North Korean Economy Watch

According to the Daily NK:

This year, the North Korean authorities have been cracking down on the sale and distribution of products, tools and materials coming out of the Kaesong Industrial Complex. As a result, such Korean goods, formerly an expensive but popular choice in Hwanghae and South Pyongan Provinces, are now hard to find in markets.

A source from South Pyongan Province who spoke with The Daily NK in China explained, “Right up until last year, literally anything being made in the Kaesong Complex was available in the market, including clocks, metal, screws, clothes, underwear, toys and parts of electronics. However, the amounts have fallen dramatically since regulations were strengthened.”

The reason behind the regulations is unclear, however; the source suggested it could only be because of deteriorating inter-Korean relations.

Regardless, the source went on, “Nowadays, revealing the fact you sell those Kaesong Complex goods results in high fines and puts you in a bind” Therefore, he went on, “Only bread (Choco Pies), stainless steel or ceramic bowls and underwear are being sold.”

One consequence of the crackdown is that it makes the sale of other South Korean products smuggled in from China equally difficult. Albeit with some provincial differences, clothes and electronics cannot now be displayed on stalls, and must be sold in alley markets in secret.

A source from Shinuiju explained, “Market watch guards go around markets every day inspecting stalls with no notice; their investigation into South Korean products is really severe.” He explained, “If they find goods with Korean writing on, they confiscate them and give them back after two or three days later, after fines have been paid.”

“I hear there was a decree from above reinforcing crackdowns, but won’t this only lead to bribes?” the source pointed out.

Even when readily available, South Korean products are at the top of the price range, so most average families cannot afford them; one Choco Pie, a circular, individually wrapped chocolate cake made famous by the movie “JSA”, is between 180 and 200 won, a set of women’s underwear is 90,000 won, and a set of roughly ten plates, five or six small bowls and some coffee cups is around 250,000 won.

The source reported, “Due to the severe regulations, some traders sell them at home or in secret, hiding the goods behind the curtain.”

Interestingly, one South Korean official with the Kaesong Industrial Complex told the Daily NK that product leakage is not a problem at Kaesong, saying, “There have been almost no cases of complete products leaking out, but it is possible for stock, tools or things provided to workers like Choco Pies. However, the leaks are not enough to affect factory management.

And yet, one defector who used to be a worker in a shoe factory in charge of testing product quality explained that the siphoning off of materials, complete products, tools and other things is common among North Korean workers.

“The way they hide things and bring them out of the factory is really expert. I sometimes put up to 20 pairs of shoes on my body and came out of the factory. If you wear a long, thick winter coat then it is not so remarkable. Sometimes we did it in collusion with the factory manager.”

Read the full story here:
South Korean Products Disappear from Markets
Daily NK
Park Jun Hyeong and Mok Yong Jae
2010-3-10

UPDATE: The Daily NK (2011-3-7) reports that the DPRK’s recently minted commemorative coins have been been appearing in the markets:

Chosun Workers’ Party cadres who attended the Delegates’ Conference in Pyongyang on September 28th were each presented with a commemorative gold coin. Now, however, some of the same coins have begun to appear on the open market, according to a source from North Pyongan Province who spoke with The Daily NK on Sunday.

The commemorative coins were minted from gold, silver and nickel by the Chosun Central Bank, and form part of a tradition of coin presentation for state events or to commemorate notable national achievements which began with the 75th birthday of Kim Il Sung in 1987 and continued with the joint 50th anniversary of the Party founding and 50th anniversary of the liberation of the country from Japanese rule in 1995.

The money needed to obtain the raw materials for the 2010 coins was apparently gathered by Bukang Trading Company, which operates under the Workers’ Party.

“The Delegates’ Conference commemorative coins which have appeared on the market are mostly being sold by people who trade with China,” the source explained. “They are not pure gold, but there is a good amount of gold in them, so the price is reasonably high.”

Kim, who defected to South Korea in the second half of the 1990s, said that such coins used to be treated with the greatest of respect, explaining, “When I was in North Korea, I saw a number of commemorative coins. Even until the end of the 1990s, people looked after them at home as a precious thing and a source of great pride. The coin itself was evidence of a person’s status.”

However, recently people’s values have changed a great deal. The source from North Pyongan said, “In those days, even a starving man wouldn’t sell a ‘gift’ from the Suryeong or the General. But now, no matter how precious the gift may be, people will sell it in the market without a second thought.”

