North Korean Economy Watch

Korea Times
Andrei Lankov
8/23/2005

The North Korea of the 1960s or 1980s was not a society of complete equality. It had its rich and poor. But the affluent people were affluent either because the party-state bureaucracy chose them, such as government officials and a handful of the most prominent scholars and writers, as well as people who were allowed to work overseas and were paid in hard currency, or allowed them to be affluent. For example, this was the case with the repatriates from Japan. From the late 1980s, the situation changed. Some people began to make money not because they were paid and showered with privileges, but because they learned how to use market capitalism.

The markets began to grow explosively around 1990, and North Korean “black capitalism’’ was conceived around this time. The first really rich people began to appear, even though they had to hide their success both from the authorities and their fellow countrymen. And one had to use whatever advantages one had, as competition was tough. In the late 1990s, the North Koreans used to say “there are only three types of people in North Korea: those who starve, those who beg and those who trade.’’

These early capitalists came from backgrounds that gave them advantages over other people who also took up trade. Most of them were officials who had useful connections. In the 1990s, a person who could command a truck easily made a huge amount of money by moving merchandise around the country and exploiting the large differences in prices between the regions. Managers of state enterprises could sell the production of their factories on the market. This was technically stealing, of course, but it was in an increasingly corrupt society there was a fairly good chance of not getting caught. Retail personnel at all levels channeled the goods through the “back doors’’ of their shops, away from the disintegrating public distribution system. Military and security personnel also had advantages, since for decades they had lived in what can be described as a “state-within-the-state,’’ beyond even the most nominal control of outsiders. Finally, “hard currency earning’’ officials made a lot of money: they have been running quasi-market operations from the 1970s and had both the necessary expertise and resources. After 1990, they began to use these resources for their own ends.

In addition to officials, generals and police officers, there were other groups of people who found themselves in an advantageous position in those early days of North Korea’s capitalist revival. These included the repatriates from Japan whose relatives back in the “capitalist hell’’ have always been encouraged to transfer money to the North. The repatriates had money, and some of them retained vestigial experience of operating in a market economy. Another group included ethnic Chinese, some of whom were Chinese citizens, and Koreans who had close relatives in China. For decades, both of these groups have been engaged in small-time cross-border commerce, and after the collapse of state control, they greatly increased the scale of their operations.

Even some humbler professions found themselves in relatively good times. Drivers, for instance, could take money for moving passengers and merchandise _ especially, after the quiet breakdown of the travel restriction system around 1997. They also augmented this money by selling and buying goods themselves and became a major source of income for train conductors.

Fortunes were made in trade, not in manufacturing, which remained largely controlled by the state. Money lending also provided good profits. In the mid-1990s, private lenders charged their borrowers with a monthly interest of some 30-40 percent. The associated risks were high, too; these private lenders had virtually no protection against the state or criminals, or above all, bad debtors.

The growth of grassroots capitalism had another unexpected effect: the empowerment of women. Like their counterparts in most other Communist countries, the North Korean authorities expected every able-bodied male to be employed in some state enterprise. It was illegal for men to remain unemployed. However, for married women, the approach was different. All Communist countries grudgingly admitted that a woman has at least a theoretical right to remain a full-time housewife. In the North, the share of housewives was unusually high: no precise data is available but it appears that some 30-40 percent of married women of working age stayed at home.

When economic disaster struck, this arrangement had unintended consequences. The men kept going to their factories and offices, even if their wages were becoming meaningless. They were afraid of the still formidable state machine, they wanted to keep the status traditionally associated with proper jobs and they also needed the rations _ as long as the rations were forthcoming. Women, especially housewives, were free to pursue completely different economic strategies. They took up market commerce with great enthusiasm and soon comprised a majority of North Korean vendors. This also meant that the women’s earnings became the major source of income in many Korean families.

This did not mean that women became prominent at the highest reaches of the new capitalist market. To occupy the key positions and make really good money, one had to have connections, capital and connections. Most of the people who had all of these things were male, but at the lower levels of the new semi-legal capitalist class, women came to play a significant role.

From the Herald Tribune:
Donald Greenlees

In May, Kelvin Chia, one of the first foreign lawyers to receive a license to practice in North Korea, took a party of Indonesian miners on an investment tour.
 
Visiting a coal mine outside Pyongyang, the group was surprised by the welcome from North Korean officials and found that the basic road and power infrastructure serving the mine site was in a better condition than they expected. Chia said the mining company – which he declined to identify for commercial reasons – is likely to soon enter a joint venture with the North Korean operator to further develop the mine.
 
Since being granted the right to open an office in Pyongyang last October, Chia, who is from Singapore, says his firm has been approached by about 20 companies from Europe, Southeast Asia and Australia with an interest in investing in communist North Korea’s shaky economy. Chia’s firm was the first wholly owned foreign legal practice in North Korea.
 
“I think there is an upsurge of interest in that country,” said Chia, who is based in Singapore but runs an office of two lawyers in the North Korean capital and has plans to expand.
 
Chia’s recent experience mirrors that of other hardy business people who have persisted with North Korea in the past decade, despite a nuclear crisis and U.S. commercial embargoes. Some business people equate the current level of investor interest with the early 1990s, when foreign companies, including some multinationals, started a spate of investments in the hope that North Korea’s largely self-imposed isolation would end.
 
While the latest round of six-nation talks to dismantle North Korea’s nuclear weapons program remains inconclusive, a handful of Asian and Western investors, some with earlier experience in doing business there, are again considering possibilities in defiance of Washington’s desire to use economic seclusion as a bargaining tool.
 
These investors, mainly manufacturers and miners, are being enticed back by low wages, plentiful mineral resources and a regime that appears increasingly prepared to support foreign investment and open its economy.
 
Pyongyang has signaled plans to open investment promotion offices within its embassies in Singapore and Malaysia, according to Chia, who maintains regular contact with North Korean officials. A revised foreign investment law, passed by the North Korean Supreme People’s Assembly in 2004, relaxed some conditions on foreign investment and permitted full foreign ownership of some ventures. The assembly has also strengthened intellectual property rights laws.
 
A South Korean government official said that Pyongyang also recently started to approve visas for foreign buyers to enter the joint North-South industrial park at Gaeseong, just north of the demilitarized zone. The official said 19 visas had been approved as of mid-July for buyers from Germany, Japan, China and Australia.
 
Investment in Gaeseong is restricted to South Korean companies.
 
Tony Michell, [Korean Associates Business Consultancy]a business consultant based in Seoul, has received permission to take a group of eight investors to North Korea in September in the first of what he said would be monthly investment missions. The first group will comprise European and Asian business people, none of whom are from China or South Korea, the countries with the largest investment in the North.
 
Michell, who introduced a number of companies to North Korea during the last upswing in investment interest from 1993 to 1995, said there had recently been “a revival of interest.”
 
“This comes up to the 1993 level of interest,” said Michell, managing director for Asia of the Euro-Asian Business Consultancy, adding that if the United States dropped its economic embargo “this would be a humdinger of an emerging market.”
 
Still, potential investors in North Korea have to weigh a long history of failure. Of the eight companies Michell introduced during the early 1990s, only one investment survives. An investment bank based in Hong Kong, Peregrine, entered a joint venture to establish Daedong Credit Bank in Pyongyang. Peregrine collapsed, but Daedong is marking a decade in business.
 
The experience of North East Asia Telecom, a Thai firm, is sobering. It set up a mobile phone network, but since May 2004 use of mobile phones has been suspended by the North Korean government as part of a security crackdown.
 
New investment largely dried up after October 2002 when U.S. officials claimed that North Korean officials had admitted during talks to possessing a nuclear weapons program. There is general agreement among investment advisers and economic analysts that if the nuclear impasse can be resolved foreign investment will accelerate.
 
The nuclear crisis erupted as North Korea was implementing a series of measures to open its economy and increase appeal to investors, like giving state-owned enterprises greater freedom to operate commercially, removing price controls and allowing its currency, the won, to be exchanged for the euro, which was adopted in December 2002 for all foreign currency transactions.
 
Analysts of the North Korean economy say those reforms remain largely on track and paved the way for an upsurge of direct investment in 2004 from China, North Korea’s main economic partner. Ahn Ye Hong, who studies the North Korean economy for the Bank of Korea, the South Korean central bank, said that investment from China rose from $1.3 million in 2003 to $173 million in 2004.
 
He said this investment was driven by China’s desire to “obtain as much of North Korea’s resources as it can,” particularly iron ore. He expects a further significant increase in Chinese investment this year.
 
The South Korean government is also seeking to increase direct investment in the North. Although the bulk of South Korean investment has gone into just two projects, Gaeseong and the Mount Geumgang tourism development, recent talks between the two Koreas explored the possibility of investment in upgrading or repairing mines that have fallen into disuse.
 
An official in South Korea’s Ministry of Unification said an inter-Korean economic cooperation meeting in Pyongyang between Sept. 28 and Oct. 1 would discuss the proposal further. The official, who requested anonymity due to restrictions on speaking publicly, said it was likely any South Korean involvement in redevelopment of the mines would be carried out by a joint enterprise between the government and the private sector.

Daily NK
Kim Young Jin
7/20/2005

Demand for Wire Telephones after the Government Confiscation of Cellular Phones

Recently in North Korea, demand for house phone skyrocketed and as the government confiscated personal cellular phones, people have also be increasingly using public phones.

It is known that setting a wire telephone for a household costs more than 450,000 Won and it is difficult to get one even after 4-5 months longs reservations.

Even Cellular Phones of Government Officials Confiscated

Park Young Chul (pseudo name, age 45) whom The DailyNK met in Tumen of China testified, “As the government completely banned the use of cellular phones after the Ryonchon Incident, demand for wire phones has been skyrocketing.”

Is the use of cellular phones still banned?

“It is hard to see cellular phones in North Korea. Not in local places, even in cities, people holding cellular phones cannot be seen.”

How about the Party cadres and managers of the state enterprises?

“The government confiscated all the cellular phones after the Ryongchon accident. They are still strictly banned. Even the provincial party cadres, National Security Agency, People’s Safety Agency officials are not allowed to use cellular phones.”

There are two kinds of cellular phones used in North Korea.

One kind is the official one acknowledged by the government, the GSM method of European style, which was used since 2002. Although it costs more than $1300 only to register and it is only usable in the city, it is known that more than 20,000 people are using this kind. Most of the users are foreigners and among the North Korean people, Party cadres and special government officials possessed it as the symbol of their special right.

The other kind is the Chinese wave, which the people use in secret along the Sino-Korean border areas. Although the number of users is unverifiable, it is known that the main purpose of their cellular phone use is to communicate with their family members in China and South Korea or with the dealers for their businesses. Due to the limitation in reach of the wave, these phones cannot be used extensively in inland. They are especially targeted by the government for control.

Then after the Ryongchon accident was known to the outside world by the cellular phones, the government of North Korea confiscated all the cellular phones last May. Although the foreigners are free from prohibition, there is no way for North Korean people to legally possess cellular phones.

Wire Phone Lines Still Hard to Get Even with Money

Then how do the people in North Korea communicate with each other?

“Usually by the wire phones (house phones). People who run business with other sellers and buyers in other verify their deals through phone. Those who have enough money seek to obtain their own phone line.”

Due to the limited means of transportation and communication, price differences between the regions varied much. For example, in Huiryeong of North Hamkyung province, the price of rice was low and the price of pollak pretty high while in Chungjin the opposite. People could take advantage of such price difference and earn money in between, for instance, by buying pollak in Chungjin and selling them in Huiryeong and buying rice from Huiryeong and selling it in Chungjin.

