Responding to crisis in N. Korea

LONDON: The Democratic People's Republic of Korea (DPRK) is experiencing a severe economic crisis with famine prevailing in some parts of the country. As a result, the DPRK is increasingly dependent on foreign aid, creating opportunities for external states to influence and pressure Pyongyang to introduce economic and political reforms.

Given that none of the DPRK's neighbors, including the Republic of Korea (ROK), want to see the North suddenly disintegrate, they may be able to help Pyongyang resolve the crisis smoothly. Lasting stability on the Korean Peninsula, however, will require a unique willingness by the DPRK's totalitarian regime to change and implement new economic policies.

Since the DPRK first reported heavy crop losses as a result of floods in 1995, Pyongyang and international aid agencies have been requesting foreign assistance to alleviate food shortages. The crisis has progressively worsened following further flooding in 1996 and a drought in 1997.

The magnitude of the problem has been difficult for the international community to measure because of the regime's closed nature and because the effects of food scarcity have varied nationally. Undoubtedly, however, malnutrition exists and deaths have occurred from related illnesses and starvation.

The DPRK requires five million tons of food grain annually. In 1995 and 1996, however, production fell well below this figure, and the 1997 harvest was estimated to be just over 3 million tons. Foreign aid, grain imports and alternative food sources have not compensated for the substantial deficit.

Nonetheless, according to aid workers, foreign assistance and the 1997 harvest softened the impact of the problem. In 1998, however, the estimated grain shortfall is expected to be 2.6 million tons and extensive foreign aid will again be needed.

The DPRK's food problems are only part of its broader economic crisis. Since 1990, its economy has contracted by almost one- third. With the end of the Cold War, the DPRK lost its subsidized trade with the former Soviet Union and Eastern Europe. Even China, Pyongyang's last remaining ally, demanded hard currency for its exports to the country.

The DPRK does not have the reserves it needs to finance fuel- oil imports. Reports suggest that the economy is collapsing, and that the country is unable to generate enough electricity to keep its factories and other essential services operating. Even Pyongyang's comparatively privileged population has experienced power and water shortages.

Distortions in the DPRK economy have had a cumulative effect. A disproportionate amount approximately 25 percent of North Korea's gross domestic product (GDP) has been spent on the military. Poor agricultural policies have led to land erosion and reduced output. In addition, the regime has maintained heavy industrial production for too long, and much-needed investment in infrastructure, notably transport, has not been forthcoming.

Recognizing the need to attract foreign capital, Pyongyang altered its trade regulations and opened a free-trade zone at Rajin Sonbong on the border with China and Russia. Despite these initiatives, however, the country has not attracted international investment.

In a 1994 New Year speech, then President Kim Il-sung acknowledged the DPRK's economic problems and called for greater focus on light industry and trade. Yet, there is still no evidence that this change has occurred. Kim Jong-il, who succeeded his father after his death in July 1994, has shown no inclination to initiate the reforms needed to rejuvenate the economy. He has continued to allocate scarce resources to the military presumably because he sees the armed forces as vital to the regime's security.

Kim Jong-il appears to have tolerated the emergence of markets permitting peasants to trade their produce. Even if the regime allowed private farming -- which it does not -- this alone would not be enough to ensure economic recovery.

The DPRK will never be self-sufficient in food production. Consequently, it must have goods to sell to finance its imports. Solving the food crisis will thus depend both on industrial and agricultural reform. But, unlike other Asian communist states, China and Vietnam, the DPRK regime appears incapable of introducing changes and is relying on mendicancy to survive.

Kim Jong-il's authority does not appear under threat. While the populace shows no signs of dissent, evidence suggests that there is some antipathy towards his regime. The unprecedented defections in 1997 of senior political figures -- such as the juche (self-reliance) theoretician, Hwang Jang Yop, and DPRK Ambassador to Egypt Jang Sung Gil -- indicate tensions among the political elite. However, it is impossible to know how deep these divisions run or how they might surface. Apparent differences between the military and the bureaucracy may be no different to those in other governments.

