Where is Ri Chol going?

Choson Ilbo has just reported that Ri Chol has left his post as head of the Joint Venture and Investment Committee (JVIC).

As we argued last fall, the name of the game for Pyongyang’s elites is securing trade and investment deals. Two main investment organs exist, the JVIC and the Daepung Investment Group.  We have in the past heard rumors of other similar international investment organizations being under consideration, also. From these overarching groups, down to smaller State Owned Enterprises, there is considerable competition to show that one’s organization can deliver.

Ri Chol was a close ally of Kim Jong Il’s and the organization he came to be associated with, JVIC, rose to prominence after he helped put together the Orascom deal and was given stewardship. He was even with Kim on his last official visit, to a joint venture supermarket in Pyongyang.

He also spent most of the 1980’s and 1990’s in Switzerland in various diplomatic capacities, not the least of which was acting as a minder to Kim Jong Il’s children as they studied at private school.

What might his departure portend?

A few possibilities come to mind.

-  Has the JVIC fallen out of favor with the new leadership? If this is the case, Ri might be tasked with building a new organization, perhaps with a similar focus. It would seem redundant to add another, rather than reform this one, but redundancy is hardly unheard of in planned economies.

-  Has Ri himself fallen out of favor? Is he being put out to pasture? Again, it is impossible to know, but it seems that such a long term friend of the Kims, who has a personal relationship with Kim Jong Un from his school days would be a key ally at this time, especially since his deals are driving economic growth in North Korea. (Though who knows? Perhaps Kim the Younger has never liked him.)

-  If not an issue with Ri personally, the move could be a part of a factional reshuffling. Bartering and dealmaking for control of the commanding heights of the economy is no doubt underway as the new government consolidates its power. It might have been deemed necessary to grant control of the JVIC to another group of Pyongyang movers and shakers - of which Ri Chol is not a part.

-  Also very possible is that the very top leadership is planning to give Ri some new responsibility elsewhere. JVIC may have been judged to be running smoothly enough that Ri's skills would be more effectively used another important organization.

This of course is highly speculative. All we really know is that Ri Chol, with a track record of securing investment, has left the JVIC. Whatever the case may be, he is worth watching in the coming months, as Pyongyang is compelled to keep investments from China and elsewhere coming.

You can read a longer bio on NK Leadership Watch.

North Korea Fashion Watch Part 2: North South Korea 80s Fashion Face-Off

When we last visited Pyongyang, we were given a catalog belonging to North Korea's Daesong Group that contained fashion photos from the 80s and 90s. We have decided to share more of those photos here as part of a New Year gift to readers. We welcome viewers to see more photos at our Facebook page and while you are at it, feel free to subscribe to our Twitter feeds. For our previous post on North Korean fashion catalogs, please see here. Also, we seek to raise funds to expand our economic policy workshops in North Korea this year. Please consider supporting our cause. We accept donations via Paypal and credit card. For larger sums, please contact us at CETeam@chosonexchange.org. We have invited Tad Farrell from NK News, a news aggregation site focusing on North Korea, to share his views on a 80s/90s North-South friendly fashion face-off. All views are those of the author and do not represent Choson Exchange’s institutional position on fashion in Korea, especially since we know nothing about this field.

Guest Piece by Tad Farrell with edits by Geoffrey See

Fashion in North Korea is an interesting topic, with large variations in style dependent on age, geography, and income. Today, younger North Koreans can buy cheap and fashionable clothing imported from China that often mimics the styles of South Korea. Older people might not have clothes that are as colorful, but can be spotted wearing brands such as Paul Smith or Burberry in the wealthier districts of Pyongyang. These pictures remind us that North Korean fashion in the 80s/90s lagged international trends.

It is not clear if the fashions included in this brochure were designed for the internal North Korean market. And with language in English throughout, it seems more likely that the brochure was designed for the export market. Nevertheless, many of these fashions could have been found in North Korea at the time (although probably only among the wealthier segments of Pyongyang), so it is interesting to contrast them with South Korean clothes of the same period.

Despite still being under a dictatorship and with strict rules on dressing in the 1980s, Seoul fashion was significantly more Westernized than that of the North during this period. For affluent young South Korans of the time, pop music hairstyles, shoulder pads, bright colors, polka dots and stripes, high rise jeans, etc were all commonplace. Young women were starting to also focus on ‘westernizing’ their looks as far as possible through eye makeup, short-skirts, and tight-fitting tops. South Korean singer (Kim Wan Sun) helped cement Western trends at the time and was known to her contemporaries as “Korean Madonna” (see picture. In contrast, these brochure pictures show how different the styles of the privileged classes of North Korea were at the time from international fashion.

