Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 1 COUNTRY PROFILE: NORTH KOREA July 2007 Click to Enlarge Image COUNTRY Formal Name: Democratic People’s Republic of Korea (DPRK; Chos4n Minjujußi Inmin Konghwaguk). 조선 민주주의 인민 공화국 Short Form: North Korea (Chos4n). 조선 Term for Citizen(s): North Korean(s) (Chos4n Inmin). 조선 인민 Capital: P’y4ngyang. 평양 Major Cities: The largest city is P’y4ngyang, with a reported 3.3 million inhabitants in 2005. According to the 1993 census, others, based on population size, are Namp’o, Hamhßng, Ch’4ngjin, Kaes4ng, Sinßiju, and W4nsan (all with populations of more than 300,000). Independence: August 15, 1945, from Japan; Democratic People’s Republic of Korea founded September 9, 1948. National Public Holidays: New Year’s Day (January 1), Kim Jong Il’s Birthday (February 16– 17), International Women’s Day (March 8), Day of the Sun (Kim Il Sung’s Birthday, April 15– 16), Army Day (April 25), International Workers’ Day (May 1), Fatherland Liberation War Victory Day (July 27), National Liberation Day (August 15), Democratic People’s Republic of Korea Founding Day (September 9), Korean Workers’ Party Founding Day (October 10), and Constitution Day (December 27). Also celebrated are Lunar New Year’s Day (variable date in January or February), Surinal (spring festival, variable date in April or May, formerly called Tano or Dano), and Han’gawi (autumn festival, September 28–30, formerly called Ch’us4k). Flag: The North Korean flag has three horizontal bands of blue (top), Click to Enlarge Image red (triple width), and blue; the red band is edged in white; on the hoist side of the red band is a white disk with a red five-pointed star. The two blue stripes symbolize peace, the red stripe stands for socialism, and the white stripes represent the purity of the North Korean ideals. The five-pointed red star indicates the leadership of the Korean Workers’ Party. The white disc surrounding the star suggests the traditional symbol for the universe―T’aeguk. Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 2 HISTORICAL BACKGROUND Prehistory: Paleolithic excavations show that humans inhabited the Korean Peninsula 500,000 years ago. From around 7,000 to 8,000 years ago, Neolithic humans also inhabited the area, leaving behind pottery and ground and polished stone tools. Around 2000 B.C., a new pottery culture spread into the peninsula from China. Early History: By the fourth century B.C., a number of walled-town states had been noted in Korea by Chinese officials. The most illustrious site, known to historians as Old Chos4n, was located in what today is the southern part of northeastern China and northwestern Korea. Old Chos4n civilization was based on bronze culture and consisted of a political federation of walled towns. The boundary formed by the Amnok (Yalu) and Tuman (Tumen) rivers has been recognized for centuries as Korea’s northern limit. However, this was not always the case; Koreans ranged far beyond this border into northeastern China and Siberia, where sizable Korean minorities still live in the twenty-first century. Three Kingdoms: With the rise of the power and expansion of the Han empire in China (206 B.C.–A.D. 220), Old Chos4n declined. A new iron culture gradually emerged on the Korean Peninsula, and in the first three centuries A.D. a large number of walled-town states developed in southern Korea. Among them, the state of Paekche was the most important as it conquered its southern neighboring states and expanded northward to the area around present-day Seoul. To the north, near the Amnok, the state of Kogury4 had emerged by the first century A.D. and expanded in all directions up through 313 A.D. A third state―Silla―developed in the central part of the peninsula. These three states give name to the Three Kingdoms period (A.D. 246– 668). Although eventually Silla, allied with China, defeated both Paekche and Kogury4 to unify the peninsula by 668, modern-day North Korean historians claim the Kogury4 legacy as a key development in their history. During the Three Kingdoms period, Confucian statecraft and Buddhism were introduced to the Korean Peninsula and served as unifying factors. By 671 Silla had seized Chinese-held territories in the south and pushed the remnants of Kogury4 farther northward; Chinese commandaries (which dated back at least to the second century B.C.) had been driven off the peninsula by 676, thereby guaranteeing that the Korean people would develop independently, largely without outside influences. Kory4 Dynasty: Silla’s indigenous civilization flourished. Its aristocracy, centered in the capital, Ky4ngju, located in southeastern Korea near the modern-day port of Pusan, was renowned