North Korean Economy Watch

UPDATE 1: By coincidence NK Leadership Watch and I posted on a similar topic today.  See his post and analysis here.

ORIGINAL POST: Today the Daily NK reported that preparations were underway for another KPA military parade:

A high level government official revealed today, “North Korea has been mobilizing military personnel and equipment to practice for the military parade at Mirim Airfields near Pyongyang. This practice has been taking place since even before the death of Kim Jong Il.”

The official explained the reason for the ongoing parade practice as part of preparations to commemorate Kim Il Sung’s birthday (April 15) and the Mlitary Foundation Day (April 25).

The military parade practice has so far involved the Worker and Peasant Red Guard, which is made up of currently-serving soldiers and reservists, mobilized with the latest-model tanks, armored cars, as well as short and medium range KN-02 and Musudan missiles.

The official added, “North Korea conducts parades on anniversaries such as the Military Foundation Day and other national holidays. Looking at the speed and scale of preparations currently underway, it seems more likely that the parade will take place in April rather than on February 16, Kim Jong Il’s birthday.”

The logistics of these parades are enormous.  I learned a lot about them back in November at a meeting with Osamu Eya in Japan. Among the many things we discussed, I asked him where the North Korean military practices their parades through Kim Il-sung Square. He answered with a single word: “Mirim”.

Now I am kind of embarrassed to admit that I never saw the resemblance (because I thought of the Mirim area as a runway strip and because the two places are not geographically laid out in the same directions). Once you rotate the satellite images and set them next to each other, however, there is no denying that the KPA has a Kim Il-sung Square-sized practice area from which to rehearse its grand military parades.

Pictured above (Google Earth): (L) Kim Il-Sung Square, (R) Mirim parade practice area.

Looking at the most current Google Earth satellite imagery (2010-10-6) we can see vehicles already practicing for their next parade:

In this Google Earth image (2006-11-11) we can see people practicing in the area:

Going back to the oldest available satellite image on Google Earth (2000-6-12) the use of the facility as a practice area is a little more clear.  We can also see some of what remains of the original landing strip in this photo:

But Mirim is not just a practice filed.  It also contains facilities to house and feed the thousands of people who come to practice. Just to the left of the field is the April 25 Hotel:

According to KCNA (1998-9-30):

The April 25 Hotel has been built on the outskirts of Pyongyang as a monumental edifice in the era of the Workers’ Party. The hotel with a total floor space of more than 134,000 square metres and accommodation for 20,000 guests has bedrooms, cultural and welfare facilities and cook equipment on a highest level. It will serve servicemen and civilians who participate in national military and civic events. Soldier-builders successfully finished this gigantic project–erection of buildings, assembling of equipment and arrangement of the area–in a little more than one year. A ceremony for the completion of the hotel took place on Tuesday. Present at the ceremony were Jo Myong Rok, Kim Il Chol, Kye Ung Thae and others. A congratulatory message of the Workers’ Party of Korea Central Committee was conveyed to the soldier-builders and helpers who had performed feats in the hotel construction. The message noted that the April 25 Hotel, a monumental edifice of the era, has been built in a short span of time under the present conditions that all the people have to overcome manifold trials and hardships in their advance. it could be done only by the revolutionary army of Korea who knows no impossibility, and it is a proud fruition produced by the might of the army and people rallied around the party as one in mind, it stressed. Highly praising the soldier-builders and helpers for demonstrating again the potentials and stamina of socialist Korea by completing the hotel, the message expressed the belief that they would make greater success in carrying out their revolutionary duties. Jo Myong Rok made a report at the ceremony. The reporter said that the heroic and proud feats performed by servicemen in the noble work to carry out the WPK’s grand plan for construction will be always remembered by the fatherland and handed down to posterity.

KCNA reported on 1998-10-8 that Kim Jong-il visited the hotel:

Pictured above: Kim Jong-il giving “on the spot guidance” at the 4.25 Hotel

[Kim Jong-il] then went to the April 25 Hotel which was newly built on Mirim plain. Looking round the interior and exterior of the hotel including a bedroom, a washroom, a dining hall and a kitchen, he learned how the hotel had been built. He highly praised soldiers and helpers for having built the hotel in a short span of time and contributed to demonstrating the potential and stamina of socialist Korea once again. He said the construction of the hotel in a short span of time is a miracle that can be worked only by the heroic Korean People’s Army (KPA) which is intensely loyal to the party. He added that the country will always remember the soldiers’ heroic feats and proud achievements in socialist construction. He called for equipping the hotel, an asset of eternal value for the army and people, with better facilities, planting many trees around the hotel, creating a pleasure park and providing those who stay in the hotel with good conditions for cultured life. As many servicemen and civilians will use the hotel, they should be given best services, he said, and gave the hotel important tasks for its management and operation. The Chairman of the DPRK National Defence Commission was accompanied by director of the General Political Department of the KPA Jo Myong Rok, chief of the general staff of the KPA Kim Yong Chun, Minister of the People’s Armed Forces Kim Il Chol and general officers of the KPA.

