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Sinuiju - The Death of Kim's Dream

In his memoir of a trip to China in 1933, One's Company, London Times newspaper correspondent Peter Fleming recalled passing through the Soviet Union. He commented on Stalin's Russia at the time: '…their newspapers announce ten projects to every one achievement. It is remarkable what a great deal is perpetually on the point of being done in Russia.' The planned Sinuiju special economic zone has been perpetually on the point of being "done" since late 2002. It is now apparently dead.

Recently South Korea's Yonhap news agency reported that the DPRK has notified China of its intention not to pursue the plan to develop Sinuiju. Further, according to Yonhap, apparently Kim Jong-il asked for China's support when he met with President Hu Jintao in Beijing last April, but failed to get a clear answer from Hu. Sinuiju, a project Kim initially staked much personal credibility and risked a serious breach with the military - a rift that may not have been entirely healed to date - is no more.

The whole fiasco of Sinuiju revealed much about the internal workings of the DPRK and how divorced from economic reality the country's leadership clearly was. Like bad neighbours hosting a noisy party Pyongyang made some very poor decisions that if thought out a little bit may have proved different:

• If you are throwing a party it is polite to let the neighbours known in advance that there may be some noise;
• Even if you don't need planning permission for some modifications you are making it's good manners to check first with the neighbours;
• When employing a decorator always ask for references first;
• Make sure you have plenty of drinks and nibbles ready for your guests;
• Make sure the whole family agrees that the planned party is worthwhile.

All these basic rules of good neighbourliness were ignored in Sinuiju. Beijing had no advance warning that Pyongyang was going to announce an investment zone. The town is on the border opposite the thriving Chinese city of Dandong. At the time Dandong was courting increasing levels of investment from South Korean, Japanese and other foreign nations. It did not appreciate the competition. According to some sources, Kim Jong-il actually consulted China's then President, Jiang Zemin, about Sinuiju when he visited Shanghai in 2001. Jiang is thought to have advised Kim against the location, saying that there would be too much competition from Dandong. Beijing took exception to the media noise that Sinuiju created and felt slighted that they had not been consulted formally before the project was announced.

We can only assume that Pyongyang was badly advised about the first suggested Chief Executive of Sinuiju, Yang Bin. Probably they were badly advised by Yang himself. They should have taken up references. If they had, they might have known that the candidates resume was a touch selective. They might have also heard the rumours that Yang was being investigated by the Chinese authorities for tax evasion, misusing company assets, and using land illegally. They might not have wanted to take up a reference from Yang's good friend, the then Mayor of Dalian or the provincial governor of Shandong (whom Yang had known since childhood) or Shenyang's Mayor who was also a close buddy. Sadly Shenyang's Mayor was arrested in 1999 for corruption when US$6 million worth of gold bars were found in his house. Yang didn't last long, his company was twice suspended from trading by the Hong Kong stock exchange, nearly collapsed and Yang himself was eventually arrested receiving a sentence of 18 years in prison along with a fine of US$1 million while his subsequent appeal was rejected.

Even if the Sinuiju HR process had been a little more thorough the chances were never good. Sinuiju didn't really have much to attract anyone. The North Koreans promised a lot - skyscrapers, a four-lane highway, a new bridge linking Sinuiju and Dandong, an international convention centre and apartment complexes - all environmentally friendly - and, of course, a casino. DPRK sources talked of Sinuiju looking like Shanghai's Pudong - a tall order for impoverished North Korea. Just how Sinuiju would have provided the power, water, gas and other utilities potential investors would have demanded is unclear as apparently no budget was ever dedicated to the project. The zone would have been largely reliant on China for supplies of raw materials. Sinuiju was still just an area of land and a run-down town with unresolved issues of repatriation of profits, access to offshore banking, legal protection and tax regulations.

Finally, Sinuiju nearly finished Kim Jong-il. Either the experiment was one that derived from an act of desperation by Kim to generate much needed revenues for the country or a quick way to get some hard currency. If successful then Sinuiju could be rolled out in a similar form on the model of the initial Special Economic zones in China, which were the testing ground for Deng Xiaoping's economic reforms. However, it is more likely that Kim saw Sinuiju as a way to generate hard cash from investors. His decision to cede, in effect, national sovereignty over a substantial area of North Korean real estate to someone else, necessarily a non-national, was to try out reform without the risk: if it failed, the political leadership, and Kim himself, could avoid blame.

The failure of the economic reforms announced in 2002 coupled with the demise of Sinuiju can be seen as a double blow for Kim. The return of harsh rhetoric since October 2002 may be evidence that, having pushed the reforms against the advice of some elements within North Korea, notably the military hierarchy, Kim is now in the process of appeasing these elements with a 'return to normal' policy that takes North Korea back to its more familiar Spartan-style permanent war atmosphere.

Paul French is the Publishing & Marketing Director of Access Asia (www.access-asia.info), and author of the forth-coming book North Korea - The Paranoid Peninsula (Zed Books, London, 2004, available on Amazon.com). He writes regularly on Chinese and North Korean economics and politics for a wide variety of publications.

Water, Water Everywhere and Not a Drop to Drink

by Paul French 3 Sep 2004

This week it rained in Shanghai which meant people got wet but was good news for the government as it cooled the city down and reduced precious power use. It has also been raining in North Korea, which is decidedly mixed news.

Water presents a double-headed problem in North Korea. Firstly there is not enough of it, at least not enough that is clean and drinkable. According to UNICEF in most rural towns in the DPRK, water is only available two to four hours a day, and the quality of that water supply is often undrinkable. Water purification and recycling has been woefully neglected along with other pro-environment measures in the country as the industrial collapse has persisted and deepened. UNICEF also noted that the majority of North Korea's rural hospitals do not have clean water. UNICEF says it needs more than US$2.7 million for water and environmental sanitation projects in North Korea.