“Watches with Kim Il Sung’s name on and various commemorative coins do appear in the market sometimes,” he went on, adding, “Things which were beyond our wildest dreams in the olden days are becoming normal. Sellers point out, ‘What am I supposed to do with possession of this kind of thing?’ Having something to eat is better.”

More than being a simple indication of difficult economic times, the act of selling something which was intended to be thought of as a personal gift from a benevolent leader appears to present compelling evidence of the deteriorating authority of the regime and its control of social discipline. This seems to be particularly so given that the commemorative coins must be being sold by cadres, in theory the most loyal group of North Korean citizens and certainly one which needs to remain loyal if the regime is to maintain its grip on power in the long term.

ORIGINAL POST (2010-10-4): The DPRK is issuing gold and silver coins to commemorate the 65th anniversary of the founding of the Worker’s Party.

Images courtesy of Daylife.com.

UPDATE 3 (2/23/2011): According to Yonhap:

A recent survey of North Korean defectors in South Korea showed Wednesday that a large number of them use part of their resettlement money from the government here to help their families in the North.

In the survey conducted in November by the Organization for One Korea, a group run by unification activists, 71 percent of 350 respondents said they have sent money back to the communist country before. About 66 percent of the cash remitters said that they used part of their money received from the South Korean government.

In an effort to buffer the initial costs of resettlement, the government here provides each defector with a subsidy of 6 million won (US$5,330) and partly finances their housing.

More than 20,000 North Korean defectors have arrived in South Korea since the 1950-53 Korean War ended in a truce. The number does not account for the estimated tens of thousands hiding in China.

According to the survey that had a margin of error of 3.59 percentage points, about half of the cash remitters said brokers took away 30 percent of their money sent to the North as a fee, while only 65 percent believed the remainder was entirely delivered.

North Korean defectors are 17 times likelier to depend on government allowances, according to the Unification Ministry. Over 50 percent of defectors depend on a universal welfare program that pays them about 400,000 won (US$355) a month.

Defections began to accelerate after a massive famine swept through North Korea in the mid-1990s, killing an estimated 2 million people. North Korea considers defectors criminals punishable even by death.

Read previous recent stories about remittances below.
(more…)

Pictured above are Kim Jong-il’s two birthplaces. On the left is Vyatskoye, Khabarovsk Krai, Russia, where Kim Il-sung was reportedly stationed with the Red Army and where Kim Jong-il is believed to have actually been born.  Learn more here.  On the right is Kim Jong-il’s official birthplace southeast of Mt. Paektu and the nearby “Jong-il Peak”.  Both images via Google Earth.

But although Kim’s birthday is supposed to usher in a period of celebration, by most accounts times are tough in the DPRK.  According to the Associated Press (via Washington Post):

But this year many North Koreans are hungry, and a brutal winter is threatening the early spring harvest. The country is coping with natural disasters: foot-and-mouth disease has devastated its livestock and heavy flooding swamped precious farmland last year. There is also the ever-present tension with neighboring South Korea; conservative lawmakers in the South planned to mark Kim’s birthday Wednesday by floating balloons filled with anti-Kim propaganda across the border.

…

North Korean diplomats have been asking for food aid when meeting officials in foreign countries, a South Korean intelligence official said. North Korea’s food shortage is grave, and the North is likely looking to stockpile food to distribute to citizens next year, said the official, who spoke on condition of anonymity because he wasn’t authorized to talk to reporters.

The North has also reached out to the U.N. World Food Program, saying it needs help because of the severe winter and a bad vegetable harvest. On Monday, the United Nations said it had begun a new assessment of North Korea’s food needs and planned more than 300,000 tons of humanitarian assistance.

These signals seem to point to skimpy holiday gift distributions to everyone outside Pyongyang and senior party/military leaders. However, with the rise of markets, these gifts have meant less and less over the years.

Though according to KCNA, the North Koreans are in a celebratory mood nonetheless.  Pyongyang held a rally, a figure skating competition (with Japanese participation), a synchronized swimming  show (Footsteps was played), Kimjongilia flower exhibition, an art show, and a photography exhibition all in celebration of Kim’s birthday.

The AFP also reported on some other activities highlighted by the official North Korean media:

Aircraft delivered gifts on eight islands in the Yellow Sea as part of an annual handout of candy, chewing gum and cookies to all children, the agency reported.

