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Category: NK Economics

March 25, 2009

Stuart Levey Renominated

Yes, it’s a perfectly excellent nomination by the Obama Administration for Treasury. No, I’m serious. Stuart Levey, the Treasury Undersecretary for Terrorism and Financial Intelligence, played the key role in snipping North Korea’s financial lifelines in 2005 and 2006, starting with Macau’s Banco Delta Asia. Treasury’s effort ended when North Korea blinked and made a bunch of false promises to Chris Hill just to stop the pain, and Chris Hill duly made it stop. But no single U.S. government official...

Categories Money Laundering/NK Economics
March 16, 2009

Kaesong Managers Become Hostages, OFK Blogger Fails to Suppress Schadenfreude

[Update: North Korea lets them out. It’s not clear whether the border is fully reopened, but either way, no sane foreign business would invest in Kaesong now. And just in case all of this wasn’t strange enough, South Korean “academics” see North Korea cutting off one of its own main sources of hard cash and conclude that it’s South Korea that’s in a bind. Hey! I had just been thinking that what an economically strapped economy really needs most is...

Categories Appeasement/NK Economics
February 20, 2009

Sanctions? Yes We Can! (But Without the U.N.)

The power to tax is the power to destroy — Daniel Webster As the Obama Administration inherits an intractable, non-compliant, bellicose, and terroristic North Korea, the administration’s great challenge is to see beyond a strategy based on concessions alone. Via GI Korea, the new administration appears to be polarizing into factions, just as the Bush Administration did eight years ago. One of the factions advocates “normalization of relations with North Korea as soon as possible,” in other words, giving even...

Categories NK Economics
February 19, 2009

Of Fools and Their Money, Part 2: Orascom Deal Starts to Sour

That Orascom’s big new investment in North Korea would fail has always been predictable, but it was always incomprehensible how Orascom’s business model centered around introducing the one thing with the most potential to destabilize the regime’s hold on power: a mobile phone network. Not surprisingly, Orascom and the North Korean regime are already at odds over Orascom’s plan to pass out 100,000 free phones to generate a base of bill-paying subscribers. Instead, the regime is selling them for $235...

Categories NK Economics
February 16, 2009

Rice Prices Fall in Remote N. Korean Provinces

That’s good news, because those are the areas the government generally disfavors in its food distribution planning. According to a source in North Korea, rice prices in Pyongyang, Pyonsung, Nampo, Sin-ui-ju, Hyesan, and Chunjin fell sharply in mid-January. The rice price in Pyongyang at the end of January was 1700~1800 Won per 1 kg (the price used to be 2000-2100 Won), the price in Pyonsung and Sincheon was 1700won (the price used to be 2100 Won), and the price in...

Categories Famine & Food Aid/NK Economics
February 11, 2009

Following the Money: The Economic Mysteries of North Korea

On Monday night, I had dinner with a distinguished group that included Andrei Lankov, Chuck Downs, Curtis Melvin, and a friend who covers North Korea for a major news service. Professor Lankov is here to speak at a think tank event and to promote some exciting ideas about getting subversive information into North Korea, which I hope to interview him about later. I asked Professor Lankov about those alarming reports from Good Friends about the food situation last year. With...

Categories Famine & Food Aid/NK Economics
February 5, 2009

Hyperinflation in North Korea?

Exchange rates for North Korean currency are collapsing, according to Open Radio. True, a collapse in exchange rates means only so much when your currency isn’t convertible, but North Korea’s irresistable bottom-up transition to a market economy — despite the regime’s best efforts — means this will hurt both the privileged and the underprivileged who are trading with China to get food. One of the costs of doing cross-border business is the price of bribing North Korean border guards. That...

Categories China & Korea/NK Economics
January 26, 2009

Eberstadt: What Went Wrong

So over the weekend, I finally had a chance to read Nicholas Eberstadt’s fine summary of the Bush Administration’s eight years of drift and indecision on North Korea (hat tip to Robert Koehler). It’s hard to pick a favorite passage, but this one certainly struck a chord: In the absence of a coherent policy, though, the imperative of “success” in talks with North Korea suddenly took on a life of its own for the Bush team. (After all, there was...

Categories Money Laundering/NK Economics/Washington Views
January 17, 2009

Hostile Policy Not Quite Dead

History will record that President Bush experienced just one brief glint of success at influencing the North Koreans during his entire presidency. Naturally, our State Department had nothing to do with it. In fact, when State realized that another cabinet department (Treasury) might actually solve the North Korean problem once and for all, it dove in to rescue failure from the jaws of success. Most people in Washington tend to think in terms of dealing with national security threats in...

