Korea: An Offer You Cannot Refuse


November 5, 2013: More signs of desperation (or economic reality) up north. Party officials have been sent around to visit known entrepreneurs (visibly rich people who do not work for the government) and asking them to donate rice to the government. Now you would think the North Korean government would just send troops around to seize private rice stocks. But the northern leadership has come to realize that the new entrepreneur class are not seeking to overthrow the government and are willing to support the current rulers. So the entrepreneurs are being offered “letters of appreciation” for rice donations. These letters can later be used as “get out of jail” cards if the entrepreneur gets into trouble with one government official or another. This is a fact of life and cost of doing business for the entrepreneurs and they can understand the deal they are being offered. But the fact that the government is coming to them for basic items like rice indicates that the food situation must be even worse than most people think. The reason so many entrepreneurs have their own stockpiles of rice is because the price of rice keeps going up on the free markets and “investing” in rice is a good way to make idle cash productive. Rice would also be a useful “currency” if there were ever a major political crises.

The northern government is also exporting more skilled personnel in order to obtain more foreign currency. Recently it’s been harder to find doctors in North Korea and it soon became evident that many doctors were now working in Chinese hospitals and clinics.

Another new revenue generating scheme was the recent doubling of the dues for members of the ruling Worker’s Party. About a quarter of the adult population are party members. The top 10 percent of party members do very well economically and all party members get priority over non-members when it comes to distribution of food or favors. But during the late 1990s, after the Great Famine and initial collapse of Cold War economy (that had been propped up by Russian subsidies that disappeared after 1991), many party members got into the habit of not paying their dues (about 2 percent of their income) and getting away with it. Now everyone has been ordered to pay and do so on time and at higher rates.

The North Korean government has increased efforts to find and punish people using foreign videos (especially porn) and consumer goods from South Korea. This is seen largely as an excuse for officials to obtain more bribes. The corruption up north continues to spread and get worse. For example, while the northern government still preaches “uniting Korea by force” to its military commanders, this goal seems even more unrealistic as recent northern refugees in South Korea talk of widespread corruption in the North Korean military. Many officers are more interested in stealing than in preparing to attack the south. There are few new weapons, little fuel for training, and more time spent on non-military activities (like growing food and troops being rented out as workers for civilian firms). Officers are even stealing food and building materials meant for maintaining barracks. So while the north may still officially believe in conquering the south, the northern armed forces continue to suffer sinking morale and declining readiness for combat.

Despite all the ills of the north, the population is still largely under control and that has allowed the government to control the food shortages, so that while a lot of people are hungry, there is little in the way of starvation deaths. Public health measures keep disease under control and prevent the outbreak of illnesses common to malnourished populations. The northern government has also been quite pragmatic about the growing number of entrepreneurs. The government tolerates these self-made businessmen (actually, most of them are women) as long as they remain politically loyal. So far the new wealthy have been loyal and most have concentrated on achieving more economic security and a better standard-of-living. Historically, however, as a tyranny finds itself with more of these entrepreneurs it eventually has to deal with demands for a share of decision making power.

Although the Kaesong Industrial Complex (financed and run by 123 South Korean firms employing 53,000 North Koreans) was reopened on September 16th, it is running at only half its pre-closure (in April) rate. Three of the firms there have shut down completely and more are expected to do so. North Korea is demanding more money from the South Korean firms at Kaesong and that is causing more companies to consider leaving. North Korea closed the facility in April to punish South Korea for trying to get the North Koreans to halt their nuclear weapons program. The northern leaders soon discovered that the foreign currency generated by Kaesong was sorely missed. Few of the senior people in North Korea know much about accounting or how the world economy works, but the cash shortage created by the Kaesong shutdown got their attention. This was seen as an opportunity by China who soon convinced the northern leadership to make up with South Korea and get Kaesong operating again. China also pointed out that Chinese firms in North Korea (especially mining operations) are major suppliers of foreign currency and that China could shut these down if North Korea does not become more cooperative.

