First busses make overland treck to Kumgang

February 18th, 2003

from the BBC:

The BBC’s Kevin Kim joined the first overland tourist trip to North Korea, and reflects on his journey to the other side of the border.

“I was on board one of 20 buses that crossed the DMZ for the first time.

As a South Korean it felt really strange, because up to now we were strictly forbidden from getting near to the DMZ.

The mountains on the North Korean side looked totally different from the mountains on the South Korean side.

It was very barren. There were hardly any trees.

North Korea is in an energy crisis right now and every single tree is put to good use, for heating.

The South Korean guide told us that while travelling through the DMZ we must not take pictures, wave outside, or show any South Korean newspapers or magazines through the window.

I guess that is why everyone on the bus was talking in a very soft voice.

Every few hundred metres there were North Korean soldiers with their rifles just looking on as the buses went by.

I was really tempted to just open the window and say “hello” or “nice to see you”.

But I had been told by my South Korean guide that I could open the window but I could not say anything to them.

Like the words of the South Korean song, “Longing for Mount Kumgang”, getting to North Korea and seeing its natural beauty has been something that people in the South could only long for until now.

Unification, too, is something that Koreans have only dreamed about.

But having travelled through the most heavily fortified border in the world, I began to think that while unification in the Korean peninsula may seem impossible right away, it does not have to stay as a dream.

Who knows, in 20 years time we might actually be seeing the fences coming down.

It is wishful thinking. But Koreans are natural born optimists. ”

Also from the BBC:

The overland border between the two Koreas has opened for the first time since the Korean war ended half a century ago. The BBC’s Seoul correspondent Caroline Gluck was among the first to cross.

Fanfare, fireworks and balloons greeted us at a ceremony on the South Korean border, as we prepared to journey through the world’s most heavily fortified road border to the North.

This is the first land route for civilians since the end of the Korean war half a century ago.

The pilot journey is due to pave the way for regular overland tourist trips to the North’s scenic resort of Mount Kumgang, or Diamond Mountain – which has been developed by the South Korean company Hyundai Asan.

Hyundai Asan’s president, Kim Yoon-Kyu, described the trip as a historic moment.

“I can compare it to breaking the wall between East and West Germany,” he said.

Opening the border was also one of the ways to reduce tensions between North and South Korea, he said.

“I’m going to persuade (the North Koreans) not to have any nuclear power. We need money. Money is better than nuclear power,” he said.

At the demilitarized zone, there was a razor wire fence on either side, and signs warning that landmines were present.

When we reached the military demarcation line, I could see the first North Korean soldiers watch the convoy – around 20 buses in all.

All around me I could see the mountains covered in snow.

It is a barren landscape but quite beautiful. Many believe that if the two Koreas reunify, it should be turned into an ecological zone.

On the North Korean side, a welcoming committee with a female brass band was waiting for us, playing the North Korean song Pangap-sumnida, or Nice to Meet You.

Around 150 North Koreans took part in the ceremony to welcome their southern counterparts.

Ro Chang hyup, a North Korean tourist official, said it was an important step forward in inter-Korean exchanges.

“This is a first step towards unification. It is helping to break the ice and I really welcome our south Korean brothers.”

Ri Jong-hyok, deputy head of the North’s Asia-Pacific Peace Committee which handles the North’s joint ventures with South Korea, said: “People are here for tourism. Why are you talking about nuclear issues? I get a headache when people talk about that”.

Bang Jong-Sam, head of the Mount Kumgang international tourism company, had a similar message.

“We don’t have nuclear weapons. Let the crazy people say whatever they want. All we have to do is to continue tourism,” he said.

Since 1988, when tours by cruise boat to Diamond Mountain began, around half a million South Koreans have travelled to the area.

For most, it is their only chance to visit the Communist North. They come to explore the peaks of the fabled mountain – immortalised in songs, paintings and poetry.

Fenced-in resort

But contacts between the two Koreans at the resort is limited.

The Hyundai-built tourism site is fenced in, and North Korean guides are on hand to monitor all movements.

You can catch glimpses of North Korean villages and people travelling on roads only allowed for locals – but most visible are the soldiers.

A group of around 40 soldiers marched by our tour group, singing the praises of their leader, Kim Jong-il.

He’s our great commander, they said.

“His love is like the sun, reaching out to every corner.”

If the project is aimed at breaking down barriers between the two Koreas, there is clearly a long way to go.

But some ventures, like a locally run restaurant open only to South Koreans, at least help to allow more contact between the two sides.

“I’m sure unification will come,” said my waitress.

“It’s really good that so many South Koreans are coming here. I’m proud to work here – and I welcome them.”

Projects like this and the opening of the cross-border road between the two Koreas are full of symbolism.

But, in practice, it is clear that there is still a long way to go before the two sides can freely mingle.

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Pyongyang’s Banking Beachhead in Europe

February 13th, 2003

Far Eastern Economic Review
Bertil Lintner
2/13/2003 

One of the few things that Kim Kum Jin and Sun Hui Ri didn’t leave behind when they fled Slovakia in August last year was their collection of bank records. Their invoices came to millions of dollars, but the documents recovered by Slovak police don’t make clear where all the money went. Some answers could probably be found just up the Danube River from Bratislava. Since 1982, the North Koreans have had their own bank in Austria’s capital, Vienna. It’s called the Golden Star Bank–almost the same name as a North Korean company in Beijing that was used by Kim.