Spring has even come early to the leader’s claimed birthplace at Mount Paekdu on the border with China, the agency said Monday, and a solar halo appeared above Jong-Il Peak there.

Although times are tough for the vast majority of North Koreans, I still see the DPRK as relatively stable, so maybe Kim and his supporters have something to celebrate after all.

Here is additional coverage of KJI’s birthday:
Hankyoreh
AFP
BBC
Daily NK
Donga Ilbo
Yonhap
New York Times
KCNA: Natural wonders

In addition to the Haggard/Noland book release, there were a couple of other interesting North Korea events in Washington DC this week that I wanted to point out:

1. Korea Economic Institute: The Markets of Pyongyang
John Everard, UK Ambassador to the DPRK (2006-2008)

-Read his paper here (PDF).
-See his power point presentation here (PDF).
-See his full presentation in three parts: Part 1, Part 2, Part 3.

2. US-Korea Institute at SAIS: Silent Partners: Chinese Joint Ventures in North Korea
Drew Thompson, Director of China Studies and Starr Senior Fellow at The Nixon Center

-The event web page is here.
-Read an executive summary here
-Read the paper here.

Both papers are well worth reading.

According to the Choson Ilbo:

The most important dates for North Koreans born since the 1970s are the birthdays of former leader Kim Il-sung on April 15 and present leader Kim Jong-il on Feb. 16. North Koreans may forget their parents’ birthdays but they always remember the leaders’, because that is when gifts of food and other daily necessities are doled out and a festive mood prevails throughout the country.

But now, due to international sanctions and the spread of grassroots capitalism, the traditional “gift politics” may be coming to an end as the regime can no longer afford to dole out grace and favor.

Gift Packages

The candy and cakes that were doled out on Kim Il-sung’s birthday were traditionally much better quality than those available in ordinary shops. Nylon and tetron fabric were also distributed, much more highly prized than the normally available synthetic cotton, mixed-spun or vinalon fabrics that shrink in the wash. Parents who can barely afford to clothe their children have no choice but to be grateful to Kim Il-sung.

On the two birthdays, a bottle of liquor, five eggs, two day’s supply of milled rice, 1-2 kg of meat, and cigarettes are distributed to every household. These are precious commodities not normally available to everyone. Thanks to these gift packages, the birthdays of Kim Il-sung and Kim Jong-il have long become established as major holidays.

The elite of the Workers Party are given luxurious houses, luxury cars like Mercedes and Swiss-made Omega gold watches. Quality wristwatches are given to ordinary people who have distinguished themselves meritorious and are preserved as heirlooms.

Economic Changes

But amid a food shortage and international sanctions, the regime is having to rethink the practice. And markets are booming there now despite the regime’s attempt to suppress them, so North Koreans can buy Chinese-made candies and cakes and other necessities without much difficulties. This makes the leaders’ birthday gifts look not so special any more.

The quality of gifts is also falling year by year. Senior officials, unable to live on gifts and official supplies alone, enrich themselves through corruption. An increasing number of officials secretly hoard hundreds of thousands of dollars, and it is therefore natural that the leader’s gifts lose their luster.

January 8 was the birthday of Kim Jong-il’s son and heir Jong-un. Although there had been rumors that the regime would designate Kim junior’s birthday as a national holiday and hold lavish celebrations, it passed quietly.

The North designated Kim Jong-il’s birthday as a national holiday quite a few years after he made an official debut in 1974. It was also only when his power base was cemented that he began to dole out gifts to celebrate his birthday. While Kim Il-sung was alive, he gave gifts only to close associates as a gesture of courtesy to his father. So long as Kim Jong-il is alive, therefore, chances are that there will be no gifts to the public or nationwide celebrations on Jong-un’s birthday.

This story is reported every year for the leader’s birthday. Here is a link to previous posts on this topic.

Read the full story here:
N.Korean Regime’s ‘Gift Politics’ Starts to Lose Its Luster
Choson Ilbo
2/2/2011

Pictured above: Nampho Glass Bottle Factory visited by Kim Jong-il

Institute for Far Eastern Studies (IFES)
(NK Brief No. 11-01-26)
1/26/2011

According to North Korean media, Kim Jong Il began this year’s onsite instruction with a visit to the Nampo Glass Bottle Factory. The January 20th issue of the Choson Sinbo also ran an editorial stating that “These days, in our country, improving the lives of the people is especially emphasized.” It also noted that Kim Jong Il’s first onsite visit of the year was to a site important to improving people’s standard of living. The paper boasted that great efforts were being made in the development of light industry — especially factories producing daily-use goods and food products — and revealed that the bottle factory in Nampo will play an important role in meeting the increased countrywide demands for packaging from factories large and small.

