Post a Comment On: China Matters

Abstract: North Korea is suffering another year of famine. Kim Jung Il's inability to keep his people fed is sometimes cited as a justification--and even an implement--for regime change.

Until its economy was disrupted by the collapse of the Soviet Union, North Korea produced 10 million tons of grain a year--vs. little over 4 million tons expected for 2005.

These circumstances and the Chinese example of the Great Leap Forward allow the North Korean leadership to view the great hunger as a transient crisis, not a systemic failure of the DPRK.

If the Kim Jung Il regime survives its confrontation with the United States, it may decide to follow the Chinese example, discard its ideology of economic self-sufficiency, and seek to bolster its political viability by allowing its people to share in the prosperity of the global economy.

China Matters reviews the history of North Korea's agricultural crisis and places it in the context of Asian economic development, pointing out that agricultural self-sufficiency is neither the norm nor the ideal for the East Asian "tiger" economies.

It concludes:

Pyongyang needs is food aid, fertilizer, and time—time to reform its economy and rebuild its agriculture.

Instead, it is enmeshed in a web of real and virtual sanctions similar to that which accelerated the decline of the Iraqi standard of living under Saddam in the 1990s.

But Saddam’s regime survived sanctions—though many of Iraq’s people did not.

It took an invasion to finish the job sanctions was supposed to do, and end his regime—an invasion that has exacerbated Iraq’s humanitarian crisis instead of relieving it.

Sanctions did not lead to the regime change result we desired.

Instead, the failure of sanctions impelled us on a course we now recognize as disastrous.

That’s something we should remember when we use a defacto cutoff of food aid in an attempt to pressure and destabilize the regime of Kim Jung Il.

Letting North Korea starve is not, in the end, the fate its Communist government has doomed it to suffer.

It is a political decision, made largely--though not entirely--in the West and China.

Full text:

A South Korean think tank reported that North Korea will once again have to rely on international aid to avoid famine.

It’s understandable to take this as just another example of how some sorry-ass Communist regime can’t feed its own people.

And it’s inevitable that some observers will take the famine conditions in North Korea as evidence of the DPRK’s failed state status—and an excuse to withhold aid and let the regime collapse.

Hey it’s their own fault!

If mass starvation is nothing more than the defining attribute of a failed state, then North Korea needs regime change before it can feed its people.

Then somehow—through that alchemy of free market forces, unbridled optimism, and immunity from consequences that served us so well in rebuilding Iraq—we can hope things will be so much better once the Kim Jung Il regime has disappeared.

Reality is a little different. The North Korean food crisis can be attributed to the failure of the North Korean government—its failure to respond adequately to a fatal combination of forces beyond its control, including geopolitical changes, bad weather, and Western hostility.

The DPRK did a good job of feeding its population—until 1989, when the Soviet Union--and its unstinting aid to Pyongyang—disappeared.

The Soviets weren’t sending food. They were sending energy.

Pyongyang’s energy imports were cut by 60%. The sudden cutoff devastated its industrial economy and rippled into the agricultural sector, disrupting fertilizer production and compromising the DPRK’s ability to mechanically farm and irrigate its fields.

North Korean fertilizer use crashed from 700,000 tons to 230,000 tons.

And food output crashed from over 10,000,000 tons to less than 5,000,000.

The grim numbers are recorded in the reports of the U.N.’s Food and Agriculture Organization investigations and are neatly summarized in a report that treats North Korea as a worst-case example of a sudden energy cutoff peak-oil Armageddon scenario.

North Korea’s agricultural land per capita is about the same as China’s. But its productivity—and inputs—today are about 40% lower.

I see parallels with China in its pre-market reform days.

Not just in productivity. The collapse of agricultural production resulting from the wheels coming off a socialist planned economy evokes parallels with the disaster of the Great Leap Forward in the 1950s.

Agriculture, which has been a human vocation for 4000 years, is surprisingly vulnerable even in its modern incarnation to transient disruptions in human, mechanical, and material inputs.

Chinese agriculture was staggered in 1959 by the disruption of rural labor diverted the catastrophic crash industrialization of the Great Leap. The error was exacerbated by bad weather and compounded by disastrous mismanagement of the planting program and the grain stocks that they were able to accumulate. Despite desperate efforts to repair the damage, the fatal dislocations persisted into 1961 and over 20 million people starved to death.

Kim Jung Il can, at least, point out that the initial shock was external and not owing to spectacular errors of commission by state planners. But North Korean agriculture has been unable to bounce back for over 10 years. Over 2 million died and hunger and malnutrition have become grim facts of life for the North Korean people.

Although the economy has expanded over the last six years, the DPRK can only meet 10% of its fertilizer needs domestically, and produces at least one million tons of grain short of what it needs to feed its people each year.

It is digging an ever deepening hole for itself, underfertilizing, overfarming, and creating a barren, nutrient-exhausted soil that will take years of remediation to set right.

The New York Times reports that this year Pyongyang is sending millions of city dwellers into the fields in an exercise that is probably part labor mobilization—to take the place of the tractors and pumps that no longer have diesel and spare parts to run with—and partly emergency evacuation—getting starving people out of the cities and closer to the food in the country, where they can barter and scavenge their living.

The fundamental error of the Kim Jung Il regime has been its lack of a Plan B: in the near term, it had no pre-existing foreign exchange reserve to cushion the population against this major, if not entirely foreseeable disruption.

