Asahi Shimbun: China provided North Korea with substantial amounts of food and fertilizer this year

November 4th, 2020

Benjamin Katzeff Silberstein

In a piece of news that should surprise no one, Asahi Shimbun reports that South Korean government sources say China provided North Korea with 5-600,000 tons of food aid and fertilizer this year. Although it wouldn’t entirely make up for the estimated shortfall, it is still a highly significant contribution:

But several South Korean government sources said China has provided North Korea with between 500,000 and 600,000 tons of food along with the fertilizer this year.

It also sent about 600,000 tons of corn and other types of grain between June and August, according to Chinese sources with inside knowledge of ties with North Korea.

Pyongyang requested more assistance in the aftermath of the summer typhoon damage and Beijing is considering sending an additional 200,000 tons of food, the sources said.

The South Korean sources focused on the volume of fertilizer shipped to North Korea as such assistance is considered highly unusual.

North Korean authorities equate one ton of fertilizer to 10 tons of food assistance, a former high-ranking North Korean government official said.

“Due to chronic shortages, fertilizer is highly prized in North Korea,” the official added. “The amount sent this year is equivalent to 5.5 million tons of food, which exceeds the yearly production of food. It was a very unusual level of assistance.”

Although North Korea is no longer in the grips of famine that raged in the late 1990s and claimed countless lives, the U.N. World Food Program has estimated that between 2018 and 2019 about 10 million North Koreans did not have enough to eat.

The situation is believed to be worse this year.

North Korea was plagued by flooding and other damage due to typhoons and torrential rain in summer after near-drought conditions in spring.

A source at a Chinese government-affiliated agency who is well-versed in issues involving North Korean agriculture said that the harvest estimate at planting time was between 3.5 million and 3.8 million tons for a shortfall of about 1.5 million tons.

Rice prices were kept stable through the release of grain stockpiled for emergencies, but the situation without China’s assistance was expected to be dire from next spring.

China’s decision to bail out its unpredictable neighbor may reflect a strategy to keep North Korea in its corner as Beijing’s confrontation with Washington worsens. In this regard, Beijing made a big fuss of its involvement in joining fighting in the Korean War on the 70th anniversary of China’s participation.

“China and North Korea have always shared interests in terms of their view of the United States, but that has strengthened recently,” said a North Korean source. “China is sending a message to the United States through its appeal of a honeymoon period with North Korea.”

With no signs of progress in denuclearization talks with the United States, the easing of economic sanctions against North Korea appears unlikely in the short term.

That suggests North Korea will continue to lean on China for support, analysts said.

“If North Korea receives support from abroad, it will no longer be able to say it is getting by with its own efforts,” said a South Korean expert on the North Korean economy. “But North Korea can continue to save face because China does not announce the assistance levels.”

(Article source: Takeshi Kamiya in Seoul and Yoshikazu Hirai in Shenyang, “China bailout to North Korea: massive food and fertilizer aid,” Asahi Shimbun, November 3rd, 2020.)

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Posted in Agriculture, China, International Aid, Statistics | Comments Closed

North Korea’s disaster management: a comment about a comment

November 4th, 2020

By Benjamin Katzeff Silberstein

It might seem a strange topic to post about on the day after the US elections, but perhaps some readers might like a break from the incessant commentary for something completely different.

If so, I highly recommend the article that former ambassador James Hoare published yesterday on 38 North, partially as a comment to my earlier article about North Korean disaster management. Ambassador Hoare gives a highly interesting historical perspective partially based on his own experiences in the country, noting that deforestation is a problem on the Korean peninsula much older than North Korea itself. He also notes that North Korea is far from the only country where homes constructed near riverbeds are regularly flooded, and argues that North Korea’s flooding problems are, after all, not so unusual in an international context.

I fully agree with all of these points, and the historical context is very valuable and crucial for understanding the current situation. If anything, there are perhaps two points of minor disagreement that I have with Hoare’s text.