If we assume the catalogue to have been designed for the export market, it is hard to say what the appeal for North Korean clothes in English speaking countries may have been like in the 1980s. Nevertheless, during the 1980s there may well have been some demand for North Korean clothing exports from the communist bloc, and internally, from the wealthier segments of North Korean society. But this doesn't help explain this fashion houses decision to publish an English language brochure. Perhaps, it was just an ill-informed attempt at accessing a new market without really understanding the potential customers there.

Editor's Note: Talking about Korean Madonna, I recall a conversation in Pyongyang in 2010. A North Korean lady was telling me how much she likes Madonna (the Western one). Without any prompting from me, she suddenly became very flustered and kept repeating “I only like her [Madonna’s] music, I don’t know what kind of person she is.”

See more photos at our Facebook page

---------------------------------------------- 우리의 임무

우리는 제정을 포함한 사업, 경제 그리고 법률 지식을 공유하기 위해 고품질의 혁신적인 프로그램을 이용한다. 이 프로그램은 북한/북조선의 젊은 사람들뿐만 아니라 각 기관들과 협력하여 북조선/북한의 장기적인 경제 발전을 지원한다.

우리의 역사

북조선/북한 엘리트 대학의 학생들은 비즈니스와 경제학을 그들 국가의 삶의 질을 향상시킬 열쇠로 보고 있다. 하지만 고품질의 교육을 접할 기회는 제한되어 있으며 이러한 분야에서 실제 경험을 할 수 있는 기회도 제한되어 있다. Wharton 스쿨의 학생으로서 Geoffrey는 북한/북조선을 방문했고 여자들도 좋은 비즈니스 리더가 될 수 있다는 것을 증명하기 위해 여성사업가가 되기를 원하는 김일성 대학은 한 학생을 만났다. 다른 북한과 관련된 경험들과 함께 이 일은 Geoffrey가 2007년에 조선 익스체인지를 만들게 된 계기가 되었다.

조선 익스체인지는 싱가포르에 등록되어 싱가포르, 대중화권, 대한민국, 유럽 그리고 미국에 소재한 단체와 함께 사회적기업으로써 운영되고 있다. 조선익스체인지의 조직은 여러 가지 방법으로 북한 사람들과 교류하여 왔고, 북한/북조선의 사회 이슈들, 국민들 그리고 국제사회에서 북조선/북한을 평화적으로 통합하려는 것에 흥미를 가진 북한 사람들을 보았다.

DPRK's 2012 Joint Editorial - More Songun or Less?

KCNA New Year

North Korea’s top three newspapers - Rodong Shinmun (Worker’s Newspaper), Joson Inmingun (Korean People’s Army) and Chongnyon Jonwi (Youth Vanguard), published this year’s Joint New Year Editorial on, well, New Year’s Day. Equally unsurprising was the dominant theme of the editorial, which was titled: "Glorify This Year 2012 as a Year of Proud Victory, a Year When an Era of Prosperity is Unfolding, True to the Instructions of the Great General Kim Jong Il."

Catchy titles aside, linking the government’s policies and campaigns for 2012 to the plans laid out by Kim Jong Il is kind of a no-brainer. It emphasizes that the ideas of Kim Jong Il are the inheritance of the new government. With less than a fortnight between the announcement of Kim’s death and the New Year, the editorial was understandably less specific than many in previous years, in terms of setting out goals and strategies. No doubt, the editorial that had been carefully prepared weeks in advance was scrapped and a new one hurriedly crafted after Kim’s passing.

It’s main role then, was to emphasize the statements made and signals sent since the 19th of December - that things would not be changing, that everyone agrees on the successor, that it is business as usual in North Korea.

The first quarter of the article serves entirely to laud Kim Jong Il’s achievements, before it swiftly transitions to the issue of succession and Kim Jong Un’s leadership. “The dear respected Kim Jong Un,” it states, “is precisely the great Kim Jong Il.”

The immediate need for those in change of managing the succession is for the DPRK’s citizens and for international actors to perceive ideological and administrative congruence with what has come before.

As such, the editorial references light industry and quality of life far less than last year. (a good summary is here)

Those themes had begun in earnest two years ago and can be see as part of the initial attempts to wean the DPRK off Songun (military-first) and onto a program more focused on economic progress. This year, such statements are still present:

“The flames of Hamnam for great innovation should flare up more fiercely in the sectors of light industry and agriculture, the leading sectors for the building of a thriving country.”

However, for the sake of continuity, the greater emphasis was on phrases like: “the Korean People’s Army is the pillar and main force of the Songun revolution and the vanguard in the building of a thriving nation.”