This hotel was built at the time the DPRK was experiencing the “Arduous March” (Forced March)–a famine which killed up to a million people. Despite the acute shortage of food and a breakdown of the DPRK’s revolutionary social contract, KCNA listed this hotel as one of the great accomplishments of the North Koreans during this time (1998-12-31):

This year proud successes have been reported from the DPRK in face of difficulties brought on by the combined effects of the never-ceasing campaign of the imperialists to stifle the DPRK and years of natural disasters. The most remarkable success gained in the forced march this year is artitifical satellite “Kwangmyongsong 1″ which was launched into orbit on august 31. The scientists and technicians of Korea launched into orbit the first artificial satellite, a product of their own wisdom and technology, fully demonstrating the national power of Korea with a powerful scientific and technical force and the solid foundations of the independent national economy. Bulky April 25 Hotel and September 9 Street sprang up in Pyongyang to commemorate 50 years of the DPRK (September 9). The hotel with modern equipment and accommodation for 20,000 is on the east outskirts of the capital city. The street linking Pyongyang Airport to the Kumsusan Memorial Palace, the sacred temple of Juche, gave a major face-lifting to the northwest area of the capital city with bridges of special characteristics, flats for thousands of households, ornamental forests, scores of metres wide, on either side of the highway in good harmony with landscape. Thousands of minor power stations were built across the country this year. The locally-built minor power stations in Jagang Province meet the needs for the lighting of the flats for more than 100,000 households and the production of local-industry factories. Flats for 10,000 households in Chongjin, an industrial city, benefit from electric heating. A growing number of cities, counties and units are offsetting the demands for electricity with electric energy turned out at minor power stations. The Huichon General Machine Tool Plant produced hundreds of machine tools in a matter of a few months. In the railway transport diesel engine locomotives were converted into electric locomotives called “forced march.” 60 kilometre-odd-long railroad between Haeju and Ongjin, between singangryong and Pupho in the central area of the country was switched over to a broad-gauge one. The Pyongyang Integrated Circuits Factory, salt refineries and other industrial establishments were commissioned or completed throughout the country. As a result, a more solid economic foundation of the nation was laid.

Andrei Lankov writes in the Asia Times:

It is often overlooked how much North Korea has changed over the past 20 years. Its Stalinist and militaristic facade is carefully maintained by the state, but in the new circumstances it is increasingly misleading. Behind this official veneer of militant posters and goose-stepping soldiers, the society itself has changed much.

In a nutshell, the past two decades were the time when the state was steadily retreating from the private life, and also was losing its ability (perhaps also its will) to control the daily activities of its subjects as well as how they made a living. One of many significant changes has been the steady decline in the significance attached to family background (known as songbun in North Korean parlance) – once the single most important factor that determined the life of a North Korean.

Family background did matter in other communist countries as well, but to a much lesser extent. For example, in the Soviet Union immediately after the 1917 communist revolution, scions of aristocrats, descendants of priests, and merchants faced many kinds of discrimination. It was more difficult for them to enter a college or to be promoted, and they were more likely to be arrested for alleged political crimes. However, this discrimination had disappeared by the late 1940s, so in the days of my youth, in the 1970s and 1980s, it had become quite normal in the USSR to boast about real or alleged aristocratic family roots.

North Korea is very different. In 1957, the authorities launched a large-scale and ambitious investigation of the family backgrounds of virtually all North Korean citizens. As a result of this and subsequent investigations, by the mid-1960s the entire population was divided into a number of hereditary groups, somewhat akin to the estates of medieval Europe. Career chances and life prospects of every North Korean were determined, to a very large extent, by his membership in one of these strictly defined groups.
The major criteria of classification were quite straightforward: the songbun (origin) of the North Korean was largely defined by what his or her direct male ancestors did in the 1930s and 1940s.

