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The Story of a Honorary Soldier Selling Noodles in Pyongyang

Friday, October 26th, 2007

Daily NK
Lee Kwang Baek
10/26/2007

Mr. “Kim,” who lives in Pyongyang, lost a foot in an accident in the army. After his discharge, he became a 1st-class Honorary Soldier of merit living on provisions and bonuses supplied by the nation. The wounded soldiers are named as “Honorary Soldiers” in North Korea. Even before the great famine, Mr. Kim and his family could survive on provisions and bonuses alone. However, after the worsening of the economic situation, they fell into serious hardship.

Nowadays, Mr. Kim steps outside every morning, dragging his one foot, because he has to buy noodles at the “Sunkyokak (a noodles restaurant)” that sells honorary soldiers at a state-assigned price of 230 won. Mr. Kim, who is a first-class honorary soldier, can buy two bowls of noodles at one time.

There is no limit on the number of times one can buy a bowl of noodles. However, with the increase in honorary soldiers living on the profit from noodles bought and resold, the number of bowls Mr. Kim can buy from standing in line all day is only four. Even then, he can sell a bowl which he bought for 230 won for 1,000 and can go home with a slightly upward amount of 3,000 won after selling four bowls.

The subsidies Mr. Kim receives as an honorary soldier every month is 3,000 won. That only comes out to 100 won per day, not even sufficient for a bowl of noodles from Sunkyokak. The cost of living for a family of four is usually 100,000 won (approx. USD30.0), so it is not enough to get by for a month. If one can earn one month’s worth of bonus in a day by selling noodles, there is nothing he can do, besides sell them, but to stand in line all day on crutches.

Until now, North Korea has poured a lot of energy to support for honorary soldiers. After the Korean War, it has guaranteed jobs for soldiers by erecting the Distinguished Soldier Fountain Pen Factory, the Sariwon Honorary Soldier Dressmaker Factory, the Hamheung Honorary Soldier Plastic Products Factory, etc. and to soldiers who have lost their ability to work, it has given provisions and bonuses. Further, it has advertised support for honorary soldiers as the “citizen’s responsibility” and has sought out civilian support.

However, recently, according to North Korean sources, among the guests who come to the Sunkyokak, approximately half are honorary soldiers who resell the noodles. The honorary soldiers demonstrate the fact that survival based on provisions and bonuses alone are impossible.

After the food shortage, an important transformation has taken place in North Korea. The number of people relying on national provisions decreased by around 30% and the rest were placed in situations where they could not survive on provisions, salaries, and bonuses provided by the state alone. At least 100,000 won is needed for monthly living costs, but the salary and bonus that the state can provide is only several thousand won. North Korea has become a society where honorary soldiers who had received the state’s special consideration and support now have to sell whatever they can to survive.

In order to buy four bowls of noodles, Mr. Kim, who has to stand on crutches all day, is the testament of North Korea’s economic system which has crumbled since the food shortage and the rapid deteriorate of whatever grip it does have.

Posted in 2002 Economic reforms, Arduous March, Black markets, Civil society, Economic reform, Labor conditions/wages, Military, Price liberalization, Restaurants | 1 Comment »

Jangmadang Will Prevent “Second Food Crisis” from Developing

Friday, October 26th, 2007

Daily NK
Kim Min Se
10/26/2007

There is a prospect of the rise of “second food crisis” next year because of the flood disaster and the resulting food shortage.

A senior researcher at Korea Rural Economic Institute, Kwon Tae Jin said warningly, “Unless North Korea comes up with a special plan to secure food supply, there will come another food crisis next year, which is as severe as the one in the mid and late 1990s.”

Kwon anticipated that North Korea would need 5.2 million tons of grain for domestic consumption. Unfortunately, it is expected that North Korea would produce around 3.8 million tons of grain. This means there will be a shortage of 1.4 million tons of grain.

The statistics indicates there is a real possibility of a food crisis. North Korean authorities announced that the flood inundated about 2.2 billion ㎡ of farmland, which accounts for 14 percent of the country’s farmland. It is estimated that 2.2 billion ㎡ of farmland produces at least 500,000 tons of grain.

However, another prospect says that although food shortage is inevitable, it will not lead to mass starvation in North Korea as it did in the mid-1990s. Most of defectors from North Korea said, “Since the mid-2000s, things have changed. There won’t be any serious starvation.” They said that the current situation is different from that of those days under the central food distribution system. They added that the Jangmadang (markets) economy has changed a way for life among North Korea people.