Secondly there is to much of it. Summer rains reportedly washed away 100,000 hectares (247,000 acres) of farmland and made thousands of families homeless. In an even greater assessment of the damage Red Cross officials claimed that floods in parts of the DPRK along the Chinese border killed 24 people and left 39,851 families homeless. Crucial infrastructure was also damaged or knocked out of action. With food shortages remaining acute and very little in storage this is not good news. Following the rains the harvest will be non-existent in many areas and in other cut by at least 30%. This is equivalent to removing 4% of the DPRK's total arable land, which is preciously limited at the best of times. Flooding this summer was observed in North Pyongan, South Pyongan, Jagang, North Hwanghae, South Hwanghae, Kangwon and Ryanggang.

KCNA referred to the damage resulting from the torrential downpours as a "natural calamity". This is not exactly true and this sort of damage is not exactly new either. When adverse climactic conditions have occurred in the past the effects have been, as they have been this summer, all the more disastrous because the economy was unable to cope with natural disaster while the ravages of flooding were exacerbated as people have been forced to clear trees for emergency fire-field agriculture to replace reduced rations. These trees had previously acted as natural flood breaks on hillsides. The result is greater run off and mud slides. Though Pyongyang claims "natural calamity", as it did during the disastrous famine period, it has never admitted that its Juche driven, rigidly political collectivised agricultural policy was the major cause.

In response to the floods little actual policy has emerged from Pyongyang with the exception of the usual mass mobilisation campaigns. Rather it seems that previous agricultural policies are being forgotten. On the coattails of the recent "revolutionary potato cultivation plan" it now appears that a new crop is in vogue - such is the power of whim in Pyongyang's decision-making procedure. Rodong Sinmun editorialized in August, while flooding was still affecting the country, "Let's cover the whole country with hemp fields through a mass movement!" Apparently Kim Jong-il, who was recently reported to be urging potato cultivation, is now in favour of hemp as well as part of a "revolutionary two-crop farming plan". For years aid agencies have urged better crop rotating and double cropping - they didn't rally envision hemp as part of the plan though. Things got even more confusing when in August Kim reportedly inspected a military farm which was urged to "feed the people with rice and meat stew."

There used to be a quip that circulated in Beijing's economic policy circles that is appropriate to the DPRK too: there are two ways for the regime to die -- one is to reform itself, the other is not to reform. At the moment reform is lacking and so too will be rice and meat stew while this situation persists. Deng Xiaoping once said that the test of socialism was whether or not it produced economic progress. So far North Korea has failed Deng's test.

Energy - The Most Needed Carrot

by Paul French 1 Aug 2004

Energy is becoming a critical issue across East Asia. The power shortages in the DPRK have long been a problem while China is also now suffering severely as central planning proves inadequate to deal with the market. For Pyongyang starting any reform process is impossible without additional energy while for Beijing the lack of energy is threatening to stall the reforms. Meanwhile Japan continues its decades long quest for energy though now more often than not having to compete, and consequently pay more, with the Chinese while South Korea remains a major importer while still struggling to exploit its own limited reserves.

China had some 757,000 power cuts or 'brownouts' from January to June this year, losing around 19.45 billion kilowatt hours in electricity, according to the State Power Grid Company (SPGC). This summer the country is facing the most serious power shortages since the 1980s: SPGC general manager Zhao Xizheng says that current demand increased about 16% in the first six months of this year over H1 2003, and is now 30 million kilowatts more than supply. In a bid to control electricity consumption, over 6,000 enterprises in Beijing have been forced to take vacations by turns from 15 July to 15 August in a bid to reduce power consumption during peak hours.

China's power shortage is a classic example of the mismatches of central planning combined with rising asset investment. The planners of the command economy simply cannot anticipate the level of investment. The DPRK, with a minimal level of foreign investment, has a vastly reduced power need compared to China but many of the issues are similar.

South's Korea National Oil Corporation has released some comparative figures that make interesting reading. According to SKNOC the DPRK's energy supply was equivalent to only 8% of the ROK's in 2000. The DPRK had a supply of 15.69 million tons of energy in 2000, as compared to a supply of 192.89 million tons of energy in the ROK. Then it is worth considering the breakdowns on energy consumption. In the DPRK, 72% of energy was coal-based, 16% water-based and 7% oil-based. In South Korea over 50% of energy is oil-derived with nuclear power providing a good portion of the remaining percentage.

The reasons behind the shortfall in energy consumption in the DPRK are well known - economic collapse, the end of subsidies, lack of funds to buy energy from outside etc. However, the legacy of central planning continues to worsen the situation in the DPRK in the same way that it is in China. However, China has a foreign currency reserve from all those years of demon exporting. However, though the PRC may have the funds to build new generating capacity and to buy in oil and gas from abroad but it is still an inefficient user, as is the DPRK. This inefficiency is what will worry both those trying to make the DPRK's dwindling energy supplies go further while potential investors, such as the South Koreans lining up to have a look at Kaesong, will also be worrying. Without guaranteed supply foreign investors will not be a happy bunch (as they were not at Rajin-Sonbong before) while energy is what turns the wheels of any economic reforms worth the name. No one is going to be producing more for export if they can't start the machinery, or transporting anything, from food aid to raw materials, without energy for vehicles. Without additional energy any reforms hit the rocks fast and abruptly. Reform is simply a non-starter.

