IFES MONTHLY RECAP: SEPTEMBER 2007

October 2nd, 2007

Institute for Far Eastern Studies
NK Brief No. 07-10-2-1

DPRK-U.S. RELATIONS
North Korean and U.S. officials kicked off the month of September with meetings held in Geneva on the 1st~2nd. The bilateral talks focused on how to implement the February 13 agreement. After two days of talks, U.S. Assistant Secretary of State Christopher Hill stated he is “convinced” the North will disable nuclear programs by year’s end, a timeline offered by the DPRK negotiators. North Korean press reported that the DPRK would be removed from the U.S. terrorism roster and sanctions imposed under the Trading with the Enemy Act would be lifted in return.

On September 7, Hill announced that North Korea had invited nuclear experts from the United States, Russia, and China to the DPRK in order to survey nuclear facilities and recommend dismantlement plans. The experts examined North Korean nuclear sites from September 11 to September 16.

On the same day, U.S. President Bush stated Washington would consider a peace treaty with North Korea in return for the North’s abandonment of nuclear arms.

On September 17 it was reported that North Korea had admitted that it had earlier procured materials needed to build uranium enrichment centrifuges. The admission regarded the import of 150 tons of hard aluminum pipes, enough for 2,600 centrifugal separators.

On September 20, the DPRK was removed from Washington’s list of countries producing illegal drugs. The North was added to the list in 2003.

On September 28, U.S. President Bush authorized 25 million USD worth of energy aid for North Korea. These funds could be used to provide the DPRK 50,000 metric tons of heavy fuel oil, equal to the amounts provided by China and South Korea as part of the February 13 agreement.

DPRK-JAPAN RELATIONS
Two days of talks between North Korean and Japanese diplomats began on September 5 in Mongolia, with both sides expressing confidence that there would be progress. Wartime compensation issues were discussed, although Japan continued to link normalization of relations with kidnapping issues.

Following the talks, North Korea stated that kidnapping issues were resolved with Japan, while Japan stated that both sides reiterated existing positions. On the same day, Japan rejected a DPRK request to allow North Korean ships to dock in Japan in order to pick up aid for flood victims.

On September 30, Chief Cabinet Secretary Nobutaka Machimura said Japanese economic sanctions on North Korea would be extended for another six months due to “basically no progress” on abduction issues.

DPRK-SYRIA ARMS COOPERATION
Reports began coming out of Israel in early September that reconnaissance flights over Syria had taken pictures of North Korean nuclear supplies and materials. Following Israeli air strikes, it was reported that Special Forces had entered Syria and confiscated material that appeared to be of DPRK origin. Conflicting reports stated that the facilities struck were missile storage facilities, rather than of a nuclear nature. North Korea has denied any nuclear cooperation with Syria.

DPRK-UAE RELATIONS
North Korea established ambassador-level diplomatic ties with the United Arab Emirates on September 18. A joint statement said the two countries aim to “enhance understanding and boost the links of friendship and cooperation between their two peoples.” Ties with such an oil-rich nation on friendly terms with Washington could be significant as the North moves to dismantle nuclear facilities.

ROK-DPRK ECONOMIC COOPERATION
It was reported on September 4 that stock prices of South Korean companies engaging in inter-Korean economic cooperation have shot up on news that the DPRK will dismantle nuclear programs. This includes not only those companies operating in the Kaesong Industrial Complex, but also firms involved in providing electricity and other projects planned in exchange for the North’s denuclearization.

On September 20 it was announced that the ROK government plans to request a 50 percent increase for inter-Korean cooperative projects in next year’s budget. The Ministry of Planning and Budget will request 822 million USD for cross-border projects, as well as 580 million USD for humanitarian assistance.

On September 27, it was reported that the ROK government was reviewing a proposal to jointly develop Nampo, Haeju, Najin, Sunbong, Wonsan, and Shinuiju. The North has requested development of heavy industries, while South Korea seeks cooperation on light industrial projects.

