Like Japan, South Korea’s food aid to the North has gone through important political ups and downs, and because of its significance and complexity we devote somewhat more detailed attention to it.16 The debate over aid has been embedded in a much larger transformation of South Korea’s foreign policy,
The Political Economy of Aid 141
from a policy of deterrence and containment to one of engagement. Aid has been subjected to vigorous domestic debate, but in contrast to the United States and Japan, the general trend in South Korean aid policy since 1998 has been in the direction of greater generosity. Moreover, aid has been embedded in a larger strategic vision of engagement that has resulted in increased trade (figure 6.3), investment, and even illicit transfers.17
This dramatic change in foreign policy has roots in the No T’ae-wu initia- tive of 1988 noted above and in the Kim Yo˘ng-sam administration. But its full articulation is not to be found until the so-called Sunshine Policy of President Kim Dae-jung (1998–2003) and the subtle but important amendments to this approach under his successor, President No Mu-hyo˘n (elected in December 2002 and inaugurated in February 2003). The No administration has not only been more willing to engage North Korea at all levels but has even sent explicit signals that its policy has been designed as a counterweight to the United States.
South Korean aid to North Korea is much more complex in its structure than that of the United States, which was basically limited to food and oil shipments, and Japan’s, which was confined to a limited number of large food shipments. Table 6.4 outlines the various channels that have been used, which include multilateral, bilateral, and a large NGO sector that has in the past been quasi-official and continues to receive direct government subvention.18
FIGURE 6.3. Commercial Trade Between North and South Korea
Source: Korean Ministry of Unification: Inter-Korean Cooperation, www.unikorea.go.kr/index.jsp.
TABLE 6.4. South Korean Humanitarian Assistance, 1995–2005 (in $US millions except where noted)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005* Total
Total public 232.0 3.1 26.7 11.0 28.3 78.6 53.3 83.8 87.0 115.1 123.9 720.6
Multilateral 0.0 3.1 26.7 11.0 0.0 0.0 0.6 18.0 17.4 25.9 104.3
(% of public) 0.0 100.0 100.0 100.0 0.0 0.0 1.1 21.5 19.9 22.5 14.5
WFP 0.0 2.0 20.5 11.0 0.0 0.0 0.1 17.4 16.2 24.0 0.0 91.2
(form) - CSB CSB, maize, Maize, - - Maize
powdered milk flour
Maize Maize Maize -
Non-WFP 0.0 1.1 6.1 0.0 0.0 0.0 0.5 0.6 1.2 1.9 1.8 13.1
(channels) - UNICEF, UNICEF, - - - WHO
WMO WHO, UNDP,
FAO
WHO WHO,
UNICEF
WHO, UNI- CEF
WHO, UNICEF
-
Bilateral 232.0 0.0 0.0 0.0 28.3 78.6 52.7 65.8 69.7 89.3 616.3
(% of public) 100.0 0.0 0.0 0.0 100.0 100.0 98.9 78.5 80.1 77.5 85.5
(form) Rice - - - Fertilizer Fertilizer Clothing,
fertilizer
Fertilizer Fertilizer Emer- gency relief supplies, fertilizer
-
Total NGOs 22.4 (1995—1997) 20.9 18.6 35.1 64.9 51.2 70.6 141.1 88.7 424.8
Korea National 22.4 20.9 13.1 9.4 22.0 6.9 5.9 37.0 137.5
Red Cross
HAGGARD CH 06.indd 1428/23/06 10:58:26 AM
TABLE 6.4. South Korean Humanitarian Assistance, 1995–2005 (in $US millions except where noted), (continued )
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005* Total
(% of NGOs)
100.0 100.0 70.1 26.8 33.9 13.5 8.3 26.2 32.4
Other NGOs 0.0 0.0 5.6 25.7 42.9 44.2 64.8 104.1 287.3
(% of 0.0 0.0 29.9 73.2 66.1 86.5 91.7 73.8 67.6
NGOs) Number of other NGOs
0 0 10 12 19 25 -29 33
Sources: 1995—2004: Korean Ministry of Unification 2005a; 2005 non-WFP data: Korean Ministry of Unification 2005b, 2006; 2005 WFP data: WFP 2006b
HAGGARD CH 06.indd 1438/23/06 10:58:27 AM
144 DILEMMAS OF HUMANITARIAN ASSISTANCE
Several features of South Korean aid are worth noting. The first is that while the government has made modest contributions through the WFP, the over- whelming majority of public assistance has passed through bilateral channels in the form of concessional loans, a useful fiction for both sides, as we will discuss. Over time, a large and growing share of this aid has been in the form of fertilizer, but food aid remains an important element both through govern- ment and NGO channels. Since public bilateral aid does not pass through the WFP—and indeed is not technically aid at all but loans—it is not subject to any of the WFP’s protocols with respect to targeting, access, monitoring, or assessment. Through 2004 South Korean aid was not monitored at all. In July 2004, North Korea finally agreed to establish a monitoring regime for South Korean food assistance, but it is substantially weaker than the WFP regime and makes no pretense of population targeting.19 Food aid goes directly into the PDS for delivery to the PDCs; as a small number of dissident South Korean NGOs have noted, the direct use of the PDS, the absence of targeting, and the relatively weak monitoring regime makes it even more difficult to guarantee that rice is not being diverted to elite consumption, other undeserving groups, or the market (see chapter 5). South Korean assistance is also provided in the form of rice, which is the preferred staple of the elite rather than less desirable grains such as barley or millet, which would be less prone to diversion and therefore more likely to reach vulnerable portions of the population.