According to official Austrian bank documents seen by the REVIEW, the Golden Star Bank is 100% owned by the Korea Daesong Bank, a state enterprise headquartered in Pyongyang. Kim Dok Hong, a top North Korean official who fled to South Korea in 1997, says that both banks come under the jurisdiction of Bureau 39, a shadowy wing of the ruling Korean Workers’ Party controlled by North Korean leader Kim Jong Il. Western and Asian intelligence services believe it was set up in 1994 to generate hard currency for Kim’s impoverished nation.

For more than two decades, the Austrian police have kept a close eye on the Golden Star Bank, but there is no law that forbids the North Koreans from operating a nonretail financial institution in the country. Nevertheless, Austria’s police intelligence department stated in a 1997 report: “This bank [Golden Star] has been mentioned repeatedly in connection with everything from money laundering and distribution of fake currency notes to involvement in the illegal trade in radioactive material.”

But finding hard evidence of illegal activity is another matter and the bank continues trading in the Austrian capital. While documents left behind in Bratislava by Kim Kum Jin and Sun show dealings with respected banks such as the Bank of China and the National Bank of Egypt, there is no paperwork connecting them directly to the Golden Star Bank. But the Austrian police report’s assertion that “Vienna must be seen as North Korea’s centre for financial transactions in Europe” remains relevant today.

The former Portuguese enclave of Macau–where the North Koreans have had a discreet but solid presence since the mid-1970s–plays a similar role in East Asia, according to Western and Asian intelligence officials. The North Koreans do not have their own bank in the largely autonomous Chinese territory, but they operate through locally owned family banks, the officials believe.

In an October 2000 conference paper, Marcus Noland of the Washington-based Institute for International Economics asserted that money owed by South Korea’s Hyundai company to the North Korean government had gone “into the Macau bank account of ‘Bureau 39’.” The payments were for permission to operate tourist trips to Mt. Kumgang in the North. An official at Hyundai Asan, which organizes the tours, says only that royalties are paid to North Korea through Korea Exchange Bank’s branches in unspecified third countries.

The Congressional Research Service–which provides United States congressmen with background briefings–reported on March 5 last year that “the U.S. military command and the Central Intelligence Agency reportedly believe that North Korea is using for military purposes the large cash payments, over $400 million since 1998, that the Hyundai Corporation has to pay for the right to operate [the] tourist project.”

Noland, an expert on Korean affairs, asserted in his paper that this income was used for “regime maintenance,” or to strengthen the government and its armed forces. Bankers and Western security officials believe this is also the case with money earned from the operations in Europe and the Middle East.
The Macau Connection
The Former Portuguese Colony was a Terrorist Base for Pyongyang

Avenida de Sidonio Pais is not Macau’s busiest street. And the trading company that is located on the fifth floor in a nondescript concrete building doesn’t even have a sign outside. But this is where Zokwang Trading is located–and from where the North Koreans have conducted some of their more nefarious activities in East Asia. The company was set up shortly after the Carnation Revolution in Portugal in 1974, when the old fascist dictatorship was overthrown and the new, left-leaning leaders recognized North Korea.

But Zokwang, which ironically means “morning light” in Korean, has always been more than a trading company. This was the alleged planning base for the 1983 bombing in which North Korean agents killed 17 South Korean officials, including four cabinet ministers, who were visiting the Burmese capital, Rangoon. In 1987, another set of North Korean agents bombed a Korean Air jet, killing all 115 people on board. One of those agents, Kim Hyun Hee, now lives in Seoul and describes in her autobiography, The Tears of My Soul, how she was trained in Macau. There, she and other North Korean agents learnt Cantonese so that they would be able to pose as Macau or Hong Kong Chinese when sent on overseas missions. They were also trained to shop in supermarkets, use credit cards and visit discos–amenities that did not exist in their homeland.

In 1994, the head of Zokwang and four other North Koreans were arrested in Macau for depositing millions of dollars worth of counterfeit $100 bills. But nothing came of the investigation and in 1999, more counterfeit dollars were discovered in Macau. The North Koreans were also suspected of peddling drugs and guns through the then Portuguese enclave. Once a week, the North Korean national carrier Air Koryo flew from Bangkok to Pyongyang with a stopover in Macau. The flights, now monthly, carried few passengers–but plenty of cargo.

So Western and Japanese intelligence agencies were apprehensive when North Korea was allowed by the Chinese government to open a new consulate general in Hong Kong on February 16. Air Koryo had applied in April last year for permission to use Hong Kong’s new Chek Lap Kok airport instead. But the airport authorities turned the request down. Air Koryo’s old Tupolev Tu-154 aircraft were just too noisy.

But those who thought Hong Kong would become a new centre for North Korean crime have so far been proven wrong. Perhaps under Chinese pressure, the North Koreans in Hong Kong have become model diplomats: open, approachable and eager to forge links with the local business community. Hong Kong has also eclipsed Macau as the centre for North Korean businesses in East Asia, and the new style may serve as a harbinger for change. No one wants to see another terrorist state emerge in Asia.

Issue cover-dated October 25, 2001

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North Korean defectors find Christianity

February 11th, 2003

BBC
Caroline Gluck
2/11/2003

The Sunday service at Doorae church in southern Seoul is like many others across the country – except that the congregation includes about 20 North Korean defectors.

Many of them, like 28-year-old Kim Song Gun, turned to Christianity when they encountered missionaries helping North Koreans on the Chinese border.