The DPRK's neighbors are concerned about the prospects for, and consequences of, political or economic disintegration. As a result, they are all prepared to provide Pyongyang with assistance. Although the ROK would be most directly affected by the sudden collapse of the DPRK, it is ambivalent about assisting the North. Having lived with the threat of a DPRK military attack since the Peninsula was divided in 1945, Seoul is keen to resolve the tension. However, the ROK is aware of the financial cost of German reunification and does not want to face a similar burden. Instead, it would prefer reconciliation to occur gradually, stretching the cost over a protracted period.

The U.S., the ROK's security guarantor, and Japan both want to avoid the regional repercussions that would follow the DPRK's disintegration. As host to U.S. forces, Japan could be drawn into a conflict on the Peninsula. Political factors such as unresolved claims of DPRK kidnappings of Japanese citizens are also influencing Tokyo's dealings with Pyongyang.

Beijing's primary concern is that deteriorating conditions in the DPRK could cause refugees to flee into China. Beijing's security interests would probably be satisfied most favorably if the Peninsula remained divided, but without the current level of tension.

Russia is playing a minor role in developments on the Korean Peninsula. Because of past historical ties and its short border with the DPRK, Moscow wants to be involved in the issue. However, it has a limited economic capacity to provide aid or to help shape an outcome to the crisis.

Both neighboring and non-regional countries have provided assistance to the DPRK. Approximately 325,000 tons of food aid has been given since 1995 under the World Food Program (WFP). Since April 1997, 525,000 tons of non-WFP assistance has also been donated of which China supplied 220,000 tons. Beijing has also granted Pyongyang 'soft loans' to purchase food, fuel-oil and coking-coal, highlighting the importance it attaches to the DPRK's survival.

Japan, the ROK and the U.S. are also providing economic assistance under the 1994 DPRK-U.S. Agreed Framework. Pyongyang effectively used its threat of developing nuclear weapons to get Washington's attention. Ultimately, Pyongyang secured U.S. economic benefits in return for freezing its nuclear program and dismantling its facilities.

The Korean Energy Development Organization (KEDO) set up in 1994 by Japan, the ROK and the U.S. is responsible for replacing the DPRK's graphite reactors with light-water models. Furthermore, KEDO is giving the North 500,000 tons of heavy fuel oil each year until the reactors are built. The Agreed Framework also provides for the lifting of U.S. economic sanctions. Pyongyang is presently adhering to its obligations under the accord.

Engagement with the DPRK creates opportunities for influence and, prospectively, reform. Pyongyang is wary of external pressures and fearful of the consequences of change. Given its present vulnerability, the regime is resisting direct dialogue with Seoul despite the fact that this is ultimately required under the Agreed Framework.

The U.S. and the ROK have sought to broaden their contact with the DPRK. The U.S., for instance, has held talks with Pyongyang on its missile program and is trying to persuade the regime not to export this technology. There has also been bilateral cooperation on discovering what happened to U.S. servicemen 'missing in action' during the 1950-1953 Korean War.

Washington and Seoul have also been pressing the DPRK to participate in four-party talks which also include China. As a basis for discussions, the U.S. has focused on Pyongyang's declared interest in replacing the 1953 Armistice Agreement with a new peace agreement. In addition, Washington has proposed that discussions should focus on reducing military confrontation between the DPRK and the ROK.

Because the North needs economic assistance, it cannot easily reject the proposal. Nevertheless, it is resisting taking part in the talks, apprehensive that food aid will be linked to concessions. Pyongyang is saying neither 'yes' nor 'no' to participation in the negotiations symptomatic of its wider dilemma.

If the DPRK continues to receive external assistance at present levels, it is likely to withstand the current crisis. However, while it resists political and economic reforms, its survival will be problematic. Furthermore, the DPRK's neighbors could acquire 'aid fatigue' if Pyongyang fails to introduce domestic changes. On the other hand, regional states will need to bear in mind the consequences if the North disintegrates.

While the threat of the DPRK reacting militarily remains of concern to the ROK and the U.S., the possibility of such irrational action will diminish progressively as the North's capabilities contract.

Consequently, the most practical approach is to give the DPRK some assistance while trying to entice it into greater regional engagement. Additional ROK and Chinese investment in the DPRK, for instance, would increase their influence while helping to ensure a smooth resolution of the crisis.