The minimalist nature of the monitoring regime reflects differences with the United States and Japan in underlying strategy and objectives. Aid policy is clearly motivated by a broader political strategy of engagement and strong inter- est in forestalling a collapse of the North Korean state, which successive govern- ments have believed would impose unacceptable financial costs on the South.
The second characteristic of South Korean aid is that a large share passes through NGO channels, fully 37 percent. This is misleading in several important respects, however (O. Chung 2003). Until 1999 the South Korean Red Cross was the main channel for both government and private aid to North Korea, working directly with its North Korean counterpart (which appeared to be used almost exclusive for this purpose). With the coming of the Sunshine Policy, the government established more direct ministerial contacts. and the Ministry of Unification developed protocols for private inter-Korean exchanges. NGOs that managed to establish a consistent record of raising funds and conducting humanitarian operations for a year were entitled to apply for a license that desig- nates them as a North Korea support groups. These organizations are diverse and involved in a variety of projects that go far beyond food aid and food security.
But as Oknim Chung summarizes, “They put more emphasis on confidence-
The Political Economy of Aid 145
building through frequent contacts than on hewing closely to humanitarian principles” (2003:82), and while U.S. and European NGOs have reduced their activities in North Korea, South Korean groups have expanded theirs quite dra- matically. Moreover, a share of the aid passing through these organizations is ultimately public, funded through the Inter-Korean Cooperation Fund. In addi- tion to financing humanitarian efforts and activities such as family reunions, the fund has also been used to finance North-South infrastructure projects—the road and rail links, the Kaeso˘ng industrial park—and to provide loans to private companies engaged in trade and investment with the North.
The final point is that, as in the United States and Japan, aid has also fol- lowed political cycles. The very large 1995 contribution was seen by the Kim Yo˘ng-sam administration as a gesture that would contribute to a political breakthrough, but these hopes were quickly disappointed. In contravention to the agreement, the North Korean authorities forced the first ship carrying grain to fly a North Korean flag and later detained the crew of another relief vessel (Noland 2000:185). The government was predictably outraged and not only ruled out the possibility of further assistance but actively lobbied other countries to condition their aid on improvement in North-South ties; as we indicated above, both the United States and Japan pulled back their assistance to North Korea at a critical juncture—early 1996—in response to South Korea’s wishes (Natsios 1999:185).
In the last year of his administration (1997), however, Kim Yo˘ng-sam revised this policy as evidence continued to accumulate that famine conditions were worsening and political support for assistance grew.20 South Korean researchers had devoted substantial effort to estimating North Korean food supplies, going so far as establishing test plots near the DMZ that mirrored North Korean conditions and even using North Korean agricultural techniques to cultivate them. These exercises noted substantial shortfalls between estimated supply and demand. They assumed, however, that the differences were being made up—or could be—by drawing down ample military stocks. Other analysts outlined conflicting evidence that pointed to serious shortages (most notably Lim 1997).
The Korean Buddhist Sharing Movement (KBSM; subsequently Good Friends) reports that we have cited above began to get public attention as well. In May 1997, the first Red Cross agreement was struck, establishing the Red Cross as the window through which private contributions could flow to the North.