Right now in China two new types of jobs have appeared. The first is an 'energy scout', someone employed by a factory with the express job of looking, hunting, bribing, cajoling or doing whatever they can to ensure power supplies keep flowing to the enterprise. It's not an easy job but a necessary one for many companies. The second new post is that of negotiating with the local government for a power supply. Simply put new investors now increasingly insist that the local government guarantee them a power supply as part of their terms of investment. No guarantee then no factory, any interruption of supply then the Chinese side must pay penalties. This kind of local sourcing and bargaining is now becoming commonplace in China, as well as enforcing supply or fines is naturally not really a starter in North Korea.

Crucially the DPRK registered a ratio of energy consumption to gross domestic product (GDP) of 0.93 in 2000, while the ROK posted a ratio of 0.42. This indicates that efficient energy use is in excess of double in the ROK what it is in North Korea. One would naturally expect richer countries to be more profligate in their energy use - America is the prime example. However, the DPRK wastes considerably more of its substantially more precious supplies than does the South. Again, central planning, poor infrastructure and mismanagement are to blame.

The problem is not going away in the DPRK. The International Institute of Energy Economics in Japan estimates that even though the economy has virtually collapsed energy consumption in the DPRK is expected to increase fivefold by 2020, growing at an average annual rate of 8%. If projects like Kaesong take off, in a mild form compared to China's Special Economic Zones, then this figure could grow even more begging the question where is the power going to come from?

Given the parlous state of Pyongyang's finances an option such as that taken by South Korea in the gas sector whereby the ROK is both tapping its small domestic reserves and importing is largely impossible.

The fuel shortages have been disastrous for the DPRK - the loss of the USSR as a subsidiser and the failing national economy that further depleted energy resources meant that agricultural production continued to fall in the late 1980s and the 1990s as wood burning became more common than coal and imports of fertilisers and other chemical inputs disappeared along with the USSR. Measures to develop hydroelectric and alternative energy sources have largely stalled except some small-scale projects. Electricity shortages occur even in Pyongyang affecting heating and other sectors such as hospitals while there is a general lack of supply for industry and the inability of ports like Nampo to often unload aid as there is insufficient power for the dockside cranes. Despite repeated reports of power station construction -- in 2003 North Phyongan province announced it was building 60 power stations as well as new power stations in Wonsan, Kumyagang, Orangchon and Taechon among others -- the financing for these projects remains unclear, their progress secret and completion still several years away if ever.

In 2003 total energy output is thought to have risen due to some reopening of mines, with coal production reportedly rising 3% over 2002, and hydropower (due to increased rainfall), which saw, increased budgets of 30% and 12.8% respectively year-on-year. However, it fell short of offsetting the losses from the suspended US oil deliveries and Pyongyang was forced to spend its dwindling currency reserves on additional imports of electricity from China -- between January and October 2003 imports of electricity from the PRC leapt 57-fold to 10.03 million kilowatt hours (kWh) compared to 8.84 million kWh for the whole of 2002. Whether this year China will have enough to sell looks doubtful given the possibility of power shortages in China slowing growth and scaring away foreign investors. Additionally Pyongyang was forced to sell some of its precious electricity capacity to raise finances, around 31 million kWh, again worsening the power situation overall in the country.

Recently US national security adviser Condoleezza Rice was in Beijing to talk about North Korea. During the visit she held discussions with Central Military Commission President Jiang Zemin and Foreign Minister Li Zhaoxing on North Korea's nuclear weapons programme and relations between China and the US. Rice reportedly urged Beijing's leaders to push forward efforts to resolve the North Korean nuclear issue. Later Rice visited the South Korean capital Seoul for a meeting with South Korean Foreign Affairs and Trade Minister Ban Ki-moon and President Roh Moo-hyun. Rice was quoted as saying, "North Korea will be surprised to see how much will be possible" if it gives up its nuclear programme completely. "So much is possible if North Korea just does that" Rice commented.

Rice's comments in both Beijing and Seoul on the DPRK reflect an interesting change in strategy from the Americans over Pyongyang. Analysts in the US believe that the Bush team want the North Korean issue solved and not to be an election issue. Coupled to this is the fact that many in Washington believe that America's position in the six-way talks has been unimaginative and that China has been scoring diplomatic points (as have the Japanese with Prime Minister's Koizumi initiatives towards the North Koreans) by keeping the process moving. It now seems that the Bush administration is retreating from its position of requiring Pyongyang to destroy any nuclear weapons programme and is returning to a 'carrot and stick' approach to try and retrieve ground. In part this new, more pragmatic position is seen as a way of soothing concerns in Seoul that America is not successfully diffusing the tensions while in Washington there is concern, particularly among the armed forces, that the administration is "losing Korea" and surrendering America's post war role as guarantor of stability in East Asia. The US earlier announced its long-expected plan to cut one-third of its troop presence in South Korea, or 12,500 soldiers, by 2005. The plan also calls for the relocation of its military headquarters out of Seoul by 2007.

Barring flood or failed crops Pyongyang can survive on the current food levels at subsistence level. However, dwindling energy threatens a lot more that Pyongyang has gambled on as well as military capability. For the American negotiators looking for new carrots, if that is what they keep on doing, then energy could be one of those new carrots.

It's Time for Potatoes in Pyongyang

by Paul French 28 May 2004

Clearly the DPRK's most urgent need is still food. The famine of the mid-1990s may be in the past but food shortages persist, malnutrition remains rampant and the country remains on the cusp of being plunged into another deadly famine if climactic conditions, falling aid levels and an unreformed agricultural sector combine disastrously.

