North Korean Economy Watch

Korea Times
Yoon Won-sup
12/9/2007

South Korea will provide 5,100 tons of steel plates to North Korea on Dec. 17 in a six-party deal that involves the provision of energy or alternatives to North Korea in exchange for the North’s disablement of its nuclear facilities by year’s-end, government officials said Sunday.

U.S. President George W. Bush sent a personal letter to North Korean leader Kim Jong-il last week urging him to keep his word on the disablement and declaration by Dec. 31.

The shipment is the first alternative to oil sent to the North under the agreement, although participants in the six-way talks have been taking turns to provide 50,000 tons of heavy fuel oil to the North every month recently.

Yonhap
12/2/2007

The two Koreas have agreed on the daily schedule for a cross-border freight train that will resume service later this month for the first time in over 50 years, the South Korean Unification Ministry said on Sunday.

The prime ministers of South and North Korea met in Seoul last month and agreed to restart the railway service, which will traverse the heavily armed border, on Dec. 11. The train will run between the South’s Munsan station and the North’s Bongdong station as a follow-up to the October summit between their leaders in Pyongyang.

The ministry said a freight train will depart from Munsan at 9:00 a.m. each weekday and reach the North Korean border station of Panmun before returning to the South at 2:00 p.m.

The train, which will not operate during weekends, will extend its route to Bongdong once the construction of a cargo-handling facility there is completed, the ministry said. The Bongdong station serves as a gateway to an inter-Korean industrial park in Kaesong.

The soon-to-be-resumed service is expected to facilitate transportation of raw materials and manufactured goods between South Korea and the North’s Kaesong park, the ministry said.

The 19.8-km route between the two Koreas was severed in the midst of the 1950-53 Korean War and has since remained closed.

Yonhap
Lee Joon-seung
11/23/2007

North Korean graphite material made at an inter-Korean joint venture factory is being shipped to South Korea, the Commerce Ministry said Friday.

The 200-ton shipment from the factory near the city of Haeju left the North Korean port of Nampo earlier in the day and is expected to reach Incheon on Saturday, the Ministry of Commerce, Industry and Energy said.

“The shipment is significant because it is the first time that products made from minerals in the North have been shipped to the South after being manufactured at an inter-Korean joint venture company,” a ministry official said. The graphite can be made into heat-resistant bricks, pencils, ceramic melting pots and car brake linings.

South Korea’s state-run Korea Resources Corp. (KORES) holds a 50 percent stake in the US$10.2 million graphite processing plant along with the North’s Kwangmyung Trading Co.

The factory can produce 3,000 tons of processed graphite every year, with KORES entitled to 1,830 tons for 15 years as payment for its initial investment. The amount is equivalent to 15 percent of the graphite products the country imports every year. China, Japan and Germany are currently South Korea’s main suppliers of the material.

The state-run company signed the contract for the joint venture in July 2003, and commercial production began in April of this year. Initial test production began in April 2006.

The ministry also said the Jeonchon mine near the factory is estimated to hold 6.25 million tons of crystalline graphite ore.

Wonjin Co., a local carbon refractory brick manufacturer, signed a contract in September with the KORES to buy all the graphite from North Korea and market it in South Korea.

Financial Times
Anna Fifield
9/19/2007

Pak Hyun-yong was, by North Korean standards, an entrepreneur. Too much of an entrepreneur. During the famine that ravaged the country in the late 1990s, Mr Pak watched his family die of starvation – first his younger brother, then his older sister’s children. Then, eventually, his sister too.

Somehow he pulled through this period, dubbed by the regime as “the arduous march”, and was spurred into taking some very non-communist, almost subversive action. He began selling noodles.

Every day he would take 10kg of “corn rice” – a poor North Korean imitation in which dried kernels are fashioned into grains – and turn it into noodles. Then he would get on his bicycle and pedal around his home town of Hamhung on the east coast, bartering the noodles for 12kg of corn rice: 10kg for tomorrow’s noodles and 2kg for his remaining family.

“The police would come by and try to persuade me not to sell the noodles, saying that I should not succumb to capitalism and that the Dear Leader would resolve our food shortages,” says Mr Pak, who escaped from North Korea a year ago and is upbeat and energetic considering the hardships he has endured.

Now 32, he is in hiding in a bleak, remote village in northern China not far from the North Korean border, together with his wife, with whom he escaped, and their new baby. They live in a one-room house with no bathroom – protected by locals who are helping them settle.

“The [North Korean] police even threatened to imprison me if I didn’t stop selling. Suddenly I realised that North Korea was a country where they would stop people’s efforts to survive,” he says, sitting on the warm floor of his house, still dressed in the apron he wears to work in a nearby butchery.

“I heard that China was a rich and modern country – that they had tractors and that people could eat rice every day, even in rural areas,” he says, shaking his head. “Chinese dogs wouldn’t eat our rice – they would ask for better.”

In almost 20 interviews along the border with China, ethnic Koreans born in China and North Korean escapees, some of whom had been in the isolated state as recently as two months ago, describe a country where change is taking place from the ground up rather than under the direction of its leader, Kim Jong-il.

North Korea remains the most tightly controlled state in the world. But recent escapees tell of the changes that are being driven by necessity in areas near China, especially in the cities of Rajin and Hoeryong in the north and Sinuiju at the southern end of the border.

While it would be an overstatement to say that this represents the type of nascent transition to free-market reforms that has occurred in countries such as Russia and China, the worsening state of the North Korean economy is leading to widespread trading and the emergence of a fledgling merchant class crossing into China, the escapees say.

Some agricultural markets – rather than just state markets – were permitted during the “economic improvements” of 2002, but ad-hoc markets have since sprung up around the country with the tacit approval, if not the encouragement, of the regime. These markets are now the backbone of North Korea’s creaking economy as the regime provides almost nothing by way of rations any more.

The parlous state of the economy is probably the driving factor behind Mr Kim’s decision to roll back his nuclear programme. The six-party denuclearisation talks are making surprisingly good progress, analysts say, as his regime seeks heavy fuel oil for its rusting industries and an end to economic sanctions.

Certainly, recent escapees from North Korea describe a desperate situation inside the country. Somewhere between 10,000 and 30,000 North Koreans are thought to be living in hiding in the north-eastern provinces of China, especially in Jilin and Heilongjiang, areas considered backward by Chinese standards.

The Financial Times travelled throughout this region to meet North Koreans while seeking to avoid endangering their lives. (North Koreans who are repatriated from China face detention in labour camps or worse, and even those who are not caught put the lives of family members at risk by talking to journalists. For that reason, names have been changed.)

“In Rajin, all the factories have stopped,” says Oh Man-bok, a 22-year-old who escaped in September from the city near the borders with Russia and China, considered relatively prosperous because it is one of the North’s main trading channels. “The men still have to go to work and have their name checked off but there is nothing to do. Sometimes they sit around and sometimes they go home. They don’t get paid but sometimes, in a good month, they get 15 days’ worth of corn in rations,” he says.

