Commentary

This has been a tumultuous couple of months in Korean affairs. The West Sea incident of 29 June was in some senses a replay of the ‘crab wars’ featured in the second issue of Pyongyang Report two years ago, though this time there were casualties on the Southern side as well as the Northern. The incident angered public opinion in the South – and presumably in the North – and all sorts of fantastic explanations were floated. It was a deliberate attempt by Kim Jong Il to derail the Sunshine Policy, we were told, taken in a fit of pique at the South’s success in the World Cup. (A theory that looked even more hollow when a message of congratulations to the Southern team arrived from Pyongyang). Rather more plausible, but still far from persuasive, was the allegation that it had been orchestrated by the US to counter the rise in anti-Americanism aroused by the accidental killing of two Korean girls by a US army vehicle. In fact the Korean American website Kimsoft probably got it correct with the phrase “it’s the crabs, stupid!”. Exports of shell fish from the North have been growing rapidly and Southern fishermen are reportedly experiencing poor harvests. Heightened competition for the rich crab resources of the area along a disputed boundary – the Northern Limit Line was unilaterally set by the US and is not accepted by the DPRK – was a recipe for disaster. Clearly the border has to be negotiated, and demilitarised, if such incidents are to be avoided in the future. The problem is exacerbated by the limited role Seoul plays. It is the US military (via the ‘United Nations Command’), not the ROK, that negotiates with the DPRK. In this, as in the wider field, the removal of the US military presence and control is a key prerequisite for meaningful north-south negotiations.

The actual events of 29 June are clouded and contested, and likely to remain so, but the repercussions were painfully evident. It seemed as if so much of the progress of the past – already heavily eroded by the Bush administration – was to be further eaten away. Seoul at first played the incident down, pressing for a measure of business as usual. However, popular opinion, inflamed by the media, demanded action. Kim Dae-jung, buffeted by corruption scandals (including two sons), the disintegration of his party and disastrous showings in elections and polls, was force to back-track and demand an apology from the North. Pyongyang, which has been alternating between blaming the US and accusing ROK, responded rather adroitly with an expression of ‘regret for the unfortunate incident’ and proposed resuming talks. This was sufficient to allow Kim Dae-jung to respond positively.

Talks on further family reunions, joint Liberation Day celebrations in Seoul (where both sides condemned Japanese remilitarisation) and the promised despatch of a large contingent to the Asian Games in Pusan have brought North-South relations to a more positive level. Whether this will bring the Americans to the negotiating table remains uncertain and is probably tied to the mounting opposition to Bush’s plan to invade Iraq.

Meanwhile Pyongyang launched potentially far-reaching economic reforms, involving greater use of market prices and forces, and trialing of new forms of industrial and agricultural organisation, including family farms. Many details are as yet unclear and there is no guarantee that the measures will have the desired results. However, they do demonstrate, once again, a certain readiness to embrace new ideas and to seek to learn from abroad – including NZ. We should do more to provide training for transition and development. The DPRK was also vigorous on the diplomatic front, hosting and sending high-level visitors and participating in the ASEAN Regional Forum in Brunei (where Foreign Minister Paek had discussions with Powell). Kim Jong Il is currently visiting Russia, just a year after his previous trip and important developments may follow. In particular it is hoped that it will advance the rehabilitation of the DPRK railway network, its reconnection with the South and hence the creation of the ‘iron silk road’ from Pusan to the Atlantic.

Tim Beal

The Truth About the West Sea Battle

'60 South Korean Crab Ships crossed NLL en masse'

South Korean (Yongpyong-do) fishermen's confession

..//..I am a young crab fisherman based on this island. The truth will hurt the fishermen here and the South Korean navy. The fishermen will lose their means of livelihood because the navy will be more rigorous in preventing them from fishing in areas north of NLL (Northern Line of Limits) and also, the navy has to explain why it has covered up the truth. ..//... The fishermen are under strict orders not to cross NLL. Violators are punished severely - on paper. The Seoul government wanted to complete the World Cup and the primary without any disturbance and told us to stay south of NLL.

