Sanctions and Dalian

Discussions on the future of the DPRK unavoidably must touch on sanctions. This just as inevitably leads to the question: “but are the Chinese implementing sanctions?” After all, when Chinese trade makes up approximately 70% of North Korea’s trade volume, China is the only country that truly matters in terms of economic influence. On the ground, evidence seems mixed. An interesting anecdote from shippers recently is that China is holding up overseas cargo of non-essential consumer goods at Dalian for extensive checking, leaving some North Koreans to wonder if these goods will be able to reach Pyongyang. Dalian is crucial to international shipping for North Korea: shipment volumes will not be large enough to justify running a route from say, Malaysia, to Nampo so they are sent to Dalian, consolidated and sent on to Korea from there.

While delays have been rumored since early this year post-UNSCR 2087, this is the first time we have heard of goods as mundane as the ubiquitous Pokka canned coffee being “impounded” for being "unnecessary items". Perhaps some crafty trader should hoard the popular Singaporean coffee in North Korea: it is after all synonomous with "iced coffee".

Thus, if the news emanating from Dalian have some truth, it could reflect a central directive to  reduce trade with North Korea from outside. It could also be local bureaucrats or shippers who have recognized that international conditions have become favorable to extract greater rents on the last portion of a product's journey to North Korea.

An interesting question, then, is whether this “impounding” of non-essential consumer goods only affects non-Chinese exporters shipping through Dalian or whether they also impact Chinese exporters to North Korea. Again anecdotally, it does not appear that Chinese businesses are much bothered by recent sanctions. New Chinese taxis have popped up all over Pyongyang in the last few months, and Chinese investors continue to do business at a healthy pace. On the ground, one sees Chinese businesspeople at every level of hotel, from the crappy one we stayed in last week to the swankiest places in town. (No word on how they feel about green tea lattes, though.)

There is also a question of how much impact sanctions on the banking sector have today. When the four main banks of China dropped North Korea’s Foreign Trade Bank as a partner, observers heralded a new age of Chinese support for sanctions. It is questionable how much actual business transactions take place through that channel.

North Koreans adjusted to the “new norm” post-2006 BDA sanctions by setting up systems to conduct banking through informal money transfers. One can easily “wire” money to China by contacting banks in Pyongyang whose agents in China can hand a businessperson his or her cash for a commission below 0.5%. The money can then be deposited in Chinese bank accounts. Again, this "banking" infrastructure benefits Chinese traders disproportionately at the expense of other foreign traders who face more complications and delays in paying their suppliers in their home country.

Bank of China's move in May to close the Foreign Trade Bank's accounts  (an important signal that BoC plays ball, to use the parlance of our times) also serves to drive organizations that were trying to move money through the most official and transparent channel possible into the hands of smaller financial actors. Meanwhile, FTB's 'Narae' debit card is becoming more and more ubiquitous domestically: it is accepted at more and more shops, taxi cabs and now the card can even be linked to one's phone number, allowing mobile cash-free payments to be made between individuals.

A smart Chinese strategy - and indeed, one they appear to be adopting - should involve encouraging sanctions by the international community, while resisting their implementation at home. Chinese businesses are the primary beneficiaries of sanctions as it forces North Korean businesses to rely more on their Chinese partners.

Yo! Cabbie!

So this is what happens when you sit on a blog post. NKnews goes and gets there first. Man, the internet moves fast these days. Anyway... Along with other forms of traffic in the capital, the number of taxis on the road has ballooned in the last few months.

There are now at least three companies competing to fulfill your individual transportation needs, one of which has seen a massive fleet expansion. Brand new Chinese-made BYD small sedans dominate the fleet. Rather than the subtle markings that marked taxis past in Pyongyang, these cars are an unambiguous bright yellow and green, with a larger rooftop sign than other taxis. This makes the fleet an extremely differentiated brand in an autoscape of black, white, grey and military green.

