Economic and Societal Impacts on North Korea and Its Regime

North Korea announced that 2012 would be the year it became a “strong and prosperous” country, but the uncertainty surrounding Kim Jong-un and his ability to consolidate power has been a major concern for outside observers. As the North deals with the aftermath of both a failed missile test and the loss of critical food aid from the United States, there are even more questions about the regime’s future.

NBR recently interviewed Professor Clark Sorensen, Chair of the Korea Studies department at the University of Washington’s Jackson School of International Studies, to shed light on some of these questions, including North Korea’s economic situation, its regime’s decision-making process, and the ideology that drives social and political behavior.

This year marks the 100th anniversary of Kim Il-sung’s birth, and the North Korean regime has announced 2012 as the year North Korea will become a “Strong and Prosperous” nation. What did the regime hope to accomplish by 2012, and what is the true state of the North Korean economy?

Kim Jong-il, who ruled the DPRK (Democratic People’s Republic of Korea) from 1994 to 2011, centered his attention on ideology, national security, and diplomacy. He more or less left the economy to technicians, saying that was what his father Kim Il-sung had advised him to do. He thus empowered the cabinet to manage the economy more independently than had been allowed under his father—something that was formalized in the 1998 Constitution—and he allowed a certain amount of flexibility.

For example, materials exchange markets between state enterprises became allowed in 2001, certain types of markets were legalized in 2002, and the DPRK has made efforts to establish special economic zones (SEZs) in its border areas based on the model of China’s Shenzhen. These modest reforms have not born much fruit, largely because the DPRK’s efforts to attain nuclear weapons and missiles have prevented the creation of the external conditions necessary to make market socialism–type reforms, such as in China and Vietnam, work. While the DPRK has created SEZs modeled on those China along its South Korean, Chinese, and Russian borders, these SEZs have not attracted the foreign investment they need to succeed. DPRK access to foreign capital markets is currently blocked by UN resolutions, as well as the DPRK’s bad credit history. To attract investment, moreover, the DPRK will need the ability to export products to the United States and other major markets that are currently blocked by sanctions due to the DPRK’s missile and nuclear programs.

The United States has offered several times to help the DPRK “join the international community” on the condition of giving up their missile and nuclear programs in exchange for security assurances, but the DPRK has continued with these programs. Since Kim Jong-il took centralized control of diplomacy during his tenure, this mismatch of DPRK external security policy with the needs of internal economic reform seems to have reflected Kim Jong-il’s policy priorities—acquiring nuclear weapons (or, possibly, obtaining ironclad security guarantees in their place) was more important to him than creating external conditions that might benefit economic reform. In any case, Kim Jong-il was worried that allowing free markets inside North Korea would lead to East European–style collapse.

In 2011, the DPRK experienced negative growth, and they are now facing food shortages once again. Nevertheless, the regime’s highest priority in 2012 will be to celebrate the 100th anniversary of Kim Il-sung’s birth. In fact, in his first New Year message of 2012, Kim Jung-un promised above all to carry through his father Kim Jong-il’s plans for a grand celebration of Kim Il-sung’s 100th anniversary. Keeping this promise will be critical for Kim III to establish his legitimacy. Recently, however, the North’s slogan has subtly changed. From Kim Jong-il’s slogan of kangsŏng taeguk (“great and prosperous country”), the slogan under Kim Jong-un has become kanggyŏng taeguk (“great country, strong and firm”). Kim Jong-un will have to celebrate success, but this slogan change hints that the emphasis will likely be on military strength rather than economic success.

The failed satellite launch on April 13 was undoubtedly supposed to be a propaganda coup demonstrating North Korean expertise in an area that South Korea has yet to master. This may be followed by a third nuclear test, since the ability to detonate a nuclear explosion is practically the only thing left that North Korea can do to demonstrate some kind of military superiority over the South. No doubt the DPRK will also claim certain economic successes, but the emphasis will be on survival through a strong military despite foreign pressure. North Korean propaganda has always been more about celebrating the perfect world toward which they are heading rather than celebrating the precise facts of the present. There have never been specific benchmarks as to what a “great and prosperous country” would be, so whatever they do this year will be celebrated as glorious progress.