Despite this praise, the reality is that the people of North Korea are suffering ever-worsening economic conditions. Just as South Korea is in the middle of a cold spell, the North has suffered chilling conditions ever since the end of December. The Korean Central News Agency reported on January 22, “The cold-weather conditions are expected to continue until the end of January,” and, “this cold spell is causing more than a little damage to the lives of the people and to spring farming preparations.”

As the cold spell drags on, their hardship will continue. North Korea is ill-prepared to deal with such cold weather; freezing pipes make it difficult for the people to access fresh water, while food and firewood are in short supply. Hunger and cold are exacerbated this winter because those without access to firewood or heating oil are also faced with an environment devoid of wild plants or animals.

Power shortages have also grown more severe in the new year. On January 20, Open Radio for North Korea (ORNK) reported that an area of the Yanggang Province has been without electricity since the first of the month. Even Pyongyang has been experiencing power difficulties, with electricity only available to most residents for 1~2 hours each day. ORNK reported that “recently in North Korea, students and parents have been burdened with supplying firewood for school heating, while the prices of coal and wood are skyrocketing in the markets.”

The cost of food has also shot through the roof. Rice, corn, pork, and other staple foods are becoming increasingly more expensive. Young-wha Lee, a spokesperson for the Japanese human rights organization Rescue the North Korean People! Urgent Action Network (RENK), announced on January 17 that a source inside North Korea had reported a 500 Won jump in the price of rice within Pyongyang, from 1,400 Won per kilogram on the January 7 to 1,900 Won within 3~4 days. Corn jumped from 750 to 950 Won, and pork was up from just under 4,000 Won to its current price at around 5,000 Won. Gasoline now costs 3,500 Won.

According to a South Korean online source for news on North Korea, Daily NK, one can see the impact of inflation by taking notice of the price gap of around 200 Won per kilogram of rice in Pyongyang and rice in rural areas (North Pyongan Province’s Sinuiju and Ryanggang Province’s Hyesan, in particular). It is noteworthy that prices are shooting up in January, rather than during the lean season of March and April.

Good Friends, a South Korean-based humanitarian organization, has also relayed reports of inflation from sources within North Korea. It has reported that rice was selling in Pyongyang for as much as 2,100 Won per kilogram on January 7, significantly more than the 1,600 Won per kilogram reported at the end of last year. Prices continued to hover around 2,000 Won until recent rations eased shortages and brought the price back down to around 1,500 Won. As North Korean organizations and social units distribute these overdue holiday rations, there has been a fall in food prices.

However, these rations were not seen in all areas of the North, and in those regions where residents were not provided food, prices remain high. Rice in Hamheung jumped from 1,500 Won per kilogram on January 1 to 1,800 Won just one week later. On January 7, similar prices were seen in Chongjin (1,750 Won) and Sinuiju (1,800 Won). Ten days later, rice in Chongjin had climbed to 1,980 Won, and was threatening to break the 2,000 Won barrier. Corn in Pyongyang was selling for 950 Won per kilogram on January 7, while it cost 780 Won in Chongjin and 850 Won in Hamheung, Sinuiju, and Pyongsong. By January 17, corn averaged between 750 and 800 Won. Only in Pyongyang, agricultural regions, and other areas receiving rations had prices fallen to 600 Won per kilogram.

According Good Friends, grain prices in the North have shot up this year because several Party officials in charge of grain imports are behind schedule with incoming shipments, and the rising value of the US dollar and Chinese yuan have driven up the cost of overseas purchases.

Pictured above: Ontan Worker’s District, Onsong (Google Earth)

According ot the Daily NK:

In advance of next week’s lunar New Year’s Day holiday, National Security Agency agents are concentrating on getting together things for the holiday from households of those whose family members have crossed into China or South Korea.

Exploitation by the NSA or other powerful state apparatus is exceedingly common, of course, and the obtainment of necessities for holidays such as Kim Il Sung and Kim Jong Il’s birthdays, the Korean thanksgiving day (Chuseok) and lunar New Year’s Day are often covered via exploitation of the people. The difference this time, however, is that the specific targets are the families of defectors.