SIX-PARTY TALKS
The latest round of six-party talks opened in Beijing on September 27, with both the U.S. and DPRK negotiators promising progress. On September 30, talks were ended to allow delegates to return to their home countries to work on a ‘nuts and bolts’ joint statement. U.S. delegate Hill stated the delegates were close to agreeing on a definition of facilities, and that the proposed joint statement was very detailed. Before returning to Pyongyang, Kim Kye-gwan was quoted as saying that the North can report nuclear programs, but will not declare nuclear weapons by the end of the year. An ROK official stated that the North’s position was acceptable to Seoul. Negotiators are also thought to have agreed to begin removal of ten core devices from three nuclear facilities beginning in November. The joint statement is scheduled for release on October 2.

DPRK FLOODING
Acting UN Coordinator to the DPRK Jean-Pierre de Margerie stated on September 3, “The level of damage to infrastructure, to communications, to crops, to farmland and to households, is considerable,” but also pointed out, “The [DPRK] government has improved its level of cooperation by giving us unprecedented access to the field to conduct our assessments of the damage.”

ESPIONAGE IN THE DPRK
Li Su-Gil, spokesman for the DPRK National Security Service, reported on September 5 that several foreigners had been arrested along with a number of DPRK citizens accused of spying for a foreign country; Specifically, for having “collected official documents and information on the DPRK’s important military facilities, and spread the idea of so-called democracy and freedom to the people.” The identities and nationalities of those arrested were not revealed.

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Posted in Institute for Far Eastern Studies, Japan, South Korea, Syria, UAE, USA | 1 Comment »

Internet lines of two Koreas to be linked during summit

October 1st, 2007

Yohnap
10/1/2007

South and North Korea will be linked via the Internet during the summit of their leaders from Tuesday to Thursday, South Korea’s top communications service provider said on Monday.

KT Corp. said that it will reopen for three days the optical communication network which was established in July 2005 for the video reunions of families separated by the inter-Korean border, enabling the South Korean entourage and press corps to use the Internet.

North Korea originally planned to allow Internet access via China, but notified the South Korean government over the weekend of its decision to use the inter-Korean network.

Twelve personal computers have been connected to the Internet at the press center established at the Goryo Hotel in Pyongyang.

KT also plans to support a broadcasting relay for South Korean broadcasters using its Mugunghwa No. 3 satellite.

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Mt. Geumgang Project to Take Another Leap

October 1st, 2007

Korea Times
Ryu Jin
10/1/2007

Mt. Geumgang tourism project, launched in 1998, has grown up as one of the three major inter-Korean economic projects in accordance with the reconciliation of the two Koreas. And it now braces itself for another leap with the 2007 South-North Summit.

But the project went through a rough and difficult road in the past nine years, largely due to exterior factors such as the political instability such as the nuclear standoff between North Korea and the United States since 2002.

Hyundai Asan, the operator of the cross-border tourism project, expects the summit to provide a fresh momentum for their business. Hyundai Group Chairwoman Hyun Jeong-eun will accompany President Roh Moo-hyun to Pyongyang.

Riding on Reconciliation

In June, Mount Geumgang opened the elegance of its inner part to outsiders for the first time since the pre-modern Korea was divided into two different systems — the capitalist South and the communist North — more than half a century ago.

Since it became accessible in 1998, Mt. Geumgang has emerged not only as a popular tourist destination for South Koreans but also one of the few places in North Korea where foreigners could travel relatively easily.

But the inner part of the mountain, better known as “Naegeumgang” in Korean, has been closed by North Korea despite the repeated requests by Hyundai Asan in the past several years.

Geumgang-san, a 12,000-peak mountain that has long held aesthetic and spiritual allures for Koreans, could be divided into three parts: “Naegeumgang” (inner, western part), “Oegeumgang” (outer, eastern part) and “Haegeumgang” (seashore part).

In the past, people took trains to Cheorwon to explore the auspicious mountain _ they climbed up through Naegeumgang to get to the highest Biro-bong peak (1,638 meters), looked around Oegeumgang and then came down to Haegeumgang.

Former Unification Minister Lee Jong-seok, who climbed up the new course, said it was quite meaningful that Pyongyang has finally decided to open the secretive area, given the strategic importance of the military bases facing the South’s Cheorwon.