Kim Song Gun left his home in the northern province of Chongjin six years ago, fearing he would die from starvation.

“I think it’s almost impossible to lead a normal Christian life in North Korea. I’ve heard rumours there are underground churches, but I haven’t seen anyone who has been there,” said Kim Song Gun.

“Mentally, Christianity helps a lot. When you are going through a lot of hardships, religion is the only thing you can rely on,” he said.

Perilous trip

Other members of the congregation agree.

During Sunday’s service, North Korean mother Park Young Ae and her 14-year-old son went to the altar to sing a song that has become popular with North Korean defectors – telling the story of a sparrow’s perilous journey.

After four years apart, they were only reunited a few days earlier.

Park Young Ae said she had been on a business trip to China – but had been unable to return to the North and her family for reasons she said were too complicated to go into.

“A lot of the time, I was trying to escape, and people were trying to capture me. At one point I was also jailed. I went through a lot of pain, but I finally made it to South Korea,” she said.

“When I received orientation in South Korea, I learnt about Christianity and spiritually I’m now very reliant on being a Christian. It gives me inner power.”

Spiritual help

After the service ends, Park Young Ae – who now runs a restaurant – is able to earn some extra money selling North Korean style sausages to members of the congregation.

The Church can help people like her – not only financially but more importantly by providing them with a sense of community.

“North Koreans are looked down upon and marginalised socially,” said Douglas Shin, a Korean-American missionary and activist working with North Korean immigrants.

“So when they need some kind of consolation, they turn to church,” he said.

But for 24-year-old Kim Kun Il, the Church is about to become his vocation.

Kim Kun Il, who left the North after his father died from hunger six years ago, is now studying to be a reverend at a missionary school.

He said he goes to church for the mental help, not the material help, the church groups give.

“Money and food has its limitations. Once you are back to a normal state, it doesn’t really help,” he said.

Douglas Shin agreed. “When you recover from malnutrition or absolute starvation, the human body adapts very quickly. So one or two meals in freedom will be enough to get you on your own feet,” he said.

“But it takes a long time and a lot of effort to be revived spiritually. They need some kind of comfort, mental and spiritual.”

“This is our role, the Christian role, to save the people from drowning. It’s almost like Noah’s Ark,” he said.

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First Korean border crossing opens

February 5th, 2003

BBC
2/5/2003

The two Koreas have re-opened their land border for the first time in half a century, despite continuing anxiety about the North’s nuclear programme.

About 100 South Korean tourism officials passed through the heavily fortified frontier by bus on Wednesday, travelling to the scenic Mount Kumgang tourist resort, some 30 kilometres (18 miles) to the north.

The opening of the first of a set of planned overland links came as the US made its strongest pledge yet to hold direct talks with the North to resolve the nuclear crisis.

North Korea says that the only way forward is for face-to-face talks with Washington, without pre-conditions.

Historic crossing

Buses carrying around 100 officials from the South Korean company Hyundai and invited guests snaked from Kosung on the South’s east coast for a 50-minute journey along a dirt road towards Mount Kumgang.

The 10 buses were escorted by a South Korea military jeep as far as the border.

The jeep then pulled over to allow the buses to make the historic crossing, and a military official from the US-led United Nations Command, which enforces the armistice agreement that ended the Korean War, followed their progress on the other side of the border through binoculars.

If the pilot visit is a success, tours will officially begin next week.

The road is the first of four planned overland routes between the two sides to be completed. A parallel rail link on the east, and a rail and road link on the west are still under construction.

Diplomacy

The links are a key part of South Korean President Kim Dae-jung’s “sunshine policy” of economic co-operation with the Stalinist state.

Seoul has been urging the US to pursue diplomacy rather than sanctions over the current nuclear crisis.

US Deputy Secretary of State Richard Armitage on Tuesday gave a strong assurance that direct talks with Pyongyang would take place.

“Of course we’re going to have direct talks with North Korea. There’s no question about it,” he told the Senate Foreign Relations Committee.

But Mr Armitage said that the consultations would only take place when Washington was confident that it had built a “strong international platform” from which to end North Korea’s nuclear programme.

He also warned that North Korea’s reported moves toward restarting a plutonium reprocessing facility could enable it to build four to six nuclear weapons within months.

Despite Washington’s assurances that it has no plans to invade North Korea, it has announced that is considering strengthening its military forces in the Pacific Ocean as a deterrent against Pyongyang.

US officials said the reinforcements would help signal that a possible war with Iraq was not distracting the US.

But the commander of the 37,000 US forces in South Korea, General Leon LaPorte, stressed on Tuesday that any deployment would be made in conjunction with Seoul.

Economic co-operation

Some analysts believe the nuclear stand-off is simply a blackmailing tactic by the North to obtain more aid for the impoverished nation.

In easing the North’s economic plight, Hyundai has played a key role. It has hitherto organised cruises to the North by boat, but they have lost the company money.

Hyundai hopes the cheaper overland trip will attract more tourists.

But its role in inter-Korean co-operation has not been without controversy.

The company became embroiled in a scandal last week when government auditors revealed that a Hyundai affiliate had sent nearly $200 million to North Korea just before the 2000 inter-Korean summit.

The company said the money was used to finance its business projects in the North; opposition lawmakers allege the money was a pay-off for the summit.

Members of the ruling Millennium Democratic Party have called on President Kim Dae-jung to make a public statement, while opposition politicians are calling for an independent counsel to investigate the fund transfers.