North Korean efforts to curb illegal migration to South Korea have succeeded. The number of North Koreans getting to South Korea are down a third so far this year compared to last year. But that still means over a thousand North Koreans a year are making it, and this is a continuing embarrassment for the northern rulers, as the migrants are quite open about how horrid (even by North Korean standards) living conditions are in the north. This crackdown reverses a growing effort by northerners to get to South Korea. Two years ago the number of North Koreans making it to South Korea had increased 19 percent over 2010. Over 2,500 a year were making it south and there were 23,000 of these refugees down there. Such migration only went into high gear after 2000. Wealthy North Koreans (either corrupt officials or market entrepreneurs) were also getting out, and organizations able to move the refugees through China to Thailand (the most common way station to South Korea) were larger and more efficient. South Korea asked China to relent and allow North Korean refugees to go directly from China to South Korea. But China continued to honor North Korean demands that illegal migrants be arrested and returned (to labor camps or immediate execution). North Korean migrants in the south admit that everyone in the north knows about the harsh prison camps up there, even though North Korean media ignores the existence of these hellish institutions and the government officially denies that they exist. North Korean police and government officials, however, regularly mention the camps to northerners and how quickly people can be sent to one if they get out of line.

November 4, 2013: North Korean media revealed that two of its warships (a 400 ton anti-submarine ship and a 150 ton patrol boat) collided and sank on October 13th, killing at least 20 sailors. The larger ship was a Chinese built Hainan (Type 037) class vessel. This is a 400 ton ship with a crew of 70 and equipped with antiquated (1950s era tech) sonar and anti-submarine weapons. Despite this, these ships can still effectively hunt coastal submarines. The smaller patrol boat was one of several hundred the North Koreans have and is armed with some autocannon (25-37mm) and a crew of less than twenty. The two ships collided off the east coast port of Wonsan during military exercises. The North Korean government was unable to suppress news of the incident and responded by making it into a media event with video of Kim Jong Un at an elaborate memorial for the lost sailors. Normally (before cell phones “infected” North Korea) news like this would be suppressed.

November 2, 2013: Russian and Japanese officials met in Japan and agreed to build military ties between the two countries. This is in spite of an ongoing dispute over some islands between the two nations and Russia’s official alliances with China. Both Russia and Japan realize that North Korea and China are a threat to both of them and Russia is risking annoying China by seeking regional allies.

November 1, 2013: China and South Korea have agreed to work with North Korea to revive northern forests. Especially since the 1990s illegal tree cutting has become increasingly common in the north as people seek fuel with which to survive the cold weather. Satellite photos show the sharp difference between forestation in the north and south. South Korea is the only nation on the planet to have succeeded at artificial reforestation since World War II. Other nations (mainly in the West) have regrown depleted forests but usually as a result of rural populations moving to urban areas and allowing forests to regrow. But in areas where huge areas have been stripped of trees, that solution can take centuries, not decades, to work. Both Koreas were heavily deforested in the last two centuries, but South Korea fixed the problem while in North Korea it got worse. Even North Korea recognizes this and is willing to adopt the techniques South Korea has used to try and replace its depleted forests.

October 29, 2013: Recent satellite photos of North Korea show continued construction activity at nuclear and long-range ballistic missile facilities.

October 28, 2013: In the north the government has ordered the entire population (including the military) to spend three days (October 29-31) of special training for wartime situations. The military will practice their defensive moves to minimize damage from enemy air attacks while civilians would do similar exercises (mass evacuations and such). The “training” consists of 12 hours a day (or more) of lectures and more physical maneuvers. This sort of thing is very unpopular up north but the government does it to remind everyone who is in charge and to keep people busy.