From June, the Red Cross sent 53,800 MT of food to Sinu˘iju, Manp’o and Namyang through the ports of Namp’o and Hu˘ngnam.
With the coming of the Kim Dae-jung administration in 1998 and the ini- tiation of the Sunshine Policy, the stage was set for broader and more consistent
146 DILEMMAS OF HUMANITARIAN ASSISTANCE
assistance. In the first year of this administration, however, the new government was hamstrung both by the regional financial crisis and a recalcitrant legisla- ture dominated by the opposition party.21 As a result, the administration had to make concessions to conservatives in Kim Dae-jung’s coalition, including important cabinet positions and the promise that engagement would only be pursed on the basis of strict reciprocity (Levin and Han 2002:91).
Nonetheless, the administration took a number of steps that established the institutions and policies of deeper engagement with the North. Among them was the early announcement of the principle that economics and politics should be separated, including an announcement in April 1998 that the legal foundation would be set for private investment in the North. Another early change was to allow agencies other than the Red Cross to operate; as can be seen in table 6.4, the Red Cross share of total NGO aid began to decline from this point as the Inter-Korean Cooperation Fund grew and a wide array of NGOs began working in North Korea on issues from agriculture to health, nutrition, and education.22
On January 4, 1999, the administration held a National Security Council (NSC) meeting that reached a number of important decisions on the overall direction of aid policy. The government decided to continue emergency food aid but would also focus on agricultural development by providing fertilizer, seeds, and pesticide as well; as can be seen from table 6.4, the fertilizer share of total aid has consistently been high. South Korea provided 200,000 tons of fertilizer aid to the North in 1999, 300,000 tons in 2000, 200,000 tons in 2001, and 300,000 tons in 2002, the final year of the Kim Dae-jung administration.
A second decision had to do with South Korea’s participation in the multi- lateral appeals process. The provision of fertilizer was motivated at least in part by ongoing concerns about transparency in the distribution of aid; diversion of fertilizer seemed less of a threat to the integrity of the aid program than was diversion of food. Nonetheless, the decision was taken that South Korea would also supply its growing food aid largely on a bilateral basis and technically in the form of loans rather than grants. The government has made contributions through the WFP, but they constitute a small share of total assistance.
As the administration stepped up its multifaceted push to orchestrate a sum- mit meeting between Kim Dae-jung and Kim Jo˘ng-il in the spring of 2000, bilateral food and fertilizer aid increased dramatically. As we have subsequently learned, a complex set of public and private payments also accompanied the more open aid offer.23 In the wake of the summit, the two governments not only reached broad agreements on principles but also established the Inter- Korean Economic Cooperation Promotion Committee, which served as the
The Political Economy of Aid 147
locus for discussions on normalizing commercial relations and cooperative infrastructure projects as well as humanitarian assistance.24
Conservatives had expressed doubts about the outcome of the summit from the beginning, and as the euphoria of the June 2000 summit faded and North Korea offered little in return, domestic opposition to the Sunshine Pol- icy mounted (Levin and Han 2002:chap. 6). Kim Dae-jung’s diplomacy was complicated not only by the lack of North Korean reciprocity and growing conservative opposition but by the transition from the Clinton to Bush admin- istrations in the United States and the new president’s open skepticism about the Sunshine Policy and hostility toward the North Korean regime. Yet despite the dramatic slowdown in policy initiatives in the late Kim Dae-jung years, the separation of the political and economic tracks remained a cornerstone of the administration’s approach to the end. As can be seen in table 6.4, despite grow- ing domestic opposition to the Sunshine Policy, total aid continued at levels roughly equal to those during 2000, and for the five years of his administration, total aid through public and NGO channels totaled over $450 million.25
The election of No Mu-hyo˘n occurred just as the second nuclear crisis was breaking in late 2002; by the end of the election campaign, the U.S. manage- ment of the crisis had become a potent issue, and No signaled his intention to distance South Korea from the American approach. No’s election also seemed to signal continuity with the Sunshine Policy, but in fact the new administra- tion placed even greater faith on using economic ties as a means of advancing broader political reconciliation. The administration’s Policy for Peace and Pros- perity included aid, commercial relations, investment, and cooperative projects as components of a larger project of regional integration that included not only the Korean peninsula but Northeast Asia more generally (Ministry of Unifica- tion 2003; Moon 2004).
