Category: NK Economics

Why legal investments in North Korea are a money laundering risk

You’ve often seen me write about the importance of “financial transparency” in transactions with North Korea. For a decade, economic engagement has mostly been done by one of two models: (1) controlled interactions with members of the elite, the actual effects of which are negligible at best; and (2) barbed-wire capitalism, where a few North Korean officials relay orders from foreign managers to hand-picked workers, and where the regime seals the whole enterprise off to prevent it from influencing the local community. The former are, for the most part, of little...

Somehow, I don’t think this will encourage Kim Jong Un to engage with us.

I think Marzuki Darusman is a good man who means well, but it’s difficult to derive a coherent policy from this: “This is a new thing, spotlighting the leadership and ridiculing the leadership. In any authoritarian, totalitarian system, that is an Achilles’ heel,” Darusman said in an interview in Tokyo, where he held talks with the government on an investigation into North Korea’s abductions of Japanese citizens. If this kind of ridicule seeps into North Korea, it could become lethal for the regime, he...

Reports: Musan mine to lay off 10,000 workers; coal exports halted

At the end of last year, the Daily NK reported that North Korea’s iron ore exports to China had stopped, but offered two different explanations for that — a price dispute with China, and a shortage of hydroelectric power caused by drought. One of the reports claimed that the power cuts halted the massive iron ore mine at Musan, which had caused “major disruptions” at the Kim Chaek and Songjin steel mills. All three facilities are propaganda showpieces of North Korean industry....

Hard times for North Korean mines, and miners

Please pardon me for taking a few days of rest with my family during the holidays. I’ll have much to say about The Interview, Nate Thayer’s intrepid reporting on the AP, and other exigent matters after we’re all played out on Legos and board games. Meanwhile, I have a few posts that I’d written last weekend and had planned to publish when North Korea hit the front pages. Here is the first of them. ~   ~   ~ A series of possibly...

What if the capitalist North Korea is just as bad as the communist North Korea?

There are many reasons why the Sunshine Policy failed, most of them rooted in the character of the men who rule in Pyongyang, and in the character of the men in Seoul who conceived and executed it. And in that conception, the flaw that was obvious to some of us from the very beginning was that Sunshine — and its surviving derivatives — invested its monotheistic faith in economic reform, yet in practice (and to a large extent, in theory,...

Of fools and their money: Volvo sold North Korea 1,000 cars. On credit.

As a tool of economic isolation, North Korea’s business ethics have proven to be far more effective than U.N. sanctions. See also Yang Bin, Senator Robert Torricelli and David Chang, Chung Mong Hun, Nigel Cowie, Roh Jeong-Ho, Albert Yeung Sau Shing and the Emperor Group, the Xiyang Group, and Lloyd’s of London. There’s actually a whole market in North Korea’s defaulted sovereign debt “involving more than 100 banks from 17 countries” dating back to the 1970s and 1980s. And still,...

RFA: N. Korea tells overseas trade reps not to use the internet

In our latest of edition of North Korea Perestroika Watch, Radio Free Asia, citing identified sources speaking on condition of anonymity, reports that Pyongyang has instructed its overseas money-men to stop using the internet. The regime is even threatening to seize their work and personal laptaps to enforce the order. The trade workers tell RFA that the order, which even includes the use of e-mail, is impeding their ability to do their jobs and earn foreign currency. A source living in China along...

N. Korea Perestroika Watch: Man executed for calling China

The Daily NK provides us some updates on Kim Jong Un’s ongoing crackdown on unauthorized contact with the outside world, via sources in North Hamgyeong Province, in the far northeast: The North Korean authorities recently added five extra clauses to Article 60 of the country’s criminal code, which pertains to attempts to overthrow the state. The additional clauses codify harsh punishments for acts including illicit communication with the outside world, which could in principle now incur the death penalty. [….] The...