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Posted in Automobiles, Foreign direct investment, Mt. Kumgang Tourist Special Zone, Railways, Special Economic Zones (Established before 2013), Tourism, Transportation | Comments Closed

S Korea drops summit investigation

February 3rd, 2003

BBC
2/3/2003

South Korean prosecutors have decided to scrap their investigation into payments made to North Korea prior to its summit with the South in 2000.

A spokesman for the prosecutors office said the investigation was being stopped in the “national interest”.

The move follows a plea from South Korean President Kim Dae-Jung, who asked prosecutors to drop the case to allow the matter to be settled in parliament.

The decision is likely to anger opposition politicians, who have accused Mr Kim’s government of being behind the money transfer, in order to gain from the summit politically.

Money transfer

The dispute centres on payments made to North Korea by the multinational conglomerate Hyundai shortly before the summit.

On 31 January investigators said the company had secretly transferred $200m to the communist North just a week before the landmark meeting.

Hyundai had borrowed the money from a South Korean state-controlled bank.

Opposition members claim the money was given as “payment” to the North for attending the summit – at the request of President Kim Dae-jung’s government.

The summit increased Mr Kim’s international standing, and contributed to his being awarded the Nobel Peace Prize in 2000.

North-South ties

On Monday President-elect Roh Moo-hyun backed Mr Kim’s appeal for a “political” settlement to the dispute.

Mr Roh “wants details of the scandal to be brought to light, but it would be better to let the National Assembly decide how to resolve the dispute,” his spokesman Lee Nak-yon said.

But the main opposition Grand National Party has said it will push for a formal investigation.

“The only way of cleansing the sin of deceiving the people is to confess frankly and apologize sincerely,” said Park Hee-tae, acting chief of the opposition.

The Hyundai group has done much to encourage links between North and South Korea.

But it has been badly affected by a joint venture tourism project with North Korea, and insisted it used the state-issued loan to improve its financial position.

Mr Kim, who has previously denied knowing about Hyundai’s dealings with the North, appeared to acknowledge them on Thursday when his spokeswoman said that the money was justified “if (it) was spent on promoting South-North economic co-operation”.

“The unique nature of South-North relations has forced me to make numerous tough decisions as the head of state,” Park Sun-Sook quoted him as saying.

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North Korea’s closed society keeps trade routes open

February 3rd, 2003

From the Washington Post

Flow of money, goods frustrates US drive to tighten isolation

Doug Struck

February 3, 2003

 

Once a month, Hiroshi Yano bundles together a few million yen, wraps the money in plastic with a Japanese customs seal, and put it on a ship to be handed over at sea to a boat captain from North Korea and delivered to the Stalinist government there.

 

It’s all legal: The money is payment for North Korean snow crabs that Yano imports for Japanese tables.  And Yano said he wants to continue the business, nukes or no nukes.

 

“We are just a private company doing trade.  We are independent of politics,” said Yano, manager of an import business that runs three ships to North Korean waters from this port town 350 miles west of Tokyo.

 

The payments are just one example of the many flows of money and goods that prop up the North Korean system and circumvent the isolation that the US and other countries have sought to impose.

 

The Bush administration’s strategy to tighten that isolation and compel North Korea to dismantle its nuclear weapons program may be undermined by the complexity and number of trade routes that snake in and out of North Korea.

 

The trade ranges from the global export of missiles to lone Korean smugglers who wade the river border into China to barter for their food.  It includes products as legal and innocuous as Yano’s snow crabs and as dangerous as smuggled drugs delivered to Japan’s coast line by unmarked ships.

 

[But each year] North Korea makes missile sales estimated to bring in anywhere from several hundred million to $1billion.  Its customers, intelligence agencies say include Libya, Iraq, Iran, Yemen and in the past, Pakistan. 

 

Japanese importers pay the North Koreans with bundles of cash or with bartered goods such as food, sports shoes or a bike for the sailors, or generators.  30,000 large crabs are worth about $4,000.

 

Seafood is the biggest component of Japan’s $370 million annual trade with North Korea, which brought the DPRK’s ships to Japan 1,200 times last year.

 

South Korea has $350 million in trade with the DPRK.  Most of it from sending textiles to the north and buying finished clothes. 

 

China reported its trade at $730 million, and that is just the legal trade.  It used to be food and oil, now it is everything: pots, pans, shampoo.

 

Many intelligence analysis believe that smuggling is orchestrated directly by powerful North Korean officials.  Japanese claim they manufacture methamphetamines.

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‘Seoul paid for summit with North’

January 30th, 2003

BBC
1/30/2003

South Korean government investigators have said that $200m was secretly transferred from a state-controlled bank to North Korea one week before a landmark inter-Korean summit in June 2000.

The summit was seen as a boost for outgoing President Kim Dae-jung’s policy of engagement with the North, but critics have dismissed the historic meeting as cheque-book diplomacy.

The government investigators’ report was the culmination of a three-month inquiry into loans granted to the South Korean conglomerate Hyundai.

Mr Kim, who has previously denied knowing about Hyundai’s dealings with the North, appeared to acknowledge the report’s findings on Thursday when his spokeswoman said that the money was justified “if (it) was spent on promoting South-North economic co-operation”.

“The unique nature of South-North relations has forced me to make numerous tough decisions as the head of state,” Park Sun-sook quoted him as saying.

Hyundai funding

Sohn Sung-Tae, an official with South Korea’s Board of Audit and Inspection which conducted the probe, said the 223.5bn won ($200m) was part of a loan from state-run Korean Development Bank (KDB) to a Hyundai subsidiary.

