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North Korea’s Transformation: Famine, Aid and Markets

Published in Review of North Korea Economy

This essay is an extended version of "How Famine Changed North Korea," an oped published on the Washington Post on February 28, 2008. Its Korean translation was published on the April 2008 edition of Korea Development Institute’s monthly magazine, Review of North Korea Economy.

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Introduction  
The true Communists starved to death at home, silent, obediently waiting for the state to come and save them. At least, that's what some North Koreans say, only half in jest. Few expect a humanitarian disaster – a famine, say – to bring anything good to any society. But in North Korea, the famine in the mid-1990s that killed a million people also led to positive change. In the very struggle people waged to survive the famine, the state lost much of its control over their daily lives. North Koreans became more self-reliant and inventive; they found ways to survive, and also to make money, replacing the almost defunct ration system with a growing market economy.  
 
Famine and Aid  
Before the famine, North Korea was a country befitting the title "Hermit Kingdom." The 20 million people had no source of information but state media, which print and broadcast only Workers’ Party propaganda. Traveling outside one’s immediate area of residency was banned, except for family weddings and funerals. The state intelligence agency ran a tight monitoring operation against its own people, tasking one out of every five households with informing on others. Most importantly, the state dominated food distribution, which kept everyone subservient and immobile for fear of losing their only access to sustenance.  
 
By the early 1990s, after decades of government mismanagement of the agricultural sector, years of natural disasters, and an abrupt end to barter trade with the Soviet Union, North Korea’s chronic food shortage developed into a full-fledged famine. By the mid-1990s, the state had stopped distributing rations to most people. At least one million died of starvation, waiting for the rations to resume. "Back then, people died of hunger, at home, very quietly. Entire families died without anyone noticing for days, even weeks," a 38-year old man from Hoeryong, North Korea, told me.  
 
Since 1995, the World Food Programme and individual countries including the United States, Japan, China and South Korea have sent food aid, but the North Korean government continued to impose severe restrictions on the monitoring of aid distribution by limiting the areas aid workers could visit, how often they could, and requiring at least a week of advance notice prior to such visits. Some humanitarian agencies accused the North Korean government of diverting aid to the military, instead of feeding the most vulnerable populations as intended. It’s true, however, that even North Korean soldiers could not avoid hunger. A man in his early 30s from Hwanghae told me how half a dozen soldiers in his 100-strong unit died of hunger, while many others were sent home, because they were too malnourished to serve.  
 
Survival Strategies  
But not everyone stayed put and starved. A massive number of North Koreans sold all their belongings, packed their bags and traveled from the cities to the countryside, where food was more readily available from collective farms and kitchen gardens. Needless to say, most of them didn’t have permission to travel. But the authorities were unable to stop them, because even police officers were out hunting for food. The restriction of movement, with which North Korea controlled its population, began to break down. "I began spending my days not watching people but trying to find food for my family. The rations I received were not enough. We were desperate," a former intelligence official from North Korea described the hunger that even he, a member of the elite, could not escape.  
 
Hundreds of thousands of North Koreans, mostly those who lived near the Chinese border, escaped to China to find food and work. Tens of thousands were arrested and repatriated to North Korea as "illegal migrants," while others voluntarily returned home to feed their families and use their newly acquired knowledge or skills to make money. These returnees brought back news from the outside world, undistorted by official propaganda. Echoing a new attitude of North Koreans who survived through the famine, a 19-year old woman from Hoeryong, North Korea, said, "The last time my family received a state ration was early 1994. Since then, we have been on our own. If you depend on the state these days, you would starve to death."  
 
Marketization  
Meanwhile, markets sprang up all over North Korea, replacing the now almost defunct ration system as the main source of food. At first, the markets operated on the barter system, where desperately hungry people could exchange anything valuable for food, but they gradually developed into places where people bought and sold anything and everything to make a profit. Now in the capital, Pyongyang, and beyond, the country is teeming with bustling markets where people buy and sell necessities, using the North Korean won, Chinese yuan and even U.S. dollars. A 40-year old man from Haesan, North Korea, explained that merchants these days prefer U.S. dollars or Chinese yuan. "They don’t trust the North Korean won. I even heard rumors that the richer merchants have piles of dollars hidden at home," he said.  
 
Nowadays, North Korean citizens are engaged in all kinds of businesses, ranging from selling homemade noodles to running express buses to real-estate development. Private land transactions are illegal, and therefore unprotected, yet across the country, residential real estate is bought and sold, from urban apartments to farmhouses. Usually, a buyer and a seller will exchange cash, then go to the local housing authority and bribe the official to change the tenant's name, rubber-stamping the illicit purchase and giving the buyer rights to the home. An 18-year old girl from Kaechon, North Korea, described the private bus operations in her city. "You go to the bus terminal, and you choose between state-run and privately-own buses, based on the condition of the buses and the departure schedule. The government knows, of course. They collect fees from people who run bus operations."  
 
Echoing words of many other North Koreans, a 60-year-old woman from Wonsan told me, "In North Korea, people now only care about making money."  
 
Money Talks  
However, without people intending or even realizing the implications, some activities motivated by profit have led to more access to information: the roaring trade in imported CDs and DVDs of South Korean soap operas and movies, for instance. Since many North Koreans still don’t have enough to eat, it may seem odd that people would spend money on entertainment, but the fact is that North Koreans are hungry not only for food but also for diversion. "I would trade a meal for a South Korean movie," said one North Korean teenager. "Food is not all you need to survive."  
 
