Tag Archive | "aid"

Drought in North Korea — What Should Be the Response?

By Robert R. King

Just a few days ago, the UN Food and Agriculture Organization (FAO) issued a report that North Korea is facing its worst drought in 16 years.  The report, prepared by the FAO in cooperation with the European Union’s Joint Research Center, concludes that the period April through June of this year was particularly dry, which has delayed planting and stunted plant growth in key crop-growing areas.  Food security in the DPRK has been precarious since the famine of the late 1990s and early 2000s, and now the UN agency is warning that “cereal output may decrease significantly.”

The other shoe that has yet to drop this year are floods.  North Korea frequently faces late summer monsoon rains and occasional typhoon rains in September that complicate farm production.  Because North Korean government policies limit private farming on good farm land in the flatter bottomlands, farmers end up over-cultivating hillsides.  Then when the late-summer rains come, they can accelerate the runoff, causing devastating damage to the hillsides through erosion.

The late August 2016 floods along the Tumen River on the northern DPRK border with China and Russia were caused by Typhoon Lionrock.  In North Korea, the floods killed over 500 people, left over 100,000 homeless, and did major damage to farmland in the area.  Flooding such as this is an all too common occurrence, and exacerbates existing food scarcity.

Unfortunately, food shortages in the North are not unusual.  Even in an average year, the country has to stretch to meet the food needs of its 25 million people.  The government provides only limited resources for agricultural inputs and equipment, farming methods are not the most modern or effective, and central planning generates further inefficiencies.  Some improvements have been made in recent years with better farming practices that reward individual efforts to encourage greater efficiency, but shortages are still serious.

In the 1980s, annual grain production (principally rice and corn) averaged around 8 million tons.  During the famine (1996-2003), annual production averaged 3 million tons, with some years considerably lower.  For the last five years, it has averaged just below 5 million tons.  Furthermore, gaps between regions and a poor transportation system make it difficult to adjust for regional differences.

The suffering of the North Korean people is certainly not their own fault.  They have little, if any, ability to influence the decisions of the tyrants that control their fate.  The food shortages are the responsibility of the regime.

In fact, the regime provides ample food and luxuries for the elite in Pyongyang, and the military leadership and elite military units will have sufficient food.  Resources that could provide much-needed inputs for agricultural production will be spent for nuclear and missile development and maintaining the military, and of course the supply of luxuries will continue to flow to the privileged.

Certainly UN agencies will appeal to member states to help North Korea. However, humanitarian assistance from the UN, particularly the World Food Program, will likely be difficult to secure.  There are great demands on UN humanitarian resources in other parts of the world right now, and in recent years special appeals to provide aid to the North Koreans have secured only limited help.  North Korea has lavished resources on missile and nuclear capabilities, despite the urgent humanitarian needs of its own people and the condemnation of its military actions by the UN Security Council.  Thus, aid to North Korea will be a particularly difficult case to make to elected political leaders.

In addition, the U.S. government is unlikely to be responsive.  A sharply divided Congress, preoccupied with healthcare, taxation, and other divisive domestic issues, will find it very difficult to support humanitarian aid to a country which has announced that its nuclear and missile programs are aimed at Washington.  Furthermore, the Trump Administration has indicated its intent to significantly cut back on all U.S. foreign assistance.

The new government of the Republic of Korea is likely to give the most serious consideration to the humanitarian needs of the North.  These suffering Koreans are their cousins, and many Koreans in the South have roots in the North.  In fact, Seoul has put forward an initial proposal for engagement with Pyongyang.  Based on previous experience, the North will likely expect to be paid to engage, and in the past humanitarian aid has been a place to start.

Another avenue for assistance in coping with the effects of drought is private humanitarian groups.  A good number of them are American Non-Governmental Organizations (NGOs), which have a good record and experience in aiding the North.  Unfortunately, these NGOs face serious difficulties raising funds.  These groups are well-organized and managed, do extremely good work, and have dedicated and compassionate leaders.  The DPRK, however, has become such an international pariah because of its nuclear and missile programs, its periodic provocations, and crude verbal outbursts that large and small donors alike are reluctant to be involved.

In considering a possible response by governments, international organizations, and private non-profit organizations to the growing signs of an impending food shortage in the DPRK, two considerations are important.

First, they must assess the need for help.  Our satellite imagery is remarkable, and we can make reasonable estimates about the extent of the need from afar.  But on-the-ground assessment is essential to determine the reality.  What crops and which regions are most affected?  What steps is Pyongyang taking to deal with this problem?  What are the transportation issues?  Does the North have the capacity to move aid from ports to affected areas?

Second, agreements must be reached to allow on-the-ground monitoring by designated representatives of the country or organization providing the aid.  In the past, South Korean and international organizations delivered food aid to the border or to the ports, and Pyongyang determined where the aid was sent.  Some was apparently sold on the black market and the payments may have helped fund the military. Other funds subsidized the lifestyles of the rich and infamous.  If aid is provided, foreign donors and the international community need to be assured that humanitarian assistance is going to those most in need.

The longsuffering North Korean people have limited alternatives for humanitarian help.  Unfortunately, the bad decisions and self-destructive policies of its own leadership, over which they have little or no control, make it very difficult to find help for them.

Robert R. King is a Non-Resident Fellow at the Korea Economic Institute of America.   He is former U.S. Special Envoy for North Korea Human Rights.  The views expressed here are his own.

Photo from (stephan)’s photostream on flickr Creative Commons.

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Prospects for Stronger Ties with Africa for the Next South Korean Administration

This is the fourth in a series of blogs looking at South Korea’s foreign relations in the run up to the next Korean administration taking office on May 10. The series also includes blogs on relations with the United StatesChina, North Korea, the European Union, Japan, Russia, the Middle EastASEAN, and Latin America

By Jennifer Cho

For the longest time, South Korea has not prioritized Africa within its foreign policy. The main exception was in the 60s, when the South competed with North Korea to earn more votes in the United Nations. Recently, however, interest in Africa has significantly increased because of its abundant natural resources and huge oil deposits. Although Korea embarked on closer diplomatic relations across Africa in recent years, Seoul has tended to focus on short-term projects that lack continuity.

In the past, each Korean president came up with similar approaches with different titles, but some projects were forgotten with changes in the administration. With a new administration in Seoul after the May 9 election, it remains to be seen whether this short-term approach will continue – so far, none of the presidential candidates have clearly stated any plans for Africa policy once they are in office.

Despite some governmental efforts toward economic cooperation, South Korea’s engagement with Africa started late compared to other countries. For example, China’s trade volume with the continent increased from $10 billion in 2000 to $300 billion in 2015. However, South Korea’s trade volume remains at about $19 billion. Along with trade volume, South Korea also lacks investment in Africa. To fill these gaps, the Korean government is looking to play a significant role in backing up domestic firms and companies.

One way Korea has done this is through President Roh Moo-hyun’s “Korea Initiative on Africa’s Development,” which began in 2006. Through this project, Korea hosted several Korea-Africa Fora to establish partnerships and strengthen economic and political cooperation in the future. The past three fora provided South Korea with opportunities to build economic relationships with more African countries, including a cooperation framework called the Korea Africa Economic Cooperation Framework (KOAFEC), which provides aid to Africa and chances to collaborate with the African Development Bank. The most recent forum was held last December in Addis Ababa, Ethiopia, where the African Union (AU) headquarters are located. More than 150 people, including cabinet ministers and representatives from 14 African countries, participated in the fourth forum and discussed challenges for establishing peace and stability and also how to tackle joint economic development projects.