◆ The amount of demand for food is overestimated

It should be double-checked whether North Korea really needs a minimum of 5.2 million tons of grain. There is criticism that the estimate of food demand which was calculated by some South Korean experts on North Korea and relief organizations is unrealistic. It is also pointed out that the estimate is calculated based on the nutrition standard of South Korea.

Defectors said that mass starvation would not have occurred if North Korea had at least a half of 5.2 million tons of grain in the mid 1990s.

Although the international standard for daily nutritional intake is between 2,000 and 2,500 kcal/day, North Korea sets the standard at 1,600 kcal/day, which amounts to 450 grams of grain.

It is easy to estimate the minimum amount of food demand needed in North Korea. Let us say every individual including children and the elderly needs 550 grams of grain per day, which is equal to the daily amount of food distributed to every adult by the state. With the population of 22 million in North Korea, the country then needs 12,100 tons of grain each day and 4.4 million tons of grain per year.

It is known that the North Korean government provides 550 grams of grain for adults and 300 grams for both children and the elderly. According to CIA’s World Fact Book 2004, the population aged between 15 and 64 in North Korea is around 15 million, which accounts for 67.8 percent of total population. This means the population of children and the elderly together reaches about 7 million. If we do the math, we come into conclusion that the amount of food needed in North Korea every year is 3,777,750 tons of grain.

Recall that North Korean people had received the aforementioned amount of food through the state food distribution until early 1990s. Of course, the country did not suffer from mass starvation back then.

The mass starvation during the mid-1990s resulted from huge decrease in food production between 1994 and 1998. In those years, North Korea produced about 2 million tons of grain, which fell far below the needed levels of food production. Hwang Jang Yop, former secretary of the Worker’s Party also testified that in the fall of 2006, while he was still in North Korea, he once heard the secretary of agriculture Seo Kwan Hee worrying about extremely low food production.

Therefore, it is correct to estimate the minimum amount of food needed in North Korea at 3,777,750 tons of grain. If the food production decreases below 3 million tons, then the food prices will skyrocket, and the possibility of mass starvation will be increased.

◆ A New way of life among North Korean people helps prevent them from falling victim to starvation.

North Koran people do not believe in the state authorities any more. The people know that they suffered from horrible starvation because they relied on the state and its food distribution system. During the crisis, many people had desperately waited for food to be distributed until they collapsed and died. Nowadays, North Korean people find a means of living by themselves at Jangmadang.

“There is no free ride” is the words on everybody’s lips in North Korea, which means that everyone must work hard in order to make a living. The lowest class became a day laborer.

The mass starvation of the mid-1990s has brought a significant change into North Korean society. Except a few, most of North Korean people do not rely on the state’s food distribution system. Instead, they have come up with a variety of survival techniques such as engaging in business, illegal trade with China or real estate transactions, receiving support from defected family members, and house sitting.

In that manner, North Korean people make money and use it to buy rice. An affiliate at the Bank of Korea who studies price trends of North Korea said, “Since the adoption of the July 1 Economic Improvement Measure, the price of rice and corn has increased the least.” If the prices go up, people would tighten their belts and decrease their spending on every item except rice. This means they are not that vulnerable to starvation as they used to.

◆ Businessmen are good at securing food.

Recently, a number of rich businessmen have emerged. Some have tens of thousands dollars, and others as many as several million dollars. Groups of Jangmadang businessmen have been organized with these rich businessmen as the leaders.

These businessmen come and go to China as they please and supply food and goods to Jangmadang in North Korea. If the rice price in North Korea is expensive than in China, they buy Chinese rice and sell it at Janmadang. In this way, they help balance supply and demand at the market.

Furthermore, Chinese residents in North Korea and Chinese businessmen also joined the North Korean businessmen as providers at the market. They too sell food produced in China at Jangmadang when food prices go up in North Korea. If possible, they even sell rice reserved for the People’s Army. There was an accusation that the state authorities supplied food aid from overseas for the People’s Army while collecting food produced in North Korea at the same time.

Of course, some businessmen could deliberately keep a hold on food supply anticipating an increase in food prices. However, that kind of unfair activity is temporary. Although it is too early to tell, the “invisible hand” of the market, however small it is, is operating in North Korea and acting as a preventive measure against starvation.