A source from North Hamkyung Province told The Daily NK today, “NSA agents in charge of northern border regions including Onsung have been engrossed in preparations for the holidays and generating private benefits, targeting smugglers and households with family members who have crossed into China or South Korea.”

The source explained, “Modes of exploitation by agents of the NSA and People’s Safety Ministry and cadres of the Party or prosecutors have been varied of late. They win houses which have problems over to their side and then get them to give certain things.”

The source said that as the lunar New Year’s Day comes closer, these moves have become more active and transparent. “NSA agents visit all of these houses and force them, or sometimes beg for things. They are no different from thieves, just without a knife.”

According to the source, the Conspiracy Research Office of the NSC in Onsung, North Hamkyung Province, which employs 25 agents, has allotted each agent items to get from their district.

There are two sets of items: one set is ten bottles of liquor, 5kg of pork, 20 packs of expensive cigarettes called “Yeomyung,” and the other set contains 20kg of gasoline, a certain amount of fruit and candy, and bottles of oil. Each agent has to select one set.

According to Onsung Jangmadang standards, a bottle of liquor can be bought for 4,000 won, 1kg of pork for 5,000 won, a pack of “Yeomyung” for 6,000 won, 1kg of gasoline 3,000 won, and a bottle of oil for 5,000 won.

In Ontan workers-district within Onsung, there are three agents. The goods assigned to them are also unaffordable, but only defector families have to provide them, the source said.

The source explained, “When an agent visits one’s home, they won’t leave until the host has set up a table of drinks for him. After drinking some, the agent coaxes them, ‘Have you got some news from the South?’ ‘Are you getting money well?’ or ‘When you get a call next time, you should grumble that the situation is hard, so that they will send more money.’”

Sometimes, agents call for bribes for their own family events, too. The source said, “While talking, agents hint furtively that there will be a family event and call for something for that, saying, ‘There will be nothing bad for you if you help out.’”

“Agents say openly that, ‘If more money is delivered, we can live well; it’s is a good thing, and a way to maintain socialism.’ They only need so much as to smell money and they come running,” the source complained.

Due to possible revenge from agents, people cannot complain about the situation and have to provide them with the things they demand, according to the source, who added, “However, the effect works only at that moment when they get the goods. When a problem occurs for these defector families, they are nowhere to be seen.”

Read the full story here:
Defector Families Are Moneybags for NSA Agents
Daily NK
Im Jeong Jin
1/27/2011

Evan Ramstad at the Wall Street Journal: Korea Real Time interviews Marcus Noland:

Only a handful of outside economists spend the enormous time required to delve into the mysteries of North Korea.

Marcus Noland is one of them. With his research and writing partner Stephen Haggard, Mr. Noland has written several books about the North, including a definitive study on the famine that gripped the country from the mid- to late-1990s and resulted in the death of at least 1 million people and perhaps upwards of 2 million.

In a new book published this week, called Witness to Transformation: Refugee Insights into North Korea, Messrs. Noland and Haggard produce the results of interviews they and their researchers conducted with more than 1,600 North Koreans who fled the country. The interviews took place from 2004 to 2008 and involved people who left North Korea as early as 1991.

The book documents the remarkable changes inside the North through the eyes of people who lived through them. Of course, it’s a group that holds negative views of North Korea. But the economists do their best to take that into account.

Mr. Noland, who is based at the Peterson Institute for International Economics in Washington, discussed the book with us. Here’s an excerpt of the interview:

WSJ: Most books and studies on North Korea by people outside the country are focused on the nuclear weapons issue and the geopolitics around that. Why have you focused on refugees and the economy?

Mr. Noland: An understudied aspect of the North Korea story, we believe, is the really quite dramatic internal changes that have been going on in North Korea over the last 10 to 20 years. North Korea poses an analytical challenge in that access is limited and the conventional ways that one could go studying a country aren’t available. In this context, the diaspora of refugees leaving the country is an important source of information.

The refugees themselves constitute a first-order crisis. Most of these people, in a clinical setting, would probably be diagnosed with post-traumatic stress disorder. Their mental health issues appear to be related not only to the difficult circumstances they faced in China but their experiences in North Korea.

WSJ: What is the cause of those stresses?