First, the current North Korean situation is in large part a result of changes that could have been avoided. Deforestation was acutely exacerbated during the Arduous March, because people had few other alternatives than to cut down trees for firewood and to clear the ground for farming. Deforestation and flooding, therefore, are not phenomena entirely endemic or “natural” neither to the Korean peninsula nor to North Korea in particular, because things were not always this way. There is nothing natural or inherently necessary about North Korea’s economic system, as the many former communist states who have adopted programs of systemic overhaul have shown. Natural disasters may be natural, but each state has a choice in how to meet them.

Second, ambassador Hoare rightly points out that one should perhaps applaud the progress being made rather than to note that improvements have a long way to go. My article neither sought to decry nor applaud any improvements, but simply to show where things stand, based partially on conversations with several people who have themselves worked in natural disaster mitigation in the country.

And despite the improvements that have been made, there is a real and substantive risks that North Korea’s disaster management improvement plans and ambitions will stop at being just that. In this realm, there should be little doubt that the government’s ambitions are high and praiseworthy. The problem is that we have seen too many examples of ambitions without implementation to conclude that they will in fact be realized. Oftentimes, the policy process, opaque as it is, often appears to stall, and political interest and attention may wane. In this, too, North Korea is not alone in the world.

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Posted in Agriculture, Economic reform, International Aid, Political economy | Comments Closed

Corruption in Sinuiju, and Women’s Union push to “find” more arable land

November 2nd, 2020

By Benjamin Katzeff Silberstein

The Daily NK’s newsletter this week highlights two interesting articles from last week:

First, corruption among officials in Sinuiju involved in border trade with China is reportedly becoming more intense and raising higher sums. This is a great example of a piece of news where what happens in North Korea is precisely what the economic logic would dictate. North Korea is often said, for some reason, to defy such logic because of its opaque economic system, but it can most often be found if one scratches the surface a little bit.

When border trade closes down through a ban enforced by the state, it will of course not stop entirely unless massive force is deployed. Rather, some trade does go through, and this pushes up the price for economic actors to participate. At the same time, skirting around the rules is more dangerous than before because of the severity of the ban. Ergo, officials have to take higher bribes for their participation in this trade to be worth it.

Second, Women’s Union organizations in Yanggang province have been tasked with “finding” more arable land. As this blog has covered many times in the recent months, the government is at a point where it can do quite little to stimulate and improve the economic situation under the current system and international context. So, factories and workers are told to simply produce “more”, and “better”, usually without being given any tools to do so. And in this case, a mass organization is being ordered to “find” more land.

We’re of course not talking about uncovering any new fields or the like. North Koreans have been growing food in unlikely spots, such as around train tracks, for much of the duration of the state. It is such spots — “highland areas and rivers, along major roads and waterways, the ridges between rice paddies, and even the spaces between vegetable gardens” — that the order concerns.

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North Korea reportedly suspends public bond program

October 27th, 2020

By: Benjamin Katzeff Silberstein

This blog has followed as closely as possible, over the past few months, the issue of North Korea’s public bonds program. It was in April of this year that news first surfaced of the North Korean government having issued public bonds, to drive in more cash to the state. The central worry with all this was that the state would use coercive methods to force people to purchase bonds, thereby creating significant distress among the public, and sucking out resources from the private economic sector.

For months, however, little subsequent reporting came on the bonds. This indicated that the state was perhaps not moving forward with the program all too aggressively.

It turns out this seems to have been what happened. Some days ago, Daily NK, who originally broke the story, reported that the North Korean government appears to have abandoned the project around early September, after what some claim was some initial success:

While the halting of the scheme appears to signal its overall failure, some North Korean officials believe that the bonds helped to quickly bring in funds the state needed to continue building the Pyongyang General Hospital and prepare for the Party Foundation Day celebrations on Oct. 10.

A Pyongyang-based source told Daily NK yesterday that the Central Committee’s Economic Affairs Department issued an order early last month to the Cabinet and its subordinate agencies that concerned “suspending the issuance of the bonds.”

The order noted that the “distribution of the state agency public bonds and state trade public bonds” would “temporarily be suspended”; that there would be a review of the bonds that were sold and those in stock by the State Planning Committee’s Financial Affairs Board; and, that bonds allotted to “each agency” would be collected, then gathered and “frozen” at the Central Bank. In short, the order stated that all bonds – except for those already in distribution or sold – will no longer be considered valid.