Pyongyang has chosen potatoes as its subsidy crop in preference to corn or rice, and is now in the midst of what the government calls a "potato farming revolution" - although the process began in the late 1990s. According to the government North Korea plans to plant 200,000 hectares of potatoes by 2006. If this goes ahead, potato production would increase to eight million tons. If issues of farm to fork wastage, loss and spoilage as well as the rampant incidences of crop viruses due to a lack of pesticides could be tackled (all still perennial problems in the North) then this could be a significant addition to the country's food stock. Nutritionists estimates that in terms of calorific content, five kilograms of potatoes equal one kilogram of rice, so eight million tons of potatoes equals 1.6 million tons of rice.

A campaign to raise the potato crop first occurred back in 1999 with much fanfare as KPA soldiers were trumpeted out to the fields to help bring in the harvest and American agricultural advisors went to offer assistance with the potato crop as part of an aid for inspection deal. It didn't amount to much.
This renewed potato push became known following a "report" by North Korea's Cabinet Premier Pak Pong-ju at the Second Session of the 11th Supreme People's Assembly, held at the end of March this year. It was one item within the rivetingly titled speech "On The Review Of The Work Of The DPRK Cabinet In Juche 92 (2003) And Its Tasks For Juche 93, 2004". According to Mr Pak "Innumerable advanced farming methods have been introduced in the course of struggling for the implementation of the party's agricultural reform policy." These methods apparently include Taehongdan-style potato farming methods (Taehongdan borders China), and various two-crop farming methods. This alone is interesting given the historic ideological opposition to two-crop farming (sometimes referred to as double-dropping farming) in the North. The Taehongdan-style of potato farming is one in which potatoes of a high-yielding variety are sown whole. Kim Jong-il gave an on-site guidance tour of Taehongdan in 1998 and in 2000 declared that the most important mission of the Taehongdan-style farms is "…to make a decisive turnaround in potato farming."

Now we have a renewed effort on potatoes. The North has also reportedly held a two-day meeting and banquet for "forerunners" in potato farming last January, the first of its kind in the country, where Agriculture Minister, Ri Ju-o, called for the potato growers to resolve the country's food shortage. The meeting was also attended by "experts on potato cultivation" from the General Association of Korean Residents in Japan. Ri said all potato growers should exert their best efforts to "decisively" increase potato production. Apparently Kim Jong-il 'desires additional potato cultivation.'

As yet the old slogan that "Rice is Communism" has not been changed to "Potatoes are Communism". The elevation of rice, whether or not a definer of being communist, was a disastrous policy for the North as the scarce available arable land in the DPRK is not particularly suited to rice growing. Arable land comprises only around 17% of the North's territory and, of this farmland; only 30% at best is suitable for rice paddies. This is without even estimating the poor state of irrigation, a necessary component of successful rice growing, and water contamination that can be harmful to the crop. May of the rice paddies that do exist actually contributed to the collapse of the economy as they were built on cleared hillsides that added to the scale of the disasters that have followed flooding in the DPRK (see last months column - Ryongchon Got the Headlines But it's Floods that Remain the Major Threat - 6/5/04).

The shift to potato cultivation, though officially Kim Jong-il's idea, has been pushed by NGOs and the UN agencies in the country for some years. Organisations such as World Vision have instigated various programmes - World Vision's involves a hydroponics seed potato project that aims to stabilize the supply of seed potato and improve related technology transfer. This project addresses two major issues for North Korea's potato farmers. The shortage of seed has been a major problem in the North while low level of technical skill has kept potato productivity to under 20 tons per hectare. World Vision believes its project would allow the North to produce four million tons of potatoes annually by cultivating 200,000 hectares a year. However, the success of the project involves there being sufficient fertiliser to support the additional crop - something that is a long term supply problem for the DPRK's agricultural system (see previous column - Why Fertiliser Might Taste Better Than Food - 8/3/04). World Vision's project has seen some success. According to the organisation the first crop of 1 million seed potatoes planted in November 2000 led to the harvesting of a second crop of just over five million seed potatoes in May 2001. In June 2001 World Vision signed a MOU with the Korea National Economy Cooperation Association (KNECA) to expand the seed potato project to four other provinces and develop facilities to produce "non-virus seed potatoes."

A boosted potato crop could go a substantial way to helping Pyongyang achieve some form of food security. However, as ever of course economics and politics remain intertwined in North Korea. To truly tackle the problem of pathetically low productivity the cooperative farms need further, deeper and more structured reform. Farmers need to be given a stake in the land so as they become as productive on the official farms as they are on their private plots and reclaimed common land. It is hard to get away from the fact that a switch needs to be made to a market-based system that incentivises farmers.

This need for significant reform raises the issue of the ongoing land rezoning projects that have been started in Pyongyang, South Pyongan Province, and Nampo, and aim to increase the amount of fertile and productive arable land in the DPRK. Unfortunately the land-rezoning scheme has become yet another massive project that overreaches itself and is personally supported by Kim Jong-il - once again politics over common sense. However, smaller projects, like World Vision's, are better suited to the North - why create large tracts of arable fields (regardless of the issue of environmental destruction) when you don't have the agricultural machinery necessary to work them? The Pyongyang mind-set still finds small, well thought out projects an anathema while grand projects suit it better - despite the long history of disasters associated with these schemes over the decades. It may still be some time before North Koreans enjoy chips with everything.

Ryongchon Got the Headlines But it's Floods that Remain the Major Threat

by Paul French 6 May 2004

The Ryongchon rail disaster led to a massive rise in the column inches devoted to North Korea in the international press. Journalists were dispatched to Dandong on the Chinese side and to South Korea (where a satellite uplink for that all-important 'Going Live' moment is easier) to report on the crash. The result? Lots of speculation, few hard facts and no on-the-spot coverage, in other words about par for the course on North Korea.