After years of the infiltration of South Korean pop culture into North Korea now it appears to be common knowledge for North Korea’s urban residents that South Korea is far richer and freer than they are – South Korea now ranks as the world’s 13th largest economy and a democracy, while North Korea remains a poor dictatorship. Until about a decade ago, however, most North Koreans "knew" South Korea as a desperately poor country, its capital, Seoul, filled with prostitutes and beggars. They also "understood" that North Korea was a "workers' paradise" going through temporary difficulties because of US sanctions.  
 
On the darker side, the same motivation to make profit is also boosting socially destructive businesses such as the trade in illicit drug. A truck driver in his early 30s told me he was taking bingdu, also called uhrum, (meaning "ice," referring to methamphetamine) to stay awake for long hours of driving. A high school girl told me she bought a cold medicine at a market from a merchant, but later found out it was bingdu, and another said many of her classmates tried it out of curiosity. One young man in his 20s said he took it with friends recreationally. They all shrugged off concerns about its addictive nature.  
 
Government’s Response  
Of course, not all has changed in North Korea. Kim Jong Il's government still holds unchallenged power, and continues to run a prison-camp system that enslaves tens of thousands of people, including young children. And it periodically executes people publicly, for offences such as stealing state property or other "anti-communist" behavior. North Koreans also complain of the ever-rising level of corruption and extortion by officials. A woman in her 40s from Hoeryong, North Korea, described how about a third of her income from markets was taken by various officials. "The housing official, the electricity official, the water official… as soon as they smell your money, they are on you," she told me. "They will find some excuse, some violation you have committed. You have to pay up. There is no avoiding them."  
 
Meanwhile, state enterprises, run by the Workers’ Party, the military or sometimes the Parliament, dominate the most profitable businesses, such as natural resources, seafood and mushrooms, mostly for export. The government also has been trying hard to regain some of the control it lost during the famine, often in vain. For example, between late 2005 and early 2006, it tried to ban the buying and selling of rice, North Korea’s staple, at the markets. But because the state was not able to offer an alternative, merchants continued to sell rice secretly. The policy failed.  
 
In 2007, the government banned women below a certain age (the specific age varied from 30, 40 or even 49 years, depending on time, location and sources) from doing business at markets to force them to return to their state-designated jobs. According to recent reports, the ban largely failed, because state jobs pay very little, if at all. An 18-year old woman from Pyongsong told me how her older sister earned 1,500 to 2,000 North Korean won ($US10 to $13 at the official exchange rate, but only equivalent to $0.40 to $0.60 on the black-market) per month as a nurse. After contribution to the Workers’ Party and other mandatory donations, her monthly income bought only about a kilogram of rice. Simply put, most North Koreans have no choice but to find a non-state source of income.  
 
Since late 2004, North Korea also threatened harsher punishment for those leaving the country without state permission. The government announced repeatedly that the "violators" would be sent to prison for several years, instead of several months as before. This new policy has certainly helped boost the bribes that border guards pocket from "illegal" border crossers, and the number of border crossers dropped significantly in the past couple of years, but it still has not stopped them completely. Merchants with financial resources still go to China by bribing border guards, while human traffickers continue to bring desperately poor North Korean women and girls as young as 16 to Chinese farmers as brides.  
 
At the same time, the North Korean authorities are also trying to take advantage of the societal changes that took place. Private citizens who do business at markets instead of reporting to their state-designated jobs must actually pay a 'contribution' to their workplaces, often amounting to many times the value of their state salary, in order to avoid prison sentences. A 24-year old man from Hungnam, North Korea, explained how it works. "You skip work, which pays you nothing, and go make money at a market. But if you just skip work, they will come and get you. So you pay up. Then they will leave you alone."  
 
Last but not least, the North Korean government started a couple of major cash-generating projects in collaboration with South Korean businesses, after relations between the two countries warmed thanks to a policy of engagement by former South Korean Presidents Kim Dae-jung and Roh Mu-hyun. The North Korean government has opened the scenic Gumgangsan, or Diamond Mountain, and more recently the city of Kaesong, to South Korean tourists. In June 2004, it opened the Kaesong Industrial Complex, which now employs 23,000 North Korean workers who manufacture a range of products including watches, shoes, clothes, kitchenware, and car parts for mostly South Korean businesses. Such projects continue to remain a precious source of cash for the North Korean government, regardless of politics between the two countries.  
 
Hunger Persists  
North Korea recovered from the famine, but food shortages persist. North Korea has long lacked high-quality seeds, chemical fertilizer and fuel for machinery, and largely remains unfamiliar with advanced agricultural technologies. The environmental degradation of hills and mountains caused by people cutting down trees for use as fuel leads to floods in the summer, damaging crops. As a result North Korea has no option but to depend upon international aid to make up for the shortage. Amid reports of rising prices of rice, corn and other staples in North Korea, choongoong, or spring food shortage, already arrived. As of this writing, the North Korean government has yet to request food aid from the new, conservative South Korean government of Lee Myung-bak, who vowed to properly monitor aid distribution, unlike his two predecessors. For North Koreans, it appears to be yet another hungry year.  
 
Conclusion  
For many North Koreans, the changes -- both positive and negative -- set in motion by the famine are irreversible. In fact, many North Koreans I met, especially the young, said they want more change. Their specific wishes ranged from the frivolously mundane, such as wearing whatever clothes they liked, to the seriously political, such as a desire for North Korea’s reforms and openness. They are survivors of the worst humanitarian disaster the country has seen in half a century. Compared to their parents, they are far more informed, open-minded, and brave. And they will continue to push for more changes.
 

 
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