Besides economic opportunities, these fora provided a space to discuss security policy in regards to North Korea. During the fourth forum last December, South Korean Minister of Foreign Affairs highlighted the importance of security issues on the Korean peninsula. South Korea asked for cooperation from various African countries in regards to North Korea and requested support for U.N. Security Council Resolution 2331 that strengthened sanctions measures against the DPRK. Last month, the South Korean defense vice-minister visited Egypt to sign an MOU on defense cooperation for security issues related to the DPRK. Because Egypt is located between Africa and the Middle East, a stronger relationship with Egypt will expand South Korea’s influence on both continents.

Continuous dialogues on targeting mid- to long-term projects will play a significant role in Korea-Africa relations in the future. Africa has ample natural resources and extensive potential for economic and energy development. In addition, the continent’s increasing population has greatly increased demand for infrastructure and has creased possibilities for the development of manufacturing, which can reach a huge group of consumers. South Korea’s effort to strengthen ties with various African countries, including Egypt, Kenya, and Angola, will not only strengthen previous diplomatic ties but also promote businesses development across the continent. It will be important for the new administration that takes power in May to review previous policies and continue recent dialogues to create lasting, long-term partnerships.

Jennifer Cho is a graduate of Kalamazoo College and an intern at the Korea Economic Institute of America (KEI). The views expressed here are the authors’ alone.

Photo from Korea.net’s photostream on flickr Creative Commons.

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Korea Aid: How Seoul is Increasing its Connections in Africa

KEI Communications Director Jenna Gibson, host of Korean Kontext, recently interviewed Valerie Dabady Liverani, manager of the Resource Mobilization and External Finance Department at the African Development Bank. After President Park Geun Hye made the first visit by a Korean president to the African Union this spring, South Korea is increasing its efforts to connect with the continent. With this in mind, Gibson and Dabady Liverani discussed Korea’s development aid to Africa, trends in the aid sphere, and what more Korea can do to collaborate with Africa in the future. The following is a partial transcript of that conversation. The rest of the conversation can be found at http://keia.podbean.com.

Jenna Gibson: To get us started off, South Korea joined the African Development Bank in 1980, and since then they have contributed millions of dollars to a variety of efforts, including knowledge sharing, education, infrastructure projects and more. Could you give our listeners maybe a brief background of Korea’s cooperation with the Bank since it joined?

Valerie Dabady Liverani: Sure. By way of background, Jenna, Korea joined the Africa bank in 1980 and so they’ve been a longstanding partner of the institution. The most recent contribution that they made was to the African development fund back in 2013, where they made a pledge of about $81 million dollars. We would say that Korea is a big friend to the African Development Bank; they are one of the few bilateral donors to have a cooperation framework something called the KOAFEC, Korea Africa Economic Cooperation Framework, which was created back in 2006. It provides if you will for a context for aid to Africa and also for collaboration with the African development bank. The first meeting was a ministerial level meeting held in 2006 and it has been held biannually in Seoul since then, with the exception of 2014 when the Ebola crisis made planning for the event a bit difficult. We’re quite excited in fact planning out the next KOAFEC meeting which will be held October 2016 in Seoul, and preparations are in high gear.

Korea has one of the most important trust funds with the institution, [as well as] a co-financing framework. The difference is that co-financing provides support to projects, and the trust funds provide grants in 6 priority areas: infrastructure, green growth, knowledge sharing, human resource development, ICT, and agricultural and rural development. Also in terms of collaboration I think what doesn’t get talked about perhaps as much as financing, but which is equally important, is exchange of staff. Currently we have about 12 Korean staff working at the bank. Recently someone from KEXIM, the export bank of Korea joined us – about two or so months ago. We’re quite happy in terms of the collaboration, and we feel there is a lot we can learn from a country like Korea in terms of its own growth trajectory; Korea was once a recipient of aid and is now a provider of aid.

Jenna Gibson: You mentioned a lot of these really important key areas including infrastructure, ICT, green growth…so within those, are there any programs or projects that Korea tends to gravitate towards? What, on the ground, do these projects look like?

Valerie Dabady Liverani: So in infrastructure for example, Korea has financed both the hard and the soft parts of infrastructure In terms of the soft parts they have, for example through the trust fund, improved the private sector regulatory and business climate in East Africa. On the infrastructure side they have financed some roads also in East Africa. On the knowledge side, which I think is also one of the more important components of the collaboration, there is a strong link between our econ department and certain Korea institutes such as the Korea International Economics Policy Institute – that’s a mouthful! – and essentially what that really tries to do is to learn from the lessons of Korea’s own economic development and essentially try to see what lessons we can learn from that. Finally, Korea has generously offered scholarships at the Korea Development Institute to Africa Development Bank Staff.

Jenna Gibson: That’s great to hear – a way of investing in the human resources and creating long-term growth…

Valerie Dabady Liverani: Exactly. Which I think one needs to really have if you want to talk about development. I think ultimately development is a very big word, and a very vague word. I think that in that, one must also focus on the hard and the soft and honestly one needs to be able to treat one’s neighbors, one needs to provide internet services and reliable energy and everything else. You also need to have a scope in your workforce in order to handle development from manual labor to things that require a bit more specialization. All those things count very much.

Jenna Gibson: Right, absolutely. Do you also see any particular openings for future cooperation and future projects where Korea could be helpful?

Valerie Dabady Liverani: I do indeed. You’ve mentioned the first visit by the Korean president recently, and I think you know we have a fairly new President, Akinwumi Adesina, who came in last year in September. I think he was able to make a trip out to Korea back in March. I think it was one of the first trips he made and I think it’s important in that it shows the value that he has for that particular relationship. During that trip back in March he was able to set out what we call the “high fives”, which is essentially the areas in which the bank is going to focus on. Those areas are energy, to light up and power Africa; agriculture, which is to feed Africa; to industrialize, which is to lead to better trade for Africa; it’s to innervate Africa; and finally it’s to improve the lives of Africans. These are what we call the “high-fives” and for us we see an opportunity for Korea to support each one of these pillars. But if I had to pick maybe two in which we see Korea being strongest, it would be industrialize Africa in terms of trade and lighten up Africa in terms of energy. I think industrialization is one of the areas where Korea has the most lessons to teach Africa, since its own growth was based on industrialization.

Jenna Gibson: One project that caught my attention, it’s not through the AfDB but is quite interesting – it’s called Korea Aid.  It’s basically a mobile clinic that promotes maternal health services, helps educate people on hygiene and nutrition, and more. Its pilot program at the moment that they started in Kenya and eventually hope to expand. The interesting element to me is that it also includes a cultural component. In these mobile clinics there is a K-meal truck to provide Korean-inspired dishes, and it also includes a K-culture vehicle that will introduce elements of Korean pop culture including music and TV programs. So, I’m very curious from the perspective of someone working on development, how do you see this intersection between aid and cultural promotion? How do you think these things will work together?

Valerie Dabady Liverani: I think actually it’s a very good idea to combine the two things, because aid sometimes happens at levels where the ordinary person maybe doesn’t have exposure to it, at least to the human side. If you build a road for example that’s obviously a good thing, but you maybe may not know who is behind this particular road, who financed it, who worked on it. I think once you put together some sort of cultural exchange you put a face to a donor, and I think whenever you do that one of the benefits will be that you learn more about a particular culture. You know sort of what the people eat, what they appreciate on television. Obviously culture is something that is shared very quickly these days. I’m trying to remember the incredibly popular pop song that my 14 year old son was singing two years or so ago – Gangnam Style! – you know, one does get snippets of culture and things like that but I think what’s important in what you’re mentioning is that one gets to choose essentially what you put out. I see this may have an audience that may be younger than your traditional segment of society whether or not that’s people working at ministries or what have you, you may reach an audience that is younger and receives information in a different way.