The BBC’s Seoul correspondent says the investigation has been frustrated by the company, which had refused to submit financial documents.

But threatened with legal action, the company finally complied this week.

In its report, the Board of Audit and Inspection confirmed that the loans of nearly $400m to Hyundai Merchant Marine were extended one week before the historic inter-Korean summit, and that half of the amount was then transferred to the Communist State.

Opposition politicians have alleged that the money was used as a bribe to induce North Korea to take part in the summit.

The Hyundai group has funded numerous inter-Korean economic projects and has played a key role in nurturing better ties between South Korea and the isolated Communist North.

But it has been badly affected by a joint venture tourism project with North Korea, and, in deep financial trouble at the time of the summit, insisted it used the loan to improve its financial position.

South Korea’s JoongAng Ilbo newspaper quoted an aide to President-elect Roh Moo-hyun on Thursday as saying that the Hyundai firm had transferred the money to the North with the help of the government’s National Intelligence Service.

“This proves that this government’s biggest achievement, the June 15 South-North summit, was bought with money,” opposition party spokesman Park Jong-hee said in a statement.

Mr Park called on Mr Kim to apologise.

The legacy of outgoing President Kim Dae-jung’s administration has been seen as his success in improving ties with the North.

He was awarded the Nobel Prize for Peace in 2000 following the inter-Korean summit.

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Reforms Turn Disastrous for North Koreans

January 27th, 2003

Washington Post
John Pomfret
1/27/2003, Page AOl

Nuclear Crisis May Have Roots in Economic Failure

Six months after North Korea announced unprecedented wage and price increases to jump-start its miserable economy, runaway inflation is emptying millions of pocketbooks and bottlenecks in production are causing widespread shortages, according to Chinese and North and South Korean sources.

The black market price of rice, the staple of the Korean diet, has jumped more than 50 percent over the past three months in most parts of the country while tripling in others, according to North Koreans, Chinese businessmen and Western aid agency workers. Some factories in poorer parts of the country, such as the heavily industrialized east coast, have stopped paying workers the higher salaries that were a cornerstone of the reforms, recent North Korean arrivals to China said. Others have taken to paying workers with coupons that can be exchanged for goods, they said, but there are no goods in the stores to buy.

“Theft new economic policy has failed,” said Oh Seung Yul, an economist at the government-funded Korea Institute for National Unification in Seoul. “The hopes that were raised in July are today pretty much dashed.”

The apparent failure of North Korea’s attempt to promote economic activity and improve living standards constitutes an important backdrop for its recent threats to resume a nuclear weapons program, according to the sources.

On one hand, Oh and others said, North Korea’s isolated government needed a scapegoat. On the other, according to Chinese sources close to the secretive government of Kim Jong Ii, Pyongyang has determined that it risks economic collapse without security guarantees and access to international lending institutions such as the World Bank and International Monetary Fund, to which the United States holds the keys. So Kim manufactured a crisis to win concessions, they said.

“Now the economic situation is more precarious than before the reforms. They can’t do this halfway,” said Cui Yingjiu, a Chinese Korean economist and adviser to the North Korean government. “They risk social chaos and economic collapse.”

The crisis has been exacerbated by a drop in the humanitarian aid that had kept North Korea on life support since 1995. Because of a shortage of donations, the World Food Program has cut back the number of North Koreans it is assisting this year from 6.4 million to 3.5 million of the country’s estimated 22.6 million inhabitants. In September, the elderly and primary school-age children on the west coast were cut off. In October, kindergarten-age children, pregnant women and nursing mothers there lost out. In November, nurseries were scratched from the list.

“It’s a tough call deciding who has to be deprived,’ said Gerald Bourke, an official with the World Food Program in Beijing. Bourke said the recent “very rapid inflation” of rice prices is “putting food way beyond the pale for a lot of people.”

The World Food Program has 25,000 tons of food in North Korea and pledges of 75,000 additional tons, he said. It needs 511,000 tons this year.

North Koreans traveling over the border to Yanji, about 700 miles northeast of Beijing, said an initial wave of hope triggered by the changes announced in July is gone in almost all parts of the country except the capital, Pyongyang.

Lee Xiangyu, a North Korean refugee in China, was arrested by Chinese border police and returned to North Korea last summer, when the changes began. After a short stint in jail, the 19-year-old returned to her home town, Musan, along the border with China. By October, she said, the lumberyard where her father worked had stopped paying him and other workers the huge raises they had received as part of the effort to promote some aspects of a free-market economy.

But prices continued to rise. “There was no money in my house, and now the prices are so high,” she said. Lee sneaked back into China in December. “It’s not like it was in 1997 when people were starving to death,” she said, speaking of the famine that cost hundreds of thousands of lives. “But it’s worse in a way. Because everybody had hope for a little while and now they are desperate again.”

North Korea’s announcement of economic reforms was front-page news, in part because the measures fit into a series of other moves that led some observers to conclude Kim was ready to lead his country out of isolation. The steps included expression of regret following a clash between North and South Korean naval forces in June, the suggestion that North Korea would hand over Japanese Red Army members wanted in Japan for hijacking a Japanese airliner in 1970, an informal meeting in July between North Korean Foreign Minister Paek Nam Sun and Secretary of State Cohn L. Powell, transportation links between North and South Korea, a summit between Kim and Japanese Prime Minister Junichiro Koizumi and talk of establishing as many as five special zones for foreign investment.