The source, who spoke on condition of anonymity, told Daily NK that the order further stated that “in accordance with an order from the central [leadership], a review of the current financial status of agencies that have used the public bonds will be conducted and [their] planned quotas for this year may be adjusted.” This suggests that the leadership is willing to “eliminate difficulties” faced by “lower-ranking work units” that “loyally” took part in the bonds scheme and that they may receive unspecified “benefits.”

The Economic Affairs Department’s order was reportedly issued after North Korean leader Kim Jong Un acknowledged the failure of his country’s economic policies at a Workers’ Party plenary session in August.

“[The] economy was not improved in the face of the sustaining [sic] severe internal and external situations and unexpected manifold challenges,” Kim reportedly said during the plenary session. He also announced during the meeting that a new five-year economic development plan would be presented at the Eighth Party Congress next January.

It appears that after Kim acknowledged the failure of the country’s existing “five-year economic development strategy” and presented plans to establish new economic goals the Central Committee’s Economic Department discussed revising the scale of the public bonds scheme.

According to the source, the Economic Affairs Department order stated that it “permits the revision of tasks related to the five-year people’s economic plan of last year and this year due to the distribution of public bonds.”

As part of efforts to increase the country’s foreign currency stores, North Korean authorities gave members of the donju, North Korea’s wealthy entrepreneurial class, and private business people “business rights” in return for having them purchase the bonds in foreign currency. Now that the bonds are not longer being issued, it appears that the Economic Affairs Department has been forced to revise its plans.

[…]

An internal investigation by the Central Committee in August found that less than 20% of the bonds earmarked for the donju (“state trade public bonds”) were sold off.

The authorities tried to woo the donju and private business people to buy the bonds by offering them “patriotism awards” and “business rights”; when that did not work, the authorities resorted to “forced allocations.” All of these efforts apparently had little effect in getting the bonds sold. The failure to sell the bonds seems to have been a major factor in the Economic Affairs Department suspending the sale of the bonds.

Within the Economic Affairs Department, however, some argue that the public bond scheme has not “completely failed” and that it “significantly helped” the country prepare for the Party Foundation Day celebrations despite facing unexpected obstacles such as the COVID-19 pandemic, typhoons, and floods. They also claim that the public bonds scheme was an “experimental yet daring attempt.”

In contrast to this assessment, the source argued that the “public bonds [scheme] was a measure that completely failed to consider the realities of the people’s economy [civilian economy].”

(Source: Jang Seul Gi, “N. Korea suspended public bonds scheme in early September,” Daily NK, October 23, 2020.)

The allocation of “business rights” sounds an awful lot like an attempt to more strongly formalize practices on which the economy already runs…

In any case, this signals a comforting sense of pragmatism among North Korean economic policy makers on this particular issue. It’s impossible to rule out, however, that the idea might come up again should the economic situation continue to deteriorate, and perhaps, regrettably, with stronger methods of coercion to back it.

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Kim Jong-un announces 80-day speed battle until 2021 Party congress

October 6th, 2020

By: Benjamin Katzeff Silberstein

Kim Jong-un announced an 80-day speed battle today, in the run-up to the 2021 Party congress. KCNA:

Upon authorization of the Political Bureau of the C.C., WPK, Supreme Leader Kim Jong Un presided over the meeting.

The meeting discussed, as its first agenda item, the issue of successfully greeting the Eighth Congress of the Party by waging a dynamic 80-Day Campaign of the entire Party, the whole country and all the people.

A report on the first agenda item was made.

The report referred to the subjective and objective requirements for launching a fresh offensive under the current situation.

Today all the Party members and working people are dynamically waging the final all-out campaign to celebrate the 75th founding anniversary of the Party as a great festival of victors.

Now we are faced with a heavy and responsible task to grandly hold the celebrations for the 75th founding anniversary of the Party we have prepared with much effort and greet the Eighth Congress of the Party to be convened at the outset of the new year with proud labor successes.