Posted in Agriculture, Arduous March, Black markets, Economic reform, General markets (FMR: Farmers Market), Political economy, Price liberalization, Public Distribiution System (PDS), Uncategorized | Comments Closed

Privileged Pyongyang Citizens No Longer Enjoy Privileges in the Market.

Monday, October 22nd, 2007

Daily NK
Lee Sung Jin
10/22/2007
(Click on image for original size)

According to DailyNK’s research on prices in North Korea conducted in late September, the prices in Pyongyang are similar to the prices in other parts of the country. The finding shows that Jangmadang (markets) economy has been going through integration and similar distribution process across North Korea.

In the past, domestic commodities were sold cheap, and foreign products were sold expensive in Pyongyang.

DailyNK has been conducting quarterly research on prices in the central such as Pyongan Province and Hamkyung Province and northern areas.

This time the research result shows that the price of rice in a Jangmadang in Pyongyang is 1,350 won/kg, which is similar to the price of rice in Sinuiju, 1,400won/kg. In North Korea, the rice price serves as a gauge for price trends.

In Pyongyang, the exchange rate is about 330 thousands won to 100 dollars, which is the same as the exchange rate in other places. The most famous imported cigarettes, Cat (Craven A) is sold at the same cost of 1,500 won in Pyongyang and other areas.

Subsidiary food is more expensive in Pyongyang. The price of cabbage is 400 won/kg, 50 won/kg higher than cabbage price in Sinuiju. The price of pork ranges from 3,500 to 4,000/kg, 500~1,000 won/kg higher than the pork price in other areas.

The prices of seafood such as brown and green seaweed, and dried Pollack are cheaper in Pyongyang. Seafood caught in Kangwon Province and neighboring areas is transported to markets in Pyongyang in refrigerator car. Since the demand is high, seafood is sold in great quantities, and the price remains low in general.

Movie ticket prices range from 200 to 400 won. Telephone service is charged five won per minute. Overall, the price range for each commodity is high, and many different kinds of goods are available in Jangmadang.

Imported items from China such as socks, sports shoes, or underwear are expensive being sold at a cost of 1,000 won in Pyongyang. That is because there are extra shipping rates and labor costs imposed on Chinese goods transported to Pyongyang. On the contrary, in Sinuiju, imported goods from China are circulated on the market right away.

Often, retail prices are higher in Pyongyang because of high levels of consumption among Pyongyang citizens. However, cigarettes or liquor produced in Pyongyang, or clothes from South Korea circulated to other areas via Pyongyang are sold cheap in Pyongyang.

However, in these days the differences in regional price levels have almost disappeared.

A defector from Pyongyang, Ahn Chul Min (a pseudonym) who came to South Korea in 2006 said, “Prior to 2002, there were individuals who hung around from place to place and made money on price differences. But nowadays, the retail prices are almost uniform across the country because people just use a telephone and find out where to get items they want at what prices.

“Since there is no big difference in retail prices, retailers are not doing well in business,” Ahn added, “Instead, individuals driving a truck and selling goods wholesale are making good money.”

Ahn said, “Not everyone who lives in Pyongyang is well-to-do. Despite of their locations whether in Pyongyang or Chongjin, all markets have goods from South Korea and China. The poor people even if they live in Pyongyang should buy cheap and low quality of products from China. In contrast, those who live in Chongjin and have money can buy goods from South Korea anytime.”

Market Prices Consistent Throughout DPRK
Institute for Far Eastern Studies (IFES)
NK Brief No. 07-10-25-1
10/25/2007

The results of a survey conducted by Daily NK on the price of goods in Pyongyang at the end of September show that prices in the capital were similar to those in rural areas. This is an indication that markets throughout the country are integrated, and evidence that goods can be circulated from region to region.

In the past, the price of domestic goods in Pyongyang was relatively cheep, while imported goods were sold at high prices. During that time, Daily NK carried out local price surveys in central regions such as Pyongan and Hamkyung provinces, as well as in northern areas. According to this latest survey in Pyongyang, the cost of one Kg of rice, the standard measure of the cost of goods in North Korea, was 1,350 won, similar to the 1,400 won price in Sinuiju, and the 1,250 won cost in Hyeryung. An exchange rate of 3,300 won per USD is also in line with rural exchange rates, as is the 1,500 won price tag on a pack of Craven A cigarettes, the most favored imported cigarette in North Korea.

