VZCZCXRO4109
PP RUEHCN RUEHGH RUEHVC
DE RUEHSH #0170/01 2680150
ZNY CCCCC ZZH
P 250150Z SEP 09
FM AMCONSUL SHENYANG
TO RUEHC/SECSTATE WASHDC PRIORITY 8850
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEAIIA/CIA WASHDC 0223
RHMFISS/COMUSKOREA J2 SEOUL KOR
RUEKJCS/DIA WASHDC 0166
RUCGEVC/JOINT STAFF WASHDC 0116
RHEHAAA/NSC WASHDC
RUEKJCS/SECDEF WASHDC 0175

C O N F I D E N T I A L SECTION 01 OF 03 SHENYANG 000170 
 
SIPDIS 
 
DEPARTMENT FOR EAP/K, EAP/CM, INR 
MOSCOW PASS TO VLADIVOSTOK 
 
E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION 
TAGS: CH ECON EFIN EMIN ETRD KN KS PARM PREL
SUBJECT: DPRK CONFIDENT BUT ANXIOUS; PRC ENVOYS; INFORMAL 
ECONOMY 
 
REF: A. SHENYANG 161 
     ¶B. SEOUL 1468 
 
Classified By: Consul General Stephen B. Wickman.  Reasons 1.4(b/d). 
 
¶1. (C) SUMMARY:  A new consulate contact who has 
extensive experience in North Korea believes the 
DPRK's "charm offensive" is the result of 
newfound confidence stemming from its missile 
launch and nuclear test.  North Korea feels 
economically and politically dominated by China, 
so it is anxious to rope in the United States to 
balance Chinese influence.  Against this 
backdrop, he believes the recent and upcoming 
high-level Chinese envoy visits to Pyongyang are 
principally to remind the North Koreans about 
the rules of engagement with the United States. 
He reports that the DPRK economy's main weakness 
is not a lack of income, but a lack of goods for 
consumers to purchase.  END SUMMARY. 
 
¶2. (C) On September 22, ConGenOff met with a 
Sino-Korean mine operator who has been working 
with North Korea for the last decade.  He is a 
frequent traveler to various sites on the Yellow 
Sea (western) side of North Korea and maintains 
regular contact with DPRK officials and 
businessmen.  His most recent visit to the DPRK 
was in June 2009.  Our contact is a 1986 Beijing 
University chemical engineering graduate from 
the Yanbian Korean Autonomous Prefecture who 
started out his mining career in Gansu Province. 
He began at a state-owned enterprise and then 
moved into the business of snapping up 
unprofitable mining enterprises and "flipping" 
them to other buyers, dabbling also in real 
estate.  He has spent most of his time in Gansu, 
Liaoning, and North Korea, and has made recent 
forays into Southeast Asia. 
 
¶3. (C) Although this was our first meeting and 
much of the below is his personal opinion, his 
views seem to be formed on the basis of many 
conversations with many North Koreans over many 
years.  Our contact is not an expert in PRC-DPRK 
affairs but simply analyzes current events 
through the prism of his collective experiences 
working with North Koreans.  His commentary may 
be seen as a proxy or mouthpiece for the DPRK 
contacts he deals with and tracks with what 
other consulate contacts have shared in the 
past. 
 
DPRK INSECURITY OVERCOME BY MISSILES AND NUKES 
--------------------------------------------- - 
 
¶4. (C) Our contact said that the DPRK's main 
obstacle to diplomatic progress over the last 15 
years had been its deeply-rooted insecurity, a 
problem he regularly encountered in business 
dealings with North Koreans.  He said that many 
North Koreans already knew they had a failed 
economy, a failed ally in the Soviet Union, and 
in the case of China, an ally who had exploited 
North Korea's weak position to pursue its own 
goals.  Hence, he thought that with nobody to 
"trust" or turn to, the DPRK was determined to 
obtain nuclear weapons at any cost, even over 
the objections of China.  The DPRK's bilateral 
approaches to the United States had been blocked 
by China earlier this decade, but the missile 
launch and second nuclear test had provided a 
turning point in DPRK flexibility.  Now, the 
DPRK felt that nuclear weapons offered foreign 
policy options that were slightly more 
independent of China, as well as better 
bargaining leverage with the United States. 
 
DPRK NEEDS U.S. MORE THAN DPRK MAY ADMIT 
---------------------------------------- 
 
¶5. (C) Our contact told us that the DPRK 
 
SHENYANG 00000170  002 OF 003 
 
 
businessmen and government officials he had 
developed over the years told him that reaching 
out to the United States was something they 
simply had to do; any official posturing that 
the DPRK could not "trust" the United States was 
simply a negotiating tactic (ref A).  The North 
Koreans had long realized that depending upon 
China had weakened their leverage.  He claimed 
that for all the talk of 60 years of PRC-DPRK 
friendship, the Chinese had demanded and 
received DPRK compensation for every bit of 
grain and energy aid, either through barter or 
other chits, while China had regularly forgiven 
African debt and loans. 
 