Jenna Gibson: I think that’s a great way to end on a forward-looking note, but before we go is there anything that you think would be important for our listeners to know about Korea’s work with the AfDB and with the African continent?

Valerie Dabady Liverani: I think that I would probably want to add is that the continent had a history back when it was still the axis between America and Russia, the sort of two poles. And obviously we see that as the cold war fell away, much more interest developed in other development poles that are interested in the continent. Today, for example, the Indian president is visiting the Ivory Coast, the Exim Bank is opening an office in Cote d’Ivoire. You’ve got lots of other players – Korea, India, China are all there as well – and Turkey is a big player too. I think it’s important at this level that those that want to participate in the sphere of development on the continent also need to coordinate between themselves. I’m still somewhat biased but I still believe that the multilateral development bank context is the best context for aid to flow through. There will always be room and space for bilateral channels, I don’t think anyone is saying that UK and France and the like will close their embassies, but I’m simply saying in terms of wanting to have the best effect for development, it’s the multilateral development channel that one should go through.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

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Unfriending North Korea…With South Korea’s Help

By Jenna Gibson

On June 16, Uganda officially kicked North Korea to the curb, asking approximately 60 DPRK troops and state security officials to leave the country. Uganda was playing host to the North Koreans as part of a military exchange program – the UN recently reported that the North Koreans were providing police training to their Ugandan counterparts, including lessons on the use of AK-47s and pistols.

Why kick them all out now? It may be yet another sign that South Korean President Park Geun-Hye’s so-called Summit Diplomacy is working.

According to 38 North, South Korea described President Park’s recent international trips as “part of diplomatic efforts to enlist the international community to the effort to bring about change in North Korea on all fronts.”

Uganda is a perfect example of the strategy’s success. Ugandan President Yoweri Museveni first promised to cut military ties with the DPRK after his summit meeting with President Park. During her visit to Uganda, which was the first visit by a South Korean president to the African nation since 1963, President Park also signed 10 agreements to cooperate on defense, health, rural development and communications technology.

While South Korea has long invested in development aid in sub-Saharan Africa, the timing of this visit and Uganda’s subsequent split with Pyongyang is noteworthy, in part because it is hardly the first country that has recently given preference to Seoul after a visit from the Korean president.

In fact, Park’s 2016 itinerary almost reads like the most recent UN General Assembly vote on North Korean human rights. Uganda – abstain. Ethiopia – abstain. Kenya – abstain. Iran – no. It seems clear that President Park’s administration is focusing on those who still support North Korea, whether actively or by staying silent.

Take Iran, for example. In one of the most high-profile diplomatic moves of her administration, Park recently travelled to Tehran for the first bilateral summit between South Korea and Iran since the two countries established diplomatic relations in 1962.

Iran has long been seen as a friend to North Korea, purchasing arms and backing the Kim regime in the international sphere. In 2002, U.S. President George W. Bush famously linked the two as part of the “axis of evil,” along with Iraq. To see Iranian President Hassan Rouhani stand next to a South Korean President and declare his opposition to nuclear development on the Korean peninsula is no less than a sea change.

 In a recent KEI podcast that examined the historic trip, Iran expert Alex Vatanka clearly saw an opportunity for South Korea to make inroads with Iran.

“Much of what Iran has done in recent years in terms of outreach to certain countries around the world was driven by an almost ideological desire to as they would put it, challenge the global system,” Vatanka said. “Rouhani is very different. This Iranian president’s view, and why he was elected in 2013, is those countries are great, but they actually have nothing to offer us. They can’t contribute to the most important thing we are trying to fix, which is the Iranian economy.”

South Korea, in contrast, has much to offer Iran economically. In fact, Park Geun-hye left Tehran with promises to triple trade between the two countries from $6 billion to $18 billion annually. Using this leverage to her advantage, Park has been able to turn a former DPRK ally away from Pyongyang.

Across the world, the pattern may be repeating itself again in Cuba. Earlier this month, Foreign Minister Yun Byung-se visited Havana, despite a lack of formal ties between the two countries. Cuba has long supported its fellow communist country, making this visit particularly key for Seoul. “For an exceptionally long 75 minutes, our talks were very friendly, serious and candid,” Yun told South Korean reporters after the meeting. “We had a broad exchange of views on bilateral, regional and global issues.”

This strategy is hardly limited to high-level visits, though. Seoul has announced they will provide $1.5 billion in development assistance to Vietnam from 2016-2020, for example. And the South Korean administration has been working to turn Myanmar away from the North with infrastructure projects and trade deals since the country began opening to the international community in 2011.

These moves have not gone unnoticed in Pyongyang. In response to Park’s recent trip, the DPRK sent Kim Yong Nam, the country’s nominal head of state, to Africa as well. There, he met with leaders from nine countries, including Chad, Gabon, Congo, Burundi and Mali. Another high-level official visited Vietnam and Laos in June.

“Pyongyang tries to maintain positive relations where it can, with countries less closely tied with its rivals,” John Grisafi, NK News director of intelligence, said in a recent NK News article. If South Korea can continue to narrow the list of countries willing to side with Pyongyang, they may be able to successfully remove what remains of North Korea’s room to maneuver in the international sphere.

And it seems like that’s exactly what Seoul is doing. It’s too soon to tell how widespread and long-lasting these shifts will be. But for now, it seems North Korea’s isolation may finally be cemented, allowing sanctions to take their full effect.

Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Korea.net’s photostream on flickr Creative Commons.

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North Korea’s Hunger Problem

By Mark Tokola

Five years of relatively good harvests have pushed the issue of malnutrition in North Korea down the list of international concerns. Reports of visible improvements in Pyongyang (but much less in the countryside), nuclear and missile testing, cyber-attacks, and Kim Jong-un’s public appearances have dominated recent media coverage and have caused memories of North Korea’s agricultural problems to fade. Now, however, hunger in North Korea may be reemerging as a concern.  We are unlikely to see a repetition of the 1994-1998 famine that killed somewhere in the range of a half-million North Koreans. Instead, the situation now may be more like earlier in the decade when the UN Food and Agriculture Organization (FAO) made international appeals for food assistance and the conditions under which the United States would be able to assist were being negotiated.

The FAO’s “Global Information and Early Warning System on Food and Agriculture” (GIEWS) warned on April 27, 2016, that North Korea’s food security situation was deteriorating and could lead to a deficit of 394,000 tons of cereals for marketing year 2016, the highest since 2011 and four times the size of the gap in 2014. The accuracy of the FAO’s warning seemed borne out in a June 10 Voice of America interview with Cristina Coslet, the FAO’s GIEWS office in charge of Far East Asia. She told the VOA that the North Korean government had reduced the country’s food rations for July to 310 grams per person, a 25 percent decrease since June and far below the DPRK’s target of providing 573 grams per person per day. The United Nations World Food Program recommends a minimum diet of 600 grams per person per day.

In June, North Korea’s official media acknowledged the problem, blaming it on “the worst drought in 100 years,” that is “causing great damage to the country’s agricultural fields.” The European Commission’s Joint Research Center (JRC) confirms that rainfall in North Korea during mid-April through June 2015 was well below average and had considerably reduced the country’s rice planting area. A 26 percent drop in rice production has been offset to some extent by planting crops that require less water, such as soybeans, millet, and sorghum. But simultaneously, production of potatoes and winter wheat will also fall by more than 20 percent from last year, creating an overall shortage. Furthermore, there is no equal substitute for rice in a Korean diet.

There are indications that drought isn’t the only problem afflicting North Korean agriculture, and that government choices have exacerbated the problem. Crop production could be increased if there was a larger shift from oxen to more mechanized farming. Currently, 40  percent of North Korea’s arable land is farmed using oxen.