That means women are increasingly becoming the breadwinners, going to the mountains to collect edible plants or to the market to sell home-made snacks. “People survive by selling. They do whatever they can to earn money – selling fried dough sticks or repairing shoes and clothes,” Mr Oh says. “But it’s very difficult to earn enough to survive and even in Rajin, many people have to eat porridge made from the whey left over from making tofu.”

Rajin and Sinuiju, as the main thoroughfares for trade with China, have been more open than the rest of North Korea for some time, but the experiment with capitalism that has been taking place in these two cities now appears to be expanding to Hoeryong.

The city of Hoeryong can be clearly seen from the Chinese side of the border, which is marked by a shallow river only 20 metres wide in places. On the bridge between the two countries, the Financial Times watched North Korean trucks trundle into China and dozens of Chinese – and a few North Koreans wearing badges stamped with the image of Kim Il-sung, Mr Kim’s late father and founder of the state – lug bags across.

A Chinese border official says that about 100 a day cross the bridge from the Chinese side, mainly going to visit family members, although in summer as many as 300 go on tour packages to the beach on North Korea’s east coast. About 10 North Koreans a day cross into China for trading or to see their relatives. “With Rmb1,000 [$135, £65, €92] they can come to China even if they don’t have family here. So they often borrow money to come here and buy things for trading in the market in Hoeryong,” the official says.

Bribery appears to be becoming more widespread as trade and travel increases – from a few cigarettes needed to pass through internal checkpoints to the few hundred renminbi expected at border crossings. “Everyone wants to be a border guard these days,” says one Chinese-Korean trader. “They don’t explicitly say, ‘Give me money’ – they just keep going through your paperwork and asking you questions until you offer them money.”

Again, Pyongyang seems to be aware that this is happening and allows it as a way to keep people happy – rotating border guards every six months to give officials from around the country a chance to earn extra money, according to escapees.

In Hoeryong, the market used to be beside the bridge on the outskirts but this year it was moved to a school building right in the centre of town. Its 180,000 residents enjoy a relatively privileged existence because Kim Jong-il’s late mother was born there.

The market has become central to the city and to people’s lives, driven by grassroots demand, says Song Mi-ok, an ethnic Korean living in China who has made several trips to the city recently. She has gained access by visiting fake relatives, a family to whom she pays Rmb1,000 every time she pretends to visit them.

“You can find everything there,” she says of the market, which opens at 7.30am and closes at dusk. “People usually start by selling food that they have grown or made, using the profits to move into goods trading.”

North Koreans say one can buy everything in the markets “except cat horns”, as their expression has it. Rice given as aid from South Korea is on sale and people even display the bag – even though they risk having it confiscated by the authorities – because people know that South Korean rice is of high quality, Ms Song says.

One kilogram of rice in Hoer­yong market costs 900 North Korean won – a huge amount in a country where the average wage for a government employee is about between 3,000 and 4,000 won a month, or slightly more than one US dollar.

“There are a lot of people buying and it’s all money trade; there’s no bartering now,” Ms Song says. “North Koreans are poor, so it’s quite surprising to see people with a lot of money. They don’t receive money from the state – it’s all money they have made themselves.”

One Korean-Chinese man who visited relatives in Hoeryong last year also describes an increasingly active drug trade. It is not uncommon, he says, to be approached by people in their twenties or thirties selling a white narcotic called “ice” – probably a form of crystal methamphetamine. The drug fetches 20 times the North Korean price in China, making smuggling a lucrative business, but the punishment for drug trafficking in China is so severe that Hoeryong dealers try to sell it to visiting Chinese.

The markets are thriving thanks to new border regulations. While the number crossing illegally has dropped because of tighter restrictions in both countries, the number of North Koreans who are allowed to cross into China legally has steadily increased, according to several Korean-Chinese who help those who make it across the border.

North Koreans with relatives in China but not in South Korea are allowed to apply for passports to cross the border. This is creating a new group of migrant workers – those who are legal but working for themselves and their families rather than for the state. “Young people come here to work for one or two months and earn some money – they’re coming from Pyongyang as well as the regions,” says Ri In-chol, an ethnic Korean missionary from China who supports border crossers, legal or otherwise.

“They pay Rmb300-Rmb400 to get a passport and then they can cross. There is now a much freer flow because Kim Jong-il realises that this is the only way to keep the people alive. They take back money, used sewing machines and used clothes from their relatives that they can sell in the markets,” Mr Ri says.

Although Chinese clothes are most prevalent, North Koreans prefer South Korean products for their higher quality. “The labels have to be cut out of South Korean clothes, so if they don’t have a label then people assume that they’re South Korean and they like them more,” says another Chinese-Korean who has recently visited Rajin.

Indeed, Mr Ri says that North Korean officials are picky about what they will let through. “When North Koreans come to China they are allowed to take used clothes back. But when Korean-Chinese people want to give clothes to their relatives in North Korea, they have to be new because otherwise the officials think they are being looked down on,” he says. (Jeans and short skirts, seen as representative of American immorality, are still not allowed.)

The economic changes – particularly the lessening dependence on the state – are potentially destabilising for Mr Kim’s regime because they weaken the tools of control. That means that there is a fine line between what is permissible and what is not. “Kim Jong-il is tolerating this much openness because people need to survive, but if he wakes up one morning and sees capitalism is spreading too far, he will order it all to be stopped,” says Gao Jing­zhu, professor of Korean studies at China’s Yanbian University, near the border.

“North Korea is small, so if there is too much change it will threaten the sustainability of the regime and it will collapse,” Prof Gao says. “North Korea is in a dilemma.”

Good Friends, a Seoul-based civic group that monitors life inside North Korea, this month said Pyongyang was cracking down on women working in street markets. “The authorities have judged that female merchants have reached a point that threatens the country’s government,” Good Friends quoted a North Korean official in China as saying.

“The men are tied to their workplaces but they don’t receive proper rations,” the official reportedly said. “This has shifted the men’s burden of supporting their families on to the women. With trade directly linked to the people’s survival, the crackdown isn’t going well.”

Indeed, it may already be too late. The increased economic interaction with China means that the flow of information to North Koreans is steadily increasing. “People’s awareness and illusions have changed,” says one Chinese-Korean who drives trucks into North Korea.

This is just the kind of contact that threatens Mr Kim’s regime, which has kept the 23m-strong population under control by cutting off access to the outside world and telling them they live in a socialist paradise. Mr Ri, the missionary, says: “People living in open areas like Rajin and Hoeryong are more exposed to the outside world but that is not the case when you go further into North Korea. So even if it is becoming more open, you never know when that is going to change. They will still come after you if you are involved in political activities.”