In the past such business were done only with guesses on price, but now phones are used to check the price differences. Recently dollar dealers are known for checking exchange rates through phone calls to China and even across the nation everyday.

How much does it cost to obtain a phone line?

“In the past it was not so difficult if you had money. Now, it is pretty difficult even if you had money. It cost about 450,000 to 500,000 North Korean won. That is a lot of money in North Korea. However, it is not a matter of how much it costs. The problem is that the government does not have enough of IC block necessary for switchboard of the Ministry of Communication to set up the phone line, so even if you had requested for a phone line, you are not guaranteed to get one.

Does that mean that someone has to withdraw a line for another person to get?

“Precisely. In the end, the cost of setting a phone line is actually the cost of selling and buying the IC block. The cost also includes the expense of laying phone line from the place where switchboard is located to the designated house. That is why it is so expensive.”

After the 7.1 Economic Management Improvement Measure in 2002, the average monthly wage of a North Korean worker ranges between 1500∼2500 won, thus 450,000won is the amount which an average worker has to save for 20 years without spending a penny, but the fact that “many people are willing to obtain” shows that there is a significant number of rich people present in North Korea.

Personal Identification and Deposit Money Required for the use of ‘Public Phones’

How is the situation of the public phones?

“They are called “common phones,” and two or three of them are located in each communications office or branch office in each area (district). There is a communications office in every 8km~12km and in the city about 4km.”

How much does it cost?

“It costs 10won for one local call. Before it was 50 jun (half of 1won) but recently the price increased. Of course the price varies for long distance called, they are more expensive. You have to leave your personal identification and 40-50won of deposit at the office prior to your make the call and when you are done you get them back after you pay.”

Why do you need personal identification and deposit money?

“They made this procedure because of some people who ran away without paying”

Are there many people using the public phones?

“There was a communications office about 4km away from my house, usually if I go, I had to wait about 30 minutes to make a call. Sometimes you have to waste as long as half of the day for your turn. Still, there are many people in line waiting.”

Park sighed and said, “Only if the transportation system were a little bit better, the living of the people would be much better. When one thing gets better, the government soon turns it down.” What we see is a scene of discord between the people who are already living in capitalistic style and the government that tries to deject it.

International Journal of Korean Unification Studies
Vol. 14, No.2, 2005, pp 52-84.

PDF Here: transformation of class structure.pdf

Abstract
This study examines how North Korea’s class structure transformations influenced the social transformations, and seeks to understand the structural characteristics of North Korea by examining in detail the existing shape of each social class. This study found that North Korea’s socialist transformation was the process of dismantling every social class, such as the landowners, farmers, commerce and industry, and intelligentsia classes, etc. The 1946 land reform dismantled the landowner class, the 1958 agricultural collectivization dismantled the farmers class, and the 1958 nationalization of commerce and industry did the same to the petty bourgeoisie. The only class remaining in North Korea is the managers of the governing class. There was no class differentiation, only dismantlement. Thus, with social classes dissolved, the governing class remains as the monolithic class monopolizing social, economic, and political power in North Korea, with no other social power to act as a balancer. This type of class structure may constitute the social conditions of political dictatorship in North Korea.

Highlights:
In North Korea, the fundamental ownership relations of the traditional class structure were dismantled in the name of socialist construction. The victims of this construction were the traditional classes of landowner, petty bourgeoisie, farmer, and intellectual.

When the 1946 Land Reform Law was passed, it was enacted in a month.  The law provided for government confiscation of land properties over 5 chongbo (1 chongbo=2.45 acres).  When completed, 1,000,325 chongbo of 1,982,431 under cultivation at the time.  At the time, land owned by the Japanese state, Japanese people, and religious organizations was barely 4%.  the remaining 96% was in the hands of Korean landowners and tenants.  It affected 405,603 of the 1,121,295 registered farming households.  4 in 10 households had land confiscated in part or whole.  Ten years after land reform, many were again prospering, and theor political influence became noticeable.  Kim il Sung sought to reassert control over them.  In 1958, land reform was reversed and farms were colectivised.

Nationalization of industry, traffic, transportation, communications and bank finances, including over 1034 important factories and businesses.  In 1947 80.2% of industry was held in state control.  Private commerce made up the rest.  After the Korean War, private enterprise production consisted of small-scale mills, metal workshops, rubber factories.  by May 1957, the number of private industrial enterprises was 633.  By August 1958, this activity was completely eliminated.

To purge the intellectuals (who were educated in the old ways) Kim il Sung proposed, “we have to speed up the construction of socialism, and fo rthat purpose, we have to fight against the conservatism of the intellectuals.” This started with technicians and economic managers.  Then dissident writers.

All social powers were ousted: Landowners, farmers, businessmen, and intellectual classes.  All menas of production were nationalized and socialiazed, so all became employees of the state, and the state became the sole employer.  North Korea’s new system consists of the rulers and everyone else (two groups).

To prevent remanats of the past from gaining influence, North Korea classified each individual according to their family background, and discriminated on this classification (starting in 1957).

Yunan and Soviet factions were purged in the August Faction Incident in 1956.  Cabinet Decision 149 mandates that ousted individuals be put in area 20km from the sea coast and demarcation line, 50km away from Pyongyang and Kaesong, 20km away fro mother cities and limited residential areas.  These individuals received a special stamp on their ID cards and were registered with the social security agency.

The North Korean managerial (ruling) class is an exclusive group which has institutionalized a system so that it may keep its privileges.  Only the sons and daughters of the core class can become promoted within the managerial class.  Children of Cadres only marry children of cadres.

Core class is 3,915,000 people in 870,000 households.  Wavering is 3,150,000 in 700,000 households.  Hostile is 7,930,000 in 173,000 households.

In the workplace, all indivduals are obliged to be part of one of three organizations: the party, the Youth League, or the Workers Union.

Supplies are divided into special numbers.  1,2,3,4, etc.  Those in higher positions are afforded higher rank in distribution.  “How could Party Secretaries, who don’t do anything,obtian objects of a 4 level?”

Private relationships are only possible through the party.

Self-criticism sessions are carried out every week.  Since these are routine, people know each other and act accordingly.  Becuase everyone has to criticize each other they tend to do so in a modest way.

Peasants most angry.  Laborers and office workers have time to do business on the side, but peasants do not.  Some bright peasants do tend private plots.

People complain openly now.

While the core class focused on inner-systemic solidarity when faced with a crisis, the wavering and hostile classes were the first to enter the black market.  After business expanded in the country side like wildfire the government brought the businesses into the open in July 2002.  The marginalized societies led the change in values.  Reportedly the collude with the regulatory authorities and security guards, borrow and rent vehicles for biusiness.

Only those sub-classified as Manyongdae line (Kim Il Sung’s lineage), Baektusan line (Kim Jong Il’s lineage), and Ryongnamsan line (People who graduated with Kim Jong Il from Kim Il Sung University) are able to receive official government posts.

Of the total population, 10% makes up the power-holding ruling class.  Another 40% make up a lower social rung doing business and making deals.

Los Angeles Times
Barbara Demick
7/4/2005

For most of her life, Kim Hui Suk had spouted the sayings of North Korea’s founder Kim Il Sung and never for a moment harbored a doubt: Capitalists were the enemy. Individualism was evil.

But then disaster rained down on her hometown, Chongjin, on North Korea’s remote east coast. Factories ran out of fuel. Food rations stopped. Watching her family slowly succumb to the famine — her mother-in-law, husband and son eventually would die of starvation — Kim realized she had to change.

Once a stickler for following the rules, she bribed a bureaucrat so she could sell her apartment. Then, with no business skills other than the ability to calculate on an abacus, she used the proceeds of the sale to set herself up in a black market business, hawking biscuits and moonshine she brewed from corn.

Kim could have been sent away for life for such crimes. But obeying the rules would have meant a death sentence.

“The simple and kind-hearted people who did what they were told — they were the first to die of starvation,” said Kim, a soft-spoken grandmother who now lives in South Korea and has adopted a new name to protect family members still in the North.

The famine that killed 2 million North Koreans in the mid-1990s and the death of the nation’s founder, Kim Il Sung, in 1994 sparked vast changes across the secretive communist country.

Markets are springing up in the shadows of abandoned factories, foreign influences are breaching the borders, inflation is soaring and corruption is rampant. A small nouveau riche class has emerged, even as a far larger group has been forced to trade away everything for food.

This is the picture of life in North Korea as painted by more than 30 people from Chongjin, the nation’s thirdlargest city. Some are defectors living in South Korea. Others were interviewed in China, which they had entered illegally to work or beg. Accounts of aid workers and videos taken illegally in Chongjin by disgruntled residents were also used to prepare this report.

Although the North Korean regime has a reputation as the ultimate Big Brother, people from Chongjin say the public pays less and less heed to what the government says. There is little that might be called political dissent, but residents describe a pervasive sense of disillusionment that remains largely unspoken.

“People are not stupid. Everybody thinks our own government is to blame for our terrible situation,” said a 39-year-old coal miner from Chongjin who was interviewed late last year during a visit to China. “We all know we think that, and we all know everybody else thinks that. We don’t need to talk about it.”

Kim Sun Bok, a 32-year-old former factory worker who came to South Korea last summer, said the country was “changing incredibly.”

“It is not the same old North Korea anymore except in name.”

Just a decade ago, when people in Chongjin needed new trousers, they had to go to government-owned stores that sold items mostly in drab browns or a dull shade of indigo. Food and other necessities were rationed. Sometimes the government permitted the sale of home-grown vegetables, but even a hairbrush was supposed to be purchased from a state-run shop.

Today, people can shop at markets all over Chongjin, the result of a burst of entrepreneurship grudgingly allowed by the authorities. Almost anything can be purchased — ice cream bars from China, pirated DVDs, cars, Bibles, computers, real estate and sex — for those who can afford the high prices.

The retail mecca is Sunam market, a wood-frame structure with a corrugated tin roof that is squeezed between two derelict factories.

The aisles brim with fresh cucumbers, tomatoes, peaches, scallions, watermelons and cabbage, as shown by rare video footage taken last year by the Osaka, Japan-based human rights group Rescue the North Korean People. Everything else comes from China: belts, shoes, umbrellas, notebooks, plates, aluminum pots, knives, shovels, toy cars, detergents, shampoos, lotions, hand creams and makeup.

Each of Chongjin’s seven administrative districts has a state-sanctioned market. Sunam, the city’s largest, is expanding, and some say it has a wider variety of goods than the main market in Pyongyang. Many vendors wear their licenses pinned to their right breasts while the obligatory Kim Il Sung buttons remain over the heart.

Although markets have been expanding for more than a decade, it was only in 2002 and ’03 that the government enacted economic reforms that lifted some of the prohibitions against them. Most of the vendors are older women such as Kim Hui Suk, a tiny 60-year-old with short, permed hair and immaculate clothing.

She was working in the day-care center of a textile factory in the early 1990s when production ground to a halt. Men were ordered to stay in their jobs, but Workers’ Party cadres at the factory started whispering that the married women, or ajumas, ought to moonlight to provide for their families.

“It was clear that the ajumas had to go out and earn money or the family would starve,” Kim said.

She first tried to raise pigs, locking them in a shed outside her downtown apartment building and feeding them slop left over from making tofu. But the electricity and water were too unreliable to keep the business going.

In 1995, Kim sold her apartment in the choice Shinam district and bought a cheaper one, hoping to use the proceeds to import rice from the countryside. But that too failed when she injured her back and couldn’t work.

The family’s situation became dire. Her husband’s employer, a provincial radio station, stopped paying salaries, and food distribution ended. In 1996, her mother-in-law died of starvation, and her husband the following year.