Until recently we obeyed the order and managed to make a living fishing south of NLL. But crab harvesting this year has been unusually poor and we could not cover our expenses. Just north of NLL, there are areas that team with succulent crabs and a group of 60 or so of the island crab fishermen got together and decided to break the law and fish north of NLL. This they did and this mass intrusion into the North Korean waters was the root cause of the battle…//..

Source: http://www.kimsoft.com/2002/westsea2a.htm

The West Sea battle II

(commentary from the US-based Korean site Kimsoft.com)

At about 10:00 of June 29, North and South Korean warships exchanged artillery and small-arms fire in the West Sea (Yellow Sea). One South Korean warship was sunk and one North Korean warship was damaged. Each side claims the other side had intruded upon it territory and fired the first shot. It has been established that South Koreans rammed the North Korean ship upon which it opened fire.

Apparently the North Korean warships are preauthorized to open fire when rammed. The second North Korean warship in the battle zone did not fire any shot.

North, South, China and the US have most likely transcripts of the radio signals from the combatants and the bare facts of this incident will certainly surface sooner or later.

(Kimsoft gives the North and South versions side by side)

Source: http://www.kimsoft.com/2002/westsea2.htm

Inter-Korean Festival Kicks Off in Seoul

Cultural and religious figures from South and North Korea turned yet another page in civilian inter-Korean exchanges in Seoul yesterday, starting the four-day joint Liberation Day festivities to mark the 57th anniversary of Korea’s independence from Japan.

The 2002 Inter-Korean Joint National Events kicked off with the arrival of a 116-member North Korean delegation in Seoul on a direct flight from Pyongyang in the morning.

The delegation, led by Kim Yong-dae of the National Reconciliation Council, received a warm welcome from their Southern counterparts waiting at the Inchon International Airport.

``Let us join hands and make this day, Aug. 15, the day when joy turned to the sorrow of national division, the day of national unity and unification,’’ Kim said in his arrival speech.

The high-powered Northern entourage included Vice Culture Minister Song Sok-chan and representatives from religious and labor organizations. ..//..

Ryo Won-ku, the most senior female Pyongyang official, is the center of attention as she is the daughter of Ryo Un-hyong, a respected political leader who tried to bring the right and left together after the nation’s liberation in 1945. ..//.. (she) defected to the North in 1946..//..

Former dissidents such as Lim Su-kyung, called ``the flower of unification,’’ and Park Yong-gil, wife of Rev. Mun Ik-hwan, also met the North Koreans. All of them have been jailed here for unauthorized visits to North Korea. ..//..

Source: Korea Times 14 August 2002

Overcoming Humanitarian Dilemmas

Report to United States Institute of Peace by Hazel Smith

In 1995 the DPRK (north Korean) government appealed to the international community for assistance to cope with gross food shortages, which threatened starvation for its people.

UN humanitarian agencies that had had some relationship with the DPRK since the 1980s—the United Nations Development Program (UNDP) and the World Food Program (WFP)— responded to these appeals and became fully operational and resident in the country after 1995.

Prior to the crisis of the mid-1990s, the DPRK had no experience of working with non-governmental organizations (NGOs) except for periodic links with the Red Cross and through its hosting of small delegations such as the American Friends Service Committee.

The UN agencies and the NGOs had little knowledge of the politics, economy, culture, or society of the DPRK prior to their involvement in emergency assistance to the country…//..

The majority perspective was that confidence building and a process of mutual comprehension had taken place and continues to evolve between the DPRK government and the humanitarian agencies.

Although difficulties remain, the process of dialogue has facilitated an improvement in humanitarian agency working conditions.

Humanitarian assistance continues to save lives and therefore multilateral and bilateral humanitarian agencies should continue to supply much-needed assistance.