But recent escapees from North Korea say that people are increasingly discussing – in private – one topic that they say would have been unimaginable until very recently: the eventual death of the Dear Leader. “State control is still as strong as before but now, when people gather together as families, they say that the system is really wrong. That never used to happen before,” says Mr Pak, the man who left Hamhung last year.

“Kim Jong-il always says he will feed the people and make them happy, but that has not happened. There are many people who hope that Kim Jong-il will die soon,” he says, shrugging his shoulders. “I have to admit it: the state is already kind of breaking down.”

Korean PMs ‘agree rail-link deal’
BBC
11/15/2007

A regular freight train service over the heavily-armed border between North and South Korea could start before the end of the year, officials say.

The deal, on the second day of talks between prime ministers from the two countries, marks the first agreed schedule for the train link.

The South has pushed for reliable transport links to supply the factories its firms run in the North.

It follows an agreement made last month at a summit of the countries’ leaders.

‘Shared understanding’

North Korean Prime Minister Kim Yong-il and his counterpart from the South, Han Duck-soo, are spending three days in discussions in the South’s capital, Seoul.

The South’s Unification Ministry spokesman, Kim Nam-shik, said the two sides were now trying to set a specific date for starting the rail service.

The 25km (16 mile) track runs from the heavily-guarded border to a joint industrial complex in the North’s city of Kaesong.

“Both sides shared an understanding that it would be meaningful in further vitalising the Kaesong industrial complex,” said the spokesman.

The meeting – the first at prime ministerial level for 15 years – follows October’s historic summit in Pyongyang between the two countries’ leaders.

Divided families

The summit between the North’s Kim Jong-il and the South’s President Roh Moo-hyun was only the second such meeting since the Korean peninsula was partitioned over half a century ago.

The two leaders signed an accord calling for greater peace and economic partnership, despite the two countries remaining technically at war with each other.

They also agreed in principle for the regular cargo rail service to be established.

The prime ministers are using their meeting to discuss more specific proposals.

One key issue is the establishment of a joint fishing area around the disputed western sea border – the scene of naval clashes in the past – and a new economic zone around the North Korean port of Haeju.

The South also hopes to increase the number of reunion meetings for families separated when the peninsula was split.

Prime ministerial meetings between the two Koreas were suspended in 1992 amid growing concern over Pyongyang’s nuclear ambitions.

Ministerial infidelity
Joong Ang Daily
11/16/2007
Lee Yang-soo

The prime minister of North Korea holds one of the top positions in the country’s hierarchy, officially fourth in political power.

Many believe, however, that the prime minister may actually be about 20th in actual influence, as there are plenty of hidden power elites in the political and army circles.

The post of prime minister in North Korea was created after the introduction of the state president in 1972. Since then, eight people have occupied the post. Among them, the person who impressed us the most was Yeon Hyung-muk, who held the job from 1988 to 1992.

The prime minister of North Korea faces tough and dangerous working conditions.

Kim Il Sung emphasized the significance of the post by insisting that the “prime minister is the general of the nation’s economy.” The prime minister, in turn, has often been made the scapegoat for the people’s discontent about the country’s struggling economy.

And to make a bad situation worse, the public economy always took a backseat to the military economy, which led to nuclear and missile development.

One after another, numerous ministers have stepped down in dishonor or suffered incurable illness.

After the dishonorable withdrawal of former Prime Minister Li Gun-mo (1986-1988), Li’s successor, Yeon Hyung-muk, was demoted after four years to the post of candidate member for the Political Bureau Presidium, or secretary of Jagangdo Provincial Party. In addition, Prime Minister Park Bong-ju was demoted last April to manager of a small-town company.

Since assuming the reins of government, Kim Jong-il has recruited people who know the economy well to the top posts.

However, he took a “military first” attitude whenever the cabinet, the Workers Party, and army were in discord over the issue of opening and reform.

In contrast, the president of the People’s Republic of China, Jiang Zemin, gave Zhu Rongji, premier of the state council, a carte blanche to decide every affair in public administration and the national economy.

For example, when rumors spread that the yuan would be further devalued, he consulted Zhu. At that time, Zhu’s nickname was “emperor of the Chinese economy.” China has shown great fidelity to the principle that the “prime minister is the general of the national economy.”

Come to think of it, South Korea has had 27 prime ministers since 1972, representing its own infidelity to the prime minister. Six of one, half a dozen of the other.

Koreas agree to open cargo railway, but key issues remain unresolved
Yonhap
Kim Hyun
11/15/2007

South and North Korea agreed Thursday to open a cross-border cargo railway by the end of this year — resuming the service halted more than half a century ago — as part of economic cooperation projects agreed upon in their leaders’ recent summit.

Seoul proposed Dec. 11 as the date to start the railway service through the demilitarized zone, a Unification Ministry official said on condition of anonymity. But North Korea’s response was not yet known.

The agreement to open a freight railway came on the second day of talks between South Korean Prime Minister Han Duck-soo and North Korean Premier Kim Yong-il in Seoul. The rare prime ministerial talks were aimed at devising concrete plans to implement wide-ranging accords reached between the leaders of the Koreas.

In their summit in early October, President Roh Moo-hyun and North Korean leader Kim Jong-il agreed on a slew of economic cooperation and peace projects. They also agreed that the agreements should be implemented through two follow-up talks — one between prime ministers and the other between defense ministers.

“There is a growing understanding between the sides for the start of the cargo rail service,” Kim Nam-shik, a spokesman for the Unification Ministry, told reporters. He said that the project “seemed highly possible,” even though more consultations are needed to secure a military guarantee by North Korea.

The 20-km cross-border route between South Korea’s Munsan and the North’s Bongdong will allow the mass transport of goods from a joint industrial complex in North Korea to the South, Seoul officials say.

The Koreas also agreed to set up a joint committee to create a peace zone in the disputed border area in the West Sea, part of key summit accords to reduce tension, the ministry spokesman said. Bloody skirmishes occurred in 1999 and 2002 near the disputed sea border, which North Korea does not acknowledge. The western sea border was unilaterally drawn by the U.S.-led United Nations Command at the end of the 1950-53 Korean War. Pyongyang has called for a new line to be drawn further south.

The peace project in the West Sea will likely include the creation of a joint fishing area in the western sea border area, and the establishment of an economic special zone in Haeju in southwestern North Korea, which will transform the naval base area into an economic stronghold.

The Koreas also made progress in social and cultural areas, the spokesman said, without elaborating on specifics.

But key issues remained unresolved.

The top item on North Korea’s agenda is South Korea’s heavy investment in the renovation of its antiquated railways and roads, said the Chosun Sinbo, published by ethnic Koreans in Japan.

The North Korean premier said in the talks that such South Korean support will help implement the summit accords “in a relatively short amount of time,” the paper said.