“First he got really, really thin and then bloated. His last words to me were, ‘Let’s get a bottle of wine, go to a restaurant and enjoy ourselves,’ ” Kim recalled. “I felt bad that I couldn’t fulfill his last wish.”

In 1998, Kim’s 26-year-old son, who had been a wrestler and gymnast, grew weak from hunger and contracted pneumonia. A shot of penicillin from the market would have cost 40 won, the same price as enough corn powder to feed herself and her three daughters for a week. She opted for the corn and watched her son succumb to the infection.

But Kim did not give up. She swapped apartments again and used the money to start another business, this time baking biscuits and neungju, a potent corn moonshine. If buyers didn’t have cash, she would accept chile powder or anything else she could use.

“We made just enough to put food on the table,” said Kim.

Much of Chongjin’s commerce is still not officially sanctioned, so it has an impromptu quality. Money changes hands over wooden carts that can be rolled away in a hurry. Those who can’t afford carts sell on tarpaulins laid out in the dirt.

Fashion boutiques are slapped together with poles and clotheslines, enlivening the monochromatic landscape with garish pinks and paisleys. Some clothes have the labels ripped out and vendors whisper that these items came from araet dongne or the “village below,” a euphemism for South Korea, whose products are illegal in the North.

Shoppers can buy 88-pound sacks of rice emblazoned with U.S. flags, and biscuits and corn noodles produced by three factories in Chongjin run by the U.N. World Food Program — all intended to be humanitarian handouts.

Some people cut hair or repair bicycles, though furtively because these jobs are supposed to be controlled by the government’s Convenience Bureau.

“They will bring a chair and mirror to the market to cut hair,” Kim said. “The police can come at any moment, arrest them and confiscate their scissors.”

Another new business is a computer salon. It looks like an Internet cafe, but because there’s no access to the Web in North Korea, it is used mostly by teenagers to play video games.

More products are available, but inflation puts them out of reach for most people. The price of rice has increased nearly eightfold since the economic reforms of 2002 to 525 won per pound; an average worker earns 2,500 won a month — about $1 at the unofficial exchange rate.

World Food Program officials in North Korea say the vast majority of the population is less well off since the economic changes, especially factory workers, civil servants, retirees and anybody else on a fixed income. But there are those who have gotten rich. Poor Chongjin residents disparage them as donbulrae, or money insects.

“There are people who started trading early and figured out the ropes,” said a 64-year-old retired math teacher who sells rabbits at the market. “But those of us who were loyal and believed in the state, we are the ones who are suffering.”

If Chongjin’s economic center is Sunam market, its political heart is Pohang Square, a vast plaza dominated by a 25-foot bronze statue of Kim Il Sung.

The grass here is neatly mowed, the shrubbery pruned and the pavement in good repair. Even when the rest of the city is without electricity, the statue is bathed in light. Across the street, a tidy pink building houses a permanent exhibit of the national flower, a hybrid begonia called Kimjongilia, named for current leader Kim Jong Il.

Since the practice of religion is barred, Pohang Square stands in as a spiritual center. Newlyweds in their best clothes pose for pictures, bowing to the statue so that their union is symbolically blessed.

When Kim Il Sung died on July 8, 1994, half a million people came to Pohang Square to pay their respects in the pouring rain and stifling heat. But among the adoring multitudes, there were malcontents.

One was Ok Hui, the eldest daughter of entrepreneur Kim Hui Suk. Though she dutifully took her place in the throng, any sadness she felt came from a foreboding that Kim Jong Il would be worse than his father.

“I went day and night along with everybody else. You had to…. But there were no tears coming from my eyes,” recalled Ok Hui, now 39, who did not want her family name published.

Ok Hui worked for a construction company’s propaganda unit, a job that entailed riding around in a truck with a megaphone, exhorting workers to do their best for the fatherland. But she didn’t believe what she preached.

Her father had taught her to doubt the regime. As a reporter and member of the Workers’ Party, he knew more about the outside world than many people and realized how far North Korea lagged behind South Korea and China.

“He and his friends would stay up at night when my mother was out, talking about what a thief Kim Jong Il was,” Ok Hui said.

Her mother, though, remained a firm believer. “I lived only for the marshal. I never had a thought otherwise,” said Kim Hui Suk. “Even when my husband and son died, I thought it was my fault.”

Ok Hui and her mother frequently clashed. “Why did you give birth to me in this horrible country?” Ok Hui remembers taunting her mother.

“Shut up! You’re a traitor to your country!” Kim retorted.

“Whom do you love more? Kim Jong Il or me?” her daughter shot back.

The regime was probably less beloved in Chongjin than elsewhere in North Korea. Food had run out in its province, North Hamgyong, earlier than in other areas, and starvation rates were among the highest in the nation.

Chongjin’s people are reputed to be the most independent-minded in North Korea. One famous report of unrest centers on the city. In 1995, senior officers from the 6th army corps in Chongjin were executed for disloyalty and the entire unit, estimated at 40,000 men, was disbanded. It is still unclear whether the incident was an attempted uprising or a corruption case.

Chongjin is known for its vicious gang wars, and it was sometimes difficult to distinguish political unrest from ordinary crime. There were increasing incidents of theft and insubordination. At factories, desperate workers dismantled machinery or stripped away copper wiring to sell for food.

Public executions by firing squad were held outside Sunam market and on the lawn of the youth park, once a popular lover’s lane.

In a village called Ihyon-ri on the outskirts of Chongjin, a gang suspected of anti-government activities killed a national security agent who had tried to infiltrate the group, former kindergarten teacher Seo Kyong Hui said.

“This guy was from my village. He had been sent to inform on a group that was engaged in suspicious activities,” she said. “They caught him and stoned him to death.”

Work crews went out early in the morning to wash away any anti-regime graffiti painted overnight, according to human rights groups, but most people were too scared to express their discontent. Badmouthing the leadership is still considered blasphemy.

To discourage anti-regime activity, North Korea punishes “political crimes” by banishing entire families to remote areas or labor camps.

“If you have one life to live, you would gladly give it to overthrow this government,” said Seo, the teacher. “But you are not the only one getting punished. Your family will go through hell.”

Even as Kim Jong Il’s regime weakens, many of its stalwarts are growing richer. Many of Chongjin’s well-to-do are members of the Workers’ Party or are connected to the military or security services. In the new economy, they use their ties to power to trade with China, obtain market licenses, extract bribes and sell bureaucratic favors.

“Those who have power in North Korea always figure out ways to make money,” said Joo Sung Ha, 31, who grew up in Chongjin and now works as a journalist in Seoul.

Joo was the pampered only son of a prominent official, and his family lived in Shinam, in the city’s northern hills overlooking the ocean. By the standards of South Korea or China, the single-family homes with lines of fish and squid drying from the roofs are nothing special. But for North Koreans, these are mansions.

The Joo family had a 2,000-square-foot cement-block house and a walled garden about twice that large. The garden proved crucial in protecting the family against the famine, though they had to contend with hungry soldiers who would scale the walls and steal potatoes and cabbages.

North Korean families like to measure their status by the number of wardrobes they own, and Joo’s family had five — plus a television, a refrigerator, a tape recorder, a sewing machine, an electric fan and a camera. They didn’t have a phone or a car — at that time those were unthinkable even for a well-off family — but they did have a bicycle.

“The appliances were of no use after the electricity ran out,” Joo said. “The bicycle was the most important thing, because the buses and trams stopped running.”

Joo attended the best elementary school in Chongjin, the city’s foreign language institute, and eventually the country’s top school, Kim Il Sung University in Pyongyang. He never met a native English speaker in the North, or any foreigner for that matter, but he trained his ear with videotapes of the BBC and banned Hollywood films.

“I sometimes watched ‘Gone With the Wind’ twice a day. Anybody else would have been arrested for watching Hollywood movies,” he recalled.

Joo’s glimpses of Western culture eroded his loyalty to the system. “I saw myself 20 years down the road in the prime of my career and North Korea would be collapsing,” he said.

While many of his classmates went to work for the regime’s propaganda news service after graduating, Joo arranged to return to Chongjin, where he taught high school until he escaped in 2001.

“The people from our neighborhood couldn’t understand,” said Joo, who stays in contact with his family. “They thought I had everything.”

Kim Hye Young, an actress, was also a child of privilege. Her father, Kim Du Seon, was an official of a trading company that sold mushrooms and fish in China. He learned how to navigate the bureaucracy, using his connections with the army and security services.

“If one of [the officials] had a wedding in the family, they would come to me for a couple of cases of wine,” the older Kim said.

As trade with China became more important, the family prospered. They took drives in a company car and ate at Chongjin’s nicest restaurant.

Growing up, Kim showed a flair for theater, and through her acting became a member of the elite in her own right. Her best-known role was in a play called “The Strong and the Righteous,” in which she portrayed a spy who sacrifices her life for North Korea.

When the production won first place in a Pyongyang drama festival in 1996, she got to meet Kim Jong Il. Still breathless with the memory, she said the leader shook her hand and gave her a fountain pen.

“I knew that I, as an actress, had an important role to promote the ideology of my country,” Kim said.

Kim and her sisters were largely oblivious to the famine, and their mother said she took pains to shelter them.

“My daughters don’t know to this day how many children in our neighborhood starved to death,” said her mother, Choe Geum Lan. She also didn’t tell them that their father, as a result of his business trips to China, had become increasingly pessimistic about North Korea’s future.

In 1998, when Kim was home from Pyongyang on vacation, her parents told her the family was going to visit an aunt in Musan, a city near the Chinese border. It was not until they had crossed to the other side that Kim and her teenage sisters, were told they had defected.

Kim, now 29 and advertising toothpaste on South Korean television, is one of the few defectors who says she didn’t want to leave.

“I was content with my life,” she said.

Today, North Korea’s elites are even better off, buying telephones for their homes and even cars.

“For $4,000 or $5,000, anybody can buy a car now. It used to be that you weren’t allowed to register your own car. We couldn’t dream of it,” said Kim Yong Il, a defector from Chongjin who lives in Seoul.

Recently, he arranged to have a computer smuggled from China to his relatives in Chongjin. North Korea’s state-run companies don’t have computers, so they’re eager to hire people who do. “If you have a computer, you can get a job,” he said.

Visitors have been shocked to glimpse the new conspicuous consumption in Chongjin.

Jeung Young Tai, a South Korean academic who was in Chongjin delivering South Korean government aid, noticed a paunchy man standing in front of the Chonmasan Hotel next to a new Lexus.

And at a hot spring in Kyongsong, on the city’s outskirts, he saw a woman carrying a lap dog — a striking sight in a country where there is so little food that the only pets usually are goldfish.

“You get the sense that there is a tremendous gap between rich and poor and that the gap is growing,” Jeung said.

The flip side, of course, is that the poor are getting poorer.

In Chongjin, those at the very bottom of the heap can be found at the train station.

The cavernous building boasts a large portrait of Kim Il Sung above the entrance and a granite-faced clock that rarely tells the right time. In front is a vast plaza crammed with people waiting for trains — sometimes for days, because the trains have no fixed schedules — and people waiting for nothing at all.

These are the homeless, many of them children. They’re called kotchebi, or swallows, because they wander the streets and sometimes between towns in search of food. Many gravitate to Chongjin station, because it is a major hub and the travelers have more to give.

A video shot last year by a military official and sold to Japan’s NTV television captured barefoot children near the station in torn, filthy clothing fighting over a nearly empty jar of kimchi. One boy scooted along the pavement on his buttocks; the narrator said his toes had been eaten away by frostbite.