Donor governments should build on the channels opened by humanitarian assistance to further develop policies of constructive engagement, confidence building, and the slow but essential formation of trust that is crucial for bringing human and international security to the Korean peninsula..//...

Source: United States Institute of Peace, Washington

DPRK ECONOMIC REFORMS

Report by UN/NGO Humanitarian & Development Working Group in Pyongyang

'We are reactivating the whole field of the national economy…we are directing our whole efforts to restructure our economic base to be in line with the information technology revolution….and as we have done since 1945, we are undertaking reforms in line with the prevailing situation, in the best interests of the people…we are reforming the economic system on the principle of profitability'.

H.E. Kim Yong Nam, 1 August 2002

On 1 July 2002, the Government ..//.. enacted a set of economic reforms, a move which most external commentators have assessed as the beginnings of the adoption of market-based reforms by the government..//..(they) introduced two key structural changes to the economy. Firstly, changes in the pricing system primarily caused by the removal of state subsidies for goods and services, and secondly, the increase of living allowances to provide both an incentive to expand production and to assist people cope with increased prices for goods and service. The government also reiterated the continuation of social welfare for 30 categories of social welfare recipients.

In DPRK, prices were originally modeled on the Soviet system, which used the cost of industrial raw materials as it basis. As of 1 July, food costs will replace industrial inputs as the basis for fixing all prices. Commensurate with changes to the pricing system was the removal of state subsidies from most goods and services in order to increase production. This is intended to incentivize producers to make 'real profits' and improve services. Most enterprises and work units in all sectors are now expected to be selfsustaining with no subsidy from the State. This infers that producers and service providers will now charge the real cost of production. ..//... For example, public transport fares have now increased by up to 20 times in order to reflect the real cost of the service. According to Government this will raise additional revenue that will allow the sector to maintain and improve services, something they were unable to afford in the past. Key social services, such as health care and education, will still be funded entirely by the state.

According to government, the removal of state subsidies also places an increased responsibility on the individual producer of goods to take an 'interest' in the distribution or market for their output. The new pricing system is flexible and will allow producers to 'circulate' goods that will address the 'prevailing' supply and demand. How the producer will source the inputs required for increasing production or react to changes in demand is unknown. Nor is it known what will happen to enterprises (and their workers) that are unable to find a market for their output.

According to government, the removal of state subsidies from staple foods should result in a significant increase in the amount of food available to the Public Distribution System (PDS). By removing subsidies, the government will now pay state and cooperative farms the prevailing 'market rate' for their produce based on the price in private farmers’ markets, which react to supply and demand. This should have two effects. Farms will have an incentive to sell more produce to the PDS resulting in an increase in produce in the PDS and government shops. The consumer will therefore have a reduced need to visit the farmer's market, as the government system will now have the same produce as the markets. This will also assist in the prevention of 'illegal sales activities', which took place when the price in the farmers market was much higher than the state price…//..

The second structural change announced was the increase of living allowances to provide both an incentive to expand production and to assist people to cope with increased prices for goods and service. In the past, the government relied on free voluntary labour in the production process (of goods and services). This resulted in a 'lack of enthusiasm' by the workers. The new allowance system will provide increased incentives for workers thereby increasing production. The government stated that different categories of workers have received increases in allowances depending on the importance and skill of the work undertaken. For example, soldiers, miners, and scientists received larger increases than office workers did. The Minister of Agriculture stated that work teams and sub-work teams on co-operative farms would now be paid allowances based on what they produced, not on how long they worked. This explanation of the new allowance system did not clarify if allowances would vary between individuals within the same category if their output or productivity were to differ. It was also not clear how enterprises would pay the increased allowances without state assistance if they were non-viable, e.g.: an obsolete factory, or a flooded mine. What was however made explicit, was that if an individual did not work and was not a social welfare recipient, they would receive no allowance from the state.