It appears all taxis from three companies now take the increasingly ubiquitous ‘narae card’ as payment so there is no need to fiddle with change – incidentally, the popularity of the narae card is in no small part due to the difficulty retail businesses have in providing hard currency change to customers.

Groups of taxis tend to cluster around the city’s hotels. Fares are usually one US dollar per kilometer, though there appears to be room for negotiation. Visiting foreigners are not yet allowed to ride taxis unaccompanied by a Korean guide. Resident expats are supposedly allowed, though we haven't met anyone who has taken a taxi and moreover, the taxis aren't allowed in the diplomatic compound where most westerners live.

New Fancy Coffeeshop

There is a new chic cafe for Pyongyangers to enjoy.

An espresso cost just over 4 US dollars, while that foul corn syrup nectar, Coca-Cola, was 5 dollars. Pat Bing Su, a shaved ice and red bean summer treat that is popular in all Koreas was almost 10 US, though large enough to share. Green tea lattes are also available for those who think that milk and green tea have too long been kept apart.

The menu also features waffles – called ‘bread sweets’, ice cream and cocktails, some with saucy names such as ‘coconut kiss’ and more innocent sounding names, such as ‘happy birthday’.

The lobby leading to the café also features a truly remarkable picture. So remarkable, in fact, that there is a security officer whose sole station appears to be to prevent people taking snapshots of it. You’ll have to visit to see it, though overall this place can’t be recommended over a visit to the aforementioned Pyongyang Hotel Coffeeshop, still the best game in town.

An Open Letter to Yonhap News

Dear Yonhap, Please do not take statements I've made in written articles, rewrite them, put quotation marks around them and act as if you've interviewed me. I took journalism classes in university. This was under the chapter: "Not Acceptable".

"I have used the account for personal transactions for 20 years but Barclays terminated it without giving proper explanation," he said. 

The facts are not incorrect, but I wouldn't have said 'proper explanation'.

When you wrote:

British banking giant Barclays terminated his account with them without prior notice

That is incorrect. When they tell you they are closing your account, that is 'prior notice'. They say, "we're going to close this account." Then they do it.

I'd like to close these remarks with an interview I've just made up:

Andray: "So, do you feel bad about making stuff up?"

Yonhap: "No, it's fine."

Andray: "I see. Have a nice week."

That is all.

Barclays hates Andray

Just like last week, this post originally appeared on Beijing Cream. Why? They get hundreds of thousands of eyeballs per month...  

You know that sound Skype makes, right? Boo-bee-boo-be-boo. Boo-bee-boo-be-boo.

“Hey dad. What’s up?”

“Not much. Where are you?”

“Back in Beijing.”

“There’s a letter here from Barclay’s.”

“Oh yeah? A statement?”

“Hold on… Dear Mr. Abrahamian, we regret to inform you that your account is being terminated…”

“What?! Why?”

“It doesn’t say. It says to call.”

~

Is it weird to have an emotional attachment to a bank account? Opening it 20 years ago was part of my initiation into adulthood. I may have had an undercut, cherry red Doc Martens, and a signature as fluid as a cave painting, but I was passing some sort of rite with my Barclays account. I could draw money from machines all across the country! There was something to put in the card section of my wallet, other than my library card!

Even as Barclays engaged in criminal behavior, I thought this surely wasn’t a reflection on the lovely old ladies (they were probably only 40) who gave me my first traveler’s cheques or accepted my deposits from my first job in the years that followed.

So when I find out from my father, 10,000 kilometers away, that my account has been cancelled, it’s a bit of a shock.

I ring them up and ask what’s going on, though I’m sure I already know.

“OK sir, I’ll just need to take you through some security questions.”

“No problem.” I rattle off the answers – mother’s maiden name, postcode, address. All the same for basically my whole life. Email address? I pause and give the one I think Barclays wants. I have four or five.

“I’m sorry, but you have failed security,” the woman on the other line monotones.

“Wait, it’s the email address, it must be this other one.”

“I’m sorry, but you have failed security,” she monotones. “I cannot discuss this account with you further. You have to go to your nearest branch with two pieces of I.D.”