And now, a brief Marxist-style criticism of North Korea’s class struggle and internal contradictions (Updated)

Yonhap reports that North Korea has cut its grain imports from China by more than in half in the first quarter of this year “due to an increase in the country’s grain production last year.” A fall in market prices for corn corroborates that there is a greater supply of corn than usual; ordinarily, spring is the leanest time of year for poor North Koreans. Despite Pyongyang’s decision to buy and import less grain, the World Food Program, which recently...

North Korea’s circular firing squad

The reaper has come for two more key North Korean diplomats: South Korea’s Yonhap news agency said that Pak Kwang-Chol, an associate of the young supremo’s uncle and political regent Jang Song-Thaek, was seen returning home after making a brief stopover in Beijing. The envoy and his wife were reportedly escorted by North Korean officials onto a flight to Pyongyang. Sweden is an influential diplomatic player in Pyongyang, AFP said. Since the United States and North Korea have no diplomatic...

North Korea’s overseas money men, called home, go to ground instead

After the news broke that Jang Song Thaek has been purged, The Daily NK reported that the regime was summoning party cadres from other parts of North Korea to Pyongyang. Now, new reports tell us that North Koreans in China are also being called back, possibly to be purged themselves. The Joongang Ilbo carries a fascinating interview with Lee Keum-Ryong, a defector and Free North Korea Radio correspondent, and obviously a very brave man. Lee defied the risk of abduction,...

Let them drink beer: Kim Jong Un’s North Korea, where Orwell meets South Park

This week, the U.N. gave the North Korean government another million dollars for flood disaster aid to North Korea. Last month, the U.N. World Food Program appealed for $98 million to feed hungry North Koreans. Earlier this year, European NGOs blamed international sanctions for their difficulties paying for their operations in North Korea. And yet somehow, Kim Jong Un has found plenty of grain for brewing beer: North Korea completed construction of a brand new brewery in Haeju city that has up-to-date production facilities, the communist...

New Focus on North Korea’s changing economy

They paint a vivid picture of an economy in a halting transition: * For better or for worse, loan sharks who trade in currency and their connections to the regime have become an important part of the new economy. * How businessmen make donations to regime projects to buy indulgences — letters of appreciation — from the regime, and use them as amulets against its enforcers of dependency. * The decay of the Public Distribution System (PDS) continues to progress....

Best Graphics of the Week (So Far)

The first shows the persistence of regionalism, in living color. Via Yonhap; hat tip to Step Haggard and Jaesung Ryu. If I’m sitting in Pyongyang right now — and also, if I’m a malignant narcissist with a bloated army — I’m thinking the people who voted this way must be punished.  One sense of ill foreboding has been replaced by another. The second graphic is a newer, higher resolution image of the Koreas at night. Don’t stop there.  The full-resolution version...

Reform Watch: North Korea can now afford to bury its orphans in Snoopy T-shirts

As a vibrant market economy arises from an underdeveloped one, it does not lift all boats as a rising tide would.  Some get very rich fast, and some stay very poor.  Such periods of rapid development are politically risky times, as uneducated masses are drawn away from their hardscrabble farm lives and packed into factory dormitories, slums, and shanty towns in the cities.  Those places become hothouses of envy and radicalism that can bring down the political systems in which...

North Korean Reform Watch 6

We don’t know how extensive North Korea’s agricultural reforms are meant to be, but we do know that North Korea wants us to think that it’s instituting big reforms in its agricultural sector, because it took the AP’s Jean Lee on a show tour of a collective where the “farmers” were primed to tell her it was so. Is it too cynical of me to tend to disbelieve any fact that North Korea wants me to believe is true? Props...

Curb Your Enthusiasm: On Change in North Korea

Over at Destination Pyongyang, Chris Green offers some useful cautions to those who have allowed themselves to become unduly aroused at the prospect of reform in North Korea based on “evidence” that is either superficial, questionable, irrelevant, or some combination of these things.  Green questions “hyperbolic” reports that North Korea will abandon its central rationing system — a system that is more responsible for North Korea’s famine and hunger than any other single factor — because that would mean ceding a...