At the same time, there remain hints that Songun is not going to be the long term focus of the new government and that the ‘weaning off’ is going to continue in the near future. The terms “Juche” and “Songun” were used in equal measure (though to be fair, one of the “Juches” was in the date). We will probably hear more and more about Juche and slightly less about Songun in the coming year.

Another hint of the balance between the military and Party lies in this statement:

“True to the intention of our Party, which set this year for the KPA as a year for the people, it should make devoted efforts to bring their happiness into full bloom, thus implementing with credit Kim Jong Il's idea of army-people unity.”

So the military’s legitimacy is exogenous: it comes, ultimately, from the party.

A quick caveat – this isn’t by any means attempting to claim that militarism in North Korea is going to be abandoned. It is and will remain one of the most militarized societies in history. Even in the North Korean context, however, the balance between the military and other influential organizations is important. As much as maintaining continuity with the balance Kim Jong Il struck –military first - is important for the new leadership, there are many who want to nudge the balance back towards what it was under Kim Il Sung. We shall have to wait and see the degree to which this takes place in the next year or two.

On another note, the exhortation that “sports should be encouraged further by enhancing social interest in physical culture and sports and making them part of people's every day life and habit” is good news for those of us who would like to see ultimate frisbee develop in the DPRK.

Choson Exchange 2011 Annual Report

On behalf of the Choson Exchange team, I would like to present our 2011 Annual Report. Our report covers the following areas: Plans for 2012, Activities & Feedback, Research, Communicating Our Work, Management, Financial Situation and a List of Media Coverage for 2011. Read our 2011 Annual Report here. -----------------------------------------------------------

Just 5 days before Kim Jong Il passed away, we had finalized our programs for 2012 with our North Korean partners. A few days after Kim Jong Il’s passing, we got in touch with our North Korean partners and they still expect us to proceed with programs for 2012. We see in this transition period an important opportunity to broaden the impact of our work through dialogue with an emerging generation of leaders. Our core mission remains the same, although we will need to expand fundraising as we ramp up our efforts for this critical period.

After reviewing previous and current programs, we decided that we will continue to focus on a rigorous selection process to pick exceptional young North Koreans for exceptional learning opportunities.

In addition, we intend to identify areas of potential policy changes in partnership with North Koreans and focus on training in those areas. This will allow us to bring training closer to actual implementation of knowledge. We also decided that a major long-term emphasis should be to build cross-institutional linkages and in developing institutions that can facilitate these linkages. This follows feedback from North Koreans who observed that economic-policies in North Korea can benefit greatly from greater communication and coordination among economic agencies.

Yours sincerely, Geoffrey See Managing Director at Choson Exchange

The Key Question

Andray points out that calls of instability in North Korea following Kim Jong Il's passing were overblown in 38North, a publication of John Hopkins SAIS. Stability is the word on everyone’s lips, from diplomats, to cable news pundits, to the man on the street. But when headlines shout, “Concerns over stability on Korean peninsula,” what do they mean?

Stability in North Korean society is almost a given, at this point. Transfixed as we are by the cultishness of Kim Jong Il’s North Korea, we often miss the fact that the Kims are just one node in a broad social and political structure. “Just” might be understating it: Kim Jong Il was the most important component of that structure and his son, Kim Jong Un, appears set to now occupy a similar, if necessarily diminished, echo of that role.

While it remains to be seen how far that transfer of legitimacy and practical control can be taken, what is clear now is that the rest of the system developed under Kim Jong Il remains entirely intact...

Read more at 38North.

Why World Should Watch Rason

An op-ed by Andray Abrahamian, Executive Director at Choson Exchange and John Kim, a former commodities trader at Goldman Sachs. Read more at the Diplomat.

The alignment of simultaneous commitment from North Korea, China, and Russia sets the scene for a North Korean special economic zone with higher chances of success than perhaps ever before. However, interest and desire may not necessarily translate into results without knowledge of markets and how to create a stable investment environment. After a recent tour of his 200MW fuel oil powered generation facility, the President of Songbong Power, Rhee Kang Chul, expressed that the reason for his plant's inactivity and the subsequent blackouts in the region was the rise in feedstock costs. When asked about mechanisms for electricity pricing, Rhee responded that the government had set power prices at 6.5 euro cents/kwh, but he couldn’t provide further details on how the number was arrived at and when it might change again. Though Rhee was clearly an expert on the technical aspects of power generation, he hadn’t had the chance to consider that potential investors, after getting comfortable with country risk, would have little clarity on the revenue side of their equation. When this was expressed to the Vice Mayor of Rason, he replied, “We can change the price of electricity here. Rason is not under the same restrictions as the rest of the country.”

