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Second Economic Committee

The main military industry of the country’s army is under the leadership of the Second Economic Committee, under the jurisdiction of multiple general bureaus and more than 130 arsenals. Weapons production in the DPRK is managed by the Second Economic Committee, which ostensibly is subordinate to the KWP Central Committee Munitions Industry Department; however, the National Defense Commission has the authority to provide oversight and certainly exercises direct supervision of important systems such as ballistic missiles. Second Economic Committee Chairman Paek Se-bong is a standing member of the NDC.

North Korea’s “second economy” under the Second Economic Committee got its start in October 1966 when Kim Il-song gave a speech at a KWP meeting and declared that national defense capabilities had to be pursued in conjunction with national economic goals to assure successful socialist revolution. In the late 1960s, the Second Machine Industry Department was established.

The parallel development of the military and economy introduced in the mid-1960s posed daunting challenges for the North. First, it shaped national industries into a military-industrial complex. North Korea’s heavy and chemical industry was put to use producing armament and munitions. The regime placed non-military and military sectors under the First Economic Committee and Second Economic Committee of the WPK respectively, and this deepened the division of the national economy into a civilian (or first) economy and a military (or second) economy.

Second, the concentration of investment in munitions impeded the development of the civilian industry, which had an adverse effect on the consumer sector and created a ‘poverty trap’ for the people of North Korea that still exists. Third, the munitions industry did not remain confined to just national defense, but gradually branched out into civilian production, which carried economic implications. In this way the ‘military economy’ became a privileged economic sector in North Korea. Since the 1990s, it has become an ever larger part of the overall national economy amid the general economic downturn.

The No. 2 Economic Committee was created in the seventies by merging all offices and bureaus related to arms production scattered under various departments of the Administrative Council. The committee has entire production plants under its management for production of small-arms, ships, and even aircraft. The committee also takes a leading role in development of new equipment as well as export and import of arms.

Even civilian manufacturing plants operating under the Administrative Council are obligated to set aside workspace for production of small arms and their parts, the production of which is supervised by the No. 2 Economic Committee. The committee operates about 130 munitions factories and about 60 facilities for the production of parts and components and for maintenance and repairs. The committee also controls about 100 factories that produce civilian goods but could be converted for military production.

The North Korean government and the military-industrial complex operates a diverse array of production plants and their numbers total 1800. Among them are forty small arms plants, ten armored vehicle factories, ten shipyards for combat vessels, fifty explosives facilities, etc. Most of the facilities are located in Chagang Province and other remote inland areas, and are partially or wholly underground to minimize damage in war.

The plants are not named but are usually given numbers like Factory No. 65 (Junchon, Chagang Province), No. 67 (Kangdong, South Pyongan), or No. 81 (Junchon, Chagang Province) to obscure their true identity. Emergency shelters are under construction near factories and plants, and mobilization plans for persons and materials have already been completed to assure continued production even through the fires of war.

The defense industry is controlled by the interrelated efforts of the National Defense Commission, the KWP, and the cabinet through a hierarchical association. Annually, the Ministry of People's Armed Forces determines defense requirements and submits them for approval to the National Defense Commission. Thereafter, the National Defense Commission, working with the party Central Military Commission, establishes defense priorities and issues directives, which are disseminated by the cabinet and the Central Military Commission.

The cabinet forwards these defense requirements to appropriate agencies for action: as an example, the State Planning Commission uses defense requirements to help inform budget appropriations, which are approved by the Supreme People's Assembly and administered by the Ministry of Finance; other agencies are directed to supply energy and material resources. The Central Military Commission, working through the KWP's Munitions Industry Department, establishes defense industry policies, which are tasked to the Second Economic Committee for implementation.

A subordinate organ of the National Defense Commission, the Second Economic Committee, directs the defense industry with oversight and guidance provided by the party Munitions Industry Department. In 1989 Kim Ch'61-man succeeded Chon Pyong-ho as chairman of the Second Economic Committee; and then in September 2003, the 85-year-old Kim Ch'61-man was replaced by Paek Sebong (suspected alias for Kim Jong Chul, second son and possible heir to Kim Jong II). In his dual capacity as party secretary for munitions and party director for the Munitions Industry Department, Chon Pyong-ho oversees and guides the work of the Second Economic Committee and thereby the defense industry. Organized into nine bureaus, the Second Economic Committee exercises responsibility for defense industry plans, finances, production, distribution, and foreign military sales.

At the head of the Second Economic Committee is the General Bureau, which is responsible for defense industry plans, budget compilation, and resource procurement and distribution. Defense industry procurement, development, and production are directed by nine bureaus, including seven machine industry bureaus.

  1. Integrated Bureau (responsible for planning, budgets, and procurement of materials);
  2. First Machine Industry Bureau oversees small arms, munitions, and general-purpose equipment.
  3. Second Machine Industry Bureau commissions tanks, armored personnel carriers, and trucks.
  4. Third Machine Industry Bureau is responsible for Multi-stage rockets, artillery and antiaircraft artillery systems.
  5. Fourth Machine Industry Bureau produces rockets and Guided Missile systems
  6. Fifth Machine Industry Bureau is responsible for nuclear, biological, and chemical weapons.
  7. Sixth Machine Industry Bureau manufactures naval vessels
  8. Seventh Machine Industry Bureau produces communications equipment and and aeronautical related equipment
  9. External Economic Affairs Bureau (also known as Yongaksan Company) is the ninth bureau of the Second Economic Committee and has primary responsibility for foreign military sales and shared responsibility with the machine industry bureaus for defense article procurement. It is suspected that foreign military sales either fund the defense industry or supplement its spending.

The machine industry bureaus supervise defense factories and coordinate internally with the Second Natural Science Institute (formerly the Academy of Defense Sciences) and with corresponding Ministry of People's Armed Forces bureaus and commands. Organized into divisions by specialty, the Second Natural Science Institute directs all defense-industry research and development.

Ministry of Military Supplies Industry

The Ministry of Military Supplies and Industry of North Korea is a subordinate department of the Workers’ Party. It has been included on the sanctions list by the United Nations and the United States for participating in the North Korean missile project. The precise relationship between this Party "ministry" [not a state government ministry] and the Second Economic Committee is unclear. Like Clark Kent and Superman, they are never both seen at the same time, and descriptions of the Ministry seem interechangeable with the Second Committee.

The headquarters of the North Korean Ministry of Military Supplies Industry is located on Lubong Mountain in the northeastern suburb of Pyongyang. The Ministry of Military Supplies Industry is not subject to cabinet leadership and has priority, and can independently carry out the planning, finance, production, and supply of military supplies economy.

There are also many subordinate organizations, including the First General Administration which directs the production of rifles, machine guns and other light weapons, as well as mortars, and grenades. The development and production of missiles is the focus of the ministry. The Military Supplies Industry Department is also responsible for the production of Kim Jong Il's special train.

The license plate number of this unit is "Pyongyang 24-XXXX", which is the highest among all economic sectors in North Korea, while the license plate number of the State Planning Commission responsible for general economy is "Pyongyang 29-XXXX".

The Ministry of Military Supplies Industry (formerly the Ministry of Machinery Industry of North Korea) is mainly responsible for the development and production of missile-related military equipment. Although it is under the leadership of the National Defense Commission and the Central Military Commission of the Workers’ Party in form, it is actually under the direct control of Kim Jong Il.

Page last modified: 30-06-2021 11:42:35 ZULU