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NORTH KOREA NEWSLETTER NO. 246 (January 24, 2013)

N. Korea Possesses Considerable Cyber Hacking Capability: Experts

SEOUL (Yonhap) -- North Korea possesses considerable cyber hacking capabilities that can disrupt and immobilize Internet traffic and key computer systems, local experts said on Jan. 17.

   The socialist country's ability to hack into online systems generated new interest after officials on President-elect Park Geun-hye's power transition team raised a possibility earlier on Jan. 17 that the North may have conducted an attack against the press room.

   "We were told by security authorities this morning to pay more attention to (computer) security as the Internet network of the press room is vulnerable to outside hacking forces," a committee official said, conceding there was a little "misunderstanding" in the course of advising reporters of Internet security risks because North Korea has a track record of hacking attempts.

   Although the alarm had turned out to be false, a string of cyber terrorist acts blamed on Pyongyang in the past few years has raised concerns that Seoul needs to be prepared for future attacks.

   The first major case of cyber terrorism occurred on July 7, 2009 when 435 different servers in 61 countries were used to carry out a distributed denial of service (DDoS) attack against South Korean government Internet sites. This was followed by the 2011 March 4 DDoS disruption that again hit state institutions such as the presidential office, the National Assembly and media outlets. After these attacks, hacking traced to the North crippled South Korea's agricultural cooperative's web system and a university's Web site, with the most recent case taking place against a conservative newspaper in June of last year.

   Lee Dong-hoon, a professor at the Center for Information Security Technologies at Korean University in Seoul, said the North has been preparing for cyber warfare since the late 1980s and may rank third worldwide in this field after Russia and the United States. He speculated that Pyongyang can carry out various electronic disruption campaigns using the Internet, hack into other vital systems and engage in psychological warfare.
"The country trains personnel under the centralized guidance of the government," he pointed out. Intelligence sources said in the past, there may be up to several thousand dedicated hackers in the North.

   Others such as Kim Heung-kwang, the executive director at the North Korea Intellectual Society, a group made of North Korean escapees, said Pyongyang has specialized hackers that are tasked to constantly find weak spots in important government or public Internet cyber systems.

   Kim, who taught computer engineering in the North before his defection, said in most cases they are not successful, adding that they then might try to use "circuitous routes" to gain non-official but valuable information.

   He pointed out that the North merged three specialized hacking agencies in February 2009 that have been placed under the military's reconnaissance bureau.

   A government official, meanwhile, said that while Seoul has moved to strengthen cyber related security for some time, the private sector that includes the media generally does not enjoy the same level of protection. State web sites are monitored and protected by the National Intelligence Service.

   "In most cases, due to excessive costs, private companies only have simple fire walls that can be overcome is the hacker is an expert," an official, who declined to be identified said.


North Korea's Economy Improves in 2011: Data

SEOUL (Yonhap) - North Korea's economy, which has generally been losing ground since the mid 1990s, posted modest gains in 2011, indicating that it may be rebounding after having hit rock bottom, South Korean data showed on Jan. 17.

   According to data from Statistics Korea, the North's economy grew 0.8 percent in the cited year, following three years of contraction.

   The South Korean government office, which monitors developments in the North, said the socialist country's two-way trade totaled US$6.3 billion in 2011. This is a four-fold increase compared to over $1.4 billion tallied in 1998.

   The rise in trade with China, North Korea's closest ally, was the main contributor to the turnaround in the country's overall economic growth, the office said in a report. North Korea-China trade topped $5.6 billion two years ago.

   Analysts in Seoul said that North Korea sold raw minerals to China, and the money earned seems to have been invested in various industries that fueled the economy.

   They said some key indicators such as the output of electricity remained dismal, but there have been gradual increases in power generation at the country's many thermal power plants.

   Reports by the World Food Programme (WFP) and the U.N. Food and Agriculture Organization (FAO) also showed rice and corn production in the 2012-2013 harvest year gaining 11 percent and 10 percent, respectively, compared to the previous harvest year.

   The U.N. agencies estimated that North Korea harvested 1.77 million tons of rice and 2.28 million tons of corn in 2011. It said if other crops such as potatoes, wheat, barley, and nuts are counted, the total would hit 4.92 million tons.

   The increase is noteworthy because weather conditions on the Korean Peninsula were not favorable last year.

   "The increase means that North Korean authorities did a good job in containing damages and there was a timely increase in fertilizers from China that played a role in the improved output," said Kwon Tae-jin, a research fellow at the Seoul-based Korea Rural Community Corp.