for its high level of culture. Among its most notable artifacts is the world’s oldest example of woodblock printing, the Dharani Sutra, dating back to 751. As Silla declined, a new state, known to historians as Later Kogury4, emerged in the central peninsula. When Wang K4n, the founder of the new state, assumed the throne in 918, he shortened the dynastic name from Kogury4 to Kory4, the word from which the modern name Korea emerged. In 930 Kory4 defeated the forces of Later Paekche (which also had emerged as Silla declined) and the remnants of Silla. The Kory4 Dynasty (918–1392), with its capital at Kaes4ng, forged a tradition of aristocratic continuity that lasted well beyond Kory4 itself into the modern era. The Kory4 elite admired the civilization that emerged from China’s Song Dynasty (618–1279), and an active exchange of trade goods and artistic styles took place during this period. In the thirteenth century, Kory4 was subjected to invasions by the Mongols. Once defeated, Kory4’s armies, using Korean ships, Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 3 participated in the ill-fated Mongol invasions of Japan in 1274 and 1281. The Mongols continued to hold domains in Kory4 even after their defeat by China’s Ming Dynasty (1368–1644), and the Kory4 court divided into pro-Mongol and pro-Ming factions. Chos4n Dynasty: The pro-Ming faction at the Kory4 court was victorious, and its leader, Yi S4ng-gye, founded Korea’s longest dynasty, the Chos4n (1392–1910), with its capital at Seoul. Yi S4ng-gye initiated land reforms, declared state ownership of property, and built a new tax base. Although there were some traditional class structures that were uniquely Korean, Chos4n society became deeply influenced by Confucianism; a new secular society developed, and a new Korean mass culture emerged. A phonetic-based alphabet―han’gßl―was developed in the fifteenth century by a king who also fostered the extensive use of movable metal type for book publications. Han’gßl did not come into general use until the twentieth century. North Korea now uses han’gßl exclusively, whereas in the South, Chinese characters are also used along with han’gßl. Chos4n faced major Japanese invasions in 1592 and 1597 that brought devastation to the peninsula. Although the Japanese were defeated and Chos4n began to recover, a new emerging force―the Manchu―invaded both Korea and China. The Manchu established a new dynasty in China―the Qing (1644–1911)―and established tributary relations with Chos4n. Chos4n then experienced a long period of peace. However, as China declined and Japan emerged as a modernizing regional power in the late nineteenth century, Seoul began reforms in an effort to keep the foreign powers at bay. Nevertheless, in 1876 Japan imposed an unequal treaty on the Chos4n court that opened three Korean ports to Japanese commerce and gave Japanese nationals extraterritorial rights. China’s influence over Korea came to a definitive end as a result of the Sino-Japanese War of 1894–95. At the same time, a large peasant rebellion―led by Tonghak (Eastern Learning) Movement advocates―broke out, and the Chos4n court invited in Chinese troops. By 1900 the Korean Peninsula had become the focus of an intense rivalry among the foreign powers then seeking to carve out spheres of influence in East Asia. Japan and Russia both sought to protect their own interests in Korea by dividing the kingdom in two at the thirty- eighth parallel. Following the Russo-Japanese War of 1904–05, in which Japan was victorious, Russia recognized Japan’s paramount rights in Korea. Unchallenged internationally, Japan turned Korea into its colony in 1910. Japanese Occupation: From 1910 to 1945, Korea was under the yoke of Japanese colonial control. Tokyo imposed a Japanese ruling elite, a new central state administration, a modern non- Confucian education system, Japanese investment, and even the Japanese language. This unwelcome imposition was considered illegitimate and humiliating by Koreans and built on a traditional love (by some of the elite)/hate relationship with the island empire. Inevitably, Korean nationalism and an armed resistance emerged. Nationalist and communist groups developed in the 1920s to set the scene for the future divisiveness on the Korean Peninsula. The Korean Communist Party (KCP) was founded in Seoul in 1925. At the same time, various nationalist groups emerged, including an exiled Korean Provisional Government in Shanghai. When Japan invaded neighboring Manchuria in 1931, Korean and Chinese guerrillas joined forces to fight the common enemy. After the defeat of Japan in 1945, resistance to Japan became the main legitimating doctrine of North Korea; North