Non-essential food goods are more expensive in Pyongyang than in outlying areas, with one Kg of lettuce selling for 400 won, 50 won more than in Sinuiju. Also, pork in the capital runs between 3,500 and 4,000 won per Kg, which is 500 to 1,000 won more than it would cost elsewhere in the country.

On the other hand, seaweed, dried Pollack, and other marine products are cheaper in Pyongyang than elsewhere. Ocean harvests from Kangwon and neighboring provinces are brought to Pyongyang markets by way of refrigerated trucks. Because of high demand, a variety of goods get delivered, yet overall, prices are held fairly low.

Overall, the price range on a particular ware was very wide, indicating that there was a variety of products available in the markets. The survey found that goods such as undergarments, socks, sneakers imported from China were selling for the high cost of 1,000 won each. In Sinuiju and other northern areas, goods from China are brought directly to markets, but by the time these same goods reach Pyongyang, additional labor and transportation costs force prices up. Pyongyang residents typically have more money to spend than those in rural areas, also leading vendors to raise prices on some goods, however cigarettes and alcohol produced in Pyongyang and distributed to rural areas, as well as South Korean goods which reach DPRK markets by way of Pyongyang, are slightly less expensive in the capital.

Recently, regional price differences have nearly disappeared. Prior to 2002, some traders earned their living traveling from region to region exploiting price differences. However, now with one simple phone call, North Koreans can find out where and for what price goods are being sold, leading the majority of retail prices to be similar throughout the country.

Posted in 2002 Economic reforms, Agriculture, Black markets, Economic reform, Film, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market), Light Industry, Manufacturing, Price liberalization, Telephones, Uncategorized | Comments Closed

Expert says North facing more famines

Friday, October 19th, 2007

Joong Ang Daily (via AFP)
10/19/2007

If floods and bad weather aggravate already chronic food shortages, North Korea may face new famines next year, a leading expert in Seoul warned yesterday.

Floods and storms, followed by outbreaks of blight and insect-related damage, deprived the impoverished nation of about 10 percent of its fall harvest this year, said Kwon Tae-Jin, research director of the Korea Rural Economic Institute.

“North Korea is likely to face very serious food shortages next year, and barring very generous help from abroad, we may see something like the 1995-98 famine,” Kwon told AFP.

That famine reportedly killed hundreds of thousands of people.

Kwon said North Korea needs at least 5.3 million tons of food to feed its 23 million people from now until next year’s harvest. But its own food production is expected to come to only 3.9 million ton, leaving a shortfall of 1.4 million.

South Korea is the North’s biggest aid provider, supplying it with 400,000 tons of food every year. Seoul is expected to increase this aid to 500,000 tons next year.

North Korea imports about 200,000 to 300,000 tons of food every year, but must rely on outside help to plug the remaining gap, Kwon said.

Paul Risley, Asia spokesman for the World Food Programme in Bangkok, said some food aid was sent directly to the North, including from China. Nonetheless, there is a significant gap between the amount of food available and the amount actually required, Risley told AFP, citing UN figures.

“This is a very serious concern, and it’s quite clear from the most recent estimate of food commodities that are available … that the DPRK [North Korea] will once again this year face a very significant gap between the amount of cereal, such as corn and rice, available and the amount of food required for its population,” he said.

He said the World Food Programme provides a “relatively small amount of food assistance” to millions of the most vulnerable, including several hundred thousand victims of August floods.

North Korea was already reliant on international aid to help make up a food shortfall of 1 million tons ― 20 percent of its needs ― even before the August rains.

Posted in Agriculture, Arduous March, Foreign aid statistics | Comments Closed

DPRK Economic Policy One Year after Nuclear Test

Thursday, October 18th, 2007

Institute for Far Eastern Studies (IFES)
NK Brief No. 07-10-18-1
10/18/2007

One year after the DPRK nuclear test, North Korea is still focusing all of their policy efforts on restoring their economy. North Korean leaders are convinced that an economic revival is crucial for the survival and stability of their regime.

The DPRK stated in this year’s New Year Joint Editorial, a publication that presents the regime’s policy direction for the year, that “the founding of a strong national economy is a crucial requirement for the revolution and advancement of our society, and is a historic undertaking toward becoming a fully prosperous and powerful nation.” The emphasis on “focusing all the state’s efforts on solving the economic issue,” was indicative of their sense of imminence regarding economic revival.