We have only 80 odd days until the Eighth Congress of the Party to be etched as an important political event of epochal significance in the development of our Party and revolution.

(Source: “19th Meeting of Political Bureau of 7th Central Committee of WPK Held,” Korean Central News Agency, 6/10/2020.)

Not to toot my own analytical horn, but I did predict around the time of the congress announcement that a speed battle campaign may be afoot. The reason is simple: North Korea is in large economic difficulties and there are few tools in the toolbox that the government can realistically use at this time. Speed battles like this one are a common temporary solution to long-term problems, sort of like those 1,000 houses recently built that may well wash away again during the next flooding season.

There isn’t much to say about the economic rationale of these speed battles. If the state forces people to put in a large amount of labor hours, that will certainly lead to more production for the moment, but it doesn’t change anything in the long run.

Many North Koreans I’ve spoken to point to such “voluntary”, extra labor as one of the most exhausting, irritating parts of everyday life in North Korea. No doubt many sighs could be heard through the country at this announcement.

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How fast can you build 1,000 houses in North Korea?

October 4th, 2020

By: Benjamin Katzeff Silberstein

A couple of days ago, KCNA followed Kim Jong-un to Kimhwa county (in Kangwon province) for a flooding damage reconstruction inspection visit. It’s a standard activity with fairly standard reporting, but what caught my eye was the timespan the article speaks of (my emphasis):

Vividly recalling the day in the mid-August when a helicopter was used to learn about the situation of the disaster after over 900 mm disastrous downpour cut off even the roads and when he was shocked to hear the horrifying report that more than 1 000 dwelling houses were destroyed, he said that they all seem to have happened just yesterday.

Hearing the report that about 88 percent of the total construction project has now been done for nearly 1 000 families- several-storey dwelling houses in township area and single-storey dwelling houses in the ri of the county, he said with great satisfaction that the People’s Army is making world-startling achievements under the energetic leadership and meticulous guidance of our Party.

(Source: “Supreme Leader Kim Jong Un Inspects Sites of Reconstruction in Kimhwa County,” KCNA, 2/10/2020.)

So — flooding in mid-August. 1,000 dwelling houses swept away. Fast forward to early October, about a month and a half later, and 88 percent of these houses are now reconstructed?

Something sounds quite odd here, because that’s an awful lot of houses in a very short period of time. For a comparison, the average construction house in the US takes 7.7 months from construction start to finish.

I am by no means knowledgeable in engineering or housing construction, so if any readers can think of how this can all be squared, do please send an email.

What is possible is that many new houses have been built, but with speed rather than quality being the number one priority. Such houses would likely have a hard time withstanding future flooding, which will occur, because it does almost every year. Aid workers I spoke to for this article pointed to poor housing construction as one of the main causes for the high rates of material destruction and fatalities in flooding in North Korea.

That’s the thing about politically motivated deadlines and speed pressures — something has to give in the process, and often, it’s quality.

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September, 2020: the Latest UN Panel of Experts Report and the North Korean Economy

September 29th, 2020

By: Benjamin Katzeff Silberstein

The latest UN Panel of Experts Report is out. Some points relating to the overall state of the North Korean economy, after a quick read:

  • Ship-to-ship-transfers of fuel (“refined petroleum products”) continue. This is nothing new. Only between January and May 2020, North Korea is estimated to have broken the sanctions-mandated ceiling of 500,000 barrels per year. As I have argued elsewhere, many times, even with STS transfers and other illicit methods to flout sanctions, they are taking a toll on the North Korean economy since they are expensive. North Korea has to compensate sellers for the added risk of smuggling somehow. So sanctions, in this sense, are certainly not without impact.
  • Coal deliveries are also happening via STS and other transportation means. Again, this is not new, and rather, is part of the steady state for North Korea under sanctions. As with oil and fuel products, North Korea must be taking a financial hit to compensate buyers for the added risk of violating sanctions. The report says that coal exports resumed, after a Covid-19-pause, in March of this year.
  • The report does note that illicit tanker deliveries decreased thus far in 2020 as compared to 2019. Whether that means that less fuel was actually supplied is unclear. Indeed, according to the report, the delivery tankers had higher capacity than in the past.
  • Overall, it seems that judging from the PoE estimates, North Korea may not be suffering from fuel shortages at all, on the whole. Of course, we know next to nothing about how the illegally imported fuel is used and distributed within the country. Fuel prices have, however, not really been outside the span of the generally normal (or at times even lower), suggesting that the amounts coming in are roughly similar to normal times.

