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Signs of life in North Korea's poor economy

REUTERS, BEIJING
Monday, Sep 22, 2003, Page 9

Second-hand bicycles, bustling open-air markets and roadside kiosks that peddle cigarettes, snacks and bottles of beer are hardly the stuff of revolution.

But some recent visitors to North Korea say they are unambiguous symbols of a shift from the grip of the command economy under which it has operated for 55 years.

Grassroots market-oriented economic activity has taken off since the isolated, impoverished country launched a sweeping overhaul of its price and salary system 14 months ago to try to revive its moribund economy, they say.

How the domestic reforms might affect the overall economy is hard to say because North Korea's troubles run so deep.

But aid workers and others who have spent time there say they see the economic changes altering how people think and live.

"You see market activities wherever you go," said Kathi Zellweger of the Catholic charity Caritas, who was in Beijing this week after a month travelling around North Korea.

"I think now it would be difficult to turn the clock back and return to a full rationing system," Zellweger said.

Since 1995 she has made dozens of visits to North Korea, which has suffered drought and starvation in recent years and is now caught in a standoff with the US over its nuclear ambitions.

The crisis erupted 11 months ago when US officials said Pyongyang had admitted to a secret uranium enrichment program for building nuclear weapons. North Korea promptly withdrew from the Nuclear Non-Proliferation Treaty and said it had no choice but to build its own deterrent.

The bigger picture remains one of an economy languishing near collapse while the government promotes an "army first" policy and forges ahead with costly plans to develop atomic weapons.

Still, evidence is mounting that the economic lives of ordinary North Koreans are radically changing.

Another aid worker who visits North Korea frequently said he was impressed by the number of bicycles in cities on the poor, industrial east coast, most of them made in Japan.

"There were bicycles everywhere. To me, that's an indicator of some kind of progress," he said. "Something is happening."

Small-scale commercial activity had picked up and people were making economic choices for the first time in their lives.

"Along the roadsides you would see these ladies with basins full of fruits and vegetables" for sale, he said.

On previous trips they would scurry away when foreigners passed, but not this time, he said.

"Clearly, this had some kind of official sanction," he said.

He and others also noted a proliferation in cities and towns of roadside stands about the size of a small minibus selling biscuits, cigarettes, drinks and other items.

Rural markets were also bustling on days other than the traditional weekly market day, and people were selling things other than farm produce, like furniture, he said.

Farm managers Zellweger talked to said they had taken a 10-day course on accounting procedures last autumn. Some farms now decided what to plant for themselves, opting for fruit, sesame and tobacco rather than the traditional maize, she said.

City families she talked to were still getting used to the new task of having to budget their incomes for rent, water, utilities and food.

In Pyongyang, a new market where anybody could buy or sell almost anything was a hot topic of conversation, one resident said. Mobile phones, non-existent until recently, were now easy to spot in the capital.

The changes may be visible and meaningful to North Koreans but have yet to alter the still-dire macro-economic picture.

Foreign trade, for example, is severely hobbled by sanctions. In the first half of this year, North Korea did just US$270 million in exports and US$800 million in imports.

Factories have closed or cut back operations. Unemployment and underemployment are rife, as is malnourishment.

Zellweger said the reforms had also exacerbated regional development gaps.

"There is by now more than one reality in North Korea, and the gaps are widening," she said.

Analysts say North Korea has studied old friend China's experience in remodelling its economy and leader Kim Jong-il even made a secret trip to Shanghai in 2001 to see things for himself.

Skeptics say North Korea's cautious economic reforms have been a washout.

Kongdan Oh, a Korea expert at the Institute for Defense Analyses in the US, said the reforms had "totally failed."

"The country basically lives in a 19th century mentality," she said. "Kim Jong-il calls the shots all the time and he's not an economic expert. His reform has been two steps ahead, three steps back."

But, she added, "he's very afraid he will be the next [Nicolae] Ceaucescu," the unrepentant communist who ruled Romania from 1965 until 1989 when he was overthrown and executed in a bloody popular revolt.
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