Koreans trace the origin of their army, leadership, and ideology back to this resistance. For the next five decades, the top North Korean leadership Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 4 would be dominated by a core group that had fought the Japanese in the old Manchu homeland, Manchuria. One of the guerrilla leaders was Kim Il Sung (1912–94). Divided Nation and the Korean War: Despite Koreans’ aspiration for independence and unity, the end of World War II in the Pacific saw the division of the Korean Peninsula at the thirty- eighth parallel. Soviet troops, including Korean resistance fighters, occupied the northern half in August 1945, and U.S. troops occupied the southern half in September. The Cold War had arrived in Korea. Separate state institutions emerged on both sides of the thirty-eighth parallel, and in February 1946 an Interim People’s Committee led by Kim Il Sung became the first central government. Land reform followed, and the KCP merged with other political forces to create the new and powerful Korean Workers’ Party (KWP) in August 1946. During the next two years, Kim and his allies consolidated their political power, and he became the preeminent figure in the North. On September 9, 1948, three weeks after the Republic of Korea was established in the South, Kim declared the establishment of the Democratic People’s Republic of Korea (DPRK, or North Korea) with its capital at P’y4ngyang. While balancing relations with both a newly unified and communist-led People’s Republic of China and the Soviet Union, Kim prepared for war with the South. South Korea, with U.S. help, had suppressed the guerrilla threat in the South, but Kim ordered his troops across the thirty-eighth parallel, and the Korean War, or, as the North Koreans call it, the Fatherland Liberation War (1950–53) broke out on June 25, 1950. North Korea’s successful drive deep into the South was countered by the combined U.S. and South Korean attack all the way to the Amnok (Yalu) River in the fall of 1950. At that point, China sent its own troops to fight with the Korean People’s Army, and the U.S.–South Korea forces were driven out of the North. After a two-year stalemate, an armistice was signed on July 27, 1953, and a demilitarized zone (DMZ) was established at the thirty-eighth parallel. The armistice and the heavily guarded DMZ are still in effect and are symbolic of both the division of the Korean Peninsula and the commitment of the United States to contain the North. The Era of Kim Il Sung: Kim’s regime established a socialist command economy, with priority development of heavy industry. Agriculture was collectivized. A Marxist-Leninist political model of autonomy and self-reliance―called chuch’e (sometimes rendered juch’e)―was popularized starting in 1955 as the guiding ideology in politics, economics, national defense, and foreign policy. By 1956, Kim Il Sung had achieved unchallenged supremacy in the KWP. With tight control over all aspects of the North Korean polity and society, Kim Il Sung became the “Great Leader” and the object of a pervasive personality cult. After years of intransigence between North and South, meetings were held that led to the July 4, 1972, announcement that both sides would seek reunification peacefully, independent of outside forces, and with common efforts toward creating a “great national unity” that would transcend the many differences between the two systems. Despite this announcement, when the United States dropped its decision to withdraw troops from Korea in 1979, North Korea upgraded its army and began building invasion tunnels under the DMZ. In the early 1980s, there were three- way talks among the United States, North Korea, and South Korea, and China sponsored talks between P’y4ngyang and Washington. U.S.-Soviet détente also mitigated North Korea’s warlike stance, although South Korea’s growing prestige and economic success put P’y4ngyang on the defensive. Some breakthroughs occurred, such as the visits of southerners from divided families to the North and South Korean economic investment in the North. Nevertheless, other tensions, Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 5 such as those created by North Korea’s development of nuclear weapons capability, arms sales to nations opposed to the United States, and support to terrorist activities and international drug trafficking, fueled the divisiveness. The Era of Kim Jong Il: The Kim Il Sung era suddenly came to an end when Kim died unexpectedly on July 8, 1994. Planned North Korean-U.S. talks in Geneva were postponed. The succession was publicly slow in coming. Although Kim’s son, Kim Jong Il, had been groomed as heir apparent since 1980 