The official songbun structure was quite elaborate and changed over time. However, at the first approximation, there have been three groups in North Korea, usually known as “core”, “wavering” and “hostile” classes. Every single North Korean had to belong to one of these groups.

The “hostile class” included people whose ancestors in or around 1945 were engaged in activities that were not to the regime’s liking. Among others, this group included descendants of clerks in the Japanese colonial administration, Christian activists, female shamans, entrepreneurs, and defectors to the South. Members of the hostile class faced the greatest number of restrictions: They could not live in Pyongyang or other major cities and they could not be admitted to good colleges or universities. People whose songbun was exceptionally bad would not even be drafted into the military.

Members of the “core class” included those whose direct male ancestors contributed toward the foundation and strengthening of the Kim family regime. They were descendants of anti-Japanese guerrillas, heroes of the Korean War, or party bureaucrats. For all practical purposes, over the past half-century, only these people could be promoted to key positions in the North Korean state and party bureaucracy. They constituted the hereditary elite.

In the days of Kim Il-sung’s rule, from the early 1960s to the early 1990s, songbun was of paramount significance. It determined where people lived and worked and even what they ate. Most marriages were also concluded between people of the same or similar songbun.

It was also important that the songbun was, in essence, unchallengeable. It was inherited from one’s father and was then bestowed on one’s children. The mother’s songbun did not matter. I know a couple where the husband’s songbun was bad (he was a “landowner’s grandson”), but the wife had the best songbun imaginable, being a descendant of a family that once was involved with the anti-Japanese guerrillas of Kim Il-sung. Frankly, such a marriage was rare and unequal – in most cases women of such standing would be as reluctant to marry a man of low origin as, say, a European noble lady from the 17th century. However, in this particular case the marriage did take place, much against the resistance of the girl’s parents.

In due time, though, the spouses discovered that the wife’s songbun did not really matter. Their daughter, a promising athlete, could not be sent for further training, since her songbun was bad: the great-granddaughter of a minor landlord could not compete on the national level and, for that matter, could be accepted only to a junior college.

In Kim Il-sung’s era – that is, before 1994 – the state was in near-complete control of an individual’s life. The only way to achieve high status and affluence was to climb the official bureaucratic ladder. As a North Korean friend put it in the late 1980s: “I hate officials, but I want to become an official, because in our country, only officials can live well.” Indeed, in Kim Il-sung’s North Korea all material goods were distributed by the state and almost all income was derived from work in state industry or the state bureaucracy.

But things started to change dramatically in the early 1990s. The state sector, suddenly deprived of Soviet subsidies, collapsed. North Koreans suddenly discovered that food rations were no longer forthcoming and their official monthly salary would only buy 1 or 2 kilograms of rice. Predictably, mass starvation followed, killing at least a half-million people.

To survive, the North Korean people literally rediscovered capitalism. Estimates vary, but the consensus is that over the past 10-15 years, the average North Korean family has come to draw most of its income from what can be described as black-market activities. Actually the so-called black market is not particularly black, since the government – in spite of occasional crackdowns – has tacitly tolerated its existence since the mid-1990s. Nowadays North Koreans work on individual fields on steep mountain slopes, they establish private workshops to produce garments and assorted consumer goods, and they smuggle and trade.

The new and increasingly dominant unofficial economy is in essence capitalist. As such, it rewards those who are sufficiently industrious, greedy, intelligent, ruthless and disciplined – and in some cases, it rewards them handsomely. Social inequality is growing and many a successful merchant or workshop owner lives better than a middle-ranking bureaucrat. A successful entrepreneur might have all trappings of luxury – including, say, a Chinese motorbike or a refrigerator, which in North Korea can be seen as roughly equivalent to a Lexus and a yacht.

The success in the emerging new economy is usually unrelated to one’s songbun. In fact, sometimes it seems that people with bad songbun tend to be more successful nowadays – perhaps because back in the 1990s they had no expectations of the state and were the first to jump into the murky waters of the emerging North Korean market economy.

Of late, the previously attractive career avenues have lost much of their allure. For example, in the past, many North Koreans were willing to do their long and tedious military service, which lasted some seven to 10 years. This popularity was easy to explain: For a person with average songbun, this would be the only way to get into the bottom tiers of the bureaucracy. As a North Korean told it, recalling the time of her youth, the 1970s: “The only way to become somebody was to go into the military, join the Korean Workers Party while on the active service, and then come back to become an official.”