After a four-month operation of the Naegeumgang tour, more than 50,000 people are expected to visit Mt. Geumgang in October to break the record for the number of visitors in a single month, according to Hyundai Asan.

For Another Leap

Since the first tour to Oegeumgang in late 1998, more than 1.5 million visitors have made the trip to the mountain resort as of May. Most visitors were South Koreans, while nearly 8,000 visitors came from 48 other countries.

But Hyundai Asan’s tourism business has often been affected by security situations on the peninsula. It met difficulties when North Korea conducted a nuclear test in October last year.

Amid the heightened tension, the number of tourists to the mountain resort plummeted to some 240,000 last year, putting a damper on Hyundai Asan’s target of securing more than 400,000 visitors.

Hyundai Asan CEO Yoon Man-joon said earlier this year that the company set the target at 400,000 again for this year. By the end of May, about 100,000 people have made the trip to Mt. Geumgang this year, according to Hyundai Asan spokespersons.

Yoon said that the company would also try to revamp tour programs to draw more younger visitors as part of its new marketing strategy for the existing tour to the outer side of the mountain, Oegeumgang.

Company officials added, once the 500,000-pyong (408-acre) 18-hole golf course is completed in October, Mt. Geumgang would be reborn as a new resort complex with “things to see, eat, buy and enjoy.”

Hyundai Asan has a new plan for the next year. “Our tourism business would be put on the right track next year, if the visitors could drive their own cars all the way to the resort area across the border and clime up to the highest Biro-bong,” a spokesman said.

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Control of North Korean Civilian Migration Begins for the Summit

September 28th, 2007

Daily NK
Kwon Jeong Hyun
9/28/2007

With the 2nd Inter-Korea Summit Talks coming up in five days in Pyongyang, the North Korean authorities have officially begun regulations of civilian migrations.

An inside source in North Korea said in a phone conversation on the 27th, “Control of civilians have become significantly toughened due to events of national importance, so the top (government) has completely limited travel permit approval numbers of average civilians to Pyongyang and the border regions.”

People’s Units’ chairs are in the midst of temporarily working on a reporting system which analyzes the data of civilian migrations and daily reports them to the security office.

North Korea still requires travel permits for moves to other regions from the place of residence. The inspection of permits becomes even more difficult when public transportation such as rails are used.

In particular, entry into Pyongyang, Yongbyun (nuclear power plants), Hwadaegun (Musoodan rocket launching site), and the northern border unit requires special travel permissions that are different from normal permits. For these special regions, an approval number, which signifies “special business,” is needed.

After the March of Tribulation, incidents of the Safety Agents issuing travel permits after receiving bribes were rampant, but recently, the regulation of such permits and travel restrictions on special regions have become more stringent. Restrictions on the issue of travel permits have significantly increased since the Local People’s Assembly representative elections on July 29th.

The source said, “After Chuseok (fall holiday), the order restricting the issue of all border and Pyongyang-related permits was announced at the People’s Unit meeting. With the Summit talks several days ahead, meetings of key leaders have all been cancelled and all entry and exit prohibited.”

Further, he said, “The northern border region or other controlled areas are not exceptions. Money will not do anything when trying to attain travel permits. Due to the fact that the issue of permits, with the exception of deceased reports, has been completely disallowed in surrounding cities of Pyongyang, such as Pyongsung or Nampo, the discontents of merchants who are dependent on travelling are high.”

With restrictions on civilian migrations, the price of commodities at the Jangmadang (market) has also been raised. Chinese products have to be brought back from the North Korean-Chinese border region, but because travel permits have not been issued, the transport of goods is difficult.

For industrial products, if the border region lowers the price, then prices go up in inland regions such as Kangwong, South and North Hamkyung, etc., because Chinese products coming in from border cities Shinuiju and Hyesan, Yangkang are not able to move inland. The inland is the opposite. However, the amount of rice coming in from inland regions is high, so their prices end up hiking up.”