and had succeeded his father as chairman of the National Defense Commission and commander in chief of the armed forces in April 1993, he did not emerge as general secretary of the KWP until October 1997. Like his father before him, Kim Jong Il, the “Dear Leader,” continued to rule in dictatorial fashion, and North Korea continued as the world’s most reclusive society amidst severe economic decline, famine, and an increasingly disaffected society. GEOGRAPHY Click to Enlarge Image Location: North Korea is located in the northern half of the Korean Peninsula, which extends southward from the northeastern part of the Asian continent and is surrounded on three sides by water. North Korea is bordered by the Republic of Korea (South Korea) to the south, China to the north and northwest, and Russia to the northeast. Size: North Korea occupies about 55 percent of the total land area of the Korean Peninsula, or approximately 120,410 square kilometers of land area and 130 square kilometers of water area. Land Boundaries: The three nations that border North Korea are to the south, South Korea (a 238-kilometer border); to the north, China (a 1,416-kilometer border); and to the northeast, Russia (a 19-kilometer border). The border with South Korea is marked by a 4-kilometer-wide Demilitarized Zone (DMZ). The DMZ extends 238 kilometers over land and 3 kilometers over the sea. Length of Coastline: The total coastline measures 2,495 kilometers. The west coast is on West Korea Bay and the Yellow Sea (or West Sea, as known to Koreans). The east coast is on the East Korea Bay and what Koreans call the East Sea but which is recognized by the United Nations and the U.S. Board on Geographic Names as the Sea of Japan. Maritime Claims: North Korea claims a 12-nautical-mile territorial sea and an exclusive economic zone of 200 nautical miles. It also has established a military boundary line of 50 nautical miles from its coast on the Sea of Japan (East Sea) side of the peninsula and the exclusive economic zone limit in the Yellow Sea (West Sea) in which all foreign ships and aircraft without permission from the North Korean government are banned. Topography: Approximately 80 percent of the land area is made up of mountain ranges separated by deep, narrow valleys. All mountains on the Korean Peninsula higher than 2,000 Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 6 meters above sea level are in North Korea. The highest peak, on the northern border with China, is Paektu-san at 2,744 meters above sea level. There are wide coastal plains on the west coast and discontinuous coastal plains on the east coast. Principal Rivers: North Korea’s longest river is the Amnok (Yalu) River (790 kilometers), which flows west into northern part of West Korea Bay. It is navigable for 678 kilometers. The Tuman (Tumen) is the second longest (521 kilometers); it flows into the East Korea Bay but is navigable for only 81 kilometers. Both the Amnok and Tuman rivers form part of the boundary between North Korea and China. The third longest river is the Taedong (397 kilometers and navigable for 245 kilometers), which flows through P’y4ngyang and into the southern part of West Korea Bay. Climate: North Korea has long, cold, dry winters and short, hot, humid summers. The temperatures range between –8E C in December and 27E C in August. Approximately 60 percent of the annual rainfall occurs between June and September; August is the wettest month with an average rainfall of 317 millimeters. Natural Resources: North Korea’s major natural resources include coal, copper, fluorspar, gold, graphite, iron ore, lead, magnesite, pyrites, salt, tungsten, and zinc. Water is an important source of hydroelectric power generation. Land Use: About 80 percent of North Korea’s land is mountainous. According to U.S. Government estimates, only 22.4 percent of the land is arable, and only 1.6 percent is in permanent crops. Based on 2002 Food and Agriculture Organization (FAO) estimates, 20.7 percent of the land, or 25,000 square kilometers, is arable. Of this arable land, about 8 percent is in permanent crops. According to a 1998 U.S. government estimate, North Korea had about 14,600 square kilometers of irrigated land. Environmental Factors: Current environmental concerns include water pollution, inadequate supplies of potable water, water-borne diseases, deforestation, and soil erosion and degradation. Time Zone: North Korea has one time zone: P’y4ngyang Standard Time (Greenwich Mean Time―GMT―plus nine hours). SOCIETY Population: North Korea’s population was estimated in July 2006 at 23,113,019. The annual population growth rate for the same year was 0.8 percent. United Nations (UN) estimates for 2007 