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NORTH KOREA NEWSLETTER NO. 219 (July 19, 2012)

N. Korean Leader's Brother Advised Not to Criticize Power Succession

TOKYO (Yonhap) -- The powerful uncle of North Korea's new leader Kim Jong-un has advised Kim's half-brother Kim Jong-nam not to criticize the country, a news report said on July 14.

   Jang Song-thaek told Kim Jong-nam to refrain from making comments critical of the power succession to foreign media, Japan's Yomiuri newspaper reported from the southern Chinese city of Guangzhou, citing an unidentified source on North Korean affairs in Macao.

   Kim Jong-un took over the socialist country following the December death of his father, longtime leader Kim Jong-il, marking the second hereditary power transfer in the North. The late Kim also inherited power upon the 1994 death of his father, the country's founder Kim Il-sung.

   Jang, who has long been considered a key official in helping the new leader consolidate power, gave the recommendation to Kim Jong-nam during Kim's trip to Pyongyang in May, the Yomiuri newspaper said.

   Still, Jang is believed to be on good terms with Kim Jong-nam, who has expressed doubts about his younger brother's grip on power.

   Repeated calls to South Korea's National Intelligence Service seeking comment went unanswered on Saturday.

   Jang, who is married to the late leader Kim Jong-il's younger sister, Kim Kyong-hui, is believed to be wielding a strong influence in state affairs as he serves as vice chairman of the powerful National Defense Commission, once headed by the late Kim.

   In January, Kim Jong-nam told the Tokyo Shimbun in an e-mail that he had "doubts about how a young successor with some two years (of training as heir) can retain the 37 years of absolute power" wielded by his late father.

   Kim Jong-nam also said "it is difficult to accept a third-generation succession under a normal reasoning" process.

   Kim, believed to be in his early 40s, has made critical comments to mostly Japanese media in recent years. He has been reported to enjoy a lavish lifestyle in the Chinese enclave of Macao after apparently falling out of favor with his father for attempting to enter Japan on a fake passport in 2001.


Mysterious Woman Flanking N.K. Leader Highly Likely to Be His Wife

SEOUL (Yonhap) -- The mysterious woman who has repeatedly been seen closely flanking North Korean leader Kim Jong-un in a recent series of public appearances, is highly likely to be his wife, a South Korean government source said on July 15.

   "From the protocol point of view, such as this woman's place and table settings, it is highly likely that she's his wife and first Chairman Kim must actually be married," the source said on condition of anonymity, referring to Kim's title as first chairman of the powerful National Defense Commission (NDC).

   The unidentified woman first appeared in state media on July 5 when she was seen seated right next to the leader during a music concert. Analysts said at the time she might be either Kim's wife or a younger sister.

   The stylish-looking woman was seen again on July 8 paying tribute to late North Korean founder Kim Il-sung, bowing deeply while standing next to the leader, as uniformed North Korean military officials raised their hands in salute behind the couple dressed in black.

   On July 15, the North's state TV released footage showing Kim bending over to talk to children during the kindergarten visit as the woman, clad in a yellow polka dot dress and a luxurious-looking white cardigan with a stylish hairstyle and high-heeled shoes, looked on next to him.

   North Korean officials accompanying the leader were seen standing a few steps behind them. State media did not identify who she was, but her act was seen as that of a first lady.

   Few personal details are known about the young North Korean leader, including his marital status and exact age, except that he studied in Switzerland when he was young. Kim assumed control of the communist nation after his father Kim Jong-il died in December.

   Cheong Seong-chang, a senior fellow at the Sejong Institute, said the woman appears to be Kim's wife, and the North appears to be releasing the images of her to dispel any misgivings among the North Korean public that their leader is too young.


North Korea Better off Under Hong Kong-style Unification: Report

SEOUL (Yonhap) -- North Korea would be better off economically if it is made a Hong Kong-style autonomous system in case of unification with South Korea, rather than full integration of the two sides as in the case of German unification, a report showed on July 15.

   The report, written by Moon Sung-min, researcher of Bank of Korea in Seoul, and Yoo Byung-hak, professor of Soongsil University in Seoul, looked into the economic aspects of inter-Korean unification based on three possible scenarios -- full integration, a federation system where the labor market is separated, and the so-called one-nation, two-systems unification like China and Hong Kong.

   If the two Koreas are fully integrated politically and economically, it would cause high unemployment in the northern part of the Korean Peninsula because North Korean workers are less competitive than their South Korean counterparts, the report showed.

   In that case, the average unemployment rate of the northern part of a unified Korea would amount to some 36.4 percent over two decades after unification, while the northern region's economy is expected to grow at about 3.35 percent annually, the report showed.

   Should the North be made a Hong Kong-style region, it would leave North Korean workers to compete among themselves and make unemployment in the region low -- an average of only 1.6 percent -- and help their wages rise gradually in line with their productivity, the report said.