Recently, however, military service has lost much of its popularity. Few people would be willing spend 10 years in a squalid barracks so as eventually to become a minor official in the city administration. Such a job is still attractive, to be sure, but it seems preferable to become a smuggler or a merchant, whose income far exceeds that of a petty bureaucrat.

Still, on the very top, songbun is important, since the key administrative positions are held by those with good songbun, and a mid- or high-level official can make a nice income by milking the private economy. Hence people with good songbun still often think about capitalizing on the real or alleged contribution of their ancestors to the establishment of the North Korean regime. However, for a majority the emergence of markets opened a new, faster and more attractive (but also more risky) avenue of social mobility.

North Korean society has become defined by one’s relationship to money, not by one’s relationship to the bureaucracy or one’s inherited caste status. Money talks, and for better or worse, in North Korea, money talks ever louder. As a female refugee in her early 40s put it recently: “Under Kim Il-sung, songbun was very important, it decided everything. Under Kim Jong-il, things are different – your family background still matters, but money nowadays is more important than social background.”

Read the full story here:
North Korea’s new class system
Asia Times
Andrei Lankov
2011-12-3

1. “Relying on One’s Strength: The Growth of the Private Agriculture in Borderland Areas of North Korea”
Andrei Lankov，Seok Hyang Kim ，Inok Kwa
PDF of the article here 

The two decades which followed the collapse of the communist bloc were a period of dramatic social and economic transformation in North Korea. The 1990-2010 period was a time when market economy re-emerged in North Korea where once could be seen as the most perfect example of the Stalinist economic model. The present article deals with one of the major areas of socioeconomic change which, so far, has not been the focus of previous studies. The topic is about the growth of private agricultural activities in North Korea after 1990. This growth constitutes a significant phenomenon which has important social consequences and also is important from a purely economic point of view: it seems that the spontaneous growth of private plots played a major role in the recent improvement of the food situation inside North Korea.

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3. Korea Sharing Movement anti-malarial program (Via Cancor)
Read a PDF of on the project here

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4. What is it like to teach at the Pyongyang University of Science and Technology (PUST)?
Find out from one instructor here. More on PUST here.

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

Asian Survey Vol. 39, No. 2 (Mar. – Apr., 1999), pp. 287-309
Kongdan Oh and Ralph Hassig

Download PDF here or download from Jstor.org here

The refusal of North Korea’s letters to institute serious economic reforms has frustrated those who study the country and those who seek to alleviate the suffering of the North Korean people.  Two French medical aid organizations have withdrawn from the country complaining that the Pyongyang government interfered with their work.  This is but one sign of a growing donor fatigue.  The muddling through plan that the Kim regime has adopted involves soliciting foreign aid, bargaining with its military and nuclear products, making minimal unofficial changes in the domestic economy, and waiting for the international environment to become more favorable—perhaps even expecting a resurgance of international communism.  Equally important, Kim and his ruling cohorts are willing to sacrifice the economic health of their nation for the security of their regime, just as other dictators, both communist and non-communist have done.  The painful difference in North Korea’s case is that it is half of a divided nation, posing an immediate humanitarian dilemma for the millions of Koreans in the Southern half of the penninsula whose families are suffering in the north.  For this reason more than any other, the future of North Korea cannot be ignored.  

Peterson Institute Working Paper
WP 08 – October 2008
Stephan Haggard and Marcus Noland

Read the paper here

Abstract: In the 1990s, 600,000 to 1 million North Koreans, or about 3 to 5 percent of the precrisis population, perished in one of the worst famines of the 20th century. North Korea is once again poised on the brink of famine. Although the renewed provision of aid is likely to avert a disaster on the scale of the 1990s, hunger-related deaths are already occurring and a dynamic has been set in motion that will carry the crisis into 2009. North Korea is a complex humanitarian emergency characterized by highly imperfect information. This paper triangulates quantity and price evidence with direct observation to assess food insecurity in North Korea and its causes. We critique the widely cited UN figures and present original data on grain quantities and prices. These data demonstrate that for the first time since the 1990s famine, the aggregate grain balance has gone into deficit. Prices have also risen steeply. The reemergence of pathologies from the famine era is documented through direct observation. Although exogenous shocks have played a role, foreign and domestic policy choices have been key.