indicate that North Korea’s population density stands at 188 persons per square kilometer; 40 percent of the population lives in rural and 60 percent in urban areas. There is no legal migration from North Korea, and after the Korean War (1950–53) only 5,000 North Koreans successfully reached South Korea until the turn of the century. However, in 2003 and 2004 unprecedented numbers of North Koreans―estimates range between 140,000 and 300,000―fled to China with hopes of reaching South Korea. Only a relative few did reach South Korea but, according to the South Korean Ministry of Unification, as of February 2007, more than 10,000 Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 7 North Koreans were living in the South. This number contrasts with only nine living there in 1990, 41 in 1995, and 312 in 2000. Demography: According to U.S. estimates of North Korea’s age structure, 23.8 percent of inhabitants are zero to 14 years of age, 68 percent are 15 to 64 years of age, and 8.2 percent are 65 and older. Estimates made in 2006 indicate a birthrate of nearly 15.5 births per 1,000 population and a death rate of just over 7.1 deaths per 1,000. In 2006 life expectancy was estimated at 74.5 years for women and 68.9 for men, or nearly 71.6 years total. Other projections are much lower for both women and men. Life expectancy is not expected to improve as the first decade of the twenty-first century proceeds. The infant mortality rate was estimated at nearly 22.3 per 1,000 live births in 2006. The total fertility rate for 2006 has been estimated at 2.1 children per woman. Ethnic Groups: Ethnic Koreans constitute the vast majority of the racially homogeneous population. North Korea has a few Chinese- and Japanese-speaking communities. Language: Korean is the national language. Dialects of Korean, some of which are not mutually intelligible, are spoken throughout the country and generally coincide with provincial boundaries. The written language employs the phonetic-based Han’gßl (or Chos4n’gul) alphabet. Religion: Traditionally, Koreans have practiced Buddhism and observed the tenets of Confucianism. Besides a small number of practicing Buddhists (about 10,000, under the auspices of the official Korean Buddhist Federation), North Korea also has some Christians (about 10,000 Protestants and 4,000 Roman Catholics, under the auspices of the Korean Christian Federation) and some 2.7 million indigenous Ch’4ndogyo (Heavenly Way) adherents. However, religious activities are almost nonexistent. Three hundred Buddhist temples exist, but they are considered cultural relics rather than active places of worship. There are several schools for religious education, including three-year religious colleges for training Protestant and Buddhist clergy. In 1989 Kim Il Sung University established a religious studies program, but its graduates usually go on to work in the foreign trade sector. Although the constitution provides for freedom of religious belief, in practice the government severely discourages organized religious activity except as supervised by the aforementioned officially recognized groups. Constitutional changes made in 1992 allow authorized religious gatherings and the construction of buildings for religious use and deleted a clause about freedom of antireligious propaganda. The constitution also stipulates that religion “should not be used for purposes of dragging in foreign powers or endangering public security.” Education and Literacy: Education in North Korea is free, compulsory, and universal for 11 years, from ages four to 15, in state-run schools. The national literacy rate for citizens 15 years of age and older is 99 percent. According to North Korean-supplied figures provided in 2000, there were 1.5 million children in 27,017 nursery schools, 748,416 children in 14,167 kindergartens, 1.6 million students in 4,886 four-year primary schools, and 2.1 million students in 4,772 six- year secondary schools. Nearly 1.9 million students attended more than 300 colleges and universities. Data on teachers are much older. In 1988 the United Nations Educational, Scientific, and Cultural Organization (UNESCO) reported that North Korea had 35,000 Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 8 preprimary, 59,000 primary, 111,000 secondary, 23,000 college and university, and 4,000 other postsecondary teachers. Health: North Korea has a national medical service and health insurance system. As of 2000, some 99 percent of the population had access to sanitation, and 100 percent had access to water, but water was not always potable. Medical treatment is free. In the past, there reportedly has been one doctor for every 700 inhabitants and one hospital