In a number of government meetings, officials have repeatedly stressed that the reforms have been under consideration for a long time and are being undertaken in order to increase both production and profit. According to the Ministry of Foreign Affairs, the 'Great Leader Kim Jong Il', laid the groundwork for the measures by emphasizing the objective of improving the 'living conditions of the people' by making 'real profits' In discussions with the EU Presidency Delegation in May 2001, the 'Great Leader Kim Jong Il' told the delegation that he would reform the economy based on lessons learned overseas in developed countries. It was also emphasized that this objective (or reform) will only be achieved by removing the last 'vestiges' of the Soviet system from the DPRK economy. The design of current measures was also based on information gained during a number of missions and study tours to the United Kingdom, Italy and Sweden over the last couple of years. The Government stated that it had studied examples of economic models in a number of countries, prior to selecting those elements that were in accordance with the basic socialist principles of the DPRK. In a number of meetings, government officials have compared the importance of these economic measures with the land reform, which was undertaken by Kim Il-sung in 1946. They have stated that these important reforms are part of wider adjustments to the economy that will continue over time as the government applies the 'principle of profit' to the economy. The Government has stressed that these measures are highly popular with people, who were consulted prior to their implementation. The current set of changes will be monitored to judge their efficacy and effect. The Vice Foreign Minister, Choi Su Hon, has also stated that it is the position of the government to learn from developed countries and apply those lessons in 'accordance with the prevailing situation'. To continue this process 'we need to send as many people overseas to learn as much as possible'.

Source: UN agencies Pyongyang

Pizza in Pyongyang

The pizza-lady Shin Hyun-sook, 22, smiled as she brought the delicious treat to her guests. Her pizza stand is right at the corner of the May 1 Stadium where the North's Arirang, a festival featuring a purported 100,000 gymnasts and dancers, is being staged. It is May 23, and the reporter is still in Pyongyang savoring the brisk atmosphere of the capital city, a welcome reprieve from the gloom of some of the local areas.

Ms. Shin is delivering pizza, popcorn, ice cream and beverages to the foreign tourists watching the gymnastics display in the stadium at no extra charge. "We heard foreigners are used to getting free delivery service, so we're trying to meet their expectations," she said. ..//..

Pyongyang residents may not quite have the hang of capitalism, but they seem to be catching on quick. When our group arrived at Bumper Harvest, a restaurant near the stadium, we saw a makeshift lighted sign that read "Arirang." The place had extended its hours during the festival; it normally closes at 10 p.m., but stays open till 1 o'clock during Arirang. The reporter has been here before, on a previous trip to the North. The service is much better this time and the menu has expanded a lot. ..//.. Next the reporter sees a photo developing shop with a sign that reads: "We provide photos in a minute for impatient customers." This is where local people lead us when we invite them to take a picture with us. "We'd love to," they said. "But we prefer seeing the results of the photo on the spot." So we pay the $2 for each Polaroid print the worker at the shop takes. The worker just smiles. "We just want to make sure you have a lasting memory of our place." ..//..

The food and souvenir stands near the Koryo Hotel close around 1 a.m., even earlier if they haven't sold much that day. Kim Chang-won, 51, who was selling beers next to Bumper Harvest, didn't have much luck that day. "I was so caught up with trying to sell beers that I forgot about preparing myself a proper stand to attract people," he said. Well, marketing takes practice. ..//..

Source: JoongAng Ilbo (Koh Soo-suk) 3 June 2002

NZ-DPRK relations

NZ ambassador to the Koreas, David Taylor, will be travelling to Pyongyang at the end of September to present his credentials.

A NZ delegation to DPRK to be led by former Governor General Sir Paul Reeves has had to be postponed. It is hoped to reschedule it for April 2003.

The NZ-DPRK Society hosted a small business delegation in July. Amongst other things the Koreans expressed an interest in courses in accounting law and international trade and finance. The Society is exploring this with NZ institutions.