Kim Hyok knows how easy it is for a child to end up at the station; he spent the better part of two years living there.

“If you can’t find somebody or they left their home, chances are you can find them at the station,” said Kim, now 23 and resettled in South Korea.

Kim’s mother died when he was a toddler, and he was raised by his father, a party member and an employee of a military unit that sold fish in China. During his early childhood, Kim, his father and elder brother lived in relative comfort in a high-rise apartment in the Sunam district.

When the government stopped handing out rations in 1993, Kim’s father used his connections to place his sons in an orphanage 60 miles away.

Kim, who was about 12 at the time, wasn’t sorry to be sent away. It was considered a privilege because the orphanages had food.

In 1997, just before his 16th birthday, Kim “graduated” from the orphanage. He caught a train back to Chongjin, but when he got to his neighborhood, things looked unfamiliar. The electricity was off. Many apartment buildings had no glass in the windows and appeared vacant.

Climbing the eight flights in pitch dark to his family’s unit, he heard a baby crying and wondered whose it might be. Confused and scared, he knocked on the door.

A young couple opened the door and told him his father had moved long ago but left a message: Look for him at the train station.

The phenomenon of vagrancy is testament to how much North Korea has changed. Before the famine, the government controlled people’s movements so strictly that they could not dream of visiting a relative in a nearby town without a travel permit, let alone selling their homes. Not showing up for work could bring a visit from police.

But as people embarked on increasingly desperate hunts for food, families broke apart. With few telephones and a barely functional postal service, parents and children became separated.

“People just started wandering around because they were hungry,” Kim said. “They would sell their apartments for a few bags of rice.”

Kim never found his father. He also never found his brother, who had left the orphanage a year earlier.

With no place to go, Kim ended up at the train station. By night, he slept squeezed into a narrow space designed for a sliding iron gate. By day, he loitered near the food vendors on the plaza. He often worked with a gang of other kids — a few would topple a vendor’s cart and the others would scoop up whatever spilled.

“If you’re not fast, you can’t eat,” said Kim, who even today in South Korea bears the signs of chronic malnutrition, with a head that looks oversized on a shockingly short frame.

Kim began hopping the slow-moving trains that pass through Chongjin on their way to the Chinese border. Once on board, Kim would scramble up to the top of a car, flatten himself to avoid the electric lines above and, using his pack as a pillow, ride for hours.

At the border, he would wade across the river to hawk the items in his pack: household goods on consignment from Chongjin residents, who were selling off their possessions.

In 1998, Kim was arrested by Chinese authorities, who do not recognize North Koreans as refugees. He was sent back to North Korea and spent two years in a prison camp before escaping again in 2000 to China, where he was eventually taken in by missionaries and brought to South Korea.

For every homeless person who survived, many more likely died. Kim Hui Suk recalled a particularly ghoulish scene at the train station.

“Once I saw them loading three bodies into a cart,” Kim said. “One guy, a man in his 40s, was still conscious. His eyes were sort of blinking, but they still were taking him away.”

Although the ranks of the homeless have thinned since the height of the famine, North Korean residents say their numbers are still considerable.

“If somebody disappears, you don’t know whether he dropped dead on the road or went to China,” the coal miner said.

About 100,000 North Koreans have escaped to China in the last 10 years. Many have ended up returning to North Korea, either because they were deported or because they missed their families. They often bring back money, goods to trade and strange new ideas.

Smugglers carry chests that can hold up to 1,000 pirated DVDs. South Korean soap operas, movies about the Korean War and Hollywood action films are among the most popular. Even pornography is making its way in.

This is a radical change for a country so prudish that until recently women were not permitted to ride bicycles because it was thought too provocative. Seo Kyong Hui, the kindergarten teacher, said that when she left North Korea in 1998, “I was 26 years old, and I still didn’t know how a baby was conceived.”

Even today, women are prohibited from wearing short skirts or sleeveless shirts, and both sexes are forbidden to wear blue jeans. Infractions bring rebukes from the public standards police.

But it is a losing battle to maintain what used to be a hermetic seal around the country. Just a few years ago, ordinary North Koreans could make telephone calls only from post offices. Dialing abroad was virtually impossible. Now some people carry Chinese cellphones and pay for rides to the border to pick up a signal and call overseas.

Smugglers also bring in cheap Chinese radios. Unlike North Korean radios, which are preset to government channels, the Chinese models can be tuned to anything, even South Korean programs or the Korean-language broadcasts of Radio Free Asia.

In the past, being caught with such contraband would land a person in political prison. Nowadays, security personnel will more likely confiscate the illicit item for personal use.

When a policeman caught Ok Hui, the entrepreneur’s daughter, with a Chinese radio in 2001, the first question he asked was, “So how do you work this thing?”

She wrote down the frequencies for South Korean radio stations.

“Don’t you have earphones so you can listen without anybody hearing you?” the officer then demanded.

North Korea instructs its citizens that the country is a socialist paradise, but the government knows outside influences can puncture its carefully crafted illusions.

“Bourgeois anti-communist ideology is paralyzing the people’s sound mind-set,” warns a Workers’ Party document dated April 2005. “If we allow ourselves to be affected by these novel ideas, our absolute idolization for the marshal [Kim Il Sung] will disappear.”

Among those who make it to China, many describe a moment of epiphany when they find out just how bad off North Koreans are.

Kim Ji Eun, a doctor from Chongjin, remembers wading across the partially frozen Tumen River in March 1999, staggering to a Chinese farmhouse and seeing a dish of white rice and meat set out in a courtyard.

“I couldn’t figure it out at first. I thought maybe it was for refrigeration,” recalled Kim, who now lives in South Korea. “Then I realized that dogs in China live better than even party members in North Korea.”

Many Chongjin residents who are caught trying to flee the country end up back in the city, behind the barbed wire of Nongpo Detention Center.

It sits near the railroad tracks in a swampy waterfront area. Prisoners are assigned back-breaking jobs in the nearby rice paddies or brick factory, where the workday begins at 5 a.m.

Ok Hui was one of those who served time in Nongpo. A rebel by nature, she had become fed up with North Korea and a difficult marriage.

In September 2001, during one of several failed attempts to escape, she was arrested in Musan and brought back to Chongjin by train. Guards tied the female prisoners to one another by tightly winding shoelaces around their thumbs.

In Nongpo, the inmates bunked in rows of 10, squeezed so tightly together that they had to sleep on their sides. Newcomers sometimes had to bed down in the corridor near overflowing toilets. Meals consisted of a thin, salty soup, sometimes supplemented by a few kernels of raw corn or a chunk of uncooked potato.

“The walls were very high and surrounded by wire,” Ok Hui said. “One woman tried to climb the wall. They beat her almost to death. You can’t imagine. They made us stand and watch.”

One day, when she was assigned to work in the fields, she spotted an old woman. She took off her underwear and offered it to the woman in exchange for sending a message to her mother. Underwear is scarce in North Korea, so the woman accepted and agreed to send a telegram to Ok Hui’s mother.

With her market earnings, Kim Hui Suk bought 10 packs of cigarettes for a security official to arrange her daughter’s release.

Some days later, the prison administrator came to talk to Ok Hui and other female prisoners who were picking corn. They were all due to be freed shortly, and the administrator urged them to resist the temptations of capitalism and imperialism, and to devote themselves to North Korea.

Then, he asked for a show of hands: Who would promise not to run away again to China?

Not a single woman raised her arm.

“We were all just thinking that our whole lives we had been told lies,” Ok Hui recalled. “Our whole lives, in fact, were lies. We just felt this immense rage toward the system.”

The prison administrator looked at the women squatting sullenly in silence in the cornfield.

“Well,” he said, “if you go again to China, next time don’t get caught.”

Forty days after her release, Ok Hui escaped again to China and made her way to South Korea. She used $8,000 in resettlement money from South Korea’s government to pay a broker to smuggle her mother out of North Korea. Today Ok Hui works in a funeral home and her mother as a housekeeper.

Korea Times
Andrei Lankov
4/12/2005

Who is the best choice for a spouse in North Korea? Someone with equal or better “songbun,’’ of course! And who can get a good job? Someone with an appropriate songbun! And who will never be allowed to reside in Pyongyang? Someone with bad sogbun!

But what does songbun mean? Essentially, this is a hereditary group to which every North Korean belongs. The first attempts to classify the entire population according to the people’s origin and, thus, perceived political reliability took place in the late 1950s, but the current system was developed between 1964 and 1969, when specially appointed groups undertook painstaking research of every adult North Korean’s family background and origin. With some minor changes, this system has been functioning to the present day.

The whole population of the DPRK is divided into 51 groups, which, in turn, forms three strata or classes: the “main’’ (kibon kyechung), the “wavering’’ (tongyou kyechung), and the “hostile’’ (choktae kyechung).

In order to make the readers feel better about North Korean bureaucracy, I’d rather name some of the groups that are included in these strata.

Let’s start from the top. The main stratum includes 12 groups: 1) workers who come from working families; 2) former farmhands; 3) former poor peasants; 4) the personnel of state organizations; 5) KWP (Party) members; 6) the family members of deceased revolutionaries; 7) the family members of national liberation fighters; 8) revolutionary intelligentsia (that is, those who received their education after liberation); 9) the families of civilians who were killed during the Korean war; 10) the families of soldiers who were killed during the Korean war; 11) the families of servicemen and 12) heroes of the war.

The “uncertain’’ stratum includes nine groups _ whose descriptions I probably omit. But as one might expect, the enemies make the longest list. The bad ones are: 1) workers of complicated origin, that is, people who had formerly been entrepreneurs and officials; 2) former rich peasants; 3) former small or medium merchants; 4) former landlords, that is, people who before the reform of 1946 had more than 5 hectares of land; 5) people who participated in pro-Japanese or pro-American activities; 6) former officials in the Japanese colonial administration; 7) families of people of good social origin who fled to the South during the war; 8) families of people of bad origin who fled to the South during the war; 9) Chinese Koreans who returned from China in the 1950s; 10) Japanese Koreans who returned from Japan in the 1960s.

I’ll stop here _ the complete list of the “recommended suspects’’ is way too long. Among others, it includes practicing Protestants, Catholics and Buddhists, descendants of shamans or courtesans, families of prisoners, and the like.

There is considerable variation in rights and privileges not only between strata, but also between different groups within each stratum. Of course, it is not as bad to be a grandson of a rich peasant than the son of a political criminal. The position of Korean Japanese is even more controversial: the authorities keep them away from some sensitive jobs and watch them closely while courting them in order to extract money and expertise from the friends and relatives they once left behind in Japan.

A person’s fate is determined by his group, by his songbun. It influences his chances of getting a good job and higher education, of being allowed to live in Pyongyang and other major cities, and, hence, his standard of living, punishment in case of a criminal persecution, and many other things. Thus, members of the “hostile stratum’’ normally have no chance to study in prestigious Pyongyang colleges.

It is sometimes possible to improve own station: say, an exemplary military service will vindicate a lad who was unlucky enough to be the grandson of a Protestant minister. These things happen, but the songbun often lasts for generations.

It is impossible to determine the number of people in each group _ even approximately. The existing (and oft-cited) estimations are often patent nonsense. Perhaps we will never learn the truth until the collapse of the DPRK. Nonetheless, it is clear that the economic turbulence of the last decade greatly damaged the system. But that is another story…

The BBC offers a summary of economic conditions in the DPRK:

The focus of the international community’s alarm over North Korea is the isolated nation’s nuclear arsenal, and its refusal to talk about it.

An aspect that is sometimes overlooked is the dire state of its economy, and yet this could be at the heart of the nuclear crisis.