bed for every 350 inhabitants. Health expenditures in 2001 were 2.5 percent of gross domestic product, and 73 percent of health expenditures were made in the public sector. There were no reported human immuno-deficiency virus/acquired immune deficiency syndrome (HIV/AIDS) cases as of 2007. However, it is estimated that between 500,000 and 3 million people died from famine in the 1990s, and a 1998 United Nations (UN) World Food Program report revealed that 60 percent of children suffered from malnutrition, and 16 percent were acutely malnourished. UN statistics for the period 1999– 2001 reveal that North Korea’s daily per capita food supply was one of the lowest in Asia, exceeding only that of Cambodia, Laos, and Tajikistan, and one of the lowest worldwide. Because of continuing economic problems, food shortages and chronic malnutrition prevail in the 2000s. Welfare: Housing and food rations traditionally have been heavily subsidized, and health care has been offered for free. However, the party, state, and military elites have had much better care than the average citizen, and there are great inequalities among the various social classes. Natural disasters in the 1990s led to a breakdown in food rationing and a rising inequality of services to the extent that upward of 300,000 North Koreans may have succeeded in fleeing to China in search of food. According to United Nations data, 27 percent of North Korea’s population is at or below the absolute poverty level, living on less than US$1 per day. ECONOMY Overview: North Korea has long had a socialized, centrally planned, and primarily industrialized command economy isolated from the rest of the world. The means of production, which are largely obsolete, are owned by the state through state-run enterprises or collectivized farms. Prices, wages, trade, budget, and banking are under strict government control. Traditionally, poor domestic economic performance was offset with infusions of Soviet aid. But after the collapse of the Soviet Union in 1991, the aid stopped and the economy was adversely affected. This situation was then further complicated by severe food shortages that began in 1995–96 and continued in 2007. Massive international food aid deliveries have allowed North Korea to escape mass starvation since the mid-1990s, but the population remains the victim of prolonged malnutrition and deteriorating living conditions. This situation was brought about by a shortage of arable land, collective farming, weather-related problems, and chronic shortages of fertilizer and fuel. In addition, large-scale military expenditures consume resources needed for investment and civilian consumption. On July 1, 2002, the government announced “economic improvement measures” (use of the term “reform” is avoided), such as creating incentives for factories to operate on a more profitable basis by allowing salaries to increase and prices to rise. Thereafter, more products became Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 9 available to cash-paying consumers. The state rationing system also was abolished, foreign- exchange rates were adjusted, free currency exchange was allowed to strengthen popular consumption, and the economy was partially monetized. The adjustments were all aimed at developing a market economy. New management techniques also were introduced with the goal of creating incentives and accountability. Product markets were established, improvements were made to agricultural organizing principles, and agricultural products were allowed to be brought to market using self-managed distribution systems. In June 2003, restrictions also were relaxed on farmers’ market activities, which led to an expansion of market activity. At the same time, the regime showed flexibility by increasing the pace of economic reforms, allowing younger- generation, more reform-minded individuals into the leadership, and encouraging further economic cooperation with the South. Gross Domestic Product (GDP)/Gross National Product (GNP): The GDP growth rate was 1 percent per annum in 2006. Based on 2006 estimates, North Korea’s purchasing parity power was US$40 billion. Government Budget: In 2002 projected total revenue and expenditures were US$10.1 billion. Inflation: The government’s all-at-once approach to economic adjustments had the expected effect of generating high levels of inflation. Estimates on the inflation rate are not available, but after the government lifted controls over wages and prices in 2002, the w4n decreased in value by some 300 percent in a year, and inflation has been chronic. Agriculture, Forestry, and Fisheries: Agriculture has long been the traditional source of employment and income