Keywords: Famine, North Korea
JEL codes: Q1, O1, P2

On Wednesday I attended a panel discussion featuring Marcus Noland, co-author (with Stephan Haggard) of Famine in North Korea, and three North Korean defectors.  Here is the video of the event.  Below is the information on the event from the Peterson Institute website:

Press release (slightly updated w/ comments from the talk)
North Korea is once again headed toward widespread food shortage, hunger, and risk of outright famine. According to Peterson Institute Senior Fellow Marcus Noland, “The country is in its most precarious situation since the end of the famine a decade ago.”

Click for larger view

Calculations by Noland and Stephan Haggard, University of California, San Diego, indicate that the country’s margin of error has virtually disappeared. For technical reasons, estimates produced by the United Nations’ World Food Program and Food and Agriculture Organization (total demand) probably overstate demand implying recurrent shortages year after year (figure 1 above). Noland and Haggard argue that in recent years available supply has exceeded more appropriately calculated grain requirements (adjusted total demand) but that this gap has virtually disappeared. “This is a yellow light about to turn red,” says Noland.

 
Click for larger view

Food prices have almost tripled in the last year, skyrocketing at a rate faster than either the overall rate of inflation or global food prices (figure 2 above). Anecdotal reports describe a breakdown in institutions and increasingly repressive internal behavior. Noland and Haggard forecast that the North Korean regime will ultimately weather this challenge politically by ratcheting up repression and scrambling, albeit belatedly, for foreign assistance.

The North Korean food crisis, now well into its second decade, presents a difficult set of ethical choices. North Korea is critically dependent on food aid, but the government has recklessly soured its relations with the donor community. Yet in the absence of vigorous international action, the victims of this disaster will not be the culpable but the innocent. As of this writing, it already may be too late to avoid at least some deaths from hunger, and shortages of crucial agricultural inputs such as fertilizer are setting the stage for continuing food problems well into 2009.

Paper presentation
Noland discussed two recent papers, written with Haggard and Yoonok Chang, Hansei University, which are based on a pathbreaking survey of more than 1,300 North Korean refugees in China (11 different cities).  The survey provides rare and extraordinary insight into both life in North Korea and the experiences of the refugees in China.

Paper 1: Exit Polls: Refugee Assessments of North Korea’s Transition 
Results from a survey of more than 1,300 North Korean refugees in China provide insight into changing economic conditions in North Korea. There is modest evidence of slightly more positive assessments among those who exited the country following the initiation of reforms in 2002. Education breeds skepticism; higher levels of education were associated with more negative perceptions of economic conditions and reform efforts. Other demographic markers such as gender or provincial origin are not robustly correlated with attitudes. Instead, personal experiences appear to be central: A significant number of the respondents were unaware of the humanitarian aid program (40%) and the ones who knew of it almost universally did not believe that they were beneficiaries (96%). This group’s evaluation of the regime, its intentions, and accomplishments is overwhelmingly negative—even more so than those of respondents who report having had experienced incarceration in political detention facilities—and attests to the powerful role that the famine experience continues to play in the political economy of the country.

Paper 2: Migration Experiences of North Korean Refugees: Survey Evidence from China 
Chronic food shortages, political repression, and poverty have driven tens of thousands of North Koreans into China. This paper reports results from a large-scale survey of this refugee population. The survey provides insight not only into the material circumstances of the refugees but also into their psychological state and aspirations. One key finding is that many North Korean refugees suffer severe psychological stress akin to post-traumatic stress disorder. This distress is caused in part by their vulnerability in China, but it is also a result of the long shadow cast by the North Korean famine and abuses suffered at the hands of the North Korean political regime: first and foremost, perceptions of unfairness with respect to the distribution of food aid, death of family members during the famine, and incarceration in the North Korean gulag, where the respondents reported witnessing forced starvation, deaths due to torture, and even infanticide and forced abortions. These traumas, in turn, affect the ability of the refugees to hold jobs in China and accumulate resources for on-migration to third countries. Most of the refugees want to permanently resettle in South Korea, though younger, better-educated refugees prefer the United States as a final destination.