In addition, fuel consumption for farming, according to the DPRK Ministry of Agriculture, declined from 71 thousand tons of diesel and gasoline in 2013 to 61 thousand in 2015. Similarly, fertilizer use dropped from 750 thousand tons in 2014 to 623 thousand tons in 2015. Under drought conditions, fewer inputs might be used, of course, but the year-by-year figures show that the DPRK has underinvested in its agricultural sector and has mismanaged agricultural policy. International donors, who have been asked to provide food assistance during many of the past twenty years, might well ask whether they are responding to a series of natural disasters or are being asked to make up for North Korea’s own failure to reform its agricultural system..

One factor which may make the food shortage less grave is the increase in small, family-run vegetable plots which the government now encourages. And an increase in ‘market’ activities may mean that families can find some supplemental items for sale. However, none of this will make up for the hundreds of thousands of tons of cereals which will be absent from North Korea for the coming year, unless there is a response to an international appeal or North Korea decides to use some of its resources to buy food to feed its people. Fortunately, according to the FAO, it appears that next year’s harvest will be better than this year’s. The question is whether this year’s shortages will encourage the DPRK to reform its agricultural sector with the same zeal with which it is building weapons.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

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South Korea’s June 9 Surprise: Economic History Worth Replicating in North Korea

By William Brown

September, 1961 was not a happy time in South Korea, at least according to the US Intelligence Community.  See how CIA described the dismal situation soon after junta commander Park Chung-hee’s coup d’état, in a declassified National Intelligence Estimate.

“The greatest threat to South Korea, at least in the near term, comes from within South Korea. The country lacks a sense of national purpose and faces both tremendous economic problems and a brittle political situation. The military junta seeks to provide the drive and stability which was lacking in the previous civilian government but is subject to internal factionalism and lacks general public support in confronting these enormous problems. … U.S. aid will probably succeed in preventing economic collapse. However, even under the most favorable circumstances, progress will be slow and South Korea will continue to require large-scale foreign aid for the indefinite future if it is to remain an independent nation allied with the West.”[i]  

The longer-term threat was North Korea, seen then as a vibrant economic entity, pu­­­lling the frustrated South into the communist orbit.   

“One thing seems fairly clear; both the South Korean people and the leadership face many disappointments, frustrations, and failures in the years ahead.  In such a situation, the desire for economic progress and for an end to hopeless temporizing, rising interest in unification, and continued enticements offered by the [more prosperous] North Korean regime could lead to some movement in the south toward an accommodation with the north.” 

National Intelligence Estimate 14-2/42-61, 12 September, 1961.[ii]

Within months, South Korea had set forth on what now must be seen as one of the world’s most remarkable economic and political development paths. And within about a dozen years, North Korea would default on foreign credits and begin a long decline into famine.

Not known for its prescience in such matters—just eleven years earlier the brand new CIA had boldly said China would not enter the then flaming Korean War[iii] — this pessimistic Estimate may have served as a useful warning to the Kennedy Administration which went on to put some of its best minds together to change the nature of U.S. assistance to Seoul.  Instead of commodities aid—free food—that was ruining South Korean agriculture, the aid program focused on fixing the overvalued monetary system and developing exports. Who did this and why would be a good topic for historians to revisit and our countries to honor. But I’d like to look at the take-off from the perspective of peering back into the past with an eye toward the future. How did this intelligence forecast turn out so incredibly wrong, and wonderfully so? And what can we learn in order to convince North Korea to make a similar about-face.

An excellent new book, The Korean Economy: From a Miraculous Past to a Sustainable Future, by Eichengreen, Lim, Park, and Perkins[iv], provides what is probably the school view of South Korea’s remarkable turnaround.  In looking for an up-to-date book for my ­Georgetown University course on the two Korean economies, I was pleased to discover this work, not the least because it includes a chapter on North Korea. But I must say I was disappointed in reading what it has to say about what caused the economic take-off. This is not to say that they might not be right; it just doesn’t fit with my pre-conception and I’d like to see a new, more full, academic discussion.  Perhaps objective economists in South Korea, that is academics not predisposed to punish Park for his authoritarian rule, can help with this.

At its essence this is a chicken and egg discussion.  Eichengreen and others say that it was Park’s shifting the economy from import substitution to export-led industry that allowed savings and investment to blossom, raising the productivity of Korean workers.  Exports, from a subsistence-level economy, were possible only because foreign aid provided the surplus needed to attract investment.  The pull from abroad thus lifted the economy.

In contrast, I have thought it was reforms to the money and banking system that provided incentives to save, even out of very low incomes, that created an exportable surplus which then pulled in the foreign investment that jump-started the economy. In other words, an outward push from inside Korea provided the lift.  Foreign aid was less important. An arcane, perhaps, but I think important distinction, especially as we look towards North Korea’s current predicament and to its penchant for nationalist self-reliance.

My view stems from a personal memory—admittedly a dangerous source of analytical vigor. I was a young American boy living in Kwangju, capital of South Chulla province, during this time—fortunately, my Presbyterian missionary parents had not read the secret CIA document. Early one rainy season morning in 1962, my mother got me up to search our neighboring American doctor’s house for a stash of hwan cash. The doctor and his family were away but had rung up (that is the way the old phone system worked) to say he had a bunch of South Korean money that needed to be turned in; he just couldn’t remember exactly where it was, probably in his library. Exciting in a way I’ll never forget, I found the stash of cash, in cut-away books just like you see in spy novels. The bigger story, of course, and unknown to us at the time, was the change to the monetary system and to Korea’s economy that this currency reform signaled.  The initial phase was not completely successful; apparently not enough new won notes had been secretly printed in England and brought by ship to Korea, but within months the new cash had taken hold.  So if I was to make a point estimate, June 9, 1962 was the day that made modern South Korea. It should be a holiday. Everyone was given a few days to take their hwan money, at least up to a pretty high limit, and go down to the Cheil bank and exchange it for newly printed won notes at a 10-to-one ratio; after that hwan would be useless.  Larger amounts of money had to be deposited for a year at a high interest rate but most of the hwan was converted and prices changed accordingly.  And to encourage the public to deposit and save their new won, something like 20 percent annual interest rates were offered.  Even in days before calculators, I remember figuring out how fast the money would grow and how soon I could be a millionaire—forgetting the problem of inflation that this new policy was meant to address.

I wasn’t the only one thinking this way and very quickly South Koreans shifted from being just about the worst savers in the world to being the best. Poor people stopped spending on weddings and funerals and instead saved money, and the banks used these saved resources to lend to farmers to buy small tractors, assembled from kits made in Japan, revolutionizing agricultural productivity.

The tractor that replaced the cow. Park’s Memorial Museum, Seoul

Elimination of U.S. food aid, and government support to higher agricultural prices, as well as subsequent deals with Japan and the World Bank helped, but the driving force was a decent money and banking system that gave the right incentives to the Korean public to save and invest in the future. At least that is the way I have remembered and taught the story.

Textile workers support exports. Park’s Memorial Museum, Seoul

Eichengreen and the other authors, however, use the data to paint a slightly different picture.

“Domestic savings remained in the single digits (share of GDP) in the first half of the 1960s, the takeoff period. … The most dramatic change was, in fact, the rapid growth in exports. Exports at constant prices grew by 35 percent per annum from the end of 1963 to the end of 1969.[v]

The data shown in their text, however, are at five-year intervals so I question the interpretation of the leads and the lags.  Looking at annual household savings data, (graphic below) it seems that the savings growth kicked-in in 1962 and 1963, simultaneously with the money change and a year before exports began their upward spiral from a tiny base.[vi] Admittedly 5 percent household savings are not much but it is the change from nothing that arguably sparked Korea’s real revolution.

