Archive for the ‘Political economy’ Category

Why the market and state sectors cannot be fully separated in North Korea (and what it tells us about price stability)

Friday, April 19th, 2019

Anecdotal but highly valuable observations from inside North Korea suggest that the market economy is taking a hit from the overall decrease in economic activity in the state sector. None of this is surprising, and it makes perfect sense. As workers at factories and state enterprises either get paid less or not at all, their purchasing power drops. Fewer people can spend less money on the markets, leading to an overall depression of economic activity. Reports Daily NK:

Following news that most state-run factories in Pyongyang and other major cities have suspended operations, North Korean sources report that the number of merchants in some areas of the country have fallen drastically. This situation is reportedly due to decreased purchasing power among ordinary North Koreans on the back of the country’s economic stagnation.

“Before international sanctions, there were around 1,000 to 2,000 merchants, including those selling their wares outside the market, but now I only see around 100,” a South Pyongan Province-based source told the Daily NK on April 10. “Even those remaining merchants are just barely holding on. Some of them went to other places to do business but had to return because their efforts met with no success.”

“Only half of the market officials that once collected market fees are visible now,” said the source. “The officials face physical harm by the merchants when they try to collect the fees, so they avoid being out in the open.”

The source also reported that “Merchants have to sell 15 kilograms or more of food per day to pay the market fees. They aren’t selling even one kilogram a day” and that “Merchants are asking themselves rhetorically whether they’re just selling wares at the market to pay the fees.”

An investigation by the Daily NK has found that there has been little change to the number of active merchants in Pyongyang, Sinuiju, Hyesan, Pyongsong, Chongjin, Hamhung and other major cities. Small markets, however, appear to be facing a decrease in merchants.

The source said that economic stagnation has impacted North Korea’s poor classes, including those living in agricultural areas.

“The factories are shut down so people can’t get paid, and this means that no one is heading out to the markets,” said the source. “The international sanctions are so bad that there’s no work left. People don’t have money to buy anything.”

This all gets at a problem with analyzing North Korea’s economic situation based on price stability. Simple analysis of supply and demand holds that if overall availability of food goes down, prices go up. They haven’t in North Korea.

But what if people just don’t have money to spend on food if prices go up? Then, market suppliers couldn’t really raise prices much, because they’d already be pretty much at the highest level at which people are willing to purchase food (also known as the “reservation price”). It’s also important to remember that cash, according to a lot of anecdotal observations – and suggested by the state of the exchange rate – is generally rather scarcely available in North Korea, as the government seems to have contracted the money supply quite significantly over the past few years.

This is what I suspect is part of what’s going on the markets in North Korea, and some may have looked much too simplistically at food and currency market prices for a long time. Price stability doesn’t necessarily mean a lack of problems in the economy.

Article source here:
Drastic fall in market merchant numbers in some areas of North Korea
Mun Dong Hui
Daily NK
2019-04-18

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Kim Jong-un’s speech at the SPA in April 2019

Sunday, April 14th, 2019

Benjamin Katzeff Silberstein

Posting the speech here in full, from KCNA:

Pyongyang, April 14 (KCNA) — Supreme Leader Kim Jong Unmade the policy speech “On Socialist Construction and the Internal and External Policies of the Government of the Republic at the Present Stage” at the First Session of the 14th Supreme People’s Assembly of the Democratic People’s Republic of Korea on April 12.

Its full text is as follows:

Dear Deputies,

The First Session of the 14th Supreme People’s Assembly of the Democratic People’s Republic of Korea is convened at a time when the prestige and strength of our Republic advancing along the road of independence are being demonstrated to the full and its socialist construction has entered a very important period.

As the election to the 14th Supreme People’s Assembly was held successfully amid the high political enthusiasm of all the people and with their active participation and the government of the Republic was reorganized, our State power has been further consolidated and the revolutionary advance of our people, who, united with one mind and will around the Workers’ Party of Korea and the government of the Republic, are marching confidently towards a higher goal of socialism, will be further accelerated.

I extend my heartfelt thanks to all the Deputies for having placed, on behalf of all the people, great trust in me so that I would continue to lead the overall work of the State as Chairman of the State Affairs Commission of our glorious country, the Democratic People’s Republic of Korea; and I pledge myself to work with devotion for the development and prosperity of the Republic and the happiness of our people.

Comrades,

Accomplishing the socialist cause under the unfurled banner of modelling the whole society on Kimilsungism-Kimjongilism is a great and historic task facing the government of the Republic.

Modelling the whole society on Kimilsungism-Kimjongilism is the highest programme of our Party and the government of our Republic and the general direction and general goal of the construction of a socialist State.

It is only when we thoroughly apply Kimilsungism-Kimjongilism to State building and activities that we can develop our Republic into the State of the great Comrades Kim Il Sung and Kim Jong Ilfor ever and creditably satisfy our people’s demands for and ideals of independence true to the will and wishes of the great leaders.

The government of our Republic will achieve decisive victory in implementing the socialist cause by conducting more vigorously the struggle for modelling the whole society on Kimilsungism-Kimjongilism.

1

Comrades,

The major fighting task facing us in our efforts for modelling the whole society on Kimilsungism-Kimjongilism is to accomplish the cause of building a powerful socialist country.

Building a powerful socialist country is a historic stage in the struggle for achieving the final victory of socialism, and this can be accomplished with credit only by applying the Kimilsungist-Kimjongilist ideas of State building in a thoroughgoing way.

The Kimilsungist-Kimjongilist ideas of State building contain in a concentrated way the ideas of, and exploits in, State building of the great Comrades Kim Il Sung and Kim Jong Il, who developed our Republic into the most prestigious and strong socialist State in its history; these ideas also indicate clearly the ways and means for accomplishing the socialist cause with the State government as a political weapon.

With the great Kimilsungist-Kimjongilist ideas of State building as the immutable guiding principle, the government of the Republic should raise the country’s strategic position and national strength onto a new high and bring about a fundamental turn in accomplishing the Juche-oriented socialist cause.

The revolutionary line of independence should be carried out in State building and activities.

Independence is the political philosophy of our Republic, and it constitutes the core of the Kimilsungist-Kimjongilist ideas of State building. A socialist State can defend the country’s prestige and people’s destiny and build and perfect socialism as suited to its situation and by its own efforts, only when it maintains the principle of independence and the Juche-oriented stand definitely in all its activities. The great Comrades Kim Il Sung and Kim Jong Il raised independence as the life of the Korean revolution and the fundamental cornerstone for State building and advanced the revolution and construction in our own way while categorically rejecting worship of big countries, dogmatism and the high-handedness and pressure by outside forces. Under their wise leadership our Republic has been built and developed to be a socialist State, independent in politics, self-supporting in the economy and self-reliant in national defence, and it is still demonstrating to the world its prestige and might as a powerful independent country. Its strategic position and influence is being raised day by day as it recently achieved the historic cause of developing the two fronts simultaneously amid a do-or-die confrontation with the imperialists and is leading the trend of situation towards peace. Today the imperialists’ wilful violation of the sovereignty of other countries is growing more undisguised than ever before, and not a few countries are being forced into a miserable plight as they have no strength with which to defend themselves; in this world it is hard to find a country like our Republic that is steadfast in the principle of independence and assures the security of the State and the happiness of the people by its own efforts.

Holding fast to the revolutionary line of independence in State building and activities is a consistent and immutable stand of our Republic.

Geographically, Korea is sandwiched between big countries and its territory remains divided. Our Republic is conducting socialist construction as the hostile forces are resorting to more vicious schemes in trying to contain, undermine and stifle it. On the other hand, the contradictions and confrontations among great powers in their pursuit of hegemony are worsening on a regional and worldwide scale.

Given the special circumstances of our revolution and the complexity of the present world situation, our Republic should build up its own strength from the firm standpoint of independence and seek independent development to defend its sovereignty and dignity and achieve true prosperity. In the past, too, when the world socialist camp existed and the countries concerned maintained cooperative relations to varying degrees, our Republic adhered to self-determination and independence in carrying on the revolution and construction, and promoted socialist construction on the principle of self-reliance. Building socialism by its own efforts according to the revolutionary line of independence is the basic principle our Republic must invariably maintain in State building.

Whatever wind may blow and whatever challenges and difficulties may lie ahead, our Republic will, in the future, too, make no concession or compromise over the issues concerning the fundamental interests of our State and people. It will resolve everything on the strength of self-reliance and self-development, stepping up the building of a powerful socialist country in our own way and by our own efforts.

A crucial factor in applying the revolutionary line of independence to the building and activities of our State is to strengthen the motive force of our revolution and develop all fields of social life in our own way. We should consolidate the country’s politico-ideological position rock-solid by fully equipping the people with the great Juche idea and the spirit of national independence and rallying them firmly behind the Party and the government of our Republic. The government will develop all realms of the economy, defence and culture from the steadfast Juche-oriented stand and in our own way, and it will never tolerate others’ way, others’ fashion, in the slightest.

Our Republic has a bright, promising future ahead, as it is steadily developing on the strong basis of independence, self-sufficiency and self-reliant defence, with the Party and the people achieving solid unity to form the powerful motive force of the revolution.

It is important to apply the people-first principle to the letter in all aspects of State activities and social life.