“Wait, wait, all that information has been the same my whole life, except…”

“I’m sorry, I cannot discuss this account with you further.”

“I’m living in Beijing!” I yell, the pitch of my voice winding up a bit too high. “Where’s my nearest branch?”

“You’ll have to wait until you come back to the UK.”

“Listen, my account is being closed and I need to know what’s going on,” I plead, my own desperation disgusting me a little.

“I won’t tell you again, sir. I cannot discuss this account with you further.”

The condescension in her words breaks something in me. I’ve always prided myself in never getting angry at customer service people over the phone — whatever problem you’re trying to resolve, it isn’t their fault; they’re just doing a job, and not a fun one at that.

That said:

“Fuck this criminal LIBOR-fixing bank!” I yell. “I don’t want to be a part of it!”

I hang up.

It’s a terrible thing to be led around phone menus by a robot, divorcing you from basic human interaction or understanding, but it is far worse when you have a real person on the line for a change, only to find the robots have assimilated them. Resistance may actually be futile.

Despite what she’s told me, I call back a few moments later. I give the other email address, it works, the pleasant lady says, “Oh, you’ve just called.”

Um… yup.

She tells me that unfortunately, after a review, I no longer meet the criteria to have an account at Barclays.

“What are those criteria?” I ask.

“That’s confidential.”

Of course it is. I thank her politely, begin looking forward to joining a Credit Union or whatever it is hippies recommend these days.

I’m not too upset about Barclays’s robot lady stonewalling my inquiry. I already know what happened.

~

It’s because I work for Choson Exchange, a non-profit based in Singapore. We provide training to young North Korean professionals in business, economic policy, and law. We take foreign experts up to Pyongyang for workshops and also bring North Koreans down to Singapore for study trips and internships. We are of the opinion that the more the next generation of North Koreans are exposed to international norms and standards, the better off we will all be in the long run.

North Korea is, of course, under sanctions. The Koreans sometimes like to use the word “embargo,” though that is false. It’s a targeted sanctions regime, with certain products and specific banks and companies on a list.

Educational exchanges are not on that list.

Moreover, Choson Exchange has never conducted a transaction with a North Korean bank. The only money we’ve ever moved in and out of North Korea has been the minimal amounts of cash we take to pay for accommodation, meals, van rental, and other costs when we run our programs. By far the bulk of our operational budget goes to bringing North Koreans out to Singapore.

Two months ago, Choson Exchange tried to pay my salary directly into my Barclays account, and after much hassle the payment was sent back. How did they know who we were? Why were we on their naughty list? I’m not sure, but I called a friend who also works with North Korea, who also had a Barclays account shut down. It made me feel better and confirmed my suspicions. We then spoke to people we knew who work at another bank, who told us it’s probably because our company has “Choson” in it.

“Choson” — or Chosun — is what North Koreans call Korea. Words like “Choson,” “Pyongyang,” “Koryo,” or even “Korea” in a company or organization’s name can apparently get you placed under scrutiny.

Ultimately, through this tale, we can see two of the key effects of sanctions on North Korea.

First, they scare people away. Barclays doesn’t want to take the slightest chance that an account at their bank might be used for anything under sanction. Why go near it? They’ve been in enough trouble recently, they can’t afford another scandal right now. This fear of getting in trouble confronts prospective investors.

Second, sanctions inconvenience. For me, this means opening a new bank account. For North Koreans — even the many engaged in legitimate business — it means moving money around in diplomatic pouches and suitcases, changing company names and paying a premium to smaller, sketchier banks willing to dance around the edges of the rules.

I mean, not that Barclays won’t skirt the rules when it suits them. Last year they agreed to pay $450 million to settle charges of manipulating the LIBOR rate, while criminal charges are going to be filed against several individual employees soon. But they’re too good for my custom.

Oi! Kim Jong Un!

This article originally appeared on the fine Sino-centered blog, Beijing Cream, and recounts a curious experience Andray had with a journalist in Pyongyang.

