North
Korea's pools of prosperity By
Andrei Lankov
What does the average
readers of the Western media think when they hear
the words "North Korea"? Admittedly, there are a
number of associations, none of which are
particularly flattering or pleasant. North Korea
is thought to be a "Stalinist country", a "crazy
and irrational dictatorship" and is of course, a
"destitute and starving nation".
Most of
these images are only partially true at best.
North Korea might still maintain a rather
compelling Stalinist facade, but its society is no
longer Stalinist. North Korea might appear
irrational and hysterical in its actions and
words, but there is a clear method in its madness
(and actually, there is no madness involved, since
the country's international actions are quite
rational and calculating). Finally, is North Korea
really destitute? To some
extent it is, but
significantly less so than most people would
assume.
Every autumn, readers of the
international media are bombarded with reports
about an unusually dire food situation in North
Korea, which is said to experience another famine
soon unless some counter-measures are taken. Such
articles usually start popping up in October or
November, but in a couple of months the topic
disappears, for good reason: no famine actually
happens in the spring. This fact is not usually
noticed by the international media, so the pattern
repeats itself annually.
For a long-time
observer of North Korean politics, it appears
obvious that these scare stories have two major
sources. First, the international aid community
and its representatives in North Korea are prone
to disseminating such alarmist reports. Indeed,
such reports help attract more aid to a country,
which is, after all, in dire need of such
assistance. Second, it seems that the North Korean
authorities have also learnt how to complain
loudly enough. Gone are the days when its
officials presented their country as a paradise on
earth. Nowadays they are far more likely to
exaggerate the extent of their country's economic
difficulties in order to maximize outside aid.
Therefore one should not be surprised that
the average Western visitor to Pyongyang is
bewildered by the scenes he or she is likely to
encounter on arrival in the North Korean capital.
Nowadays Pyongyang decisively does not feel like a
city whose population faces the constant threat of
death by starvation - even though it remains
backward, anachronistic and poor by the standards
of both Europe and East Asia.
There are
numerous signs of steady improvement in the
economic situation in North Korea - or, at least,
in Pyongyang and other major cities. The huge
avenues of Pyongyang, once infamous for their
complete lack of traffic, are now reminiscent of
the streets of 1970s Moscow - traffic is not too
heavy, but clearly present. In older parts of the
city, where streets are not that wide, one can
occasionally even encounter minor traffic jams,
once completely unthinkable in North Korea.
Visitors and Pyongyangites alike can feast on
numerous delicacies in a multitude of posh
restaurants, which have been popping up around the
city in recent years.
More expensive shops
stocking luxury goods are becoming more numerous
as well. Gone are the days when a bottle of cheap
Chinese shampoo was seen as a great luxury; one
can easily now buy Chanel in a Pyongyang boutique;
and, of course, department stores offer a discount
to those who spend more than one million won on a
shopping spree. One million won is roughly
equivalent to US$250 - not a fortune by the
Western standards but still a significant amount
of money in a country where the average monthly
income is close $25.
The abundance of
mobile phones is much talked about. Indeed, North
Korea's mobile network, launched as recently as
late 2008, has more than one million subscribers.
It is often overlooked that the old good landline
phones also proliferated in the recent decade. A
phone at home ceased to be seen as a sign of
luxury and privilege, as was the case for decades.
Rather, it has become the norm - at least, in
Pyongyang and other large cities.
The
capital remains badly lit in night, but compared
with the norm of some five or 10 years ago, the
situation has improved much. The electricity
supply has become far more reliable, and in late
hours most of the houses have lights switched on.
Of course, this affluence is relative and
should not be overestimated: many people in
Pyongyang still see a slice pork or meat soup as a
rare delicacy. The new posh restaurants and
expensive shops are frequented by the emerging
moneyed elite, which includes both officials and
black/grey market operators (in some cases one
would have great difficulty to distinguish between
these two groups). In a sense, Pyongyang's
prosperity also reflects the steadily growing
divide between the rich and poor that has become a
typical feature of North Korea of the past two
decades.
Nonetheless, those foreign
observers who have spent decades in and out of
Pyongyang are almost unanimous in their appraisal
of the current situation: Pyongyang residents have
never had it so good. It seems that life in
Pyongyang has not merely returned to pre-crisis
1980s standards but has surpassed it.