The economic changes included raising prices and wages, devaluing the North Korean won against the dollar and cutting state subsidies for failing businesses. Wages were increased between 900 percent and 1,500 percent. Prices, which are in theory set by the state, went up as well. Rice went up 4,000 percent, corn 3,700, pork 700, diesel fliel 3,700, electricity 5,900, apartment rent 2,400 and subway tickets 900.

The government announced that factories with bloated workforces could effectively lay off unnecessary workers so they could concentrate on making things again — a step North Korean industry had not taken since economic troubles began in 1995.

The main motivation for increasing the price of rice was to prompt farmers to plant more food. But Cui, who attended a conference on North Korea’s economic changes last fall in Pyongyang, said farmers were not happy.

“Grain prices went up, but so did prices for inputs like fertilizers and seeds,” he said. ‘So all gains were canceled out.”

Another issue, Cui said, is electricity. North Korea has good hydropower resources, but as farmers become interested in planting more crops, they will want to use water in reservoirs for irrigation, not for power generation. “There are a whole series of these conundrums and Catch 22s,” Cui said.

He said North Korean factories have yet to begin producing goods people want to buy. That is why trucks rolling into China from the Dandong border crossing, 350 miles southwest of Yanji, now carry clothes, television sets, shampoo and other consumer goods.

The changes befliddled Western and Chinese economists from the beginning. Chinese experts noted that when China undertook its first major economic reform in 1979, it increased the price of grain by only 25 percent. Second, they said, when China began this process, 80 percent of its population lived in rural areas, so there was a huge pooi of potential beneficiaries from the liberalized agricultural policies. But North Korea is highly industrialized: Two-thirds of its people live in cities.

Marcus Noland, at the Institute for International Economics in Washington, speculated that the changes were either a desperate attempt to jump-start a half-dead economy or a backhanded attack against North Korea’s nascent private economy. Increasing prices would reduce the value of currency held outside the state system, breaking the back of private entrepreneurs.

But then again, he said in a recent paper, “the possibility that economic decisions are being made by people who do not grasp the implications of their actions should not be dismissed toohastily.”

Correspondents Doug Struck and Peter £ Goodman in Seoul contributed to this report

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Posted in 2002 Economic reforms, Agriculture, Black markets, Economic reform, Foreign aid statistics, International Aid, Labor conditions/wages, Price liberalization, Statistics, UN World Food Program | Comments Closed

Koreas progress on border links

January 27th, 2003

BBC
1/27/2003

North Korea has made a key concession on cross-border road and rail links with South Korea, South Korean officials have said.

The move means that tourists and businessmen from the South could be able to cross over to the North Korea within weeks.

The apparent breakthrough in the long-running negotiations came as South Korea’s top national security adviser, Lim Dong-wan, arrived in Pyongyang seeking to resolve tension over the Stalinist state’s nuclear programme.

Mr Lim, a former unification minister, said he hoped to avert war, but warned he did not have a quick solution.

“My visit to Pyongyang is designed to lay the ground for dialogue on the peaceful settlement of the North Korean nuclear issue that will help avoid war,” Mr Lim said before leaving Seoul on Monday.

The BBC’s Caroline Gluck in Seoul says North Korea’s decision to allow the visit indicates it is now willing to accept mediation from its neighbours. Before, it had said it would only discuss the nuclear issue with Washington.

North Korea’s concession in the separate, cross-border talks ends months of wrangling over who should control the so-called Demilitarised Zone (DMZ) that separates the two Koreas.

Analysts said North Korea might be pushing for progress with the South as a way to undermine South Korea’s alliance with the United States, which favours a much harder line policy on engaging with the North.

‘Cat’s paw’

The South Korean delegation includes Lee Jong-suk, an advisor to President-elect Roh Moo-hyun, who takes office next month.

Its visit comes a day after the US said it had no intention of attacking North Korea but warned the nuclear standoff was a danger to Asia.

Mr Lim is expected to meet North Korean leaders and other top officials during his visit.

North Korea on Monday hit out at the United Nations nuclear watchdog, describing the International Atomic Energy Agency (IAEA) as the “cat’s paw” of the United States.

“It is… an objective reality that the secretariat of the IAEA is not in a position to discuss the DPRK’s (North Korea) issue and the days are gone, never to return, when it could unreasonably handle it,” reported the official Korean Central News Agency.

The Vienna-based IAEA has said it will hold an emergency session on 3 February to decide whether to refer the nuclear issue to the UN Security Council.

The crisis started last October, when the US said North Korea had admitted it was working on a banned nuclear weapons programme.

The US stopped fuel aid to North Korea in protest, and that led to North Korea expelling United Nations weapons inspections and announcing it was reactivating a previous nuclear programme.

Earlier this month North Korea announced it was pulling out of the Nuclear Non-Proliferation Treaty.

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Posted in Railways, Tourism, Transportation | Comments Closed

Inside the DPRK’s ruling elite

January 1st, 2003

“Inside North Korea’s Ruling Elite”
Aidan Foster-Carter
AsiaInt
January 2003

As the international community struggles to find an appropriate response to North Korea’s moves to restart its nuclear programme, the questions of how key decisions are reached, and who by, have become of paramount importance. The received opinion is that “Dear Leader” Kim Jong-il is the omnipotent and omniscient genius responsible for everything – as was his father before him, the DPRK’s founding Great Leader Kim Il-sung. Pyongyang’s ineffable media endlessly praise the greatness of these two. Lesser figures, by contrast, remain in the shadows or shine only with reflected glory: success is due to following the leader loyally. Yet it misleads to take this at face value.