but, under state control, secondary to industry in emphasis. The agricultural sector was collectivized by 1958. An estimated 30 percent of the land was in agricultural use in 2002, and agriculture produces approximately 30 percent of gross domestic product. Most agricultural land is on plains in the south and west and was subject to flooding in 1995 and 1996 and to drought in 1997 and 2000. The principal crops, according to the size of the yield in 2002, are rice, potatoes, corn, cabbages, apples, soybeans, pulses, and sweet potatoes. Other vegetables, fruits, and berries also make up important parts of the annual crop. In 2002 North Korea reportedly had 48,000 horses, 575,000 head of cattle, and 2.6 million goats. Livestock production, in order of volume, includes pork, eggs, cows’ milk, poultry meat, beef and veal, and goat meat. North Korea has always been faced with food shortages, but since the mid-1990s they have become more severe. Because of oil shortages, most forestry products are used for fuel, with only small amounts of timber (roundwood) going for construction and manufacturing. In 2002, according to Food and Agriculture Organization estimates, North Korea produced 7.1 million meters of roundwood. Fishing provides an important supplement to the diet and for export. The catch in 2001 totaled 200,000 tons of fresh and saltwater fish, shellfish, and mollusks and about 63,700 tons produced using aquaculture. Mining and Minerals: North Korea’s major minerals, which are found throughout the nation, are coal, iron ore, cement, nonferrous metals (copper, lead, and zinc), and precious metals (gold and silver). It also has large deposits of magnesite. North Korea exports many of its minerals in Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 10 order to gain foreign currency but also uses them domestically for industrial and military purposes. Mining contributed 7.8 percent of gross domestic product in 2002. Industry and Manufacturing: The major industries are machine building, armaments, electric power, chemicals, metallurgy, textiles, and food processing. Industry produced 34 percent of gross domestic product in 2002. Energy: The predominant domestic sources of commercial energy are coal and hydroelectric power. In 2003 about 82 percent of North Korea’s primary energy consumption was coal. In that year, North Korea produced an estimated 32.3 million tons (in oil equivalent) of hard coal, lignite, and peat. In 2001 hydroelectric power plants generated about 69 percent of North Korea’s electricity, and coal-fired thermal plants produced about 31 percent. Thermal generating capacity is underused because of the shortage of thermal sources. Electricity consumption in 2003 was 17.4 billion kilowatt-hours, accounting for only 55 percent of the previous year’s total. About 6 percent of North Korea’s primary energy consumption is from oil. In 2005 North Korea consumed about 25,000 barrels of oil per day and produced only 138 barrels per day. Thus, the country is dependent to the extreme on imports, some of which have been suspended because of international disputes over North Korea’s nuclear weapons program. In 2002 an estimated 1million tons of light petroleum products and 1,529 tons of heavy petroleum products were produced. There may be some oil reserves in West Korea Bay, but exploration efforts have failed to find commercially viable quantities. Seismic survey data have indicated modest deposits of probable oil and natural gas in the Tachon–Najin area near the Tuman River border with China. The nuclear energy generation sector is involved in major international political discord because of suspicions about the militarization of this capability. Several agreements have been signed that would have led to the construction of light water reactors and training for technical staff to operate them. However, disclosures about North Korea’s nuclear weapons program raised international protests and have kept this energy sector from developing. Services: This sector produced 36 percent of gross domestic product in 2002. Banking and Finance: Banks in North Korea, with the exception of the Central Bank and the Farmers Bank, were closed in 1946 and 1947. In 1959 the Farmers Bank was incorporated into the Central Bank, and the Foreign Trade Bank was founded to conduct international business for the Central Bank. Since 1978, six other state banks have been founded to deal with foreign exchange and foreign enterprise exchanges. Moreover, between 1987 and 1996, nine joint- venture and foreign-investment banks were established to attract Koreans overseas to invest in North Korea. North Korea also has four insurance companies. Tourism: North Korea