Certainly the disaster was terrible. The truth is I suspect that a combination of industrial collapse, poor maintenance of the rail network, below standard procedures for handling and transporting hazardous substances and the confusion that the holding up of all rail traffic due to Kim's journey back to Pyongyang would have caused lead to the tragedy. Probably the only reason disasters of this sort do not happen frequently is that in today's resources-starved DPRK there are few combustibles to move around the country.
Ryongchon was a gory reminder of how desperate the industrial situation has become in the DPRK. Train crashes have been reported before - in the 1970s a freight train carrying chemical fertilizer (and there are fewer of those now) exploded at Hungnam Station in South Hamgyong Province, destroying buildings and houses around the station. Again in 1985 an estimated 500 people were killed or injured when a train crashed in Jongpyong, also in South Hamgyong Province while in 1987 a train carrying DPRK soldiers reportedly exploded in Hwasong, yet again in South Hamgyong Province. More recently in 1997 around 2,000 people were reportedly killed or injured when a train crashed in Hichon, Jagang Province while in January, 2000 approximately 1,000 people were killed or injured in a train accident in Yangdok, South Pyongan Province. None of these numbers are fully verifiable though the high casualty rates would seem to indicate the inability of the North Korean health and emergency services to respond to such disasters is a major contributing factor. The North Korean tendency to keep on throwing huge numbers of people at these problems with no equipment or medicines achieves little except good internal propaganda shots.

However, the fact is that train crashes occur in many countries and disasters can be caused as easily by crumbling Stalinist command economies in North Korea as they can by botched privatization schemes and lack of regulation and corporate responsibility in supposedly advanced economies like the UK. 'Accidents' do happen, scapegoats are found.

What is not accidental any longer is the devastation still caused by floods in North Korea. The World Food Program (WFP) raised the issue of the danger of repeated flooding in the DPRK this week though I fear this story has become lost under the weight of Ryongchon coverage. Flooding is something that has happened before and may happen again while Ryongchon was suddenly right there - a true case of 'if it bleeds it leads.' However, flooding has killed more people than train crashes and will continue to kill more people in North Korea likely occurring again and again until fundamental change in the agricultural system occurs in the DPRK.

On one level flooding is nothing new in the DPRK - flooding caused famine in the early 1800s and led to peasant rebellions. The risk of periodic flooding has meant that the north has been perilously close to shortages due to the lack of arable land and low yields for many centuries. However, the flooding continues and its effects are worse than they should be due to, what the WFP this week, described as "short-sighted farming practices used by North Korea". Regional director of the UN programme, Anthony Banbury, correctly pointed out that Pyongyang's new policy of farming hillsides and mountains without first terracing the soil had already led to massive erosion and posed a major environmental hazard. He commented that "If there are huge floods as there were in the mid-90s the extent is probably going to be much worse because they are much more flood prone as the soil will come off the mountains it will fill up stream beds and river beds so when the rains come there will be floods. This whole emergency started in the mid-90s because of the flooding in North Korea and they weren't ploughing the hillsides then". Partly true. Organised ploughing of the hillsides was not widespread but ad-hoc and illegal fire field clearance played a major role as explained below as people developed survival strategies in the face of the mounting famine. Banbury also made the important point that flooding puts urban areas at risk of disease outbreaks as silt caused by the new farming techniques blocks up sewage systems in towns and cities - "There's so much silt accumulated that they've lost 50% of their capacity so when it rains, instead of rivers overflowing the sewage overflows and is going into the road and people's homes". Typhoid, hepatitis and other related disease rates all increase.
Repeated and increasingly uncontrollable flooding on a major level is a truly frightening prospect for North Korea. Ryongchon has shown how stretched and potentially useless North Korea's emergency response forces are. Flooding will cause immediate casualties over a much wider area and a more prolonged period as disease spreads. Banbury's observations of the North Korean response to Ryongchon illustrate how severe this could be: "They can mobilize people quickly to respond but they can't mobilize equipment, medicine or food".
Flooding has already done severe damage to North Korea over the years. Though the country's industrial base was collapsing under the weight of the contradictions of the command economy and the loss of Soviet subsidies in the 1990s there is little doubt that the floods of the mid-1990s exacerbated the famine. Flooding has always been the official North Korean reason for any hunger in the countryside - indeed the department that was in charge of liasing between donor nations, NGOs and local officials was the Flood Relief Committee. The North Korean Committee For Liquidation of Floods' still exists. The damage these floods did was catastrophic and contributed significantly to the overall collapse of the agricultural system in the North and the end of any notion of food security.

• 1995: in the summer of 1995 flooding destroyed 330,000 hectares of arable land and lead to the loss of nearly two million tons of grain (approximately half the annual harvest) and an estimated 50,000 tonnes of unprocessed rice. At least 100,000 families were rendered homeless according to official figures. The situation became so severe that Pyongyang was forced to turn to the international community for help for the first time.
  
• 1996: in the summer of 1996 torrential rains and flooding caused US$1.7 billion in damage. The same year seawater from Typhoon Winnie destroying even more crops and homes.
  

Food confiscations by the state and worsened flooding due to desperate fire-field (or brush burning) agriculture on hills and mountainsides exacerbated the crisis further. Though many believed that North Korea exaggerated the devastation caused by the flooding it was also politically useful as Pyongyang was able to justify its 1995 appeal to the international community for assistance to cope with the famine as the result entirely of natural disaster and not government agricultural policy and the inefficiencies of the command economy.

