Category: Uncategorized

Radical changes to North Korean foreign exchange rate system

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A new North Korean publication has confirmed what has been rumored for some time: that markets are integral to the country’s official exchange rates. In any other country this would be the first sentence in a beginner’s textbook on foreign currency markets, but in the DPRK, this marks a major admission of the central role that markets play in North Korean life. 

The book “The Methodology of Monetary Issuance and Monetary Adjustment” has a lot to tell us about the future of market-oriented reforms under Kim Jong Un. Contrary to inferences drawn from other sources, this book indicates a level of consolidation and commitment to the use of market mechanisms in the management of the economy, and speaks to the leadership’s willingness to accept markets over central planning in a growing number of areas.

North Korea is a country where the word ‘market’ is rarely used in official publications, and where markets remain at the alleged margins of the economy. The fact that some of the country’s top minds in monetary economics openly admit the existence of a market-oriented exchange rate that is in widespread usage is a dramatic signal of just how serious the government is about reform. This has the hallmarks of naked and all-encompassing state capitalism, without private firms or private property outside the household, with a side-order of state socialist planning alongside.

All this represents a dramatic improvement on state socialism, and if other areas of economic policy – especially investment policy – and the sanctions situation improves, these kinds of measures may help to encourage economic growth and better lives for North Koreans. 

[Read full article at NK News]

Defectors in Seoul lose platform to speak out against North Korea

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Joo Yang once hid underground in a tiny bunker made for storing kimchi as she evaded detection while fleeing across the North Korean border to China. Years later, Yang built a new life in Seoul, speaking in public about her experiences to shed light on life in the communist country.

But she and multiple defectors and human rights activists say paid speaking opportunities for North Korean escapees — including media appearances and public lectures at universities and military bases — have disappeared over the past two years while President Moon Jae-in has sought rapprochement with dictator Kim Jong Un. 

The allegations raise questions over whether Moon’s policy of engagement with Kim has also included efforts to silence critics and shift public focus from problems such as human rights abuses in North Korea. Suzanne Scholte, chair of North Korea Freedom Coalition, a U.S.-based nongovernmental organization, says the change in approach was “definitely coming from the government.”

Ahn Chan-il, a Seoul-based defector, researcher and commentator on North Korea, likewise believes that from early 2018 — ahead of a flurry of summitry between Moon and Kim — he was “permanently struck from the list” of guest contributors with most state-backed media. “I used to be on [state-linked television news] almost every day, but suddenly since March [2018], they stopped calling me,” Ahn says.

Academics and others say they have also been directed by officials and media executives to use the formal title of “Chairman” when talking publicly about Kim. For North Koreans who risked their lives to escape and still have family in the country, the request is highly offensive.

Human rights organizations say Moon’s government has also cracked down on groups that try to counter Pyongyang’s propagandists by sending factual information and cultural content into North Korea. The 2018 Panmunjom Declaration, signed by Kim and Moon, contained a pledge to “stop all hostile acts” including loudspeaker broadcasting and distribution of leaflets along the border area. Read more

[Ozy]

Information is key to liberating the minds of the North Korean people

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Thae Yong Ho, a former deputy ambassador to the U.K., who in 2016 became the highest-ranking North Korean diplomat to defect to South Korea, says disseminating information to younger North Koreans is “very important” in spurring people to reject the state’s ideological control and authoritarian rule.

A North Korean defector, speaking on the condition of anonymity, says he worked with South Korea’s Defense Ministry on radio broadcasts targeting North Korean soldiers near the border area for three years “mainly discussing North Korea media’s incorrect reports.” But, he says, his role was discontinued in early 2018.

Losing this job was particularly galling, he adds, because he was inspired to defect in 2009 after listening to similar illegal foreign media broadcasts for years. “My experience of listening to radio in North Korea changed my life,” the defector says.

With the South Korean–based efforts to both expose North Korean human rights issues and educate people inside North Korea about the outside world under pressure, some international organizations are stepping up their activities via China.

The Human Rights Foundation (HRF), a New York-based NGO, claims to have smuggled approximately 100,000 data storage devices into North Korea via China over the past three years. The foundation sends donated USB flash drives and SD cards loaded with entertainment programs like movies and soap operas into the country. The devices often include news clippings and broadcasts, testimonials from defectors and political material such as translations of books about the fall of the Soviet Union and the Arab Spring.