¶6. (C) Our contact said his DPRK interlocutors 
told him that, in spite of DPRK anti-United 
States rhetoric, they considered the United 
States as the only country in the world that had 
not abandoned its allies over the last 50 years, 
contrasting this with the behavior of China and 
Russia toward their various Eastern European, 
African and Asian allies.  He speculated that 
the North Koreans would treat American 
businesses very well, despite the longer history 
of interaction with China and Russia.  In their 
effort to "balance" the mix of foreign 
investors, the North Koreans would be thrilled, 
in his view, to get Americans into joint 
ventures, if only to spite the Chinese and the 
Russians. 
 
DAI AND WEN TRIPS TO PYONGYANG: PRE-GAME HUDDLE? 
--------------------------------------------- --- 
 
¶7. (C) Against this backdrop, our contact said, 
the recent Dai Bingguo and possible Wen Jiabao 
trips to Pyongyang had less to do with the 60th 
anniversary of PRC-DPRK relations, but 
everything to do with "prepping" and "reminding" 
the DPRK about its obligations when dealing with 
the United States, including rules of engagement 
and red lines.  As part of the game plan, as 
long as Pyongyang stuck to the PRC script, the 
Chinese would support any bilateral or 
multilateral engagement with the United States. 
Contrary to being a "loose cannon," over the 
last decade the DPRK had largely acted on orders 
from Beijing. 
 
¶8. (C) Our contact claimed that the Chinese 
government might pretend to play the role of 
responsible world leader, touting its support 
for UNSC sanctions and denuclearization, but in 
reality Dai and Wen's trips represented the 
Chinese suzerain telling the client state how to 
behave, based on Chinese national interests. 
Although the Chinese authorities would spin 
these trips to outside observers, including the 
United States and the UN, as part of a 
"collaborative and multilateral" policy, he said 
the trips simply reflected a Chinese need to 
protect Chinese interests in any future U.S.- 
DPRK interactions.  Any other interpretation of 
the Dai/Wen trips stemmed from a lack of 
understanding of the Chinese government's 
worldview, the Chinese people, and/or the PRC- 
DPRK relationship. 
 
¶9. (C) (NOTE:  Our contact is an equal 
opportunity cynic.  He followed the above 
analysis with a harsh criticism of what he 
perceived as an anti-China bent in U.S. foreign 
policy, citing it as a possible rationale for 
PRC resistance on DPRK issues.  He asked why the 
USG was reaching out to the Russians and 
Indians, citing the recent pullback of the 
proposed missile defense shield in Eastern 
Europe and U.S.-Indian nuclear cooperation as 
examples of concessions.  He wondered about 
continued U.S. support for the Dalai Lama around 
the world, not to mention U.S. policy on 
 
SHENYANG 00000170  003 OF 003 
 
 
Xinjiang and Rebiya Kadeer.  He said he and many 
of his cohorts did not wish the U.S. any ill 
will; most believed that Russia, not the United 
States, was the true enemy of China, noting that 
in the past 200 years Russia had made the most 
efforts to seize Chinese territory.  He pointed 
to Manchuria and Xinjiang as areas where as 
recently as the 1950s the Russians had 
encouraged secession.) 
 
NORTH KOREAN ECONOMY NOT GOOD, BUT MONEY HELPS 
--------------------------------------------- - 
 
¶10. (C) While admitting that North Korea was not 
a well-to-do country by any stretch of the 
imagination, our contact reported that the 
people ate decently and "get by" (ref B).  The 
public distribution system (PDS) was not able to 
provide people with much, but when goods were 
available outside of the PDS, people had enough 
money to purchase foodstuffs.  Euros were now 
the preferred currency and could be exchanged 
throughout the country, along with dollars.  The 
use of renminbi was common on the west side of 
North Korea along the railroad from Pyongyang to 
the PRC-DPRK border, and Japanese yen could be 
exchanged in ports on the east side, such as 
Wonsan. 
 
¶11. (C) Our contact said that usually at least 
one person per household worked at an informal 
market and that it was not uncommon for such 
traders to earn RMB 1000 a month.  The main 
problem was that North Koreans usually had no 
way to spend this money.  As a result, North 
Koreans tended to hoard currency and staples, 
such as rice, a practice reminiscent of our 
contact's childhood in 1960s rural China, 
waiting for the next group of traders to bring a 
shipment of goods for sale.  He cited an example 
where he had visited a family in a rural village 
in Hwanghae Province.  The family did not have a 
wide variety of things to eat, other than common 
staples, but hearing they had a visitor, they 
took out their bundles of cash, went out to the 
informal market, and came back with all kinds of 
meat, fruits and vegetables.  He concluded that 
a lack of reliable access to goods was North 
Korea's main problem, not a lack of cash. 
 
¶12. (C) Our contact said that he never used the 
North Korean banking system or any financial 
tools when doing business with North Korea.  He 
said that he used barter, separate settlement 
accounts in China, and mainly cash.  He said 
that he avoided the use of EFTs or other 
internationally-recognized methods in his 
business with North Korea. 
 
WICKMAN