Household Savings Graph

As I say, a chicken and eggs argument. If my memory serves, it was human hair (wigs), plywood, and leather goods that started the export push, not products that required foreign investment.  But clearly Eichengreen is right about what happens next; general and soon-to-be “president for life” Park got on the export bandwagon and the rest is history. Export growth soared giving the economy a huge boost even as savings and investment rates rose, allowing the import of capital goods for South Korean industry.  Park’s most controversial policy was then to shift from light industrial exports, especially textiles and footwear, to heavy and chemical industry, despite what appeared to World Bank and U.S. economists as a comparative advantage in labor intensive products.  By now it would be hard to argue that Park wasn’t correct but, whatever the case, on the basis of this surge in investment, South Korea’s comparative advantage has shifted, for the time being, to heavy industry.  I say for the time being since China looms as a tough competitor in all of these products and is investing even more heavily than did Korea.  Another important step, as is hinted at in the old NIE, was Park’s creation of an objective and expert Economic Planning Board that supervised the creation and publication of data that his and subsequent governments could use as the road map and guide for economic policy making (and which makes possible our current analysis of what caused the economic takeoff).  The U.S. role was critical as well.  Despite missteps with respect to aid, the U.S., soon after liberation from Japan, had supervised the fundamental change in Korea from a tenant based agricultural economy to a capitalist one with massive land reform giving land to the tenants, and, of course, by providing the security shield that protected the country from the Communists.  While initially skeptical of the currency reform—U.S. officials had not been notified in advance even though the U.S. was financing about half of the South Korean budget—U.S. balance of payments support that followed allowed the new won to achieve credibility.

But the real genius of the Park administration, it seems to me, was those early courageous and risky steps in changing the money and using the change to create a sound currency and a high-interest banking system that encouraged savings and that recognized the high returns on capital if used only in high productivity endeavors.  Now seen as a textbook solution to be sure but one that must have been complicated and risky for the generals to manage. Subsequent Seoul governments have relied too much on banking and not enough on more efficient direct capital markets—stocks and bonds—but all of that is a different story, well told in Eichengreen.

The parallels to North Korea today are interesting and I would hope officials and scholars in Pyongyang are carefully studying Park’s success.  I say carefully since they tried something similar to the South Korean currency reform in 2009 but bungled it badly.   On paper what is known as the 2009 currency redenomination must have looked similar but with critical differences. Citizens were told to change about a third of their cash into a redenominated currency of the same name at a 100-1 ratio. That ratio doesn’t matter but the fact that only a small share of cash could be converted, and the absence of a name change, are important.  North Koreans immediately saw most of their money devalued by 99 percent over the span of a few days and naturally associate that disaster with the North Korean won notes.  It isn’t clear what was supposed to happen with their bank accounts but these were artificial anyway since cash can’t be withdrawn from a bank except with special permission—maybe like a 401k that never matures—and that policy has not changed.  By sharply reducing the money supply, the move might have been designed to bring black market prices down close to the fixed ration price levels and end the arbitrage that was and continues to destroy the planned, fixed price, economy.  That didn’t work since market prices immediately soared, leading to an even larger gap between official and market prices.

Whatever the reasons for the redenomination, it backfired—even strongly socialist PRC commentators called this a theft of the people’s money.  The Kim Jong-il government executed the party finance chief and, a first, offered an apology to the public.  But once done such a deal cannot be undone and North Korean won quickly became essentially worthless, with foreign money, U.S. dollars and RMB, seeping into the circulation in large amounts. Pyongyang by now has stabilized the won at prices significantly above the pre-2009 level but the foreign money circulates without impediment, an astonishing development in a so-called Marxist and “self-reliant” economy.  To hire a taxi, you now need something like two U.S. dollars.  To buy an apartment, you need $30,000 US.

In these respects, the situation now is probably not so different than South Korea in 1961.  At least a market now exists and the command economy seems to have lost some of its sting.  Entrepreneurs make dollars buying and selling in the street markets, and former (maybe current) officials and military officers might be hoping to make it big, using their government connections and licensing abilities to make millions of dollars by building apartment buildings and selling the flats, carefully keeping enough dollar cash handy to pay off the authorities.

In fact, it is interesting to think that the 1961 NIE might work well today, simply exchanging “North” for “South” Korea. Land reform that gives farmers’ ownership rights; stopping the inflow of disrupting foreign aid that discourages export development; and an export push all are within the capabilities of even a sanction-limited Pyongyang government. But most important is creating a money and banking system that allows the North Korean people to do their own saving and investing.  If Kim Jong-un wanted to link such a policy to his grandfather, all of this could be placed in a “juche” nationalist and self-reliance context.  Clearly, against the advice of many non-Koreans, Park Chung- hee managed to change South Korea from a beggar, aid-dependent country to a self-reliant lending and aid giving powerful and well-liked country.  One would think the young Kim would like to do the same. But before any of this can work, he needs to fix his rapidly dollarizing monetary system and adopt capitalist tools to raise savings and create private incentives to invest in the future. A decent bank and a decently positive real interest rate would do wonders.  And like Park, Kim might be able to use a little American and Japanese help to get this done.

So, where is the briefing book that we can give the young General that will properly explain what he needs to do?  I’m pretty sure the junta leader’s daughter can give the lecture.

William Brown is an Adjunct Professor at the Georgetown University School of Foreign Service and a Non-Resident Fellow at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photos courtesy of the author.

[i]  http://www.foia.cia.gov/sites/default/files/document_conversions/89801/DOC_0000661631.pdf

[ii]  ibid

[iv]  Barry Eichengreen, Wonhyuk Lim, Yung Chul Park, Dwight Perkins; The Korean Economy: From a Miraculous Past to a Sustainable Future,  Harvard Press, 2015

[v] Ibid. p. 64.

[vi] http://kosis.kr/eng/statisticsList/statisticsList_01List.jsp?vwcd=MT_ETITLE&parentId=L#SubCont

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Five Surprising Ways South Korea and the United States are Working Together

By Jenna Gibson

This week, South Korea became the first Asian country to sign a space cooperation pact with the United States, the first step for the two countries to collaborate on projects like Mars exploration, launching a moon lander, and expanding possible uses of the International Space Station. This announcement strengthens what is already a robust relationship between South Korea’s space program and NASA, which KEI has discussed extensively through our podcast and other research projects.

This announcement may come as a surprise to those who see the U.S.-Korea relationship mostly in terms of security cooperation. However, there are many arenas where the United States and South Korea work together outside of the military alliance. Here are five surprising places where these two countries collaborate.

 1.      Improving maternal and child health

The United States and South Korea have a long history of cooperation on development assistance, beginning with American help in the wake of the Korean War to South Korea’s entry into the donor community in the 1990. South Korea’s development assistance agency, which celebrated its 25th birthday recently, has close ties with USAID. A joint project launched in 2013 focuses on combatting maternal, newborn and child health concerns across sub-Saharan Africa. Another new project will look into ways to promote sustainable development in Southeast Asia through science and technology.

2.      Developing wireless charging technology for electric cars

A grant from the US Department of Energy is helping fund a project to develop wireless charging capabilities for electric vehicles. The Hyundai-Kia America Technical Center (based in Ann Arbor, Michigan) and American company Mojo Mobility are collaborating on the project, which aims to improve the speed and convenience of charging for electric vehicles.

