Lurching towards Reform

In the aftermath of Ri Yong-ho’s removal from office, there have been sporadic speculations regarding the internal state of the Kim Jong-eun regime. But even if there is power jockeying within the upper echelons of the party and military, what is truly testing the regime is the rampant food crisis. According to DailyNK sources, since June 2012, rice prices have increased KPW 2100 in Pyongyang (65.6%), KPW 900 in Sinuiju (26.5%), KPW 1100 in Hyesan (22%). These are troubling indicators of major entitlement loss for everyday North Koreans relying on meager wages.

Nonetheless, there are some signs that Kim Jong-eun is not oblivious to these difficulties. Prior to the politburo meeting on July 15, a major initiative called the June 28 Policy (or ‘On the establishing of a new economic management system in our own style’) was launched, attempting to resolve the food deficit through basic macroeconomics.

According to sources from Daily NK

The proposed reforms, which will see the size of the average cooperative farm production unit [bunjo] reduced to 4-6 people and grain procured at market prices… The state will take 70% of the target production and the farmers will get 30%, but if the farmers exceed the target then they get to keep the surplus

On top of incentivizing farmers to produce more for themselves, policymakers are hoping that the potential earnings in agriculture will also draw people from cities back to the rural areas. In addition, to better ensure success, the state is providing new seeds, fertilizer, weeding implements and machinery. This program has been launched in three counties in Yangkang Province to test its effectiveness. Nation-wide implementation is expected to begin in October of this year.

However, Pyongyang’s previous debacles with economic reforms may greatly hinder the initiative as

local people are not yet prepared to trust the authorities… following a history of disappointments such as the 2009 currency redenomination. In consequence, many are reportedly looking upon the latest policy with skepticism; many expect the authorities to break their promises in one way or another, for example by taking more than [70%] of production in order to feed the military.

Indeed there have been a few attempts since the Great Famine of the 1990s to reduce the quota of the state’s grain collection, decrease the size of farming collectives and increase land set aside for private farming. They have not been effective enough to lift North Korea out of a food crisis and have all been scrapped after a short time.

Nonetheless, many are looking to Kim Jong-eun’s new plans as sign of things to come; North Korea following the footsteps of other reformist communist states like China and Vietnam. Professor Lee Young Hwa of Kansai University went as far as to speculate that Ri Yong-ho was purged because he proved to be an obstacle in executing the economic reforms.

In light of these changes, new faces will probably become more prominent in the political scene in Pyongyang. According to Chris Green

it is believed by experts in Seoul that those officials who drove the July 1st Economic Management Reform Measures of 2002, current Vice-Prime Minister Roh Du Cheol and Pak Pong Ju, the head of the Chosun Workers Party Light Industry Department, are leading the current economic changes. As [then-]prime minister, Pak was responsible for driving the 2002 reforms, while Roh, his then-deputy, is adjudged to have played a key supporting role.

Looking beyond Ri Yong-ho’s dismissal, some experts believe that the politburo meeting on July 15th may have been about the strategic direction of the state, evaluating the last 6 months of Kim Jong-eun’s rule.

While these recent changes are positive signs, it is still too early for optimism. Unlike Vietnam and China, North Korea still has a standing political conflict with South Korea and the United States which limit certain options. At the same time, the June 28 Policy relies heavily on the government being able to deliver the necessary tools and resources to the farming communities – the uneven allocation of these limited resources could create imbalances in food production.

Furthermore, the food and economic crises in North Korea needs a holistic solution that incorporates good infrastructure, economic sensibilities and ecological responsibility. Most of all, as all command economies are challenged, the human element is the most difficult to predict and will challenge rigid implementation.

More to come.


About Yong Kwon

I develop trade advocacy strategies for a DC-based consulting firm. Studied economic history at the London School of Economics, and can be found on twitter at @ykwon88
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2 Responses to Lurching towards Reform

  1. Pingback: Food and Reform update | DPRK Food Policy Blog

  2. Pingback: Reintroducing the Blog | Rice and Iron

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