What effect have international sanctions had on the North?

International sanctions have made it more and more difficult for the DPRK to acquire foreign exchange and to finance its international trade deficit. This is one of the main reasons for the negative economic growth in 2011. Up until 2008 the Kŭmgang Tourist Area, along with international and South Korean aid, provided substantial foreign exchange to help finance the import of needed consumer goods. In 2008, however, the Kŭmgang Tourist Area closed due to the shooting of a South Korean tourist, and the Myungbak Lee government of South Korea has declined to provide substantial financial and food aid until the DPRK ceases its nuclear program and military provocations. Other foreign aid has also dried up, and trade has become more difficult.

However, trade with China continues to be robust, and inter-Korean trade is growing (the Kaesŏng Industrial Zone has survived recent tensions), so the DPRK seems to be able to muddle through, despite the tightening noose of international sanctions. Thus, although the DPRK economy has continued to suffer due to international sanctions, there is little evidence that this economic decline will precipitate foreign policy change. The DPRK wants increased foreign investment, but the April 13th satellite launch indicates that the DPRK is not willing to suppress major military developments to facilitate economic reform.

Has the food situation improved or worsened since the 1990s famine?

Although the DPRK faces significant and worsening food shortages in 2012, it is not facing outright famine comparable to the mid-1990s. The DPRK agricultural system is chronically incapable of supplying the North Korean population adequate food due to unfavorable agricultural conditions, ecological damage, and planning irrationalities. The DPRK, moreover, is loath to spend scarce foreign exchange to import food, so in the absence of external food aid, shortages will continue. The continued existence of food markets in North Korea, however, may give the system enough resilience to cope with the level of shortages currently apparent. No long-term solution to North Korea’s food problem is in sight, however.

How does the North Korean regime continue to survive in the face of ongoing food shortages?

There is much speculation as to why the DPRK continues to survive in spite of being unable to provide food security to its population, much less a high standard of living. Party and military elites, of course, have been spared major privation and probably see the continuance of the regime as being in their best interest. In addition, draconian controls over speech, communication, and assembly prevent alternative political discourses and leadership from emerging. Although North Koreans are more and more aware that their standard of living is well below that of their neighbors, it may well be difficult for North Koreans to imagine a meaningful alternative to the narrative of revolutionary Korea maintaining staunch independence despite the pressure of the imperialists, a storyline that is present in almost all DPRK film and other media products. The competitive individualism of South Korea for which North Koreans are poorly prepared may not seem as compelling an alternative to North Koreans as the twenty-fold higher standard of living in the South might make one suppose. Until North Korean elites can imagine sociopolitical alternatives to the present regime in which they could continue to have an important place, it is hard to think that regime change is possible.

The recent offer of food aid from the United States was compromised by the North’s decision this month to launch a satellite using ballistic missile technology. Why might the North consider the missile launch more important than food aid?

In my view, the satellite launch—put on as a long-planned celebration of North Korean technical prowess and strength in honor of the Kim Il-sung’s 100th birthday—was a policy that Kim Jung-un felt compelled to complete to prove his loyal succession to his father’s legacy. My guess is that the completion of the missile test was non-negotiable for Kim Jung-un, because cancelling it would erode his critical relationship with the North Korean military. Though food aid has been compromised because of this project, I suspect the regime was willing to pay that price.

Although we know little about internal North Korean policymaking, some have speculated that the cabinet-level negotiators of food aid with the United States have been caught off-guard and overruled by the military in a power struggle. My own view is that this scenario is unlikely because there are inter-agency working groups in the DPRK that are tasked with coordinating major policies such as missile development and foreign relations. It is thus unlikely that the foreign ministry was unaware of the recent missile launch. In my view, it is more likely that the DPRK authorities planned from the beginning to assert their right to the “peaceful launch of satellites” despite UN Security Council Resolution 1874, which prohibits DPRK ballistic missile launches, a prohibition that the UN has deemed to include satellite launches.