The organization estimates that each device reaches about 10 people, implying the material has been seen by as many as 1.3 million North Koreans, or 1 in every 20 people in the country.

“Information is key to liberating the minds of the North Korean people,” says Alex Gladstein, chief strategy officer of HRF.

[Ozy]

North Korea sees little reason to rein in its missile program

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Since the regime in Pyongyang doesn’t see any reason to rein in its nuclear weapons program or to put the brakes on its ballistic missile technology efforts, North Korea possibly poses “the most pressing national security issue we face,” a member of the Senate Foreign Relations Committee said Thursday.

“Tearing up [the Iranian nuclear agreement] sends a signal” to North Korea’s leader Kim Jong-un that the United States might not live up to its part of any future arrangement with Pyongyang, Sen. Chris Coons, (D-Del.) said while speaking at the Woodrow Wilson Center in Washington, D.C.

He said Kim and others in North Korea’s leadership are well aware of “the Libya model,” where Muammar Gaddafi, former leader of the nation, voluntarily ended his nuclear weapons program. A few years later was killed in a coup that toppled his regime and sent his country into years of civil war. “Why would he choose to give up nuclear weapons” and risk his regime’s existence, Coons asked rhetorically.

Ukraine’s post-nuclear experience, Coons said, provides Kim with another example of the dangers he could face if he turned over his nuclear stockpile for disposal. Kyiv turned over nuclear weapons the Soviet Union left behind after its collapse. “Now it is a smaller nation and under assault by Russia,” Coons said.

Apparently, nothing is holding Kim back from resuming nuclear testing now. In the same way, North Korea continued ballistic missile testing following the two summit meetings with the United States, Coons said. Adding to the tension is the most recent test, of a sea-based missile raising the threat of quick, surprise attack to South Korea and Japan to a higher level.

[US Naval Institute News]

Highly personalized diplomacy: When Trump is debilitated, the diplomacy suffers

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What has been most distinctive about his North Korean diplomacy is how President Trump has thoroughly personalized it—whether by measuring his “nuclear button” against the North Korean leader’s when they were at odds or by feeding a narrative that he and Kim alone could resolve the crisis over North Korea’s development of nuclear weapons thanks to their “beautiful” relationship.

This weekend, U.S. and North Korean officials met in Sweden to revive nuclear negotiations, a development that barely registered amid the impeachment frenzy in the United States. With little fanfare, certainly not the kind on display during his meetings with Kim Jong Un, the bill is coming due for Donald Trump’s diplomacy with North Korea. The chief North Korean negotiator, Kim Myong Gil, blamed the “breakdown” on his U.S. counterparts not coming to the table with fresh ideas, and suggested that talks be suspended until the end of the year, a period that North Korean officials have ominously described as a deadline for Washington to adopt a more flexible position. U.S. negotiators tried to cast the impasse in the best light, stating that they’d raised “new initiatives” and describing the discussions as “good.”

If Kim’s negotiators remain determined to tread water between summits with Trump, that doesn’t bode well for the prospects of a comprehensive nuclear agreement. As the nuclear expert Toby Dalton has observed, concluding such a deal with North Korea would be more complicated than the process of negotiating the nuclear-arms-control treaty known as START was; the United States and the Soviet Union signed START in 1991 after nearly a decade of diplomacy involving “1,000 hours or more of negotiations where you had teams of Soviet and American experts who were living in Geneva, meeting every day,” and churning out hundreds of pages of text. “Presidents don’t negotiate 100-page documents,” he pointed out.

North Korean officials (who are known to closely follow U.S. politics) may be calculating that they are in a stronger negotiating position, and that Trump, a “self-advertised dealmaker” without many actual deals in foreign affairs, will be interested in “a distraction” from his domestic troubles in the form of a nuclear accord, notes Joseph Yun, who served as Trump’s North Korea envoy at the State Department until 2018. But if the assessment in Pyongyang is indeed that Trump is desperate for a win and will scramble to cut a deal at the end of the year, it could prove a hugely consequential miscalculation. One of the downsides of highly personalized diplomacy is that when the person in question is debilitated, the diplomacy suffers.