This principle is a political ideal of regarding the masses of the people as masters of the revolution and construction, relying on them and making selfless, devoted efforts for their interests. It embodies the Juche-oriented revolutionary philosophy that the people are the most precious and powerful beings in the world; it reflects the unwavering commitment of our Party and the government of our Republic to love the people dearly and satisfy their demands and interests.

The people are the roots of our socialist State and its foundation; they are responsible for developing it. All the activities of Party and government organs should be thoroughly oriented and subordinated to safeguarding and realizing the people’s demands and interests and faithfully serving them-this is just the way to promote the revolution and construction with success and bring the viability and advantages of socialism into full play.

Maintaining the viewpoint and attitude of prioritizing the people in the activities of the State presents itself as an important matter, in view of the fact that abuses of power, bureaucratism and other violations of their interests may appear among officials in the course of socialist construction. The impertinent practices of lording it over the people and abusing the authority vested by them will impair the prestige of socialism and its people-oriented character, and weaken the people’s support for and trust in the Party and the State. They may end up threatening the very existence of our socialist system.

With a view to carrying forward and holding up the ennobling ideas and intentions of the great leaders, who believed in the people as in heaven and devoted their lives to their interests, our Party defined the essence of Kimilsungism-Kimjongilism, the guiding ideology of our revolution, as the people-first principle and set it as the greatest priority to apply the Juche-oriented view on the people, a people-oriented philosophy, in the activities of the Party and the State.

The slogan “Everything for the people and everything by relying on them!” encapsulates the people-first principle maintained by our Party and the government of our Republic. In all spheres of State and social life we have given top and absolute priority to what are oriented to the people and popular among them, unsparingly investing everything for their wellbeing. Over recent years our State has implemented gigantic construction projects in a bold manner. This is not because there is a surplus of funds in the country’s coffers; those projects are aimed at providing our people, who are the best in the world, with better conditions for a happy, cultured life.

Our Party and the government of our Republic have resolutely declared a war against abuses of power, bureaucratism and corruption, which are infringing upon the people’s interests, and waged an intensive struggle against such practices, taking it as a matter with a vital bearing on the existence of our State.

In the course of the endeavour to apply the people-first principle in all the activities of the Party and the State and in all fields of social life, the Party, the State and the people have formed a community in which they share the same destiny with one another; our Republic has advanced dynamically along the orbit of its development, never flinching in the face of unprecedented trials and difficulties.

As socialist construction is progressing, we should direct closer attention to applying the people-first principle. Then we can double the dynamic for the advancement of our revolution and continue to demonstrate the advantages peculiar to our style of socialism, those which other countries cannot imitate.

The Party and the State make selfless, devoted efforts for the good of the people, and the people support their Party and State whole-heartedly, entrusting their destiny and future entirely to the latter-these are the genuine features of our State embodying the people-first principle.

The government of the Republic will invariably hold fast to the people-first principle as the core of its mainstay, and strive to hasten the bright future of socialism aspired after by the people by relying on their strength.

Party leadership over the overall affairs of the State should be provided in every way possible.

Party leadership is the intrinsic requirement of the building of a socialist State and lifeline of its activities. Only under the leadership of a party, the incarnation of the demands and interests of the masses, can the socialist State perform its mission as their servant with credit and properly organize and undertake unified guidance over all realms of social life and all regions and the overall socialist construction. A socialist government, not led by a revolutionary party, will lose its intrinsic nature and fall prey to the reactionaries and plotters, with the result that its people cannot escape the pitiful plight of a political orphan.

Our Party is the veteran and seasoned General Staff of the revolution, which has gained rich experience and outstanding leadership skills and abilities in the course of leading the several stages of social revolution and socialist construction. What instils boundless dignity and confidence in sure victory in our people is the leadership of our Party, which is bringing about world-startling, miraculous achievements one after another while leading the gigantic campaign of creation for building a powerful socialist country amid acute confrontation with the hostile forces.

Party leadership over State activities should be consistently based on political guidance, policy-oriented guidance. The Party is the guiding force that provides guidelines to be followed by the socialist government and guides all State activities so that they are properly conducted; the State is the executor and performer of the Party’s lines and policies. Proceeding from these interrelations between the Party and the government, our Party has shown close concern over encouraging its organizations to exercise unified control over the affairs of their sectors and units and give political and policy-oriented guidance over them in the efforts to materialize its leadership over State activities. If the Party, a political leadership body, is involved in the administrative work and resorts to technical methods, it will not only deviate from its main principle but paralyse the functions of administrative organs and impair its authority, ending up making a mess of the revolution and construction.

At present, the government of our Republic is satisfactorily effecting unified leadership over the State and society by relying on the revolutionary guiding ideology and scientific strategy and tactics advanced by the Workers’ Party of Korea. In the future, too, it should remain faithful to the Party’s ideas and leadership, so as to perform its missions of representing the rights of the masses of the people to independence, organizing their creative abilities and activities, taking care of their lives and protecting their interests.

When it strictly adheres to the ideas and principles of building a socialist State elucidated by Kimilsungism-Kimjongilism, our Republic will be built more splendidly as an independent powerful State that no one can dare provoke, a people’s State in which the people’s ideals are fully realized and a great State that leads the world by giving full scope to its unlimited potential for development, and the victory of the socialist cause will be brought closer.

2

Comrades,

The central task facing our Republic at the present stage of the struggle to build a powerful socialist country is to solidify the material foundations of socialism by concentrating all national resources on economic construction.

Economic self-sufficiency is a material guarantee and prerequisite for building an independent State. Only by relying on independent and strong economic capability, it is possible to defend the dignity of a State and increase its political and military might on a steady basis.

The present political situation demands that our State hold higher the banner of self-sufficiency and self-reliance.

Recently, the United States has grown fearful of the threats posed by our rapidly-developing nuclear armed force to the security of its mainland. At the negotiating table, it has made much ado about improved relations and peace; on the other hand, it is resorting to all conceivable schemes in trying to prolong the economic sanctions, with the aim of preventing us from following the path of our own choice and disarming us first to create conditions for realizing its ambition of overthrowing our social system. Now that it is raising demands that run counter to the fundamental interests of our State, as a prerequisite for lifting the above sanctions, the confrontation between our country and the United States is bound to be drawn out and the hostile forces’ sanctions will persist. We have built socialism in the face of their constant sanctions, but we must neither become accustomed to this nor slacken the speed of advance of our revolution. To the forces who cannot thwart us by force, sanctions are a last resort. However, these are an intolerable challenge to us; we must never connive at or remain indifferent to them, but act resolutely to frustrate them. As we put an end to the prolonged nuclear threat by dint of nukes, we must frustrate the hostile forces’ sanctions on the strength of self-sufficiency and self-reliance.

We have the capabilities and foundations for independent development to revitalize the national economy and raise it to the advanced international level in the shortest possible period. The foundations of our self-supporting economy that have been laid for several decades, able scientific and technical personnel, and the creative strength of the heroic people who have made self-reliance part of their mental qualities and are brimming with patriotic enthusiasm-these constitute our valuable strategic resources. By making the most of these enormous and unlimited potentialities, we must create another legendary tale of world-startling, miraculous successes and go ahead of others by making a greater leap forward.

When we adhere to the line of building an independent national economy and give full play to the revolutionary spirit of self-reliance, we can achieve remarkable development with a strength that others can neither fathom nor imagine.

The strategic policy pursued by our Party and the government of our Republic in promoting socialist economic construction is to make the national economy Juche-oriented, modern, IT-based and scientific.

The independence and Juche character of the national economy should be consolidated in every way possible.

We must strive hard to achieve self-sufficiency in power, fuel and raw materials, which constitute the basic guarantee for independent economic development.

The electric-power industry should maintain and strengthen the existing bases to maximize the production of electricity, put power supply on a scientific and rational basis, and actively develop the hydraulic, tidal, atomic and other promising sources of energy so as to create greater generating capacity.

Coal and other mines, which are in charge of the primary front for economic development, should give precedence to prospecting and tunnelling, and concentrate their efforts on realizing mechanization of extracting and transport, thus extensively increasing the production of coal, the food of industry, and minerals.

The metallurgical industry should establish a new modern yet large-scale iron production system that suits our actual situation by solving the scientific and technological problems arising at the Juche-oriented iron production bases and operating them properly. The chemical industry should turn itself into a Juche-oriented, energy- and labour-saving industry that totally relies on locally available raw and other materials. By doing so, it should meet the domestic demands for fertilizer, chemical fibre, synthetic plastics and various other chemical goods.

The problems of food and consumer goods, which are of decisive importance in the improvement of the people’s living, should be solved in the earliest period.

The agricultural sector should pay special attention to solving the problems of seed, fertilizer and water and securing the land under cultivation, introduce scientific farming methods and raise the rate of mechanization of farm work, and thus attain without fail the grain production target set by the Party. The stockbreeding bases such as chicken and pig farms should be modernly built or renovated, domestic animals be raised in a scientific way, and a mass movement be launched to raise grass-eating animals perseveringly. Also, a turn should be made in the production and processing of seafood by consolidating the material and technical foundations of the fishing industry.