Other speakers: Several North Korean defectors also spoke as part of North Korean Freedom Week here in Washington DC.  Comments and biographies below:

Kim Seung Min: Founder and Director of Free North Korea Radio, the broadcasting program providing news and information to North and South Korea and China. Kim attended both elementary and high school in Pyongyang before serving in the North Korean Army. He escaped from North Korea to China in 1996 but was arrested and repatriated. While traveling from Onseong to Pyongyang to face punishment for leaving the country without government permission, he jumped from a moving train to escape to China again and eventually made his way to South Korea. He worked as a laborer at a coal factory in Yenji, China, until his uncle in South Korea helped him to escape to South Korea. He attended Yonsei University and Graduate School at Joong Ang University, where he received a Master of Arts degree. After serving in leadership roles in the North Korean defector groups, he founded Free North Korea Radio, which was available on the internet beginning April 2004 and began broadcasting on shortwave in December 2005 with regular daily broadcasting beginning in April 2006. (Born 5/6/62 in Jangang Do, North Korea)

*Mr. Kim was a captain in the KPA for 16 years.  He talked about how soldiers were no better off in terms of access to food than ordinary North Koreans.  Starting in 1986, the DPRK state limited food supplies to the military to only rice, leaving the generals up to their own devices for feeding the army.  This led to a break-down in discipline and now people resent the personal behavior of many soldiers who are looking for food.

Kang Su Jin:Founder and Representative of the Coalition for North Korean Women’s Rights, the only organization focused specifically on increasing awareness of the horrors facing North Korean women in China, the role of women in democratizing North Korea, empowering and encouraging North Korean women who have resettled in South Korea, and building cooperation with other organizations. Kang was a member of the elites from Pyongyang and was the Manager of Supply from 1991 to 1998 of the Bonghwasan Hotel in Pyongyang, the biggest hotel in Pyongyang, which catered to high-ranking party and army officials and was used for special events. When food distribution stopped in Pyongyang in 1996, the regime announced that all hotels had to operate on their own, and conditions became very difficult for the workers. Kang visited China and saw how much better off the people were and decided to defect to South Korea. (Born 10/23/66 in Pyongyang, North Korea)

Kim Young-il:President and Founder of People for Successful Korean Reunification (P-SCORE), an organization founded in the fall of 2006, specifically to ensure the successful reunification of the Koreas would not adversely affect the South Korean economy. To that end, PSCORE, chiefly composed of young people, studies other reunification models, informs about the human rights conditions in North Korea, and prepares and educates young North Koreans to be ready to help lead a reunified Korea. Because Kim was not born into an elite family in North Korea, he was not allowed to attend university and was destined to become a coal miner after serving his mandatory military service. While in the military he witnessed many people including soldiers dying of starvation. His own uncle died of starvation and his cousins were left to wander the streets. His family made the decision to defect to China in August of 1996 instead of starving to death in North Korea. They survived there for five years bribing the police not to turn them in until they safely defected to South Korea in January 2001. Lim received a BA in Chinese from Hankook University of Foreign Studies in August 2006. (Born 4/10/78 in Hamheung, North Korea)

*Mr. Kim still communicates with people in the DPRK on a regular basis.  He said that the price of rice inside the DPRK is sensitive to external supply shocks (or even the rumors of external supply shocks).  This means that reports of aid cut offs could result in temporary domestic price spikes even if aid is delivered.

UPDATE: Photo and coverage in the Daily NK.

From the Daily NK:

There had been eight of us in the group, including my brother. Among us, the females included myself and a 13-year old named Shin Kyung Rim. Even though we could not wash our face, were worn out, and wore ragged clothes, there were strict rules and order unique to Kotjebis (street children).

Kotjebis have leaders and areas where they beg. Also, they never eat the food they steal or receive from begging alone, but share with others.

Kotjebis, even when they sleep during the winter, seat the children, the weak, and the women in the middle and the stronger ones sleep in the periphery so that they can block the wind. People may think female kotjebis sleeping in the center of the group might be strange, but they have rules to protect women and children. If they ignore such rules, they are chased out of the group and in extreme instances, have to be prepared for death.

Read the full article here:
Want to Show the Painful Legacy Left by Kim Jong Il
Daily NK
Han Soon Hee
4/16/2008

News of the DPRK’s food shortages began to surface several weeks ago when Good Friends reported:

North Korea’s chronic food shortage has worsened to affect even some of the country’s elite citizens in the capital, a South Korean aid group said Thursday.

The communist nation has not given rice rations to medium- and lower-level officials living in Pyongyang this month after cutting the rations by 60 percent in February, the Good Friends aid agency said in its regular newsletter.

Pyongyang citizens are considered the most well-off in the isolated, impoverished country, where the government controls most means of production and operates a centralized ration system. Only those deemed most loyal to Kim Jong Il’s regime are allowed to live in the capital.

The food situation is more serious in rural areas, with residents in many regions in the country’s South Hwanghae province living without food rations since November, the aid group said. (AP)

Why was this the case?