The new policy of farming hillsides and mountains without first terracing the soil that Banbury referred to this week is another example of the official adoption as policy of something that has been occurring for a long time. Along with private plots and farmers markets the state is legitimising and trying to control things it once turned a blind eye to or forcibly try to suppress. With organised hillside farming and permitted ploughing things must be getting desperate. In the 1990s fire-field (or brush burning) agriculture on hills and mountainsides exacerbated the flooding further as starving people had been forced to clear trees for emergency fire-field agriculture to grow crops in the face of famine. These trees had previously acted as natural flood breaks. This illegal and potentially lethal tree clearance has continued as rural dwellers try to grow extra crops outside the collective farm system and also earn some money selling lumber across the border to China. The result is short-term survival for starving desperate people but when the rains come there are few natural breaks to protect the country from mudslides and catastrophe.

Even if the disastrous consequences of farming the hillsides hadn't already been shown by the illegal fire-field agriculture, you'd have thought the North Koreans might have learnt from the Chinese. However, innovation comes late to the DPRK. As mentioned before in this column a major problem for the North's agriculture is the legacy of Lysenkoism decades after it has been discredited even in the Soviet Union. A good many North Korean cadres must have visited the famous Maoist-era Chinese model village of Dazhai where hundreds of thousands of Chinese cadres were shown how simple terracing up hillsides had reclaimed valuable arable land despite hours of backbreaking work. Dazhai managed it on inclines of 25 degrees and more. Very inspiring to the North Koreans too I expect. However, now soil conservation experts in China believe that these steep terraces are responsible for about half the Loess Plateau's topsoil runoff annually - a prime reason the environment in the area has worsened in recent decades. Probably news that the Dazhai model village was a mirage has never trickled down to North Korea's farmers.

The true disaster behind insisting that floods caused the famine was that this indicated that neither economic or agricultural planning or methodology was to blame and therefore didn't need to be changed. It was just flooding - an act of God. This insistence on not addressing the real problem meant that issues of severe deforestation, the silting of rivers and the poor state of agricultural equipment were not addressed. Pyongyang has stuck to its claim that the famine was largely due to natural disaster, it has never admitted that its Juche driven, rigidly political collectivised agricultural policy was the major cause. That the DPRK's response to the famine has been largely political is also no surprise though has meant that NGO efforts to help the country recover have been consistently hampered and that any efforts by Pyongyang to improve the situation for its people have been driven by their primary concerns of regime survival and maintaining 'face' despite NGO insistence that the agricultural sector must change its mode of operation if it is to hope to provide a sustainable food economy for the country. The longer Pyongyang refuses to make significant changes in the organisation of agriculture the more the risk increases of famine returning, what USAID's Andrew Natsios called a possible 'second apocalypse'. The continued adherence to collectivised Soviet-style agriculture combined with another major crop failure and the current donor fatigue reported by NGOs would be truly catastrophic for North Korea, its people and its neighbours.

The Ryongchon rail disaster was not an isolated incident and neither is the devastation caused by flooding. Both will sadly occur again and both are tragic illustrations of the failed industrial and economic policies of Pyongyang.

The North's Environmental Disaster

by Paul French 12 April 2004

In my last column for Pyongyang Square I raised the issue that decades of massive chemical inputs - fertilisers, herbicides, pesticides etc had had a severely detrimental effect on the DPRK's environment. As the agricultural economy came increasingly to depend on these inputs so major damage to soil and water pollution occurred. However, this 'over-chemicalisation' of agriculture is far from the only environmental problem facing the country.

As the economy has deteriorated in the North so the environment has been neglected adding to the pollution of vital agricultural land. North Korea now ranks virtually last globally in terms of environmental sustainability according to the Economist Intelligence Unit (EIU). Despite having adopted ten major laws for environmental protection including a Land Law (1977), Environment Protection Law (1986), Forestry Law (1992) and Law On Protection Of Useful Animals (1998) rampant pollution has continued abated only by shortages of chemicals to pollute with. Despite laws and political sloganeering environmental protection has never been seen as a high priority. More recently with finances stretched to breaking point environmental protection and 'green' technologies have had to be sacrificed. The release of industrial sludge and waste by factories has led to pollution throughout the North's waterways including the Taedong, Chongchon, and Tuman rivers. The Taedong, despite being polluted, remains Pyongyang's primary source of drinking water. The Tuman River is polluted by both North Korea and China as several North Korean mines and paper factories discharge into the river as well as China's large Kaishantun Pulp Processing Plant, Shixian Paper Factory and Yanbian Chemical General Factory. Pollutants such as phenol are found in large levels in the Tuman River and this pollution has serious consequences for the health of the population that lives adjacent to the river and relies on it for drinking water. Water-borne diseases such as dysentery and cholera have been reported as growing as well as a negative impact on the fish populations of the river, which naturally further exacerbates the food shortages and food security.

This impact on fish stocks has also been noted on the coast where pollutants are discharged directly into the sea from factories in the coastal towns of Wonsan, Hamhung, and Chongjin adversely affecting the local marine life. Mines adjacent to the Yellow Sea also discharge directly into the ocean and the construction of the Seohae Lockgate significantly reduced the ability of the Taedong river to disperse pollutants. This has led to a build up of pollutants in the Taedong estuary and in the ocean around the west coast port of Nampo. It has also been reported that coastal reclamation and barrage projects destroyed tidal flats vital for the purification of seawater adding to the environmental damage.