North Korean Partners are Online and In Touch

We would like to share the good news with all of our partners. We have been in touch some of our North Korean partners. Despite this period of mourning, they are expecting Choson Exchange to continue deepening the impact of our work in North Korea, and have requested that we update them on our plans for 2012. As I have argued at the East Asia Forum, I believe we should all see in the dramatic changes taking place in North Korea an opportunity to expand our impact and program depth, especially in ongoing program areas of economic strategy, financial sector and fiscal restructuring. Our team will be reviewing how we should reposition ourselves to capture opportunities on Dec 24, 2011.

Reform and stability in North Korea

An Op-Ed in the Korea Times on the factors driving stability in North Korea

On the day following the announcement of Kim Jong-il’s death the KOSPI dropped 3.6 percent and news outlets around the world sternly talked of instability and uncertainty on the Korean Peninsula.

The major worry is that political infighting behind the scenes will become uncontainable, degrading the government’s ability to maintain its control over society. This could then lead to some sort of military conflict. There are several reasons why this is unlikely in the near to medium term.

Kim’s death is of great importance, but we tend to become overly transfixed by the personality-cult aspect of North Korea’s system. This is hardly unsurprising, for two reasons. First, it is as pervasive as it is iconic.

As Westerners, it takes us back to the bygone era of the Cold War, occupying an emotional space that other contemporary dictatorships do not. Its images dominate North Korean public spaces, media, pop-culture and education to a degree that is unmatched.

Second, it is an image that they want us to see. When Western media or tourists go to Pyongyang, they see little other than the “single-hearted unity” that supposedly drives North Korean society.

Kim was the most important part of North Korea’s ruling system, but at the end of the day he was just one component of it. More important than the son he has left behind is the ruling structure that continues. This is one that includes competing factions of elites in various organizations, crossing boundaries of state, party and military institutions...

Read more at the Korea Times

North Korea: new opportunities in a post-Kim Jong-il landscape

The following is an op-ed in the East Asia Forum on the opportunities and openings we should try to create in the post-KJI political landscape.

My team was finalising our 2012 program plans for North Korea exchanges — preparing to implement workshops on fiscal strategy and financial sector development, as well as discussing the potential of an economic think tank comprised of policy makers — and in close contact with our local partners shortly before Kim Jong-il’s passing. These were all very interesting ideas because our North Korean partners were driving them, rather than us. Now, programs will be delayed and disrupted.

More broadly, we expect an immediate and short-term lockdown in North Korea with restrictions on travel and communications as authorities move to stabilise the situation in preparation for mourning. While some pundits rushed to proclaim the likelihood of instability and provocations, it is more likely that North Korean elites will try to present images of a united front in the short-term despite any backroom manoeuvrings.

We should also watch to see whether Kim Jong-un undertakes a trip to China at some point after the mourning period. Given that China is North Korea’s most important partner, who leads and who goes on this trip will say a lot about North Korea’s political order. A trip by North Korea’s next leader will also indicate that the internal situation has stabilised, and that the leader is confident a coup will not take place in his absence.

The changing political landscape will provide new opportunities to explore innovative policy options. The hope is that policy makers will also react to this situation not just defensively, but proactively, identifying opportunities in the medium term to encourage sensible and outward-looking economic policies in North Korea. In the longer run, this will support the livelihoods and aspirations of the 30 million North Koreans who want better living standards and greater interaction with the outside world...

Read more at the East Asia Forum.

KCNA Cites Party Organs before National Defense Commission

In KCNA’s piece on Kim Jong Il’s passing, we note that in both the Korean and English versions, the order in which institutions are cited are as follows:

“The WPK Central Committee and Central Military Commission, DPRK National Defence Commission, Presidium of the Supreme People's Assembly and Cabinet released a notice on Saturday informing the WPK members, servicepersons and all other people of his passing away.” (KCNA December 19, 2011)

We wonder if this is something interesting indicating the role the NDC might play in this new political landscape. The National Defense Commission was Kim Jong Il’s institution of choice for managing the country. As most institutions did not communicate much with each other (stove-piping of bureaucracies), the NDC was central to decision-making. The NDC was never fully formalized and even until our last few trips to North Korea, it still seemed to lack a large bureaucracy supporting it. It is also often misunderstood as a military body, even though its membership is comprised of party and military elements.Kim Jong Eun is not on the NDC, while many of North Korea’s big names are (e.g. Jang Sung Taek). It will be interesting to see what happens to the NDC over time.