By all accounts Kim Jong-il is an active micro-manager. (He is nocturnal, too, and waiting for his midnight faxes causes much anxious ministerial insomnia.) He insists on being the node and centre of many separate chains of command. As in the spokes of a bicycle wheel, these are all linked to the hub yet have minimal lateral contact with one another.

Like his late father, but less energetically, the Dear Leader is also given to “on the spot guidance”: visiting all manner of places and making free with “expert” advice which of course cannot be ignored.

But this is not the whole picture. The public spectacle and personality cult serve to mask a more private sphere: one of smoke-filled rooms, where a few men (and a very few women) grapple with the political, economic, and military choices which confront all states, even those blessed by the Juche philosophy. Moreover, the choices are growing harder and starker, not least between war and peace and between market reform and further stagnation. North Korea cannot feed itself, and its economy lies in tatters. Now even its old allies, Russia and China, have joined the chorus of foes urging it to end its renewed nuclear programme.

So, even if Kim Jong-il is the ultimate decision maker (and even this cannot be accepted with absolute certainty), there are important questions about in what forums, formal or informal, policies are discussed and decisions made, and about who aids him – whether with policy input, advice, chewing the fat, or even daring to disagree. Who, in a word, are North Korea’s power elite, and do their minds really move as one? Or are there – as in any political system – divisions, perhaps profound ones, which could precipitate power struggles or even potential conflict?

Needless to say, no definitive answer to such questions is possible. As with much else, North Korea has succeeded in keeping its politics well hidden. If anything, things have grown more opaque over time (glasnost in reverse), especially under Kim Jong-il, when even the already minimal due process – for example the brief annual meeting of a rubber-stamp parliament to pass the budget – ceased. In 1998 the state apparatus was overhauled, the constitution revised, and normal service resumed, after a fashion. Yet the officially ruling Korean Workers’ Party (KWP) remains in limbo, with no sign that its Politburo or Central Committee have even met since the death of Kim Il-sung in 1994; nor has it held a full Congress since 1980, when Kim Jong-il was proclaimed as successor.

The Dear Leader has scant regard for formalities, ruling instead via a kitchen cabinet of trusted cronies, the most important of whom is his brother-in-law Jang Song-thaek. Meanwhile a third estate, the military, has risen to rival the usual communist party-state dyad.

Rise of a dynasty

It helps to know how North Korea got this way. In 1945 the young ex-guerrilla Kim Il-sung came home in Soviet uniform. Moscow’s support and his own ruthless skills helped him kill off rivals, including three other communist factions: local, Soviet-Korean, and pro-China. The last overt challenge to him was in 1956, and thereafter his Kapsan (partisan) faction monopolized power. Most of today’s Pyongyang elite are descended from, or have married into, this group.

As medieval history east and west attests, dynasties have their own internecine strife. Kim Il-sung’s first choice as heir was his younger brother Kim Yong-ju, who vanished in the 1970s but resurfaced on the Politburo in 1993: a hint that Kim Jong-il’s succession was in trouble. But then the Great Leader died, and YJ has hardly appeared since. The Dear Leader has also seen off his hated stepmother Kim Song-ae, who used to head the women’s union, and her sons. One, Kim Pyong-il, a potential rival, lives in quasi-exile as ambassador in Warsaw.

By contrast, Kim Jong-il is close to his one surviving full sibling, his sister Kim Kyong-hui, and her husband Jang Song-thaek. She runs the party’s light industry section; he is a vice-director of the KWP Central Committee. As often in Pyongyang, an anodyne nominal title belies real rank. In November Jang visited Seoul with an economic delegation, to great excitement there. One day he overslept but none of his compatriots dared wake him; a South Korean had to do it.

Kim Jong-il turned 60 last year, so his own succession is a real if not yet a public issue. Given a tangled marital history, this too risks conflict. His Swiss-educated elder son Kim Jong-nam, 31, who runs the DPRK’s IT activities, was front-runner until caught on a covert trip to Japan last year. That embarrassment might make JN’s half-brother Kim Jong-chol, 20, the favourite.

A party preserved?

All this, of course, is behind the scenes. Officially North Korea is ruled by the KWP, but as noted this seems oddly frozen. The most important Politburo member is ex-foreign minister Kim Yong-nam, 74, who as presidium president of the Supreme People’s Assembly (SPA) is the titular head of state. (The DPRK’s “eternal president” remains Kim Il-sung, mortality notwithstanding.) It was Kim Yong-nam who met foreign dignitaries before the Dear Leader began to do so, selectively, in 2000. He is also a unifying bridge between generations in the party.

Other full Politburo members each have specific oversight responsibilities. Jon Byong-ho, 76, as head of the secret Second Economy Committee, runs an arms industry which is bigger than, and has priority over, the civilian economy. Han Song-ryong, 75, has the poisoned chalice of heavy industry; while Kye Ung-tae, 77, oversees public security.

Alternate members (a rank lower) of the Politburo include Yon Hyong-muk, 71, a technocrat who impressed as prime minister a decade ago on several visits to Seoul. Demoted, after North-South ties worsened, to run the remote northerly Jagang province, he showed his mettle by a campaign to build local power stations, and he is now a rare civilian on the National Defence Commission (see below). Other alternate Politburo members are the current premier Hong Song-nam, 78, a former chief planner; Yang Hyong-sop (76) and Choe Thae-bok (73), respectively vice-president and chair of the SPA (in effect, speaker); and Choe Yong-rim, 76, the prosecutor-general.

