|Date||March 17, 2004|
|Speaker||ENDO Tetsuya(Former Vice Chairman, Atomic Energy Commission of Japan)|
|Moderator||IRIE Kazutomo(Director of Administration and Director of Research, RIETI)|
North Korean economy in dire straits
I believe that it is more difficult to understand the Democratic People's Republic of Korea than the former Soviet Union. It is more difficult to understand because North Korea is extremely wary of foreign countries, the people are more ethnically homogeneous compared to the former Soviet Union, North Korea is not connected to Europe like the Soviet Union is, and many people in Japan - including those in the mass media - express their own subjective views on the country. Today, I would like to talk about the current situation in North Korea by breaking it down into the economy, military affairs and domestic policy, as well as touching on the nuclear problem and the abduction issue.
First of all, the economic situation in North Korea is, comparatively, the easiest to grasp. Why? Because North Korea is engaging in trade to some extent, one can tell what is going on from the outside even if they try to hide it. The bottom line is that North Korea is stuck in the most severe of situations. The fields that North Korea is most in trouble can be summarized as: 1) agriculture and food supply; 2) energy (oil); and 3) foreign currency shortage.
As for agriculture, North Korea is mountainous and cold, and not at all suited for farming. During the period of Japanese rule, people in the south engaged in farming, while people in the north in mining. In addition, farms are cooperatively managed and, above all, the biggest issue is political intervention. Since Kim Il-Sung and Kim Jong-Il are treated like gods in North Korea, whatever they say is absolute. Kim Il-Sung ordered the people to grow maize, and thus the mountains were cultivated and turned into maize fields. What happens when maize fields are cultivated in the hills is that soil washes into the rivers causing flooding if it rains, but then there would be drought if it did not rain. He also commanded the people to farm everywhere, which increased production at the beginning, but in the end production rapidly plummeted because they continued farming without using fertilizer. The international society is continuing its food aid, but there is no sign of improvement in agricultural production. Consequently, starvation and considerable malnutrition leading to deaths are taking place. Food aid is essential, but then so is a fundamental solution to the problem.
Next is the petroleum issue. While North Korea is relatively rich in mineral resources, it does not have any oil. In the 1980s, North Korea's oil demand was said to be 2.5 million tons per year, of which, roughly speaking, 1 million tons were provided by China, another 1 million tons by the former Soviet Union, and the remaining 0.5 million tons by the Middle East. The oil from China is still carried by pipeline. Oil from the former Soviet Union was provided at one-third of normal COMECON (The Council for Mutual Economic Assistance) prices. Although the facts are not clear, oil from the Middle East is thought to have been in exchange for missiles. Incidentally, following the Soviet breakup, the provision of 1 million tons of oil was halted, and even today has not been recommenced. Furthermore, oil does not appear to be coming in much from the Middle East, as a result of tighter monitoring. It seems as if about 1 million tons of oil is still arriving from China, but because North Korea lacks money, the payment appears to be on trust. Through the Korean Peninsula Energy Development Organization (KEDO), 0.5 million tons of unremunerated oil had been coming in from the United States, but this stopped as of last year. The situation is rather severe. And there is no prospect of it improving. The impact of this has been the heavy drop in the operating rates of factories. Halfway through the 90s, the economic growth rate was negative, but since the start of the 21st century it has recovered slightly.
Finally, the foreign currency shortage. Products made in North Korea do not sell because of poor quality, and as a result the factory operational rate is also low. The only things that North Korea could export are anthracite coal, zinc, iron ore and fishery products. Due to a lack of gasoline, they can only engage in coastal fishing and deep-sea fishing exports of fishery products are also on the decrease. Thus, exports and imports are both sharply decreasing. In the 70s, when North Korea's economy was still in a healthy condition, a number of plants were imported from overseas, including Japan. However, since 1975, North Korea has ceased to be applicable for international trade insurance, and even now the country has debts close to ¥100 billion including interest. It is barely engaging in contract manufacturing trade, but then the contracted parties are North Koreans living in Japan, rather than Japan itself. Trade is taking place with China. Due to the fact that many North Koreans live on the Chinese side of the border, active border trade is taking place. North Korea also earns a little by trading with South Korea.
