In our discussion of the origins of the great famine in chapter 2, we placed par- ticular emphasis on the failure of the North Korean government to respond in a timely way to evidence of food shortages. An aggressive promotion of exports and foreign investment, the maintenance of even a minimal capacity to bor- row, or an earlier appeal for humanitarian assistance all would have mitigated the severe distress the country experienced in the mid-1990s. As the extent of the country’s economic problems became more apparent, the North Korean leadership did belatedly place greater emphasis on generating or economizing on foreign exchange, for example, by seeking to revive export-processing zones, increase remittances from Japan, and expand illicit export activities.
Aid seeking was a critical component of this new strategy. As we indicated in chapter 4, North Korea’s quest for aid faced the dilemma that confronts all aid relationships. The political leadership sought to maximize aid flows, and on highly concessional terms, while maintaining its political autonomy and con- trol over resources to the greatest extent possible. Donors, by contrast, sought to ensure that aid went to intended beneficiaries, was not diverted, and adhered to the principles outlined in the preceding chapter: transparency, access, effec- tive monitoring, assessment, and even empowerment and organization of final recipients, in short objectives that were largely anathema to the North Korean regime.
Even were aid motivated solely by humanitarian considerations, this game would be complex. But donors faced two additional problems. First, aid and
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politics were not, and could not, be held on altogether separate tracks; indeed, it is largely in the United States that this fiction is continuously repeated. Aid is used for diplomatic purposes. Moreover, in democratic societies, it is also subject to the pull of domestic political forces. Across the major donors, some groups sought an expansion of aid for various ends (engagement), and others wanted to see it curtailed (pressure, sanctions). Initially, these pressures con- tributed to crucial delays in getting aid into North Korea in the immediate aftermath of the flood announcement; the international community cannot be held completely blameless. South Korean pique at North Korean behavior following some early and very large food shipments was particularly important in this regard, influencing both the United States and Japan. But U.S. and Japanese policy also sought to limit aid for political ends.
Over time, political calculations lead to oscillations in aid flows across all the major donors. Figure 6.1 shows the volatile pattern of aid by focusing on the five major donors that are the subject of this chapter: the United States, Japan, the EU, South Korea, and China. U.S. aid rose sharply in 1998–99 but then fell dramatically in 2000, exhibiting a steady decline through the remainder of the first administration of George W. Bush. South Korean aid moved in nearly the opposite direction, largely offsetting the decline in U.S. aid until 2004. Chinese aid rose steadily through 2001 but then declined thereafter. EU assistance has been somewhat changeable, rising slightly as U.S. aid has fallen in recent years.
Japanese aid flows, finally, spike, fall, and are terminated completely on several occasions.
It could be argued that this volatility reflected changing needs in North Korea, but as we have reported, the dependence of the country on aid—in terms of material need—has been surprisingly constant. Rather, this volatility reflects political and policy cycles in the donors themselves.
A second dilemma was that these divergent political calculations at the national level created coordination problems among the donors. Once aid began to flow, North Korean diplomacy sought to exploit this coordination problem, sometimes adroitly, sometimes less so. While the United States showed a declining willingness to extend humanitarian assistance, and Japan has oscillated between engagement and the imposition of outright sanctions, the EU and particularly South Korea have shown a growing willingness to expand assistance to the country. Moreover, South Korea’s foreign assistance is but one component of a much broader strategy of economic engagement with the North that has created a variety of other channels for effective transfers to the country, from private (and in some cases subsidized) investment to coop- erative projects of various sorts. North Korea has also managed to maintain its
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FIGURE 6.1. Total Food Aid by Major Donors, 1996–2004
Note: EU includes contributions by the European Commission and EU member countries. Source:
WFPINTERFAIS 2005.
economic relationship with China. Although political relations between the two socialist countries have seen ups and downs, the informal Chinese penetra- tion of the North Korean economy is proving to be one of the most important external factors in its transformation.
This fundamental inability to coordinate aid policy has crucial implications for the debate over engagement. Hawks and critics of the current aid effort have consistently argued for a policy of containment, isolation, or the use of sanctions against North Korea.1 Conversely, even those more favorably inclined to engage North Korea have argued that such engagement should be done selectively, using incentives in order to modify North Korean behavior. Yet both these approaches would require careful calibration not only of aid flows but of the entirety of North Korea’s foreign economic relations. In particular, the calls for tougher sanctions against North Korea that tend to emanate from hawks in the United States and Japan face the problem that both Chinese and South Korean foreign policy are not only resistant to such a strategy but at times exhibit a pattern of explicitly offsetting efforts to isolate North Korea by increasing their own contributions.
By carefully calibrating its aid-seeking diplomacy, the North Korean gov-
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ernment managed to maintain a surprisingly constant level of assistance in the decade after 1995. By 2004 this strategy hit some limits. The onset of the second nuclear crisis in 2002 was an important event in this regard. In October of that year, the United States accused North Korea of seeking to enrich uranium for the purpose of making nuclear weapons. When the United States responded by cutting off heavy fuel oil shipments promised under the Framework Agreement of 1994, North Korea began a calibrated escalation of the crisis by kicking out inspectors, withdrawing from the Nuclear Non-Proliferation Treaty, restarting the 5MW(e) nuclear reactor in Yo˘ngbyo˘n, reprocessing spent fuel into pluto- nium, and ultimately declaring in February 2005 that the country possessed nuclear weapons. During this same period, the regime ran afoul of the Japanese over the abduction of a number of Japanese citizens.
Needless to say, these and other political issues—such as mounting evi- dence of North Korean involvement in illicit trade, counterfeiting, and missile exports—had the result of sharpening disagreements over the utility of engage- ment. Hawks in the United States, Japan, and South Korea once again argued that economic pressure should be used more aggressively to secure North Korean compliance with its international obligations; the European Union pulled back at the margins as well. Through 2005, these calls largely proved ineffectual as China and particularly South Korea not only maintained exist- ing economic relations but, in South Korea’s case, also promised even wider economic cooperation. Not until 2006 did a set of financial sanctions appear to have a substantial, and largely unanticipated, effect on North Korea’s trade relations. But even these had not—by mid-2006—forced North Korea back to the bargaining table.
In addition to the constraints on aid posed by these political issues, aid to North Korea faced rising resistance within the humanitarian community itself.
Aid hawks were by no means limited to those preoccupied with the nuclear question. As we noted in chapter 4, a number of NGOs walked away from North Korea, human rights groups pressed for a tougher stance, and prominent refugees argued forcefully that the regime should be cut off (for example, C.
Kang 2005; Haggard and Noland 2005). In addition, donors have faced strong demands on aid resources from other quarters, including ongoing crises in the Middle East and Africa and the South and Southeast Asian tsunami of 2005. As a result, supporters of humanitarian assistance faced increasing skepticism about the prolonged and seemingly open-ended nature of aid to North Korea.
In this chapter, we explore these issues by focusing on the five major donors beginning with the hawks—the United States and Japan—before turning to the doves: the EU, South Korea, and China. In each case, we outline the development
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of the aid program over time and provide some sense of the overall economic relationship of which it is a part. We then discuss the ways in which both interna- tional and domestic political concerns have influenced the magnitude and nature of aid flows. Throughout, we concentrate on the problems of coordination that have resulted from shifting patterns of support for aid and engagement and the surprising ability of North Korea to maintain its external economic lifeline even while once again pursuing a high-risk nuclear diplomacy.