It’s also possible that North Korea’s leaders have drawn the opposite lesson from the political turmoil in the United States: that there’s no use in surrendering assets as part of an agreement with Trump that could collapse within months as a result of impeachment pressures or the 2020 election.

[The Atlantic]

North Korea breaks off working-level nuclear talks in Sweden

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Working-level nuclear talks in Sweden between officials from Pyongyang and Washington have broken off, North Korea’s top negotiator has said.

Chief nuclear negotiator Kim Myong Gil blamed what he called US inflexibility.

Delegations from the two countries had been discussing Pyongyang ending its nuclear programme in exchange for sanctions being lifted.

The US says it has accepted an invitation from Sweden to return for more talks in two weeks’ time.

North Korean defectors reveal 30 times safe level of radiation exposure

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Tests on North Korean defectors in September who lived near the secretive state’s Punggye-ri region have revealed dangerously high levels of radiation exposure. Radioactivity levels exceeding 250 millisieverts (mSv). Exposure to just 100 mSv a year is considered the threshold for cancer risk.

One 48-year-old woman, reports Chosun Ilbo, showed 1,386 mSv of radiation. That’s nearly 30 times the level allowed for workers in the nuclear industry. Tests on half of the defectors also revealed significant genetic damage.

Punggye-ri is the site of three nuclear weapons tests undertaken by the Kim regime between 2006 and 2013.  Observers suspect the nuclear tests have contaminated the soil and ground water table in the area.

Kim Tae-woo, the former head of the Korea Institute for National Unification, told Chosun Ilbo: “Residents of Kilju county and other areas near the test site get their drinking water from underground springs emanating from Mt. Mantap. “I believe a lot of the exposure to radiation comes from the drinking water.”

Jeong Yong-hoon from the Korea Advanced Institute of Science and Technology added: “There is no way these levels of radiation exposure could happen under normal conditions. … The reason must be that a tunnel at the test site collapsed, so it is urgent to check how the site is being managed.”

Joo Han-gyu at Seoul National University said that “the radioactivity levels found in North Korean defectors is hundreds of times higher than normal and can only be the result of exposure to severe radiation.”

There are fears not only for the health of people still living in the region, but for South Koreans as well – water from springs in Punggye-ri eventually flows into the Sea of Japan, known in Korea as the East Sea. Korean cooking involves a good deal of fish, and a threat to fish stocks represents a significant danger to food supplies in general.

[Daily Star (UK)]

How the North Korean mobile phone industry is changing the country

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North Korea is evading U.N. sanctions to cash in on soaring domestic demand for smartphones, using low-cost hardware imports to generate significant income for the regime, according to defectors, experts and an analysis of North Korean-made phones. Economists estimate as many as six million North Koreans – a quarter of the population – now have mobile phones, a critical tool for participating in an informal market economy that has become a key income source for many.

Reuters spoke to some 10 defectors and experts about the use of mobile devices in North Korea, as well as reviewing advertisements for mobile devices, and examining two North Korean-branded smartphones. The phones feature Taiwanese semiconductors, batteries made in China and a version of Google’s open-source Android operating system, analysis of the North Korean phones revealed. These basic North Korean phones typically cost between $100 and $400 at state stores or private markets.

One young North Korean woman surnamed Choi recalled selling two pigs and smuggling herbs from China to raise the 1,300 Chinese yuan ($183) her family needed to buy a mobile phone in 2013. She used the phone to help successfully run a retail business selling Chinese clothes and shampoos, arranging deliveries from wholesalers. “It turned out we could make a way more money than our official salaries,” said Choi, who has since defected to South Korea.

Phones are typically sold with service plans that include 200 minutes of calling time. Prepaid plans cost about $13 dollars for 100 minutes. While those prices are comparable to or higher than what mobile phone customers pay in other countries, North Koreans only earn an average of about $100 per month.

North Korean leader Kim Jong Un has endorsed wireless networks, some reportedly built with the help of China’s Huawei Technologies, and local mobile phone brands through public speeches and state media reports.

[Reuters]

North Korea and United States to resume nuclear talks Saturday

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North Korea and the United States will resume negotiations Saturday, marking the first official talks between the two sides since President Trump met Kim Jong Un in June, the North Korean government announced Tuesday.