~

“Mr. Kim Jong Un! Channel 4 News, UK!” yelled the journalist at the back of Kim Jong Un’s head.

The Great Marshall stopped. He slowly turned and smiled, his visage a million shining suns. The room, which had been full of raucous cheers, came to a hush. In perfect English he replied, “Yes? How may I help you?”

Just kidding. That last part didn’t happen.

~

Visiting Pyongyang always has an element of surreality. The Democratic People’s Republic of Korea is just such a different way of organizing a society, the last such social experiment of this sort, stubbornly hanging on in contravention of all predictions.

But when visiting, especially for the first time, many things are far more normal than you would expect (which is strange in and of itself), and some things can appear even more depressing. How you process what you see and encounter depends on who you are.

If who you are is a journalist, North Korea basically represents the hardest reporting target in the world. If you’re writing from the outside, you have to plow through acres of rumor and guesswork to try to assess what’s happening. It’s difficult to get into North Korea as a journalist, and if you are accepted, you end up on heavily-managed tours or junkets. If you sneak in on a tourist visa, you generally get to reveal nothing special (thousands of Western tourists go every year), and moreover, you probably harm the interests of whatever company or organization invited you. Take, for example, John Sweeney of the BBC. He snuck in on a London School of Economics trip and made the most unrevealing, contrived hack job of an undercover report you could imagine. Let’s see if LSE gets to bring people in next year.

Certainly, the BBC was absent last week as foreign media were invited to cover the 60th anniversary of the armistice that stopped fighting in the Korean War.

Channel 4 News, however, was there, and it was with its reporter, John Sparks, that I was chatting with in the newly christened war museum one afternoon. They had just finished the opening ceremony, presided over by Kim Jong Un. I thought that because we were allowed to go in so soon after the ceremony meant Kim had already gone out the back. Every other event that week had us arriving long before the man himself, and then we were kept in our seats until he’d left.

But suddenly there was applause and cheers in the hallway next to where we were standing. It could only mean one thing. We quickly darted over, and there he was, with a scrum of people all around, looking frankly quite comfortable with it all. It was such an exciting surprise, it was hard to believe it was happening. Then, at my left shoulder:

“Mr. Kim Jong Un! Channel 4 News, UK! What message are you trying to send to the West?”

To my credit — if I may say so — I turned to Mr. Sparks and asked in that incredulous teenager’s tone: “Really?”

“Well,” he muttered, “if I’d had more time…”

At first I thought I’d made Sparks see the pathetic desperation that characterizes such journalistic “exchanges.” Of course Kim ignored him and moved on, dragging the melee behind him. When I left North Korea, however, I realized that Sparks had actually filed a story titled, Inside North Korea: Channel 4 News questions Kim Jong-un. “Channel 4 News becomes the first news organisation to question leader Kim Jong-un,” reads the subhead. Presumably, “Inside North Korea: Channel 4 News yells at back of Kim Jong-un’s head” was changed by an editor.

Now, I understand that “doorstepping” is an acceptable tool in the modern journalist’s box, even if to me it seems desperate, intrusive, and unilluminating in pretty much all circumstances. (Oooo, look how uncomfortable he looks… must be guilty.) They rarely produce answers, certainly not from sitting heads of state, and certainly not in freaking North Korea*. I mean, Sparks knew he wasn’t going to get an answer.

But looking at his DPRK dispatches, it’s easy to see that actually learning anything about North Korea or attempting some form of illuminating representation was never a part of his agenda.

First, of the encounter, Sparks writes, “He gave me a look but kept on walking.” That is partially true and would have been fully accurate if he had only written, “He kept on walking.”

The video on Channel 4’s site also contains downright disingenuous moments. When describing the military parade, Sparks says, “Not everything was as it seemed. The sound of cheering crowds had been prerecorded, some band members didn’t seem to be playing their instruments, and bits of soldiers’ gear looked suspect, like these plastic-looking grenades.”