Several of the above are also among the KWP’s secretaries. Others include Kim Kuk-tae, 78, who monitors the elite; Kim Ki-nam, 76, in charge of propaganda; and the best known, Kim Yong-sun (68), who after years in charge of international relations now has the hot potato of North-South ties. Here the stakes are high: a Seoul daily claims Kim was jailed last year after the new Bush administration chilled the atmosphere, until Kim Jong-il ordered his release.

All the above, as their ages attest, have been around for a while. (Some even older figures in their 80s, including the last survivors of Kim Il-sung’s guerrilla band, play a merely honorific role.)

As in the traditional communist model, the party takes priority over the state. Cabinet ministers, therefore, are a lesser breed unless like Hong Song-nam they also hold party positions. To complicate matters, at the eight rounds of inter-Korean “ministerial” talks since the June 2000 Pyongyang summit, North Korea has sent not ministers as such but a “cabinet advisor”, Jon Kum-jin (70), leading a younger team whose precise jobs and status are unclear.

Similar oddities apply in foreign affairs. Whereas Kim Yong-nam as foreign minister had real clout, the incumbent now, Paek Nam-sun (formerly Paek Nam-jun: name changes are another quirk), mainly does smile diplomacy – as at the ASEAN Regional Forum in Brunei, where he had coffee with Colin Powell. But for serious talks his nominal deputy Kim Kye-gwan takes over, or the real heavy hitter, first vice-foreign minister Kang Sok-ju. Kang negotiated the 1994 Agreed Framework, and it was reportedly he who in October defiantly boasted to the US of North Korea’s new nuclear programme. By all accounts, he is one of Kim Jong-il’s closest confidants.

Soldiers on the march

Other emissaries to foreign lands are military. Two years ago, when Kim Jong-il sent a special envoy to Washington, he picked vice-marshal Jo Myong-rok, who took tea with Bill Clinton in the White House in full Korean People’s Army (KPA) uniform. That choice bespeaks the rise of the KPA under Kim Jong-il as a third elite, alongside or even above the party and state. Not only have the military as such gained status, but ups and downs in the ranks contrast with the KWP’s stasis.

For example the ex-air force chief Jo, 72, who in 1995 ranked 95th on one funeral committee (a vital index of political snakes and ladders for Pyongyang-watchers) by 1997 had shot up to 7th. His post as KPA political chief belies his role as Kim Jong-il’s top military ally and North Korea’s number two.

Similarly, Japanese sources report an unnamed general as central to secret talks to arrange Prime Minister Junichiro Koizumi’s visit last September. Amid the debris of that abortive initiative, this figure told his Japanese counterpart: “At worst, you may lose your job” and drew his hand across his throat.

Whatever an individual’s fate, there are many signs of the KPA’s new clout overall. Formally, the revised 1998 constitution made the military-dominated National Defence Commission the highest state body, above the cabinet. Kim Jong-il rules North Korea as NDC chairman. An “army-first” policy is proclaimed; last year the army even replaced the proletariat as officially the core force of the revolution. Theory and practice point the same way. North Korea’s hard line on many issues is widely attributed (including by some DPRK diplomats, sotto voce) to military veto. The KPA would have much to lose from an outbreak of peace on the peninsula.

Besides Jo, the two main military figures are defence minister Kim Il-chol (69), a navy man, and chief of staff Kim Yong-jun (66 or 70; sources vary). Both have shot up the ranks, at the expense of others like O Guk-ryol, chief of staff in the late 1980s who was seen then as Kim Jong-il’s key ally in the KPA.

The crucial question of the Dear Leader’s precise relations with the military remains unclear. Many must have resented his being foisted on them, without any military experience, as commander-in-chief, his first official role. Then again, the success of his succession (so to say) was not predetermined; this testifies to his own political skills, even after paternal protection ceased. So he might have tamed the KPA – or have they tamed him? He has certainly promoted generals en masse and lavished gifts to buy their loyalty. It is just not known whether the current crisis reflects their stubbornness, or the limits of his horizons.

All change?

What next for North Korea’s political elite? At a well-lubricated lunch in happier times two summers ago, Kim Jong-il told visiting South Korean press magnates that a KWP congress would be held that autumn (it was not), which could remove a clause pledging it to communize South Korea. But there was a problem: “Among the top officials…are several who worked with President Kim Il-sung, so I find it’s difficult to revise. If the platform is changed, a lot of officials here will have to quit their posts. Some may claim that if I initiate the revision of the platform, I am trying to purge my opponents”. The laughter around the table was nervous.

Will there ever be another KWP congress? Maybe it is neither necessary to Kim Jong-il – nor possible for fear that desperation might unleash real debate over the country’s tragic trajectory. Many in Pyongyang must dread their future. If debate between hawks and reformers is barely audible, this reflects not only fear of getting out of line, but a shared stark awareness that they might all sink together.

If and when real change begins, by whatever means, then the chances of it evolving into a complete unravelling of the regime and state as such grow ever greater. Who, in 2003, would even want to save the foul shell that the DPRK has become? And how could they do it? But North Korea’s eventual agents of change, be they KPA colonels or workers goaded beyond endurance by hunger, still have no names that we yet know.

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