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Open Sources, December 11, 2013

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THIS COULD BE BIG, even if the conclusion seems exaggerated: Yonhap reports that North Korea is dumping gold in China, and calls it a sign of “imminent economic collapse.” Yonhap says the last time that happened was when Kim Jong Il died, but to me, it’s reminiscent of North Korea’s behavior after the Banco Delta Asia action froze their money. I wonder if this is because the purge of Jang disrupted their financial network. If so, it could be a temporary coping mechanism.

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NORTH KOREA HAS RELEASED AN ENGLISH-LANGUAGE “VIDEO” of the report of Jang Song Thaek’s arrest. It’s a slightly different report (or translation) from the KCNA report I pasted in at the bottom of this post, and the only images are stills. “Dreaming different dreams” actually makes some sense if you add “in the same bed.” HT: Chico Harlan’s excellent Twitter feed.

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KOREAN PAPERS ENGAGE IN GHOULISH ODDS-MAKING on the next North Korean to be purged. Runners-up include the Ambassador to China, or any military officer over 65. The Chosun Ilbo looks at the ongoing propaganda campaign, and speculates that the purge could trigger mass defections.

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BARBARA DEMICK OF THE L.A. TIMES (also the author of this must-read book) has written another report on the Jang Song Thaek purge. The tone of this report is noticeably different then her first take, when she wrote, “The purge suggests that Kim believes he has sufficiently consolidated his rule to take the gamble….” Now, she writes that it “could bring about more political turmoil as the purge extends to Jang’s coterie of powerful relatives and supporters.” I’m a big fan of Demick’s reporting, and I don’t mean to suggest that there’s anything wrong with shifting one’s conclusions in response to new facts or arguments. Both reports are well worth reading.

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THIS LOOKS MORE LIKE A DENIAL by the ROK government that it’s harboring a senior North Korean defector. I hope they’re lying, because I’d really like our Treasury Department to know exactly where Kim Jong Un’s scratch is.

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YOU COULD SAY THAT JOE BIDEN has a unique aura about him. It’s what makes him the bride at every funeral, the corpse at every wedding.

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SELIG HARRISON, CALL YOUR OFFICE. “North Korea may have one more uranium enrichment facility besides the existing facility located in the Yongbyon nuclear complex, a prominent U.S. nuclear scientist said Sunday. David Albright, a physicist and head of the non-profit Institute for Science and International Security (ISIS), said North Koreans would not ‘put everything at Yongbyon,’ given the number of years they spent developing nuclear weapons.”

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YET AGAIN, AID IS FOUND FOR SALE in a North Korean market. This time, it’s medicine being sold in a market in Pyongyang. In my comment to NK News, I cited multiple cases in which sacks of U.S., U.N., South Korean, and NGO-supplied foreign food aid have been seen or photographed for sale in North Korean markets (here, here, here, here,here, via former Ambassador John Everard). 

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ORASCOM, THE PROVIDER of North Korea’s Koryolink cell phone service, has a whole year’s revenue — $420 million — trapped in North Korea, says Steph Haggard. I wonder if the blocking of the Foreign Trade Bank in March stranded those assets there. I’d always imagined that sanctions would strand North Korean assets abroad, but the opposite could also be true.

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THE ADMINISTRATION is fighting for the life of its new deal with Iran, and it may not win. On foreign policy, Congress has entered the power vacuum created by the executive’s disinterest and passivity. Congress will only be encouraged by the fact that the Iran deal is polling poorly (more here). That surprises me, given the overwhelmingly positive press coverage, and the isolationist mood of the country. Americans really must loathe and distrust the government of Iran.

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7 Responses

  1. Gold. One justification for Jang’s purge was his refusal to follow Baby Kim’s dictates. Baby Kim forbids the sale of gold. So…gold is not being sold. It is more likely that it is being deposited in China as collateral for debt, and as a “good faith” gesture to guarantee to China that certain contracts will continue.

    It is likely that these deposits are essentially involuntary, and that China has demanded the security of gold to continue deliveries…this was reported to have happened a couple of years ago. I can’t quite remember when, but I think it was about a year before Little Kim died (or was pushed by his son.)

    The Daily NK also reports that the entire northern border is on alert, reportedly to capture high level defectors in the Jang coterie. If so, why does the report suggest the soldiers are looking across the border? Relations with China are as bad as I can recall, and I only hope they get worse.

  2. More on gold. Yodong suggests the sales occurred several months ago, rather than being current deposits or transfers: if so, that could be a major factor in Jang’s political demise. Assume Baby Kim is a 30 year old man with the sophistication of a 23 year old: he’ll like military bangs (nuclear or artillery) and gold. He won’t realize for a few years yet that they are a means to an end rather than the end itself. So a depletion of national gold reserves (and, given the terms of Jang’s denunciation, possibly the sale of the mines to Chinese generals?) appears to him to be a national loss, rather than a benefit for internal development with a convenient entanglement of China in the success of its mining ventures.