The light industry establishments should hold fast to recycling as one of their strategies, along with the strategy of relying on locally-available raw and other materials, step up modernization of their production lines and invest great efforts in developing new products. In this way, it should ensure that larger amounts and various kinds of quality consumer goods are supplied to the people.

We should carry on grand construction projects more vigorously to provide the people with more affluent and cultured living conditions. The construction sector should make innovations in architectural designing and construction method and improve the level of technical equipment of construction units to build world-class architectural structures in a larger number. The building-materials industry should build up the capacity of cement production and decisively raise the proportion of domestically-produced finishing materials.

The transport sector should adopt revolutionary measures for improving rail and water transport in conformity with the actual conditions in our country and resolve the problem of passenger transport in the capital city and provincial seats in our own way.

We should improve the structure of the national economy still further, develop all its branches in a harmonious way and secure the international competitive edge in the magnesia and graphite industries and other promising economic sectors.

We should make proactive efforts to put the national economy on a modern and IT footing so as to transform the country’s economy definitely into one that is knowledge-based.

We should work out strategies and targets for developing hi-tech industries including the machine-building, electronics, information, nanotechnology and biological industries, and concentrate investment on them. Every sector should build a parent, standard factory in which science and technology are integrated with production and all production lines are made remote-controlled, intelligent and fully automated and generalize its experiences, so as to raise the overall economy to the advanced level of the world.

We should develop the local economy and reenergize the external economic work.

Provinces, cities and counties should build and develop the economy with their own distinctiveness by giving full scope to their natural and geographical advantages and properly sustaining their economic, technical and traditional characteristics. The State should empower the local authorities to stand on their own feet and develop by themselves, and adopt relevant practical measures.

The external economic sector should conduct external economic cooperation, technical exchanges and trading activities in a multifarious, proactive and tactical way on the principle of strictly abiding by the line of building an independent national economy and in the direction of reinforcing the fields and links essential in strengthening the country’s economic foundations.

In order to give full play to the potentials of the self-supporting socialist economy, comprehensive measures should be taken to enlist all the human and material resources and potentialities of the country in a coordinated way and utilize the new elements and driving force for economic development.

The economic work of the country should be conducted under the State’s unified control and supervision, and in accordance with its strategic plan and command.

We should adopt a scientific and practical strategy and phased plans for the economic development of the State and execute them without fail. The structural and work system should be adjusted so that enterprises can arrange and conduct production and management activities smoothly while fully satisfying the needs of the State’s unified guidance over and strategic management of the economic work.

The State’s institutional and legal conditions and environment concerning economic affairs should be improved and an iron discipline be established so that the economic organs and enterprises give priority to the national interests and the promotion of the people’s wellbeing and observe the law and order strictly.

We should further improve planning in compliance with the essential requirements of the socialist economy and deal with pricing, monetary and financial matters-the important links in the whole chain of economic management-in accordance with the economic principles and laws and in such a way as to reap profit in reality. By so doing we can encourage the enterprises and producers to work with great interest and high enthusiasm. Measures should be taken to conduct the economic management on the basis of scientific calculation so that optimum results can be obtained. Raw and other materials, funds and manpower should be economized as much as possible and the expenditure be made cost-effective so that all the resources of the country may contribute to the development of the State to the maximum.

The main force that propels a self-supporting economy is the talented personnel and science and technology.

We should make it part of the national social practices to attach importance to the talented personnel and science and technology, identify and appoint the talented personnel to the appropriate posts so that they may lead production and the development of technology; and we should steadily increase State investment in the field of science and technology.

We should make proper decisions on major scientific and technological tasks and projects, strategic, pivotal, profitable and economically important, and concentrate our forces and funds on them to ensure that science and technology may render decisive services to reenergizing the overall economy and developing the hi-tech industry.

We should build up the political and military might of our Republic.

Our political and ideological might is based on the advantages and stability of the political system of our socialist State. We should substantially provide all the people with genuine political rights and dignity and give full play to the political and ideological advantages of our system, in which the whole country, united in ideology, purpose and moral obligation, makes uninterrupted progress.

The government of the Republic should regard the people’s interests as the absolute standard and give the first consideration to their will and desire in formulating and carrying out its policies; in this way, we can encourage the broad sections of the working masses including workers, farmers and intellectuals to take active part in the management of the State and society as befits the genuine masters of State administration.

The government should give definite precedence to the political and ideological work as required by the intrinsic nature of the socialist society, so as to train all members of society as true advocates of Kimilsungism-Kimjongilism and further consolidate the political and ideological unity and cohesion of our State.

The government of the Republic should perfect the legal system of the State and intensify the role of law in State and social life.

The laws of the Republic are powerful weapons for defending the gains of the revolution, consolidating and developing the socialist system and championing and guaranteeing the people’s rights and interests. In keeping with the intensification of the revolution and construction, the laws and regulations should be subdivided and specified on the basis of the requirements of the Party’s policies and in reflection of the prevailing realities so as to legislate and perfect them in a scientific way; they should be modified and supplemented in good time, so that they can reliably guarantee the administration of the people-oriented politics of the socialist State. It is necessary to thoroughly establish a habit of observing the socialist laws throughout society so that all the people respect the State laws with a noble sense of law observance and abide by them on a voluntary and obligatory basis; law-enforcement organs should enhance their role, never allow double standards of discipline in enforcing laws and strictly adhere to scientific accuracy, objectivity, impartiality and prudence in applying laws; in this way, we should turn ours into the most advantageous socialist law-governed State in which laws safeguard the people and the latter observe the former.

The self-reliant defence capability is a powerful and valuable weapon for defending the sovereignty of our Republic.

The peace-oriented atmosphere that has begun to be created on the Korean peninsula is not stable, and the hostile forces have not given up their attempt to invade our Republic. Always keeping in mind the iron truth that peace can be guaranteed only by powerful military strength, we should hold fast to the principle of self-reliant defence and keep building up the country’s defence capability.

The government of the Republic will provide, on a preferential basis and in full, the human and material resources necessary for strengthening the People’s Army, arming all the people and fortifying the whole country, and steadily raise the national defence capability by putting the defence industry on a highly Juche-oriented and modern footing.

Socialist culture should be developed in our own way.

It is important to create a climate of giving top priority to education throughout the country and bring about a radical improvement in education in our own way so as to overtake the developed countries in the educational level. The educational sector should strengthen the ranks of teachers, improve the quality of education as demanded by the trend of developing modern education, and thus train larger numbers of talented personnel who will shoulder the scientific and technological development of the country and socialist construction.

Upholding the slogan of making all the people well versed in science and technology, we should enrol all the working people in the study-while-you-work system and prepare them as intelligent workers.

The government of the Republic should give special attention to the socialist health service. It should further improve medical service, raise medical science and technology to the cutting-edge standard and consolidate the material and technical foundations of the health service sector, thereby bringing greater benefits of our country’s socialist healthcare system to the people.

The sector of culture and arts should create larger numbers of masterpieces that represent the demands of the times and aspirations of the people, and the sector of cinematic art, in particular, should kindle the flames of effecting an upsurge in film-making in the new century, thus playing the role of pacesetter in opening up a new heyday of the development of socialist culture.

Sports play a very important role in consolidating a nation’s strength and exalting its resourcefulness and prestige. A nationwide effort should be directed to developing sports science and specialized sporting techniques and organizing the mass-based sports activities on a wide scale. At the same time, sports facilities should be increased in number and the existing ones renovated with an eye to satisfactorily hosting even international games.

Establishing a socialist way of life and moral discipline is a severe political struggle and an acute class struggle to safeguard and add lustre to our ideology and system.

We should encourage all the members of society, with a high sense of pride and self-confidence that our culture, our way of life and our morality are the best, to give full play to the collectivist way of life and moral traits and actively create and fully enjoy the revolutionary and optimistic cultured way of life of our style as suited to the aesthetic sensibilities of today that aspire after cultural development. We should firmly defend the ideological and cultural position of our State by strictly guarding against any slightest expression of immoral and alien phenomena that poison the people spiritually and degenerate and debase society, improving ideological education and struggle and intensifying legal sanctions against them.

In order to successfully carry out the enormous revolutionary tasks facing the government of the Republic, people’s government organs should enhance their functions and roles.

They should further intensify their unified guidance over the whole society as required by the developing revolution.

They should consolidate and develop the socialist political system and carry on the work of accelerating economic and cultural construction. In particular, they should give precedence to economic work and concentrate their efforts on improving the people’s living standards. They should put every realm of social life and every region under their supervision and provide unified guidance over them while giving free rein to the creativity of individual sectors and units.

People’s government organs should establish the trait of making selfless, devoted efforts for the good of the people as appropriate to their basic duty.

They should always pay heed to the people’s opinions, plan and organize their work in reflection of their demands, find what can be done for them and carry it through to completion, and enlist them in carrying out the Party’s lines and policies. They should give top priority to the people’s interests and comfort and take responsible care of their living.

They should properly enforce the advantageous people-oriented policies including free compulsory education and free medical care, which General

Kim Jong Il pursued invariably even in the most trying days, so that the people can feel keenly the gratefulness of the socialist country in their daily life and turn out in the efforts for achieving its prosperity.

People’s government organs should maintain it as the iron rule to work only under the Party’s leadership.