Categories NK Economics/Proliferation/WMD
December 18, 2008

Of Fools and Their Money

When North Korea first started ejecting South Koreans from Kaesong, I noted that the Kaesong project was already economically marginal and falling well short of its ambitious goals. I also predicted that the North Korean move would be fatal to the project’s efforts to coax cowardly capital into a potential war zone controlled by the world’s most opaque, least capital-friendly regime. That prediction has already come true. The leftist Hankyoreh is reporting that South Korean companies are fleeing for the...

Categories NK Economics
December 15, 2008

Kaesong Worker Defects

So, I was wondering, just how popular is the Workers’ Paradise among its hand-picked proletariat, that is, those able to pass the best family history, background, and loyalty screening the government of North Korea can manage? Not very, evidently: A North Korean defector who escaped from an inter-Korean industrial complex in the border city of Kaesong where she was employed remains in a third country, a South Korean activist here said Wednesday. The 27-year-old woman, whose identity was withheld for...

Categories Deprogramming/NK Economics
December 1, 2008

N. Korea Expels Half of the South Koreans from Kaesong.

North Korea has allowed 880 South Korean people to stay in the inter-Korean industrial complex in the border city of Kaesong, far less than expected by the South, South Korea’s Unification Ministry spokesman said Monday. North Korea verbally informed South Korea of its decision Sunday night, Kim Ho Nyoun told a press briefing. [Kyodo] You say that like it’s a bad thing. Updates: The better media reporting on this subject probes two questions: (a) how will this affect Kaesong and...

Categories Appeasement/NK Economics
November 26, 2008

Activists to Resume Leaflet Balloon Campaign

A wave of free publicity, courtesy of the governments of North and South Korea, has made the leaflet balloon campaign has been a great success. Why quit now? Activists for human rights in North Korea on Tuesday vowed to keep sending propaganda leaflets to the North even though the government has asked them to desist. The announcement was made by Park Sang-hak, head of Fighters for Free North Korea and Choi Sung-yong, president of Family Assembly Abducted to North Korea....

Categories Activism/Appeasement/Deprogramming/NK Economics
November 24, 2008

So I Can Keep the Masthead for a While, I See

Blackouts frequently interrupted a four-day stay in Pyongyang for South Koreans attending a rare joint seminar between the Cold War rivals, with the North’s showcase city often plunged into pitch darkness by power outages. ‘What is going on here?’ a North Korean border control officer said when computer terminals lost power and the lights went out at the Soviet-era Sunan Airport terminal, which serves Pyongyang, while he was processing the documents of the visiting South Koreans. One of his colleagues...

Categories Inside NK/NK Economics
November 16, 2008

Arbeit Macht Nichts: The End of Kaesong?

The second of the twin pillars of the Sunshine Experiment, the Kaesong Industrial Project, may have gone to join the Kumgang Tourist Project on the ash heap of history this week with North Korea’s closure of the border between North and South.  With that closure, South Koreans inside the North Korean enclave have been served with their eviction notices.  The North Korean directive may yet prove to be a bluff, but it will still mean the end of Kaesong as...

Categories Appeasement/NK Economics
August 7, 2008

North Korea Rejected Lefkowitz Visit to Kaesong; We Had to Hear It from the South Koreans

A few weeks ago, after Jay Lefkowitz, the Special Envoy for Human Rights in North Korea, cancelled a visit to Kaesong, I speculated that the North Koreans felt free to just blow him off:  “One wonders whether the North Koreans, sensing how completely Lefkowitz has been marginalized in Washington, simply withdrew his permission to visit.”  And that turns about to be pretty much what happened: “We understand the North has refused to register the application by the special envoy,” South...

Categories Appeasement/Human Rights/NK Economics
August 5, 2008

The End of Sunshine

North Korea is now threatening to expel South Korean  staff from Kumgang.  A spokesman for the North Korean military unit in charge of the region around Kumgang said it would kick out all South Koreans “we deemed unnecessary” from the resort. Although South Korea suspended tourism after the shooting, more than 260 South Korean businesspeople remain there, most of them affiliated with Hyundai-Asan, a Seoul-based company that operates the resort together with the North Korean  government. The unidentified spokesman said...

Categories Appeasement/NK Economics