Home  >  NK Economics

Category: NK Economics

March 24, 2012

Told you so: Now that the FTA is in effect, South Korea wants to use it to put North Korean-made products on your store shelves

So now that the Free-Trade Agreement between the U.S. and South Korea is officially in effect, the supposedly conservative South Korean government is pulling a bait-and-switch, reviving the demand of its leftist predecessor to include products made by the virtual slave laborers in Kaesong, North Korea in the deal: South Korea is pushing to include the Gaeseong industrial zone in North Korea in its free-trade deals with the U.S. and Europe, a step that would deepen cross- border ties after...
Categories NK Economics/Sunshine
January 11, 2012

North Korea’s Economy Contracts, Despite Chinese Sanctions-Busting

The Donga Ilbo publishes a very interesting study finding that North Korea’s economy has contracted recent years, mostly due to the loss of South Korean aid and the effect of sanctions: South Korean assistance to the North surged to raise the indicator to a high of 236.9 in 2007, a huge leap from the baseline score of 100 in 1995. The communist country`s trade volume also jumped 43.4 percent due to the expansion of trade with China. The North`s economy...
Categories NK Economics
July 19, 2011

Reunifying Korea, One Shot at at Time!

You may remember that several years ago, a liquor distributor in the United States tried to introduce North Korean soju into the U.S. market. That effort failed long before President Obama reimposed trade sanctions on North Korea, partially because of the importer’s legal troubles, but probably also because the stuff supposedly tasted awful. Apparently, North Korean consumers share that assessment, because the same brand of South Korean soju that once kept me fully occupied as a prosecutor and defense counsel...
Categories Famine & Food Aid/NK Economics/Subversion
May 20, 2011

Close Kaesong, Then Pass the FTA

I’m a fan of the Heritage Foundation’s Bruce Klingner, consider him a friend, and can’t remember the last time I disagreed with him about anything, but when he writes, using unusually strong language, that the U.S.-South Korea Free Trade Agreement won’t help North Korea, I continue to harbor doubts. First, North Korea has become adept at selling its products under false labels. Second, some South Koreans — including some who could end up governing South Korea after the 2013 elections...
Categories NK Economics/Sanctions/U.S. & Korea
February 8, 2011

South Korea should close Kaesong and encourage remittances.

The Chosun Ilbo reports that as the North Korean diaspora swells, those who have escaped are forming stronger financial links with their hungry families in the homeland. And this has some people concerned: North Korean defectors settled in South Korea are sending some US$10 million a year to their families back home, it was reported on Sunday. The amount is expected to grow as there are more than 20,000 North Korean defectors in the South and the number is increasing,...
Categories Famine & Food Aid/NK Economics/Refugees/Regime Change/Subversion
January 18, 2011

The Great Wall of Rason: Kim Jong Il’s Grand Sell-Out

Over the weekend, as I was poring over relatively recent new imagery on Google Earth, I spotted the chilling sight of a fence line — the kind of fence line that until now, I’ve only seen around North Korea’s political prison camps. This was a mystery to me, since I believed that I’d located and delineated the last of the large prison camps years ago. I followed the fence line, wondering what I’d found, until I’d traced it for the...
Categories China & Korea/NK Economics
December 20, 2010

It’s Still “Business as Usual” Until Kaesong Closes

Hmmm: The government on Monday banned citizens from going to the Gaeseong Industrial Complex in North Korea, site of an inter-Korean reconciliation project, as tension on the peninsula remains taut. The Ministry of Unification, citing “security concerns” for South Koreans working there, said it would monitor the situation and decide on a day-to-day basis whether to recommence travel to the complex or other parts of the North. “If the situation gets any worse, the ban could be extended,” an official...
Categories Appeasement/NK Economics
December 15, 2010

Kim Jong Il, Unplugged Again

First, I’ll just say that I have nothing to say about Eric Clapton that I didn’t say more than two years ago. We’ve already heard Eric Clapton unplugged. The economic unplugging of Kim Jong Il is a more consequential thing, one that I see as closely related to domestic discontent inside North Korea. My suspicion, though it is not yet supported by much direct evidence, is that these recent developments have reduced him to new lows of extortionate desperation. When...
Categories Defectors/NK Economics/Sanctions
October 15, 2010

Lack of Money Is the Root of All Evil

While most of the media are fixed on the movement of stage props on reviewing stands in Pyongyang, mine remains in North Korea’s outer provinces, markets, and ratlines across the Yalu. These, after all, are the things that will drive real change in North Korea. A new report from the Korea Times suggests that increasingly, money smuggling has become an engine of regeneration for North Korea’s free markets: It is common for North Korean defectors here to send money to...
Categories NK Economics/Refugees/Subversion
August 10, 2010