In the long term, it wasn’t set up for a transition to a market economy that would generate exports, attract investment, and create savings that could be tapped to effect food imports as needed.

The fact is, most of the high population density East Asian countries import food.

The demand that North Korea—originally the most heavily industrialized portion of the Korean peninsula and perhaps best considered as a East Asian dragon in utero (or hibernation)—prove its viability as a sovereign state through agricultural self-sufficiency is something of a canard if you look at its neighbors.

The world’s biggest importers are Japan (over 25 million tons per annum of food and feed grains) and, ironically, the Republic of Korea (13 million). This compares to the 700,000 tons or so of grain North Korea needs to import (it faces a 500,000-ton shortfall) to achieve the meanest level of subsistence for its population.

(While we’re talking irony, those regime-change wonders Iraq and Afghanistan are among the biggest non-industrialized or de-industrialized grain importers a.k.a. basket cases, with current annual imports of 3 million tons and 1.6 million tons respectively. Afghanistan might be considered a free-market success story because its six-fold increase in wheat imports is driven in part by the rational decision to devote its resources to an extremely profitable export commodity—opium.)

Perhaps the true roots of the East Asian economic miracle lie in the extension of the New World’s bulk grain business to Asia, ensuring reliable supplies of grain to countries that otherwise would have to choose between balanced development of agriculture and industry and simple pell-mell industrialization underwritten by U.S., Canadian, and Argentine grain.

Of course, the Asian countries that couldn’t make the choice in favor of headlong industrialization underpinned by grain imports were the socialist economies: China and the DPRK.

I remember reading somewhere that China’s opening to the West in the 1970s was triggered by the Oh Shit realization that China would find itself trapped permanently in a high risk low growth cul de sac if it persisted with its primitive agricultural and industrial policies as the population grew remorselessly and the country’s food security became more and more vulnerable to a hiccup in the harvest.

Even if the quota of hog bristles and silver ear fungus for export through the Canton Trade Fair was multiplied with Stakhanovite intensity, in other words, China would always be a step away from famine and profound internal and international weakness if it did not change its system.

And change its system it did, creating an export juggernaut and, in developments that have received less attention, it brought large numbers of peasants into the cities and townships—and into the market economy, getting the farmers hooked on debt and consumer goods, and reducing the propensity of the agricultural sector to hoard and consume its own grain while soaking up subsidized state inputs.

During its agricultural and economic reform, China was in the enviable position of benefiting from a lot of pro-China feelings from the West, possessing enough foreign exchange reserves to meet its food needs, and having generally good harvests in the 1980s.

The DPRK has, of course, had none of these advantages.

Disruption to the economy was followed by terrible weather and accompanied by hostility of the Western powers that Kim Jung Il did much to exacerbate.

So a humanitarian crisis that could be alleviated by the redirection of four days of Asia’s grain imports per annum to North Korea is allowed to persist because of “donor fatigue”.

In the absence of aid, North Korea has been trying to cover the shortfall by agricultural reform, decollectivizing land and allowing free markets in agricultural products.

Trouble is, the peasants are withholding what grain they have—hunger is worst among the urbanized population—and the price of food is out of reach of many families.

And the Chinese-style mobilization campaign to reclaim marginal lands for agriculture has apparently been counterproductive in some cases. Flooding not only destroyed many newly terraced fields, but swept down sand and gravel and destroyed otherwise viable fields in the valleys.

DPKR agricultural policy has not been one of folly and neglect. It has been one of frantic improvisation and growing desperation as nutrients are mined out of an increasingly barren soil, plants and machinery rust uselessly, and people starve.

One of the interesting questions is why the PRC didn’t step in to ameliorate the the North Korean regime’s ordeal.

Maybe it was parsimony. Maybe it was focus on the emerging relationship with the ROK at the expense of the DPRK.

And perhaps Kim Jung Il felt so insecure about his authority that he felt he could maintain his position only by the most ostentatious and counterproductive displays of independence from Chinese interference.

More intensive Chinese-style market reforms—which might have revived the industrial economy and created more admirable and popular exports than SCUD missiles—were rendered politically suicidal by the need of the isolated Pyongyang regime to keep itself on a militarized state of siege footing vis a vis the West.

What is preventing the DPRK’s recovery is a lethal combination of its own inability to reform while under intense political and economic pressure, and the unwillingness of China and the West to assist it in a transition to a market-mediated socialist economy with the ability to import and attract investment.

All Pyongyang needs is food aid, fertilizer, and time—time to reform its economy and rebuild its agriculture.

Instead, it is enmeshed in a web of real and virtual sanctions similar to that which accelerated the decline of the Iraqi standard of living under Saddam in the 1990s.

But Saddam’s regime survived sanctions—though many of Iraq’s people did not. It took an invasion to finish the job sanctions was supposed to do, and end his regime—an invasion that has exacerbated Iraq’s humanitarian crisis instead of relieving it.

Sanctions did not lead to the regime change result we desired. Instead, the failure of sanctions impelled us on a course we now recognize as disastrous.

That’s something we should remember when we use a defacto cutoff of food aid in an attempt to pressure and destabilize the regime of Kim Jung Il.

Letting North Korea starve is not, in the end, the fate its Communist government has doomed it to suffer.

It is a political decision, made largely--though not entirely--in the West and China.