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North Korea: Witness to Transformation

Monitoring Aid

by and Marcus Noland | May 17th, 2011 | 07:58 am
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A central issue—if not the central issue—in the debate over food aid to North Korea is the effectiveness of monitoring arrangements. In Famine in North Korea, we reached a conclusion that no one liked and is unpopular to this day: that any monitoring agreement is imperfect; that some diversion will inevitably take place; but that food aid may nonetheless be warranted.  Everyone wants all good things to go together; sorry, that’s not the way the world works.

Rather than replay that debate, we thought it would be useful if everyone was on the same page with respect to monitoring agreements over the last several years.  The outcomes reflect the bargaining interests of the North Koreans, the donors, and their service provider intermediaries—the WFP and/or NGOs.

Pyongyang has never liked stringent monitoring arrangements. Concessions on this front are not only significant for reducing diversion; they could also be a significant sign of conditions in the country. When things are good—or aid is perceived as unnecessary—the WFP mandate is restricted and monitoring agreements are weakened. When things are bad, the North Koreans make concessions.

Likewise, the intensity of donor commitment to stringency may vary with circumstances. Everyone holds to the myth that food aid is purely humanitarian but as we also show in Famine this is obviously not the case. When diplomatically useful, donors will “throw them some food” to induce cooperation on otherwise unrelated political or military issues. When a tough line is deemed necessary on political or military grounds, the food situation is not as bad as it seems and humanitarian assistances slows.

As for the service providers, while they pay proper obeisance to the idea of standards, in practice they may have their own parochial interests in aid—regardless of monitoring stringency.

A brief recap. Beginning in 1995, the WFP, which historically has handled the vast majority of food aid going to North Korea, negotiated a series of agreements over access.  This process reached its zenith in 2005 when WFP reached an agreement “in principle” that provided for:

  • Household food information. Every four months the WFP would undertake baseline household surveys, interview local officials and others (e.g., farmers, factory officials, etc.), hold focus group discussions, and take observational walks.
  • Distribution monitoring. The WFP would shift at the margin to monitoring distribution centers and food-for-work projects, interview those receiving food aid there, and increase monitoring visits to non-household sites (e.g., county warehouses, factories producing food products with WFP commodities, and institutions receiving food aid).
  • Ration cards. All WFP beneficiaries would be given a WFP-designed and printed ration card that would be checked by the WFP at distributions.
  • Commodity tracking. WFP staff would be allowed to physically follow food aid from the port of entry, to county warehouses, to three to six Public Distribution Centers (PDCs) per county, as well as implement a more uniform and consistent system to track commodities by waybill number, with the ultimate goal of eventually introducing an electronic system that would allow tracking of individual bags from port to final point of delivery.

On the back of improved harvests and generous aid from South Korea and China, later that year North Korea pulled back and threatened to expel the WFP and the NGOs.  This was the beginning of the period we call “reform in reverse,” which included misguided effort to revive the public distribution system (PDS),

The 2005 package was never implemented, but elements of it found their way into the next agreement concluded in June 2008.  The Six Party Talks had made some progress in 2007 and humanitarian assistance was a sweetener. Severe floods in the fall of 2007 provided the pretext for aid, as they did in 1995, even though the North Koreans did get around to negotiating in earnest until the situation worsened dramatically in early 2008, as we tried to document at the time.

The negotiations over the monitoring protocol revealed a split within the North Korean side.  The US was the main donor.  On the North Korean side, the counterpart organization to the American NGOs was the Korea-America Private Exchange Society (KAPES) while the WFP’s counterpart was the National Coordinating Committee (NCC). The US government could effectively impose its will on the NGOs for whom the North Korea project was a potentially big deal who in turn were facing the relatively dovish KAPES.  In contrast, the US government had less complete sway over the WFP who in turn were dealing with the more hard-line NCC.

In effect the US negotiated a relatively strong deal with KAPES which was then extended to the WFP-NCC program. However, the NCC had vociferous objections to the program from the outset and refused to adhere to the terms of the agreement. Although accounts differ, it appears that WFP management may well have explicitly or implicitly signaled to their North Korean interlocutors, presumably in an attempt to maintain access, that strict adherence was not mandatory. Donor problems with the WFP program led to interruptions and its eventual suspension in late 2008. The NGO managed-effort continued in operation until early 2009.

All of this was unfolding against an inauspicious political backdrop. With Kim Jong Il’s stroke in August 2008, the DPRK starts to retreat into a defensive crouch, culminating in the missile and nuclear tests that greeted the incoming Obama administration. Perceived security needs trumped humanitarian ones, as they always do in North Korea. The regime was willing to walk away from much-needed grain rather than make the minor adjustments that would have been required to sustain it.

In March of this year, the Rapid Food Security Assessment (RFSA) undertaken by WFP, FAO and UNICEF reached dire conclusions which we thought were generally warranted by the evidence. The new LOU—signed in April–is linked to the emergency operation formally launched in May 2011 that will seek $200 million in support. The program will provide both staple cereals to vulnerable groups through the Public Distribution System (PDS) and inputs for the local production of corn-soy milk, rice-milk blend and nutrient rich biscuits. Given the urgency, the WFP is looking to procure food in China and other countries in the region, and use ports and rail entry points as close as possible to the program areas.