The regime, with few allies in the world, cannot appeal to the sort of humanitarian emotions that African or South Asian nations have in the past.

To ensure the flow of food and oil, it must have a bargaining chip, and its nuclear arsenal is that chip.

Therefore Pyongyang’s diplomatic bluster is inextricably linked to its need to keep what remains of its economy propped up by donations.

North Korea has recently attempted limited reforms to its economy, but these have not been comprehensive or well-enough planned to work.

Pushed into reform

North Korea became an independent state in 1953, and has operated a rigid centrally planned, or “command” economy based on that developed by Stalin in the USSR.

Industry and agriculture are planned on a five-year basis, all farms are collectivised, volume is praised over value and most foods and goods are rationed.

This model initially allowed for rapid industrialisation and rebuilding, but it failed to deliver sustainable growth or raise living standards.

The economy began to collapse, and by the mid-1990s the country was in a state of famine. The industrial base and the agricultural sector have been in decline ever since. Beijing, North Korea’s only real ally, decided to act in October 2001 with an economics lesson for North Korean leader Kim Jong-il.

He was shown round a GM plant and a hi-tech factory in Shanghai, and received a lecture about the benefits of Chinese-style reform.

The Chinese were effectively telling Mr Kim that it was time for change – and that they were fed up with the growing number of refugees fleeing over the Chinese border, and increasing demands for aid.

Mr Kim realised he needed to keep China close, and in June 2002 announced a series of economic reforms.

Pyongyang partially ended rationing and reformed the wages and pricing system.

Retail prices shot up – rice by 55,000%, corn 5,000%, electricity 143% and public transport fares 2,000% – but average wages increased by just 1,818% – from 110 won to 2,000 won (US$22) per month.

It also allowed private farmers’ markets to expand – to provide more goods for the consumers this monetary liberalisation had created.

Another major plank of the reforms was the new investment zone in Sinuiju – and another one in Kaesong, agreed as part of Kim Dae-jung’s Sunshine Policy.

These investment zones used foreign investment to create new economic ventures.

But neither the wage and pricing reform, nor the investment zones, have worked.

Scarce resources

The government had hoped that inflation created by the reforms, if kept under control, would “kick-start” the economy.

But this theory assumed there was a mass of underutilised resources waiting to be kick-started. Twenty-five years of decline meant that these resources were now scarce.

More food found its way into the farmers’ markets, but at prices ordinary people could not afford.

This effective legitimisation of private farming and smuggling across the border from China only succeeded in increasing the availability of goods to the elite – those whose wages were protected or had access to foreign currency.

As for the economic zones, Sinuiju’s position, opposite China’s flourishing economic zone in Dandong, annoyed Beijing.

It consequently arrested the Chinese businessman hired to run Sinuiju, imprisoning him for 18 years for tax evasion and effectively ending the project.

Kaesong survives but all the ventures are foreign-owned, with little benefit, therefore, for North Korea.

By the end of 2002, economic growth was estimated at just 1.2% at best, with the average citizen’s purchasing power severely eroded.

For most ordinary North Koreans, the end result of the reforms was further impoverishment and the eroding of any savings they may have been able to build up.

So, in light of the reforms’ failure, North Korea’s alleged announcement in October 2002 that its country was pursuing an enriched uranium programme could be interpreted as a return to its old bargaining tactics.

The international community responded to the announcement by setting up six-party talks in August 2003.

But the diplomacy is failing because North Korea, with no allies but the increasingly exasperated Chinese, and little prospect of economic revitalisation, needs to ensure a continued drip feed of aid.

That means a hard bargaining process, and Mr Kim has one bargaining chip – his nuclear bombs.

Already twice, as far as we know, Beijing has managed by persuasion, and perhaps a little economic pressure, to get Pyongyang back to the table after talks have stalled.

Now Beijing is trying again. Perhaps what Pyongyang wants most is a serious package of economic aid from China.

China may provide it to get the talking started again.

But the price Beijing will need to demand is that Pyongyang restarts economic reform in earnest, and moves away from the continual brink of collapse that forces it to make desperate diplomatic gambles such as the current crisis.

As for the economy today, it has to all intents and purposes collapsed.

The reforms were limited, and benefited just the elite of the country rather than ordinary people.

The basic structure remains in place and continues to erode the economy.

However, as long as the regime can keep the country isolated, it can survive on this drip-feed indefinitely.

The endgame is simple – regime survival. It is a long-term strategy using diplomatic belligerence and military threat to secure enough aid to maintain power and isolation.

The regime may survive, and may under pressure begin another round of tentative reform, but it seems unlikely that life will improve for ordinary North Koreans any time soon.

Read the full story here:
Economy root to N Korea crisis
BBC
Paul French
2005-4-12

NK Zone
Scott Bruce
4/6/005

Tony Banbury, WFP Regional Director for Asia, said: “There were three main themes that emerged in my mind from this trip. The first is that the people in the DPRK are still in great need of food aid … The second main theme I’d like to share with you is that the situation, in terms of the amount of WFP food aid going into the country these past several months, has been very good…. The last issue that is very important to touch upon is the issue of monitoring, and WFP’s operating conditions…. they [the DPRK government] started putting more limits, as of September of last year, on our operating conditions, on our monitoring.”

Tony Banbury: I’m very happy to have a chance to meet you again, and pass on some reflections on the World Food Programme’s operation in the DPRK, and some of the observations from this visit that I’ve just completed. It was the third visit I’ve made to the country. The purpose this time was, as always, to observe the WFP operation, see for myself first-hand what the situation is like, not just in Pyongyang but also on the ground among the 6.5 million WFP beneficiaries. And also to have discussions with the government on the WFP operation and how we might be able to improve it.

We met of course with government officials – senior government officials – donors, NGOs, UN agencies; then in the field with local officials, beneficiary institution leaders, beneficiaries themselves in their homes, etc. So in a relatively brief period we were able to meet with a wide cross-section of people, international and Korean, and see a lot. So I think we were able to get a pretty good impression about what the situation is like now.

We spent a couple of days in Pyongyang, but then also did a field trip to Chagang province – primarily Huichon city. This is a province that WFP had been working in for quite some time, but then access to the province was cut off by DPRK officials at the end of last year, and its just been re-established. Its again open, we’re again able to monitor our food aid there. When access was cut off we of course stopped delivering food aid – we have a consistent “no access, no food aid” policy. Now that access has been restored our food aid is again going back in. We ourselves brought a small amount of assistance with us, to a “baby home”. We brought some Rice Milk Blend, which is a highly fortified blended food that, mixed into porridge, is primarily for young children. Much more assistance will be again flowing in the coming days.

While there, we were also able to visit a Public Distribution Centre, which is not something we’re often able to do, and that was a positive thing. In fact, more and more frequently, we are able to visit PDCs now. And we visited a co-operative farm, and met with the vice-chairman of the farm. That also is a rather unusual event for WFP. Normally we are not able to visit co-operative farms. We had a very good visit there on this trip.

There were three main themes that emerged in my mind from this trip. The first is that the people in the DPRK are still in great need of food aid – particularly the most vulnerable people whom we’re trying to help. We have a lot of statistical data to back that up, as a result of the hundreds and hundreds of monitoring visits we do, as well as a nutrition survey that was carried out by UNICEF and WFP in the DPRK last October. Perhaps you’re familiar with those statistics – we can provide them for you if you want.

But my observation that people are still in need was based on much more sort of individualistic circumstances, on people that I saw. We met one woman who had a newborn baby and a four-year old daughter. We went to her home. And she had stopped sending her four-year to the nursery school because WFP assistance had been stopped. And now that WFP assistance was starting again, she said she would start sending her daughter back to school. In the meantime, though, the family was existing essentially on maize porridge and acorn meal. They find acorns in the forest and dry them and boil them into meal. It’s a very sour, bitter taste that they don’t particularly like. But its one of the few options they have at this time of year. This family had no access to meats of any kind, except on major holidays or special occasions. They had run out of vegetable oil, which is an important source of fat – nutritious fat – especially for young children and nursing women. Occasionally they were able to get some beans from their in-laws. The husband’s parents live in a rural area and occasionally send beans, but at the time we visited there was none in the household. So this one family was clearly in a very difficult circumstance.

We met with another family, another woman, and her food situation was more or less the same: no chicken, no meat, no eggs etc. And we asked: “do you raise any livestock – pigs, chickens, etc?” She replied that they could not afford to raise a pig, they were so poor. They had no left-over food to give a pig. This is an indication of the condition of your average family in an average North Korean city now.

On the drive up to Huichon city, the river was still frozen over at a certain part, hard-frozen. People were walking across it, riding bicycles across it. Then, a few kilometres further on, the river was running freely, but obviously still very cold. And there were people in the river with their pant-legs rolled up, trying to catch fish. I promise you that water was very, very cold, and it would have been hard simply to walk in. And these people were working, barefoot, with their pant-legs rolled up, trying to catch fish. That’s one small indication – nonetheless a very telling indication – of the lengths to which people in North Korea are going to try to get some food.

On top of this, the Public Distribution System has just recently cut its ration size for the average North Korean from 300 grams a day to 250 grams a day. This glass here [holds up small glass containing rice] has 250 grams of rice. That is what people are living on in North Korea, day after day. Without any meat, proteins, vegetables – except perhaps what they’re able to hunt in the forests or get from relatives in the countryside.

They are obviously suffering from, in many cases, severe malnutrition. The statistics from the nutrition survey are quite clear in that respect. More than a third of the population is chronically malnourished. About a third of the mothers in North Korea are malnourished and anaemic. So there is a continuing, very serious food crisis in the country. That’s clear from the statistics, and its very clear based on observations. And it’s hard to imagine anyone visiting the country would conclude differently.

One last comment on the food situation: the economic reforms, which I imagine you’re all familiar with, are having an impact – in fact a big impact. As a result, some people are doing very, very well. In Pyongyang you can see more and more cars – imported cars. And restaurants, and people eating in restaurants, where a meal may cost the equivalent of five to seven times an average monthly wage. Some Koreans are doing very well, and are able to afford that. But that is a very thin stratum of society, at the very top. The large numbers, the masses of the people in the country, are living on an average wage of 2,000-3,000 won per month, more or less one euro. So the people who have that wage, and are obliged to go into the markets to buy – or try to buy – commodities to supplement what they get from the PDCs [Public Distribution Centres], to supplement this bit of rice [holds up glass containing rice], are ill-able to afford, for instance, vegetable oil, which as I mentioned a moment ago is such an important part of a diet. A litre of oil is a month’s wage, or two months wages – I’m sorry, but I forget the exact statistic now, but it’s far beyond the affordability of the average working family. So they’re highly dependent on either humanitarian assistance, or, if they have close relatives living in the countryside who are producing excess food in their kitchen gardens and are able to transfer it.

It was very clear talking to the local officials and the people in Chagang province that they were extremely pleased that WFP food was returning. They had obviously suffered. A local official spoke in very clear and direct terms about the difficulties experienced after the WFP assistance was cut off. And he was literally ecstatic that the assistance was being resumed. The families that we spoke to were likewise very pleased. I mentioned the food aid is influencing the decisions of households, such as the woman’s decision to take her daughter out of school and to send her back. So the food aid is highly appreciated by local officials and the population.

The second main theme I’d like to share with you is that the situation, in terms of the amount of WFP food aid going into the country these past several months, has been very good. We’ve been fortunate. We’ve been in a position to feed all 6.5 million intended beneficiaries – that’s about a third of the population – as a result of generous donations from Japan, ROK [Republic of Korea], others; we have had a very good what we call “pipeline” – stocks of food. That’s the good news.