They should organize and carry on all work with the Party’s ideas and policies as the yardstick, proactively defend the Party’s policies and implement with credit the revolutionary tasks advanced by the Party, thereby giving full play to the validity of our Party’s policies. Party organizations at all levels should intensify collective guidance over the activities of government organs in conformity with the demands of the developing revolution and actively encourage all their officials to perform their responsibilities and basic duties for the revolution.

Officials of people’s government organs at all levels should enhance their sense of responsibility and roles.

The present stirring realities urgently demand that our officials take the lead in the general offensive and wage a vigorous struggle in order to discharge their duties as befits the leading personnel of the revolution.

Officials of people’s government organs should possess a high degree of Party spirit and revolutionary principle and conduct their work in a daring and active manner with the attitude that they are fully responsible for it. Courage and activeness arise out of trust in the Party, whereas timidity and acts of basing their actions on how people look at them result from lack of trust in the Party. Officials of people’s government organs should definitely root out passive approaches of expediting their work only when the Party throws its full weight behind them, and cherish an unyielding revolutionary work style of carrying through the task set by the Party even though their bodies are torn to pieces. They should constantly cultivate abilities for conceiving, organizing, supervising, guiding and developing their work to become versatile workers who are capable of implementing any tasks with credit. They should acquire our Party’s methods of mass work, set personal examples in all undertakings and make tireless efforts for the good of the people. Cherishing deep in their hearts the true meaning of our Party’s affection for the people, they should be infinitely courteous to them and become their faithful servants, always sharing weal and woe with them and working with devotion for them.

3

Comrades,

At present, our historic struggle for national reunification, a long-cherished desire of the nation, has entered a new phase.

We have taken momentous measures in succession to improve inter-Korean relations and ensure peace on the Korean peninsula with a firm resolve to achieve without fail the cause of national reunification, into which the great Comrades Kim Il Sung and Kim Jong Il put their heart and soul all their life.

Last year we held three rounds of historic north-south summit meetings and talks and adopted inter-Korean declarations to bring about a dramatic turn in the relationship. They were events of great significance which turned around the grave situation that was teetering on the brink of war every moment and which heralded the start of a new journey to national reunification.

Now the entire nation ardently hopes that the historic Panmunjom Declaration and the September Pyongyang Joint Declaration will thoroughly be implemented so that the peaceful atmosphere on the Korean peninsula will continue and inter-Korean relations will improve uninterruptedly.

The south Korean conservative forces, however, are responding to the aspirations of the nation and the unanimous expectations of the international community with too perfidious words and behaviours, and are struggling to bring inter-Korean relations back to those in the period before the publication of the Panmunjom Declaration.

The United States openly forces “speed adjustment” on the south Korean authorities and tries in every way to subordinate the implementation of inter-Korean agreements to its anti-DPRK policy marked by sanctions and pressure.

As a result, a grave situation has been created for us to decide whether to ease the tension on the Korean peninsula and continuously carry on the atmosphere of inter-Korean rapprochement or to return to the past when the tension spiralled up towards a catastrophe with the danger of war looming larger.

We cannot look on with folded arms the current situation which causes serious concern over the destiny and future of the nation and peace and security in the region, but we have to take proactive measures without delay to straighten it out in line with the unanimous aspirations of all the fellow countrymen.

To this end, it is needed above all to take a proper stand and attitude with which to invariably adhere to and implement the inter-Korean declarations encapsulating the unanimous will of the nation, whatever difficulties and obstacles in the way.

I would like to make it clear once again that as I already declared, it is my firm determination to turn, together with the south Korean authorities, inter-Korean relations into a lasting and durable relationship of reconciliation and cooperation and write a new history of the nation that achieves peace and co-prosperity as desired by all the countrymen.

In order to untangle the prevailing unsavoury situation, heighten the good atmosphere for improved relations north and south created with much effort and make it bear meaningful fruit of peace and reunification, it is important to put an end to big-power worship marring the spirit of independence and to the policy of dependence on foreign forces encroaching upon the common interests of the nation, and subordinate everything to the improvement of the relations.

I think that if the south Korean authorities truly want improved relations, peace and reunification, they should come back to the original intention they had at the time of the Panmunjom summit and the September Pyongyang summit and fulfil the responsibility they have assumed before the nation through the sincere implementation of the north-south declarations.

They should not waver in their attitude as they see the tide nor pose as a meddlesome “mediator” and “facilitator” as they busy themselves with foreign trips, but be a responsible party that defends the interests of the nation speaking what they have to say squarely with the mind of their own as members of the nation.

It is our consistent assertion that it is imperative to smash the underhand schemes of the hostile anti-reunification and anti-peace forces within and without in order to sustain the atmosphere of improved inter-Korean relations.

It is needed to realize before it is too late that neither progress in inter-Korean relations nor any fruit of peace and prosperity can be expected if the hawkish forces in the south Korean military, who persist in veiled hostility as they resume the military exercises, which were agreed before to be discontinued, jointly with the United States by changing their names, continue to be allowed to make reckless moves, and unless the anachronistic arrogance and hostile policy of the United States, which is creating artificial obstacles in the way of improved relationship as it presents its arbitrary outrageous demand, are eradicated.

All the fellow countrymen in north and south and abroad should, staking the destiny and future of the nation, resolutely check and foil the moves of the United States and south Korean conservative forces that go against the historic current towards improved inter-Korean relations and peaceful reunification.

If they are truly willing to opt for the improvement of north-south relations, peace and reunification, the south Korean authorities should sympathize with our stand and will, keep pace with us and make a courageous decision to show their sincerity by practical action, not by words.

Our Party and the government of our Republic will continue to make sincere and persevering efforts to achieve the sustained development of north-south relations and peaceful reunification of the country, solemnly cherishing the aspirations and desires of the nation in the future, too.

Comrades,

The first-ever DPRK-US summit meeting and talks, which were held in Singapore in June last year under the world’s spotlight, were a momentous occasion that brought the hope of settlement of peace to the Korean peninsula where fire had been exchanged; and the June 12 DPRK-US Joint Statement was a historic declaration announcing to the world that the two countries which had been hostile to each other from one century into the next would write a new history of relationship, and therefore it won full support and approval of the international community aspiring to peace.

The DPRK voluntarily took crucial and significant measures including the discontinuation of nuclear test and test-fire of intercontinental ballistic missile, thereby taking the first step towards confidence-building which is the main key to the removal of bilateral hostile relations, and it also took the broadminded measure of realizing the repatriation of the remains of US soldiers, which had been requested by the US President, as a show of its will to sincerely implement the June 12 DPRK-US Joint Statement which serves as a milestone in the establishment of a new bilateral relationship.

However, the second DPRK-US summit talks held in Hanoi last February raised strong questions about whether the steps we took under our strategic, courageous decision were right, and they were an occasion that gave us a sense of caution about whether the United States is genuinely interested in improving the bilateral relations.

At the talks we expressed our resolve to set the essential stages and course to be followed without fail for the implementation of the June 12 DPRK-US Joint Statement in the interests of both sides and to take more prudent and trustworthy steps, and looked forward to a positive response of the United States.

But the United States came to the negotiating table after thinking only about completely unrealizable methods.

In other words, they were unprepared to solve problems with us at the table and they had no definite orientation or methodology.

By that sort of thinking, the United States will not be able to move us one iota nor get what it wants at all, even if it sits with us a hundred times, a thousand times.

It has recently conducted a test for simulated interception of our intercontinental ballistic missile and resumed military exercises the US President committed himself to suspending, while making other hostile moves contrary to the spirit of the June 12 Joint Statement in a more undisguised way. These seriously get on our nerves.

I am very displeased with such a trend.

As waves rise when wind blows, the more pronounced the US policy hostile towards the DPRK becomes, the tougher our counteraction will become.

Although it strongly hints at the settlement of issues through dialogue as it thinks about the third round of DPRK-US summit talks, the United States still looks away from the withdrawal of its hostile policy, the basic way for establishing a new bilateral relationship; rather it mistakenly believes that if it pressures us to the maximum, it can subdue us.

We, of course, attach importance to the settlement of issues through dialogue and negotiations, but the US-style dialogue of unilaterally pushing its demands does not fit us, nor are we interested in it.

Though the United States calls for a negotiated settlement of issues, it is stirring up hostility to us day after day, which is an act that is as foolish and risky as an attempt to put out fire with oil.

Given the deep-rooted animosity between the DPRK and the United States, in order to implement the June 12 Joint Statement both sides should give up their unilateral terms and seek a constructive solution that meets each other’s interests.

To this end, it is needed above all for the United States to approach us with a new way of calculation after putting aside the current one.

The United States is talking much about holding the third round of bilateral summit talks, but we are neither pleased nor willing to see summit talks like the Hanoi summit talks re-enacted.

However, as President Trump continuously observes, personal relations between he and I are not hostile like the relationship between the two countries, and we still maintain good relations, and if we want, we can send and receive letters asking for each other’s regards any time.

If the United States proposed holding the third round of summit talks after finding out with a proper attitude a methodology that can be shared with us, we would be willing to try one more time.

But in my opinion at this moment, it comes to my mind that there is no need for me to obsess over the summit talks with the United States out of thirst for the lifting of sanctions.

Anyway, we will be patient and wait till the end of this year to see whether the United States makes a courageous decision or not, but it will obviously be hard to get a good opportunity like the last time again.