Having also been at the parade, I can say that those grenades look fake because they were pinned to the belts of middle school marchers. Channel 4’s shot selection was intentionally misleading. And some band members didn’t appear to be playing their instruments because they played pieces in shifts. It was two hours in the relentless, blazing sun. Have you tried blowing a trumpet for two hours in 33-degree weather with no water? No, you haven’t, because that’s mental. (One musician apparently collapsed afterwards.)

I don’t want to be too hard on John Sparks, though. After all, as the correspondent for all of Asia, he’s got a lot on his plate. As I said, covering North Korea is exceptionally difficult. The problems associated with that country are complex, and TV news is especially poorly suited to covering them. TV is good for explosions and parades, but the conventional sound bites it must trade in just don’t get to the heart of any of North Korea’s problems. It is too easy to just look at the nukes, the weird culture, the failed economy, and call the people zombies or slaves.

(Sparks, by the way, calls his minders “Number 1” and “Number 2,” and writes that after seeing Kim Jong Un brisk by, “They were speechless. I don’t know if it was the fact that I had asked the ‘great marshal’ a question – or because they had found themselves so close to him but they looked stunned.” I talked to other journalists that week who learned their minders’ names and developed good rapport with them — you know, treated them as actual people.)

There are also general professional pressures that make it very hard for news about North Korea to be free of bias. These include a dependence on official sources for information and alignment with the state on foreign affairs, which are exacerbated during wartime. Despite Pyongyang trumpeting their victory (or were they really trumpeting?), the celebrations last week were merely for an armistice. The war, technically — and sometimes kinetically — continues to this day.

North Korea doesn’t help itself by being so secretive. The desire to control all information not only rankles journalists, but creates distortions by forcing a news-hungry world to wade through the muck of rumor and guesswork. This is why we so desperately need more journalists willing to look deeper, do more research, and tell us longer stories with more complicated analyses.

There are a few out there. But don’t go looking for them on Channel 4.

*North Korea nerds: no need to write and tell me Kim Yong Nam is the actual head of state.

Sticks and Stones

This week CE is having a couple of meetings in Pyongyang, hopefully laying the groundwork for new exchanges in 2014, while taking in the celebrations commemorating the end of the Korean War 60 years ago. They will be bittersweet (even if the form that they take - parades and mass games - will not give that away) because as everyone knows, the war is not yet resolved. Whether you call it the Fatherland Liberation War, 6.25, The Korean War, the Forgotten War or the War to Resist U.S. Aggression and Aid Korea, this tragic event still looms large over everything in the region, from military alliances to stock markets. George Bernard Shaw wrote in his preface to John Bull's Other Island:

"A healthy nation is as unconscious of its nationality as a healthy man of his bones. But if you break a nation's nationality it will think of nothing else but getting it set again. It will listen to no reformer, to no philosopher, to no preacher, until the demand of the Nationalist is granted. It will attend to no business, however vital, except the business of unification and liberation."

Shaw wasn't advocating nationalism, by any means: he regarded it generally as a cause of much strife and violence. (He also once wrote that "patriotism is your conviction that this country is superior to all other countries because you were born in it.") He did recognize that before nationalism could fade into the background of social life, a degree of security in one's identity as a group needed to be addressed and the modern form that group takes is that of the nation.

The two Koreas are as nationalist as anywhere in the world. Its a complicated mess, this fractured nation of Korea, which despite growing disinterest amongst southern youths, still broadly believes that the natural order - a single, unified, independent state - has been disrupted for over a century, first by Japanese imperialism, then by superpower rivalry. Tomes and opuses have been penned explaining and arguing over where the greatest blame should fall in this tortured stalemate.

Rather than seeking to affix blame on this melancholy anniversary, perhaps we should endulge a moment just to imagine an era of reconciliation. At some point, all parties must admit that this situation isn't the fault of any person left alive, forgiveness must be broadly granted and leaderships will have bold compromises to make. We're not there yet: so many things need to shift and be made healthy before Korea's nationality can be fixed. One hopes that as we look back on 60 years ago, we're all also considering ways to get past this status quo. So far we've just been content to leave the injury for a later remedy.