Floods last August ruined part of the main yearly harvest, creating a 25 percent shortfall in the food supply and putting 6 million people in need, according to the U.N. World Food Program.

Over the winter, drought damaged the wheat and barley crop, according to a recent report in the official North Korean media. That crop normally tides people over during the summer “lean season” until the fall harvest.

North Korea’s ability to buy food, meanwhile, has plunged, as the cost of rice and wheat on the global market has jumped to record highs, up 50 percent in the past six months.

China also appears to have tightened its food squeeze on North Korea for domestic reasons. In order to meet local demand and control inflation, Beijing slapped a 22 percent tariff on grain exports to the North. (Washington Post)

So North Korea’s domestic agricultural production has fallen and so have commercial food imports (international inflation, OECD government subsidies for bio-fuels, and increasing fuel prices have combined to raise the prices of commodities such as rice and pork up to 70% in the course of a year). 

Compounding this problem, however, agricultural aid from North Korea’s two most reliable benefactors (China and South Korea) has dried up.

[China] has quietly slashed food aid to North Korea, according to figures compiled by the World Food Program. Deliveries plummeted from 440,000 metric tons in 2005 to 207,000 tons in 2006. Last year there was a slight increase in aid, but it remained far below the levels of the past decade. (Washington Post)

And strained relations with the new Lee government in South Korea have not helped:

The South typically sends about 500,000 tonnes of rice and 300,000 tonnes of fertiliser a year. None has been sent this year and without the fertiliser, North Korea is almost certain to see a fall of several tens of tonnes in its harvest (Reuters)

So what will be the mitigating factors that prevent another humanitarian emergency?

“The reason for the mass starvation that occurred in late 90s is that North Korea faced natural disasters without expanding the market’s capability to substitute for the broken planned economy capability, and so the damage to North Korean citizens was inevitably large.”

“The market in North Korea has expanded in the last 10 years. The supply and demand structure of daily necessities, including food items, has been formed.”

“Because the market capacity has expanded, the possibility of a mass-scale starvation occurring is no longer high. In actuality, the change in food prices is being monitored at the market.”

-Dong Yong Seung, the Samsung Economic Research Institute’s Economic Security Team Chief, speaking at the 19th Expert Forum sponsored by the Peace Foundation (Daily NK)

Mr. Dong’s analysis addresses the improved efficiency of DRPK’s market supply chains but does not address the effects of an adverse supply shock. 

The UN seems ready to help, although it has not been asked:

Institutionally, mechanisms are in place in North Korea to ring the international alarm bell before hunger turns into mass starvation. The World Food Program monitors nutrition in 50 counties, and the Kim government has become expert in asking for help.

“The North Koreans know that they are facing a difficult situation and have made it increasingly clear in the past few weeks that they will need outside assistance to meet their growing needs,” the U.N. official said, asking not to be identified because of the sensitivity of the issue.

North Korea, which even with a good harvest still falls about 1 million tonnes, or around 20 percent, short of what it needs to feed its people, relies heavily on aid from China, South Korea and U.N. aid agencies to fill the gap.

The UN official said it was clear from a variety of sources that the food security situation was worsening in North Korea and that it needed to be addressed.

Last month Kwon Tae-jin, an expert on the North’s agriculture sector at the South’s Korea Rural Economic Institute told Reuters that if South Korea and other nations did not send food aid, the North would be faced with a food crisis worse than the one in the 90s.

The U.N. Food and Agriculture Organisation said in late March it sees the North having a shortfall of about 1.66 million tonnes in cereals for the year ending in October 2008.

The North will start to feel the shortage the hardest in the coming months when its meagre stocks of food, already depleted by flooding that hit the country last year, dry up and before the start of its potato harvest in June and July. (Washington Post)

The UNWFP, however, will be under pressure from its donors to monitor food aid and make sure it is not diverted to non-emergency uses.  Under these conditions, it is not likely that they will be asked to provide much aid until a catastrophy is already underway.  So with the UN out of the picture, who is best positioned to prevent the reemergence of a humanitarian crisis in North Korea today? China.  

Despite China’s own food probelms, however, it is always likely to capitulate, at least in part, to North Korea’s emergency requests.  China does not want to deal with another North Korean famine, particularly during the Olympic season, and they certainly do not want to deal with any political instability that could result. 

