January 13, 2013: North Korea has apparently informed China that a third nuclear weapons test will occur before the end of the month. China has not been happy with the North Korean nuclear weapons program but has been unable to coerce its troublesome neighbor to stop. In response the North Koreans have tried to reassure their neighbor that the nukes pose no danger to China. Informing the Chinese ahead of time is seen as a courtesy and sign of respect. Western satellite photos show work going on at the North Korean nuclear test site. The last nuclear test was in 2009, and the first one was three years before that. Western intelligence believes that the North Korean nuclear weapon design is flawed, as the first test was only a fraction of what it should have been (less than a kiloton equivalent in high explosives) and is called in the trade a "fizzle." Thus North Korea needs more tests to perfect their bomb design and is still years away from a useful nuclear weapon, even though the second bomb appeared to be more effective. Thus a third test is considered overdue.

There’s a more significant explosion going on up north and it has nothing to do with loud noises and radioactivity. North Korean leader Kim Jong Un recently gave a speech that talked about making peace with South Korea and opening up the economy. In the last few months more North Korean officials have been in China looking into how China reformed its economy over the last three decades and more foreign economic experts have been flying into North Korea for discrete discussions with their North Korean counterparts. Something is up, but one of the few open indications is the recent move by North Korea propaganda officials to drop the use of terms (like “juche”) that emphasize self-reliance and opposition to foreign trade. For decades North Korea has preached a classic form of communism in which foreign trade was condemned as a capitalist vice. Most North Koreans have learned in the last decade that China and South Korea have become fabulously wealthy (by North Korean standards) via trading with foreigners, especially with high-tech exports. Now the North Korean government appears to be condoning that solution.

More astute North Koreans will have already figured out that any economic freedom will not mean any political reforms. North Korea is still a classic communist police state, one with a hereditary ruling class (based on who was a communist in the late 1940s) and some justifiable fears about the entrepreneurs who have gotten wealthy in the last decade as the government has legalized the growing black market. Those with economic power desire political power to defend their interests. That’s a threat to the current rulers of North Korea.

It’s not just political freedom that North Korea’s ruling class fears but public exposure of what they have and what they do to hang onto it. For example, Internet satellite photo services like Google Earth revealed the wealth of the North Korean rulers and the many prison camps holding any who would threaten that rule. In the nine years since Google Earth first appeared, many people and groups have gone over the satellite photos of North Korea and shared their finds with each other and the world. Thus we know of the palatial estates of the North Korean rulers and recreational facilities closed to all but the elite. There are also extensive and detailed photos of military sites, as well as the network of prison work camps holding at least one percent of the population. This is causing the North Korean rulers image problems at home and abroad.

Loosening up the economy is not likely to improve that image much. That’s because many of North Korea’s export to date have been illegal (weapons, drugs, counterfeit currency) and allowing for more legitimate enterprises will lead to more tainted exports. That means counterfeit goods. Some of this stuff is already being produced, no doubt because neighboring China has shipped some of its own counterfeits (usually of Western products, but South Korean and Japanese luxury items are also made) to North Korea.

While the North Korean leadership is now preaching more openness and economic progress it is also seeking to halt smuggling of people and data on the Chinese border. More special secret police units have been sent up there to root out corrupt border guards and more special electronic detection equipment (often Western models that had to be smuggled in) to find and arrest those using Chinese cell phones on the border (where you can often get a signal from Chinese cell phone towers). This time of year there are always more troops assigned to rivers that form much of the Chinese border. These rivers freeze over by January and make it easier for people to escape (or “defect”, as the North Koreans describe it).

The latest Kim Jong Il rumors to reach China and South Korea indicate that the late dictator of North Korea died in 2011, when he got extremely angry (and had a stroke) on being told that a major hydroelectric power project at Heechon was facing major delays because the dam had serious flaws and was leaking. This construction failure was not exceptional. Such failures, in the form of half-built or poorly built structures in the capital and elsewhere, are there for all to see. Many more are hidden from sight in remote areas. Meanwhile, Heechon is still causing heartache. Last year, at the ceremony celebrating the “completion” of the hydroelectric power plant there were some unfortunate events. The new generating equipment was not working because some key components had not yet arrived and, worst of all, there was not enough water behind the dam to turn the generators anyway. This plant was supposed to produce 300,000 KW, mainly for the capital (where embarrassing electricity shortages are increasingly frequent). These failures are widely known but not mentioned in the government controlled media.

North Koreans are losing faith in their own government, economy, and currency. This can be seen in what currency is used in legal and black markets. In the capital about half the transactions are carried out using U.S. currency with a quarter using Chinese and the rest North Korean. The cost of U.S. dollars in North Korean won continues to increase, and now it’s over 9,000 won per dollar. Two years ago it was less than 1,500 won to the dollar. A year ago the government outlawed the use of foreign currency at markets but this is widely ignored and police are bribed to keep it that way.

January 2, 2013: Two North Korean border guards on the Chinese frontier were arrested and accused of killing two Chinese men who were standing on the Chinese side of the border when attacked. The two Chinese had made a deal with the two border guards to buy a kidnapped North Korean woman for use in a Chinese brothel. The two border guards could not carry out the kidnapping, so they went and killed the two Chinese and took the money they were supposed to receive for the woman.

January 1, 2013: North Korean leader Kim Jong Un gave an unprecedented televised New Year’s speech in which he called for higher living standards and more money for the military (the troops are going hungry and using increasingly ancient and inoperable weapons).

December 31, 2012: In the north special 24 hour guards were ordered for all statues of Kim Jong Il and founder Kim Il Sung as well as other “historical sites” that might be defaced with graffiti by unhappy North Koreans. Local pro-government groups supplied volunteers for this cold and often lonely duty.

December 29, 2012: After cancelling an order four years ago, South Korea has come back and once again ordered four American RQ-4B (Block 30) Global Hawk UAVs. These will be equipped with EISS (Enhanced Integrated Sensor Suite) and electronics package that combines day/night cameras and synthetic aperture radar (which can provide photo like images in all weather). With support, training, and spares, this will cost about $1.2 billion. The new RQ-4s will arrive in three years and provide much better photo and electronic reconnaissance of North Korea.