Management Lessons from North Korea

Pyongyang is probably the last place most people look to for management practices to include in the Harvard Business Review. But still, its always interesting to understand the management lessons participants distill from programs. After all, management is one of the tougher areas for participants to summarize their learning. Unlike other technical fields, management is a “soft” subject where learning is most effectively achieved through a mix of observation, practice and reflection. The subject of management came up when I met with a program alumnus. The alumnus mentioned that over the course of several meetings with various business managers in a range of enterprises, he felt that the good managers shared a few common traits:

1. They have strong technical skills relevant to their respective industries 2. They have strong managerial skills and the ability to manage and lead a team effectively 3. They were able to set a vision for the team, and motivate people with the vision

While such lessons might seem banal to those of us bombarded by management-speak everyday, it struck me as interesting. Many program participants have a tendency to focus on technical skillsets and technology as a solution to all economic problems. Thus it was interesting to hear a participant highlight points 2 and 3 as key takeaways from a program.

The Economist on running a CE workshop

We have often received questions on what it is like being a workshop leader for Choson Exchange in North Korea. It is an unusual experience for sure. Surprising fact? North Koreans are well...kinda human too. An Economist bureau chief who helped us run a workshop in North Korea on inflation policies recently wrote about his experience. Some excerpts:

...

However, instead of challenging me over The Economist’s view of the world economy, they pumped me for facts—hard facts. Each session ended with notes delivered to me either in English or via my interpreter, with almost desperate demands for case studies from around the world that (I surmised) could be useful for the DPRK. This led to a delicate dance, because discussion of the country’s own economic problems was strictly taboo. The strong wording of the messages themselves seemed to say a lot: “You better tell us in more detail,” said one. “We want more real examples,” said another.

...

Without a doubt, the seminar’s participants were part of a privileged elite—but not that privileged. They wore heavy winter gear in late spring because they were literally freezing cold in the cavernous hall as they sat through the lectures. Only I was given a small heater to keep warm, which was hidden behind the dais. One member of the audience who did not realise I had this privilege came up to tell me that I should put on a coat while I gave my lecture. She also brought me glasses of hot tea. Some people seemed wary of talking to me directly. That made such subtle gestures all the more touching.

Shih Tung, another workshop leader, has also blogged about his experience. Some excerpts:

The first workshop I conducted was on Lean Production as part of a Women In Business program. The Women In Business program is one of Choson Exchange's key activities this year and includes workshops held in North Korea as well as study trips abroad for selected participants. Apart from my session on Lean Production, the March workshop also included seminars on the changing role of women in business, marketing and business strategy.

...

Simultaneously with the Women In Business workshop, we also ran a workshop on inflation for officials from the Ministry of Finance and other financial institutions. The former Tokyo Bureau Chief for the Economist presented on recent global economic developents and delivered a macro view of inflation while I discussed the nuts and bolts of how Singapore measures inflation, starting from the Household Expenditure Survey to the Consumer Price Indices (CPIs) for different income groups.

Atlantic Coverage

The Atlantic covers our work. Some great quotes from volunteer Desmond Lim:

...

The two-way exchange (Choson is the Korean name for the Korean peninsula) has been cited in the Economist magazine, the Wall Street Journal, and elsewhere in the international media for its work sponsoring internships, educational programs, workshops, and other programs, all in an effort to promote dialogue and mutual understanding.

"Building trust is key," said one volunteer, Desmond Lim, 27, of the group's low-key and gradual approach to creating openings with people in the Democratic People's Republic of Korea.

...

"As Singaporeans, we play a role of middle man," Lim said. "They trust us, and they are keen to know how we grew so fast over the past 30 years, what did the Singapore government do right."

...

One of the group's efforts this year is a Women in Business program focusing on young and high-potential female business managers and entrepreneurs. Of the 90 participants involved in programs so far this year, 55 percent were female, the group reports.

"This is one way we can try to help them," Lim said. "North Korea is at a time where they need help, but help is hard to give."