The Joint Editorial presenting the DPRK’s national goal of “founding a strong national economy” came out three months after the October nuclear test, which took place just over one year ago. Since its publication, the North Korean media has been stressing that the DPRK already realized powerful military strength and strong political ideology, and must now strive to establish a strong national economy. The military might of the nation was epitomized by the success of the nuclear test.

A copy of the North Korean quarterly publication “Politics & Law Review” obtained on September 14th emphasized the need to establish a strong national economy, stating that “without a strong national economy, it is impossible to strengthen the forces of political ideology and military power,” and, “the only way to block the infiltration of economic imperialism is by strengthening economic power.” It also added that “if we are weaker than South Korea, we will naturally look to them and depend on them.”

North Korean press claims that Kim Jong Il’s decision to carry out a nuclear test was the reason the 6-party talks have been working since January’s meeting between the United States and the DPRK in Berlin, thus easing tensions on the Korean peninsula by ameliorating the U.S.-DPRK relationship and advancing inter-Korean relations. The fact that 18 out of 55 public appearances (a significantly higher proportion than that of last year) made by Kim Jong Il this year were visits to economic bureaus also reflects North Korea’s economic ‘all-in.’ North Korea’s pro-active movement toward ameliorating relations with the United States, and its determination to expand inter-Korean economic cooperation, all stem from its urgency to develop their economy in order to stabilize their regime.

Posted in Domestic publication, Economic reform, Institute for Far Eastern Studies, Juche, Kim's New Year Address (Joint editorials), Songun | Comments Closed

North Korea Farming Region Destroyed, So the Cost of Rice Increases

Wednesday, October 17th, 2007

Daily NK
Han Young Jin
10/17/2007

Due to the flood damage which heavily affected the central region of North Korea last August, the next year’s price of rice has been putting an increasing burden among civilians.

Min Nam Su (pseudonym), a North Korean trader who has come to Dandong, China, said on the 15th, “In Hwanghae and South Pyongan Province this year, farming has been affected for the flood damage, so the price of rice has been showing signs of an increase. Currently in the Jangmadang (markets) in Shinuiju, 15kg of rice costs 25,000 North Korean won (KRW8,000, USD8.7).

“The farmlands in Hwanghae and South Pyongan have been completely submerged, so we were only able to look to farming in North Pyongan Province. It is obvious that they will be taken up for provisions for the People’s Army, so people who have money are already busy buying and hoarding rice.”

A majority of urban civilians are directly purchasing rice from the jangmadang, with the exception of Hwanghae and Pyongyang, after the breakdown of the provision system in North Korea. If the price of rice skyrockets, the livelihood of North Korean citizens will be directly affected.

It is possible that the rice aid from South Korea or international society, which will be distributed from the end of this month, may stabilize the price of rice.

Good Friends, beginning early this month, relayed through its newsletter, “Only when the rice aid comes in quickly will the overall price of rice decrease, no matter whose hands it falls into. It is difficult to buy a kg of rice for 1,700~1,900 won.”

Rice aid to North Korea flows in through Pyongyang, Nampo, or through Chongjin Harbor. The rice, after it goes to the People’s Army or large-city political employees, travels down a path of smuggling into the jangmadang. NGOs for North Korea estimate that the actual amount of rice allocated to civilians is around 30% of all the aided rice.

The North Korean authorities recently gave an instruction to factories and offices to guarantee six-months worth of food provisions to laborers, but the factories are reportedly in a difficult situation due to the rice shortage.

Mr. Min said, “From now on, 15kg of rice is supposed to hike up to 50,000 North Korean won (approx. USD17.4). In places like Yongcheon plain and Jungju plain, some farming has been well done, so the armies are mobilized and will do harvest. This year in particular, there will probably be a lot of thieves in farmlands.”

He said further, “The price of rice is supposed to have risen even more in Kaecheon, Suncheon, and Pyongsung in South Pyongan Province than in Shinuiju. There have been news that people are even coming from the Hwanghae region, which is a famous farming province, to North Pyongan to buy rice.”

Mr. Min said, “In early August, when the initial flood damage occurred, a kilogram of rice rose to 1,960 (approx. USD0.7) in the Shinuiju and in the second week of August, remained stable at 1,500 won (approx. USD0.52). It seems like the price of rice will continue to rise. But, the situation would change when the support is distributed to the civilians, but who expects that?”