In future, I will put my signature on an agreement without hesitation only when it contains fair clauses which conform to the interests of both sides and which are acceptable to them, and this depends entirely on the stand the United States takes and the way of calculation it comes up with.

What is obvious is that if it sticks to its current political way of calculation, the prospects for problem solving will be bleak and very dangerous.

At this crucial time, I hope that the United States will make a well-advised judgment and the second hand of the clock of the DPRK-US showdown which they stopped with so much difficulty will not move again for all ages.

The government of the Republic will strengthen and develop the bonds of friendship and cooperation with all the countries of the world that respect the sovereignty of our country and are friendly to it, and will advance hand in hand with all the peace-loving forces of the world to establish a lasting and durable peace mechanism on the Korean peninsula.

Comrades,

As I have just said, I will no longer set my heart on such a trivial issue as lifting sanctions by the hostile forces, but open up the way to prosperity by our own efforts.

Although the goal of our struggle is demanding and challenges and difficulties stand in the way of our socialist construction as ever, our Party and the government of our Republic are steadfast in their will to open a new phase of prosperity and achieve the ideal and goal of building a powerful country by their own efforts under the unfurled banner of Kimilsungism-Kimjongilism.

The road of independence leads to prosperity and victory. Nothing can reverse or stop the dynamic advance of our State and people that have unshakable faith and will to pave their own way by themselves with confidence in their own strength.

Let us all make a general advance to successfully accomplish the cause of building a powerful socialist country, holding higher the banner of the great Kimilsungism-Kimjongilism and firmly rallied behind the Party and the government of the Republic. -0-

Their website is being a little difficult at the moment — will add the Korean version as well when possible.

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North Korea’s harvest numbers: what “food production” really means

Monday, March 11th, 2019

By Benjamin Katzeff Silberstein

I wrote about the confusing harvest numbers this past Friday, and I’ve been able to find little new information to make things clearer. Basically, the problem is that talking about “food production” is too vague, since that can mean a lot of different things. In the standard World Food Program/FAO crop assessments, there are usually two numbers quoted: one estimate for total production of food,  and one for “milled cereal equivalent”, a standardized measurement used to translate the varying nutritional contents of different crops into a standardized weight measure.* (See below for a more detailed explanation.) Basically, the “milled cereal equivalent” figure tends to be significantly smaller, by about 20 percent or so, than the original, total food production figure.

Since we don’t actually know exactly which number is being thrown around in analyses of the current harvest, I’ve calculated a possible milled-equivalent harvest figure, using the average difference between milled and unmilled for the years where I have the two different numbers from the WFP/FAO crop assessments. None of the historical estimates I’ve found correspond with the harvest numbers for previous years in the 2019 UN Needs and Priorities Plan. Crop production figures are usually given in terms of “marketing years”, not in calendar years. For simplicity’s sake, I denote each year by the second half of the marketing year, when most consumption will occur. So “2019” is the 2018/2019 marketing year, “2018” is the 2017/2018 marketing year, et cetera.

The following shows the scenario where the 4.95 million tonnes production figure is the “unmilled” cereal equivalent measure. Based on the average difference between milled and unmilled for the years where I’ve had data available from UN institutions (0.85 million tonnes), I’ve added and subtracted to complete the figures where necessary. This is not an exact, scientific way of looking at the harvest numbers. For exact accuracy, I’d need to calculate the milled cereal equivalent of each crop, something I don’t have time to do right now. This may well make the figure even lower. (Hazel Smith’s figure, for reference, is 3.2 million tonnes.) But the following does, at the very least, give a sense of the proportions at hand. And it makes the numbers look different from my initial assessment.

Food production, million tonnes (unmilled) Food production, million tonnes (milled)
2009.00 4.20 3.30
2010.00 5.17 4.32
2011.00 5.33 4.50
2012.00 5.50 4.66
2013.00 5.80 4.90
2014.00 5.98 5.03
2015.00 5.93 5.08
2016.00 5.92 5.07
2017.00 6.03 5.23
2018.00 5.75 5.00
2019.00 4.95 4.10

Table 1. Figures are sourced from various assessments by the WFP and FAO; contact me for exact sourcing on specific figures. 

Graphically, the trend in food production in milled terms, i.e. the lower-end, more realistic figure of how much food is available for consumption, using the above assumption for the 2019-figure, looks like this:

Graph 1. Estimate food production in North Korea, million tonnes, in milled cereal equivalent terms.

In short, this does give a rather grim and highly problematic food situation, putting the quantity of the harvest at 4.10 million tonnes. It puts North Korea back to a state of food production prior to 2010–2011, when harvest started to climb. And now, North Korea receives far less aid than it did a decade ago. Plus, its imports will only amount to 200,000 tons, the government seems to be saying, a similar amount to what it procured in imports and humanitarian aid in 2016/2017, when the harvest was much larger.

For long, this is how low North Korean harvests were. Only a few years ago, this would have looked like a rather solid harvest. Looking back in the future, it might turn out that the past few years of food production growth, since around 2011, was an abnormally good period of time. None of this means that this food situation is anything but poor.

To me, among the figures I’ve been able to find, it’s the only one that make sense in the context of the statement from UN representatives that this harvest was the worst “in a decade”. Hopefully things will become clearer over the coming days and weeks, as more information may be published, in which case I’ll update this post.

In sum, the actual food available in North Korea is, in all likelihood, much lower than the 4.95 million tonnes-figure quoted by the UN and the North Korean government. As the following graph shows, even using the North Korean government’s figures, the drop from last year doesn’t appear all that massive. But on closer inspection, the actual quantity of food available may be significantly lower than the figure the North Korean government states, as I’ve tried to show in this post.

Graph 2. Food production in North Korea, from the UN’s “2019 Needs and Priorities” report on North Korea.

Finally, a note on the issue of the markets and the public distribution system. I maintain that it’s impossible to get a sense of total food availability and circulation in North Korea as a whole, without taking the markets into account. According to most studies we have, the majority of North Korea’s population rely on these markets, rather than the public distribution system, for their sustenance.

But one has to acknowledge that just like the UN and North Korean government figures may not reflect the whole situation accurately, there may be a fair bit of bias in the data on the prevalence of the markets too. Most of this data comes from surveys done with defectors in South Korea. They overwhelmingly tend to come from the northern provinces of the country, closer to China, where market trade has traditionally been more prolific. Most sources for news from inside North Korea are based in the northern parts of the country, where one can get access to Chinese cell phone network coverage.

There’s likely another form of bias present in these surveys, too. Most people who are reliant on the PDS for their sustenance are likely underrepresented among defectors. People in state administration and security organs, for example, are less likely to leave North Korea, though that of course happens too. And in any case, we’re talking about a quite large demographic of people, whose livelihoods would be significantly impacted by cut rations. Such cuts are already happening, Daily NK reports, with some professional groups receiving only 60 percent of  what they otherwise would. The PDS may have changed shape and function quite drastically since the early 2000s, but it may also be more important to the North Korean public than the currently available survey data and reports from inside the country tells us.

Conclusion

North Korea’s food situation, though not at famine-time levels, does appear to be dire. The figures, in combination with reports from inside the country, gives serious cause for concern. Government numbers may not tell the full story since they likely underestimate the role of the markets. Nonetheless, things do look serious. The government could easily alleviate the situation by changing its spending priorities and policies. Chances are that it won’t.

Footnote:

*I’m borrowing here a footnote from a 38 North piece by the late scholar Randall Ireson, whose archive of articles remain one of the best sources for information on North Korean agriculture:

The FAO has consistently used grain equivalent (GE) values for the major crops to compensate for varying moisture and energy content. Thus, husked rice (GE) is .66 of the paddy weight, potatoes (GE) are .25 of the fresh weight, and soybean (GE) is 1.2 times the dry weight because of the high oil and thus calorie content.

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A few thoughts on North Korea’s harvest numbers

Friday, March 8th, 2019

By Benjamin Katzeff Silberstein

I unfortunately don’t have time to do as deep of a dive into the different numbers going around on North Korea’s harvest as I’d like, but a few short thoughts:

  • The numbers are confusing, because there’s a whole bunch of different ones being cited. The UN (citing North Korean government figures) puts the harvest at 4.95 million tonnes, while Hazel Smith cites 3.2 million tonnes. I suspect that part of what’s going on is that some figures refer to total food production estimates, while others refer to the milled cereal equivalent, the most common measurement for actual food availability by international humanitarian organizations. But that can’t explain the full difference at play here since it’s simply too large. (For reference, see this WFP-report from 2010.)
  • The vast differences in numbers cited is a big impediment to really getting a grasp of how bad the situation seems to be. If the 4.95 million tonnes-figure refers to unmilled cereal production, it represents a significant drop from the past few years, but not one that would necessarily indicate a return to the famine-level supplies of the 1990s. If it refers to milled cereal equivalent numbers, which I don’t believe it does, it’s not that bad (milled equivalent production was reported at 4.48 million tonnes for 2011).
  • The reason that many may be suspicious about the claims of a bad harvest being exaggerated, is that it is an historical pattern on the part of the DPRK government. That doesn’t mean that this time isn’t different. The past may be a good indicator for the future, but it’s never proof.
  • No serious assessment can be fully trusted as long as it fails to take the market system into account. That the UN is unable to survey and study food supply from the markets, and their contribution to resiliency in food supply, is a massive problem. That’s surely not for a lack of attempts on the part of the WFP and other organs to get to visit markets. I’m sure they repeatedly press the North Korean government on this, thus far, to my knowledge, to little avail. Still, the magnitude of the drop in the production estimate still likely says something about the magnitude and direction of the dynamics of change on the markets as well.
  • Lastly, regardless of how things stand, North Korea’s humanitarian situation is precarious and very bad. While Kim Jong-un has spent much of his tenure cutting ribbons at avenue renovations in Pyongyang, the population in almost half of the country’s provinces are estimated to lack access safe drinking water. This is a matter of priorities on the part of the government. In any case, for the purposes of humanitarian aid, in the immediate term, it doesn’t really matter whose fault the situation is. My skepticism of the numbers should not be taken as arguing that North Korean civilians shouldn’t receive aid; the humanitarian situation in the country, particularly in the souther provinces, is almost certainly more or less constantly bad enough to warrant it. This paragraph from Hazel Smith’s recent PacNet piece is particularly chilling, if these numbers are accurate:

The starkest confirmation of a catastrophic harvest in 2018 is the precipitous drop in output from the big food producing provinces. Between 2016 and 2018, South Hwanghae, the ‘granary’ of North Korea, had a 5 percent reduction in area planted but an enormous 30 percent decrease in output – with a 19 percent drop in agricultural output between 2017 and 2018.

 

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North Korea’s 2018/2019 harvest and food shortage

Thursday, March 7th, 2019

By Benjamin Katzeff Silberstein

The UN has officially compiled and published the estimated harvest figure for North Korea during the 2018/2019 marketing year, and as we already knew, it lands at 4.95 million tonnes. AFP:

North Korea recorded its worst harvest for more than a decade last year, the United Nations said Wednesday (Mar 6), as natural disasters combined with its lack of arable land and inefficient agriculture to hit production.

The isolated North, which is under several sets of sanctions over its nuclear weapon and ballistic missile programmes, has long struggled to feed itself and suffers chronic food shortages.

But last year’s harvest was just 4.95 million tonnes, the United Nations said in its Needs and Priorities assessment for 2019, down by 500,000 tonnes.

It was “the lowest production in more than a decade”, the UN’s Resident Coordinator in the North Tapan Mishra said in a statement.

“This has resulted in a significant food gap.”

As a result 10.9 million people in the North needed humanitarian assistance – 600,000 more than last year – with a potential for increased malnutrition and illness.

It is equivalent to 43 per cent of the population.

But while the number of people needing help rose, the UN has had to cut its target for people to help – from 6.0 million to 3.8 million – in the face of a lack of funding.

Only 24 per cent of last year’s appeal was met, with Mishra describing it as “one of the lowest funded humanitarian plans in the world”.

Several agencies had been forced to scale back their programmes and some faced closing projects, he said, appealing to donors to “not let political considerations get in the way of addressing humanitarian need”.

“The human cost of our inability to respond is unmeasurable,” he said, adding that sanctions had created unintended delays and challenges to humanitarian programmes, even though they are exempt under UN Security Council resolutions.

[…]

It was hit by a heatwave in July and August last year, followed by heavy rains and flash floods from Typhoon Soulik. As a result, the UN said, rice and wheat crops were down 12 to 14 per cent.

The figure is significantly larger than in the South, where rice production was down only 2.6 per cent last year, according to Seoul’s statistics, even though it experiences similar weather and climate.

The North’s soybean output slumped 39 per cent and production of potatoes – promoted by leader Kim as a way to increase supplies – was 34 per cent down, the UN said.

Last month Pyongyang told the UN that it was facing a shortfall of 1.4 million tonnes of food this year.

Full article and source:
North Korea food production ‘lowest for a decade’: UN
AFP
2019-03-06

A few thoughts on this:

The UN figures must have been updated and adjusted over the past few years, because according to the data I have at hand, 4.95 million tonnes is not nearly the worst production figure in a decade. I’m assuming that the 4.95-figure refers to the “milled tonnes equivalent” number. According to the World Food Program’s November 2011 estimate, for example, the equivalent figure for 2011/2012 was 4.66 million tonnes. But again, the numbers might have been adjusted since they were first calculated.

Like I wrote a few weeks ago, there is little to suggest a true food emergency of massive proportions. Market prices for rice, for example, have barely moved over the past few weeks, and are actually down quite a bit in the latest observation, from 4,600–4,870, to 4,200–4,210 won/kg. This might not mean much, but still, these prices tell us something. Usually, prices seem to only climb in reaction to shortages as the market gets closer to the next harvest season, and food availability becomes increasingly scarce. Expectations aren’t easy to calculate or project. It may be that the market as such isn’t even fully aware of the shortages.

While current prices alone aren’t necessarily a sufficiently certain indicator of the food situation, however, were the situation completely disastrous, we should have seen prices rise already, as farmers and others hoard grains to store up for worse times to come. Instead, prices remain stabile.

Again, that’s not to say that things aren’t bad. A ten percent decrease in the harvest, even though not disastrous, is still a notable decrease. The view from the ground in North Korea seems to unequivocally be that yes,  this year’s harvest is much worse than those of the past few years, mainly due to the dry, hot weather in the summer and fall of last year. News outlets with sources inside North Korea, such as Daily NK, have also reported – independently of the North Korean government, unlike the UN – that harvests have been notably poor.

Conditions also vary a lot between different regions and socio-economic groups. Though there’s been no wide-spread starvation in North Korea since the early 2000s, some particularly vulnerable groups do likely rely on humanitarian assistance for their sustenance.

It really is striking and strikingly problematic how little we know though. The fact that the international community isn’t even allowed to monitor the markets, the most important source of sustenance for most North Koreans, is problematic. To my knowledge, international humanitarian organizations are not allowed to survey the market system in any comprehensive way.

There’s also an important overarching question we should be asking: what about the long term? Food insecurity in North Korea did not arise with “maximum pressure” or the sanctions. It’s been a fact since the late 1980s. Humanitarian international institutions are,  I am sure, doing their best. Hopefully, they continuously to ask North Korean regime representatives what institutional, systemic changes the government is undertaking to alleviate the problem. Giving humanitarian aid without making demands for systemic change would be to let down the people in greatest need of help.

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While Kim goes to Hanoi, anti-corruption crackdown continues at home

Sunday, February 24th, 2019

By Benjamin Katzeff Silberstein

While Kim Jong-un is off to Hanoi, sources in North Korea report that the anti-corruption crackdown at home, on the ground, is becoming increasingly intense. Anti-corruption campaigns are nothing unusual in North Korea in general, and they certainly haven’t been under Kim Jong-un’s tenure. He’s talked publicly about the importance of eradicating corruption several times. But this campaign seems particularly intense and lengthy, according to Daily NK’s reports:

An inspection team from the Workers’ Party of Korea (WPK)’s Central Inspection Committee has been deployed to North Pyongan Province to investigate corruption among local government officials. The inspection will reportedly be longer and more comprehensive than previous investigations.

“The inspection team arrived on December 20 and is continuing to investigate local government officials,” said a source in North Pyongan Province. “The team is looking at officials working in customs bureaus, factories and enterprises, and even in storage facilities.”

The WPK Inspection Committee is tasked with investigating party officials who have committed offenses against the party or anti-revolutionary activities, or who have failed to follow policies and rules. The organization is run by former Organizational Guidance Department (OGD) First Director Jo Yon Jun, who is considered one of North Korea’s most powerful figures.

“The inspections being conducted by the central government are much more intense than those conducted by the provincial party apparatus,” said the source. “There’s a rumor that two customs agency officials in Sinuiju, the manager of a City Management Center, and the party secretary of an enterprise have been fired due to the inspection.”

“Most inspections last around 20 days, but this one has been going on for more than three months,” said the source. “It seems like the longest one of its kind.”

During his New Year’s Address, North Korean leader Kim Jong Un emphasized the “eradication of corruption” and an editorial published in the Rodong Sinmun in December labeled corruption a “traitorous act”.

North Korea watchers believe that Kim’s emphasis on eradicating corruption is due to its negative impact on his key goal of economic development.

Locals, however, are reportedly very tense due to the atmosphere brought on by the inspections in the area.

“People are saying to each other that the inspection is really intense and scary. They’re warning each other not to get caught,” said a separate source in North Pyongan Province. “Smugglers are making every effort possible to avoid getting caught up in the crackdown.”

Full article and source:
Elite inspection team to crack down on corruption in North Korea
Mun Dong Hui
Daily NK
2019-02-25

Now, there’s always an imperative for the North Korean government to crack down on corruption. Like the article mentions, the goal of economic growth and development is a sufficient reason alone. Corruption is probably also one of the most common causes of discontent among the citizens, while at the same time, it’s a crucial source of income for public officials at all levels of the system.

At the same time, one might speculate that at a time when foreign currency reserves are likely becoming increasingly scarce, the anti-corruption drive is also a way of tightening accounting. With closer inspections in the name of anti-corruption, the government will gain a better sense of what assets firms and other entities in the country have, possibly in order to demand that more of it be handed over. It’s too early to draw any conclusions, but in any case, these inspections are always done for a reason.