Pyongyang also expects Seoul’s money to develop shipbuilding facilities in the country, Seoul officials said.

South Korea is expected to seek North Korea’s support in improving the business environment in the Kaesong industrial complex, where communication facilities are poor and border customs inspections are highly restrictive.

The Kaesong complex, where scores of South Korean factories produce garments, shoes and other labor-intensive goods with North Korea’s cheap but skilled labor, emerged from agreements at the first-ever inter-Korean summit in Pyongyang in 2000. But business restrictions and political strains have limited its development.

Other issues include reunions of families separated since the 1950-53 Korean War, with South Korea pushing to regularize the sporadic events.

The two Koreas are expected to issue a joint statement wrapping up their three-day talks on Friday. To settle outstanding details, Seoul has proposed to hold follow-up economic talks between vice prime ministers in the second week of December, a Unification Ministry official said on condition of anonymity.

The Koreas held eight rounds of prime ministerial talks until 1992, when they signed an accord calling for an end to Cold War hostilities on the Korean Peninsula. But the talks were suspended afterward as relations soured over a dispute on North Korea’s nuclear weapons program.

This week’s talks, covering economic projects, will put aside thorny issues on military tension, which will be dealt with in defense ministers’ talks set for Nov. 27-29 in Pyongyang, Seoul officials said.

Unification Minister Lee Jae-joung said on the first day that this week’s talks were “a bit more flexible, a bit more amicable” than previous inter-Korean meetings.

South Korea expects that improved inter-Korean ties will facilitate progress in ongoing multilateral talks to persuade North Korea to abandon its nuclear ambitions.

The communist nation has shut down five key nuclear facilities under an aid-for-denuclearization accord signed in early October in talks involving the two Koreas, the U.S., Japan, China and Russia.

Pyongyang is also supposed to disable its key nuclear facilities at Yongbyon and submit a full list of its nuclear programs by the end of the year in return for the normalization of ties with the U.S. and Japan, as well as economic and energy assistance from the other parties involved.

N.K. asks for help in repairs to facilitate implementation of summit agreement: report
Yonhap
Byun Duk-kun
11/15/2007

North Korea has asked South Korea to help repair its dilapidated railways and roads so the agreements at the recent inter-Korean summit can be quickly implemented, a pro-Pyongyang newspaper published in Japan reported Thursday.

In a rare report from Seoul, the Chosun Shinbo said North Korean Prime Minister Kim Yong-il proposed the modernization of North Korea’s railway between the border town of Kaesong and the northwestern city of Shinuiju at his talks with South Korea’s Han Duck-soo.

Kim, 63, was also quoted as saying that projects to modernize railways and roads will enable the joint declaration from the inter-Korean summit to be implemented “in a relatively short amount of time.”

The North Korean arrived here Wednesday for three days of talks to follow up on the summit held in Pyongyang on Oct. 2-4.

At the summit, President Roh Moo-hyun and North Korean leader Kim Jong-il called for a quick expansion of economic cooperation and an end to military hostilities between the divided Koreas.

This week’s talks had been expected to focus on economic issues as separate talks between the defense ministers of the two countries are to be held in Pyongyang later this month.

Seoul is also calling for an early opening of cargo rail service between the North’s border town of Kaesong, where dozens of South Korean businesses are producing over US$1 million worth of goods each month, and its border town of Munsan.

Still, the Seoul government is placing more weight on the opening of other areas in the reclusive North to South Korean businesses as well as establishing a joint fishing area in the West Sea, where a maritime border dispute led to deadly clashes between the navies of the divided Koreas in 1999 and 2002. The Koreas technically remain at war as the 1950-53 Korean War ended with an armistice, not a peace treaty.

Seoul officials are also calling for easier access for South Korean businesses to the South Korea-funded industrial complex in Kaesong as well as the relaxing of customs and quarantine inspections at the border.

The North Korean premier said his country is ready to resolve the difficulties facing the South Korean businesses operating in Kaesong, according to the report.

“The North side believes what the leaders (of the two Koreas) agreed are not mere economic cooperation projects, but projects that will lead to the reconciliation, unification and prosperity of the nation,” the report said.

Asia Times
Andrei Lankov
11/15/2007

For six decades, the myth of unification as Korea’s supreme goal has been enshrined in the official mythology of both nations. The lip service to this myth is still paid by virtually all political forces in both Koreas, but the actual policy of both Pyongyang and Seoul nowadays is clearly based on a very different set of assumptions and hopes: both sides try to avoid situations which might lead to unification.

There are good reasons for this quiet change of policy. The gap between the Koreas is too great; depending on which calculations you believe the per capita gross domestic product in the South is between 15 and 40 times higher than that of the North. Perhaps, nowhere in the world one can find two neighboring countries whose income levels would be so vastly different – and in this case the two countries happen to speak the same language.

The North Korean rulers know perfectly well that in a unified country they would be unable to keep their privileges, and also are likely to be held responsible for decades of gross human-rights abuses and economic mismanagement. South Koreans are no more willing to unify with their impoverished brethren – unification of Germany where the initial situation was much better, became an ordeal, so the unification of Korea would clearly become a disaster.

Therefore, South Korean politicians are doing everything possible to support the dictatorship in Pyongyang, assuming that “stability” in the North is necessary for South Korean economic prosperity. Sufficient to say that some 40% of all grain consumed in North Korea is either received from the South or produced with the help of the mineral fertilizer shipped by Seoul free of charge.

This policy is usually explained as a way to “create the environment for Chinese-style reforms”. This indeed might be its long-term goal, but for all practical reasons the major immediate outcome of massive South Korean aid is a continuous survival of the Pyongyang dictatorship. The statement that a “German scenario is unacceptable” has become a mantra of Seoul politicians.

However, over the past decades, Kim Jong-il’s regime has not shown the slightest inclination to reform itself. Obviously, the Pyongyang elite believes that the Chinese model, so enthusiastically extolled by the good-wishers from Seoul, is not acceptable for them. Perhaps they are correct in their fears. The existence of a rich and free South, always presented as another part of the same nation, makes the situation in Korea quite different from that of China or Vietnam.

Chinese-style reforms, if undertaken by Pyongyang, are bound to produce a certain openness of the country and certain relaxation of political control. As a result, the North Korean populace will soon learn about South Korean prosperity and will be less afraid of the regime’s repressive machine. It’s questionable to what extent the North Koreans would be willing to obey a government whose track record has been so bad after they see an attractive alternative of the South.

Hence, North Korean leaders have made a rational decision: to keep stability and their own privileges, in recent years they have used foreign aid to roll back the changes which happened in the mid-1990s. Instead of reforms, they now do everything possible to limit or ban private economic activity and reassert their control over society.