One quick reflection on the exports issue, particularly of coal and other sanctioned export goods: it’s clear that coal trade is happening, seemingly relatively undisturbed, on a scale that is troubling from a sanctions-implementation perspective. What’s tricky, though, is that we know fairly little about proportions. How much coal is North Korea actually able to sell, and to what prices?

As of now, all we know is that coal is being exported on a substantial scale. From an analytical perspective, that leaves a lot to be desired.

However, it is crucial to note the myriads of ways in which the government is able to at least partially compensate for the loss in export income stemming from sanctions. The report details several of these, including a wide range of cyber crime.

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North Korea and China strike agreement on border security

September 29th, 2020

By Benjamin Katzeff Silberstein

Since North Korea closed the border with China due to fears of Covid-19, there have been reports of Chinese citizens being shot at and, in at least one instance, killed by North Korean border guards. The North Korean government ordered border guards to shoot anyone from the Chinese side entering buffer zones it set up along the border.

All of this seems to have been done rather hastily and with little coordination with the Chinese side. Moreover, as is often the case with governance in North Korea, most has been done through relatively unclear decrees. The same factor could possibly explain the recent killing of a South Korean man apparently intending to defect to North Korea over the northern limit line (NLL), for which Kim Jong-un later expressed regret.

Now, Daily NK reports, North Korea and China have struck an agreement about border security in the age of Covid-19:

North Korea and China recently signed an agreement to help ease tensions along their border following shooting incidents involving North Korean border guards and Chinese nationals, Daily NK has learned.

According to a Chinese diplomatic source familiar with the agreement, the Chinese requested consultations with the North Koreans to “protect their citizens” and an agreement on the “working-level measures” came about at the North Korean embassy in China on Sept. 10.

Based on this agreement, China will raise customs duties three-fold on goods entering the country (from North Korea) if North Korean border guards “indiscriminately” and “recklessly” shoot and kill a Chinese national. The agreement also requires North Korea to compensate a shooting victim with RMB 1,200,000 (around USD 175,922).

On Sept. 11, the Ministry of State Security and General Staff Department ordered the North Korean border patrol to abide by details of the agreement. The order was accompanied by a directive telling the border patrol to “refrain” from shooting at people in China who cross into North Korean territory.

“From this past Spring until last month, North Korean soldiers shot and killed several Chinese near the border but North Korea failed to apologize properly, so the Chinese government proposed [the agreement] as a way to protect their citizens,” the source, who requested anonymity for security reasons, told Daily NK.

The source said that the closure of the border because of the COVID-19 pandemic means that North Korea is unable to import many of the things it needs from China. “That’s why North Korea had no choice but to acquiesce to China’s demands,” he added.

CHANGING TACTICS ON THE BORDER

Another source in China who spoke to Daily NK on condition of anonymity recently reported on signs that North Korean border guards seem to be taking a different approach to Chinese who cross the border.

The source said that two Chinese men had brought their cow down to the Yalu River to drink water near Changbai, Jilin Province, on Sept. 21. When the men and the cow moved toward the line demarcating the Chinese border with Yanggang Province, North Korean border guards started to approach them.

Given that the North Korean border patrol had shot and killed a Chinese smuggler in May, the two men were reportedly “tense” because they feared they may be harmed by the border guards.

Despite their fears, the North Korean border guards just threw rocks at the two men while yelling at them to return to Chinese territory; the men took their cow and left the area without incident.

(Full article and source: Jang Seul Gi, “N. Korea and China recently signed agreement aimed at easing border tensions,” Daily NK, September 25th, 2020.)