3.      Curing cancer

In 2015, the Korean National Cancer Center signed an agreement with the U.S. National Institutes of Health to share information and work together on cancer treatment and prevention. According to the Korea Herald, “The NCC seeks to set up a database of medical records of its 1.2 million patients who have suffered or survived cancer. Once the database is complete, the NCC plans to analyze the ‘big data on cancer’ for preventive measures and post-recovery treatment of the disease.”

4.      Stopping wildlife traffickers

South Korea and the United States have been working on a range of environmental issues, from climate change to sustainable fishing. But one interesting area of collaboration is on wildlife preservation. According to a Work Program adopted by the two governments in 2013, they are working to “Improve collaboration and communication among judicial, law enforcement, customs, and border security personnel in seizing illegal shipments of wildlife products, investigating wildlife crime, prosecuting wildlife traffickers, and dismantling transnational organized criminal networks.” In a related field, the Work Plan also includes a provision to engage in information exchange and dialogue with the goal of fulfilling wildlife management responsibilities, with an emphasis on the preservation of waterbirds and their habitats, and the restoration of habitat. This includes birds that migrate between the United States and the Republic of Korea, and threatened and endangered species of birds.”

5.      Cooperating on nuclear energy technology

In 2015 the United States and South Korea signed a new nuclear cooperation agreement, or 123 Agreement to replace the original agreement that had been in place since 1984. The two countries have already began to cooperate on “shared objectives such as spent fuel management, assured fuel supply, promotion of cooperation between our nuclear industries, and nuclear security.” An extensive KEI report written last year by former Department of Energy and Department of State official Dr. Fred McGoldrick delves into the details of this new agreement.

Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from K putt’s photostream on flickr Creative Commons.

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Three Dilemmas of Dealing with North Korea

By Mark Tokola

Short conversations about North Korea generally end with similar conclusions: it is too soon to tell whether Kim Jong-un has successfully entrenched himself; the North Korean economy whether by design or necessity has introduced some market elements; China is growing impatient with North Korea’s unpredictability and belligerency; and Kim Jung-un’s regime is even more brutal and repressive than his father’s.  The level of purges and numbers of executions is unprecedented, even for North Korea.  The regime’s fixation with building amusement parks while much of its population goes malnourished is the epitome of how far a dictator can place whims above necessities. That much, at least, attracts a consensus of opinion.

It takes a longer conversation to reveal the fault-lines and seams in opinion among experts regarding what should be done in regard to North Korea.  There is a weight of opinion, but without unanimity, that urgency is beginning to ratchet up.  The DPRK’s nuclear and missile programs are closer to producing weapons which can threaten other countries.  In truth, Seoul has been within the range of North Korean artillery for decades, but longer-range North Korean weaponry carrying nuclear warheads would alter broader, strategic equations regardless whether they could reach the United States. The United Nations Commission of Inquiry (COI) report on human rights violations in North Korea is making it increasingly difficult for the international community to avert its eyes from the regime’s widespread and systematic abuses of its own people, which are likely to be counted as crimes against humanity.  The prospect of unification of the Korean peninsula is being discussed more seriously than it has been for years.  The most surprising outcome of the change that seems to be in the air would be if the situation on the Korean peninsula remained as it is for another generation.  Hence, the need to talk about North Korea with increasing seriousness.

Two such longer conversations about North Korea were held first, at the June 2-6 Salzburg Global Seminar on “International Responses to Crimes Against Humanity: The Challenge of North Korea,” and second, at the Annual Conference of the International Council on Korean Studies (ICKS) held at Georgetown University from June 25-26 on “Unification of the Korean Peninsula: Issues and Opportunities.”  The Salzburg Seminar was held under the Chatham House rule and therefore remarks by the participants are not to be publicly attributed to them without their permission, but what they discussed can be shared.  Confidentiality was necessary in order to have a free-flowing and frank conversation among the government and private sector experts who attended the seminar.  The Seminar ended with an agreed public statement outlining specific steps that should be taken by governments, private organizations, and concerned individuals to improve the human rights situation in North Korea. The ICKS conference by contrast was a public meeting and will be made available on the KEI website.

During long conversations among experts on North Korea, three questions often surface, the answers to which have practical consequences: Is it better to engage North Korea or to isolate it?  Is there a choice to be made regarding whether to prioritize North Korea’s strategic threat or its human rights record?  And, which is the higher goal, peace or justice?  The answer to each of the questions may be “It depends,” “That is a false choice,” or “This isn’t black and white, the best policy lies along a spectrum.”  In any case, the questions are not ones that can be ignored.

Engagement or Isolation?

If the goal is to change North Korea’s behavior, is that more likely to come about through interacting with the North Korean government, or through refusing to have anything to do with it until its behavior changes?  The answers depends upon a series of further, refining questions:  are we talking about government-to-government, diplomatic engagement? humanitarian assistance and other NGO engagement? or people-to-people engagement (and is that even possible with a country as totalitarian as North Korea)?

The question of diplomatic engagement already seems to have an answer.  Both the South Korean and U.S. governments have said that they are willing to engage in talks with North Korea.  President Park says she is prepared to hold talks without preconditions, but rejects North Korea’s requirement that U.S.-ROK military exercises be cancelled before it is willing to meet.  North Korea has called for “unconditional” talks with the U.S. but then conditioned the unconditional talks by saying that they would have to be held without reference to North Korea’s nuclear weapons program.  In essence, the path is open for diplomatic engagement should North Korea choose to take it.  Demanding that South Korea end its military exercise while continuing to conduct its own, and insisting that the U.S. abandon its primary objective, getting North Korea to abide by the international obligations it undertook regarding its nuclear program, seem to show a lack of enthusiasm for diplomacy on North Korea’s part.

An alternative might be to make unilateral gestures towards North Korea in hope that North Korea might respond positively.  It seems likely, however, that the Kim Jung-un government is not firmly enough on its feet to be able to respond to concessions, whether a reduction in sanctions or a pause in U.S.-ROK military exercises.  Absent a signal from Pyongyang that it was truly interested in a negotiation, a unilateral concession from Seoul or Washington would only reduce the number of bargaining chips available for future talks, making them more difficult.

For organizations that provide or might provide assistance to North Koreans, there are serious practical and ethical questions regarding their unavoidable interaction with the North Korean government.  On one hand, the humanitarian need for nutritional supplements and medicine is great.  The cost of saving a life in North Korea is less than in other struggling countries because the base line is so low.  On the other, does providing assistance merely serve to extend the life of an abhorrent regime?  Do outside resources allow it to channel its resources to prison camps and nuclear weapons programs?

One NGO has given up and pulled out of North Korea.  The problem was not that its resources were being diverted to the government, but that the government was controlling the population that the NGO in question was serving.  The government in effect chose the people whom the NGO would help.  The people being served were needy, but not the neediest or most vulnerable population in North Korea.  Because the baseline principle of the organization was that it would serve those most in need of assistance, it deemed that it could not continue.  Other organizations have decided otherwise, that providing assistance to anyone in need was worth doing if possible.

There are other considerations in deciding whether to engage with humanitarian assistance or not.  One is the theory of “feeding the executioner.”  The idea is that if the international community did not provide assistance to the needy in North Korea, neither would the North Korean government.  Belief that Pyongyang would fill the gap left by decisions of NGOs not to operate in North Korea is naïve.  In fact, the DPRK government would be more likely to extract what it could from its most vulnerable populations to support its programs rather than to assist them.  If everyone has enough food, the government will not have to take any from the people to give to the ruling class and army.  If everyone has too little, the government will take what it can from the population.  Providing humanitarian assistance, therefore, prevents the DPRK from further preying on its own people.