Despite the government’s resistance to reform, the North Korean system is gradually crumbling from below, and this slow-motion disintegration might turn into an uncontrollable collapse in any moment. A sudden death of even a serious illness of Kim Jong-il is almost certain to trigger a serious crisis. If this happens, all bets are off, but it seems that a collapse of the system, Romanian or East German style, is one of the most likely outcomes.

This is what people in the South fear most. Indeed, unification might indeed spell economic and social disaster for the rich South. There are different estimates of the “unification costs”, the amount of money that would be necessary to close the yawning gap between the two Korean economies. The most recent estimate was made public last October. A report prepared by a committee at the South Korean National Assembly states that if unification happened in 2015, it would cost US$858 million to raise North Korean per capita income to half of the South Korean level. This is guesswork, of course, but everybody agrees that the amount of money necessary for reconstruction of the impoverished North could ultimately be counted in trillions of US dollars.

The “unification cost” is a hot topic, but many problems are of a social nature and have nothing to do with money issues. For decades, North Korea has remained one of the world’s most isolated regimes whose rulers once perfected Stalinism to the level undreamt of by Joseph Stalin himself. The population, with the exception of a tiny elite, has very vague and distorted ideas about the outside world.

North Korea is a well-educated society, but the technology and science they teach at the colleges is of 1950s vintage. The average North Korean engineer has never used a computer. Society has been conditioned to perceive the total distribution of goods and services as the norm, and experts seem to agree that the average North Korean defector in the South has serious problems when it comes to making consumer or career decisions for oneself (no such decisions are necessary or even possible under the North Korean system).

So, it is easy to see why South Koreans are so afraid of unification. However, history does not flow in accordance with human desires. If the North Korean state collapses, South Koreans will have few choices but to prepare themselves for unification at time and under circumstances which they would not be too happy about.

As the East European revolutions of 1989-1990 (or, for that matter, of nearly all popular revolutions) have demonstrated, once changes begin, nobody can control the pace and direction of events. Now it is time to think what should be done if an emergency happens and the North Korean regime follows the fate of nearly all regimes which once were its models and aspirations – Albania, Romania and the Soviet Union itself. When a crisis starts unrolling, it doesn’t leave much time for rational thinking.

Alas, any open media discussion of this subject remains taboo in the South. There are fears that such discussions might annoy the North, undermining inter-Korean detente. The Korean nationalist left, now (barely) in power, still believes that the Chinese solution is possible and “progressive”, and also perceives any talks about regime collapse in the North as a reminder of the official anti-communism of the past. The right is slightly more realistic, but it seems that its supporters are not too eager to discuss the difficulties such a turn of events could bring about.

It will be a simplification to think that South Koreans are completely unprepared for such an eventuality. Seoul government agencies do not like to talk about it, but it is clear that somewhere in government there are secret files with short-term contingency plans, to be put in motion in case of a power collapse in the North. However, these plans deal with immediate consequences of the crisis, especially with handling of refugees, and not with the long-term strategy of reconstruction, and this strategy is actually the hardest part of the task.

The major task is to smooth the transition, to make the shock of unification less painful and more manageable. It seems that one of the possible solutions is a confederation. The idea of confederation has been suggested many times before, but in most cases it was assumed that the two existing Korean regimes would somehow agree to join a confederative state. Needless to say, one has to be very naive to believe that the North Korean rulers could somehow co-exist with South Korea, which even in its worst times was a relatively mild dictatorship committed to a market economy (and become a liberal democracy two decades ago).

Such confederation is plainly impossible. However, in this case we mean a different type of state union, a provisional confederation, whose sole and clearly stated task would be to lay the foundations for a truly unified state and to cushion the more disastrous effects of North Korea’s transformation.

Such a confederation will become possible only when and if the North Korean regime changes dramatically, and a new leadership in Pyongyang will have no reasons to fear the influence of the democratic and capitalist South. In other words, only a post-Kim government can be realistically expected to agree to such a provisional confederation. It does not really matter how this government will come to power, whether through a popular revolution, a coup or something else. As long as this government (most unlikely, bowing to pressure from below) would be genuinely willing to unite with the South, it might become a partner at these negotiations and a participant of the confederation regime.

The confederation regime should make North Korea a democracy, one that introduces political freedoms and basic political rights. There should be an explicit statement about the length of the provisional confederation regime, and 10 to 15 years seems to be ideal. A longer period might alienate common North Koreans who will probably see it as an attempt to keep them from fully enjoying the South Korean lifestyle while using them as “cheap labor”. On the other hand, a shorter period might not be sufficient for any serious transformations.

One of the tasks of such a provisional system will be to control cross-border movement. South Koreans are now haunted by nightmarish pictures of millions of North Koreans flooding Seoul and other major cities, where they will push the South Korean poor from unskilled jobs or resort to robbery and theft. Such threats are real, and the confederation will make it relatively easy to maintain a visa system of some kind, with a clearly stated (and reasonable) schedule of gradual relaxation. For example, it might be stated that for the first five years all trips between the two parts of the new Korea will require a visa, and North Koreans will not be allowed to take jobs or long-time residency in the South. In the following five years these restrictions could be relaxed and then finally lifted.

South Korean fears of a North Korean crime wave might be well-founded – notoriously tough North Korean commandos indeed make ideal mafia enforcers. However, the North Koreans also should be protected from the less scrupulous of their new-found brethren – for example, from South Korean real estate speculators. In the case of uncontrolled unification, South Korean dealers will rush to buy valuable property in the North, a task which will not be too difficult in a country where $10 a month is seen as a good income.

South Korean dealers vividly remember what happened in Kangnam, former paddy fields which were turned into a posh neighborhood in southern Seoul. In some parts of Kangnam land prices increased more than a thousandsfold within a decade or so, making a lucky investor super-rich, and there are good reasons to believe that the price of land in Pyongyang or Kaesong could sky-rocket as well.

However, it is easy to predict the resentment of those North Koreans who will lose their dwellings for what would initially appear to be a fortune, but soon will come to be seen as small change. If real estate speculations are left uncontrolled, in a few years entire North Korean cities could become the property of South Korean dealers – with predictable consequences for relations between northerners and southerners. Hence, the provisional confederation regime, while encouraging other kinds of investment, should strictly control or even ban the purchase of arable land and housing in the North by South Koreans.

Another painful issue is that of land reform, distributing the land of state-run agricultural cooperatives among individual farmers. One of the major challenges would be claims of land owners who lost their property during the North Korean radical land reform of 1946. A majority of the dispossessed landlords fled to the South in 1945-1953 when some 1.5 million inhabitants of the North crossed the border between the two Koreas. Their descendants now live in the South and, as both anecdotal evidence and some research testify, carefully kept the old land titles. It is just a minor exaggeration to say that an arable plot in the North usually has an aspiring landlord residing in Seoul. These claims remain technically valid since the Republic of Korea has never recognized the North Korean land reform of 1946.