Kim Jong Il, Call Your Lawyer

I think it’s safe to say that North Korea is going through something of a legal rough patch. Boycotting talks has worked well for North Korea, but boycotting trials, not so much: A state-run North Korean bank has lost a lawsuit for not paying back a loan it borrowed from a Taiwanese bank nine years ago, the New York district court said Friday. The District Court of New York confirmed it ordered the Foreign Trade Bank of Korea to pay...
Categories NK Economics/U.S. Law
August 5, 2010

Plan B Watch: Einhorn Goes to Tokyo, Pressure Builds on China

The latest reports in the Korean press tell us that the President will soon sign an over-arching executive order that will subsume the authorities of Executive Order 13,382 (see sidebars), and will also allow the blocking of assets used for proliferation, drug trafficking, and currency counterfeiting: In a press briefing on Monday, Department spokesman Philip Crowley said, “We have no doubt that North Korea has engaged directly in counterfeit operations as a means of bringing currency into the country. This...
Categories Counterfeiting/Money Laundering/NK Crime/NK Economics/Proliferation/Sanctions
July 27, 2010

Lifting Trade Sanctions: A Bad Idea We’ve Already Tried

This seems rather badly timed, somehow. In Forbes, grad student Koen C. Munneke argues that “[i]nstead of following the previously ineffective path of applying pressure and saber-rattling, the international community should switch to ….” Let me guess: the previously ineffective path of trying to use investment to better the lives of ordinary North Koreans and broadening the minds of their overlords, in the hope that they might again promise to disarm? If only someone had thought of that before! It’s...
Categories NK Economics
July 9, 2010

Kaesong Updates

A bus accident, apparently caused in part by bad weather, has killed 10 North Korean workers and injured 40 others at the Kaesong Industrial Complex, which, by the way, subsidizes Kim Jong Il to the tune of $50 million per month. Give a thought to the poor families of the dead … and the wounded as well. I’m not sure how much of that substantial sum goes into providing suitable medical care for the North Korean people, but my best...
Categories Human Trafficking/NK Economics/North-South/Sunshine
July 1, 2010

What Sanctions Can, and Can’t Do

While President Obama expresses frustration at China’s refusal to support sanctions against North Korea for sinking the ROKS Cheonan, U.S. officials are also expressing their concerns that China will also undermine sanctions against Iran. For what it’s worth, I’m much less bullish about Iran sanctions than I am about sanctions against North Korea. The potential effect of sanctions is inversely proportional to a regime’s connections to the outside world and its possession of goods that have an export market. As...
Categories Iran/NK Economics/Sanctions
June 30, 2010

North Korea’s Money Men in China

It’s a few days old, but this Daily NK piece is a fascinating insight into how North Korea’s state trading companies put revenue in Kim Jong Il’s coffers, how they’re adapting to the politics of succession: Ri, who is in his mid-40s and living in Dalian, says he enjoys extravagance which he could never have imagined in North Korea. “The Cheonan incident and other issues are complicated,” he explains, “I now believe here (China) is my hometown and where I...
Categories China & Korea/Kim Jong Un/NK Economics
May 26, 2010

North Korea Saves Lee Myung Bak the Trouble of Closing Kaesong

[Update: So did they mean it or not? Damn Kim Jong Il never keeps a promise ….] President Lee can heave a mighty sigh of relief. Not only will the Kaesong Industrial Park be closed after all, but also, Chung Dong-Young, the Hankyoreh, and the usual suspects among Korea’s nationalist left can’t possibly criticize him for it without abandoning all pretense of logic. Oh, wait …. In any event, this is all proceeding very much like I’ve been predicting for...
Categories Appeasement/NK Economics
May 11, 2010

Kaesong Death Watch

Alternate title: Of fools and their money. North Korea has led a delegation of Chinese investors on a tour of the Kaesong Industrial Complex. Would the North Koreans really confiscate Kaesong as they did Kumgang and hand it over to the Chinese? I sure as hell wish they would. Nothing would please me more than such an ineradicable deterrent to foreign investment, such a thorough repudiation of the Sunshine Policy, and the closure of Kaesong’s money pipe to Pyongyang. Alas,...
Categories China & Korea/NK Economics
May 7, 2010

Lender Beware: North Korea’s Foreign Trade Bank Sued in U.S. Federal Court

The Korea Times reports that since its establishment in 1959, North Korea’s Foreign Trade Bank has been the regime’s “main foreign exchange bank,” with “branch offices in France, Australia, Kuwait, Hong Kong and Beijing.” The Times also informs us that the bank now finds itself the defendant in a multi-million dollar lawsuit in a U.S. federal district court: A state-run North Korean bank is facing trial in the United States for failing to pay a $5 million loan that it...
Categories NK Economics/U.S. Law