   Reflecting the improvements, experts said, the number of North Koreans defecting to South Korea fell from 2,706 in 2011 to around 1,500 last year.

   Despite such positive developments, there seems to be a growing divide in North Korea between the haves and have-nots, particularly between those that live in the capital city of Pyongyang and those who live in rural areas, South Korean analysts said.

   One reason for the big economic divide in North Korea is inflationary pressure that will require some sort of currency reform down the road, they said.


N. Korea May Allow More Foreign Media Outlets: AP Vice President

SEOUL (Yonhap) -- North Korea may open its borders to more foreign news media as part of its efforts to increase contact with the outside world, a senior official of the Associated Press (AP) said on Jan. 18 after a visit to the socialist country.

   AP was allowed to open a bureau in North Korea in January last year, becoming the first Western media outlet in the country. Other foreign media that had been allowed in the country before were all from the old Soviet Union, its successor Russia and China.

   "I suspect that they probably will allow more foreign news outlets in the country down the road," AP Vice President John Daniszewski said in an interview with Yonhap News Agency in Seoul.

   "The AP presence was a big step for them, and nothing in our talks at least with the (North) Korean Central News Agency indicated that they regretted the decision," he said. "I think they are conscious of wanting to tell their point of view and (having) their policies (heard)."

   Daniszewski arrived in Seoul on Jan. 17 after making what he called a four-day "working" trip to North Korea, during which he said he mainly met with officials of the KCNA. A courtesy call on the North's foreign ministry was the only contact he said he had with the government there.

   The trip was arranged as part of programs that marked the first anniversary of AP's opening of its bureau in the North's capital, Pyongyang. AP's video news affiliate, APTN, had opened an office in the North in 2006.

   Despite its presence in North Korea, Daniszewski said, AP's only American correspondent in Pyongyang "hasn't had good luck getting out of Pyongyang and doing stories," he said, referring to the difficulties in obtaining government permission to travel.

   "When we want to cover a story, we have to request interviews, request permissions to go to places either to government offices involved or KCNA, which arrange things," he said.

   Additionally, visa restrictions prohibit long-term residency, forcing the AP correspondent in Pyongyang to frequently travel in and out of the country.

   "We argue that exchange of news and information among countries is a positive value. We try to make the case that we should be allowed to live there," he said.

   Daniszewski also said North Korea appears to be more open to Western pop culture, airing foreign television programs.

   "Our correspondent mentioned that there are some new TV shows, some interesting films like 'Madagascar,'" he said, referring to the hit American animation film.

   Speculation mounts among foreign media that North Korea under the new young leader, Kim Jong-eun, may be more liberal than when his late father, Kim Jong-il, ruled. The senior Kim died of a heart attack in December, 2011.


North Korea's Regime May Undergo Reform in 3-4 Years: Report

SEOUL (Yonhap) -- North Korea's regime led by young leader Kim Jong-un seems stable on the surface but it may go through drastic reforms within the next three to four years, a report showed on Jan. 19.

   The new leader has created a visage of strength by spending his first year at the helm of the socialist state consolidating his power, but skepticism still remains over whether he can lead the regime that is burdened by a broken economic system without major reform.

   "It seems that Kim Jong-un's regime is relatively stable on the surface, but it is not enough to judge its stability appropriately," the National Assembly Research Service said in a report. "There is a possibility of changes in its policy or politics in the next three to four years."

   Kim, due to his limited resources and lack of political experience, is exposed to the power struggles of the inner circle elites, the report said, noting that a military purge or political instability could cause a potential rift between these powerful and influential political players.

   The parliamentary research agency called for the incoming government to implement North Korea policies that take into consideration of the regime's flexibility.

   The report said the next government should try to communicate with Pyongyang through various channels to foster trust between the two sides and build consensus among the public over the legislative process on North Korea policy.

   President-elect Park Geun-hye, who takes office in late February, earlier said she is willing to meet with the North Korean leader after the two sides build mutual trust to promote inter-Korean ties.


N. Korea Allows Foreign Visitors to Bring Mobile Phones: Report

HONG KONG (Yonhap) -- North Korea, one of the world's most reclusive countries, has started to allow foreign visitors to bring their own mobile phones into the country, a Chinese media outlet said on Jan. 21.