For generations, the North Koreans have been told by their government that the collapse of the communist regime will bring back the nasty landowners who have been laying in wait in the South. If in this particular case the propaganda statements are correct, this would produce a very serious negative impression on North Koreans, further increasing their alienation and disappointment.

Under protection of the confederation regime, a land property system could be redesigned, or rather created from scratch. The recognition of the 1946 land reform and its results is a necessary first step. To placate former owners, some partial compensation might be paid, even though the present author is not certain whether grandchildren of former landlords, usually rich and successful men and women, are really in dire need of such compensation.

As the next step, the cooperative property should be distributed among its members, preferably among the people who are really present in their villages (perhaps, a free rent system might be the first step). At any rate, by the end of the confederation period, land and real estate in North Korean should be safely privatized, with North Korean residents (and, perhaps, recent defectors) being major or even sole participants in this process.

One of the more controversial parts of the package might be a general amnesty for all crimes committed under the Kim family regime. This is especially necessary because the fear of persecution seems to be one of the reasons which keeps the North Korean elite, including its lower ranks, united around the inefficient and brutal regime. They believe that collapse of the Kims’ rule will mean not only the bend of their privileges (which actually are quite small – only a handful of top officials enjoy a really opulent lifestyle in North Korea), but they are more afraid of judicial persecution and even mob violence.

It is not incidental that North Korean officials and guides in Pyongyang ask one foreign visitor after another about the fate of former East German bureaucrats. Indeed, despite considerable liberalization in recent years, the regime remains exceptionally brutal, and its officials have no illusions about this. Unfortunately, this fear of persecution has kept the murderous regime going for the past decade or so and led to many more deaths.

One might argue that such unconditional amnesties to all Koreans is probably “unethical”. Perhaps, but let’s face it: the sheer scale of the crimes committed makes any serious and fair investigation impossible. About half million people have been in prison during those decades, and many more exiled, and nobody will be capable of investigating all these cases carefully and impartially. A great number of people have been directly or indirectly involved with the human-rights abuses, and again, it is impossible to investigate a few hundred thousand former officials who by the nature of their job might have been responsible for some criminal actions. Hence, only partial, selective symbolical (and therefore largely politically motivated) justice can be served at best.

A general amnesty would solve two problems: first, it will make former North Korean bureaucrats less willing to resist changes; second, it would diminish the scale of intrigue and manipulations, since people would not be fighting to avoid the fate of arbitrarily chosen scapegoats. It should become part of the law, and to be taken seriously the amnesty should be made as straightforward and unequivocal as possible.

Of course, amnesty does not mean complete forgiveness. There might be restrictions for former party and secret police officials to occupy certain positions in a post-Kim Korea (a policy pioneered by Eastern Europe). It might be a good idea to create non-judiciary commissions to investigate former abuses, like it was done in post-apartheid South Africa. This commission might lead to truly awful discoveries, but the promise of amnesty should be kept even if it will become clear that North Korean prison camps were not much different from Adolf Hitler’s Auschwitz or Pol Pot’s Tuol Sleng in Cambodia.

The confederation treaty also should include some legal measures which will make certain that North Koreans will not remain the source of “cheap labor”, to be used (and abused) by South Korean businesses.

For example, the military of the two Koreas should be integrated first, and there should be large quotas reserved for former North Korean servicemen in the united army. Politically, the North Korean military might become a hotspot of social discontent: the 1.2 million-strong North Korean armed forces probably lack the skills necessary for modern warfare, but this force consists of professionals who have not known anything except the barracks life and intense nationalist indoctrination. If former military officers are given commissions in the post-unification forces, their skills and zeal will find a good and useful outlet. Otherwise, the very same people are likely to join the ranks of organized crime.

It is also important to provide large admission quotas for North Korean youngsters at major South Korean universities. Korean society is both hierarchical and meritocratic, and being a graduate of a major Seoul school is a necessary condition of entry for nearly all important jobs. It is not incidental that the entire life of a middle-class South Korean family is often designed to facilitate exam preparations for the children.

Unfortunately, for decades to come even the most gifted North Koreans will be unable to compete on equal terms with much better prepared South Korean students, and this means that they can realistically hope to get only to lower-level universities, usually in the North. Both actual and perceived quality of education in those schools will remain relatively low for decades, and this will ensure that North Koreans, even with “new” college-level education, will be permanently relegated to subaltern positions. Hence, affirmative actions are necessary, even if such measures are certain to provoke an hysterical outcry from Seoul and Busan parents.

The confederation regime will help to solve another important problem – that of the North Korean middle class. As East Europe demonstrated, a majority of active supporters of democracy and reform has come from local-educated urban groups, a close analogue of the Western “middle class”. The same is likely to happen in Korea.

However, the same people will become very vulnerable after unification. Who will hire an engineer who has not seen a computer? What can be taught by a social science teacher who spent his or her college years memorizing Kim Il-sung’s genealogical tree and the “Dear Leader’s” asinine pronouncement on everything, from rice planting to nuclear physics? Who will visit a former North Korean doctor whose medicine is essentially on the 1950s level?

During the confederation regime, special efforts could be made to re-educate those people, at least partially, preparing them for a new environment while still allowing them to continue their professional work in the North. Most of them will be unable to adjust, unfortunately, but at least the 10 or 15 years leniency will give a chance to the lucky and determined few, and will also provide others with time to find other ways to make a living.

The confederation model does have serious shortcomings. For example, there are good reasons to believe that the new North Korean political elite will consist largely of Kim-era officials (or their children) who will retain their old habits, including that of corruption and inefficiency. A Northern democratic government would be prone to populist decisions, based on pressure from below, and North Koreans are likely to have particularly naive views on how their society and economy can and should operate, so some mistakes introduced via popular vote might become ruinous and costly.

But no ideal solution is possible. One should not harbor too many illusions. The recovery of North Korea will be prolonged and painful. Even if unification happens tomorrow, the difference between the two Koreas will remain palpable until 2050, if not longer. Tensions, misunderstanding and even outright hostility between northerners and southerners are bound to continue for a long time.

There are no easy and simple solutions. But the current state of affairs cannot continue indefinitely, and it is time to think how unavoidable problems can be mollified. The current policy of Seoul administrations merely helps to postpone the problems created by Korea’s division, and the disastrous choices made by the North half of the country. But sooner or later, Korea and the entire world will have to face these problems – and solve them.

Daily NK
Moon Sung Hwee
11/13/2007

Recent demand for small-sized TVs has been rapidly increasing in North Korea’s border regions, resulting in a huge price increases.

According to an inside North Korean source, the price of 12-inch (dubbed “chok” in North Korea) and 14-inch TVs, compared with prices this time last year, increased by 50 thousand to 100 thousand won (approx. USD15-30). Despite the increase, these small TVs are selling out, resulting in a supply shortage in stores located throughout the border regions.

