S.-North Korea relations have recently been improving. In early September, Christopher Hill, the top U.S. negotiator to the talks, had a successful meeting with his North Korean counterpart Kim Kye-gwan in Geneva on the normalization of relations.

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Gov’t refrains from using “reform, openness” to describe Kaesong industrial park

October 10th, 2007

Yonhap
10/10/2007

The Unification Ministry has dropped the words “reform and openness” to describe the South Korea-invested industrial park in the North’s border town of Kaesong from its Web site in an apparent bid not to provoke the North.

North Korean leader Kim Jong-il complained in the second-ever inter-Korean summit in Pyongyang last week that South Korea has been using the Kaesong industrial park as a scheme to force reform and openness in the communist North, whereas Pyongyang had gained little from the inter-Korean economic cooperation project.

President Roh Moo-hyun responded by saying in the North Korean capital that North Korea should not be described as a subject of reform and openness.

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EBA Press Release: Pyongyang International Trade Fair

October 10th, 2007

Europen Business Association
October 2007

EBA.JPG18 European companies are participating at the European booth organized by the European Business Association (EBA) in Pyongyang. This has been the largest ever participation of European companies at a Trade Fair in Pyongyang. The 18 EBA-member companies come from 6 European countries and are engaged in banking, IT, pharmaceuticals, maritime transportation, railways, courier services, industry, mining, solar driven water pumps, energy saving technology, commodity inspection, cosmetics and other consumer goods and general trading. Some already operate in joint ventures with Korean partners or found other forms of close business cooperation, particularly in the fields of banking, mining, internet services, logistics, software development and pharmaceuticals.

The EBA will continue to make efforts to attract more European companies to invest and do business in the DPRK in the coming years and will share its experience to help make the endeavors of the newcomers and their Korean partners a success. The EBA closely cooperates with the DPRK Chamber of Commerce and the Korea International Exhibition Corporation to facilitate the participation at exhibitions, to intensify trade between European and DPRK-enterprises and to enhance the identification of suitable business and investment opportunities for European companies.

Pictures of the European booth will be published on http://www.eba-pyongyang.org/
Felix Abt, President
Dr. Barbara Unterbeck, PR-manager
European Business Association
President´s Office
Chang Gwang Foreign Residential and Office Building
10th Floor, No. 10-2
Central District
Pyongyang
The Democratic People’s Republic of Korea
http://www.eba-pyongyang.org/

 

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Reports cite high cost of North business

October 10th, 2007

Joong Ang Daily
Limb Jae-un
10/8/2007

Days after both Koreas vowed to heighten cooperation, a lawmaker said yesterday in a report that the Kaesong Industrial Complex, the experimental site combining South Korean technology and North Korean labor, has been unprofitable so far.

In addition, the Ministry of Construction and Transportation said in a report yesterday that repairs to the airport on Mount Paektu will cost 280 billion won, or $304 million.

One of the agreements signed at the inter-Korean summit Thursday calls for allowing South Korean tourists to visit the scenic mountain on the Korea-China border.

“In terms of the runway length, Samjiyon Airport can accommodate large airplanes, such as a Boeing 747, but the condition of the airport is bad,” said an official of the construction ministry, who asked for anonymity. The airport, located on a plateau 1,000 meters, or 3,280 feet, above sea level, needs advanced navigation facilities, he said.

Despite the optimistic discussions during last week’s summit, inter-Korean economic cooperation has so far had dismal results, according to a report from Grand National Party Representative Lee Han-koo. Thirteen out of 16 companies operating at the Kaesong Industrial Complex are currently in the red, he said. Their debt is four times higher than their assets, he said. The combined assets of the 16 companies is only 4.5 billion won and their average annual sales is 790 million won.

“The biggest problem of the economic cooperation is that the relevant information has been held back from the public,” Lee said.

Meanwhile, a top European official said North Korea must go through serious reforms to become a viable investment destination for Europe.

North Korea is unattractive for Europe because “the conditions for investment are not safe enough and the regulatory environment is not predictable,” Guenter Verheugen, the EU Industry and Enterprise Commissioner, said in an interview with The Associated Press on Saturday.

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Sound economics

October 10th, 2007

Joong Ang Daily
Jo Dong-ho
10/9/2007

The summit meeting was quite successful. Some say it was because North Korea’s nuclear program was not on the agenda. Relinquishing its nuclear ambitions is the North’s card for normalizing ties with the United States and receiving rewards.

Costs cannot worry us either, because South Korea’s economy has grown so much that we can now pave a road even for a village on a remote mountain. If the size of government projects for culture cities or innovation cities were reduced, we would have trillions won, or billions more dollars, available.

As an economist, I would like to focus on roles of the government and the market discussed in the summit meeting. The ultimate question of economics can be summarized as how the market and the government will divide their roles to get maximum benefits out of limited resources.

The economics of past 200 years concludes that the best way is for the private sector to make independent decisions in economic activities and for the government to manage the rules so that those activities will be carried out fairly and smoothly. This can be likened to the relationship between players and referees in a sporting event.

The same principle applies to economic cooperation between South and North Korea.

Easing military tension, which will reduce the risk of investing in North Korea, is something that only the government can do. Repairing railways and roads is also the responsibility of the government. To improve transportation, communication and customs are the same. The private sector cannot do those jobs on its own.

However, building a shipyard or developing tourism on Mount Baekdu is for the private sector to carry out. But as these projects were agreed upon in the summit meeting, they must be carried out without feasibility studies. These projects were being discussed even before the summit meeting.

Private companies have been interested in them for years, but they have not made the decision to pursue them for many reasons, including low profits. Now the leaders of the two Koreas have made an agreement so these projects must be carried out. North Korea will probably make more unreasonable demands. The South Korean government will have to provide subsidies, and that will increase the burden on the South Korean people.

Some may find it disturbing that I criticize a few projects when there were many other good agreements reached. But these projects show the South Korean government’s basic view on economic cooperation with the North.

In fact, in all the projects agreed upon, there is a vague guideline for the division of roles between the government and the market. The same is true with the agreement to complete the first step of construction at the Kaesong Industrial Complex earlier than planned and to start the second step. The Hyundai Asan Corporation and the Korea Land Corporation are the ones doing the industrial park project, not the government.

These companies have their reasons for managing the industrial park project in its first stages. The government cannot and should not agree to implement the project at a faster speed. After North Korea tested its nuclear bomb, there was pressure to halt that project. Then the government said it could not intervene because it was led by the private sector. But the government has now agreed to complete it at an earlier date.

Some maintain that these agreements will improve inter-Korean relations so there is no use in dividing the government and the market. But it is more important that economic cooperation between South and North Korea improves properly than quickly. Let’s say the improvement of economic cooperation between South and North Korea is of the utmost value so the government can lead economic projects. But there must be good reasons for the government to intervene in the market.

The government has said until now that it supported economic co-operation with the North in an attempt to induce North Korea to open its doors and reform its economy. But that no longer sounds like enough. When providing assistance, the supporter must make sure that the party that receives assistance tries to stand on its own. But the president said we should not mention this in the summit meeting.

Six months ago, at an event for businessmen in the fisheries industry, the president said the government would provide support if need be, but what is most important is their own will and efforts.

One of President Roh’s strengths is that he is not afraid to say what he needs to say. That he could not say what he had to say to Kim Jong-il is what is most regrettable about the meeting.

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