North Korean Vice Foreign Minister Choe Son Hui said the two countries “agreed to hold a working-level discussion on October 5th, following a preliminary contact on the 4th,” according to a statement carried by North Korea’s state-run Korean Central News Agency.

Negotiations between the two countries’ diplomats have been frozen since the breakdown of a summit between Trump and Kim in Hanoi in February. Another meeting between the two leaders at the demilitarized zone between the two Koreas in June was supposed to lead to a resumption of negotiations, but the stalemate persisted until now. 

On Monday, North Korea blamed the stalling of the dialogue on Washington and Seoul, accusing them of failing to keep their promises. North Korean Ambassador Kim Song told the U.N. General Assembly that it was up to the United States whether negotiations “will become a window of opportunity or an occasion that will hasten the crisis.” The ambassador added, “The situation on the Korean Peninsula has not come out of the vicious cycle of increased tension, which is entirely attributable to the political and military provocations perpetrated by the U.S.”

North Korea has also insisted that talks will succeed only if the United States takes a different approach from the one it took in Hanoi, but it has been careful not to criticize Trump directly. Indeed, the North Korean Foreign Ministry also said last week that Trump is “different from his predecessors in political sense and decision” and that it hoped he would make a wise and bold decision. 

“Next year, the United States will have its presidential election, and South Korea will have a legislative election. [Kim Jong Un’s] strategy could be to have his third meeting with President Trump before next year to get the best result ahead of the elections race,” said Yang Moo-jin, a professor at the University of North Korean Studies in Seoul. 

Leif-Eric Easley, a professor at Ewha University in Seoul, said the removal of John Bolton as White House national security adviser last month might have encouraged North Korea to think it could win sanctions relief by making a deal with Trump. Bolton had consistently held a hard line on North Korea. In return, Easley said, Pyongyang might offer concessions, such as an unverifiable freeze on nuclear weapons production, that Trump could present as a symbolic victory.

[Washington Post]

How a sanctions-busting smartphone business thrives in North Korea

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In 2017, official customs data show North Korea imported $82 million worth of mobile phones from China, the third biggest import item after soybean oil and fabrics. That number dropped to zero in 2018 as sanctions bit. But while sanctions eliminated official imports, informal trade along the China-North Korea border appears to be ongoing, experts and defectors say.

The availability of North Korean mobile phones are a big asset in North Korea’s flourishing grey market economy. One young North Korean woman surnamed Choi recalled selling two pigs and smuggling herbs from China to raise the 1,300 Chinese yuan ($183) her family needed to buy a mobile phone in 2013. She used the phone to help successfully run a retail business selling Chinese clothes and shampoos, arranging deliveries from wholesalers.

“It turned out we could make a way more money than our official salaries,” said Choi, who has since defected to South Korea, declining to give her full name for fear of retribution against relatives still in North Korea.

In a survey this year of 126 North Korean defectors who had used mobile phones, more than 90% said cellphones improved their daily lives and about half said they used them for market activities. “Millions of people are using mobile phones and need them to make a living or show off their wealth,” said Shin Mi-nyeo, executive director of the Organization for One Korea, a South Korean support group for defectors that conducted the poll.

Sin adds: “Then their phone bills create huge income for the government.” Kim Bong-sik, a researcher at South Korea’s Korea Information Society Development Institute, said estimating revenues was difficult, but it was likely to be one of the state’s biggest earners given the scale of the business.

North Korean phones can only be used to call domestic numbers and have some unique security features. Downloading or transferring files is severely restricted. Reuters found a warning pop-up when installing an “unidentified program” on the Pyongyang 2418 smartphone stating: “If you install illegal programs, your phone can malfunction or data will get destroyed.”

“North Korea puts algorithms and software in its mobile phones to keep data from being copied or transferred,” said Lee Young-hwan, a South Korean software expert studying North Korean smartphones. The regime has also developed a home-grown surveillance tool on mobile phones, according the U.K.-based cybersecurity company Hacker House. When a user accesses illegal or non-state approved media, an alert is generated and stored inside the phone. A modified version of Android also conducts surveillance and tracks users, Hacker House said.

[Reuters]