Finally there is the notion of investing in the future through humanitarian assistance.  Providing help to the people of North Korea now will make unification of the peninsula easier when it occurs.  A healthier, better-educated North Korean population will be easier to accommodate into a unified Korea than one that is stunted and unable to work.  In the end, everyone has to decide for themselves whether their engagement with North Korea is a good idea and what compromises they are prepared to make to achieve their goals.  The term “principled engagement” is often used.

Even people-to-people engagement is a tougher calculation than we would all wish.  It would be nice to think that all contacts that can be arranged with North Koreans — whether government officials, sports figures, or artists – are bound at least to give them a better impression of us, and at most to raise questions in their minds about the state of their own country and whether it might be different.  That may even be true.  However, there is another side to the argument.  The costs of people-to-people engagements may be that they give the North Korean government propaganda points to argue to their own people that the Kim Jong-un regime is indeed internationally accepted and admired.  Second, the DPRK has complete control over who gets to participate in people-to-people programs.  If they are being used to reward the party faithful, does that make them little more than treats which can be dispensed to maintain loyalty to the regime?  There is no easy answer.

The Strategic Threat versus Human Rights

So long at the DPRK argues that it will never abandon its nuclear weapons program and that its population enjoys the world’s highest level of human rights, there is no reason not to press the DPRK on both issues.  It should abide by its commitments to not pursue nuclear weaponry and should accept the UN COI recommendations on how to put an end to its abuses of the rights of its citizens.  It could, and should, do both.

However, it is possible to imagine a different situation.  What if the DPRK expressed a willingness to engage in negotiations on its nuclear program, but only if the international community would stop trying to undermine the government by charging it with human rights violations?  Why would members of a government who were being threatened with being sent to the International Criminal Court for crimes against humanity agree to negotiate with their prosecutors?  Being afraid to travel for fear of being arrested would make protracted negotiations impossible.

This is a dilemma that posits a situation different from the one we are in with North Korea, but among the DPRK’s few international defenders, there are voices who argue that the choice is already upon us.  We should accept right now the DPRK as a sovereign, “normal,” state rather than treating it as an outlaw.  Sanctions should be ended and serious negotiations should begin to reduce regional tensions.  After all, they argue, the greatest violation of human rights would be general warfare on the Korean peninsula rather than the selective if unfortunate actions by the DPRK against disruptive individuals in its quest to maintain domestic order.

One argument that may tip the balance towards those who argue that accountability for crimes against humanity cannot be negotiated away is the weight of international opinion.  The Six Party Talks have six parties because they (South Korea, North Korea, the U.S., Russia, and China) have the dominant stake in the strategic stability of the peninsula.  The circle of countries who have an interest in human rights is far broader.  It should be possible to enlist democracies such as India, South Africa, Brazil, and others in an international effort to pressure North Korea to improve its human rights situation.  Not only North Korea, but its chief patron, China, have shown sensitivity to wider international opinion beyond what the U.S. and its close allies have to say.  The human rights situation in North Korea is, or should be, a global concern.  That is reason enough to keep it on the agenda with North Korea.

Peace or Justice?

The call usually goes up for peace and justice, but what if they are not compatible in regard to North Korea?  This dilemma is similar to that of strategic threat versus human rights, but different.  It most likely would surface in regard to unification.  Under any unification scenario (usually boiled down to peaceful and negotiated, or following a collapse of the DPRK) it will be necessary to deal with the crimes against humanity that have been committed by North Korean authorities.  Will the priority be to quickly reach a peaceful situation by giving amnesty to those who might otherwise resist unification, or to give justice its chance to do its slower work to determine crime and punishment?  In the longer term, will the many North Korean mid and low-level authorities be given the right to resume positions of authority in a unified Korea, or will they be forever excluded?  Peace may argue one answer, justice another.

The UN’s COI report is legally correct in its carefully worded finding of “reasonable grounds to establish that crimes against humanity have been committed.”  The rule of law requires that the facts and judgment be weighed through a trial process, not though a presumption of guilt.  The “reasonable grounds” are strong enough that the COI recommends a Security Council referral to the International Criminal Court, but the report is light on naming names or identifying institutions of those who should be tried.  It is for this reason that a UNHCHR Field Office began operating in Seoul this June.  Its purpose is to collect evidence for use in  future prosecutions, whether international, Korea, or hybrid.

There is much to be decided in regards to eventually holding North Korean authorities accountable for crimes committed by the regime.  Which authorities, at what level, and with what degree of culpability should be tried and for what crimes?  This is an issue that will need to be decided primarily by the unified Korea, but the international community also has a stake in the prosecution of crimes against humanity.  The Nuremburg trials, and the International Criminal Tribunal for the Former Yugoslavia (ICTY) are examples, if imperfect models, of how justice might be done.  Other countries that have emerged from conflict have opted for ‘peace and reconciliation commissions,’ to make sense of what they have been through.  Maybe in the case of Korea both will be needed: criminal trials to establish guilt among those most responsible for the human rights abuses, and peace and reconciliation organizations to help all Koreans come to terms with living in a shared Korea.

One future benefit of the justice system is that it will establish a common, evidence-based history of Korea from 1954 to the date of unification.  In the case of Yugoslavia, the ICTY has created an invaluable collection of first-person, sworn testimony offered by all sides that will help settle future disagreements about the true story of their tragic recent history.  One of the problems in dealing with the ongoing tensions in Northern Ireland is that there is no common historic database of fact shared by the unionists and the nationalists, leaving each with its own version of history.  The court records of the Korean human rights trials, when they come, will help people come to terms with their past better than any government-organized, official history.

Well-informed, well-intentioned people can disagree over how to deal with North Korea.  Discussing the common dilemmas can help them make their individual decisions.  The stakes are high.  Today’s decisions on engagement immediately affect the lives of people living in North Korea.  Coming to terms in advance with the issues that will follow unification will increase the odds that the process of unification will be less costly and painful than might otherwise be the case.  Unification of the peninsula will improve the lives of millions.  The process of getting there will require the best that South Korea and her allies can do.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Photo from Niels Sienaert’s photostream on flickr Creative Commons.

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Excerpts of an Interview on the Humanitarian Situation in North Korea

Troy Stangarone of the Korea Economic Institute of America (KEI) recently interviewed Jérome Sauvage, the Deputy Director of the United Nations Development Program’s Representation Office in Washington, DC and previously the UN Coordinator in the DPRK , on the humanitarian situation in North Korea for KEI’s Korean Kontext podcast series. In the interview, Deputy Director Sauvage discusses life in North Korea and the humanitarian challenges the population faces from a lack of food, potable water, electricity, and a collapsed healthcare system. The following is an excerpt of that discussion.

Stangarone: When we think about the wellbeing of a society, it is more than simply nutrition and the agricultural sector. One area that is obviously important is the public healthcare system. What do we know about the current state of the healthcare system in North Korea and how it’s able to address the healthcare needs of the population?

Sauvage: I can tell you that the healthcare system is unable to provide any kind of healthcare services to the population. It has collapsed. Today, basically, you are talking about no equipment. And I mean for example, certainly no heat and no water in the hospitals, and no supplies. No anesthesia. Most deliveries are done in a natural way, so the health system is basically broken.

Stangarone: You had mentioned issues with water. Water is essentially the basis of life. What is the current state of water supplies and sanitation? Obviously, diseases can be carried through unsanitary water. How does that impact the population?

Sauvage: One of their problems has been that they used to have a pretty good system, good pipes, up until the 90s. So, basically, now you have these pipes that are broken and you will have the sanitation system and the water supply system basically mixing and getting people very sick…Its comparable to some the most difficult cases that we have in other countries in the developing world.