Here, cash transfer from Japan becomes an issue. There are thought to be about 700,000-800,000 Koreans currently residing in Japan, of which two-thirds are from the South and one-third from the North. From the end of the 50s to the start of the 60s, North Korea was advertised as an earthly paradise. Not just the result of rivalry with South Korea, the aim of this was to invite engineers and workers from Japan to replace those who had been lost in the Korean War. The Koreans living in Japan at that time were persuaded to return home, and about 100,000 did. Before long, the "earthly paradise" campaign was discovered to be a big ruse and it dwindled. The influence of Confucianism on the national character is particularly strong in Korea and people are very devoted to their families. The relatives who had returned home seemed to be experiencing great hardship, and the remaining families came to want to send them money and goods.
There are three ways of sending money to North Korea: 1) legitimately, through a bank; 2) by money laundering in a third country; 3) packed in trunks, by ship. Because the amount of money sent using the first method is very little, it is thought that the latter two techniques are almost always employed. I am often asked exactly how much money is sent, but given the situation, it is not easy to know.
Those North Koreans living in Japan chiefly work in pachinko parlors, Korean barbecue restaurants or as estate agents. Following the collapse of the bubble economy, however, I think the amount of money sent to North Korea by the estate agents must have decreased by quite a bit. In addition, no matter how strong family ties are, 40 years have already passed, and I doubt that as much money is being sent now as was previously.
Consequently, the drugs trade is being used to make money. There has recently been a shift from heroin to stimulants, the popular drug among Japanese. It is claimed that a large amount of these narcotics are being smuggled in from North Korea.
In response to these problems, I think the Kim Jung-Il's administration understands that reform and transparency are absolutely necessary. However, if they are actually implemented, it would become difficult to maintain the current system. Due to this serious dilemma, only lukewarm policies can be taken as a result.
For example, it was decided that a free economy be introduced in July of last year, and the prices of quite a few products were shifted from fixed prices to market prices. However, things do not seem to be going so well. Such a scheme has no chance of success if only prices are changed and industry itself is not stimulated. North Korea's future prospects are looking exceedingly bleak.
North Korea's military and foreign policy
Of greatest importance in North Korea's foreign policy is its relationship with the United States. It is vehement in slandering the United States, but North Korea pays the most attention to it. In the past, North Korea had been economically, militarily and politically supported by the former Soviet Union and China. But since the Soviet has now become capitalist Russia, and China has been advancing its open reformist policies including establishing diplomatic ties with South Korea, North Korea has lost all the supporters behind it. Under these circumstances, North Korea seemed to look to Japan at one time. After all, the U.S. is the head of the capitalist empire, and because Japan is a reasonable counterpart, negotiations began on the normalization of diplomatic ties between Japan and North Korea following Prime Minister Shin Kanemaru's visit to North Korea. In the end, however, negotiations over diplomatic normalization were halted in 1993 because North Korea felt that Japan was only quibbling that it would not give them any money, but it took up the nuclear issue. The normalization talks were broken off under the pretext of the abduction issue, but in reality I think it was because North Korea judged that it had no choice but to negotiate with the capitalist big leader, the United States.
As to the North Korea's military development, its tanks, aircraft, and artillery exceed those of the South Korea in terms of quantity but in terms of quality its military is inferior. It is still using MiG-19 fighter planes, with very few MiG-25s or MiG-29s, while its tanks are from a previous generation. Meanwhile, South Korea possesses cutting-edge military aircraft. North Korea puts about 25-30% of gross domestic product (GDP) into its military affairs, while the figure in South Korea is around 4-5%. I wonder what will happen to North Korea in the future because North Korea's GDP is shrinking while South Korea's is growing. Another problem is that in order to acquire new military vehicles or spare parts for its best tanks and fighter jets, North Korea has to buy them from either China or Russia, but the country has no money.
