Op-eds

Aid to North Korea

by Stephan Haggard, University of California, San Diego
and Marcus Noland, Peterson Institute for International Economics

Op-ed in the KoreAm Journal, 18, no. 8
August 2007

 


In the 1990s, North Korea experienced one of the worst famines of the 20th century. By our estimates, as many as 1 million people, or five percent of the population, perished, equivalent to 15 million deaths were such an event to happen in the United States. Although the worst of the famine has passed, food shortages and malnutrition remain a chronic problem with some households spending up to 80 percent of their income on food. As many as 300,000 refugees have fled to China, living in fear and uncertainty, vulnerable to deportation and punishment in North Korea at any moment.

The world community has responded to this tragedy with considerable generosity, committing more than $2 billion in food aid over the past decade. The United States alone contributed more than $600 million, equivalent to 2 million metric tons of grain, and South Korea has become a major donor. The Korean community in the United States has also assisted, particularly through churches involved in assisting refugees and providing aid through China.

Aid efforts reflect strong humanitarian impulses. But 10 years after the famine we have to assess the impact of these efforts. Is aid benefiting the North Korean population? Or is it merely shoring up the Kim Jong Il regime? Should aid be curtailed in order to achieve political objectives, such as denuclearization or even regime change? What forms of assistance are likely to be most beneficial over the long run?

The primary conduit for the famine relief effort has been the United Nations’ (UN) World Food Program (WFP). It solicits food aid from member countries and oversees its distribution to areas of the world experiencing distress. At the peak of its program in North Korea, the WFP was distributing enough food to feed one-third of the population—roughly 6 million vulnerable individuals—in a country the size of Louisiana.

Yet at virtually every turn, the North Korean government places roadblocks in the way of the donor community, for example, prohibiting Korean speakers or ethnic Koreans from participating in the WFP’s operations. Today, fewer than 10 WFP staff are present, confined to the capital city, Pyongyang, and only permitted supervised trips outside the capital once every three months. Under such constraints it is impossible to monitor aid deliveries effectively, and our estimates suggest that up to half of aid deliveries do not reach their intended recipients.

Obviously, it would be best if the aid reached its targeted beneficiaries. Yet in the North Korean case, the diversion of aid had an oddly positive side effect, encouraging the development of markets. During a famine, aid is extremely valuable, and there is an enormous incentive to sell it in the market—if such markets exist. In North Korea, however, markets were thoroughly suppressed under the communist system. Ironically, the inflow of aid acted as a lubricant, encouraging the development of markets, a desirable development in the long run.

In this context, one of the positive things done by the US government has been to insist that a large share of its contribution should be routed through ports in the extreme northeast of the country where problems are the worst: Even if the aid is stolen and sold in the markets, it will still be circulating in the region where malnutrition is most severe. Under such tenuous conditions, providing aid in the form of poor people’s food such as barley or millet rather than rice, the preferred staple of the elite, is another way of trying to maintain the humanitarian effectiveness of the program.

Not all food aid is administered by the WFP. Indeed, its share of total aid has fallen sharply in recent years, and in 2005 North Korea threatened to expel the UN agency. This diminution in the role of the WFP has been offset by an increase in bilateral food aid from South Korea. South Korea’s “sunshine policy” seeks to entice North Korea toward good behavior through positive inducements, and its aid program puts greater emphasis on political relations with the North over more narrow humanitarian concerns. South Korean aid primarily is in the form of rice, delivered to the relatively well off regions in the southwest, with relatively little monitoring of its distribution.

This approach has become increasingly controversial in South Korea. Engagement did not stop North Korea from testing a nuclear device in October 2006 and promises of food aid and other assistance may even encourage bad behavior. South Korea suspended food and fertilizer assistance to the North following the missile tests of July 2006. That aid was recently resumed following an agreement in February of this year on the nuclear question. But no sooner had South Korea resumed food shipments than North Korea again tested ballistic missiles. Despite massive assistance to North Korea since the summit of 2000, other forms of cooperation between the two countries have been on-again, off-again. For example, the North Korean government has repeatedly played politics with family reunions across the demilitarized zone (DMZ).

Although the food situation in North Korea has improved in the last 10 years, the country remains highly vulnerable to shortages. As a result, the international community faces an ethical dilemma. It is tempting to walk away, hoping that the intensification of misery will contribute to regime change. But such a strategy would only worsen the plight of innocent North Koreans, and a regime that survived a great famine is unlikely to collapse in the face of renewed shortages.

What can be done? First, the humanitarian community would benefit from greater coordination. Two bilateral donors, China and South Korea, supply large amounts of aid outside the ambit of the WFP. Such aid effectively undercuts the agency’s negotiating leverage with the North Korean government. More active South Korean participation in the UN process, which is beginning to occur, could strengthen the hand of the WFP and contribute to improved access and monitoring.

Although there is no alternative to continued food aid, the growth of nongovernmental organization (NGO) and church involvement deserves the support of the Korean-American community. NGOs and churches operate on a small-scale, supporting a variety of projects from orphanages to noodle factories. Such efforts involve face-to-face contact and subtly convey important information from the outside world, such as the fact that Americans bear no ill feelings toward the North Korean people.
Over the long run, however, the objective of the international community should be to wean North Korea off of food aid. This strategy involves several components. Now that we have at least a preliminary agreement on the nuclear issue, the United States should move quickly to encourage North Korea to join the international financial institutions. The World Bank, International Monetary Fund, and Asian Development Bank are not in the business of providing handouts. Rather, they offer development lending on the basis of careful planning and in the context of economic reform. Joining these organizations would expose North Korean officials to new economic ideas, and encourage greater transparency in economic decision making.

The ultimate solution to North Korea’s food problems is to be found not in humanitarian aid or even in development assistance, but in economic reform and opening. North Korea’s domestic food production needs to be supplemented by commercial imports of grain, as has been the case in South Korea for decades. To pay for these imports, North Korea needs to engage in commercial relations with the world economy: expanding exports, encouraging foreign investment, and abandoning its failed strategy.

South Korea has an important role to play in this regard. South Korean aid needs to be supplemented with greater encouragement of commercial and investment relations between the two countries. The Kaesong Industrial Complex may be a first step in this direction. Such export-processing zones did play a role in the early stages of both South Korea’s and China’s development. Yet such zones also have drawbacks, including limited contact with the North Korean economy and extensive subsidies that blunt their commercial impact.

In sum, the international community—the United States, South Korea, churches, NGOs—all have a role to play in providing assistance to the North Korean people. Yet we must also focus on the long-run objective of transforming North Korea and reducing the country’s dependence on aid. This requires a diplomacy that continually encourages economic reform, commercial trade, and investment relations. At the private level, the Korean-American community can have impact through private strategies that expand people-to-people contacts and gradually weaken the regime’s grip.



© 2014 Peter G. Peterson Institute for International Economics. 1750 Massachusetts Avenue, NW.
Washington, DC 20036. Tel: 202-328-9000 Fax: 202-659-3225 / 202-328-5432
Site development and hosting by Digital Division