The
North Korean government ceased to publish
virtually any economic statistics half a century
ago, so most of the statistics cited in the media
are estimates often based on the thinnest of data
samples. The world's leading authority on the
North Korean economy, Marcus Noland, loves to
repeat that "one should not believe any data about
North Korea if it comes with a decimal point
attached". Even this warning seems to be slightly
optimistic, since the normal margin of error is
definitely much higher than a fraction of a
percentage point. Nonetheless, almost all
estimates agree that North Korea has experienced
mild economic growth over the past 10 years.
It is remarkable that this minor economic
boom began around 2006-7, that is, roughly around
the time the country was subjected to an
increasingly harsh (on paper) sanctions
regime.This speaks volumes about the efficacy of
the international sanctions.
All this
leaves us with two important questions to answer:
how representative are developments in Pyongyang -
ie how prosperous is the rest of the country? And,
of course, who and what has bankrolled these
developments?
Both questions are not easy
to answer. It is clear from visitors' reports that
the countryside has changed far less than the
cities although certainly life is better than it
was 10 years ago. The North Korean village remains
a world of pre-modern technology, where oxen and
pushcarts remain the major means by which cargo is
hauled, and electricity is supplied at best for a
couple of hours a day.
Starvation seems to
be very rare or absent, but malnourishment is
still a fact of life for many, if not most, North
Koreans outside Pyongyang. It seems to be the case
that the gap between Pyongyang and the
countryside, which has been yawning for many
decades, has increased even more, but this does
not mean that the situation in the countryside
keeps deteriorating. This appears to be the tide
which rise all boats, albeit with very different
speed.
What about the source of this
economic expansion? We cannot know for certain,
but there seem to be three main reasons behind it.
The first seems to be the growth of
private economic activity. Estimates vary, but
most experts agree that the average North Korean
family gets well over half its income from a
variety of private economic activities. Many (if
not most) of the above mentioned new restaurants
in Pyongyang, for example, are owned privately,
even though, for the sake of legal rectitude, they
are registered as government enterprises.
Many of the cars that get caught in
emerging traffic jams in Pyongyang are also owned
privately, even though they usually have number
plates marked with the credentials of a particular
state agency - this can be easily arranged by
paying a small bribe to an official of the said
agency (private cars are theoretically allowed,
but due to many reasons car owners prefer to
obtain a fake registration with some government
agency).
The North Korean authorities were
very suspicious about the spontaneous growth of
markets and have waged a number of campaigns to
curb unwelcome changes. None of these campaigns
has been particularly successful, and at least one
of them, the currency reform of 2009, was
positively disastrous. The private economy
continues to grow, and it seems that it has
finally begun to generate economic momentum. This
is happening against the government wishes, but it
is happening nonetheless.
The second
reason is the gradual adjustment of what is left
of the state-controlled economy. Nowadays, North
Korean industrial managers do not sit by
helplessly when they cannot get spare parts or
fuel from the state - as was often the case in the
1990s. Instead, they try to find what they need,
often getting the necessary supplies from the
private market. They also enter into deals with
other managers of other state enterprise. Often
the line between government and private economic
activities has become blurred, and many state
enterprises have learned to sustain themselves
through capitalist methods of management,
acquisitions and sales.
The third reason
is, of course, Chinese economic assistance and
investment. In the early 2000s, the trade between
North Korea and China, long stagnant, began to
grow dramatically. In 2011, the growth was
spectacular: trade between China and North Korea
increased almost 50% compared with 2010. Once
again, this speaks volumes about China's attitude
to the international sanctions regimes dealing
with North Korea.
So there is little doubt
that the current improvement has been
significantly backed by Chinese money.
Nonetheless, it is not known to what extent that
money comes from long-term projects or results
from one-off payments (for example, the sale of
mining rights, or port access rights). Some people
in the know believe that the newly found
prosperity of Pyongyang has largely been
bankrolled by sales of mining rights to Chinese
companies. If this is the case, the current
prosperity is not going to last, but we simply do
not know enough to be certain about this.
One should not misconstrue what is said to
the effect that North Korea has become a
moderately prosperous state. North Korea remains
Asia's poorest country, and the gap between North
Korea and its booming neighbors continues to grow.
Nonetheless you cannot help but be
skeptical when you see statements about the
exceptional destitution of North Korea. It is a
very poor, very brutal and repressive place, no
doubt about it, but in the last five to seven
years, the life of the average North Korean has
changed for the better.
Andrei
Lankov is an associate professor at Kookmin
University in Seoul, and adjunct research fellow
at the Research School of Pacific and Asian
Studies, Australian National University. He
graduated from Leningrad State University with a
PhD in Far Eastern history and China, with
emphasis on Korea. He has published books and
articles on Korea and North Asia.
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