However, the source said, “This time, the management will probably end at one-time inspection because the South Korean President is visiting. The jangmadang price levels will not skyrocket.”

Regulations regarding private visits of Chinese through Chinese travel agencies have not occurred yet.

It appears that the North Korean authorities, in order to prevent accidents and events which could happen around the Summit talk period, have strengthened preventative means.

One source who is residing in Musan, North Hamkyung, said, “In order to ensure the success of national events, lectures for leaders, with the content of hindering behind-the-scenes maneuvering of enemies and accidents and events on a timely basis, are taking place. Strict disciplinary actions for those who divulge national secrets and illegal use of cell phone are being emphasized.”

The source relayed, “Border guards are telling smugglers, ‘Wait just a few more days. After the national event (the Summit Talks), regulations will be relaxed. The situation nowadays is that smuggling is self-restrained.”

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Posted in Automobiles, China, Civil society, General markets (FMR: Farmers Market), International trade, Railways, Real estate, Transportation | Comments Closed

Samsung, LG Likely to Expand TV Business in North Korea

September 28th, 2007

Korea Times
Kim Yoo-chul
9/28/2007

Samsung Electronics and LG Electronics are considering expanding investment in the TV business in North Korea, according to company sources Friday.

Such expectations came after the government confirmed that Samsung Group Vice Chairman Yoon Jong-yong and LG Group Chairman Koo Bon-moo will join President Roh Moo-hyun’s entourage for the inter-Korean summit on Oct. 2-4.

Expectations have arisen among business groups that the second inter-Korean summit will produce substantial results in creating more business opportunities in North Korea, though big firms responded less enthusiastically than they did seven years ago.

“As our vice chairman will go to North Korea, we will start reviewing the North Korean business,’’ a Samsung spokesman told The Korea Times.

Asked about the possibility to expand production of cathode-ray TVs (CRT) in the North, the spokesman declined to elaborate.

But a source familiar with the situation raised the possibility of more production of CRTs.

Samsung began producing CRTs in the reclusive country on an original equipment manufacturer (OEM) basis since late 2000, the year then President Kim Dae-jung visited the North.

LG, which has produced between 15,000 and 20,000 CRTs in the communist state since 1996, is also considering expanding its TV business there in a long-term perspective.

“Nothing has been confirmed yet. But the issue is a possibility,’’ an LG spokesman said.

He said there will be more discussions after Chairman Koo returns from Pyongyang.

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DPRK trade officials crack down on corruption

September 28th, 2007

Institute for Far Eastern Studies
NK Brief No. 07-9-28-1
9/28/2007

Since early this year, North Korean authorities have been systematically implementing a double-entry accounting system to keep track of cross border trade with China, and as of late have been cracking down on private sales of goods imported under state requisitions.

It has become common practice for most traders to keep two sets of books, a private accounting record, and a set of records for government use. As these traders exported state goods to China, they would conspire with Chinese counterparts and make huge profits by recording lower prices than goods were actually being sold for. In many cases, bribes are taken to turn officially imported and exported goods (minerals, seafood, etc.) over to private sellers. These facts came to light through Chinese traders in business with North Korea.

Recently, however, investigations by the Kangsung Trade Company, operated under the supervision of the People’s Armed Forces Bureau, led to the conviction and execution of a foreign currency trader in Kangwon Province, Wonsan City and another from South Hamkyung Province, Hamheung City on charges of funneling company funds for private use. The crackdown appears to be because embezzlement and other forms of corruption are on the rise.

It was also disclosed that the foreign currency trader in Hamheung was accepting money from private business operators and using the company’s name to lend import and export quota chits. Inspectors raided the homes of the suspects and found large amounts of U.S. currency and gold, as well as no small amount of Japanese yen.

The human rights NGO ‘Good Friends’ reported in last month’s newsletter, “ After Oh Moon-hyuk, foreign currency director for the Chosun Fabric 88 Trade Company in Yunsa County, North Hamkyung Province, built a private villa on a plot with a good view, and purchased a Mercedes out of pocket, he drew the attention of General [Kim Jong Il] and was exposed. He was publicly executed in the middle of last July.” The NGO went on to report, “Every day young girls were called to the villa for his enjoyment, and security forces and police made it a point not to stop by the area near the villa often.”