Therefore, the strategy that North Korea has in mind is to concentrate its military arsenal near the 38th parallel, ready to turn Seoul into a "sea of fire" should anything occur. Another option is nuclear missiles.
North Korea's nuclear program
I believe that North Korea started to engage in its nuclear program quite some time ago because nuclear arms are not unattainable anymore, and there are no other better tools for intimidation. It is thought to have started the nuclear program around the 80s with a relatively small 5000 kW-level nuclear reactor located in Yongbyon, some 60 km northeast of Pyongyang, and it is not for producing electricity. The reactor, known as a graphite-moderated reactor, can produce very high-quality plutonium for use in weapons using natural uranium found in North Korea as fuel, if extracted when it becomes half crude coal. The technology involved is so simple that even a junior high school student could easily accomplish, if one ignored the danger of deadly radiation exposure.
Two months ago, I had a chance to hear from the Shanghai Institute of Applied Physics, Chinese Academy of Science, which is engaged in the design of nuclear warheads, how much plutonium North Korea has in its possession, or how much uranium has been enriched. They said that while much was still unknown, North Korea probably has about 4-5 kg of plutonium - at most 20 kg. According to the International Atomic Energy Agency (IAEA), 6 kg of plutonium is required to make a bomb. This is based on the Nagasaki-type of atomic bomb which fell on Nagasaki, but recently it has been said that a bomb could be made with less than 4 kg. All of which means that North Korea might possess two or three nuclear bombs. They said that although the technology required to detonate a plutonium bomb (a Nagasaki-type atomic bomb) is complicated, and thus tests are imperative, it is not clear if what they have can be defined as weapons because North Korea has not been conducting any tests.
On the other hand, the work involved in enriching the uranium is tedious. Even if North Korea is making an effort to produce it, I imagine it will still take some time. However, detonation of a Hiroshima-type bomb, which was made from enriched uranium, is easy and experiments are not necessary. Because use of plutonium was restricted when KEDO was established, it seems that North Korea is headed toward enriching uranium, which does not require tests.
I think it is only natural that Kim Jong-Il is attracted to the nuclear weapons because they do not cost much to develop and are the perfect tools for intimidation. Nuclear weapons were the reason that the talks between the United States and North Korea in the early 90s took place - otherwise the U.S., the only superpower in the world, would never deal with Asia's poorest country - and the present six-party talks would not be held either were it not for the nuclear issues.
The missiles too are for intimidation and moneymaking, and in this respect North Korea is being particularly shrewd. When it comes to conjuring up a far-fetched argument, no other country can beat North Korea For example, North Korea announced its withdrawal from the Nuclear Non-Proliferation Treaty (NPT) on March 12, 1993, because it was likely to be subjected to special nuclear inspections by the NPT. But then the summit between the United States and North Korea began and in the end, one day before its announcement was due to come into effect on June 11, North Korea suspended its withdrawal, meaning that the country was still in the NPT, but on "special terms." North Korea is using the same kind of sophistry again this time, whereby the country said that it was withdrawing from the NPT on January 10, 2003, and that the announcement was immediately put into effect the following day. The reason given for this is because the last time the country suspended its withdrawal one day before it was due to come into force. Only North Korea is interpreting the treaty in this way. In short, it is simply not possible to make any kind of a treaty with that country based on a trustful relationship. For this reason, one must constantly be aware of how to avoid being double-crossed.
The first nuclear crisis in 1993-94 was averted thanks to KEDO and the framework agreed on by the United States and North Korea. This time, six-party talks are being held to deal with the second nuclear crisis. I think it will face serious challenges though. Will North Korea actually abandon its nuclear program in the end? If it does, then what has it got left? North Korea is demanding security guarantees for the regime, but it is uncertain whether it really will abandon its nuclear program. North Korea might act as if it will. And verifying the fact will also pose problems. Who will carry out the inspections? IAEA? The U.N. Security Council? The United States and Russia? The United States and China? Nothing has been discussed yet on this issue. Even if North Korea says it would give up its nuclear program, verification will proceed with difficulty. Should the IAEA carry out the inspection, neither the United States nor Japan would be satisfied. To undergo exhaustive inspections is like being completely naked, and will North Korea accept this in the end?
