PIIE Blog | North Korea: Witness to Transformation
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
Subscribe to North Korea: Witness to Transformation Search
North Korea: Witness to Transformation

Slave to the Blog: Groundhog Day

by | April 3rd, 2014 | 06:13 am

OK, so it’s not literally Groundhog Day but when I looked at my notes that’s what it seemed like.

I think that it was almost two years ago when I first wrote about Seoul’s attempt to collect on the “food aid loans,” the creative fiction adopted during the Sunshine era to provide aid to North Korea but circumvent international food aid rules by describing the transfer as a “loan.” Subsequent “loans” were made during the Roh Moo-hyun administration to support North Korean manufacturing activities. I remember in one post I quoted George Thorogood’s rap from “One Scotch, One Bourbon, One Beer,” about his landlady trying to get her back rent, and in another Bruce Klinger somehow made the link to Lee Majors and the “Six Million Dollar Man.”

Well, they’re back. The Korea Herald reports that the interest and principal due on the Export-Import Bank of Korea loans are up to $86 million. Seoul keeps sending Pyongyang bills, but my guess is that they have about as much chance collecting as Thorogood’s landlady had with her back rent. This must be about the fourth time this issue has come up in this blog.

Know what else never changes in North Korea? Inequality. Last year I wrote about how economists at the KDI School did yeoman’s work mining refugee data to construct measures of inequality. Steph Haggard, who coined the term “Pyongyang Illusion” several years ago to describe the widening gap between the privileged capital city of Pyongyang and the hinterlands, passed along a recent story from the Chosun Ilbo which argues that the growing diverenge in fortune is at least partly due to policies ordered by Kim Jong-un. These include both measures to intensify the screening of residents for political loyalty as well as increase the allocation of resources to the capital.  Some of the “detail” is pretty juicy, but, alas, unconfirmable:

“The cream of North Korean society feed their babies South Korean formula and drink imported coffee and bottled water, keeping dogs and working out at the gym. Stores in the capital sell luxury goods, where the wealthy can buy Chanel and Dior clothes and handbags. They eat at restaurants in the newly-opened swish Haedanghwa shopping mall in Pyongyong where a dish costs more than $50. An intelligence official here said around one percent of North Korea’s population, or 240,000 people, are believed to own between $50,000 and over $100,000 in assets.”

Jim Rogers, where are you?

Hope for economic reform springs eternal, but suppression of market information is perpetual: from Kang Mi Jin  at the Daily NK: authorities warned residents in border areas that market prices are “state secrets”, so any information shared with the outside world will result in harsh punishment. An anonymous source from North Hamgyong province reports that “Recently lectures at People’s Units have emphasized that the Republic’s secrets are being leaked to the outside via phone conversations. We were threatened that if anyone was caught in the act of calling someone outside of the country they would be sent to a prison camp.” Not exactly the BLS.

And the marketization from below doesn’t end either. Call them servi-cha, tro-tros, jitneys, whatever, but the side hustle goes on. This time its Seol Song Ah from Daily NK again basing the story on an anonymous  source in North Hamgyong reporting that private mini-buses are emerging as a popular form of mass transit. These unregulated forms of transport are illegal, but whether you call a dash or a bribe, some FX can get you through that government checkpoint.

A few years ago I wrote a post in which Simon Cockerell of Koryo Tours made some comment about people “collecting” countries which brought to mind a minor subplot in a Kundera novel in which two of the male characters have a lifelong contest to see who can sleep with women from the highest number of countries [Hey readers: someone write in and remind me which novel its from]. Anyway, Simon dropped the pretense in a recent blog post: yes, his tour group does cater to such characters, and no, to his knowledge, none of his clients have planted the flag so to speak.

Just to show that we are equal opportunity at Witness to Transformation, our final story concerns enduring behavior in South Korea. Earlier this year I wrote a post on President Park Geun-hye’s plan to revitalize the South Korean economy. A recent headline in the Maeil Business News, South Korea’s equivalent to the Wall Street Journal: “S. Korea ‘bureaucracy risk’ derails economic innovation.”  Need I say more?

(PS You know I was thinking about doing something on the DailyNK story about the surge in opioid usage in North Korea—drugs are another unchanging story—but why bother? Why not just leave you with an impression of what happens to your talent if you take too many opiates? Jimmy Page from the mid-1970s…)