has been a member of the World Tourism Organization since 1987 and allows tourism via the National Directorate of Tourism. By 1999 there were 60 tourist hotels with some 7,500 beds. North Korea’s tourist attractions are its extensive mountain scenery and skiing and, for some, its “retro-Stalinist atmosphere.” In 2000, the latest year for which tourism figures are available, some 130,000 tourists visited one of the world’s most reclusive states. Prices are extremely high. Starting in 1998, officially sponsored tourism from South Korea has been allowed to Mount Kßmgang Tourist Zone, a joint venture between the North Korean Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 11 government and South Korea’s Hyundai Corporation for a scenic sport area on the southeast coast, near the Demilitarized Zone (DMZ). In 2003 agreement was reached allowing South Korean tourists to also visit P’y4ngyang. As of October 2004, North Korea held the vice chairmanship of the World Tourism Organization’s Commission for East Asia and the Pacific. Labor: The labor force was estimated at about 9.6 million workers in 2007, approximately 36 percent of whom worked in agriculture, 64 percent in industry and services. There is a general shortage of both skilled and unskilled labor. Foreign Economic Relations: Based on 2005 figures, North Korea’s major import partners are China (42 percent), South Korea (28 percent), Russia (9 percent), and Thailand (8 percent). As of 2005, imports totaled US$2.6 billion c.i.f (cost, insurance, and freight). The major imported commodities were petroleum, coking coal, machinery and equipment, textiles, and grain. North Korea’s main export partners in 2005 were China (35 percent), South Korea (24 percent), Thailand (9 percent), and Japan (9 percent). In 2005 exports totaled an estimated US$1.4 billion f.o.b (free on board). The main export commodities were minerals, metallurgical products, manufactures (including armaments), textiles, and fishery products. Until 1988 there was no trade between North and South Korea; since then it has increased steadily, reaching more than US$1 billion in both 2005 and 2006, which placed South Korea as North Korea’s second-largest trade partner after China. Trade Balance: North Korea has a poor balance of trade. In 2005 imports totaled US$2.6 billion while exports were only US$1.4 billion. Balance of Payments: No information available. External Debt: Since the 1970s, North Korea has been in debt to many nations, including France, Germany, Sweden, Austria, and Japan. Additionally, North Korea is in debt to its communist allies, the Soviet Union―with Russia as the successor to old Soviet debts―and China. Only a few of these creditors have been paid since the 1980s. As of 1996, North Korea had an estimated US$12 billion in external debts, mostly owed to Russia and China (US$7.4 billion, or 62 percent) and the rest to Western nations and Japan (US$4.6 billion, or 38 percent). Between 1999 and 2001, North Korea received a total of US$394.8 million in bilateral and multilateral official development assistance. In 2001 and 2002, P’y4ngyang was the recipient of some US$367.9 million in socioeconomic development assistance from the United Nations system. Foreign Investment: North Korea has a limited ability to attract foreign investments because of the amount of debt that is owed to so many different countries. However, this impediment has not stopped North Korea from pursuing new foreign investments, particularly for its first special economic, or free-trade, zone at Najin–Sonb4ng in northeast North Korea. This zone is accessible to Russia by railroad and to China by road but to the rest of North Korea only by helicopter. The Sinßiju Special Administrative Region, located on the western end of the border with China, is a self-managed entity aimed at fostering bilateral trade. Two other economic zones are the Mount Kßmgang scenic and sport-tourist zone and the Kaes4ng Special Industrial Zone, Library of Congress – Federal Research Division Country Profile: North Korea, July 2007 both in southeast North Korea. The nuclear proliferation issue also has had a negative impact on foreign investment. Currency and Exchange Rate: 1 w4n = 100 ch4n. As of July 1, 2007, the interbank exchange rate was US$1 = 220 w4n. The internal rate was much different. In an effort to reduce the gap between the official and black market rates and to remove U.S. dollars used on the black market (in favor of the euro), the government devalued the w4n in 2003, making the internal exchange rate 900 w4n to the dollar. But, by 2005, black-market exchanges continued, and the rate soared to 3,000 w4n to the dollar. Fiscal Year: Calendar year.