Posted in 2002 Economic reforms, Agriculture, Economic reform, General markets (FMR: Farmers Market), Good Friends, Price liberalization, Private property | Comments Closed

North Korea on Google Earth

Saturday, October 6th, 2007

Version 5: Download it here (on Google Earth)

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the fifth version.

Additions to the latest version of “North Korea Uncovered” include updates to new Google Earth overlays of Sinchon, UNESCO sites, Railroads, canals, and the DMZ, in addition to Kim Jong Suk college of eduation (Hyesan), a huge expansion of the electricity grid (with a little help from Martyn Williams) plus a few more parks, antiaircraft sites, dams, mines, canals, etc.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your additions to this project.

Posted in 1990s Famine, Advertising, Agriculture, Architecture, Arduous March, Art, Automobiles, Aviation, Banking, Civil society, Coal, Communications, Computing/IT, Cosmetics, Dams/hydro, DPRK organizations, Economic reform, Education, Electricity, Energy, Environmental protection, Film, Finance, Fiscal & monetary policy, Football (soccer), Foreign direct investment, Forestry, Gambling, Gasoline, General markets (FMR: Farmers Market), Golf, Google Earth, Health care, Hoteling, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Illicit activities, Juche, Kaesong Industrial Complex (KIC), Labor conditions/wages, Leisure, Library, Light Industry, Manufacturing, Mass games, Military, Mining/Minerals, Mt. Kumgang Tourist Special Zone, Music, Nuclear, Political economy, Pyongyang International Trade Fair, Pyongyang Metro, Radio, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Real estate, Religion, Restaurants, Sea shipping, Special Economic Zones (Established before 2013), Television, Tourism, Transportation, Water, Worker's Party | 2 Comments »

Expert says N.K. becoming more open, better at dealing with national disasters

Monday, September 24th, 2007

Yonhap
9/24/2007

North Korea is becoming more transparent and effective in dealing with disasters, spurred by both internal and external factors, an Asia-Pacific regional specialist said in his latest paper.

Dr. Alexandre Mansourov, a securities studies professor at the Asia-Pacific Center for Security Studies (APCSS) in Hawaii, noted five trends in the North Korean government’s responses over the past decade to nationwide shocks, including floods, typhoons, drought and avian influenza outbreaks.

Increasing transparency is one of the trends, with Pyongyang more quickly admitting to disasters that have struck the nation, he said in a paper (download here) released last week through the Korea Economic Institute in Washington.

It took North Korea several years to admit the impact of natural disasters in the mid-1990s that led to massive starvation and chronic food shortages. But in August 2000, when it was hit by Typhoon Prapiroon, North Korea released the news three weeks after it occurred, and in the two following years, when other typhoons struck, North Korea reported it within three to six days, Mansourov said.

Pyongyang immediately acknowledged flooding in August 2007, he said.

“Observers agree that the timeliness, details, and amount of coverage of flood damage and rehabilitation work in August 2007 is unprecedented.”

North Korea is also showing institutional knowledge and a capacity for disaster management, with new organizations growing out of a decade of learning and experience, such as various provincial centers, the professor said.

The North Korean Red Cross Society has been exceptional, he said, working with the International Federation of Red Cross and Red Crescent Societies, and has made itself the leading agency in disaster preparedness and response.

Inter-agency coordination has also increased, with deputy prime minister-level working groups working closely together in each disaster since the flood of 2001, as there are preventive programs through which basic relief supplies are stored in town and villages.

For example, the 10-year strategy against avian influenza, worked out by the emergency commission in 2005, would have been unthinkable a decade ago, Mansourov wrote.

Another notable trend is the increasing cooperation between the North Korean government and international humanitarian community, gradually allowing joint needs assessments and monitoring, he noted.

Mansourov argued that external factors helped bring about the changes.

“International factors did make a difference in what happened in (North Korea), especially through the introduction of innovative ideas and dissemination of best humanitarian practices,” in addition to foreign aid, he said.

The scholar also argued that while the country’s top leader, Kim Jong-il, does control any institutional changes, there is also adaptation driven by needs.

“There has been some degree of autonomous institutional learning and adaptation; it is incremental in nature and caused by both positive and negative feedback from the environment regarding institutional performance in crisis situations,” he said.