   China's state-news Xinhua News Agency said North Korean authorities lifted the ban on foreigners bringing their mobile phones to Pyongyang when visiting, citing an Egyptian technician working for the North Korean-Egyptian joint venture company Koryolink.

   The lift took place on Jan. 7, Xinhua said.

   In order to bring their cellphones into North Korea, foreign visitors need to register with North Korea's customs office and fill out a form to provide the office with the International Mobile Station Equipment Identity numbers of their phones.

   In the past, foreigners were required to leave their phones with customs and pick them up when leaving the country.

   Still, foreigners are not allowed to use the North Korean communications network, but are allowed to make international calls only with a 50-euro (US$66.5) SIM card sold by the Koryolink.

   A mobile Internet service for foreigners is expected to open soon, the report said.

   Some 1.8 million people are estimated to have been using third-generation mobile phones in North Korea since 2008, Xinhua said. However, they cannot use mobile phones to make international calls or connect to the Internet, it added.


Head of Inter-Korean Automaker Given Honorary Pyongyang Citizenship

SEOUL (Yonhap) -- The head of inter-Korean automaker Pyeonghwa Motors said on Jan. 22 that he was made an honorary citizen of Pyongyang late last year to reflect his contribution to North Korea's development.

   In an interview with Yonhap News Agency, Park Sang-kwon said he received the citizenship at the Mansudae Assembly Hall in the North Korean capital on Dec. 18.

   Park has led the carmaker that started off as a joint venture between South Korea's Tongil Group, run by the Unification Church, and North Korea. Production began in 2002, with the company producing about 2,000 vehicles every year.

   He said his citizenship has a serial number of 002 and has an inscription saying that the honor is being bestowed because of his contribution to the fatherland and the Korean people. He is the first foreign national to have received the honor under the socialist country's new leader Kim Jong-un.

   Kim Chin-kyung, the Korean-American president of Pyongyang University of Science and Technology, was the first to receive an honorary citizenship in Aug. 2011 by late North Korean leader Kim Jong-il.

   "The reason why they gave me the citizenship reflects recognition for the trust I have shown them and may be a sign that they want me to more freely engage in business activities," he said. Park claimed that the citizenship can be seen as a sign that the North will allow him to start a new business in the country.

   He then said that the reason why Tongil decided to turn over management of the carmaker last November was so it could focus on a wholly-owned business operation in the country. Last year, the business group created by late Rev. Moon Sun-myung also agreed to hand over control of the Pothonggang Hotel in Pyongyang.

   The executive said he had asked the North to approve such a step.

   "Pyeonghwa Motors has been generating profit for the past five years," Park said. The businessman said that in the future, he wants to engage in the distribution of household necessities in North Korea, and in particular to Pyongyang.

   He said there is a need to show that a wholly-owned (outside-invested) company that is not tied to a joint venture project with a North Korean partner can succeed in the country, which can act as an incentive for other foreign companies to invest.

   He pointed out that Chinese companies that invested in the North are generally those that have not done well at home. He said that successful South Korean, Japanese and U.S. companies need to engage in business activities in the North.

   "If 200 competitive South Korean companies operate in the North, there would be no reason for inter-Korean tensions, and it can actually help push forward the unification process," he said.


China Backs 'One Country, Two Systems' in Korean Unification Effort

SEOUL (Yonhap) -- China wants South Korea to form a loose-knit federation of "one country, two systems" with North Korea for an eventual unification between the two Koreas, a prominent Chinese expert said on Jan. 22.

   Pan Zhenqiang, a retired People's Liberation Army major general, warned that any unification effort based on the collapse of North Korea would bring "greater disastrous effects" than the deteriorating security situations that have taken place in Libya and Syria.

   The two Koreas have still technically been at war since the 1950-53 Korean War ended with a cease-fire. Though reunification with North Korea is not an immediate concern, President Lee Myung-bak has voiced the need to prepare for the possibility.

   "With regards to the format of unification, China's formula of 'one country, two systems' may have some exemplary value," said Pan, now senior adviser to the Council of China Reform Forum.

   The loose-knit federation model is a "correct direction" and then the two Koreas should be "gradually developing into a full-fletched unified nation," Pan told a forum in Seoul organized by the Asian Institute for Policy Studies.

   Pan also expressed "great skepticism" over any long-term policy planning based on the collapse of the North Korean regime.