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Is North Korea’s food situation as bad as the government says? Probably not.

Friday, February 22nd, 2019

By Benjamin Katzeff Silberstein

(Updated 27/2: see below for clarification on the nature of the North Korean memo; the appeal was never meant to be publicized. Another minor clarification below done on 11/3.)

During the past week, both the UN and the North Korean government has made claims that its food situation is bad enough for the country to need international emergency aid. AP:

U.N. spokesman Stephane Dujarric said Thursday that food production figures provided by North Korea show “there is a food gap of about 1.4 million tons expected for 2019, and that’s crops including rice, wheat, potato and soybeans.”

Dujarric says the U.N. has “expressed and will continue to express our concern about the deteriorating food security situation” in North Korea.

He says the U.N. “at various levels” is consulting with the North Korean government “to further understand the impact of food security on the most vulnerable people, in order to take early action to address the humanitarian needs.”

A few days ago, North Korea’s UN ambassador distributed a memo (presumably to UN officials) saying that because of sanctions and unusually warm and dry weather last summer, this year’s harvest was worse than expected. NBC reported some of the contents:

Kim’s claims are difficult to verify, and his government has not always been a reliable source of internal statistics. He said a food assessment, conducted late last year in conjunction with the UN’s World Food Program, found that the country produced 503,000 fewer tons of food than in 2017 due to record high temperatures, drought, heavy rainfall and — in an unexpected admission — sanctions.

The food agency could not immediately confirm that the organization conducted an assessment with North Korea or the conclusions the country shared in the memo.

In a plea for food assistance from international organizations, however, the memo states that sanctions “restricting the delivery of farming materials in need is another major reason” the country faces shortages that has forced it to cut “food rations per capita for a family of blue or white collar workers” from 550 grams to 300 grams in January.

“All in all, it vindicates that humanitarian assistance from the UN agencies is terribly politicized and how barbaric and inhuman sanctions are,” the memo says.

The memo is worth reading in its entirety.

There are a lot of things that are strange about this memo and its contents. I’ll try to deal with as many of them as possible here. But first: how bad is the food situation, really?

This question is virtually impossible to answer accurately, because no one really knows how much food is being produced in North Korea. The World Food Program that works with the North Korean government to estimate harvest yields does what it can under difficult circumstances to accurately measure harvest yields in the country. But these measurements are severely restricted by the fact that much of food supply and production in North Korea still completely lacks transparency. For one, we know that most citizens get the majority of their food through state-administered private markets.

International agencies, however, still cannot survey these markets or study their role in food provision, because the government’s attitude to the market’s very existence remains somewhat ambivalent. The crop surveys conducted with the North Korean government simply cannot answer how much food is available throughout the system, because the markets, the most important node, cannot be assessed and studied accurately. Surveying the markets would let the WFP study the situation in its entirety,  since that way, they could take into account both imports, private plot farming, and the like.

But taking the numbers provided by North Korea and the UN at face value, it’s clear that if these numbers reflect reality, domestic food production is down since the past couple of years, but not by disastrous amounts. There’s no second “arduous march” lurking behind the corner, judging from these figures. In fact, harvests have been growing for several years, largely thanks to changes in agricultural management under Kim Jong-un.

Food production in North Korea, in millions of tons. Harvest data is usually given in “marketing years”; figures here partially based on full-year estimates earlier in the respective year. Data source: World Food Program/Food and Agriculture Organization. Graph by North Korean Economy Watch.

Moreover, and perhaps most importantly, market prices for rice have remained stabile. So the markets don’t seem to think there really is a true food shortage coming, even though things do seem to have gotten more difficult due to the drought. I cover this in more detail in this post, but the following graph speaks its clear language.

Average rice price for three North Korean cities, spring of 2017–early 2019. Data source: Daily NK.

At the very least,  had there been major signs of stark shortages, it would have been visible in the price data. Reports from North Korea do confirm that food production seems to be down overall, but remember, that’s from a fairly high level and after several years of increases. Over the past few years, the North Korean government and UN agencies have made similar appeals, but in the end, fortunately, no major crises seem to happen.

The strangest part about the North Korean memo is that it speaks of reduced rations of grains to  “a family of blue or white collar workers” as a result of the drought  and  sanctions. The thing is, only relatively few people and almost no civilians in North Korea actually get  their food through these government rations. The Public Distribution System (PDS, or 식량배급제도) essentially only operates for the military, shock work brigades (돌격대), and within the judicial administration (more accurate would be to say “government administration”; this is a rather nebulous category in North Korea, including large numbers of civil servants within both the central state, local government level, and policing organs). So this “white or blue collar worker” likely wouldn’t necessarily get her or his rations anyway. As far as we know, they’d go and buy their food at the market with cash instead, in most cases.

It’s often believed that North Korea doesn’t admit weaknesses such as food shortages out of political principle, but over the past few years, the government have been very public with claims of shortages on the horizon, and in asking for aid. Not because the state can’t afford to compensate for the shortfall, but because it simply has other priorities.

Reading the North Korean memo, it’s easy to suspect a connection with next week’s summit in Hanoi and the sanctions situation. By getting news stories out that civilians are starving because of sanctions – a highly questionable claim of causality – the North Korean government may be trying to create more bad press for the sanctions as such.* How can the US argue that they should be preserved, if they’re even preventing North Koreans from getting access to food? There are certainly troubling humanitarian aspects of the sanctions, but it’s difficult to imagine how they could have directly caused the harvest to dwindle.

None of this is to say that North Korea shouldn’t get food aid, that’s a different question. But the government’s basis for the appeal is rather dubious, to say the least. Hopefully, one day international humanitarian agencies will have good enough access to actually get to evaluate the country’s food situation, without constraints.

*Apparently, the memo from North Korea’s UN ambassador was leaked, not intentionally distributed. A person with insight into the issue and appeals process tells me the appeal was never meant to be publicized. This makes my interpretation above far less likely, though the direct impacts of sanctions on the harvest is still questionable.

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North Korea’s economic situation, going into Hanoi: a roundup of the data

Thursday, February 21st, 2019

By Benjamin Katzeff Silberstein

The Hanoi summit is under a week away, Daily NK recently put out new market price data, and I’ve finally had time to update my dataset. There seems like no better time than the present to take a look at some of the numbers we have available for the North Korean economy, thanks to outlets such as Daily NK and Asia Press/Rimjingang.

Currency

Let’s start with the exchange rate. A few weeks ago, the (North Korean) won depreciated quite significantly against the USD, which I wrote about here. At 8,500 won/1usd, the USD-exchange rate on the markets hit its highest point since the inception of “maximum pressure”. The graph below is shows the average market exchange rate in three North Korean cities for won-to-USD.

Graph 1. Average won-USD exchange rate on markets in three North Korean cities, spring of 2017–February 2019. Data source: Daily NK.

As the graph shows, the won rebounded somewhat after the initial spike in early January. According to the latest data point, the exchange rate stands at 8190 won, still somewhat higher than the average for the period, 8136, but barely.

What could have caused this spike? One possibility is that the government has started to soak up more foreign currency from the market, because the state’s foreign currency coffers are waning. After all, given the vast trade deficit, the continued necessity of spending hard currency on things like fuel (bought at higher prices through illicit channels to a greater extent) and other factors, it would make a great deal of sense. Currencies fluctuate all over the globe, sometimes based even on loose rumors that fuel expectations. One anonymous reader who often travels to North Korea for work heard from Korean colleagues that accounting conditions for firms had gotten stricter, likely because the government wants to be able to source more foreign currency from the general public.

It is also noteworthy that while the Daily NK price index reports that the USD-exchange rate has gone back to more normal levels, the Rimjingang index remains at very high levels. Its latest report (February 8th) has the USD at 8,500, and on January  10th, it registered 8,743 won, a remarkably high figure that the Daily NK index hasn’t been near since early 2015. The difference between the two may simple come from the figures being sourced from different regions, or the like. North Korea’s markets still hold a great deal of opportunity for arbitrage, not least because of the country’s poor infrastructure.

So, it does seem like there may be some unusual pressure on the won against the dollar. What it comes from is less clear, but the state demanding more hard currency from the semi-private sector and others may be one important factor. In any case, we shouldn’t be surprised if the trend continues, unless sanctions ease soon.

At the same time, while the RMB has appreciated against the won over the past few weeks, it hasn’t really gone outside the span of what’s been normal over the past few years.

Graph 2. Average exchange rate for won to RMB, average of three North Korean cities, late 2015–early 2019. Data source: Daily NK.

The average exchange rate for RMB since the start of Daily NK’s data series in late 2015 is 1228 won. The latest available observation gives 1241 won/RMB, and the RMB has appreciated against the won over the past few weeks. The Rimjingang data, here, too, gives a higher FX-rate for RMB than Daily NK, at 1250 won. Their index, too, shows the FX-rate for RMB going up over the past few weeks, but not to levels out of the ordinary. Still, if the won continues to depreciate against both the dollar and the RMB, it may be a sign of a more persistent foreign currency shortage.

Food prices

Rice prices remain as stabile as ever, in fact, even more so than this time last year. They continue to hoover between 4,500–5,000, with the latest observation being at 4,783.