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What tighter Party membership requirements may say about North Korean society

September 22nd, 2020

By: Benjamin Katzeff Silberstein

According to reporting by Daily NK, requirements have gotten stricter for membership candidates to the Korean Worker’s Party (WPK). This says several interesting things about the role of the Party and North Korean society more broadly. A few snippets:

In what appears to be a move aimed at “steadying the foundations” of North Korea’s communist party before Party Foundation Day on Oct. 10, North Korean leader Kim Jong Un’s sister, Kim Yo Jong, recently ordered a new set of guidelines aimed at raising party membership requirements to be handed down to party committees and party cell organizations nationwide.

“About a month ago, the North Pyongyan Province Party Committee chairman submitted a petition to the Central Committee saying he thought the situation surrounding the recruitment and expulsion of Party members in the province is serious,” a source in North Korea told Daily NK on Tuesday. “Following this, Comrade Kim Yo Jong ordered the Organization and Guidance Department [OGD] to ensure that the Party is made up of [only] the most loyal of members, and then the OGD recently issued a set of guidelines to Party committees and Party cell organizations nationwide on raising the standards for joining the Party.”

[…]

Notably, the OGD ordered that party membership candidates must wait three years, instead of the normal one year, to become full party members. The source explained that party rules denote a one-year period for being promoted from candidate to full member, but a three-year period is currently being applied even though the rules were never amended. This suggests that rules pertaining to membership may be partially amended at the Eighth Party Congress set to be held in January next year.

“The three-year waiting period has [actually] been in place since March for members joining the Party from the Korean People’s Army,” the source said. “Since 80% to 90% of Party members have served in the military, the new rule was first tested on the military before it was recently expanded to all Party committees and Party cell organizations.”

(Source: Ha Yoon Ah, “Kim Yo Jong tightens party membership requirements nationwide,” Daily NK, September 18, 2020.)

The report speaks to something interesting, more broadly, regarding Party membership and North Korean society. In speaking with people from North Korea, particularly those born prior to, say, the 1980s, it’s often clear that you can hardly overestimate what it means to be a Party member. For social success, marriage, wealth, virtually anything — Party membership was always key.

Now, since the famine and the breakdown of the planned economy, many expected the Party to lose in significance. If money-making opportunities aren’t to be found within the state anymore, surely the Party’s social and political power should begin to wane?

However, there have been relatively few signs of any such change over the past few years. The Party is still, perhaps now more because of the money-making opportunities it gives in the (semi-)private sector, an extremely important institution for social and political advancement, marketization or none. That the market economy has gained in prominence, size and significance does not necessarily mean that the power of the state and the Party has diminished; rather, it may above all have changed. Even though the market may be the chief avenue to truly get rich, Party membership still provides crucial opportunities and access within  the market realm as well.

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North Korea’s 2020 floods in perspective

September 3rd, 2020

By: Benjamin Katzeff Silberstein

By all accounts, North Korea has been badly hit, with severe damage all over the country, from the typhoons sweeping the region over the past few weeks. Though Kim Jong-un reportedly concluded that the damage to crops was not as bad as feared – fantastic news if true. The situation is still developing, however, and today (Thursday September 3rd), typhoon Maysak was expected to hit the northeastern coast of the country around noon.

In other words, it is much to soon to draw any firm conclusions about the overall damage. Still, it is worth noting that at least so far, it appears to be smaller than only a few years ago. One person I spoke to, with direct experience of disaster relief management in North  Korea, partially attributed this to early warnings. North Korean TV has been reporting live about the floods, and Kim Jong-un convened emergency meetings to prepare for the oncoming floods. The extent of information from the government seems much wider now than in some past years.

Take, for example, the impact in the northeastern regions and Rason in particular. Countless buildings were razed to the ground and KCNA reported that 40 people died in Rason alone, though one Daily NK source dismissed that as unrealistically low. This year’s flooding seems to be much worse quantitatively speaking, and yet, so far, news media reported “only” 22 deaths. Each is of course tragic, but it is interesting that the death toll, at least so far (and I cannot caution this enough) seems to be lower even with the force of the typhoons being stronger. For reference, in Rason in 2015, rain levels reached 160mm, while now, Wonsan city has been submerged with 200mm.

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