Mr. Noland: Specifically the loss of family members and family separations associated with the famine. The sense among many of them that they were abandoned in their moment of greatest need. The feeling that they were not given access to international humanitarian aid, which many of them believe was diverted to the military. And the experience of many of them of having been arrested and incarcerated in North Korea’s vast and sprawling penal system.

So the refugees themselves are an issue. They also provide us a window into North Korea.

WSJ: What did you learn from them?

Mr. Noland: Our book addresses three broad issues, which they illuminate.

The first is the underlying economic changes in the country. What we find is the economy has essentially marketized over the last 15 years or so, not as any kind of planned reform but rather as a function of state failure. What is extraordinary is the degree of marketization that the refugees portray when describing their daily lives. They describe a situation in which doing business or engaging in corrupt or illegal activities is increasingly seen as the way to get ahead in North Korea. And positions in the state or the party are still highly desired and seen as a way to get ahead, but not out of patriotism because these positions increasingly provide a platform for extortion of the general population.

Which brings us to the second big theme of the book and that is the criminalization of economic activity and the use of this vast penal system not only for its traditional use as a tool of political intimidation but for economic extortion. What we find is that changes in the North Korean legal code have criminalized vast areas of economic life, the sort of economic life that real people actually lead. In their daily lives, most if not all of North Korea’s non-elites run afoul of some of these statutes, which in effects makes everyone a criminal.

The fact that everyone is running afoul of some statute is combined with the fact that the police are given extraordinary discretion in who they arrest and who they incarcerate and for what period of time. We find that the North Korean penal system has four components. The worst and best known are the long-term political prisons, the North Korean gulag that was set up by Soviet advisors. There’s also a set of institutions that are effectively felony prisons, where you put the murderers and the rapists. Then there are a set of institutions that correspond to misdemeanor jails in other societies. What has developed since the famine period of the 1990s is a fourth set of institutions that have been codified. Those primarily house people who have made economic crimes, such as hiring labor for money or selling things in the market that you’re not supposed to be selling. We go through the enormous expansion of articles in the North Korean legal code to cover these crimes, such as illegally operating a restaurant.

This is a fantastic instrument for extortion. It means if you were engaging in entrepreneurial behavior, the police can come to you and say ‘You’re engaged in illegal activity. We can take you, take your spouse, take your kid and put them in this institution where you know horrible things happen.’ So the penal system not only serves its traditional function as a platform for political corruption but we find it is now a platform for economic predation as well.

We discovered something that we call the ‘market syndrome.’ It is a series of characteristics that seem to be linked with engaging in market activities. People who engage in market activities are 50% more likely to be arrested than their counterparts. They are more likely to harbor more negative appraisals of the regime than their counterparts. And in a society where people are afraid to express their opinions, these guys who are engaged in the market, who have been to jail and been released, are more likely to express their views to others. That is to say that the market is emerging as a kind of semi-autonomous zone of social communication and potentially political organizing. And in that sense, the regime is right to fear the market.

And that brings us to the final theme, and that is the political attitudes of these people and nascent dissent. What we find is people have very negative appraisals of the regime. That’s not surprising. We’re sampling from a group of people that have voted with their feet and one would expect them to have negative views, though we go through fairly elaborate statistical exercises to try to control as best we can for the demographic characteristics of the people we’ve interviewed.

People have very negative views of the regime. They are increasingly disinclined to believe the regime’s meta-narrative, which rationalizes their misery as a function of being held captive by hostile foreign forces. Most of these people hold the government itself as responsible for their plight.

WSJ: You two previously wrote one of the seminal studies on the North Korean famine (Famine in North Korea: Markets, Aid and Reform), what did the refugees tell you about living through that?

Mr. Noland: Both Steph and I were really struck by was just how the famine experience reverberates. The famine was more than 10 years ago. It ended in 1998. A significant share of the people, I think about a third, reported separation from, or death of, family members during that process. You had people out scavenging to find food. People going to China. Family separation and death of family members just continued to reverberate.

We asked them: ‘Were you aware of the international food aid program?’ The numbers differ in our surveys, but significant numbers of people were unaware of the food aid program. It was astonishing to us.