On coming to office, the No administration quickly made a contribution (100,000 MT of maize) through the WFP, but aid policy reverted to the bilat- eral format that developed since the 2000 summit. The bilateral Inter-Korean Economic Cooperation Promotion Committee became the venue for the dis- cussion of aid commitments. In May 2003—while the nuclear standoff with the United States was continuing—the North Koreans requested 200,000 tons of fertilizer, which the South Koreans delivered, and a total of 500,000 MT of grain, an amount that proved somewhat higher than the approximately 400,000 MT South Korea ultimately supplied for the year, which was equal to nearly half the country’s uncovered food deficit for the year (that is, the short- fall between WFP estimates of domestic production and commercial imports and total demand). Requests to maintain these levels of support were subse-
148 DILEMMAS OF HUMANITARIAN ASSISTANCE
quently made in the June 2004 meetings of the bilateral economic cooperation committee and approved by the South Korean side
Several things are noteworthy about these commitments. First, they are quite large when scaled either to the total uncovered food deficit or the total WFP appeal. Second, this commitment was initially made in the absence of any monitoring system, in part because of the aid-as-loan fiction. Monitoring was only put in place and became operational in the following year as pres- sures mounted for greater accountability. Third, the aid extended by South Korea was unconditional on progress on the nuclear issue or even in bilateral relations; after June 2004, bilateral relations fell into a freeze that would not thaw until June, when a high-level South Korean envoy met directly with Kim Jo˘ng-il in an effort to restart both North-South talks and the broader Six-Party effort. As during the Kim Dae-jung administration, the engagement policy explicitly sought to separate the political and economic tracks, including not only humanitarian assistance but commercial relations as well.
This commitment was severely tested by the February 10, 2005, announce- ment that North Korea was suspending its participation in the Six-Party Talks and had nuclear weapons; only a month before this announcement, the North Korean government had placed its largest aid request to the South Korean gov- ernment ever: 500,000 tons of fertilizer. The government was divided over how to respond to the February 10 statement and was pressured by the United States not to grant the aid request. South Korean public opinion was by no means altogether unified on this issue. The opposition Grand National Party has argued for more stringent monitoring, and a minority voice within the South Korean humanitarian community has argued strenuously that large amounts of aid are diverted to the military and that food aid should be cut sharply.26 But as table 6.5 shows, Korean public opinion has changed sharply in recent years, despite the onset of the second nuclear crisis; opposition to aid has fallen to new lows and even support for conditional aid has been replaced by sentiment that South Korea should extend assistance without strings attached.
Despite statements by President No that additional aid should await prog- ress in the talks, humanitarian assistance—in which the government counted both its fertilizer and food aid shipments—was not so conditioned. Moreover, as was subsequently made clear, the June breakthrough and the resumption of both the bilateral and Six-Party Talks in mid-2005 had been facilitated by promises of generous economic assistance, including not only humanitarian assistance but also massive commitments to provide energy in the form of elec- tric power, deepen commercial relations, and expand government-to-govern- ment projects.27 In early 2006, as the United States was cutting aid and tighten-
The Political Economy of Aid 149
TABLE 6.5. South Koreans’ Opinions on the Nature of North Korea (2003, percentage)
Question:
In your opinion,
North Korea is a country . . . 1996 All ages 2003
20s
50s and older
In need of our assistance 22.3 11.8 6.4 14.4
To cooperate with 45.7 46.1 63.1 28.4
In bona fide competition 4.0 2.7 3.1 2.3
Impeding South Korea’s 6.3 31.4 25.1 40.2
advancement
Threatening national security 19.2 7.8 2.4 14.4
Source: Bong 2003, table 6).
ing sanctions, South Korea announced it was doubling its budget for economic cooperation with the North despite the fact that Pyongyang was continuing to boycott the Six-Party Talks (Agence France Press 2006).
The statements of President No and South Korean officials have remained consistent on the principle that humanitarian assistance (and even broader eco- nomic cooperation) should not be linked to political progress on other issues.
Decisions concerning aid were to be taken by South Korea in consultation with the North and were not subject to either multilateral cooperation or coordi- nation with the United States and other parties to the Six-Party Talks. South Korean officials consistently expressed their reservations concerning the use of sanctions, which would require a substantial adjustment of an increasingly well entrenched aid strategy. Moreover, the South Korean government supported liberal use of both current and prospective economic assistance as a means of facilitating political cooperation.