North Korea's domestic policy
North Korea's domestic policy is, so to speak, the Kim dynasty. Started by Kim Il-Sung, it is a dynasty that is at most two generations old. Because it is only 50 years old, it is extremely difficult for it to exert authority. Therefore, the dynasty tightens its grip on the people, restricts the flow of information, and constructs a mythology. For example, despite the widely-known truth that Kim Jong-Il was born in the far east of the former Soviet Union, a legend was concocted claiming that he was born on the sacred Paektu Mountain and how thunder rolled at the moment of his delivery. This is how the people are brainwashed, but how does information enter North Korea? Those at the top are acquiring right information regarding the world outside North Korea. However, all radio and television that the normal citizens receive is state-run. What is even worse, like the "gonin gumi" of Edo-period Japan that encouraged the practice of informing on one's neighbors, citizens also monitor one another. Yet, I do believe that information enters by word of mouth. Anyhow, an awful lot of care is taken over the influx of information, and even up until quite recently at the worksite of KEDO, because South Koreans were working there too, at lunch time the North Koreans would sit apart from them to avoid engaging in any gossip.
As to the future of the Kim Jong-Il administration, Kim Jong-Il turns 62 this year, and when Kim Il-Sung turned 60, Kim Jong-Il had already been chosen as his successor. The son that Kim Jong-Il wanted to succeed him caused problems when he visited Japan, and is still out of grace with his father. Kim Jong-Il has a number of wives and children, but they are all young, thus the question of who will succeed him poses quite a problem.
Negotiations over the normalization of diplomatic ties between Japan and North Korea
I served as a government representative for the negotiations regarding normalization of diplomatic ties between Japan and North Korea in the past, but it was only a formal appointment. The negotiations were halted just before they started, seemingly because of the abduction issue. Kim Hyon-Hui, who bombed a KAL airliner in 1987, attested that she had learnt Japanese from a Japanese person by the name of Li Un-Hye, that was almost unquestionably Yaeko Taguchi who had disappeared from Niigata Prefecture at the end of the 1970s; and Japan wanted to be informed of her whereabouts. North Korea left their seats at the negotiation table when Japan asked if there was such a person as Li Un-Hye, and that was the end of the negotiations. I wanted to restart the negotiations somehow, but there was no way that one could ignore the abduction issue. This was all before anything had been mentioned about Megumi Yokota. It was not clear whether the abduction issue was an entrance or an exit to negotiations. Anyhow, I tried all manner of things to restart the negotiations somehow, but nothing came to any fruition. And so for eight years no negotiations took place between Japan and North Korea.
Through eight rounds of negotiations between Japan and North Korea, I am acquainted with the general points of contention. Japan tried to proceed with the negotiations with North Korea on the basis of the Treaty on Basic Relations Between Japan and the Republic of Korea which had been concluded in 1965. Because Japan had not fought against South Korea, the idea of compensatory payments seemed peculiar, but because South Korea had been colonized by Japan it had the right to make claims. However, that was a long time ago and the facts were not clear, so in the end both Japan and South Korea rescinded their right to make demands, and it was decided that Japan give $500 million in economic aid, which served for the economic expansion of the country. Japan wanted to negotiate with North Korea likewise, but North Korea claimed that it was a war. The reason given was because Kim Il-Sung had led an uprising against the Japanese army and won. Japan held the position that its colonial administration had acted in accordance with international law, ethical perspectives aside, since it was grounded upon the Korea-Japan Annexation Treaty, but North Korea rejected the idea firmly. Opinions differed on almost everything. And on the nuclear issue, North Korea claimed that talks with Japan were not necessary.
