August 26, 2012:
North Korea is pressuring China to help obtain a peace treaty to formally end the 1950-53 war. Fighting ended with an armistice, which is still in force. A permanent peace treaty would involve recognition by the UN and elimination of the outlaw status North Korea achieved by invading South Korea in 1950 (and triggering a UN sponsored effort to push the North Koreans out). North Korean diplomats are also trying to persuade China to invite the North Korean leader to China for an official state visit next month.
At the moment, China is reluctant to give North Korea anything. That's because North Korea has proved to be a disobedient and troublesome client since Kim Jong Un took over last year. For example, North Korea is threatening to carry out a third nuclear weapons test if China (and South Korea, the United States, and Japan) does not become more generous and cooperative. The Chinese don't like being threatened by the economic basket case next door, but the North Koreans refuse to show the proper respect to their patron and major source of trade and foreign aid. North Korea manages to irritate even its friends and allies.
The new government up north is trying to come up with inexpensive things it can do that will improve morale. One recent action was to repeal a 1990s law that prohibited women from riding bicycles. This law was passed in response to the death of the daughter of a senior army general, who was hit by a car while on a bicycle in the capital. This law was very unpopular, and women would often take their chances and pay the fine (a few dollars) if caught. But if caught too many times, the bike (a valuable item) could be confiscated. One reason bikes were so expensive was because North Korea never produced them, they were all imported from China or Japan. This has long been another source of irritation for most North Koreans. In the last decade the law was generally ignored in the countryside but still sporadically enforced (as a source of income for cops) in cities (especially the capital). So now there is one less irritant for North Korean women, and a momentary boost in morale, at least for women with bicycles.
A South Korea study of precision munitions in the military has found that a refusal to train regularly with these weapons (mainly guided missiles used by aircraft) has resulted in the effectiveness of these weapons being low whenever they are used. The military is now under pressure to spend the additional money and use these expensive weapons more in training. American advisors have been suggesting this for years but the South Korea military leadership felt more comfortable just having the high tech weapons and not spending millions each year to replace those used in training.
August 25, 2012: Japan reported that they had, based on a tip, found forbidden cargo in containers loaded on a ship that had stopped in a North Korean port. The inspection was carried out in accordance with a 2010 law that was enacted to help deal with UN sanctions against North Korea. Japanese ports had long been used by North Korea to facilitate smuggling operations. The UN pressured Japan to enact regulations that made it easier to investigate suspicious situations like this.
August 24, 2012: North Korea agreed to receive aid from private South Korean donors. The food and other items will be for victims of recent floods up north. North Korea is very touchy about foreign aid and insists on a measure of control. This makes it easier for North Korea to claim (to their own people) they are doing the donor a favor.
August 23, 2012: The U.S. is applying private and public pressure on South Korea and Japan to tone down the political tensions over who owns Dokdo Island. The U.S. had earlier suggested that Japan cede to South Korean claims on Dokdo. South Korea has long been willing to sacrifice good relations with Japan over the issue of who owns the uninhabited Dokdo (Takeshima to the Japanese) island in the Sea of Japan (East Sea in Korean). What is really going on here is continued Korean resentment of Japanese colonial occupation and centuries of Japanese aggression towards Korea. Both countries have been sending more air naval reconnaissance missions to the rocky outcroppings and the mass media in both countries have been jumping all over the tension. Japanese politicians would take an enormous domestic political hit if they managed to get the votes in their parliament to give South Korea Dokdo. But it would make Japan popular enough in South Korea to get the long-desired (by defense officials in both countries) cooperation treaty. The Dokdo dispute has been a recurring source of bad feelings between the two countries.
August 21, 2012: In northeastern North Korea, work has picked up on the long-delayed Rason International Commercial Trade Center. This project has languished for 21 years. Five years ago Russia agreed to refurbish the rail connection with North Korea but that was it. Since then North Korea has been forced to amend its commercial laws to accommodate the reluctance of Russian firms to do business in North Korea. These fears are maintained by continued unreliability of North Korean companies and a lack of law and order, at least regarding commercial agreements, in the north. This time, North Korea insists it will be different. But the northern officials always say that and in the past they have always lied. It’s the same situation with China, where many more firms have actually crossed the border and set up shop. Many of these Chinese were cheated, had their assets stolen by government officials, and chased out. The Chinese government says that this time around it will back the Chinese businesses in their disputes with North Korean officials. The Chinese has shown that it can apply meaningful pressure on the North Koreans, at least in cases where Chinese government property is stolen. The most famous recent case involved North Korean officials trying to steal a Chinese railroad train and its freight cars.
August 18, 2012: North Korean leader Kim Jong Un made a well-publicized visit to a coastal artillery unit that had fired on a nearby South Korean island in November 2010. The soldiers were praised and told they might have to fire again if the South Koreans did not stop their military training near the border and start showing more respect for North Korea. Neither of those things is likely to happen and South Korea has warned the north that another incident involving artillery fire will meet with massive retaliation. The North Koreans pretend to ignore that.
August 15, 2012: The North Korean government has halted a month long effort to compete with private money changers to obtain foreign currency (usually Chinese Yuan). This effort was carried out by having the national bank set up booths at legal markets and offering to buy Yuan at a better price than the private money changers. This led to a price war, with the price for Yuan increasing week after week until, earlier this month, the government halted its effort. The price for Yuan then dropped, which made it cheaper for business, and government, to obtain Yuan. But the government still did not have as much Yuan as it wanted to buy foreign goods. This was all because government incompetence had ruined the economy, resulting in their being less and less to tax. So now the government is trying to obtain Yuan by using their monopoly over the rice supply to sell rice for Yuan in the legal markets.