Stangarone: One of the interesting things I saw once was that companies are now doing much more corporate social responsibility work. And, one of the things that I thought was interesting is the point where business interests and community interests overlap.  Coke when they go around the world, because it costs far more than it would be worth produce Coke in the United States and to essentially take water and ship it overseas, when they build the plants [overseas] they often take and do sanitation issues with the water. Given the level of sanctions and everything, it might be difficult for Coke to set up in North Korea, even if North Korea wanted them to come in, but should we be trying to encourage or look for, because North Korea is looking for Western investment, trying to match up companies that might have a corporate social welfare interest as well in North Korea with their own economic interests?

Sauvage: Yeah, it’s interesting that you mentioned Coke, because the UNDP works with Coke. Not in North Korea, but in quite a few place to work on water sanitation issues. This is one of our best partnerships and so I really like when you are mentioning this. Yes, if there was a space for corporate social responsibility for firms to come in and assist. Obviously, South Korean firms have done a little bit in the past, I think, that would be wonderful. It’s just that for the moment really is hardly any foreign investment in the country. But if South Korean firms could come and do work on that it would be very good.

The full interview with Deputy Director Jérome Sauvage of the United Nations Development Program’s Representation Office in Washington, DC is available on the Korean Kontext website. The views expressed in the interview are the interviewer and interviewee’s alone. The text represented here should not be considered an official transcript of the interview.

Photo from Baron Reznik’s photostream on flickr Creative Commons.

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North Korea’s Economic Diplomacy with Southeast Asia

By Sarah K. Yun

After the failed April 13 rocket launch, North Korea seemed to be headed towards increased isolation from the international community. The United Nations Security Council tightened the sanctions regime, while the United States canceled the 24,000 metric tons of food aid that had been part of the “Leap Day” Agreement. However, within just a few weeks there were signs of active economic diplomacy by North Korea. While Pyongyang’s diplomatic efforts with Southeast Asia and China are particularly visible, what are the implications of North Korea’s attempts to rekindle old relationships?

From May to August, North Korea began kicking its diplomatic outreach into high gear. In May, Kim Yong-nam, Chairman of the Presidium of the Supreme People’s Assembly, traveled to Indonesia and Singapore. While no official agreements resulted from the meetings in Singapore, Kim’s meetings with the Indonesian President Susilo Bambang Yudhoyono and Foreign Minister Marty Natalegawa resulted in cooperation in communications, information technology, and economic/trade issues, while increasing the exchange of visits between government officials and journalists. Additionally, on June 1 Indonesia agreed to send $2 million in aid to North Korea.

The following month Cambodian foreign minister Hor Namhong visited North Korea to discuss security issues and bolster bilateral ties, while Kim Yong-il, Secretary and Director of International Affairs of the Korea Workers Party, visited Laos, Vietnam and Myanmar. In return, Lao and Vietnamese government officials visited Pyongyang in July. Also in July, North Korea’s foreign minister Park Ui-chun visited Cambodia to participate in the ASEAN Regional Forum and engage in side meetings mostly focused on trade and investment.

From August 5 to 10, Kim Yong-nam visited Vietnam and Laos to try to yield concrete results from the previous trips. On August 6, President Truong Tan Sang of Vietnam said that the “Vietnam-DPRK relations of friendship will grow stronger in mutual interests amidst the deep concern of the top leaders of the two countries.” Vietnam agreed to donate 5,000 tons of rice to Pyongyang as aid towards North Korea’s recent heavy floods. In Laos, the two countries completed four cooperation agreements to include issues of cultural exchange, information and technology, economic cooperation, education and sports.

Despite the fluctuating trade volume between North Korea and Southeast Asia, what are the incentives for countries to engage with each other at the current juncture? For North Korea, there is a significant need to diversify its trading partners. According to South Korea’s Ministry of Unification, inter-Korean trade decreased from $1.9 billion in 2012 to $1.7 billion in 2011. Even then, the figures are largely dependent on the output from the Kaesong Industrial Complex. On the other hand, while estimates vary, North Korea has become increasingly dependent on trade with China where bilateral trade increased 62.4% from 2010 to 2011. With mounting pressure to diversify its trading partners, Southeast Asia is a viable candidate given its geographical proximity and economic growth. According to the IMF, Myanmar, Singapore, and Thailand were eighth, ninth and eleventh respectively as North Korea’s import partners. While Myanmar, Singapore and Thailand were North Korea’s tenth, fourteenth and fifteenth largest trading partners.

Additionally, there are many lessons that could be learned from the Southeast Asia’s development experience. Singapore could be a model for attracting foreign direct investment and managing special economic zones. As Vietnam’s economy grows, the country could provide an alternative model besides the Chinese development model. Indonesia could be a case study on natural resource management. For the purposes of information gathering and political control, North Korea could benefit from engaging with Laos, Myanmar and Thailand. There are also historical ties in Southeast Asia, which creates a less threatening relationship. Many Southeast Asian countries, such as Indonesia, the Philippines and Singapore, were involved in the Non-Aligned Movement, which influenced North Korea’s foreign policy framework after the Korean War.

Southeast Asia also identified opportunities in engaging with North Korea. As ASEAN tries to take a more active role in the regional security and economic structure, North Korea could become an example of ASEAN’s symbolic politics and global role to create an alternative space for engagement. With China’s continuing rise, North Korea’s diplomatic outreach also represents an opportunity for ASEAN to balance China’s growing role in the region to an extent. Indonesia, as the largest country in the region, may have a vested interest in playing an alternative mediator role, particularly on non-nuclear issues.

Beyond Southeast Asia, there have also been other internal and external developments which may hint at the prospect for further engagement and opening on the part of North Korea. It has been reported that on June 28 Kim Jong-un announced a new development plan which includes the downscaling of work units in cooperative farms, allowing increased autonomy to enterprises and factories, and transferring economic projects from the military to the cabinet. In August, North Korea sent a 50 person delegation to China, including Jang Sung-taek, vice chairman of the National Defense Commission. During the summit, the two sides agreed to actively develop the Rason special economic zone and the Hwanggumpyong/Wihwa Island economic zone. Moreover, North Korea and Japan will hold high-level talks to discuss various issues including the abductee issue.

To be sure, indications of reform should be measured with the realities of North Korea. The Kim Jong-un regime will still want to maintain a considerable amount of market control to balance external engagement. The execution and level of genuine reform, including labor market reform, still remains untested. Furthermore, the Kim regime would have to resolve the inherent conflict between the legacy of juche ideology vis-à-vis reforms and opening to the outside world.

Although many are observing North Korea’s growing diplomatic efforts in the Asia Pacific with much interest, it is too early to assess true reform. However, this could serve as an opportunity for the United States, South Korea and their friends. By introducing non-traditional players such as Indonesia, Vietnam, and Singapore, North Korea’s interests and trading partners could be diversified. This could create additional entry points into the new Kim regime. This model might hold the potential to be employed on projects in developing industries in North Korea, such as technology, communication, infrastructure, education, and culture/entertainment. These efforts could potentially de-couple the technocrats from the Kim royal family. In response to North Korea’s increasing relationship with their northern neighbor, China could serve as a platform for small and medium enterprises to invest in the northeastern provinces to build greater ties with North Korea. Such projects would take place in anticipation of Rason’s rapid development.

Cooperation between the United States, South Korea, Southeast Asia, as well as China, could induce North Korea to undertake economic reform and ultimately reduce tension. On one hand, the changing circumstances in North Korea mean that the U.S. and South Korea’s close coordination is crucial in understanding internal debates and foreign policy developments within the Kim regime. On the other hand, changing the current dynamic in the region with new players and creating incentives for economic development could induce change in the North Korean society.

Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.

Photo from Mac Coates photo stream on flickr Creative Commons.

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