    If the Yodong report means that national gold reserves are depleted, there may be an imminent problem: there is nothing to send abroad as security or to obtain foreign exchange. One assumes that supplies of supernote paper have been exhausted: UN sanctions make it difficult for Russia or China to extend further credit. The Russian logging operations have been expanded, but it is now winter in Siberia, so they are in hiatus. There are presently very limited sources of foreign exchange available to the DPRK, and it still needs to buy basic needs, like fertilizer and cement. The ouster of Jang (the man who embodied what passes for sophisticated economic theory in the DPRK) and the not-so-veiled threat to abrogate all Chinese mining concessions, suggests that China is unlikely to be willing even to consider extending credit surreptitiously. The DPRK has put itself on probation.

    There will be a short-term gain to the State Treasury from the recapture of the large Jang family fortune, but that will not last long. It is likely that the DPRK is broke (but a better than normal harvest means that this affects the Uppers primarily, and less the proletariat, to the extent the Kim dynasty even considers them.) The only real way to get real money is to sell nuclear technology, or military stuff. Yongbyon is being reactivated.

    Let’s hope we, the USA, just ignore the DPRK for the next year, rather than bailing them out of their financial pit. I still think they are more likely to nuke Singapore, Tokyo and Beijing than to go gently into that dark night, but it is just conceivable that Baby Kim’s misunderstanding of his uncle’s gold transfers will bring about an internal collapse, and soon. But it will need physical Chinese demonstrations of displeasure.

  5. In an above comment David mentions North Korea possibly nuking Singapore, Beijing, and Tokyo. I’ve thought for some time that the real value of nukes would be to turn Shanghai, and Beijing, into hostages in order to keep the financial aid coming. I wondered why none of the reporting I read mentioned that possibility, so it’s satisfying to see someone else bring it up. Now, a question for David – why Singapore? Isn’t that rather far for their missiles? And I’m curious why Seoul is not on the list. Thanks!

  6. Singapore goes first, a ship-borne bomb, with no admission of responsibility from the DPRK, but total certainty who dun it. Singapore’s demise would kill a lot of overseas Chinese, but would disrupt entirely the South China Sea countries, and much of the world. It would also demonstrate the awesome and terrifying power of a single weapon — say, a 10 megaton bomb 500 yards from Jurong: it would end Singapore for ever, and all its communications links. The internet would fail for several years.

    Then the DPRK emplaces (by tunnel and truck) three nukes in the three major South Korean cities, discloses their existence and exacts a major political toll for the safe and public removal of each in sequence — removal of all foreign troops and embassies, disarming and demobilization of all ROK Forces, unification under the Kims. It takes over and silences the South, and actively integrates the South’s industrial base with its 15 divisions of Special Forces.

    Then, six months later, it nukes Tokyo Bay using a single medium range non-ballistic missile (and the US Naval base at Yokosuka) and takes over Japan by treaty, and the Japanese fleet, with the active assistance of Hanjin, Hyundai, Daewoo and other major South Korean enterprises.

    The USA withdraws from Asia to Hawaii.

    Then the Kim regime (and its three puppet states – North and South Korea and Japan,) nukes Beijing, invades northern China and, by treaty, is awarded China’s permanent seat on the UN, thereby totally paralysing it. Four years later the new KimManchu dynasty begins the next wave of barbarian invasions of central Asia. After all, all those single sons of military age need to find brides somewhere.

    There are riffs — commercial treaties of friendship and subservience with Indonesia for oil, Mongolia for other minerals, and Vietnam to encircle China by sea — but this is the outline, in my mind, of a DPRK that will not go gently. It seems a lot more likely than the East German syndrome.

    It means that Russia once again becomes the bastion of Europe against the Asian hordes.

  7. I think I’d agree that the chance of a mass-casualty nuclear detonation goes up, but I don’t think I can follow David’s scenario. This presumes more competence than the Norks have demonstrated. For one thing, unless I’m mistaken, the Norks have yet to demonstrate a for-real, complete, high yield fission detonation. And the projected Nork invasion of northern China just seems fantastical. The Nork army has rusted weapons, no gas, and hasn’t done any serious training in decades. Any attempted maneuver as large as an invasion of China would quickly disintegrate into a shambles, and the Chinese would hardly be expected to react passively. One detonation plus attempted extortion I might go for, I guess. Lamentably, our current administration’s general passivity in foreign affairs might tend to encourage this. It would still mean the end of the regime, at more or less hideous cost to countries in the region, and the U.S. A warhead finding it’s way into the hands of some third-party terrorist organization seems more believable. In any event, we are in for tense times.