North Korea, America and the Lure of Food Aid

Going Nowhere

" Agricultural experts estimate that $1 worth of fertilizer would produce $8 worth of rice, which implies that less than $100 million in fertilizer assistance would go a long way in alleviating North Korea’s food problems."

by Peter Lee

(April 21, Washington DC, Sri Lanka Guardian) Virtue is its own reward, intransigence is infinitely satisfying, and masturbation is an end in itself.

That’s my feeling about the “three stage” negotiation process for North Korea, that requires a meeting of the minds between Lee Myung-bak and Kim Jung-Il, respectively the leaders of South and North Korea.

Going nowhere, is my prognosis.

Here’s my basic thesis: Lee Myung-bak’s hardline policy has led Western North Korea policy into a cul-de-sac. North Korea, backed by China, is simply running out the clock until the ROK presidential election and a hopefully more favorable constellation of forces. The United States discretely pursues Track II (non-government engagement) with North Korea to wean Pyongyang from Beijing.

What are they going to talk about?

Nukes are off the table as a serious topic of discussion. Even pre-Libya, US policy was based on the idea that North Korea would never give up its nukes. Post-Libya, even the most gullible dictatorship realizes that a nuclear weapons program is an indispensable insurance policy.

Food aid is apparently the preferred currency of discourse.

North Korean food aid is an interesting, politicized issue.

North Korea’s current difficulties in providing adequate nutrition to its population are a matter of widespread agreement, although Andrey Lankov, Russia’s Korean specialist, harrumphed a couple years ago that the FAO had been overly pessimistic in its assessment of North Korean agriculture.

At one time, North Korea’s agriculture was highly collectivized, input and technology intensive, reliant on irrigation and mechanization, employing only 25 per cent of the population, and successful in feeding its people.

Although natural disasters and soil exhaustion from decades of multi-cropping and extension of farming into marginal lands have played their role in depressing production, the day of reckoning for North Korean agriculture clearly came with the collapse of the Soviet Union and the evaporation of the low-cost energy, fertilizer, and mechanical inputs that the North Korean agricultural system depended on.

By the mid-90s, fertilizer usage, previously among the highest per-hectare in the world, fell to 23 per cent of previous levels as crude oil imports fell to 40 per cent of their peak. Almost 60 per cent of the tractors and trucks were sitting around idle for want of fuel or parts, and mechanical degradation and power shortages sent the elaborate irrigation system straight to hell.

GDP was halved, agricultural output crashed, from a surplus-generating 8 million tons per year to dearth levels of less than 6 million tons per year. Perhaps two to three million people died in the resultant famine.

Ever since, North Korea has limped along, tilling, harvesting, threshing (and losing production) with an decreased mechanical and petrochemical/increased human and draught animal component, short of irrigation and fertilizer, lacking a grain reserve, and pummeled by a series of floods and other disasters, with a grain shortfall of somewhere between 800,000 and 1,000,000 tons per annum

From the perspective of the North Korean leaders, the fundamental problem is probably not viewed as one of agricultural reform or managerial incompetence by government apparatchiks (though those these factors probably exacerbated the crisis), it is one of inputs.

The DPRK is not interested in responding to its difficulties by abandoning the agricultural and industrial model that served it quite well until the late 1980s and sending its urbanized proletariat back to the countryside to labor in the fields.

Instead, Pyongyang is simply trying to keep things together, starving its population, mooching food aid, engaging in risky proliferation, arms sales, and other economic stunts to earn forex for grain (and nuclear technology) imports, hoping and working for a change in the political climate that will allow it to acquire once again the relatively modest foreign energy inputs that underpinned its economy during its halcyon days.

In absolute, global terms-- even in regional and national terms-- fixing North Korea does not involve huge numbers.

The FAO estimates that in 2010-2011 North Korea will be short 867,000 tons of grain. It has the wherewithal to import 325,000 tons itself. The shortfall to be covered by food aid is 542,000 tons. Even when the recent spike in rice prices to $600/ton is taken into account, covering this requirement would require less than $350 million dollars.

Agricultural experts estimate that $1 worth of fertilizer would produce $8 worth of rice, which implies that less than $100 million in fertilizer assistance would go a long way in alleviating North Korea’s food problems.

One study ballparked that undoing the ravages to North Korea’s agricultural infrastructure might be undone at a cost of under US$1 billion in capital and equipment programs over four or five years.

By contrast, the first 17 days of the Libyan no-fly mission cost the Pentagon $608 million dollars.

Of course, the United States is not the only power that could solve North Korea’s problems “easy as kiss my hand”.

South Korea could do it, although it is anathema to the current regime.

And there is China, though Pyongyang is loathe to sacrifice its independence and economic assets in return for Chinese aid.

And there is—counterintuitively--North Korea.

Looking at the structure of North Korea’s economic difficulties and the mindset of its leaders, it would appear that the preferred route for Pyongyang would be to regain unfettered access to the world trade and financial system—especially its markets in Japan and South Korea—so it could satisfy the relatively modest import demands of its economy.

In the current environment, having elicited entrenched, politically self-reinforcing hostility in South Korea and Japan, and with China sidelined in Asian councils as a disturbingly destabilizing authoritarian economic and military force, North Korea’s best chance for a breakout is the United States.

And that may be why North Korea is talking. And that’s why it’s talking about food. Because talking about nukes is, by mutual understanding, off the table for the near future.

Peter Lee is a business man who has spent thirty years observing, analyzing, and writing on Asian affairs. Lee can be reached at peterrlee-2000@yahoo.