However, in signing the Japan-DPRK Pyongyang Declaration one and half years ago, North Korea said it would drop the idea of compensation, and that it would accept economic aid, such as that given to South Korea. Japan and North Korea had finally started to discuss on an equal footing, but it was only a beginning. They have not yet talked about the specific figure of money. Why has North Korea broken off? Several things can be considered, but I take it as, first and foremost, a sign that North Korea desperately needs money.
Negotiations between Japan and North Korea have some hurdles to overcome, such as the abduction issue and the nuclear issue, and there are still the issues of the figure of money and apologies. As I mentioned earlier, even if North Korea says it would completely abandon its nuclear program, as the United States insists, there still remains the incredible difficulties involved in proving it has done so. There are concerns that North Korea will complete making nuclear weapons in the meanwhile.
On the other hand, the difficulty surrounding the abduction issue is the question of how far one must go before the issue can be said to have been resolved. One condition is the safe repatriation of the eight family members of the five abductees who have already returned to Japan. A second condition is making North Korea give a more proper explanation as to the fate of the 10 Japanese who are said to have passed away. The third condition regards the dozens more who are said to have been abducted, and how they should be dealt with before the whole matter can be laid to rest. The first condition is clear-cut. I am not sure how North Korea will take the second condition, but my feeling is that compliance with the first condition is not that difficult for North Korea. Rather, North Korea would perceive the remaining relatives as a burden. But, because North Korea is a calculating country, it surely not going to return them for free. North Korea might keep them as wild card to use in case of an unforeseen event. I think that dealing with the second and third conditions will be rather more difficult.
Therefore, the restarting of negotiations is very difficult and the proceeding of them will be even more difficult. Furthermore, KEDO's construction of a light-water nuclear reactor is not functioning well. Yet, KEDO, the organization itself, could prove useful in the future. It is a shame to waste the light-water reactor which is already a third complete. The six-party talks will not accomplish anything immediately. I think Kim Jong-Il is suspending anything before the result of the U.S. presidential election is known. He considers it in his interests to wait until the end of November because there is a great difference in policy on North Korea between the Republican Party and the Democrat Party. Yet, he will not stop the six-party talks, and I think Kim Jong-Il's strategy is to let things just drag on.
Questions and Answers
Q: You said that the six-party talks will not accomplish anything immediately, but since North Korea is economically in a terrible state at the moment, which side do you think would benefit from the passage of time - the U.S. or North Korea? Also, you said that it is technically difficult to engineer a plutonium bomb, but it seems like this is not the case recently. What is your opinion on the matter?
A: I will begin by answering the second of those questions. It certainly became possible recently to develop plutonium bombs through simulation without carrying out any actual tests. But, I do not believe that North Korea possesses the equipment to carry out such simulations. Having said that, North Korea is developing nuclear weapons more for political purposes rather than for military purposes. In order to intimidate Japan, the bomb serves enough purpose even if it does not hit its target or even does not explode. Regarding the first question, it is difficult to answer but if I compare an autocratic state like North Korea and a democratic nation whose politics are influenced by public opinion, I feel the democratic nation is slightly more at a disadvantage. In North Korea the people come second no matter how bad the economy may be, it is enough for Kim Jong-Il to only care about strengthening the military and the political party that he relies on.
Q: I am sure that the U.S. and South Korea would both like an unified Korea, but how do you think China feels on this issue?
A: To a certain extent China would like North Korea to remain as a buffer zone, which is obedient to some extent. From China's point of view, with a population of 25 million North Korea is a small country and it does not mind providing a modest amount of monetary aid. But China would like North Korea to stop its development of nuclear weapons because these issues are bringing instability. Therefore, although it hopes that the six-party talks will boost its national prestige, I think that China is also participating in them with the intention of stopping North Korea's nuclear program. China has no intention of challenging the United States, in fact its relations with the United States are of utmost importance for improving China's economy even further. Thus China wants to see stability in East Asia, somehow.
*This summary was compiled by RIETI Editorial staff.