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Korea: Expert Analyzes Economic Conditions

Prague, 25 November 1998 (RFE/RL) -- Following is the first of two interviews with Joseph Williams, an international expert who has worked with the United Nations on-and-off in North Korea for four years. The name is a pseudonym the expert uses to enable him to speak freely about conditions inside the country without compromising his work or that of his colleagues.

RFE/RL asked Mr. Williams to describe the political and economic situation in North Korea.

Q: The most common news we hear from North Korea is that its economy is in desperate shape and hunger is widespread. You have recently returned from North Korea after working there over four years. How would you characterize the food situation in the country?

A: Well, I would think that the only manifestation of this situation, the difficult situation, is the number of people who nowadays approach even foreigners asking for money, for cigarettes, for a drink, for a piece of bread. And although they don't speak (your) language, they sometimes come to you making gestures that they are hungry, or need a cigarette or anything ... even people wearing military uniforms come and ask for money in the street. That's in the capital, let alone the countryside. When you go to the countryside you easily can find people coming directly to you ... and that was not the situation three of four years ago ... In the countryside people look pale, they look unhealthy from malnutrition ... But in my opinion the situation is bad but it is not very bad, you do not see children with (swollen) bellies ... Now you can see foreign aid workers all over the place ... people now believe that food comes only through the foreigners, not through the government, because the government now is unable to do that ... meat is very rare, very very rare, cabbage is the number one staple food.

Q: What has happened to North Korea's economy over the last decades to cause the situation the country is now in?

A: Well, they blame the Soviet Union for abandoning, I'm quoting, for abandoning socialism ... so now they feel like they have been abandoned, or neglected, or ignored. You see the (North Korean) economy itself, in my opinion is no economy ... they produce coal, some minerals, but I think they cannot export them because what they do produce is (only) enough for themselves. They cannot generate hard currency. So now they are trying to develop light industry, like the garment industry, I think they have joint ventures with Germany, with Japan, and with Italy, France, Thailand, even with China. I think one German company has about 40 factories working for it in Pyongyang ... They have tried to revise their laws allowing people to come in for investment because they have been inviting people to come in and do some investing, particularly South Koreans but I think the South Koreans have been reluctant to do that.

Q: You have mentioned that North Korea is also suffering an acute energy crisis?

A: They have a big energy crisis because they rely on coal and coal is the only source of power for them ... they don't have oil ... and because of the floods during the last two years in Korea, maybe that worsened the situation, most of the mines collapsed and they just have had to neglect and ignore them because they couldn't go and repair all the collapsed mines. So that's why they feel they are short of power. But recently we hear that the South Korean Hyundai company, because the owner of the company is originally from North Korea, is coming with a new prospect for the North Koreans ... he promised to build a very big power station north of Pyongyang in addition to some car assembly company and factory and other facilities all over Korea.

Q: And North Korea has signaled that it is ready to accept this kind of economic aid. But what is it willing to give in return, for example, to South Korea?

A: Well, I don't know if it's a matter of give and take or giving something in return, but I think this is what they need now and they feel it is very hard. They feel they need to do something, otherwise things might go out of hand. You know, the contact with South Korea has been going on a long time and even with Japan, although in public, and maybe this is for local consumption, Japan is dubbed as enemy number one (since World War II) ... and the recent private visits by South Koreans to North Korea is another sign of opening. You know people would love to have better relations with South Korea because they feel they are one nation and Koreans are Koreans whether in the south or the north, they say the only difference is in the political systems. And now they are calling for what they call "one country with two systems," maybe they are trying to follow ... the Chinese example ... like China and Hong Kong, two systems but in one country.

Q: Even as there are these signs of new openness, North Korea continues to pursue a weapons development program and to export, for example, missile technology, that almost guarantees its isolation by Western nations. Are these activities partly driven by the country's needs for hard currency?

A: I would think this is the main reason ... they need hard currency. I think a good example is that when the Americans asked them to give them access to a suspected underground nuclear facility they said, OK, we can give you the access but give us $300 million. So, I think they need somebody to pay them for anything they want them to do. And in my opinion they need the money. If you pay them the money then you can do whatever you want.

Q: You've mentioned that due to the economic crisis each ministry, each department of the government is now responsible for generating its own revenue and finding its own hard currency sources.

A: Yes, because the government told them that look, we are not anymore supporting you, you go and get your own source of hard currency to meet your requirements for spare parts of whatever.... Universities earn their own money, they have their own farms, they grow vegetables and fruit and they sell the fruit in the dollar shops to generate money ... they make even furniture, in some universities they make furniture, in some offices they make furniture and they sell it on the market in order to get hard currency. So, you name it you have it, every office, every department gets involved in some kind of money-generating process, whether it's... growing something or raising animals. The Central Committee has the largest shop in Pyongyang, it has all the imported goods, even computers, musical instruments, Rolex watches, Cannon cameras, VCRs, TVs, everything ... and its all for sale for hard currency.

Q: If you look ahead 10 years, what do you see in North Korea? Are its economic problems now great enough to force it to end its political isolation and to adopt a market economy?

A: Well, Kim Jong Il himself is looked at as a young leader, not (just as the son of) his father, and maybe he represents the new generation among the party leaders and the military. I think there is some kind of tug-of-war between him and his followers and the army and the generals -- now we are talking about the 500 generals in the army, you know, they are in their sixties maybe their seventies and they are still in power and they are very, very influential, but I think he is trying to make some changes and the only change people now talk about is the economic change which has got to be like the Chinese way but which maintains the Korean style... So they try to change but maybe that might take some time. I wouldn't say five years, I wouldn't say 10 years but maybe within this period ... A good sign of that is you can see the North Koreans are preparing themselves for that period ... they try to organize some courses for their people to go to Budapest and study management, market economy, and I think they are also planning to have an economics chair within the university itself whereby students study for four years economics, the economics that we know. There are so many young people who are willing to learn about the market economy and even informally they come to you and say 'tell us what is market economy?' ... so I think there is a tendency among the people and in the government also, there is a way, there is a plan to get ready for that period of openness. But when, this is a question which remains to be answered, maybe five years. Maybe less, maybe more. I don't know, we have to wait and see.

(The second interview with Williams describes the conditions of daily life in North Korea.)