Trade authorities in the area report that the crackdown on these violators has had no effect on DPRK-PRC trade. High ranking officials are aware of the abuse of authority to earn money, but had to some extent turned a blind eye to the issue. The crackdown is a result of the recent considerable growth in the problem.

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Posted in Black markets, China, Economic reform, Good Friends, International trade, Kangsung Trading Company, Military, Political economy | Comments Closed

Kim Jong-il agrees to U.S. troops: Kim DJ

September 27th, 2007

Korea Herald
9/27/2007

North Korean leader Kim Jong-il would allow U.S. troops to be stationed on the Korean Peninsula even after the reunification of the two Koreas, former President Kim Dae-jung said.

During an address at the Korea Society forum in New York on Tuesday, Kim said the North Korean leader had agreed to the idea during their summit in 2000.

North Korea has repeatedly criticized the U.S. troop presence in South Korea and demanded its withdrawal. Some 29,000 U.S. troops are stationed on the peninsula as a deterrent against the North’s 1.17 million troops.

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Do You Know the Shooting Game of North Korean Children?

September 27th, 2007

Daily NK
Moon Sung Hwui
9/27/2007

What do North Korean children do during the Chuseok?

They are not sponsored with computers or theme parks so they enjoy things like a game of slap-match or hide-and-seek like South Korean children back in 70s or 80s. Through the starvation phase, the North Korean have invented a new form of play called “Ceremonial Game” and “Shooting Game.”

Kim Ha Yeon, a North Korean defector originally from Shinuiju, said that the play that is popular among the children even before the Chuseok is called “Ceremonial Game.” Even the North Korean civilians were surprised with the games of children mocking and playing out what the adults have done in such uncanny manner.

Kim said, “As the Chuseok approached, children went around the village, making a mound of sand like that of a tomb and imitated their parents’ bowing. They also imitate their adults sobbing next to their tombs.”

‘It got so bad that this problem was raised during the meetings of the People’s Unit and the parents were told to take better care and control of their children from playing amiss games.”

Ceremonial Play: Making Tombs and Sobbing

It is not uncertain when this play was initiated. However, the reason why this ceremonial play was invented cannot be linked to the action of directly linking this as the culture of visits to ancestral graves.

Kim said, “It is sad that the children are making a death-ceremony into a type of a game – after they watched citizens die of starvation in mid 1990s.”

The games that North Koreans play are not just the Ceremonial Play. They also made a game out of the public persecution called “Shooting Game” in 2000.

The story told by Cho Kyung Cheol (pseudonym), a North Korean defector from Hyesan, Yangkang is quite shocking.

“One day I was coming home from work and I saw a row of children lined up next to the garage of our apartment. I thought they were playing hide and seek or something. But in front of those kids, there were 3 kids holding sticks. I saw these children hold the sticks between their armpits and take a shot, and in the mouths of these children, they shouted, ‘bang bang bang’ and each and every one of the children would fall. I utter shock, I screamed, “You rascals!” and they ran like their tails were on fire.”

Massive Group Execution Popular Among the Children

“At the moment, the parents shouted and the passing by elders clicked their tongues. The adults were surprised- even though the situation was quite harsh it was to their disbelief that children would make a play out of execution. When he told his colleagues after he went to work the next day, his colleagues said that the execution game has been popular among children for a long time and laughed at him instead.”

According to the inside source residing in North Pyongan said through the text message with the reporter on 19th that, “Even the children play the shooting game. Because the gun shooting is so rampant, it just happens.”

The shooting game has begun to take its toll from 1998 to 2002 when the North Korean National Security Agency initiated nationwide group executions.

North Korea has always had public executions since its establishment but the executions have been a frequent occurrence since the March of Tribulation, the mid-1990s’ famine. Kim Jong Il initiated an official order of “Ring the Gunfire” on June 1995 and initiated the reign of terror through the usage of public execution.