   The region's economy is also expected to grow at 5.21 percent on average annually, it said.

   The per-capita gross national income in the northern region is estimated at US$2,399 in case of full integration, and $3,370 in case of a Hong Kong-style autonomous system, 20 years after unification, the report showed.

   The authors cautioned that the report only looked into the economic side of unification, and other political and social aspects should also be studied before determining which option would be most favorable in case of unification.


North Korea to Send 40,000 Workers to China: News Report

SEOUL (Yonhap) -- North Korea has agreed to send 40,000 of its workers to China in an apparent bid to earn much-needed foreign currency, a Japanese newspaper reported on July 16.

   Under the deal, the North's new Kim Jong-un regime has begun to send 20,000 workers each to the northeastern border provinces of Liaoning and Jilin in China, the Tokyo Shimbun said, citing multiple sources in Seoul.

   Other sources familiar with issues in Pyongyang have said as many as 120,000 North Korean workers may be dispatched to China.

   The workers, comprised of seamstresses, technicians and construction workers, will each earn a monthly average of US$170, 60 percent of which will be remitted to the regime in Pyongyang, informed sources said.

   The economic exchange between the two countries is expected to bring in an annual sum of between US$21 million and US$28 million to the North, and the deal will likely serve as an important source of funds for the socialist regime in need of hard currency, experts say.


Kim Il-sung Univ. Graduates Dominate North Korean Ruling Cass

SEOUL (Yonhap) -- Graduates of North Korea's top university named after the socialist country's founder Kim Il-sung dominate top government and party posts under the leadership of new leader Kim Jong-un, a government report in Seoul showed on July 17.

   About 35.5 percent of key North Korean government and Workers' Party figures are alumni of Kim Il-sung University while the army-oriented Kim Il-sung Military University is the alma mater for 17.7 percent of them, according to the report by the Unification Ministry, which handles inter-Korean issues.

   Kim Il-sung University is the first and best-known North Korean university, established in 1946 in Pyongyang. Late North Korean leader Kim Jong-il, the son of Kim Il-sung, also attended the school.

   The report, which analyzed 106 party and government bigwigs in the North, also illustrated the predominant male ratio of the governing class, with females accounting for only 5.7 percent of those surveyed.

   The female component in the North Korean cabinet was even lower at 2 percent, compared to 11.5 percent recorded in China and 7 percent for Russia, both also socialist regimes.

   The average age of the cabinet members was far lower at 63 than the 72 average for key party members, indicating a higher proportion of technocrats in the cabinet are equipped with greater field knowledge, according to the report. Officials of the Workers' Party of (North) Korea tend to be elder citizens who have long been loyal to the Kim family, the ministry said.

   The ministry also singled out several officials as rising stars under the new regime of Kim Jong-un, who took over the leadership after his father Kim Jong-il died in December. Among them were Choe Ryong-hae, the director of the General Political Bureau of the (North) Korean People's Army, and Mun Kyong-dok, secretary of the party's Central Committee.


HSBC Apologizes for Lax Controls on Transactions with N. Korea

WASHINGTON (Yonhap) -- Executives from HSBC Holdings admitted on July 17 that the largest European bank had some loopholes in controlling transactions involving North Korea and other "rogue states."

   A group of top HSBC officials appeared at a U.S. Senate hearing a day after the Senate released a 330-page report accusing the London-based bank of exposing the U.S. financial system to North Korea, Iran, and Cuba as well as terrorists groups and Mexican drug cartels.

   HSBC had transactions with North Korea in breach of U.S. sanctions rules, according to the report.

   A host of North Korean entities and officials have been subject to U.S. and U.N. sanctions for the regime's nuclear and ballistic missile developments.

   "I recognize that there have been some significant areas of failure," David Bagley, the head of group compliance for HSBC, said at the hearing of the Senate Homeland Security Subcommittee on Investigations. "HSBC has fallen short of our own expectations and the expectations of our regulators."

   Sen. Carl Levin (D-MI), who chaired the hearing, said HSBC "sets up a U.S. bank affiliate as its gateway into the U.S. financial system and lets its global network of affiliates abuse that gateway."

   He added problems arose when "some HSBC affiliates tried to circumvent the Treasury's Office of Foreign Assets Control (OFAC) filter to send potentially prohibited transactions involving other countries like Sudan or North Korea."

   The OFAC has the Specially Designated Nationals (SDN) List of individuals and entities that have been subject to sanctions under the range of sanctions programs.

   "These sanctions programs cover illicit actors like terrorist financiers, weapons proliferators, transnational organized criminal groups, narcotics traffickers as well as rogue regimes -- Iran, North Korea, Syria and others," Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen told the subcommittee.