Air pollution in North Korea is largely a result of the failing economy which has meant that there is no money for filtration technology. Pollutants such as sulphur and carbon monoxide are widely released by industrial enterprises. Sulphur dioxide and carbon dioxide emissions are a particular problem with emission rates of approximately 7.64 thousand tons per populated square kilometre for the former and 2.64 tons of carbon per person in the latter. Environmental watchdogs in South Korea have estimated that even currently at a time of virtual economic collapse the North releases a total of 10.8 million tons of sulfides, nitrogen oxides and other pollutants annually, 2.4 times the amount created by the whole, significantly more industrialised, ROK. The South has also reported acid rain with pH figures of 4.7 falling in the proximity of the Chongjin Thermoelectric Power Plant. Incidences of respiratory ailments have reportedly risen in recent years in the surrounding area.

These pollutants and toxic gases from industrial enterprises also have a deleterious effect on nearby agricultural collectives where an accumulation of toxic pollutants in the soil affects production and quality and combine with the overuse of chemical fertilisers, herbicides and pesticides over the decades to poison the soil.

There doesn't appear to be much possibility of environmental improvement in the DPRK except through the fact that the country increasingly lacks the resources to run much of the industry that causes the pollution. Environmental awareness is extremely low and with shortages and industrial collapse ongoing environmental protection and improvement are likely to remain low priorities. Additionally, the government's 'nature remaking' projects started in the 1980s have not helped including the US$4 billion West Sea Barrage aimed at reclaiming land but ultimately worsening soil erosion and silting.

It should also be noted that while the ROK has complained about acid rain and other pollution from the DPRK, the North has suffered from cross-border contaminations too since the 1970s - pollution is one thing that does cross the DMZ with impunity. In 1978 the WHO declared that Seoul's air had the highest sulphur-dioxide content of all major world cities while the industrial centre of Osan, the area around the port of Pusan Busan) and Taegu are all areas of environmental problems. Additionally, the ROK was one of the highest global users of pesticides until the 1980s. However, the environment is now a pressing concern for the DPRK if it is to ever secure loans and credits from the major international lenders who all require guarantees against detrimental environmental and social effects for projects they sponsor.

Why Fertiliser Might Taste Better Than Food

by Paul French 8 March 2004

The recent news that Seoul is to provide North Korea with 200,000 tonnes of fertiliser aid this year in response to a request from the DPRK might be an indication that Pyongyang is taking food security a little more seriously than just simple aid dependency. As I wrote in my last article for Pyongyang Square the policy of bargaining for food aid has been erratically successful and this erratic nature of supply could potentially bring on another famine, or at least mass hunger, if it continues into the autumn and then the harsh winter ahead. As USAID's Andrew Natsios has correctly pointed out the combination of a failed crop and falling aid shipments could engender a 'second apocalypse'. The request for fertiliser may indicate that Pyongyang is finally realising the truth in the old saying "Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime." However, it also needs to be remembered that a request for fertiliser is neither something new nor a signal that a much needed overhaul of the agricultural system is about to take place.

Seoul is also looking at some other useful contributions besides the US$60 million of fertiliser (the cost includes shipping and delivery) - US$40 million from its cooperation fund to help build infrastructure such as roads in an inter-Korean industrial park in Kaesong. Better infrastructural links from the ROK to Kaesong will benefit Pyongyang if the project keeps on track, however arguably the biggest beneficiaries will be the South Korean chaebols currently looking to invest in Kaesong. A cynic might suggest that this US$40 million is more a government subsidy to Seoul's corporations than largesse. Not a massive sum when you consider that the first 3,2 hectare phase of the Kaesong zone is due to open in June and that ROK firms will be able to pay North Korean workers US$57.50 per month - 3% of the average ROK salary of US$1,812 a month.

This is not the first time that Pyongyang has requested fertiliser. Since 2000, the South has given the North approximately one million tonnes of free fertiliser, including 200,000 tonnes last year following official requests. This fertiliser is essential if the DPRK's agricultural system is to ever get anywhere near back on its own two feet. Remember that the 18-20% of the DPRK that is arable provides 25% of GNP despite a lack of modern fertilisers, pesticides, herbicides, other chemical inputs. For much of the DPRK's history its agricultural system has been in a process of increasingly shifting towards a smaller number of crops while raising reliance on a continued supply of chemical inputs. This has put the rural economy at greater risk of a total crop failure due to lack of diversity. When the USSR collapsed and the supply of fertilisers dried up crop failure is exactly what happened. We all know the disastrous results.

All this came about thanks to the tradition of Lysenkoism continuing to be official policy in Pyongyang. Trofim Lysenko (1898-1976) was a Soviet biologist who developed a controversial approach to biology. As head of the USSR Academy of Agricultural Sciences he declared genetics and cybernetics to be anti-Soviet and also advocated the close planting of seeds and heavy use of fertilisers, both policies that have caused long-term problems for the DPRK. In 1962 a group of Soviet scientists set out the case against Lysenko following which Khrushchev dismissed him. However, he has long remained in general favour in North Korea.

Food shortages had appeared in the early 1970s indicating that the entire economy was stumbling around that time after the fast-growth Chollima period. This was despite the fact that during the Chollima period the role of fertilisers in agriculture had been increased to what many foreign agronomists considered wildly excessive levels. This led to stored up problems for the agricultural economy when after the collapse of the USSR, fertiliser, pesticide and herbicide imports largely disappeared, though by this time their untrammelled usage had caused major damage to soil and exacerbated water pollution while withdrawing their use virtually overnight led to reports of fields of weeds and stunted crops as well as massive pest infestations that destroyed swathes of crops.

The reality in the late 1990s, nearly a decade after the collapse of the Soviet Union and following the worst of the famine, was that the DPRK's agricultural economy had been adversely affected by a number of factors including seven or eight years of repeated drought and crop infestation as well as the chronic shortages of fertilisers the system had become overly reliant on. Fertiliser inputs were down from 217,000 metric tonnes in 1995 to 81,000 in 1997 with a demand for 350,000.