October 23, 2013: South Korea has come up with a number (over $800 million) for the cost of dealing with North Korean cyber attacks over the past four years. The list the government complied is quite detailed. The latest attacks (in March and June) accounted for 93 percent of the cost. South Korea has been subjected to a growing number of Cyber War attacks since 2009, and the high cost of the latest ones shows that the North Koreans are getting better and that South Korea is not keeping up. South Korean intelligence also warns that North Korea is using Russian technology to develop EMP (Electromagnetic Pulse) weapons. EMP was first noted as something created by nuclear weapons and that the pulse damaged or destroyed microelectronics. There are several ways to artificially create an EMP. One being developed in the West uses high-powered microwave (HPM) devices. Russia has developed some methods as well. In the last decade British military researchers have duplicated long rumored Russian devices (from the 1980s and 90s) that allowed a short-range EMP device small enough to fit in a 155mm artillery shell, small rockets, or bombs. Such a device is supposed to be inexpensive and could be used to destroy civilian and some military electronics. This is apparently the tech North Korea has gotten hold of. North Korea is seeking to create the capability to quickly cripple the high-tech edge South Korea has in any future war.

October 22, 2013: For over a decade now the United States has been trying to halt the blatant North Korean counterfeiting of American currency. Unfortunately North Korea long ago figured out that counterfeiting U.S. hundred dollar bills is a viable way to get lots of cash. Not an unlimited amount, because of problems getting the bills into circulation. Now there is a new complication. The U.S. recently changed the design of the hundred dollar bills again to make it more difficult to counterfeit. The last few revisions of U.S. currency made it much harder for counterfeiters and now there are fewer players capable of rolling their own hundreds. The latest version of the hundred dollar bill is the most high-tech and difficult to counterfeit ever. The new bill is not impossible to counterfeit, just a lot more expensive. Even a government counterfeiting effort, as is the case in North Korea, incurs high costs to figure out how to duplicate the new anti-counterfeiting features. Even if those obstacles are overcome, if the production cost becomes too expensive the counterfeits are not worth producing. Depending on how convincing the fakes are, you can sell each of these bills for ten to fifty dollars each. So there is not an unlimited budget available to figure out how to do it and then go into production.

October 21, 2013: China suggested that South Korea not sell its new T-50 armed jet trainers to the Philippines. This suggestion was ignored and angered many South Koreans.

October 20, 2013: North Korea has been spotted (from space) building missile silos next to a dormant volcano (Mount Paektu) on the Chinese border. In fact, half the volcano is in China, where it is a popular tourist destination for South Koreans. That’s because Koreans and Manchus (as in Manchuria, the native people of northeast China) both consider Mt Paektu as a sacred place where their tribes originated thousands of years ago. North Korea has put the silos for their long range (2,000-3,000 kilometers) ballistic missiles up there because that part of North Korea is a triangle, surrounded on two sides by China. This makes it difficult for the Americans to launch air attacks without entering Chinese territory and makes it easier for North Korean anti-aircraft forces to defend against cruise missile. On the down side, Paektu is a dormant volcano that is active (lava flows and the like) about once a century. The last time it erupted (throwing large quantities of rocks and dust into the atmosphere) was in 1703 and an eruption in the late 10th century blew the top off the mountain and created the current 4.5 kilometers wide crater lake. Volcanologists consider Paektu capable of another major eruption, but North Korea considers that less likely than an American air attack. So the silos stay, despite the risk of destruction by lava flows and earthquakes. Before all these silos were built, North Korea planned to keep its long range ballistic missiles mobile and launch them from any number of launch sites (a flat field where the missile could be fueled and the guidance system programmed before launch). Bad weather could complicate the use of mobile launchers (washing out bridges or blocking roads with snow). The quality of North Korean roads has also declined sharply (from lack of maintenance) in the last decade. Then there is the increased American surveillance (from satellites, U-2s, and high-altitude UAVs) that makes mobile missiles more vulnerable to air or missile attack. Silos can also be attacked from the air, but in a war the more numerous and shorter range ballistic missiles to the south would also be subject to air attack, as these missiles would be aimed at the South Korean capital. North Korea apparently believes that silos protected by a sacred volcano are a worthwhile investment to ensure that some of long-range missiles will get launched during a crises.




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