   "It is not only because it runs counter to China's unification philosophy, but also because the design runs a risk of being built on wishful thinking," Pan said.
North Korea's young new leader Kim Jong-un appears to have consolidated his grip on power since the death of his father Kim Jong-il in December 2011, and analysts see no clear sign of instability in Pyongyang. Still, questions remain about the long-term viability of poverty-stricken North Korea.

   Pan indicated that China would eventually try to prevent South Korea from absorbing North Korea.

   "There are people who are too enthusiastic to see the regime collapse in the North," he said. "This planning would most probably serve to enhance the temptation for them to take drastic actions to fulfill their dreams."

   Citing worsening security situations in Libya and Syria, Pan warned, "A Korea case could bring even greater disastrous effects that no one hopes to see in the end.

   "We had better not embark on that dangerous path." Pan said.

   Victor Cha, who was a top adviser on Koreas to former U.S. president George W. Bush, told the forum that forging a free trade agreement between Seoul and Beijing could positively affect the future of the Korean Peninsula.

   "An FTA with China will be very long-term strategy to try to shift the way China thinks about North and South Korea," said Cha, who holds the Korea Chair of the Washington-based Center for Strategic and International Relations.

   Cha expected the incoming government of President-elect Park Geun-hye to continue to hold negotiations with China to sign a free trade deal.

   A free trade deal with South Korea "will help reevaluate the equities China holds about the Korean Peninsula," Cha said. "Emphasizing the relationship between South Korea and China is the best way to influence China's interest in North Korea."

   South Korea and China announced last May the launch of formal free trade negotiations, expecting the talks to take two years.


North Korea's Grain, Fertilizer Imports from China Fall Sharply

SEOUL (Yonhap) -- North Korea imported significantly less grain and fertilizers from China last year, mainly due to improvements in overall food conditions in the country, local sources said on Jan. 22.

   Kwon Tae-jin, a research fellow at the Seoul-based Korea Rural Community Corp., said data compiled from January through November showed North Korea's grain imports from its neighboring country reaching 257,931 tons.

   This represents a 26.8 percent decrease from 352,282 tons tallied for the same 11 month period in 2011.

   "There was a noticeable drop in various grain imports last year," the researcher said, adding that imports of corn and rice fell 19.2 percent and 16.7 percent vis-a-vis the year before, with wheat and bean purchases declining 56.2 percent and 7.4 percent, respectively.

   The latest data also showed Pyongyang importing 252,780 tons of chemical fertilizers from China up till November, down 28.8 percent from 355,023 tons reported from the year before.

   Experts in the South said the decrease reflected improvements in overall food supply in the communist country brought on by the new leadership paying more attention to the economy.

   Kim Jong-un, who took over running the country in December 2011, after the sudden death of his father Kim Jong-il, stressed the importance of growth and pledged to make the country an economic powerhouse.


China's Xi Opposed to North Korea's Nuclear Weapons Development

BEIJING (Yonhap) -- China's next President Xi Jinping expressed his opposition to North Korea developing nuclear weapons and any other weapons of mass destruction, a South Korean special envoy said on Jan. 23.

   The remark, made in a meeting with a South Korean delegation sent by President-elect Park Geun-hye, came as Pyongyang hinted at the possibility of carrying out a nuclear test after the U.N. Security Council adopted a new resolution condemning the country's Dec. 12 long-range rocket launch.

   North Korea also pledged to abandon any efforts to denuclearize the Korean Peninsula.

   "It is China's consistent position that denuclearization and prevention of proliferation of weapons of mass destruction are essential conditions for peace and stability on the Korean Peninsula," Xi was quoted by South Korean special envoy Kim Moo-sung as saying.

   Kim said his delegation told Xi that South Korea's next government will continue humanitarian aid to the North while leaving open the window for dialogue and cooperation, though it will respond sternly to any North Korean provocations.

   Xi welcomed the position, Kim said.

   Kim also said his delegation delivered a personal letter from Park to Xi. In the letter, Park expressed her hope for further strengthening relations between the two countries and invited Xi to visit South Korea in the near future.

   Xi also extended an invitation for Park to visit China, Kim said.

   The four-member delegation has been in Beijing since Jan. 21, holding meetings with top Chinese officials, such as Foreign Minister Yang Jiechi and Wang Jiarui, head of the International Department of the Communist Party of China. They are scheduled to return home on Jan. 24.

   China is the only major ally of North Korea and has provided the impoverished nation with economic aid and diplomatic protection. A permanent Security Council member, Beijing also joined in adopting the new U.N. resolution on Pyongyang.