DPRK Forum

When it comes to economics of North Korea and the region, the man to look to is Marcus Noland. An interesting story came down the pike today on the DailyNK.

“This week KREI released a report indicating that North Korea faces famine. The staff at KREI are serious researchers. They are not necessarily right, but they are serious…”

Taken from an on-line interview with Daily NK in October, the words of Marcus Noland, renown American economist and author of award winning book Avoiding the Apocalypse: the Future of the Two Koreas, remind us all that history may repeat itself if NGO, KREI, and WFP figures ring true. (I added the links)

If you have not read One Free Korea’s excellent report on Marcus Noland and Stephen Haggard’s book, Famine in North Korea, then it is a must read to get a general overview on it.

At any rate, in my opinion, it is not any surprise North Korea is in a serious crisis from the inside out, and is rotting at the head. Common sense tells me if there is smoke, there is fire, and in the case of North Korea’s general mismanagement, poor farming techniques and the short food supply plaguing the hermit kingdom, the recent flooding only adds fuel to the fire. Hundreds of thousands if not millions died from starvation with millions more seriously malnourished. That much is known for North Korea watchers. What is unknown is if North Korea faces a new mid-late 90’s style famine:

The situation today is showing tell-tale signs that history will repeat itself if things don’t change in the North. As Daily NK reported earlier this month, the government has ordered 6-month rations to be given to workers and their families through their places of employment; however, this is a hardly possible task given labor shortages and the costs to harvest and transport the crop. Therefore, managers are submitting false reports that 6-month rations have been provided in an effort to keep their positions, while in reality, many are going hungry. In addition, floods like those that plagued the agricultural sector in 1995 have taken their toll once again.

Sounds kind of like the Great Leap Forward. Also, as One Free Korea posted, China does not seem too happy about the reselling of rail cars for scrap (back to China no less), and looks like they are punishing North Korea for it. I believe North Korea is not punished enough for the crap they pull, and in the typical Kim Jong Il way, he stabs his friends in the back. If he does that with his friends, how much more will he do with his enemies? Yes, you know the answer to that question.

If the North sold the rail cars for scrap, how can they give any back? Marcus Noland answers part the question:

“On 11 October, the UN agencies were informed by the Chinese Railway Ministry that the Chinese would not send any more of their wagons into the DPRK until the DPRK returns any one of the 1800 Chinese rail wagons that are currently there,” explained Noland. “This decision has delayed the arrival of 4000MT of WFP maize and 4192MT of WFP wheat flour intended for distribution to both EMOP and PRRO beneficiaries and for use in blended foods.

“The story, as I now understand it, is if the DPRK returns 1 wagon, then the Chinese allow 1 wagon of WFP food to cross the border. It is a one-for-one deal,” he said. (Emphasis mine)

How many they scrapped is not known to me, but looks like Kim Jong Il may be shooting himself in the foot. I do not have to rehash the story, OFK covers that more than sufficiently.

Now comes the next questions Marcus Noland says in his remarks:

According to Noland, rather than providing immediate monetary assistance, the IFI would first and foremost provide technical assistance in establishing an effective and durable economic infrastructure including institutions, procedures and regulations. They would assist in assessing economic data and in developing a strategic plan to improve current conditions. North Korea would be able to set up a stock exchange or revise investment law to attract more foreign investors. Despite the long-term stability that come with establishing this type of system, North Korea walked away from the IFI opportunity in 1996 when it discovered immediate monetary assistance was not part of the package.

“In short, my impression is that the North Koreans want money, not technical assistance, and may not be willing to undergo the scrutiny that is required for membership in the organizations,” concluded Noland.

1. Will North Korea accept such a deal regarding changing from a centrally planned economy and forming some kind of stock market, or will the capitalist like infrastructure happen only in the special zones? As said in the same paragraph, North Korea did not care for the idea of the IFI opportunity.

2. Will North Korea really open the books? Tey have not done so in decades, and if they do, is sketchy and most likely fabricated.

In all, Marcus Noland is skeptical, and he has every right to be. All of these things listed above will only be ideas and pipe dreams until something actually happens which nothing has happened. North Korea wants quick cash, and all of these and other things they agree to are for the further enrichment of the regime and to keep it afloat.

With all the happy, shiny things the Kaesong Complex promises, Noland in his usual no-nonsense style boils it down:

“In the actual implementation of the KIC, we see two things,” explained Noland. “First, a lot of South Korean public funds have been spent to support its development and appear to subsidize implicitly or explicitly the actual operations of firms there. Second, there is a real lack of transparency, both in the operation of the KIC (for example in how workers are paid and how much) as well as the financial operation of the complex itself. Moreover, the South Korean authorities appear to have limited influence over the operations of the complex, which after all is on North Korean territory.

“Therefore, KIC has probably had some benefits from the standpoint of North Korea: South Korea has built some infrastructure, the KIC has created employment for nearly 20,000 North Korean workers, and the North Korean government earns hard currency from the wage payments the South Korean side makes to the North Korean government. They probably could accept some more KIC-like projects. And my impression is that the South Korean side is willing to replicate the model,” he observed.

Talk about pointing out the obvious.

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Also, do not miss Hwang Jang Yop’s view of the Syrian/North Korean connection. He is not buying it.

President Hwang said at an informal gathering for youth and students regarding Syria and North Korea’s nuclear connection, “Kim Jong Il will not spoil the ongoing nuclear negotiations with the US by providing to Syria its nuclear technology or facilities, which he uses as the best diplomatic weapon. Its possibility is zero.”

He also pointed out regarding the movement towards normalized relations between North Korea and the U.S., “President Bush is hurrying to reap results regarding North Korea nuclear weapons within his term. Ultimately, he means to preserve the North Korean system through compromise once again, but such a result will only raise the value of Kim Jong Il.”

I have to agree. On the last paragraph, but still wonder about the emphasized. We will see (Added for clarity).