[TESTIMONY]North Korea lacks the courage to reformMr. Chairman, members of the Subcommittee, I am pleased to appear before you today to offer some of my insights on life in North Korea. I have been given a rare extended glimpse into North Korea that most foreigners are not allowed to see. I first visited North Korea as an observer to an international table tennis meet. This visit encouraged me to focus my graduate research on North Korea. Upon completion of my degree at Columbia University, I taught Korean studies and worked as a consultant for a variety of North Korea-related projects, including an effort by the Reverend Billy Graham to develop relations with North Korea’s leader, Kim Il Sung. When the North Korean government officially asked for assistance in 1995, I founded the Eugene Bell Foundation and began to coordinate shipments of donated food. In 1997, North Korea’s Ministry of Public Health formally asked me to focus our organization’s work on tuberculosis.
North Koreans experienced a severe economic shock in the mid 1990’s, a drastic economic downturn they blame on a series of natural disasters. By their own admission, North Korea’s citizens, used to relying on dependable though modest government subsidies, were unprepared (and in all too many cases, unable) to adjust to a new economic order where survival depended on individual initiative. As a result, untold numbers starved to death. While traveling in the countryside in the spring of 1997, I witnessed hundreds of internally displaced people who were wandering the city streets, highways, and railroad tracks in a desperate search for food. Many of them drifted northward to the Chinese border as if following the shipments of corn and other foodstuffs that were trickling over the border from China. The plight of these people was indescribable, a tragedy that I will never be able to forget.
Outsiders would have a hard time believing it, but what the average person eats now is an improvement when compared to 1996 and1997; the lives of its ordinary citizens have improved slightly. This is despite North Koreans’ struggles with severe shortages of almost everything.
The credit for a modest improvement in the standard of living in North Korea is threefold. Indubitably, foreign food assistance, particularly from the United States, deserves a major share of tribute for saving and improving the life of the average North Korean. Foreign economic assistance and barter trade has also played a major ― if unmeasured ― role in the modest gains. Of particular significance has been agricultural assistance from the Republic of Korea that has made it possible for the North Korean peasant to grow more food. North Koreans have also shipped countless rail cars loaded with timber and scrap metal to China where they have bartered it for food and other necessities. Whole factories have been scrapped and shipped north, along with much of what remained of North Korea’s forests. These measures may have stemmed some starvation, but have not brightened North Korea’s long-term economic potential.
The primary credit for North Korea’s modest economic gains has been the informal economy. These so-called ‘informal coping mechanisms,’ including produce from private plots and farmer’s markets, have halted North Korea’s precipitous economic slide toward oblivion. Although the economic situation is still precarious, improvement in the over-all food supply has meant that some officials are beginning to refer to the “Arduous March” (their euphemism for the famine) in the past tense.
North Korea’s attitude toward economic reforms is one of the most controversial topics among students of North Korea today. While some would argue that attempts to set up special economic zones and adjustments in currency represent a genuine willingness to embrace economic reform, these policies aimed at promoting economic growth have yet to make a meaningful impact on everyday life.
During the 1960’s and early 70’s, North Korea enjoyed a period of economic growth and stability that old timers in the North still wistfully look back to. That decade made such a strong impression on the people living at the time that many who remember it are reluctant to abandon the economic system that delivered it. Although the North’s state-supported standard of living would hardly satisfy South Koreans today, money was not needed for survival. As the state’s public subsidy system faltered, North Korea’s population had to retreat toward a money-based economy where prices are determined by market principles rather than official fiat. This retreat became a rout in 1995.
One creative example of the workings of North Korea’s informal economy at the international level is Hyundai’s Diamond Mountain project. Instead of sharing risk with South Korean investors and accepting an agreed portion of the profits, related North Korean ministries collect rent for the use of this scenic area, regardless of whether the overall effort turns a profit or not. The result has been a massive Seoul government-funded subsidy to North Korea disguised as a tourist industry. As a result, North Korea’s own tourist industry has learned very little from this venture about how to profit from international tourism.
North Korea’s leadership is fearful of what might happen if its ordinary citizens are permitted to make the contacts with the outside needed to produce and ship legitimate merchandise. Clearly this concern is behind the attempts to set up ‘special economic zones’ that can be quarantined from the general population.
This kind of thinking is also behind the restrictions placed on humanitarian aid monitoring today, but fear of people-to-people contacts is not the primary reason North Korea has not wholeheartedly embraced economic reforms.
North Korea’s leadership has never believed in a world governed by fair play. Instead, they believe that nature, as well as history, has created a world of national haves and have-nots. Because the world’s natural resources are unequally distributed, they say, smaller nations have to rely on diplomacy and pressure for their needs. Their energy goes to getting the leverage needed to force other powers to take them seriously.
The primary products North Korea has to sell, from this perspective, are not the material goods that its people produce but the intangible benefits outsiders could gain through engagement. This was the reasoning behind North Korea’s support for the light water reactor project. North Korea hoped to gain not only electricity, but a relationship with the United States. Whether or not the venture would ever provide competitive electrical power never entered into the equation.
While the informal economy in North Korea may help stave off starvation, it can never provide the structure or legal protections needed to promote private sector business and industry, much less develop partnerships with outsiders essential to promote trade.
Until their leaders are willing to risk real economic reforms, North Korean citizens will have to rely on the informal economy to get by. This is no way to build a prosperous future , but it may be the only way they can survive.
by Stephen W. Linton