However, the public execution that took place in 1998 to 2002 was different from that of just taking down 2-3 people at once by the Social Safety Agency. According ot the witnesses, the NSA lined up 10 or more people and shoot them.

Back then, the popular shooting game among the children was quite a shock to the elderly generation. This kind of play was notified internally to Pyongyang and was told, strictly, to stop this from reoccurring.

Through the meetings of People’s Unit, the indoctrination content included “a ban of unrealistic games among the children.” However, it is the general opinion and consensus of the North Koreans that this shooting game will not disappear in the condition where the public execution still continues and no other game culture develops for these children. 

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North Korea: Illegal Exporting of Weapons to Sri Lanka Guerilla Groups

September 27th, 2007

Daily NK
Namgung Min
9/27/2007

The Sankei Shimbun reported on the 26th that a smuggling vessel containing North Korean weapons have been caught on their way to illegally entering Sri Lanka.

According to the Sankei, the Sri Lanka navy arrested the vessel containing the 68 automatic rifles manufactured by the Munitions Industry Department (No. 99 Department) of the Worker’s Party that was leaving from Chonjin to Sri Lanka.

The Sankei announced that when the Sri Lanka navy tried to capture the smuggling vessel on October in 2006 and February this year, the smuggling vessel opened fire so the Sri Lankan navy shot them down. On March in 2007, the Sri Lankan navy took the North Korean vessel near the shore and confiscated the North Korean weapons and arrested the captains.

Furthermore, the newspaper revealed that there was no sign implying the nationality but it was identified as North Korean due to the confiscated weapons which were identified by the former North Korean military men who defected to South Korea.

It was announced that the North Korean machine guns and antitank guns were planned to be passed over to the Anti-government guerrilla groups named the Liberation Tigers of Tamil Eelam (LTTE) in Sri Lanka.

The U.S. appointed LTTE as a foreign terrorist group in 1997 and the EU also appointed the LTTE as a terrorist organization in April, 2007.

According to the newspaper, the Sri Lankan government conducted investigation and came to a conclusion that a Chinese weaponry company probably acted as an intermediary to smuggle the North Korean weapons to the anti-government guerrillas in Sri Lanka.

In regards to this incident, the Sri Lankan government raised complaints to the North Korean ambassador located in India and the Chinese government, but the both representatives are denying their relations to the illegal smuggling of the weaponry.

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US Geological Survey 2006 Minerals Yearbook

September 26th, 2007

Summary: For the next 4 to 5 years, the North Korean mining sector is likely to continue to be dominated by the production of coal, iron ore, limestone, magnesite, and zinc. Because of growing demand for minerals by China and the Republic of Korea, their investment in North Korea’s mining sector is expected to increase and to extend beyond their current investments in apatite, coal, copper, and iron ore into other minerals, such as gold, magnesite, molybdenum, nickel, and zinc. North Korea’s real GDP is expected to grow at between 1% and 2% during the next 2 years.

Other highlights:

  • North Korea ranked third in production of magnesiate in the world.  Its value-added product–magnesia clinker, which is used as a refractory metal–was marketed world wide. 
  • According to Corporate social Responsibility Asia (CSR Asia), North Kroea ranked virtually last in environmental sustainability in the world, despite the country’s enactment of major laws for environmental protection, such as the Land Law of 1977, the Environmental Protection Law of 1986, the Forrestry Law in 1982, and the Law on Protection of Useful Animals in 1998.
  • On the basis of North Korea’s industrial structure in 2004 (the last year in which data is available), the mining sector accounted for about 8.7% of North Korea’s gross domestic product.
  • Recoverable coal reserves in North Korea were estimated to total about 8 billion metric tons in 2006.  Coal production reportedly dropped to about 23 Mt/yr in 2006 from 37.5 Mt/yr in 1985 mainly because of outdated mining equipment and technology.

Download the full version here: USGS.pdf

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Posted in Agriculture, Coal, Copper, Economic reform, Energy, Environmental protection, Foreign direct investment, Gold, Graphite, Iron Ore, Mining/Minerals, Sand, South Korea | Comments Closed

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