Why would the North Korean authorities jeopardize food aid? My view is that the Kim family has consistently sold to both itself and the North Korean people the story that “not having a country” is the ultimate cause of peoples’ suffering, and that being independent and self-directed is a transcendent value to which all other values must be subordinated. Mere material deprivation (in the leaders’ well-fed view) cannot negate such a transcendent value. Material deprivation, in their view, is contingent while independence is transcendent. Independence must therefore take precedence over everything else.

From an anthropological perspective, what can help explain North Korea’s foreign policy decisions? What kinds of domestic concerns can we see in the regime’s international dealings?

I interpret North Korean actions from a values-based vantage point—their values as promulgated by the Korean Workers Party Propaganda and Agitation Bureau (Sŏnjŏn sŏndongbu) that was under the control of Kim Jong-il from the late 1960s. It was through this bureau that movies and propaganda promulgated the idea that the (North) Korean nation is transcendent over the individual, and that the loss of country is the basic cause of people’s suffering. The narrative continues by averring that an exploitative, feudal (or capitalist) society is incapable of reform, so the people’s happiness can only be made possible through a revolution that overthrows the system and establishes socialism.

I believe that the North Korean elites have basically internalized this narrative and thus feel that opposing imperialism (i.e., the United States and its allies) is the only moral option. Because of this value orientation, DPRK authorities reject the authority of institutions such as the UN that put pressure on them. They don’t accept the legitimacy of UN Security Council resolutions, which, as they see it, limit their sovereignty in ways other nations’ sovereignty (like the “nuclear club” of the United States, Britain, France, Russia, and China) is not limited. Thus, while UN Security Council Resolution 1874 makes North Korea’s missile tests “unlawful” in terms of international law, the North Koreans do not accept the legitimacy of such international law.

Because the DPRK is ruled by a small policy elite who are not answerable to the people through elections or other democratic institutions, domestic concerns carry little weight in the DPRK’s foreign policy formulation. The people are simply supposed to follow their leaders. While the North Korean people do not have the capacity to organize and form pressure groups, however, the legitimacy of the DPRK regime must surely be cracking under the strain of famine and the seeping in of outside information. What keeps the DPRK together, in my opinion, is the fact that elites have nowhere else to turn except to support the existing regime. North Korean elites well noted the fate of Nicolae Ceauşescu after his fall in Romania. If the DPRK regime should fall, current leaders must be terrified of suffering similar retribution.

What else do you think is important for readers to understand about North Korean society and the country’s domestic situation?

I would counsel interested observers to take North Koreans’ statements seriously. This is no small matter. While North Korean pronouncements are easy to parody, we should resist that temptation. No matter how absurd they seem to us, they make sense to many citizens of the DPRK within the closed metaphysics of North Korean values. These values guide the many North Koreans who think of themselves as being patriotic, good citizens of their own country, resisting pressure from foreigners who would keep them down. There may well be independent thinkers in North Korea who can see the world with independent eyes and don’t accept this closed metaphysics. These people, if they exist, are not yet in a position to express themselves and exert political influence.

In fact, the reversal of the “currency exchange” of 2009 is the only time I can think of in the 64-year history of the DPRK that the government reversed a policy due to popular opposition. I thus would not expect North Korea to collapse any time soon (though admittedly, such collapses often happen suddenly and unexpectedly). For the United States and South Korea, there is no simple royal road to “solve” the North Korean “problem.” China, while it shares some goals with the United States and South Korea, shares other goals with North Korea, and it cannot be expected to act as the United States’ cat’s paw. Patient negotiation, perseverance, and, when necessary, pressure can over time yield results—but the process is bound to be frustrating and inconsistent for some time to come.

This interview was conducted by Allen Wagner, an Intern at NBR, and David Schlangen, a Sales and Marketing Information Specialist position at Morgan and Claypool Publishers who was formerly an Intern at NBR. Recent graduates of the University of Washington, Allen holds a BA in Asian Studies and Political Science and David holds a BA in Korea Studies. The interview was organized by the NBR Alumni Network, which aims to connect the next generation of Asia specialists.