Then, among the ones who were aware, we asked `Do you believe you were a beneficiary?’ Only a small minority responded yes. And when we run all the regressions, this status of knowing of the existence of the program but believing you were not a beneficiary, this is a profoundly demoralizing experience. These people feel they were abandoned at this time of need, when they were seeing their families and neighbors dying. They believe it’s going to the army and the elites. That group of people, when we run the psychological tests and ask them their views of the regime, this is an embittered group. The effect of that experience is bigger than being in the prisons.

We wrote a book on the famine, so obviously we’re interested in it. But we were surprised and we wouldn’t have guessed that this experience continues to reverberate among the people who lived through it.

Read the full story here:
Marcus Noland on NK’s Refugees and Economy
Wall Street Journal: Korea Real Time
Evan Ramstad
1/12/2011

Andrei Lankov writes in the Korea Times:

The North Korea of the old Stalinist days is gradually dying. In some regards the North is still a Stalinist society, but it is changing even if these changes do not necessarily attract much outside attention. One of the most dramatic transformations of the last year is a great relaxation of the control over movement inside North Korea.

Let’s start from how the system used to work in the past. For decades, no North Korean was allowed to leave his or her native county without special travel permit, to be issued by local authorities. The only exception was that a North Korean could visit counties which had a common border with the county where he or she had official household registration. If found outside his or her native county without a proper permit, a North Korean was arrested and then ‘extradited’ back to their native county for appropriate punishment.

There had to be valid reasons for issuing a travel permit, unless the person went somewhere on official business. In most cases one had to produce an invitation from relatives for a wedding or funeral or other sufficiently important event. Then the paperwork could begin. In most cases the application was first authorized by the party secretary in one’s work unit, then it was sent to police and, finally, to the so-called “second department” of a local government (these departments were staffed with police officers).

There were various types of travel permits. For example, a trip to some special areas, like Pyongyang or districts near the DMZ, required a special travel permit which had to be confirmed by Pyongyang. There were also special types of permits for the military and some very special types for big wigs.

A trip overseas was virtually impossible. North Koreans could go abroad only on official missions and, in a very limited number of cases, they were permitted to visit relatives in China.

The system crumbled in the mid-1990s. The Great Famine made it unsustainable. Around 1996 the public distribution system collapsed, and millions of North Koreans began to move all over the country looking for food. The government turned a blind eye to their activities, and soon the restrictions ceased to be enforced.

It is not clear to what extent the travel control system was officially relaxed, and to what extent the changes resulted from benign neglect. For all practical purposes, from around 1997-98 the North Koreans enjoyed some freedom to travel without permits, with Pyongyang and some sensitive areas being an exception. This sudden relaxation (even collapse) of the domestic controls was a necessary preliminary condition for the explosive growth of private economic activities in the country. People could trade only because they could travel.

North Koreans also began to cross the border and travel to China where they looked for food and jobs. Crossing the border was illegal, but it was impossible for a country with a crumbling economy to enforce border control. Thus, once again, authorities turned a blind eye on everything which was happening in those areas.

In 2001 the system changed again. The Great Famine was over, largely due to the efforts of international relief agencies and the new policies of Seoul busily feeding its “brother/enemy.” Thus, the system of travel permits was re-introduced, but its new version, in operation from 2002, is less restrictive than earlier regulations – and still largely ignored.

Nowadays, the authorities issue travel permits for trips lasting a week or two. Often they can be bribed to speed up the process, and in such a case the permits are produced almost immediately. The amount of bribe varies, depending on the destination: from some $10 for Pyongyang to merely $2 to $3 for a humble countryside destination. Money seems to be paid usually in exchange for speed.

There is something even more remarkable: In recent years North Korean authorities began to issue certificates which allow its bearer to travel to China, crossing the border legally. The procedure is time-consuming, taking about six months. As usual, it requires special security checks by the authorities. However, the outcome of such procedures is not pre-ordained, so generous payments are helpful to steer officials in the right direction. In this case, the bribes are much larger, up to $100 (as opposed to the usual $50). For the average Korean this is a large amount of money, but a majority of the applicants are engaged in the cross-border shuttle activity, and for them $100 is not an exorbitant sum. They are quite happy to get permits. Even if they pay bribes they still feel themselves more secure and more law-abiding. Being Koreans, they obviously prefer to go about business legitimately.

So, the old system is dying, even though the authorities would much prefer to keep it in place. Nonetheless, it might take many years before these changes have meaningful political consequences.

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Travel permits in N. Korea
Korea Times
Andrei Lankov
1/2/2010