Most 12-inch black and white TVs are Chinese-made. These TVs, which could have been purchased for a mere 150,000 won (approx. USD46) up until the end of last year, have recently sold for as much as 250,000 won.

The reason for the increase in the border region is that the state has strengthened inspections in these areas of those who watch Chinese TVs. The recent preference for small-size TVs comes from the fact that they are relatively easy to conceal.

A majority of border region civilians from North Pyongan to North Hamkyung Province can receive Chinese TV signals, thanks to the close distance. Among the channels able to be viewed is once broadcasted via Yanbian TV and South Korea’s China TV (www.openchina21.com). In accordance with a 2004 agreement between these two companies to promote broadcasting and cultural exchange, diverse South Korean dramas and movies as well as advertisements of South Korean products can be viewed.

The North Korean government collected remote controls to prevent the viewing of Chinese TV along the border region and implemented measures such as sealing the channels. Throughout the China-North Korea border region, inspections conducted by the No. 27 Bureau (under the Central Communications Office) are still very much underway.

The source said, “No. 27 Bureau agents come knocking at the door and turn on the TV at once to verify which channels have been viewed. Further, they inspect the state of sealed channels; if the seal has been damaged, the TV is confiscated.” When inspections take place, 30~50 sets are taken at a time, and in order to retrieve them, several thousand won in bribes is needed.”

However, in cases where these methods have failed to prevent the viewing of Chinese TV, technicians have entered homes and intercepted the circuits inside the TV, re-sealing the attached apparatus with high-strength adhesives. By doing so, the channels are forcibly fixed on Chosun Central TV broadcasting.

When the government carried out such invasive measures, the civilians put up a strong resistance, “Are they planning to just break TVs?” However, the government enforced the regulation of internal equipment, even when faced with civil rebellion.

The source said, “The apparatus inside televisions have been fixed so that people cannot watch Chinese TV channels, and inspections have been occurring randomly, so people have been watching and hiding small-size TVs in their homes.” This activity is reflected in the price increase.

One defector who has experience in selling used TVs in Rajin in North Hamkyung Province said, “Small-size TVs by which people could watch South Korean broadcasting were originally in high demand in South Pyongan, Kangwondo and South Hwanghae.” He said, “Since they cannot pass through customs, they are usually smuggled into and sold on the black market.”

The People’s Safety Agency handed down a decree stating that, “Those who pose a threat to the state and social system will be severely punished. Get rid of all kinds of places offering karaoke, movies, film subscriptions, PCs, and games.” It further emphasized the National Security Agency’s tightening of cell phone regulations along the border region.

Since last year, severe regulation of illegal films (foreign and South Korean DVDs and VCDs) has continually been enforced. Since this year, the North Korean government has gotten headaches from regulating the houses of civilians.

The North Korean government claims that the purpose of the regulations is “Destroying enemy maneuvers and directly impugn acts that pose a threat to society and the system.” North Korea’s opening and reform still seems far off.

Korea Times
Andrei Lankov
11/12/2007

Kim Jong-il loves to surf the net. In 2001 he asked the U.S. Secretary of State for her e-mail address, and in 2002 he told a visiting North Korean dignitary that he spent much time going through South Korean sites. He repeated this statement during the recent summit describing himself as ”an internet expert.”

Despite his relatively advanced age, Kim Jong-il takes the IT industry seriously. He obviously believes that the IT industry might become a wunderwaffen (super weapon) which one day will save the ailing North Korean economy (Kim Jong-il has always believed in simple, one-step, technology-based fixes for problems).

Now and then, news agencies report on North Korean efforts to train software specialists, or on a technology firm established by the North Koreans, or even on Kim Jong-il’s plans to create a large industrial complex which would become the North Korean reply to the Silicon Valley.

Efforts to create a computer industry go back to the late 1970s. In those days, the U.N. Development Program helped the North build a small pilot integrated circuit plant. Its history was plagued by one misfortune after another: the plant’s building proved to be badly insulated, the electricity supply was unreliable, and the engineers who were sent overseas for training arrived too late (most of them did not speak English, anyway). However, by late 1985 the plant was operational, producing ICs, an essential component of a computer.

By the early 1990s, the North was producing some 20,000 computers a year. Not much, but enough to provide for the military and even earn some money from export (over 60 percent of them were said to be exported).

In the early 1990s the North Koreans developed their own software, including a word processor. The latter had, among others, a peculiar function: it could automatically insert the names of the Great Leader and Dear Leader through a specially designated hot key.

In the North the PC was never meant to be a personal computer. It is reserved for office or industrial use, not for home – not least because the Internet is unavailable. For a regime which (correctly) assumes that its survival depends on its ability to keep the populace ignorant about outside world, the internet presents a mortal danger. Matters are further exacerbated by the unique success of the South Korean internet. If North Koreans were allowed to surf the numerous Southern sites at will, the carefully constructed picture of the world would instantly fall apart.

Thus, the internet is outlawed – but not completely. In recent years, foreign embassies have been allowed to connect to Chinese internet providers, but they have to pay the exorbitant fee for an overseas call (currently, $2 a minute). The connection is unreliable, but if your bills are paid by your country’s taxpayers, you probably can check your email… Access to email through business centers and even Internet cafes is becoming possible as well _ as long as one is a foreigner and is willing to pay exorbitant prices.

Only the privileged few have unlimited high-speed access to the Internet. But these trusted people are numbered in the hundreds or, perhaps, count a few thousands. Access is provided for the military, intelligence, and few privileged research centers only. Rooms where the internet-connected computers are installed are considered off limits for the North Korean personnel, and only people with proper security clearance can access this source of dangerous knowledge.

Less privileged institutions have access to local networks with limited connections to the World Wide Web. Their task is to let scientists and engineers retrieve the data they need without unduly exposing them to the dangers of overseas decadence.

There have been attempts to make money through IT. None of the grand plans for selling locally developed software on the international market have come to fruition, but there are easier ways to make a buck. In 2002 the North Koreans started an on-line gambling site in cooperation with a South Korean company. It targeted South Koreans, since gambling is illegal here. Its message board attracted much popularity since it was a place where the Southerners could exchange messages with the North Korean staff. The ability to chat with the Northerners was exciting (even though the largely young participants probably did not realize to which extent their interlocutors were controlled). The combination of gambling and propaganda obviously terrified Seoul, and the site was closed down.

Another area where North Koreans are trying their luck (and obviously not without moderate success) are game development and computer animation. Indeed, even major studios are sometimes inclined to outsource their animation work to North Korea.

The Internet remains a hot potato for the North Korean leaders. They understand its importance, but they do not know what to do about its political dangers. While facing such a choice, they have always opted for political security.