The bad news is those stocks are close to running out. In fact, we have already had to make some cutbacks. We’ve stopped giving vegetable oil to 900,000 elderly people. As of next week we’ll have to stop providing vegetable oil rations to kindergarten children, nurseries and pregnant and nursing women. This vegetable oil is enriched with vitamins; it’s an extremely important part of the diet for people in the situation that they are in in North Korea. Withdrawing it doesn’t just make cooking more difficult; it actually has a very significant nutritional impact on the recipients. And that’s happening now.

In May, WFP will stop providing pulses to 1.2 million women and children; and in June, we’ll stop providing cereals – our main commodity – to about one million primary school children, pregnant and nursing women, elderly people and particularly vulnerable urban households. This is assuming we don’t get additional contributions very soon.

So, as good as things have been these past few months, they’re about to get much, much worse. The supplies from the crops that come in at the end of the year last a bit, but the lean season – the hardest season for people in North Korea in terms of food supply, when they have very little left over from the previous year’s crops – is just about to start. So it’s a very bad confluence of events where we’re about to run out of food, and they’re about to run out of their own food. Unless we get on a very urgent basis new contributions in the coming weeks, we’re going to face these very serious cuts that I was just mentioning. And in my view the impact of those cuts could be extremely tragic, truly tragic, for the families, the children, the elderly, the very vulnerable people who WFP is trying to reach.

The last issue that is very important to touch upon is the issue of monitoring, and WFP’s operating conditions. WFP has struggled with this issue from the first day we started working in the country in the mid-90s. It is a perpetual quest of ours to improve the monitoring conditions. In the course of 2003 and 2004 we had, in fact, made some great progress. We steadily increased the number of monitoring visits we were able to conduct. On average, over the years, it went from the low 200s to more than 500 visits per month. We were able to access much different kinds of information, a much wider variety of information. Not just how much food you need, but what your sources of income are, your sources of food – where else do you get food – what you are consuming, what you go forage for in the forest.

This gave us a much better understanding of household-level food security. WFP used to look at the food security issue from a national perspective: what’s the total national requirement, what’s the total national production, and then we’d look at helping to fill the gap. Now we are much more focused on household-level food security. What are individual households’ experiences, who are the most vulnerable – is it the elderly, is it the urban poor, is it the children, is it the pregnant women? And as a result of the improvements in our monitoring in 2003-2004, we have developed a much better understanding of that. So we are better able to target our assistance to the people who need it the most.

It seems, though, that as a result of the improvements in our monitoring, there were certain segments of the North Korean authorities that were uncomfortable with WFP activities: the very large number of visits we were making, the intrusiveness of those visits – our visits into households, the very detailed questions we were asking. We were told by the North Korean authorities that this was making the people uncomfortable, and some parts of the government itself uncomfortable. So they decided to change our operating conditions. And they started putting more limits, as of September of last year, on our operating conditions, on our monitoring. And, for instance, reduced the number of visits we’re able to make from more than 500 a month to down to around 300 a month. They also closed off some counties, although as I said our access to most has been re-established. They also told us we should not ask certain types of questions which were not directly related to food aid.

We understand their concerns. I understand if I was living in my country and some foreigner decided to come up unannounced to my front door and say “let me into your kitchen, I want to ask you a half-an-hour’s worth of detailed questions about you and your family and your family’s practices”, I’d have some doubts. So I understand that.

But we have also worked very hard to try to explain to the North Korean authorities the importance of having confidence that our food is reaching the people who need it. There are different ways to have that confidence. One way is to follow the type of practices we had in 2003-2004. But there are other ways. And in the past few months we have been having very intensive discussions with the North Korean authorities about different ways to develop the same or even greater confidence about how food aid is being used, where its going, instead of the past practice of these rather intrusive visits.

So, for instance, we are looking at having much more frequent visits to Public Distribution Centres. I indicated a few moments ago that those have been very limited. Now if we can go and observe people receiving assistance directly, and talk to them at the PDCs about their situation – similar types of questions but in a more public setting – that’s one way we can get information.

Another way we can get the required information is to have focus group discussions, where, instead of one person in her living room with three government officials and three WFP people there – a rather intimidating setting – we can gather a larger number of beneficiaries and talk to them in a group setting and allow them to talk among themselves, where they might be more confident in sharing common experiences.

Another important way that we expect to have this greater confidence in where food aid is going is through baseline surveys. Where, instead of doing household visits on a regular basis across the entire year, we would do three surveys a year. We would have household visits, but a rather intensive number over a short period.

The fourth and perhaps most important element of this new system that we are discussing with the government is a commodity tracking system, where we would use an internal technical logistics commodity tracking system that includes software – in WFP we call it COMPAS and use it around the world – that helps us track a bag of food aid from the point it enters the country to the point its distributed to the beneficiary. Technical logisticians can explain how this system works using computer tracking methods, where we know where the food is the whole way through the system.

We have discussed all of this with the North Korean authorities. They agree in principle on the need for us to have the confidence we demand on how the food aid is being used. They agree in principle to develop this new system, where we would have improved quality of monitoring, even if the quantity of visits is reduced. And they agree in principle with the elements that I have just mentioned. We are now in the process – our country team there, the country director Richard Ragan who I think some of you have met – are in the process now of trying to roll this out at the provincial level. Starting in April, officials from all the 158 counties where we deliver our assistance, where we have access, will be getting training from WFP on this new approach.

So it’s not a done deal yet. We have still to implement the agreement in principle. But I’m very pleased that the government has extended its agreement in principle, has shown its understanding of our need to have confidence in the use of the food aid. It’s a point that we have stressed in very explicit terms. And we have likewise stressed that if we do not have that confidence, WFP and our donors will perhaps not be in a position to provide the type of assistance we have been providing. But there is a high level of understanding, I would say, in the government on WFP’s position, and I’m cautiously confident, cautiously optimistic, that in the coming weeks and months we will have successful implementation of this new monitoring system.

I am also equally sure that there will be some adjustments and changes to it on the ground as we go into implementation. That’s to be expected, even desirable, if we can make some improvements on the ground. The key point, though, is whether WFP will in the end be able to say with confidence “we know how the food aid is being used”. If we are successful in implementing the agreement in principle, we will have a better understanding of the use of this food aid than before, as a result primarily of this commodity tracking system. We’ll have a better picture of the food aid from its entry into the country to its final consumption. What appeared to us to be a big problem in the latter part of last year has in fact turned into a very good opportunity for WFP. And I think we’ll emerge in a stronger position as a result of the changes.

I’d like to make two final comments and then open it up to you all for questions. In my conversations with the government we discussed the issue of OCHA, the [UN] Office for the Coordination of Humanitarian Affairs. It was reported in the press a few weeks back that the government had decided to close the OCHA office in Pyongyang. I was assured categorically and repeatedly by authoritative officials from the foreign ministry that there has been no decision to close the OCHA office in the DPRK. They made that very clear to me and asked me to pass that on to our colleagues at the UN in New York, Geneva and Rome, and also to all of you. The OCHA office in the DPRK is not being closed.

The DPRK government had said that they didn’t see a need for the OCHA official in Pyongyang, whose contract ends in August, to continue, because they thought that his role was just tied to the CAP [Consolidated Appeals Process], which the DPRK government has said they no longer want. When the acting Humanitarian Coordinator, Mr. Ragan, explained in greater detail to the government that the role of OCHA went beyond the CAP, they expressed understanding, and an openness and a willingness to allow an OCHA presence to continue in the country. This is an issue that will be discussed when a new UN Resident Coordinator/Humanitarian Coordinator arrives in the country in April. But as of now there is an OCHA official and there is no decision to close the OCHA office.

The last point I’d like to make is on issue which I’m frankly surprised continues to appear again and again in the press: reports of WFP food aid in the markets, and pictures of WFP food aid bags in the markets. This is nonsense. The economy in North Korea is so bad that they re-use everything. And the bags that WFP uses for food aid are very sturdy, heavy-duty bags that are designed to last a long time so they won’t burst open and have the food aid spill out and get wasted. These bags can last years and years. They are being used for all kinds of things in the DPRK. They are being used for tablecloths. Does this mean that WFP is providing tablecloths to the people of North Korea? No.

We saw in a warehouse a WFP bag that said “Wheat – Gift of Russia to the people of North Korea”, and it was filled with locally produced beans. They re-use these bags, and the fact that a WFP bag shows up in a market in North Korea or any other country does not in any way suggest WFP food aid is being diverted to the markets. And it is frankly irresponsible for people to suggest it does. Because it is ignoring completely the reality and the facts of how the economy works and the habits of people – which are to use every last item of value in the country they can. And these bags are, frankly, valuable items and do get re-used. I’m pleased they get re-used. It would be nonsensical to think that as soon as the food is consumed they’re somehow throwing these bags out. It’s simply not the case. So, for NGOs who constantly repeat this, I encourage you to ask any of them to go to North Korea and see for themselves – or you to see for yourselves – that this is just utter nonsense. And if any of you have a report and think this is happening, or are tempted to report it, please contact Mr [Gerald] Bourke [WFP Public Information Officer in Beijing] or myself and we’ll be happy to repeat that this is just not happening.

I’d be happy to answer any questions anyone might have. Thanks.

Morgenavisen Jyllands-Posten (Denmark): I noted you said that people in the cities have to rely either on food aid or relatives in the countryside. Does this mean that people in the countryside are better off than those in the cities?

Banbury: It’s a multi-tiered economy in North Korea. There is this thin stratum of elite that I referred to who are doing quite well. There then are the workers, basically, who were employed in factories and live in urban environments. Many of these factories are no longer producing anything. And these workers used to be able to rely upon a guaranteed state salary. That state salary is often no longer coming – they have to rely on the production of the factory to pay their salaries. If the factory is not producing, the salary’s not there. Many of these factories are sitting idle and the workers are in fact no longer even employed. These people are indeed very vulnerable. They’re a new category of vulnerable people that WFP started paying close attention to about a year ago, or 18 months ago, after these economic reforms.

In the countryside, it’s a real mixed story. The farmers tend to be better off, at least in terms of their food situation. We do not generally provide food assistance to farmers. Their daily ration from the government is 600 grams, compared to the 250 grams, or in some cases 200 grams, that other people get. 600 grams a day is probably still much less than any of us in this room consume, particularly if you consider all the commodities we consume – not just grain. But relative to other people in North Korea, the farmers tend to be better off. However, there’s an interesting dynamic occurring now, and this became apparent to us during our visit to the co-operative farm and talking to others: there is such a thing as a cash crop in North Korea now. That never existed in the past. Farmers can get more money producing vegetables, fruits, and selling those in the market, than in producing the staple grains such as maize or rice or potatoes.

There are people who are not in a good situation. This is particularly true of children, or elderly people. When we visit hospitals or “baby homes” [orphanages] and identify the particularly malnourished and ask where they’re from, it surprises us to find that sometimes they come from co-operative farms, farming families. And it’s a little unclear to me what is the explanation for that. Oftentimes malnutrition is as much a result of care practices as food availability. Its hygiene, its the diet itself – what is fed, not just the total quantity – but also are you trying to ensure that the children get some protein, some animal fat. So, as a general matter, farmers are the best off in terms of food. But it’s a mixed picture.

Public Radio International: The areas where WFP was cut off from monitoring: any idea why those particular areas were chosen? Do you think it was arbitrary, that the government was trying to make a point that it didn’t want you doing as much visiting as you had done? Or was there some reason why those particular areas were chosen?