Posted in 1990s Famine, Arduous March, Avain Flu, Disease prevention, Epidemics, Foreign aid statistics, Health care, International Aid, International/Korean Red Cross, Korea Economic Institute, Statistics, UN, UN Food and Agriculture Organization, UN World Food Program, UNDP, UNICEF, UNWHO | Comments Closed

North Korean Citizens Are Differentiated into Six-Levels

Friday, September 21st, 2007

Daily NK
Lee Kwang Baek
9/21/2007

The expansion of Jangmadang’s private economy

Several years ago, I met a defector from North Korea and is currently residing in Japan. He frequently meets people coming and going from North Korea.

The change he relayed regarding North Korea was interesting and vivid. Although hundreds of people are not dying from starvation as in the past, transformation brought about by the expansion of the private economy, such as the Jangmadang (markets).

I asked him what the most significant change in North Korea was after the mass starvation of the mid-90s.

It was the reorganization of North Korean society’s class system. According to him, there are currently six levels of classes forming in North Korea.

First is the top privileged class based on Kim Jong Il. It is the class that feeds and lives on Kim Jong Il’s administrative funds, all kinds of support coming in from South Korea, and extractions from civilians.

The second is the power class engaging in the area of foreign currency earning activity. A portion of money gained from the foreign currency earning business is offered to the Kim Jong Il regime and the rest are accumulated as their own wealth.

The third is the “moneybag” class who has earned money from exchanges with the products from Jangmadang and China. They use “violence” and “money,” like the Russian mafia, to secure the commercial rights of each region via the Jangmadang.

The fourth is the class whose sustenance depends on provisions. It can be deduced that people in the middle-class take up approximately 20~30% of the civilian population.

The fifth is the common class who depend on Jangmadang and individual patches. Approximately 60% of the total population falls into this class. They live day to day on their labor power.

The lowest class is the elderly, the handicapped, Kotjebi (begging children), city migrants, and diseased patients.

The most outstanding class is the 5th class. They are a class who has started living independently without depending on the Kim Jong Il regime and counts as 60% of the population.

South Korean administration believes that there is a need to seek a North Korean policy while considering the size and characteristics of the lower class.

That is, direct support or loans to the North Korean government should be reduced and a direct commercial transaction with North Korean citizens should be increased. Gradually, Kim Jong Il regime’s political position should be weakened and the status of self-sufficient lower-class citizens have to be elevated. This can become an important foundation for North Korean society’s move towards a market economy.

The second eye-catching element is the most venerable people in the lower class. Approximately 10% of people who fall under this class are humanitarian aid recipients of our government and international society. The latter two have steadily continued their support to them.

Despite this, according to a recent North Korean source, a significant amount of people are suffering from malnutrition among those who have been admitted to hospitals, long term reeducation camps, and concentration camps for beggar children. Why are such events occurring?

The defector said that when the rice that the South Korean government sends arrives at the North Korean harbor, North Korean authorities or organizations immediately sell them for money.

Similar testimonies have come forth from North Korean civilians. Rice which is sold at the harbor can only be bought with foreign currency. People who can purchase rice by paying foreign currency are “moneybags” for a portion of bureaucrats who have accumulated wealth. Moneybags and corrupt officials hand over this rice to the Jangmadang and collect the enormous balance.

The humanitarian aid provided by the outside, before they are even relayed to the lowest class who should be receiving support, are flowing into the hands of moneybags and corrupt bureaucrats. If such defectors’ testimonies are true, the South Korean government’s humanitarian rice support has lost its original function.

The solution regarding this is two-fold. First is directly relaying medical products and rice to North Korea’s lowest class. Through civilian and organizational efforts, a humanitarian support team jointly based on South Korean civilians and government should be formed and they should initiate humanitarian aid activity by directly going into North Korea.

Further, a large-sized South Korean humanitarian support activity inspection team should observe the activities of the North Korean Red Cross and raise the transparency of distribution. If this is difficult, there is a need to simplify the window through the support of international society whose monitoring is much ahead of our government’s monitoring of formality.

The government should urgently restore the original capacity of humanitarian support in order to avoid falling into a policy of failure geared only towards a dictatorship regime.

Posted in Black markets, Civil society, Dating/Courting, Economic reform, Foreign direct investment, International Aid, International trade, Price liberalization, Private property, Songbun | Comments Closed

What Are N. Koreans Up to?