Graph 3. Average rice price for three North Korean cities, spring of 2017–early 2019. Data source: Daily NK.

This should not necessarily be taken to mean that North Korea’s current food situation is not problematic. Even with increasing harvests in the past few years, it’s always been fragile. The past year’s drought reportedly took a toll on the harvest. Though market prices aren’t suggestive of any shortages as of yet, that could change in the months ahead. The latest harvest was likely lower than those of several previous years and difficulties in importing fertilizer may have contributed, but the dry weather was the main factor.

Even with a slightly lower harvest than in previous years, it seems that structural changes in agricultural management has improved agricultural productivity to such an extent that food safety isn’t severely threatened even with a reduced harvest.

Gasoline

Gas prices appear to have stabilized around a sanctions equilibrium, of sorts, since a few months back. The past year hasn’t seen any spikes near those of the winter in 2017, when prices went above 25,000 won per kg. For the past year, the price has mostly hovered between 13,000 and 15,000 won per kg. The last observation available from Daily NK, is at 15,200 won per kg. This is slightly higher than the average of the past 12-month period, 13,500 won per kg. A more recent report from Rimjingang puts prices at 13,750 won per kg, so perhaps prices have declined over the past few weeks.

What’s likely happened is that China has settled on a comfortable level of enforcement of the oil transfers cap, for now. (For a detailed look at fuel prices in North Korea and Chinese sanctions enforcement, see this special report.)

Graph 4. Average gasoline price, three North Korean cities, early 2018–winter 2019. Data source: Daily NK.

There is lots to be said about gas prices and their impact on the economy, but for now, it looks like supply of gasoline in North Korea is restricted, but stabile.

Hard currency reserves

I unfortunately don’t have any data to present on this issue, but it’s too important not to mention. We don’t know how large North Korea’s foreign currency reserves are, but all throughout “maximum pressure”, people have been speculating that they’ll soon run out. One South Korean lawmaker said in early 2018 that by October that year, North Korea would be out of hard currency. That clearly didn’t happen.

The lack of stabile foreign currency income may still be a problem for the regime, as mentioned above. It’s hard to imagine how it couldn’t be a huge headache. Look at the following graph for example, showing North Korea’s trade (im)balance with China, throughout 2017 and the first few months of 2018.

Graph 5. North Korea’s trade balance with China, in $1,000 terms. Data source: KITA.

Let’s assume that China is simply letting North Korea run a trade deficit, with only some vague future promise of payment in the form of cheap contracts for coal and minerals. Or, let’s say that China is even just sending North Korea a bunch of stuff without requiring any form of payment whatsoever. It seems highly unlikely to me that even a government like China would support the full extent of these imports. Even if North Korea is only paying in hard currency for a relatively small proportion of what it imports from China, that’s still a lot of money that’s just leaving the vaults, with virtually nothing coming in to replenish them. How long can this go on for? Probably longer than many estimated at the onset of “maximum pressure”, but certainly not forever.

Summary

In sum, judging by the numbers, North Korea’s domestic economic conditions appear stabile but quite difficult. No sense of widespread, general crisis is visible in the data. Nonetheless, the regime is likely under a great deal of stress concerning the economy. How much is hard to tell, but definitely enough for some form of sanctions relief and/or economic cooperation to be high on their agenda for Hanoi.

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The sanctions relief that North Korea might be asking for

Thursday, February 14th, 2019

By: Benjamin Katzeff Silberstein

Some interesting reporting by Hankyoreh, citing South Korean government sources familiar with the US-North Korea negotiations, suggests that North Korea is pushing for two concessions from the US:

According to a South Korean government source closely acquainted with the North Korea-US talks, Kim reaffirmed the North’s willingness to dismantle its Yongbyon nuclear facilities during the first round of working-level talks in Pyongyang on Feb. 6–8, while demanding the partial loosening of sanctions as a corresponding measure for allowing inspections of the facilities. The North Korean side said it “could offer more generous steps” if the US were to even partially loosen sanctions as a corresponding measure, the source reported.

Politically,  this makes a great deal of sense. Yongbyon dismantlement would make for great photo-ops and video clips, regardless of the actual substantive meaning of such actions. For North Korea, partially loosened sanctions would be highly beneficial for several reasons. For one, it could be a tacit signal to China and Russia that the US will no longer be as vigilant on sanctions monitoring as it has been in the past. Moreover, should North Korea push for the ceiling on its oil imports to be lowered, that would likely save the regime substantial amounts of hard currency that it now has to put towards more expensive, illicit transfers and the like. Gas prices in the country have stabilized over the past few months, but are still higher than in normal times. (I dig into this more in a new working paper published by the Stimson Center, click here to read it.)

And not least, any sanctions exemptions on Mt Kumgang and the like could – hopefully, from the regime’s point of view – be a first step to more South Korean investments and cash flows to tourism in North Korea, one of Kim Jong-un’s hallmark industries.

According to Hankyoreh, none of this is out of the question:

Biegun stated in no uncertain terms that the US would not be able to loosen or lift sanctions. At the same time, he reportedly suggested it may consider loosening sanctions if North Korea were to offer the Yongbyon dismantlement “plus something extra.”

And:

Accordingly, they suggested that if North Korea adopts a more forward-thinking approach on the Yongbyon dismantlement issue during negotiations, the US may grant priority consideration to projects involving inter-Korean cooperation, including partial resumption of the Kaesong Complex and Mt. Kumgang tourism. This prediction was based on the limited range of measures available to the US without touching the current sanctions framework. Indeed, many Korean Peninsula experts have noted that the Mt. Kumgang tourism venture individually would not be in violation of UNSC resolutions and suggested that it should be quickly resumed.

I’m no judicial sanctions expert, but I suspect that this might not be entirely accurate. If sanctions are strenuous enough to prevent South Korean reporters to bring in laptops into North Korea, it’s easy to wonder how large-ish-scale tourism to North Korea through Kumgangsan wouldn’t risk violating sanctions. In a way, the multilateral UN sanctions are easier to loosen in practice. A strong, even informal signal from the US to China could make the latter re-interpret its sanctions interpretations, and make monitoring and enforcement much more loose. Truck traffic has reportedly already increased across the border compared to a few months ago, and it’s a trend that’ll likely become increasingly more pronounced the less vigilant the US is about pushing for rigid sanctions implementation.

Article source:
N. Korea demands partial relaxation of sanctions in exchange for Yongbyon inspections
Kim Ji-eun
Hankyoreh
2019-02-14

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North Korea’s puzzling maternal mortality figures

Monday, February 4th, 2019

By Benjamin Katzeff Silberstein

South Korea’s Institute for Health and Social Affairs, using data from the UN Population Fund, claims that maternal mortality in North Korea has increased in the past few years, since 2008. (This was reported back in November of last year, but for some reason I only stumbled upon the article now.) I don’t have time to check out the data or the original source in question right now, but hope to later. It may well be Yonhap’s reporting that is off, because something sounds odd here (my emphasis in bold):

Amid the prolonged international sanctions on North Korea, the health of the North’s infants and pregnant women is in a very vulnerable state, a South Korean government think tank said Tuesday.

The Seoul-based Korea Institute for Health and Social Affairs said in a report that North Korea’s maternal mortality rate was 82 per 100,000 newborns, about eight times higher than the rate of 11 in South Korea, based on the United Nations Population Fund’s 2017 World Population Survey.

Of course sanctions likely have some degree of detrimental impact on the humanitarian situation in North Korea. But to blame current sanctions for what the situation looked like in 2017 – when most of the most effective, hard-hitting ones had just been put in place (or were not yet in place depending on when these measurements were done) is simply inaccurate.

The North’s maternal mortality rate marked a rise from 77.2 persons in 2008, the report noted. Maternal mortality rate refers to the proportion of women who die of pregnancy-related illness during or immediately after childbirth.

Source:
Report shows deteriorating health of N. Korean infants, mothers
Yonhap News
2018-11-20

It is surprising that data would show North Korea’s health situation declining from 2008 and nine years ahead, but there is actually quite a bit of other data, albeit from similar sources, saying the same thing. Again, I hope to take a closer look at some of this data soon, but for now, I’d say there are two possible conclusions one can draw from these figures.

The data may look this way because measurement methods and access got better, not because things on the ground actually got worse. UN institutions have gotten somewhat better access, in my understanding, since the earlier 2000s, and are able to survey places that could not be visited before. These may be localities where things are simply worse than in others, which may be why the government didn’t want to grant access in the past, leading to figures that are more accurate, but also show a trend that may not be consistent with reality.

The other alternative is that the recovery from the famine period, and economic growth of the past few years, has not been as consistent as often believed. (Update 5/2: It’s also possible that there simply hasn’t been any consistent path of recovery, but rather, that many indicators first improved vastly from the 1990s and early 2000s, only to decline again after a few years of an upward trend). Conditions are generally believed to have improved in the country as a whole over the past few years, and there is very little data to suggest otherwise. Institutional change combined with increased exports of natural resources, has spurred some degree of growth in the North Korean economy over the past few years, but we know fairly little about the degree to which different demographics of the population have actually seen their conditions improve. If maternal mortality has gone up while North Korea’s incomes from foreign trade have skyrocketed in relative terms, that would tell us something important about the distribution of economic gains.

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