Banbury: The short answer is we don’t know. We heard all kinds of speculation. None of it was based on reality as far as I could tell. It was a brief period of cut-off, and one of the interesting points that I should have mentioned earlier is that when WFP assistance was no longer being provided to those counties, the assistance was not made up by state authorities. We asked about that: How did you get by? Did you reduce the ration? Did you get more food? And, in fact, they just had to do with less. Which also tells you something. This area where we were is known for its production of tools. They don’t produce much food. It’s a very hilly, mountainous area, it’s a very food insecure area, and they trade tools with other provinces in exchange for grains. But they were not able to make up the difference at all, and they really suffered as a result. Which raises real concerns for us – they’re longstanding concerns – about the food security situation in the counties to which we don’t have access.

Public Radio International: Are you at all concerned that food aid is going to become a political tool as the United States and other countries start putting more pressure on North Korea to come back to negotiating table? You’re running out of stocks at the moment. How confident are you that the US and other major donors are going to continue to give the way they have been?

Banbury: WFP is of course always concerned if food aid is used in any way in a political manner. We believe strongly that decisions on food aid should be made on purely humanitarian grounds. The US has consistently said – the President of the United States has said, the Secretary of State has consistently said – they will not use food aid as a weapon. And I believe that is the United States policy. In our discussions with the US, they have repeatedly, repeatedly stressed the monitoring issue. As there have been problems, the US contributions have reflected those problems. I’m quite hopeful that, as we’re able to implement this new monitoring system I was talking about, the US will have the confidence that we have that its improved and they’ll give more than they have been giving. That’s certainly our hope and expectation.

Asahi Shimbun: North Korea cut the PDS ration from 300 to 250 grams. Why? Did North Korean officials give you an explanation?

Banbury: Its simply because they do not have enough food. Its lack of availability of food – food supply.

Asahi Shimbun: But according to WFP reports, harvests are better, no?

Banbury: There were also cuts last year. There are cuts basically every year, depending on the time of the year. It’s no surprise that they’ve cut it to 250. I think that’s something we more or less expected. It was just a question of when. And as I mentioned, in some cases the ration has been cut to 200 grams a day. That’s a very clear indication of the continued food shortages in the country. If they had the food – particularly now during the winter months, and its very cold there – they would be giving the food, I believe.

Asahi Shimbun: We can see this ration cut transferred to the army?

Banbury: WFP did not see that. I believe that the army is being well fed. It’s only natural to assume that the North Korean authorities are providing adequate food to their army. There’s a standing policy to put the needs of the army first. That’s the North Korean policy. So it only makes sense to assume that the army is being well fed.

One thing that’s very important for all of us to keep in mind is that food is needed in the country right now very badly. But it’s the people who need the food, not the government, and not the army. The government’s going to be okay; the army is going to be okay. I’m not worried about them. I am very worried about the people in North Korea, these very poor people in rural areas, in urban areas. Imagine eating maize porridge and dried acorn meal every day, day after day, and not having anything else to feed your child. Imagine not having fat or protein to feed your child. They’re in a very difficult situation.

EFE (Spanish news agency): You mention that North Korea is running out of food. Is WFP preparing any campaign to get more food from private donors? Are you going to call for more donations from the West – Europe, America – or other main donors like China, Japan, South Korea. My second question is: do you think the nuclear crisis is directly affecting the lives of the North Koreans?

Banbury: WFP will be appealing to a very wide cross-section of donors and potential donors to urgently provide new donations to our operation in North Korea. We particularly need cash donations, because we need cash to buy food in the region in order to get it into the country in time to avoid the looming cuts that I was talking about. We will be appealing to traditional donors. Though you mentioned China as a traditional donor, China has never provided any assistance through WFP to North Korea. But we will be talking to the main donors that we have traditionally relied upon. That’s the United States, South Korea and Japan. We have also received important donations in the past from the European Union, from Australia, from Italy and a number of others. So we will be appealing to the big donors, the medium donors, the little donors, and those who have not donated in the past.

And we will be appealing to the private sector in South Korea. We have started a campaign in South Korea to raise resources for the programme in North Korea. We believe that there is a strong sense of solidarity between the people in South Korea and the people in North Korea, and a concern among the people in South Korea for the situation of the average person in North Korea. His Excellency President Kim Dae Jung, former president of South Korea, has agreed to serve as the honorary chairman of the World Food Programme’s Senior Advisory Council in South Korea. This is a private sector grouping that will be working to raise funds from the private sector, and President Kim Dae Jung’s role in that is obviously a very important one.

With respect to your second question, it would really be political speculation for me, and I prefer to avoid the realm of politics as well as speculation, so I don’t feel comfortable answering your question. Just perhaps to make an appeal that, in making decisions on providing assistance to North Korea, humanitarian concerns take precedence, because as I said a moment ago, its not the government that needs the food, it’s the people of North Korea who need the food.

Associated Press: Two questions. The first is: we’ve heard about these economic reforms, and you mentioned them again today. Can you tell us whether you see that they are having an effect on the average North Korean, say, in food terms, the bottom 90 per cent? Do they appear to be having an influence on food production, food availability to the general public? Second, on the new monitoring system: it sounds as if you’re settling in for the very long term. Do you see this situation in North Korea just becoming a decades-long situation where the outside world is going to have to continue to feed ordinary North Koreans? Or do you see a time when North Korea can produce enough or buy enough from abroad to feed its people?

Banbury: With respect to your first question, there clearly is a very significant impact. In fact, there are many different kinds of impacts. The main one, though, is that salaries of workers, government officials etc. have risen, giving them more income. But prices of basic commodities – foodstuffs – have risen much more dramatically. So their purchasing power has decreased. They’re less able to buy things. That’s very clear. The prices of foodstuffs have doubled, tripled, quadrupled. The prices of staples, vegetable oil, meat, the high-value items. For people who are able to benefit from the economy somehow – the winners – they’re able to make money, whether its from working in a restaurant, or through trading, then they’re doing okay. But for people who are relying upon traditional income sources, they’re clearly in a worse position. And that’s making us think that – and in fact this relates to your second question – maybe instead of 6.5 million people, WFP should be feeding 7.5 or 8.5 million people in North Korea. Because the number 6.5 million more or less is the same as we were providing assistance to when the reforms were implemented. And the number of winners compared to the number of losers in the economy as a result of these reforms is much smaller.

With respect to your second question, it’s always the happiest day of WFP’s involvement in a country when it’s no longer needed there. In the case of China – we have been providing assistance in China for 25 years – assistance will end this year. WFP will no longer provide humanitarian assistance in China after 2005. And that’s a great thing. In the case of DPRK, one day we will stop providing assistance there. In some countries – Ethiopia, for example – it’s gone on for decades and decades. I hope that won’t be the case in the DPRK. But until there are significant changes in the economy that allow people to earn a living wage and provide for their families, I think our assistance will be required. And its absence would be a very serious hardship on literally millions and millions of people. I hope its not long, I hope its next year that we can leave. My guess is it’ll be a little more than that.

Danish Radio: You said maybe you should be feeding 7.5 million, or 8.5 million. Why is the number still 6.5 million?

Banbury: The number this year is in fact larger than last year. The number is based on our best assessment of the economic conditions in the country and the most vulnerable people. We are providing assistance now to especially vulnerable urban households, which is a new category of beneficiaries for WFP. Two years ago we were not providing assistance to them because they had this guaranteed state salary, and prices were flat. So our numbers do change according to circumstances. Each year we come up with a new programme for the next year on how many people we think need our assistance. Depending on developments this year, and on our assessment that will be done in September-October, we may well change that.

But it will also depend to a very large degree on the government. And as I repeatedly stressed to the officials there, they need to help us help them – help their people. They have to create the necessary conditions to allow us to operate with confidence. And if they do not do so, then it would be harder to justify continued increases in the numbers of people. It would be easy to justify in terms of their need. It would be harder to justify to our donors why we would want to continue to expand if the North Korean authorities are trying to constrict our operating conditions. But, based on my cautious optimism that we will have a better monitoring system in place in the coming weeks and months, and the changing economic conditions, next year we may well try to provide assistance to more.

Danish Radio: How many more?

Banbury: It’s too early to tell. It’s a very technical assessment. It’s based on visits to all the provinces, it’s based on a crop assessment, its based on analysis of all the household visits we do. We don’t just whistle it up – it’s a scientific assessment.

Deutsche Presse-Agentur (German news agency): Two questions: Do you have any numbers now for the inflation rate? And what about the exchange rate – black market and official rate, the difference? And the second question: last year Japan gave a very generous donation to the WFP programme, I think because of the Koizumi visit at that time. So at that time I think somehow political considerations influenced WFP in a very positive way. But that also means that maybe political considerations can influence WFP’s programme this year in a negative way.

Banbury: We have some pretty good statistics on inflation that we can share with you after the meeting. I don’t have them in front of me. And it varies very much according to the commodity. Some commodities have seen very steep rises; some have seen more moderate rises. But we can give you the specifics.

In terms of the [market] exchange rate, I think it’s about 3,000 won per euro, and the official rate is 180 won to the euro.

The average salary for a worker or mid-level government official is about 2,000 won per month – less than a euro at the market rate. Think about getting by on a euro a month. Okay, prices are lower there, but they’re not that much lower. A euro a month, and that rice a day [points to glass of rice] – these people are suffering. People have talked about how the situation is improving, they’re producing more food – but the people we saw, their situation is not improving.

With respect to your second question: the government of Japan announced a very generous donation last year – 250,000 tonnes, which is equal to basically half our annual requirement. They have so far provided 125,000 tonnes, half of what they promised. We hope very much that they will soon be in a position to provide the other half. Obviously we’re having discussions with them about that, the second half of the contribution.

Different governments decide to provide assistance for different reasons. For WFP – a humanitarian organisation, with only humanitarian considerations – we are very grateful for Japan’s contribution. We understand that the Japanese government and the Japanese people have certain concerns and sensitivities with respect to their bilateral relations and the issue of Japanese people who are missing, who have been abducted. Those are very understandable, legitimate concerns, and it’s not for WFP to question them. We respect whatever decision the government will take. But we hope they will provide the second half of the contribution.

Agence France Presse: I’m wondering why the market-driven reforms for the agricultural sector don’t lead to an increase in production, since now they’re also allowed to raise cash crops and sell in the markets. It’s a little bit the same thing that happened in China 20 years ago. But then, at the same time, why is production of food in general not increasing?

Banbury: I can guess, and give you my best sense. I may be wrong, though. It’s my impression that there’s not necessarily increased production, but a diversified production. The grain supply may be more or less stable, but where there is an ability to produce more, farmers are increasingly interested in producing cash crops – something they can go sell in the market and don’t need to turn over to the state at a lower price. I think farmers are also, if they’re able to meet their quota – this is just sort of common sense, based on human nature – rather than put in more effort to produce additional stocks for the government that they’ll get little benefit from, they’ll diversify and produce cash crops either on the co-operative farm, that keeps some of it, or on their own family plots. There are a lot more family gardens now than there used to be, where families, anyone who has a little land, are growing something. For their own consumption, or to sell in the market if they have enough. The production is being diversified and channeled into the private markets. As I said earlier, the total grain supply, I don’t think, is growing. I don’t know if it’ll shrink, but there’s more attention into these other areas.

In addition, there are still very severe shortages of inputs into the farming sector. Fertiliser is a big problem this year. Fuel for tractors: big, big problem. Tractors themselves certainly a big problem, for lack of spare parts. And even when they produce, their post-harvest losses tend to be very high because of lack of equipment to move the crops from the field into the storage facilities, and lack of adequate storage facilities. So, to produce more and more grain, they might have a point of diminishing returns because they’re frankly not able to get it into storage facilities, and store it. That’s my impression. I’m not an expert. I may be wrong, as I said. But I think that’s what’s happening.

