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North Korea: Witness to Transformation

Slave to the blog: The Chinese are coming!

by | September 21st, 2012 | 06:15 am
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As regular readers will know, we track the goings on at Mt. Kumgang and Rason fairly closely.  Yonhap is reporting Chinese military involvement in both projects. According to unnamed sources, “Paekho Trading Corporation, the key trading unit of the military, is believed to be the de facto operator” of the Kumgang resort, although two agencies — the National Economic Cooperation Federation and the Asia-Pacific Peace Committee — are officially in charge. According to Yonhap, “the source also said Paekho Trading Corporation is the same entity the North said was involved in the building of the Rason International Commerce and Trade Center in the northeastern city. North Korea’s state media said last month the construction project was “jointly funded by the Rason Paekho Trading Corporation and a real estate development company in Qin Huangdao, China.” The source has claimed that the trading company is affiliated with the general political bureau of North Korean People’s Army.”

Speaking of Rason, Radio Free Asia is claiming that North Korea will relocate its wartime command headquarters to Rason City in Hamgyeong Province from Mount Baekdu in Ryanggang Province.  The former is less prone to volcanic eruptions than the latter, though with the newly refurbished road and rail links, may be more accessible to foreign troops. How do you say “Paul Revere” in Korean?

Parenthetically, Yonhap also reports that the Ministry of Unification is considering buying out Hyundai Asan and its subcontractors, effectively nationalizing the Mt. Kumgang project. We’ll have another post on socializing risk next week.

The Chinese are not just in Mt. Kumgang and Rason.  Lying between these two on the east coast is the industrial city of Chongjin. Multiple sources are reporting that North Korea has entered into a joint venture with a Chinese firm, the Yanbian Haihua Group, to manage and utilize two wharves at the port of Chongjin for the next 30 years, which are capable of processing 7 million tons of cargo a year. The company is reportedly planning to start its first shipment through the port before the end of this year. This follows on earlier agreements to allow foreign operators access to piers in the smaller Rason port. The deal is not particularly large.  According to the Chinese newspaper that broke the story, the Chinese firm invested some $ 12 million in the deal, representing over 60 percent of the total capital.

The Chinese are coming but the South Koreans may be hitching a ride. POSCO and Hyundai are building a logistics center at the Chinese border city of Hunchun connected by a newly created paved road to Rason.

Finally, a couple non-China items (yes, there are some).

Ahn Cheol-soo has declared that he will run for the South Korean presidency.  Here is a rundown off his views on North Korea.

We have also been following the scandal regarding WIPO shipments of computer equipment to North Korea and Iran. We have regarded the contretemps as overblown but the story just keeps rolling along. Reuters reports that a UN investigation into the episode found the agency innocent of wrongdoing but guilty of political stupidity: “We simply cannot fathom how WIPO could have convinced itself that most Member States would support the delivery of equipment to countries whose behavior was so egregious it forced the international community to impose embargoes, and where the deliveries, if initiated by the recipient countries, would violate a Member State’s national laws,” Reuters quoted the report as stating. “The DPRK and Iran could not have legally purchased most, if not all, of the U.S.-origin equipment … due to restrictions imposed under U.S. national law,” said the report commissioned by WIPO, the U.N.’s richest body, and signed by Swedish police official Stig Edqvist and U.S. attorney John Barker. According to Reuters, the report recommended that WIPO consider complying with the national laws of member states even if it is not legally obliged to do so and take steps to increase transparency. WIPO says it is mulling over the report’s recommendations. No word from Rep. Ros-Lehtinen yet.