Without new inputs of fertilisers the agricultural economy doesn't stand a chance (unless there is a change of regime change and hence of total farming policy). Agriculture remains highly problematic though still accounting for over 30% of GDP (compared to 4.6% in South Korea), with the ongoing fertiliser short falls meaning that many farming provinces have reported infestation of rice water, maize weevils and other pests surging. Ryanggang and North Hamgyong provinces predicted a substantially reduced output of maize and rice for 2003 due to heavy rainfall during July and August.

However, simply throwing fertiliser at the problem may also add to environmental damage as well as reinforcing the inputs dependent agricultural system that remains a major stumbling block in attaining genuine food security - a genuine case of the shit hitting the fan. Nobody in the South is talking about tying the fertiliser aid to changes in agricultural production such as the sort of schemes the Agricultural Recovery and Environment Plan (AREP) has tried to institute including double cropping, crop diversification and the greater growth of potatoes or even to look at introducing a system similar to China's Household Production Responsibility System (HPRS) that was responsible in large part for boosting reform and production levels in rural China. However much fertiliser is shipped over the border the fact is the system doesn't work and additional inputs of fertilisers into the current system only represents a band-aid approach.

Scraping The Bottom Of The Barrel…Again

by Paul French 19 February 2004

WFP Representative for the DPRK Masood Hyder's recent warnings that humanitarian food aid supplies to North Korea were running out and that the WFP was "scraping the bottom of the barrel" was reported around the world raising the issue of Pyongyang's precarious food security once again. Hyder was right to raise the issue now and so vocally. With the winter now receding there is a period of some respite - a window of opportunity to try and raise aid levels before the temperatures and food stocks drop again. However, though donors have recently pledged contributions amounting to some 77,000 tons little of this will arrive before April, meaning that for the next two months, almost four million people will be deprived of cereals, which constitute a large share of the basic 'survival' ration. Only 75,000 childbearing women and 8,000 children in orphanages and hospitals may receive WFP cereal distributions in February and March - still bitterly cold months across the DPRK.

The fact is that raising funds, transporting aid and getting it into the system - the North's public distribution system (PDS) in many cases - takes time. The whole process takes longer than it should as North Korea's ports continue to suffer power shortages and infrastructure up in the most in the most troubled parts of the country - the North East - remains in a poor state of decay. Despite the recent North Korean government announcement that it is to build a new container port at Nampo, on the Daedong River, equipped with 130-tonne and 80-tonne cranes, unloading remains problematic at Nampo because of poor power supply and vessels have reported being effectively stranded in port for as long as a week due to delayed unloading caused by power failures and the DPRK's chronic energy shortage. Most aid, including that from South Korea, is shipped to Nampo.

Added to this is the fact that Nampo can only handle 20-foot containers and currently has no cranes capable of unloading 40-foot containers. Aged equipment, a lack of maintenance and shortages of spare parts also mean that stevedoring equipment regularly breaks down. Nampo has nine piers with grains and coal unloaded at piers one and two while containers are dealt with at piers eight and nine. The remaining piers serve smaller vessels. In total Nampo has 1,890 metres of pier. Three 10,000-ton freighters and three 300,000-ton freighters can berth at the same time. The port's stevedoring capacity is around eight million tons, compared with over 56 million tons at Inchon in South Korea.

More aid will of course relieve suffering for many and save some lives. However the basic problem remains the collapsed state of the agricultural system. So far Pyongyang has stuck rigidly to collective farming, embracing the theories of the Soviet agronomist Trofim Lysenko that has left the sector over dependent on pesticides, herbicides and other chemical inputs. As with the adoption of the Soviet industrial economic system so Pyongyang also adopted the Soviet agricultural system.

Declines in production have been annual until recently, in 2001, when production rose due to an abatement of natural disasters and the implementation of various programmes designed to raise yields largely instituted by the UNDP Agricultural Recovery and Environment Plan (AREP). AREP has instituted a number of reforms to North Korean agriculture including double cropping, crop diversification, greater growth of potatoes and better use of advanced fertilisers. Despite this rise in production a serious food deficit persists, particularly of cereals, while Pyongyang continues to oppose the wider spread use of techniques not originally part of the Chongsan-ri system such as double cropping.

Pyongyang also knows that it must do something to try and raise the levels of aid. With the country now effectively an aid-dominated economy Pyongyang's regime survival strategy partly rests on keeping inflows coming. Hence we are seeing what may be a somewhat scaled down version of the Kim Jong-il 2002 charm offensive that featured a train trip to Russia and the Pyongyang summit with Japanese Prime Minister Junichiro Koizumi. This time Kim is not personally leading the charge perhaps signaling that even the Dear Leader is aware of his ability to alienate and annoy.

Overtures to America and the second round of six party talks are two examples. North Korea is also trying to reopen avenues to Tokyo after the general disaster of the 2002 Kim-Koizumi One-Day Summit and the kidnapping admissions. These new overtures from Pyongyang to Tokyo may just work. Japan's NHK TV devoted a large amount of air time to discussing the issue. The kidnappings remain a highly emotive issue in Japan and have been a major block on aid shipments and public attitude in Japan.

However, the long term question will be when and how will North Korea reform its agricultural system and start to tackle the question of beginning to ensure its own food security? In his appeal to the global community Hyder noted that "Painstaking gains made in improving nutritional standards since the late 1990s risk being reversed."

Paul French is the Publishing & Marketing Director of Access Asia (www.access-asia.info), and author of the forth-coming book North Korea - The Paranoid Peninsula (Zed Books, London, 2004, also available on Amazon.com). He writes regularly on Chinese and North Korean economics and politics for a wide variety of publications.