Kyodo News: My question is regarding North Korea’s attitude towards international aid. I’ve heard that from September they began calling for longer- term development aid, and that may be why you have problems with monitoring. Did you notice any changes in their attitude, or is that still what they’re saying?

Banbury: The North Korean authorities still say that they would like to transition to more long-term development assistance. However, at the same time, they reaffirm their commitment to humanitarian assistance – certainly WFP humanitarian assistance. They want us to meet the entire target that we have for the year; they want us to bring in all the food that we’ve said we will try to bring in. They are trying to improve our operating conditions. So they remain quite committed to the WFP programme, even though I think it would be their preference to transition to more development assistance. But to achieve that, they’re going to have to convince some donors that that’s the way to go. I think they’re going to continue receiving humanitarian assistance – and wanting to receive it – until they successfully make that transition. And so far, the development assistance isn’t there.

Deutsche Presse-Agentur: Do you think that in the next couple of months the Public Distribution System will maybe run out of stocks?

Banbury: I don’t think the Public Distribution System will entirely run out. I think it’s entirely possible that the ration will be reduced further: 250 grams down to 200, or whatever; fewer commodities. But I think its unlikely, in my experience, to my knowledge of the past, they’ve never totally stopped. So that’s probably unlikely. But WFP assistance, that could completely run out. So much of that assistance is going to really vulnerable populations. Kids who should not be eating only maize; kids who really need protein. You go to these “baby homes”, these orphanages and schools, and you know…Someone once said “a hungry child knows no politics”, and its clear that those kids need assistance. And the elderly too. I mean, my goodness, these elderly people…it breaks your heart to see them…eating maize and acorn meal.

Deutsche Presse-Agentur: One more question, on the nuclear issue. There’s been a kind of hardening of the political attitude of the North Korean government. In your talks with the North Korean side, did you discover a similar hardening? Is the political climate different now than before?

Banbury: The climate for WFP, I think, is better now than it was eight months ago, or seven months ago. There was a period in the latter third of last year, where, as a result I think of several factors, the overall climate became more difficult. And WFP was impacted by that. But as a result of very determined efforts on the part of WFP and our team in Pyongyang, the government understands that we are not a political actor; we are a humanitarian actor with a humanitarian agenda, who is really trying to help needy North Korean people. And they appreciate that, I believe. As a result, we enjoy quite good support from our interlocutors in the government. Of course, we do not meet with all segments of the government. There are different parts of the government with different responsibilities. But with the part that we’re working with, I think, the relationship is better. They were a bit caught, perhaps, in the past. The fact that they’re now able to work in a more constructive manner with us on technical matters suggests that perhaps there’s a generally improved climate.

Thank you very much.

Asia Times
Andrei Lankov
4/6/2005

A defector from the North, a typical tough Korean auntie with trademark permed hair, smiled when asked about “men’s role” in North Korean families: “Well, in 1997-98 men became useless. They went to their jobs, but there was nothing to be done there, so they came back. Meanwhile their wives went to distant places to trade and kept families going.”

Indeed, the sudden increase in the economic strength and status of women is one of manifold changes that have taken place North Korea over the past 10 or 15 years. The old Stalinist society is dead. It has died a slow but natural death over the past decade and, in spite of Pyongyang’s frequent and loud protestation to the contrary, capitalism has been reborn in North Korea. The old socialist state-managed economy of steel mills and coal mines hardly functions at all, and the ongoing economic activity is largely private in nature.

But the new North Korean capitalism of dirty marketplaces, charcoal trucks and badly dressed vendors with huge sacks of merchandise on their backs demonstrates one surprising feature: it has a distinctly female face. Women are over-represented among the leaders of the growing post-Stalinist economy – a least on the lower level, among the market traders and small-time entrepreneurs.

This partially reflects a growth pattern of North Korean neo-capitalism. Unlike the restoration of capitalism in the former Soviet Union or China, the “post-socialist capitalism” of North Korea is not an affair planned and encouraged by people from the top tiers of the late communist hierarchy. Rather, it is capitalism from below, which grows in spite of government’s attempts to reverse the process and turn the clock back.

Until around 1990, the markets and private trade of all kinds played a very moderate role in North Korean society. Most people were content with what they were officially allocated through the elaborate public distribution system, and did not want to look for more opportunities. The government also did its best to suppress the capitalist spirit. The rations were not too generous, but still sufficient for survival.

And then things began to fall apart. The collapse of the Union of Soviet Socialist Republics brought a sudden end to the flow of the Soviet aid (which was, incidentally, happily accepted but never publicly admitted by the North Korean side). This triggered an implosion of the North Korean economy. In the early 1990s people discovered that the rations were not enough for survival, and thus something had to be done. In a matter of years acute shortages of food developed into a large-scale famine, and in 1994-96 the public distribution system ceased to function in most parts of the country.

But men still felt bound to their jobs by their obligations and rations (distributed through workplaces). Actually, rations were not forthcoming, but this did not matter. Being used to the stability of the previous decades, the North Koreans saw the situation as merely a temporary crisis that soon would be overcome somehow. No doubt, they reasoned, one day everything will go back to the “normal” (that is, Stalinist) state of affairs. So men believed that it would be wise to keep their jobs in order to resume their careers after eventual normalization of the situation. The ubiquitous “organizational life” also played its role: a North Korean adult is required to attend endless indoctrination sessions and meetings, and these requirements are more demanding for males than for females.

Women enjoyed more freedom. By the standard of the communist countries, North Korea has always had an unusually high percentage of housewives among its married women (for example, in the northern border city of Sinuiju, up to 70% of married women were estimated to be housewives in the 1980s). While in most other communist countries women were encouraged to continue work after marriage, in North Korea the government did not really mind when married women quit their jobs to become full-time housewives.

Thus when the economic crisis began, women were first to take up market activities of all kinds. This came very naturally. In some cases they began by selling those household items they could do without, or by selling homemade food. Eventually, this developed into larger businesses. While men continued to go to their plants (which by the mid-1990s had usually ceased to operate) women plunged into market activity. In North Korea such trade involved long journeys in open trucks, and nights spent on concrete floors or under the open skies; they often bribed predatory local officials. And, of course, women had the ability to move heavy material, since the vendor’s back tends to be her major method of transportation.

This tendency was especially pronounced among low- and middle- income families. The elite received rations even through the famine years of 1996-99, so the women of North Korea’s top 5% usually continued with their old lifestyle. Nonetheless, some of them began to use their ability to get goods cheaply. Quite often, the wives of high-level cadres were and still are involved in resale of merchandise that is first purchased from their husbands’ factories at cheap official prices. It is remarkable that in the case of North Korea such activities are carried out not so much by the cadres themselves, but by their wives. Cadres had to be careful, since it was not clear what was the official approach to the new situation of nascent capitalism. Thus it was assumed that women would be safer in such undertakings since they did not, and still do not, quite belong to the official social hierarchy.

But for the cadres’ wives, these market operations were a way to move from being affluent to being rich. The lesser folks had to do something just to stay alive.

Perhaps, had the state given its formal approval to nascent capitalism (as did the still formally “communist” state of China), the men would be far more active. But Pyongyang officialdom still seems to be uncertain what to do with the crumbling system, and it is afraid to give to unconditional approval to capitalism. Thus men are left behind and capitalism is left to women.

This led to a change in the gender roles inside families. On paper, communism appeared very feminist, but real life in the communist states was an altogether different matter, and among the communist countries North Korea was remarkable for the strength of its patriarchal stereotypes. Men, especially in the more conservative northeastern part of the country, seldom did anything at home, with all household chores being exclusively the female domain. But in the new situation, when men did not have much to do while their wives struggled to keep the family fed and clothed, many men changed their attitude that housework was something beneath their dignity (at least this is what recent research among the defectors seem to suggest). As one female defector put it, “When men went to outside jobs and earned something, they used to be very boastful. But now they cannot do it and they become sort of useless, like a streetlight in the middle of the day. So a man now tries to help his wife in her work as best as he can” to keep the family going.

Recently, when it is increasingly clear that the “old times” are not going to return, some men are bold enough to risk breaking their ties with official employment. But they often go to market not as businessmen in their own right but rather as aides to their wives who have amassed great experience over the past decade. Being newcomers, males are relegated to subordinate positions – at least temporarily. Or alternatively, they are involved in more dangerous and stressful kinds of activity, such as smuggling goods across the badly protected border with China. As one woman defector said: “Men usually do smuggling. Men are better in big things, you know”.

Economic difficulties and change in money-earning patterns as well as new lifestyle and related opportunities in some cases led to family breakdowns. In South Korea the economic crisis of 1998 resulted in a mushrooming divorce rate. In the North, the nearly simultaneous Great Famine had the same impact, even if in many cases the divorce was not officially recognized.

Of course, we are talking about a great disaster here, and a large part of the estimated 600,000-900,000 people who perished in those years were women. Of the survivors, not all women became winners, bold entrepreneurs or successful managers: some were dragged into prostitution, which has made a powerful comeback recently, and many more had to survive on whatever meager food was available. But still, it seems that years of crisis changed the social roles in North Korean families. For many women, the social disaster became the time when they showed their strength, will and intelligence not just to survive, but also to succeed.

Reuters
Robert Evans
3/24/2005

North Korea represses religion and has an official ideology that is a form of secular humanism, a U.S. government agency said on Thursday.

The United States Commission on International Religious Freedom (USCIRF) said interviews with North Korean refugees showed a pattern of arrest, imprisonment, torture and execution for public expressions of religion.

“Any reappearance of Christianity, possibly permeating from northern China to where many thousands of North Koreans fled from famine in the 1990s, is rigorously repressed,” USCIRF North Korean researcher David Hawk told a news conference.

Only two active churches, with one more to be built, and one Buddhist temple were known to exist — all in the capital, Pyongyang, and apparently serving the foreign diplomatic and business community there.

USIRC vice-chair Felice D. Gaer said a full report on the findings from interviews with some 30 ordinary North Koreans among some 6,000 who have escaped to South Korea since 2000 would be published later this year.

Information, published in part by USIRC last summer, would be a useful contribution to debate at the current session of the United Nations Human Rights Commission, where North Korea is under fire from mainly Western countries, she said.

The 53-member Commission narrowly agreed in 2004 for the first time to appoint a special investigator for North Korea — Thai jurist Vitit Muntarbhorn. The government in Pyongyang has refused to cooperate with him.

A similar resolution — proposed last year by the European Union with U.S. backing — is expected at the Commission next month after Vitit has presented his own report.

Hawk was asked if the North Korean attitude toward secular humanism was any different to its stance on theistic religion. Secular humanism is a widespread philosophy that aims to promote human cooperation and morality without reference to a deity. North Korea’s official ideology is called Juche.

“Juche thought is a form of secular humanism,” he said, referring to the North Korean system of strict obedience to the national leader — currently Kim Jong Il, son of the country’s first communist chief Kim Il Sung. Secular humanism, which emerged from the 18th century European Enlightenment and inspired some early U.S. leaders, is currently under assault in the United States from Christian evangelicals who have the ear of President Bush.

Officials of secular and humanist organizations accredited to the UN and to the Human Rights Commission have long complained that religious freedom issues are privileged there at the expense of the freedom to reject religion.

Roy Brown, President of the International Humanist and Ethical Union, said a report to the Commission on “defamation of religions” by a Senegalese rights investigator appeared to suggest that secularists were a danger to religious freedom.