Friday, September 21st, 2007

Korea Times
Marcus Noland, Stephan Haggard
9/21/2007

Last summer North Korea conducted provocative missile and nuclear tests. Yet only four months later, Pyongyang signed on to a roadmap that included a return of international inspectors, a full declaration of contested nuclear activities, closing down existing facilities and ultimately disabling them.

American negotiator Christopher Hill predicted this last step could take place as early as the end of the year.

What are the North Koreans up to?

The cynical, some would say realistic, view in the United States _ advanced by departed Bush administration hawks such as John Bolton _ is that Kim Jong-il is raising false hopes.

The appearance of cooperation has several tactical advantages. Sanctions and ongoing uncertainty have had substantial economic costs. The February agreement was preceded by secret meetings in Berlin to resolve the Banco Delta Asia issue.

In return, the North Koreans closed their nuclear facilities, but they have not firmly committed to the difficult aspects of the agreement _ providing a full accounting of their programs, disabling their programs, and giving up actual stores of fissile material and weapons.

Cooperation also drives wedges between the U.S., South Korea and China. If North Korea appears to be making concessions, it is easier for South Korea and China to continue diplomatic and financial support.

Next month, President Roh Moo-hyun will travel to Pyongyang for a summit with Kim Jong-il. Expect him to come bearing gifts to cement his legacy as a peacemaker.

Other politicians in the presidential race have also offered extraordinarily ambitious and generous programs of support for the North as well.

Recent studies we have done on North Korea’s changing external economic relations are consistent with some of this cynical picture, but also suggest a sliver of hope for more substantial change.

To understand why, requires a brief tour of the miserable history of North Korea over the last two decades. Following the collapse of the Soviet Union, the North Korean economy went into a steep decline ending in full-blown famine.

By our estimates, as many as one million people _ five percent of the entire population _ perished in the mid-1990s. Out of the human ashes of this tragedy, however, the North Korean economy began to undergo a profound transformation.

As households and work units scrambled for food, they engaged in barter, trade and new economic activities.

The desperation of the famine also saw an upturn in illicit activities, from missile sales to drugs and the counterfeiting of U.S. currency. But trade and investment also started to flow across the Chinese border.

Chinese companies, small-scale traders and North Korean firms pursued business opportunities, from large-scale mining operations to the import of South Korean videos.

The regime was always hesitant about the emergence of the market. In July 2002, the government initiated economic policy changes that decriminalized some private activities. But reforms have taken a zig-zag path, always subject to reversal.

Sanctions and closer scrutiny have limited the country’s arms sales and illicit activities.
With these sources of revenue increasingly foreclosed, North Korea has two alternatives _ open the economy and increase normal commercial activities or cooperate primarily to obtain aid. In terms of internal change, these two options may actually push North Korea in opposite directions.

Consider the aid tack. Given the regime’s concerns about internal stability, aid could provide a lifeline, allowing the regime to sustain a modicum of current consumption while forgoing deeper reforms. Under this option, North Korea trades away its nuclear program for assistance precisely to maintain the political and economic status quo.

Alternatively, North Korea could use the resolution of diplomatic tensions to deepen the economic reform process.

The military has been engaged in commercial activities and could potentially benefit from such a course. But real reform will reshuffle power and influence within North Korea in ways that are unpredictable and risky.

So what can we expect from Pyongyang? The nuclear program is the regime’s one major asset and we should not expect them to bargain it away easily.

Rather we should expect prolonged and difficult negotiations as they try to extract tribute for their “Dear Leader.”

In the end, we may eliminate North Korea’s capacity for making additional nuclear weapons, but this will not necessarily be accompanied by economic or political reforms.

An important lesson learned elsewhere in the developing world is that aid is not a substitute for reform.

Ambitious schemes for infrastructure and other investment in North Korea will only generate large economic pay-offs if they are accompanied by genuine opening and a more aggressive embrace of the market.

The key issue, therefore, is how tightly South Korea will link its offer of aid to progress in the resolution of the nuclear issue. Properly conditioned, South Korean aid could be a powerful carrot in the nuclear negotiations, whether it ultimately encourages internal reforms or not.

But if the South Korean offers at the summit are large, unconditional and open-ended, they could permit the regime in Pyongyang to stall the nuclear negotiations while actually discouraging deeper reform.

Posted in 1990s Famine, Arduous March, Black markets, China, Economic reform, General markets (FMR: Farmers Market), International Aid, Mining/Minerals, Political economy, South Korea, USA | Comments Closed

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