Yonhap reports that the DPRK has asked the Chinese for 150,000 tons of corn this year.  Chinas says they will give 50,000 tons–and that is just initially. (Yonhap)

UPDATE 4/14/2008: I still have not seen any reports in the media of Noth Korea seeking suport from Russia.

UPDATE 6/9/2008: China increases grain export quota to North Korea to 150,000 tons

(more…)

Daily NK
Moon Sung Hwee
4/8/2008

April 8th is Postal Service Day in North Korea. Each province has a branch office of the Ministry of Posts and Telecommunications and Communication Maintenance Bureau. The postal system manages the distribution of letters, telegrams, telephone calls, TV broadcasts, newspapers and magazines. Additionally, they mint stamps and also operate an insurance agency in name only.

In the late 1990s, the national postal system was completely ruined

In North Korea, postal service offices are set up in each “ri”—a small village unit–, of each county to deliver letters, parcel posts and telegrams. Following the March of Tribulation in the late 1990s, the delivery system was completely destroyed and its formal structure was left in tatters. Even in the 1980s when the North Korean economy and people’s lives were relatively stable, it took around 15 days to two months on average to deliver a letter from Pyongyang to a rural village.

In the case of a telegram, it took generally 3 or 4 days to reach a postal office in a rural area. In the late 1980s, to guarantee efficiency within the telegram delivery system, the authorities supplied the offices with second-hand bicycles from Japan.

After the March of Tribulation, letters disappeared due to train delays and frequent blackouts, and the telegram service was virtually incapacitated due to the lack of electricity.

Telephones were restricted to control the outflow of national secrets

North Korea uses a separate electricity supply for its telephone system. Even if there is a power blackout in a village, villagers can still use the telephone network. In 1993, fiber-optic cables were installed and the use of mail and telegram services began to decline. North Korean people call fiber optic cable a “light telephone.”

North Korea built an automatic telecommunicates system by developing multi-communication technology with imports of machinery and by inviting engineers from China in 1998.

In 2003, authorities allowed cadres to use telephones in their houses and in 2005, they also allowed people to use the telephone at home as long as they paid 2,000 North Korean won (approx. USD0.6) a month (a monthly salary is 1,500 won per laborer).

In August, 2007, the government tightened regulations regarding the telephone system. People could make calls only within their province. Authorities said the reason was to prevent the outflow of national secrets.

The Ministry of Posts and Telecommunications controls TV and other broadcasting. There is no cable TV in North Korea. Authorities set up an ultra-short wave relay station in each county to relay television broadcasts.

North Korea signed a contract with Thailand for satellite broadcasting and installed U.S.-made transmission and relay facilities in 2000.

People can now listen to “Chosun Central Broadcasting,” but in rural areas, it is difficult to recieve signals because the broadcasting facilities and cables have already begun to deteriorate.

People sarcastically say a “newspaper is not about news but about “olds.” The authorities pay special attention to the successful delivery of the Workers Party Rodong Shinmun bulletin. To deliver Rodong Shinmun from Pyongyang to each province or even to each city and county by train, it normally takes 4-5 days. Sometimes, it takes more than a week.

People also say they use an “oral-paper” to get information because rumors are faster than the Rodong Shinmun.

Postal service workers were dragged to prison camps

In 1992, the Minister and all related officials of Posts and Telecommunications were fired, and the Minister, the Vice Minister and their families were sent to political prison camps for having wasted national finances for the import of factory machinery to produce fiber-optic cables from the U.K.

They submitted a proposal to Kim Jong Il to buy factory machines in order to earn foreign currency through the production and export of fiber optic cables. However, in the end they eventually bought worn-out machines from the U.K. and failed to earn profits. In addition, they embezzled some of the funds.

In 2001, in Lee Myung Soo Workers-District of Samjiyeon, Yangkang Province, two office workers and a manager of a relay station broadcasted Chinese TV programs that they were watching to residents by mistake, so they were sent to a political prison camp and their families were expelled to a collective farm.

Agents of the National Security Agency are stationed at the Ministry of Posts and Telecommunications in order to scrutinize mail, parcels, to tap telephone wires and to supervise residents.

The Ministry regularly dispatches professional engineers to the 27th Bureau, to the airwaves-monitoring station, and to the 12th Bureau, which was newly established to censor mobile phones.

On Postal Service Day, Chosun Central Agency often delivers praise for the development of North Korea’s postal system and facilities under the General’s direction.

However, most ordinary citizens will not be able to watch or read about it in time, for the lack of paper, electricity, infrastructure, and delivery systems.