Before diving in, an editorial comment on transparency. As much as we respect the WFP, we do not understand why the 2011 LOU cannot be released to the taxpayers who are being asked to provide this assistance to the DPRK. The WFP is now less transparent in this regard than the IMF; the following is thus based on the equivalent of a press release, not on a full parsing of the document itself.

The bottom line is as follows; the table below provides the details. In terms of county coverage, staffing, Korean speakers, sub-offices and requirements with respect to lists of institutions provided to the WFP, the new agreement is broadly similar to the one reached in 2008—which was never implemented by the North Korean side, at least with respect to the WFP component which accounted for 80 percent of the deal.

There are two ways to interpret this agreement: as a benchmark of what might actually be implemented in North Korea; and as implicit if imperfect evidence of the degree of distress. Under the monumental assumption that the agreement is implemented as set out on paper, some things that matter look better. Nutritional assessments are a big plus. As we have emphasized ad nauseum, the debate about food aid never looks at the crucial role of markets in the food economy. Markets can now be monitored, something the North Koreans had always resisted. Opportunities for wholesale diversion are limited by ability to monitor at port of entry more aggressively, and if the commodity tracking system is in fact implemented it will be harder to divert at the “retail” level as well. Nothing is perfect; Walmart loses product in its supply chain so we should not think it is avoidable in North Korea.

Most critically, actual implementation will be a function of North Korean, service provider and donor behavior.  As we have seen from the 2008 episode, things can go badly awry. Some have gone so far as to advise the US government to cut out the WFP and NGOs entirely, going to purely private subcontractors who would presumably be more scrupulous in carrying out donor instructions.

The 2008 agreement was not simply the result of a breakthrough on the nuclear front; the food situation was dire too as we argued at the time. We have seen nothing to challenge our assessment then. And now the North Koreans are making more concessions on monitoring, not fewer. One  obvious inference: the situation is worse. But this conclusion has to be tempered by the recognition that the outcome is a product of negotiation, and good faith on the part of North Korea can never be assumed.

Issue June 2008 LOU New Operating Conditions effective June 2009 April 2011 LOU Comment
Geographic Coverage 8 provinces, 131 counties (an expansion from 50 counties of the previous agreement) 6 provinces, 57 counties; Ryanggang, South Phyongan and Pyongyang are excluded. 8 provinces, 107 counties DPRK did not grant access in all counties WFP wanted to operate; under “no access, no food” norm, those counties are cut from operations
International Staff Numbers Up to 59 international staff, with numbers linked to food shipments. Strict quid-pro-quo: one international staff per 10,000 MT of food commodities. Staffing bottoms out at 10. Up to 59, with 60% involved in monitoring activities Looks like status quo ante
Korean-speakers Agreement to recruit international Korean-speakers for the first time, with maximum of 8 employed from August 2008. International Korean-speakers cut; last one departs June 2009. A provision for Korean speakers, but exact terms not released. Status quo ante.
Sub-offices 5 field-offices (Hyesan, Chongjin, Hamhung, Wonsan and Haeju) to complement WFP Country Office in Pyongyang. Only Chongjin and Wonsan allowed outside Pyongyang, but closure of Hyesan and Hamhung was from lack of funding. Allows for 6 field offices; exact locations not released but WFP claims best access outside Pyongyang since 1996
Assessments Crop and Food Supply Assessment in October 2008; joint WFP/UNICEF Nutritional Assessment postponed. No arrangements for assessments, but UNICEF carries out Multiple Indicators Cluster Survey in October 2009. Crop and Food Supply Assessment scheduled for September/October 2011; nutritional assessment in 2011; anthropometric measurements (middle upper arm circumference) allowed; access to markets for the purpose of monitoring and tracking prices and commodity composition Significant changes if the North Koreans allow nutrititional assessments and market visits to take place.
Access/Monitoring Field visits with 24 hours notice; random access within designated area to beneficiary institutions, factories, households etc. One week advance travel plan. No formal changes on randomness but one week advance travel plan reduces it. Field visits with 24 hours notice, but decision of which institutions to visit can be made on arrival at the location. Randomness is crucial to effective monitoring; this looks like a subtle improvement.
Distributions Global Implementation Plan (GIP) lists all institutions/outlets; monthly distribution plans issued by WFP to Government. No formal change but obvious adjustments in the face of declining aid flows. Appears similar to 2008 agreement.
Supply Chain Management Dedicated warehousing for WFP commodities; local Food Production (LFP) in 13 factories. No changes to dedicated warehousing. Government wanted to run LFP factories but their fate not clear with declining coverage. WFP can access any facility where food is being stored. New elements include access at any time to warehouses at entry points (ports, rail heads); use of computerized commodity tracking system and greater timeliness of documentation. We have heard credible reports of large-scale diversion at the time food was delivered during the great famine. These seem like significant improvements.