Daily NK
Kwon Jeong Hyun
11/12/2007

North Korean authorities recently started regulating motorcycle operation in order to control private market.

Motorcycle is most preferred means of transportation especially for North Korean salespersons. And in North Korea, everybody must get a license from the government to operate cars, motorcycles or even bicycles.

North Korean authorities now give license to only Made in DPRK “Bugang Motorcycle,” which is considerably more expensive than those imported from China.

Choi, a 33 years old resident of Sinuiju visiting his relative in Dandong, China, said on last Thursday “getting operator’s license for Made in China motorcycles has become ridiculously difficult.” According to Choi, only domestic motorcycle owners receive license and popular dissatisfaction increased.

It seems that North Korean authorities want to stop growing of private market by making it impossible to operate motorcycle, a vital part of transportation of goods.

Choi added “even before, someone had to bribe police officer to get a license, but now, bribery doesn’t work for Chinese-built motorcycles at all.”

Why people prefer Made in China? “Korean motorcycles manufactured in Pyongyang cost 1,500 US dollars and often break down. However, Chinese ones cost only 600 dollars while perform far better.”

Choi complained that “some people who operated Chinese motorcycle without license got their bikes confiscated.”

The loots were sent to the Army troops on DMZ.

Chinese motorcycle has become prevalent since 2002 when North Korean residents whose relatives lived in China received it as gift and operated for commercial purpose.

According to Choi, “Motorcycle can carry a certain amount of goods to inlands and it is so convenient. Even if motorcycle is expensive, everybody wants to own one. People buy seafood on the coast and bring them to the cities or sell small commodities.”

For alluvial gold, price differs among regions, so transporting it fast with motorcycle is lucrative business.

Lee, defected Pyongyang last year, said “In the past, a few rich people bought used Japanese motorcycles like Honda or Yamaha, but now many people operate Chinese ones for commercial purpose.”

Daily NK
Moon Sung Hwee
11/11/2007

A source inside North Korea reports that most of the country’s complex microbial fertilizer factories built during the mass starvation period in 1990s for increase of food production have been shut down.

The source said, “Those factories built between 1996 and 1997 in Kyongsung county of North Hamkyung Province had produced fertilizers only for one year following the construction. The year after, they were shut down. Now, the factory buildings are cleared”

North Korean media has praised till quite recently about North Korea’s advanced technology for producing complex microbial fertilizers. They said that the country’s fertilizer-producing technology and nature farming methods helped solve the food crisis and protect the ecosystem of North Korea. South Korean media have also once positively reported upon North Korea’s new fertilizer-producing technology.

However, the source said, “The situation is pretty much the same across the country. Most factories had stopped operating the year after the construction. It was Kim Jong Il who gave orders to build those fertilizer plants. But many factories fell into ruins.”

North Korea had built more than one hundred complex microbial fertilizer plants throughout the country during the mass starvation period in 1990s because it needed quite an amount of fertilizers to increase crop production.

The agricultural technology, which uses complex microbial fertilizers is a natural farming method developed by Dr. Teruo Higa, a professor at Ryukus University, Okinawa, Japan and the founder of Effective Microorganisms(EM) technology. Since complex microbial fertilizers contain 100 times more nutrients than ordinary fertilizers, they are used in many places in South Korea such as Yichu city of Kyungki Province where environment-friendly agriculture method is being practiced.

When crop production rapidly decreased in the mid 1990s, the failure was attributed to soil acidification, and Kim Jong Il urged his people to spread burnt soil, decomposed grass and compound fertilizers composed of soil, manure and chemical fertilizers over the field.

Unfortunately, that did not work. Then, Kim Jong Il gave another order to produce complex microbial fertilizers in large quantities in an attempt to increase crop production. Upon his order, North Korea started promoting the construction of complex microbial fertilizer plants through Chongryon (General Association of North Korean Residents in Japan) and built more than one hundred factories nationwide for the period of one year including ‘Patriotic Center for Complex Microorganism,’ whose construction work was completed in June, 1997.

Many North Koreans had to use pure grain to make complex microorganisms instead of costly granulated sugar. However, that was a bad idea because there was food shortage across nation and a great number of people were staving to death. Moreover, North Korea should not have wasted grain for microorganism production in such situation because it takes three years to see any effect of the use of microorganisms on crop production.

Kim Yong Hwa (pseudonym), a defector from Hyesan city of Yangkang Province, who used to work at ‘Patriotic Center for Complex Microorganism’ said, “350 kg of corn is used to make one ton of fermentation solution. That amount of corn is sufficient enough to feed one person for an entire year. Overall, the plant had used 38 tons of corn during its first two- year operation.”

The defector said, “The workers received food ration, but it wasn’t enough. So, many people stole corn power and even fermentation solution from the factory.” The defector added, “When people heard that we were using corn to make fertilizers, they found it hard to believe at first, but soon flared up in anger, saying ‘those microorganisms are eating us.’”

The defector said, “In addition, we did not know what to do with microorganisms we had produced because we didn’t have gas and a means of transportation. Sometimes, containers for storing microorganisms were lost or broken. We also had difficulty to move around microorganisms because they were produced in liquid form.”

Kim said the locals did not believe the expert’s explanation that microorganisms would produce germs three years later, which produce nitrogen gas, and therefore make soil rich. He said that the locals disapproved the use of corn for the production of microorganisms, and had no interest in sowing microorganisms in the field. Therefore, Kim said, the plant had to close.

South Korean experts have continued to point out the problem of soil acidification in North Korea and encourage the use of organic fertilizers. Nevertheless, many defectors criticized the use of grain for the production of complex microbial fertilizers for being detached from the realities of food situation in North Korea.

Lee Min Bok, a defector who used to work at North Korean Academy of Agricultural Science, said, “Staring with 1979, soil acidification became a serious problem, and Kim Jung Il has been giving orders to improve soil condition. The use of microorganisms can better the condition to some extent. However, North Korea needs to come up with comprehensive policies on its agricultural structure, anti-flood afforestation, and the establishment of production systems for chemical and organic fertilizers to solve the acidification problem.”

The source inside North Korea said, “In 1996, the authorities began praising about the effect of complex microbial fertilizers. Disappointedly, there weren’t any significant effect. So, starting with 1999, many fertilizers plants began to shut down.” The source added, “Most plants fell into ruin except few large factories such as Patriotic Center for Complex Microorganism in Pyongyang and a fertilizer plant in Rasun.”

North Korea began to display an interest in the production of complex microbial fertilizers because it had failed to produce enough manure and chemical fertilizers before. The South Korean government agreed to provide North Korea with 300,000 tons of chemical fertilizers this year and 400,000 tons next year.

According to Rodong Shinmun (North Korean state newspaper), Kim Jong Il spoke about the worldwide decrease in the production of chemical fertilizers, and stressed the importance of the use of microbial fertilizers in May, 2004.